The Killing of America's Free-Market Economy
We must get off this fiscal path of government deficits -- now.
Peggy Noonan, maybe the most gifted essayist of our time, wrote a few weeks ago about the vague concern that many of us have that the looming monster has the potential (my interpretation) not only to pluck a few feathers from the goose that lays the golden egg (the US free-market economy), or steal a few more of the valuable eggs, but to actually kill the goose. Today we look at the possibility that the fiscal path of the enormous US government deficits we're on could indeed kill the goose or harm it so badly it will make the lost decades that Japan has suffered seem like a stroll in the park.
And while I don't think we'll get to that point (though I can't deny the possibility) for reasons I'll go into, there's the very real prospect that the upheavals created by not dealing proactively with the problems (or denying they exist) will be as bad as or worse than the credit crisis we've gone through. This isn't going to be something that happens overnight, and the return to normalcy that so many predict has the rather alarming aspect of creating a sense of complacency that will only serve to "kick the can" down the road.
This week we look at the problem, and then consider the more likely scenarios that may play out. You may find this article a little more controversial than normal, but I hope it makes everyone think about the very serious plight we've put ourselves in.
Let's review a few paragraphs I wrote last month in Why We Won't Avoid a Double-Dip Recession:
As [my] family grew, we limited the choices our seven kids could make; but as they grew into teenagers, they were given more leeway. Not all of their choices were good. Yet how do you teach them that bad choices have bad consequences? You can lecture, you can be a role model; but in the end you have to let them make their own decisions.
I've watched good kids from good families make bad choices, and kids with seemingly no chance make good choices. And one thing I've observed: Very few teenagers make the hard choice without some outside encouragement or some help in understanding the known consequences from some source. They nearly always opt for the choice that involves the most fun and/or the least immediate pain, and then learn later that they now have to make yet another choice as a consequence of the original one. And thus they grow up.
What Were We Thinking?
As a culture, the current mix of generations, especially in the US, have made some choices, some of which, in hindsight, leave the adult in us asking, "What were we thinking?"
We made a series of bad choices and suffered the credit crisis because of it. Now, as a nation, we're in the middle of making an even worse choice; one that will leave us with no good choices rather ones that range from pretty bad to awful.
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