The Killing of America's Free-Market Economy
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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But then you suppose Peggy Noonan is perhaps "our most gifted essayist."
You really have no business commenting on public policy. Go make money.
Do you realize that Federal workers are already 18.9% behind on their pay based upon COLA? The last two presidents have used "emergency status" to limit the COLA amounts this decade. So, maybe Federal workers have already sacrificed 18.9% but heaven forbid if we ask people making money for breathing (dividends, passive capital gains) to pay a bit higher on their taxes! And don't forget that our insurance premiums have increased 10-15% the last two years..yes those same plans that everyone wants because Congress gets them. Of course, the Republicans want to kill that insurance for us too and throw us into state exchanges with no bargaining size. The federal workforce reflects the demographic problem facing the country...lots of older, higher-paid workers. Once they are retired (and that process is underway), the average will come down. So, before you argue for 7.5% and more reductions, maybe you should think about priorities and where you could generate more bang for the sacrifice.
For a turnaround specialist to be effective he has to be given total power to make the necessary changes. We have no mechanism by which we can appoint such a person in our representative republic. The very checks and balances that were suppose to keep us safe on the way up will now ensure the skids are greased on the way down.
Its probably too late anyway. The country has been sold out from under us. If not in absolute financial terms at least in the sense of the attitude that has become ingrained our society over the past 30+ years. The attitude of 'I'm going to get mine' which is now morphing into the attitude of 'I'm going to keep mine'. Can you even imagine JFK saying "Ask not what your country can do for you, but rather what can you do for your country" today? He would be booed off the stage.
We've all become addicted to something for nothing. We want low taxes and unlimited government services. We want gold-plated healthcare but want someone else to pay for it. We want to impose our will around the world financed only with off-balance sheet 'supplemental' spending. We want unlimited cheap credit so we get rid of the gold standard and mark-to-market accounting. We have devolved into a world of make believe where we can have it all. Rational people are pushed aside in favor of those who insist we need to 'optimize' the economy with 'stimulus packages' of borrowed and printed money.
We are in the process of revealing the fundamental flaws of democracy and captialism. They are the same flaws inherent in all forms of government and all economics systems. These philosophies depend on the fallacy that large groups of people act in ways that are sane. It is an assumption that history has refuted repeatedly but that our egos refuse to allow us to accept. War does not end war, more debt is not the answer to indebtedness and mans humanity doesn't keep us from continuing to do inhumane things.
History seems to tells us that 'normal' for human beings is a boom/bust cycle. Stability breeds chaos. Greed and arrogance have no limits. We are powerless against our own animal spirits. In the totality of time we have only recently emerged from caves.
You might as well advocate the need for witch doctors as turnaround specialists.
You and your pals continue to describe a system that meets the definition of fascism (look it up) but calls it freedom. If your ideas are paramount, I would point you to the lessons of history offered by the French or Russian revolutions...how'd that work out for you overlords then?
One man's 'waste' is another mans 'need'. You've got money to pay for your needs...that should be enough, but no! Today's US rewards greed, complete lack of social conscience and using that money to manipulate elections, fund the constant barrage of pro-capitalist propaganda while at the same time subverting every piece of legislation that might relieve the suffering of the rest of the country.
I'm convinced that a great, bloody, nasty revolution lies in the future of this country. I'm sorry I'm old now and probably won't live to see it, let alone assist it, but I offer you the suggestion of Malcolm X: It's a b**** when the chicken come home to roost.
Good luck with that attitude, Mikie.
What Corporate welfare does increase, however, is the price of financial assets and non-productive assets (like homes), since it provides rich investors with excess capital that they cannot invest elsewhere. The end result is the malinvestment of capital in to non-job-producing endeavors, and--in the case of housing--maintains home prices at unaffordable levels for most Americans.
Businesses aren't creating jobs due to the lack of demand for their products due to increased unemployment and stagnant wages--not because of lack of investment capital.
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I do agree we need some changes in medical in the country. When you go to two doctors and they repeat tests, it is insane and costly. I've complained but I suspect there are financial kickbacks. How many doctors gain additional income from these tests? We need to change our collective thinking about health care. Why doesn't our country view health care with a "global view" like we want to view the "markets globally"? Our trading partners approach health care differently and I believe they have a competitive advantage.
Finally, I agree we spend far too much for the military. We should stop being the world's police force and use that money to improve our own country. Global deployment of troops isn't necessary for defense. By the way, if there was a draft, lots of people would quickly oppose those military deployments for their children.
Now, I consider the VA system to be a national disgrace, but in terms of rationing care, they are not particularly worse than the private system. And the VA can't terminate you for getting sick or preexisating conditions which the "free market" system does routinely.
In any event, there are only a few ways to "reform" health care (if by reform you mean reduce costs). One of those ways is rationing care - which means among other things that people who are on their third or fourth heart attack find themselves at the back of the line. Period. (Mind you, I am not endorsing this, but if you want to be intellectually consistent...)
There are two ways to reduce costs and only two ways to reduce costs: get people to use the system less and/or descrease profits to providers. Period.
The other reforms to lower costs include single payer (which consolidates adminstrative costs and buying power), reforming the patent system and other rent seeking systems, improving average public healthfullness and prevention, and opening the system to global competition (health care remains a highly protectionist industry). Tort reform, by the way, is a red herring.
In any event, a true disciple of Peggy Noonan ought to write his Vet buddy back and inform him that Reagan Conservative dogma insists that he must suck it up and get a job, becuase the public teet doesn't do endless surgeries for out of work public welfare recipients.
