Thursday, January 24, 2008
A favorite slogan in recent years has been: "It's The Economy, Stupid!"
What those spouting this drivel have failed to mention is that we are the economy - you and I, the ordinary men and women who make up this nation.
What they also fail to mention is that our Government and Federal Reserve have been spending like drunken sailors for the past several decades. They haven't asked us about it: they've just gone ahead and spent money they didn't have. They're still doing it. All the 'entitlement' programs so beloved of politicians - whether the recipients are inner-city welfare mothers, farmers in the Mid-West, or defense contractors all across America - are funded by our Government. Most of them are not paid for out of our taxes, but out of borrowing. The Government has eaten up our Social Security patrimony by 'borrowing' it to pay for other programs. As a result, Social Security is technically approaching bankruptcy. The only reason it's not been declared bankrupt is that it has a stash of Government I.O.U.'s saying that they'll repay the money.
As for our money supply, the Fed hasn't published figures on the US money supply for some time. Why not? My guess is that they've been running the printing presses overtime, flooding the market with dollars to meet the demand for liquidity - but without any underlying assets to maintain the value of the currency. The steadily declining value of the US dollar against other currencies bears this out.
There's just one small problem with that picture. Where is our Government going to get the money to pay back all those I.O.U.'s? What can be done to restore the value of our currency?
There's only one answer, friends. Take a look in the mirror. That's right. You and I are going to have to pay for this profligacy. We'll have to do so in part by paying our share of the national debt through increased taxation; in part by accepting lower benefits from the State in terms of Social Security, Medicare, etc.; and in part by paying a lot more for the goods we want from overseas. Of course, our politicians will disguise their guilt by appealing to us to 'share the burden' and 'do our part' - but they'll never admit that it's their fault we're in this mess to begin with.
And, to be honest, they may have a point. You see, we elected them in the first place. We've continued to elect them. We've voted to station the hogs at the trough and voted in more hogs to keep it full. Now that the trough's empty and the feed bill's come due, we have only ourselves to blame.
Politicians know this. Just look at the current candidates to be our next President. Look at those who are telling us, "I have a wonderful program to fix this - I'll allocate X billion dollars to that problem - if we take spending from here and allocate it there we can deal with so-and-so." They're all lying to us, people, and they're doing it because they know they can get away with it. We've grown into a nation that believes you can fix social and societal issues by throwing money at them. It's never worked throughout human history, and it certainly hasn't worked in the USA over the past half-century, but we continue to tolerate (and elect) those politicians who lie to us about it.
Just look at the numbers. Let's take education for a start. From 1965 through 1999 the US Government spent $118 billion on Title 1, the largest K-12 education program. However, evaluations concluded that the program "has been unable to lift [the] academic level of poor students". If that's so, where's the return on that $118 billion? You tell me. Some more numbers: "Since 1983, over 10 million Americans have reached the 12th grade without having learned to read at a basic level. Over 20 million have reached their senior year unable to do basic math. Almost 25 million have reached 12th grade not knowing the essentials of U.S. history." This in a nation where "average per-pupil spending in U.S. public schools rose 212 percent from 1960 to 1995 in real (inflation-adjusted) dollars" - but "American 12th graders rank 19th out of 21 industrialized countries in mathematics achievement and 16th out of 21 nations in science. Our advanced physics students rank dead last."
How about Social Security? If anyone tries to suggest that the system is bankrupt and reform is necessary, the 'entitlement junkies' will eviscerate him - but the facts speak for themselves. Our current politicians are deathly afraid to fix things because they know they'll be savaged at the polls by those who've grown accustomed to feeding at the public trough: so they're ignoring the problem, leaving it to their successors in office to deal with the mess they inherit. The fact that our children will hate and loathe us for dumping them into such a financial cesspit doesn't faze them in the least. They won't need our children's votes. They do need ours.
Take the current credit crunch. It exists for one reason only: GREED. Good old-fashioned greed, one of the Seven Deadly Sins. We became greedy, as a nation, as a people, as individuals. We're overflowing with physical possessions (just look at the number of storage units springing up all over the country to hold 'stuff' that we can't fit into our homes any more). We're drowning in debt. The average US family had over $8,000 in credit card debt in 2003; about 43% of US families spend more than they earn each year; and the total US consumer debt in October 2003 was just under $2 trillion - yes, TRILLION - or about $18,654 per household excluding mortgage debt.
Because we're willing to spend like drunken sailors, the banks and the Federal Reserve have fallen over themselves to accommodate us. Valuations on houses were 'fudged' to look better; mortgages were offered to sub-prime borrowers; credit cards were issued as if they were greeting cards; and banks loaned money on an ever wider variety of consumer goods. Now the chickens are coming home to roost . . . and everybody's looking for someone else to blame.
Folks, it's time we started being honest at last. We're to blame, each and every one of us, for tolerating this mess, for allowing it to develop for so long, for voting into office the politicians who empowered it, for putting up with their lies, for not taking a stand for the things we know to be true.
When I was a child my father began to give me pocket-money as soon as he figured I was old enough to manage it. I received five cents for every year of my age. Guess what? When I didn't have any money left because I'd thrown it away on chocolates or candy, my father and mother wouldn't help me out with more. I soon learned that if I wanted something expensive, I had to save up for it. If I wanted something really expensive I was expected to do odd jobs around the house, or get a part-time job, and earn the money I needed. My dad wasn't unreasonable: if he saw I was really working towards something and saving responsibly he'd often give me half its cost so I didn't have to work too hard. However, if I didn't bring my part he wouldn't help me. I learned from that.
The Master, Robert A. Heinlein, coined an acronym in his magnificent novel, The Moon Is a Harsh Mistress. It's T.A.N.S.T.A.A.F.L., meaning "There Ain't No Such Thing As A Free Lunch". My father taught me that from an early age. I highly recommend the book, and I suggest it's long gone time all of us re-learned that lesson - and time we started electing politicians who understand it.
If we don't, we're doomed.