The nonsensical blame game over the economy

There's a huge blame game going on in the USA and abroad right now. It seems everyone's trying to blame everyone else for the mess we're in. Liberals blame conservatives, and vice versa; progressives blame reactionaries, and vice versa; and the Tea Party is blamed by both liberals and conservatives, whilst giving as good as its getting in the criticism stakes.

Trouble is, all sides are equally at fault for past mistakes, and all sides are equally wrong to try to pin the blame for our current dilemma on each other. We're in this mess because all those in power, today and yesterday, have implemented policies that have finally come home to roost. The roots of our current dilemma extend back to before World War II. Oddly, no US publication seems to have caught on to this fact. I had to look to an article in the Telegraph, in England, to succinctly state what any student of economic history knows to be true. Here's a lengthy excerpt.

Which of these is the most important question to ask in the present economic crisis: how can we promote growth? Should we pay off government debt more or less quickly? Is the US in worse trouble than Europe? Answer: none of the above.

The truly fundamental question that is at the heart of the disaster toward which we are racing is being debated only in America: is it possible for a free market economy to support a democratic socialist society? On this side of the Atlantic, the model of a national welfare system with comprehensive entitlements, which is paid for by the wealth created through capitalist endeavour, has been accepted (even by parties of the centre-Right) as the essence of post-war political enlightenment.

This was the heaven on earth for which liberal democracy had been striving: a system of wealth redistribution that was merciful but not Marxist, and a guarantee of lifelong economic and social security for everyone that did not involve totalitarian government. This was the ideal the European Union was designed to entrench. It was the dream of Blairism, which adopted it as a replacement for the state socialism of Old Labour. And it is the aspiration of President Obama and his liberal Democrats, who want the United States to become a European-style social democracy.

But the US has a very different historical experience from European countries, with their accretions of national remorse and class guilt: it has a far stronger and more resilient belief in the moral value of liberty and the dangers of state power. This is a political as much as an economic crisis, but not for the reasons that Mr Obama believes. The ruckus that nearly paralysed the US economy last week, and led to the loss of its AAA rating from Standard & Poor’s, arose from a confrontation over the most basic principles of American life.

Contrary to what the Obama Democrats claimed, the face-off in Congress did not mean that the nation’s politics were “dysfunctional”. The politics of the US were functioning precisely as the Founding Fathers intended: the legislature was acting as a check on the power of the executive.

The Tea Party faction within the Republican party was demanding that, before any further steps were taken, there must be a debate about where all this was going. They had seen the future toward which they were being pushed, and it didn’t work. They were convinced that the entitlement culture and benefits programmes which the Democrats were determined to preserve and extend with tax rises could only lead to the diminution of that robust economic freedom that had created the American historical miracle.

And, again contrary to prevailing wisdom, their view is not naive and parochial: it is corroborated by the European experience. By rights, it should be Europe that is immersed in this debate, but its leaders are so steeped in the sacred texts of social democracy that they cannot admit the force of the contradictions which they are now hopelessly trying to evade.

. . .

... collapsing before our eyes is the lodestone of the Christian Socialist doctrine that has underpinned the EU’s political philosophy: the idea that a capitalist economy can support an ever-expanding socialist welfare state.

As the EU leadership is (almost) admitting now, the next step to ensure the survival of the world as we know it will involve moving toward a command economy, in which individual countries and their electorates will lose significant degrees of freedom and self-determination.

We have arrived at the endgame of what was an untenable doctrine: to pay for the kind of entitlements that populations have been led to expect by their politicians, the wealth-creating sector has to be taxed to a degree that makes it almost impossible for it to create the wealth that is needed to pay for the entitlements that populations have been led to expect, etc, etc.

The only way that state benefit programmes could be extended in the ways that are forecast for Europe’s ageing population would be by government seizing all the levers of the economy and producing as much (externally) worthless currency as was needed – in the manner of the old Soviet Union.

That is the problem. So profound is its challenge to the received wisdom of postwar Western democratic life that it is unutterable in the EU circles in which the crucial decisions are being made – or rather, not being made.

The solution that is being offered to the political side of the dilemma is benign oligarchy. Ignoring national public opinion and turbulent political minorities has always been at least half the point of the EU bureaucratic putsch. But that does not settle the economic predicament.

. . .

A general correction of the imbalance between wealth production and wealth redistribution is now a matter of basic necessity, not ideological preference.

The hardest obstacle to overcome will be the idea that anyone who challenges the prevailing consensus of the past 50 years is irrational and irresponsible. That is what is being said about the Tea Partiers. In fact, what is irrational and irresponsible is the assumption that we can go on as we are.

There's more at the link. I highly recommend reading it in full. The author, Janet Daley, is (as far as I'm aware) the only mainstream media figure who's put it all together in a single neat package. She speaks the truth about the crisis facing us.

It's long past the time when the blame game will do us any good at all. It no longer matters who got us into this mess, particularly when both the Democratic and Republican parties are equally guilty. What matters is the way forward . . . and that's going to be painful, costly, and damaging. There's no alternative to that. The Tea Party is fundamentally correct - unarguably correct - in its assessment that we simply cannot go on borrowing more and more money to feed our insatiable demand for entitlements. That has to stop, right here, right now.

THERE IS NO MORE MONEY TO PAY FOR IT.

It's as simple as that.

Peter