Tuesday, May 31, 2011

America at a crossroads? or have we already crossed the event horizon?

For a while there, it looked as though there might be a chance that the United States would do what was necessary to get back to some sort of fiscal sanity....for a while there.

Today we still have our $14+ trillion dollar national debt, trillion dollar deficits as far as the eye can see and, perhaps more importantly, something like $57 trillion in unfunded liabilities, that is, money we've promised to pay out in entitlements that nobody has a clue where it's going to come from.

Paul Ryan and friends proposed to cut the growth of Medicare at least, by block granting fixed amounts to the states. You would have thought he proposed internment camps for the elderly. "Hands off Medicare" is the popular chant. I don't imagine Social Security reform is going to fare any better. Lest you think that government will be forced to make reforms just in the nick of time, consider Eastern Airlines. Unions knew full well that if they didn't make major concessions the company would go under. They didn't, it did. In the case of the auto industry, the government took the companies from the rightful owners, the bondholders, and just gave it to the unions. No incentive for concessions there. It's not just unions. It's everyone that get some kind of check from the government, and boy there are a lot of them.

Americans still like to think in terms of the land of the free, home of the brave, baseball, apple pie, etc., but they also seem to want to continue to work toward a society where everyone's basic needs are taken care of by somebody else. This has never worked and never will, but that's not slowing down the movement. Americans are looking for that fairy tale hybrid of capitalism and socialism. They want the vitality, innovation, creation, wealth and productivity of capitalism, with the carefree security of cradle to grave socialism. I guess the hope is that there are enough people who are genetically inclined to produce and excel, regardless of incentive or motivation, that they will deliver enough to take care of everyone else. It's a fairy tale.

It's entirely possible that hundreds of years from now, the decline and fall of the United States of America will be marked as beginning around 2007. I hope that I'm wrong, but I don't see any popular movement that would change it. No China is not going to be the new global superpower either. In fact, the alleged economic behemoth wont even be able to produce enough electricity to keep their own factories operational this summer. They have tightly controlled the power industry to the point that it's tied up in knots and they have no idea how to fix it. Getting out of the way is not on the proposed solutions list. I think a rudderless, backwards world economy is the more likely scenario for quite a while.

I don't know exactly what the future will bring in my lifetime. But I do know that, in general, the American public is not in the mood for limited government and real free markets and politicians are not going to do anything long term or substantial without the express consent of the voters.

I'm beginning to feel that we are not, as many like to say, at a "crossroads", a point where we can determine whether we're headed for greater prosperity or history's dust bin. We may have already crossed the event horizon into the black hole of "something for nothing" land. We're just too close to the situation to see it clearly.

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