A comment by “Buck O’Fama” in response to this post by Victor Davis Hanson:
Years ago, the kid next door was bouncing his ball against the side of my house, occasionally hitting a storm window in the process. I came out and said to him, “Don’t do that, you’ll break my storm window.” He replied, “No I hit it already and it didn’t break.” It never occured to him that he may have just gotten lucky previously, or perhaps the cumulative micro damage from the previous strikes would soon cause the window to yield, or maybe he just hadn’t hit it hard enough. Regardless, he broke the damn thing within the hour.
America is at that point now. All the abuse the nitwits and the idiots have done to the culture and the economy over the past decades have failed to break the country, and they now assume it is unbreakable. This leads me to suspect we are shortly to find out that it is not.
Ruin is formal — Devil’s work
Consecutive and slow —
Fail in an instant, no man did
Slipping — is Crash’s law.
–Emily Dickenson
The belief that things are not as bad as they really are–the window that looks fine but has microscopic cracks that will soon cause it to fail–is common in business organizations heading for trouble. People, from the Board of Directors down to the lowest-level employee, think that things will continue as before when it should be obvious that they cannot.
In American society today, we are seeing the opposite phenomenon. There is a widespread belief that **there is no hope**, and that things are headed for crumbling or outright disaster, with the only question being how long it will take and how catastrophic it will be.
And 1 party it seems wishes to profit from the breakup – Sometimes 2.
I was thinking yesterday – an honest question – but why would people vote for things that so obviously are financially ruinous?
“….but why would people vote for things that so obviously are financially ruinous?”
Ruin does not fall equally across the population. Reagan’s 1986 Tax Reform has been essentially undone – nominally high corporate marginal tax rates and Federal regs hit small and medium business in full while some top Fortune 500 companies like GE (whose CEO, Jeffrey Immelt is an Obama ally) pay no taxes whatsoever due to complicated and sophisticated tax loopholes unavailable to everyone else, or get subsidies and waivers from regs that exceed the cost of their taxes.
http://www.nytimes.com/2011/03/25/business/economy/25tax.html?pagewanted=all
At the other end of the spectrum, significant part of the population receives transfer of wealth payments:
http://www.nytimes.com/interactive/2012/02/12/us/entitlement-map.html?ref=us
The middle-class is a barometer of national health, economic vigor and political stability. Federal policies for the past 10 -15 years have increasingly been tilted against upward social mobility,bottom-up entrepreneurship and wealth accumulation by ppl in modest income brackets in favor of easy credit/debt accumulation, holding down US standards of living by depressing wages (via illegal immigration and subsidized outsourcing) and so on. The net outcome is we are growing a superclass that does well despite the economic stagnation they are causing and an underclass that consumes more than they contribute.
I don’t know if we are too far down the path to ruin. I do know that if we continue on this path bankruptcy is inevitable, that costs will be spread about unevenly, and that the outcome will be too chaotic to be predicted.
However, from where we are, a climbdown and restoration is expensive, difficult, and for a great many people, exceedingly painful.
We must deleverage, first in our private affairs, but eventually also in public finance. Millions of Americans will have to go through bankruptcy proceedings. We will have to make the process cheaper, simpler and faster.
Our financial system must be recapitalized at much higher levels than in the past. This will cause immediate pain in that sector of the economy.
We will have to cut back on the entitlement beast. Social security benefits must be reduced, which can be done slowly by changing retirement ages and indexing provisions. But, taxes on benefits must go up. The old folks must share some pain.
The health care business has been the big hog at the Federal trough for a generation. There are two possible ways of controlling that. Either we dramatically reduce the federal role and require people to make their own decisions that they will pay for through higher premiums, co-pays, and deductibles, or the federal government will put price controls on everything they do. In either event, the health care business will be deprived of revenue and growth. Many providers will consolidate or go bankrupt. There will be lots of pain.
Medicaid must be abolished. Legions of other government programs as well.
Finally, there will be big tax increases, largely through excise and sales taxes, such as a VAT. Fiddling with the income tax will not produce much more revenue. Only a VAT and some strategic excises, such as $2/gal. on gasoline, can produce the kind of revenue we need.
The bellowing of sacred cows being led to the slaughter can be heard from here. I think the current path, bankruptcy, and chaos are safer bets.
A VAT Will have to be dedicated to debt reduction or it will become part of the problem. It will cut consumption and will limit economic growth. Downsizing government will be very difficult and expect resistance from the group to be reduced in size. Perhaps violent resistance, like Wisconsin but worse.
Part of the problems of Greece and Italy has been low tax compliance. We will see more of that. Credit ratings will lose some effect as half the population has late or defaulted mortgage payments. Lending will become riskier to a population that has been through such an experience was many of us are having now. Interest rates will have to be higher for private loans. Municipal bonds will lose attraction and cities will have a hard time borrowing for infrastructure.
It will be an interesting experience. I think there was something similar coming out of the Depression as most people paid cash for everything, even houses.
Raising tax rates will just cause them to spend more. Revenue from a VAT will be spent, and then some. They will not cut spending on anything until there is some very obvious disaster that makes it politically and practically impossible to do so.
In American society today, we are seeing the opposite phenomenon.
I think a lot of people are too pessimistic, conservative/libertarian bloggers in particular. At the same time it’s clear that our public finances are headed for disaster unless we cut govt spending substantially, and that our political class is not up to the task.
Bill Crystal today wrote column about how Obama thinks the people like poetry, as he imagines his speeches to be. I have a couple of other examples of poetry that might be of more value.
1. “Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded—here and there, now and then—are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty.
This is known as ‘bad luck’.”
– Robert A. Heinlein
2. There is nothing new under the sun: and I mean, nothing. It is a point brought home to us with increasing force by the expansion of the Internet. Conceive of an “original idea.” Now, select two or more keywords suggested by it. Use them as search terms, and you will soon find that, say, 438,000 other people have entertained said “original idea,” and a dozen are currently blogging on it.
Yes: a lot of people have entertained the idea, that Mikhail Gorbachev was to the late great Soviet Union, what Barack Obama is to the surviving United States — the leader who reforms so many things so quickly that his country suddenly disappears. One recalls the speed with which the first Soviet head of state to be born after the October Revolution became its last head of state. It took him about three years: just less than the time of one U.S. presidential term. (Though he had already taken three years to warm up, as General Secretary of the Communist Party.)
It is, today, a little-known fact that Gorbachev did not bring about the collapse of the Soviet Union, on purpose. Those who still detect a glint in his eye would do well to respect his persistent denials. He was sincerely trying to reform the place. He was walking a dog with powerful jaws, but rather loose teeth; he tried to adapt it to a vegetarian diet; it died.
The poor dictator inherited not only an economy going bankrupt by even socialist standards; but a war in Afghanistan that was being lost, against an utterly disorganized enemy from another century; to say nothing of half-a-dozen other imperial missions, in exotic third-world locations, that were not going well. By merely liberating the little West Indian island of Grenada, President Reagan was able to send a hollow sound through the hearts of aspiring Communist revolutionaries all over the world.
The comparison between Gorbachev and Obama is apt on few levels. The chief difference is between the U.S. of 2009, and the USSR of 1985; between a huge, decentralized, open economy, and the society it serves; and a much smaller, very centralized, command economy, and the society serving it. These circumstances are not even remotely comparable, and one must be a fool indeed to play with a moral, economic, or ideological “equivalence” between the two old superpowers. Which is not to say such fools aren’t numerous.
Nor are the two men, themselves, remotely comparable in their backgrounds, or political outlook. Gorbachev, for instance, had come up from tractor driver, not through elite schools including Harvard Law; he lacked the narcissism that constantly seeks self-reflection through microphones and cameras, or the sense that everything is about him.
On the other hand, some interesting comparisons could be made between the thuggish party machine of Chicago, which raised Obama as its golden boy; and the thuggish party machine of Moscow, which presented Gorbachev as it’s most attractive face.
Both men have been praised for their wonderful temperaments, and their ability to remain unperturbed by approaching catastrophe. But again, the substance is different, for Gorbachev’s temperament was that of a survivor of many previous catastrophes.
Yet they do have one major thing in common, and that is the belief that, regardless of what the ruler does, the polity he rules must necessarily continue. This is perhaps the most essential, if seldom acknowledged, insight of the post-modern “liberal” mind: that if you take the pillars away, the roof will continue to hover in the air.
Gorbachev seemed to assume, right up to the fall of the Berlin Wall and then beyond it, that his Communist Party would recover from any temporary setbacks, and that the long-term effects of his glasnost and perestroika could only be to make it bigger and stronger.
There is a corollary of this largely unspoken assumption: that no matter what you do to one part of a machine, the rest of the machine will continue to function normally.
A variant of this is the frequently expressed denial of the law of unintended consequences: the belief that, if the effect you intend is good, the actual effect must be similarly happy.
Very small children, the mad, and certain extinct primitive tribes, have shared in this belief system, but only the fully college-educated liberal has the vocabulary to make it sound plausible.
With an incredible rapidity, America’s status as the world’s pre-eminent superpower is now passing away. This is a function both of the nearly systematic abandonment of U.S. interests and allies overseas, with metastasizing debt and bureaucracy on the home front.
And while I think the U.S. has the structural fortitude to survive the Obama presidency, it will be a much-diminished country that emerges from the “new physics” of hope and change.
Davir Warren
otiosus@sympatico.ca
Policy is complicated. Conservatives (rather than mere Republicans) are people who have decided after long observation and thought that a small set of principles guide to the correct path. Spend a lot less through government, reduce the federal payroll, regulate only what is absolutely necessary in business, and remove government mandates like Obamacare which increase the costs healthcare, hiring, and working. I agree.
The worst part of Republican infighting is that it convinces many undecided voters that Republicans are hacks and their free market philosophy is a veil to hide their supposed heartlessness.
A large middle of independents sit on the fence. The Left says that if government spends less money, it will kill private sector jobs through lack of Keynesian demand. Government workers don’t want to be fired. People like the idea of a protective government, and 30% of the public gets a government check. Why believe that they would be better off without big government? Why not tax the rich? Why not go on as before?
Leftist politicians proclaim attractive goals and principles, as if they were possible. They make their goals seem possible through emotion. They fight for every inch. They appear to have a clear vision of a glorious future. They fight for that future with conviction, not daunted by the contradictions and idiocies which they proclaim. They make aggressive moves toward their goals and then compromise on how much they win.
The Republican opposition shows fear. They want a better future within the bounds of morality and reality, but they don’t act like this is supremely important. They say that reality requires conservative policies, and then they make compromises which ignore that reality. This makes them appear opportunistic, trading away the results which they say are necessary. They compromise on how much they lose.
If conservative policies are good for almost everyone, then why don’t Republicans act like it? An observer on the fence can infer that Republicans don’t really believe in the reality they describe. For example, they started a fight over the debt ceiling, saying correctly that increased debt is dangerous to the health of our country. They said that spending must be controlled, and correctly that the disruption from a temporary government default was worth it, because otherwise we would go over the cliff.
Then, they made a deal with no spending cuts of importance. What about the cliff? Why start the fight in the first place? Someone on the fence sees this as political positioning, not conviction backed by an analysis. This demeans the Republican and Conservative brand.
The debt deal gave approval to the Democratic vision. The Democrats claim credibility when they now say “Republicans started a fight they don’t believe in, but they have opposed us enough to cause the next recession. They want to block our plans for their own political gain, but they don’t want to implement their own plan and take responsibility. They risked default without believing their own analysis.”
It is not enough to have a good policy, one must fight for that policy as if it were actually good. Independents judge conviction as much as the facts.
— —
An example is the current capitulation by Republicans in congress. They have agreed to continue the Social Security tax “holiday”. Workers will continue to pay about $80 less per month toward Social Security, while losing no promised benefits, and without matching reductions in other spending. The result is $150 billion in additional yearly deficit. Even some Democrat senators have decried this situation, because they see support disappearing for Social Security.
Republicans don’t want to seem like they are raising taxes seven months before an election. But, this desire to never stir things up destroys their argument. We can see how important is the spending issue. Spending is a threat to the country, but they won’t oppose spending legislation because they want to be elected.
It is a disgusting display for Republicans in congress to say, essentially, “We have given in to the last five requests by the Democrats, but this is merely tactical. We are only waiting for the right time to work on the side of reality. Really.
@zenpundit – while I am certainly no defender of the status quo – crony capitalism and GE for example – I wonder if anyone considers – “if the window finally breaks” – that there will be no transfer of wealth payments because there will be no wealth in this country to transfer?
I
MK…”Obama thinks the people like poetry, as he imagines his speeches to be”
As Sigmund Freud and William Bullitt wrote about Woodrow Wilson:
Throughout his life he took intense interest only in subjects which could somehow be connected with speech…He took no interest in mathematics, science, art or music–except in singing himself, a form of speaking. His method of thinking about a subject seems to have been to imagine himself making a speech about it…He seems to have thought about political or economic problems only when he was preparing to make a speech about them either on paper or from the rostrum. His memory was undoubtedly of the vaso-motor type. The use of his vocal chords was to him inseparable from thinking.
Jonathan,
“I think a lot of people are too pessimistic, conservative/libertarian bloggers in particular.”
I am an optimist but I am pretty pessimistic about the prospects for the USA in the coming decades.
You are on a train and you notice that there is a gorge up ahead and the bridge is down. You warn the engineer but he tells you not to worry.. he is shoveling more coal on and the train will sail right over the chasm.
Do you:
a) go back to your seat and read a book
b) grab the engineer by the shoulders and try to shake some sense into him
c) look for a way to jump off the train?
I think there’s more than one thing going on. The economy is recovering, albeit weakly due to bad govt policies, but it is recovering and that’s good. People who continue to believe that the bottom will fall out later in the year or whenever are ignoring reality. Some of these people also, I think, confuse secondary effects of economic dynamism, particularly on domestic employment in traditional fields that are affected by rapid technological advances or overseas economic growth, with recession. (Traditional media businesses are in the former category, and I think Virginia Postrel’s observation that media people are chronically too gloomy about the economy because their own jobs are insecure continues to be valid.)
But the long-term problem still looms. At some point, absent major spending and entitlement reform, there will be a financial crisis. The possibility that short-term economic recovery will lead to reelection of the pols who are shoveling more coal as the public-finance train approaches the chasm makes this prospect even more troubling.
I agree that US prospects don’t look good for the coming decades. OTOH, opinion consensuses tend to be wrong at the extremes, so who knows.
Nicholas – I think the tendency for most people is that – when faced with catastrophic news – they want to disbelieve it. I guess most people choose “a”.
Good comments.
I don’t think the end state here is total catastrophe, civil war, societal collapse. But it’s going to be very painful for a large proportion of the population of the USA and really, pretty much every human alive. That’s really unfortunate because it doesn’t have to be that way but the longer the current situation continues, the more painful the recovery will be. Much like what’s happening in Europe.
Given the choice of some pain now vs more pain later, as individuals we know what the sensible choice is but as groups we seem to be in denial.
““I came out and said to him, “Don’t do that, you’ll break my storm window.” . . . Regardless, he broke the damn thing within the hour.”
The home-owning adult told the kid to stop bouncing his ball against the adult’s house.
Then, the home-owning adult sat inside and listened to the kid bouncing the ball against his house.
For an hour. After telling the kid to stop, he walked away and passively fumed for an hour while the kid continued throwing the ball at his house.
Seems to me that “the nitwits and the idiots” couldn’t have torn down or defaced or stolen the idea of a civic virtue – a social contract, as it were – without the at-least-passive neglect of the most likely proponents of that civic virtue.
I don’t believe that “there is no hope”.
What I do believe is that far too many of those “most likely proponents of civic virtue” have allowed themselves to be cowed by the argument, advanced by the nitwits and the idiots, that nitwittiness and idiocy, being immutable traits, must be treated with respect, and that any attempt to interfere with the naturally nitwitty and idiotic cohort of our population represents a severe moral fault.
That is our one major societal fault – that we have disarmed ourselves in order to win the good graces of our attackers.
The old bromide is “an armed society is a polite society.” We’ve reached the corollary – a disarmed society is no longer a society, it is merely chaos. If we passively accept the rule-breakers’ premise that we become the unjust when we seek to force their compliance with the rules, we’re not going to win them over and get them to like us. We’re just going to lose all of our windows.
For an hour. After telling the kid to stop, he walked away and passively fumed for an hour while the kid continued throwing the ball at his house.
If I recall, someone raised this point in the discussion thread at Belmont Club where Buck O’Fama’s comment appeared. The essence of Buck’s response, again IIRC, was that he has a life and doesn’t have time to keep chasing away kids or even to think much about it.
IMO this is a good metaphor for what’s happening in the country. Productive people generally know that they would gain little or nothing by getting involved in public affairs but would lose a lot of time and energy that could otherwise go toward making their own and their families’ lives better. At some point, maybe, the societal situation becomes so personally threatening that such people get roused to participate, but things have to be pretty bad and by then it may be too late to reverse the decline. Meanwhile, unproductive people get subsidized for participating in political shakedown schemes against productive people. So the incentives, from the POV of long-term societal well being, are the reverse of what they should be.
Those roused productive people you are talking about are called the Tea Party.
People getting involved in public affairs….In his memoir of Germany between the wars, Sebastian Haffner noted that those who need to get the sense of meaning in their lives from getting involve in politics may not tend to be the best people in a society. Two passages…
First, Haffner describes the extremely politicized situation shortly after the end of WWI (even *sports clubs* had political orientations) and the notes the various reactions of his schoolmates when the political temperature fell to a more normal level:
“Many of us sought new interests: stamp-collecting, for example, piano-playing, or the theatre. Only a few remained true to politics, and it struck me for the first time that, strangely enough, those were the more stupid, coarse and unpleasant among my schoolfellows.”
Speaking of a slightly later period, when things again began to stabilize (temporarily, as we now know):
“The last ten years were forgotten like a bad dream. The Day of Judgment was remote again, and there was no demand for saviors or revolutionaries…There was an ample measure of freedom, peace, and order, everywhere the most well-meaning liberal-mindedness, good wages, good food and a little political boredom. everyone was cordially invited to concentrate on their personal lives, to arrange their affairs according to their own taste and to find their own paths to happiness.”
But…and I think this is a particuarly important point…a return to private life was not to everyone’s taste:
“A generation of young Germans had become accustomed to having the entire content of their lives delivered gratis, so to speak, by the public sphere, all the raw material for their deeper emotions…Now that these deliveries suddently ceased, people were left helpless, impoverished, robbed, and disappointed. They had never learned how to live from within themselves, how to make an ordinary private life great, beautiful and worth while, how to enjoy it and make it interesting. So they regarded the end of political tension and the return of private liberty not as a gift, but as a deprivation. They were bored, their minds strayed to silly thoughts, and they began to sulk.”
“Those roused productive people you are talking about are called the Tea Party.”
Though they may be roused (for all of the wrong reasons), I would hardly call the Tea Party “productive,” Jeff.
“Though they may be roused (for all of the wrong reasons), I would hardly call the Tea Party “productive,” Jeff.”
The coming debtageddon isn’t the right reason to be roused?
Political advocacy groups who succeed in getting their candidates elected and, to some extent, influence establishment figures are not productive?
You keep using those words. I do not think they mean what you think they mean.
The Tea Party people I know are almost all self-employed or small business owners/management. They have to be productive in their vocation as they have learned that there really aren’t any free lunches. Working hard and being productive is how they make a living.
I think Jonathan’s response above is spot on. It seems like such a waste of time and energy it wade into the cesspool kabuki dance of today’s political arena.