This recession is going on and on. We can say it isn't, because there hasn't been negative growth. But there isn't exactly positive growth either. Stagnant is the best we can say about this economy. He is quite pessimistic:
Previous generations of politicians could reach agreements on taxing and spending by punting their differences to the next generation -- that is to say, where they could not agree, they could agree to borrow the difference, and expect the next generation to pick up the tab.
This was never moral nor responsible but it was workable so long as each generation was wealthier than the last, so that the next generation would have the money to pay for the previous one's profligacy and irresponsibility.
What happens when that is no longer true?
We are about to enter a truly brutal phase of American politics, in which we will less and less be able to call in the wealth of the next generation as a way of papering over differences between segments of the population. For a long time to come, a Winner today will not make a Loser some time down the road (who cannot complain too much, as his loss will register in the future).
Government-Mandated Winners will come at the expense of Government-Selected Losers in the here and now, people who can and will object. Passionately, and even, possibly, violently.
The United States has been, thusfar, exceptional in a fairly low level of social disorder and political violence. Such things plague most of the rest of the world, but the United States has mostly avoided such things.
But we avoided such things because we were always becoming richer, and could afford to float a certain amount of keep-the-peace debt.
But we've lost that exceptional advantage. The last big innovation in American industry was the internet, and while this does provide certain improvements in informational efficiency, it has nothing like the game-changing effects of the rise of mass production, or the rise of the steam engine and then the gas-powered engine, or the rise of electrification, the explosion in agricultural productivity, and so on.
He goes on to say:
There will not be another big gain in American productivity, and hence American prosperity, until there is a similarly large breakthrough in a technology with wide economic implications.
Or a change in government policy. Which seems increasingly unlikely.
Or a change in the national character, away from entitlement and sloth and towards self-reliance, hustle, and industry. Which seems increasingly... impossible.
I really want to take exception to this. In the 1930's we had the worst economy this nation ever faced but we recovered. The problem with the depression was the government policies of make work programs instead were make worse programs.
The policies were contained in the National Industrial Recovery Act (NIRA), which exempted industries from antitrust prosecution if they agreed to enter into collective bargaining agreements that significantly raised wages. Because protection from antitrust prosecution all but ensured higher prices for goods and services, a wide range of industries took the bait, Cole and Ohanian found. By 1934 more than 500 industries, which accounted for nearly 80 percent of private, non-agricultural employment, had entered into the collective bargaining agreements called for under NIRA.
Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943.
Typically the government in an attempt to help the little guy will put in policies that seem to help but actually work against the very thing they attempt to do. Minimum wage laws hurt teens and low wage workers by pricing them out of jobs for instance.
But in the thirties, the generation of people who then went through a World War were not the sort that wanted to sit around. "I ain't lookin' for charity." It was shameful to take handouts, they wanted work.
There was always a slothful percentage of the population, that will never change. We are humans. But several things have increased that percentage into the realm of unsustainable.
For the first time in American history, more of the population is receiving some sort of government money than is not. Nearly half of all Americans do not pay taxes. How many people demand.. not ask.. not request.. DEMAND something from the government? No dollar gets to the government without someone working and paying it and yet so many people think absolutely nothing of living off of other people's hard work. Many don't even know where the money comes from. If they don't get it, they riot.
Now less and less people are working as a percentage of the population. There are incentives to make it more attractive if the government suddenly starts endorsing personal responsibility. In this climate, that is not likely.
So it really comes down to my faith in the American people. Are we the type of people who define success and dignity as running out to the mailbox to get our government checks?
I sincerely hope not. But we have so many people that are unaware of how things work and why successful people are successful. There are more of them now than those that work.
And they vote. No one is going to vote against their own interests. Once on the dole, they aren't going to vote people who want to kick them off. Whether it's student loans or paying for your home loan or welfare checks, so many people will not vote to for that kind of change.
So I get where Ace is coming from. Detroit is in ruins, having been run exclusively by democrats for the last 50-60 years and yet any person in that city will blame republicans. The press will blame republicans even though there hasn't been anything remotely resembling a conservative in that city for years. Hey, the left runs the schools, why should we be surprised?
One wonders how this country is sustainable as more and more fall under the government spell. The constitution is our last bulwark against this.
I think we have farther to fall. But I also think that there is enough free press out there, enough expectations for a better life that when we hit bottom, there will be a change. Or rather a change back.
For most of history of this world, man lived under some sort of oppressive and powerful government, from the Pharaohs to King George. The odds of creating a free society in 1776 was astronomical but it happened. The taste of self reliance and freedom has been given to too many people. I don't know what will happen. Perhaps we kick the blue states out of the union. Perhaps a new generation will say enough. Perhaps it will slowly over time just become more free, law by law, regulation by regulation.
But it will happen. There are still many of us who want freedom. We want the responsibility that comes with it, indeed is the root of freedom for without it, there isn't any freedom. We will have it.
Even if we have to let the country fall on its face to make it happen.
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