It is absurd to think that we can just float along waiting for economic growth to generate tax revenue enough to pay it all off. The interest that will paid out on this debt will leave the principal balance lingering for years.
Some rough calculations.
The GDP of the US in 1997: $8 trillion.
Debt of the US in 1997: $ 5 trillion (about 65% of GDP)
Current US GDP:$14 trillion
Current debt: $9 trillion (about 65% of GDP)
Economic growth - which has been going nicely for the last decade - makes a difference. Our debt is the same relative to GDP, and so it doesn't concern me in the slightest.
We will be much better placed to deal with the obligations that the boomers voted themselves in 2040 if our GDP is $60 trillion (which is doable) than if it is $20 trillion (which would be catastrophic).
Am I right?
Further, I am seriously concerned for the future growth of our economy. We all are aware that jobs continue to bleed out of the country. We seem to be losing our technological superiority, an industry that has driven much of our economic growth and superiority over the last few decades. In biotech I don't see us leading the pack; in stem cell research, a phenomenon with huge potential, we have essentially decided not to be a part of the game. Economic growth that depends so significantly on consumer spending seems particularly susceptible to downturns and decreasing or even stagnant earnings.
There is so much wrong with those statements I don't know where to begin.
Jobs bleeding out of the country.
Why is our unemployment rate holding steady (at 4.5%)?
The typical answer is that what you meant to say is that we are being left with Wal-Mart jobs while good jobs are going overseas.
But where is the plummeting US household income data that one would expect is to see if that were true?
If you look at US household income in constant dollars, you see nothing of the sort. Percentage changes are minimal, and in the last decade they have not fallen in real terms.
You'll hear pundits say things like that all the time, but when you actually analyze the data, it vanishes in a puff of smoke.
losing technological superiority...
Another unanalyzed statement. What are you basing this on? The US dominates in biotech (where I work), our silly stands on stem cells notwithstanding. We dominate in patents, published research, university science prestige, science Nobel Prizes, venture capital for new technology-based businesses, new technology business start-ups....
Other countries are copying our lead. That's all you need to know.
The fallacy that increasing taxes leads to economic stagnation is the common cry of conservatives.
Oh really? Why not raise taxes to a confiscatory 100% then?
I'm sure you'd admit that that policy would destroy economic growth. Do you seriously believe that the economy would hum along just as nicely if tax rates were 70%?
There question is not whether high taxes hurt economic growth. They certainly do (as Mr. Reich would agree). They questions is how high can raise taxes and still have a rate of economic growth that we would consider acceptable.
There is much evidence in history that refutes this absurdity.
I'm sure there is. I would love to see it.
Sunday, October 28, 2007
Saturday, October 27, 2007
FDR/LBJ Socialism
A while ago, I received several letters from a friend who wanted me to believe that LBJ and FDR were socialists. It is unclear whether the writer himself is a socialist, wanting me to believe that socialism has been part of the American fabric for decades, or whether he himself thinks socialism is a quiet threat to the American way of life.
No matter. I find the argument tedious, because it is like arguing about whether somebody was a little stupid or a full-fledged moron.
Socialism (and its close cousin Communism) has been one of the most unquestionably disastrous experiments in human history. Its death toll is well into the hundreds of millions by now, and it is climbing (way to go, North Korea!). Wherever it is tried there are political prisoners and privileged elites.
The more socialist characteristics an economy exhibits, the poorer it will be. It invariably leads to widespread corruption, and amazingly, it has failed on every continent and in every culture.
Yet, hundreds of failed experiments later, socialists endure. They are ridiculous figures, like people who want to wear clown outfits in public and forbid anyone from laughing at them. They tend to populate our universities, where ivory towers can protect them from the sound of giggling.
When this letter writer declared that these presidents were, in fact, socialists, I replied with the dictionary definition of socialism and said that they didn't fit the bill: socialism is the "public collective ownership or control of the means of production ,distribution and exchange, with the avowed aim of operating them for use and not profit."
The difference between socialism and communism is slight: substitute "state ownership" for "public collective ownership."
This definition is so stark, and so clearly a failure, that socialists have been retreating from it for the last two decades. Now, they believe, socialism is any vestige of the nanny state in a CAPITALIST economy.
So naturally, they point to the glowing cities of Europe as the "future." They see caring governments and happy people (they don't see privately-owned businesses, making things that people actually want).
I look at Europe and I see the past: sluggish growth, stagnant economies and high unemployment. I see a continent whose entrepreneurial spirit is choked by union work rules and dumb laws, and a numbed populace that looks on passively while a huge bureaucracy puts on jackboots.
I also see a way of life in Europe that is unsustainable, one that will be washed away by a demographic tidal wave in the next thirty years.
In America, our future, while by no means secure, is also threatened. It is imperiled by our own government's "socialist" obligations.
LBJ and FDR did, in fact, create huge governmental programs that will haunt us for the next fifty years. These programs remove incentives for people to take care of themselves.
Social Security, FDR's darling, is a demographic nightmare. By telling people that they were under no obligation to save for retirement, this program enabled baby boomers to spend thoughtlessly and save little: the average baby boomer is in his late fifties and has less than $80,000 to retire on. I'm in my thirties and I have a lot more than that.
Likewise, Medicare told people that your drug costs are someone else's responsibility (mine again...you're welcome). Naturally, those costs have skyrocketed.
Everybody wants to go first class when the government is picking up the tab.
And of course, LBJ's welfare programs told the poor that poverty had nothing with them and everything to do with society. And for the next thirty years, we watched teenage birth rates, drug use and dropout rates go up. We watched poor families erode (and the black family disintegrate). Poverty has gotten worse, more entrenched and more helpless, and now it is almost impossible to "cure:" single moms beget single moms, and single moms almost always have lower household incomes than two parent families.
FDR also created one of the most noxious aspect of modern government: the idea that the government can buy people's votes by sending them checks. The Left today eagerly seeks more ways to buy new groups of voters. Rest assured, whatever your problem is, somebody in Washington is eager to send you a check to deal with it.
Of course, if you were to let the Left go, things would only get worse: health care would become the sole responsibility of the state. So would housing. And food. And fuel...etc. And pretty soon the US would be as big a shithole as Cuba is.
No, LBJ and FDR were not socialists because they made these dumb programs. They just made stupid mistakes, mistakes that have ended up costing much more than they were supposed to.
But the modern Left is as red - and as stupid - as you can get.....And the conservatives -especially lately - have turned a deep shade of pink.
No matter. I find the argument tedious, because it is like arguing about whether somebody was a little stupid or a full-fledged moron.
Socialism (and its close cousin Communism) has been one of the most unquestionably disastrous experiments in human history. Its death toll is well into the hundreds of millions by now, and it is climbing (way to go, North Korea!). Wherever it is tried there are political prisoners and privileged elites.
The more socialist characteristics an economy exhibits, the poorer it will be. It invariably leads to widespread corruption, and amazingly, it has failed on every continent and in every culture.
Yet, hundreds of failed experiments later, socialists endure. They are ridiculous figures, like people who want to wear clown outfits in public and forbid anyone from laughing at them. They tend to populate our universities, where ivory towers can protect them from the sound of giggling.
When this letter writer declared that these presidents were, in fact, socialists, I replied with the dictionary definition of socialism and said that they didn't fit the bill: socialism is the "public collective ownership or control of the means of production ,distribution and exchange, with the avowed aim of operating them for use and not profit."
The difference between socialism and communism is slight: substitute "state ownership" for "public collective ownership."
This definition is so stark, and so clearly a failure, that socialists have been retreating from it for the last two decades. Now, they believe, socialism is any vestige of the nanny state in a CAPITALIST economy.
So naturally, they point to the glowing cities of Europe as the "future." They see caring governments and happy people (they don't see privately-owned businesses, making things that people actually want).
I look at Europe and I see the past: sluggish growth, stagnant economies and high unemployment. I see a continent whose entrepreneurial spirit is choked by union work rules and dumb laws, and a numbed populace that looks on passively while a huge bureaucracy puts on jackboots.
I also see a way of life in Europe that is unsustainable, one that will be washed away by a demographic tidal wave in the next thirty years.
In America, our future, while by no means secure, is also threatened. It is imperiled by our own government's "socialist" obligations.
LBJ and FDR did, in fact, create huge governmental programs that will haunt us for the next fifty years. These programs remove incentives for people to take care of themselves.
Social Security, FDR's darling, is a demographic nightmare. By telling people that they were under no obligation to save for retirement, this program enabled baby boomers to spend thoughtlessly and save little: the average baby boomer is in his late fifties and has less than $80,000 to retire on. I'm in my thirties and I have a lot more than that.
Likewise, Medicare told people that your drug costs are someone else's responsibility (mine again...you're welcome). Naturally, those costs have skyrocketed.
Everybody wants to go first class when the government is picking up the tab.
And of course, LBJ's welfare programs told the poor that poverty had nothing with them and everything to do with society. And for the next thirty years, we watched teenage birth rates, drug use and dropout rates go up. We watched poor families erode (and the black family disintegrate). Poverty has gotten worse, more entrenched and more helpless, and now it is almost impossible to "cure:" single moms beget single moms, and single moms almost always have lower household incomes than two parent families.
FDR also created one of the most noxious aspect of modern government: the idea that the government can buy people's votes by sending them checks. The Left today eagerly seeks more ways to buy new groups of voters. Rest assured, whatever your problem is, somebody in Washington is eager to send you a check to deal with it.
Of course, if you were to let the Left go, things would only get worse: health care would become the sole responsibility of the state. So would housing. And food. And fuel...etc. And pretty soon the US would be as big a shithole as Cuba is.
No, LBJ and FDR were not socialists because they made these dumb programs. They just made stupid mistakes, mistakes that have ended up costing much more than they were supposed to.
But the modern Left is as red - and as stupid - as you can get.....And the conservatives -especially lately - have turned a deep shade of pink.
Subscribe to:
Posts (Atom)