During the last few years, America has witnessed the birth of two seemingly dissimilar movements: Occupy Wall Street and the Tea Party. Indeed, one is only supposed to compare the two to disparage the other. To the Tea Party, Occupy Wall Street protestors are dirty hippies who ought to find jobs; the protestors see the Tea Partiers as stodgy old Republicans, out of touch with the world. Yet there are similarities between the two groups. Both represent dissatisfaction with present realities and the total absence of political will to improve matters.
The Tea Party is concerned--and rightly so--with government growth. Yet this problem is not exactly a new one. It is true that Obama has added more to the debt than all of his predecessors combined, but this has far more to do with the machinations of fractional reserve banking and the compounding of interest than any especial radicalism of the President. Had McCain been elected, he too would have "stimulated" the economy, probably by bombing Iran and cutting taxes--which also would have increased the national debt substantially.
It is distressing then, that so many former Republicans--despite the re-branding, Tea Partiers are still, by and large, GOP faithful--took so long to notice that government was getting bigger. Ironically, it was Republican presidents--chiefly Reagan and George W. Bush--who added most of the pre-Obama debt. Charges of hypocrisy then, are fair. But they are also beside the point. We cannot undo past profligacy. Any movement which seeks to curb spending is acting in the interests of the American people, however ineffectual it may be.
There is another arresting fact about the Tea Party. It is made up largely of older citizens. This leads to the second great irony of the movement: these supposed opponents of government depend upon it continuing to function as it has. Many members of the Tea Party are retired. They have worked hard and expect to enjoy the fruits of their labors in their golden years. Yet in this they are--however begrudgingly--dependent on government programs, namely Social Security and Medicare. Alas for the retirees, the money they have paid in has already been spent. These programs must now be paid for out of the general fund. As our debt climbs, it becomes increasingly unlikely that these programs will continue to be funded. No politician is insane enough to propose major cuts now, but through a combination of means testing and rationing, the programs will invariably be reduced.
Which brings us to Occupy Wall Street. Since the movement is newer and has not--yet--been co-opted by one of the major parties, it's a bit difficult to discern the agenda of the group. We know that, to their credit, they are mad at Wall Street and the bankers. For while envy of the rich is not virtuous, demanding that those who committed crimes be brought to justice is. Indeed, not only have the banksters escaped jail, they have been bailed out. It's true that some of the protestors are youthful idiots, whose mushy heads are receptive to socialist nonsense; this should not cause us to forget that they are largely correct about the banks.
The most obvious difference between the two groups may be the age disparity. This is significant. Our entitlement programs are Ponzi schemes. Since Occupy Wall Street types tend to be younger, there is no chance that they will receive any of the benefits of these programs. No one knows when the insolvent programs will be abandoned; retirees are hoping that it will be after they die; young people know that it will be before they retire. In any event, some retirees will be left without any money, which is why one should think carefully about retiring, if one retires at all
Much of the criticism against the Occupy Wall Street movement has focused on the entitled nature of the protestors. Certainly those who demand a free college education seem to fit the bill. But youngsters will not be able to act entitled for long. Just today, the national debt surpassed the $15 trillion mark. No one can fathom these sorts of numbers; still, the message is clear: the US Government will go bankrupt fairly soon. Younger people will have to do without the nanny state--but so too will older people.
Political prophecy is a tricky thing, but I think the end result is pretty obvious. Old folks vote in large numbers. For awhile, they will ensure that no politician dares upset the Social Security and Medicare gravy train. But the State will not be able to continue to force taxpayers to pony up in perpetuity.
In their own clumsy way, the Occupy Wall Street protestors are adumbrating the coming generational clash. If we are governed by responsible adults, the transition will proceed peacefully. If we continue to be governed by children in thrall to the banks--and I see no indications that this will change--the transition will take a violent turn.
The details are murky; this is a topic to which we shall have need of returning in the upcoming months. The police may have sent the protestors scurrying for cover, but the problem remains. The young and the old have been pitted against one another by a government that takes from the former to give to the latter. This is a problem that must and will be solved.
Wednesday, November 16, 2011
Wednesday, November 09, 2011
The Costs of College
I threw this together with the tentative plan of presenting the information to students at my former high school. As it turns out, I know very few of the teachers who still teach at said school, so I'm left with an essay in presentation form. Enjoy.
"There's no such thing as a free lunch."
This phrase has been popularly attributed to the economist Milton Friedman. Although he believed in the wisdom of the saying, he never claimed to have been the originator of it. Instead, he utilized it to illustrate an important economic concept. Every action costs something. Often this is denominated in dollar terms: a pop costs a dollar. Other times, the terms are different: the cost of writing this piece is reading a book. Economists refer to this as opportunity cost. It's a very good habit to account for this when contemplating any significant decision.
We'll come back to opportunity costs in a bit. For now, I'd like to talk briefly about the benefits of a college education. The primary benefit is that possession of a college degree increases the likelihood of employment; it also, on average, enhances earning potential, as college graduates can out bid non-graduates for preferred jobs. The latest numbers from the Bureau of Labor Statistics1 suggest an unemployment rate of 4.2% for American citizens with at least a bachelor's degree as compared with a rate of 9.7% for those who possess only a high school diploma. Other numbers, also from the BLS2, place take home pay at $1038 per week for college graduates as compared with $626 per week for those who have only completed high school. There are exceptions, of course: despite never completing college, many founders of businesses—Mark Zuckerberg, Bill Gates, etc.—obtain remuneration which far exceeds that of the average college graduate. Nonetheless, these general truths do hold.
"There's no such thing as a free lunch."
This phrase has been popularly attributed to the economist Milton Friedman. Although he believed in the wisdom of the saying, he never claimed to have been the originator of it. Instead, he utilized it to illustrate an important economic concept. Every action costs something. Often this is denominated in dollar terms: a pop costs a dollar. Other times, the terms are different: the cost of writing this piece is reading a book. Economists refer to this as opportunity cost. It's a very good habit to account for this when contemplating any significant decision.
We'll come back to opportunity costs in a bit. For now, I'd like to talk briefly about the benefits of a college education. The primary benefit is that possession of a college degree increases the likelihood of employment; it also, on average, enhances earning potential, as college graduates can out bid non-graduates for preferred jobs. The latest numbers from the Bureau of Labor Statistics1 suggest an unemployment rate of 4.2% for American citizens with at least a bachelor's degree as compared with a rate of 9.7% for those who possess only a high school diploma. Other numbers, also from the BLS2, place take home pay at $1038 per week for college graduates as compared with $626 per week for those who have only completed high school. There are exceptions, of course: despite never completing college, many founders of businesses—Mark Zuckerberg, Bill Gates, etc.—obtain remuneration which far exceeds that of the average college graduate. Nonetheless, these general truths do hold.
This does not necessarily imply, however, that the college education is the cause of the benefits. This would be an example of the post hoc ergo propter hoc fallacy, Latin for: "after this, therefore because of this." Typically, the best and brightest high school students are encouraged to attend college; it should not surprise us if this same group has more success in the job market. This is not to say that college education has no influence on the employment prospects of graduates, only that this influence is not necessarily causal. Intelligent, hard-working people tend to succeed in relatively free societies such as ours.
As an aside, I should add that data gathered during our current recession suggests that the job picture has darkened, though this holds for both college graduates as well as those without college degrees. In many cases, the former are displacing the latter and squeezing them out of the labor market.
Since we haven't really proven that college education makes a difference, it's worth examining some of the reasons it might do so. To do this, we have to separate the two disparate functions of education: that of providing a classical liberal arts education, and that of providing training for a specific vocational function. The former was the traditional aim of all institutions of higher learning. So a student would learn Greek and Latin; he would read Virgil and Homer in the original, and provide his own translations. As our educational system began to let in more students, the emphasis on the classics faded. This is an important development for our civilization, but it's not terribly relevant here.
The second function of education, and, for all intents and purposes, the only aim of education today, is to provide training for employment in specific fields. I received a degree from Michigan Tech in Computer Engineering; so I received instruction in physics and math, circuits, software design, computer hardware, etc. Elementary education majors learn how to teach classes, accounting students learn how to keep books, and so on and so forth. Schools will still require a handful of general electives, but it's basically correct to say that modern universities are glorified trade schools.
Earlier, we looked at some statistics comparing college graduates to high school graduates. Yet when we see universities as trade schools, we should also see that lumping all college graduates together doesn't make a lot of sense. In economic terms, the BLS is aggregating dissimilar goods. The market is prepared to pay software developers different wages than teachers. This may or may not be just, but it is reality. So when one hears statistics that suggest that college graduates make more money, be sure to compare remuneration across degrees. When doing so, it's interesting to note that professions which pay well are thoroughly documented. Finding any sort of data on Women's Studies majors proves difficult, but implicitly tells us something about the wages such graduates command.
Even after we've accounted for varying fields of discipline, we need to account for the quality of the institution. Possessing a business degree from Harvard is going to be worth more than possessing a business degree from St. Cloud State—even if my brother refers to his alma mater as the Harvard of the Midwest. This isn't to say it's imperative to get into the best college; certainly Michigan Tech is a far cry from MIT, and yet I'm gainfully employed. But at the high-end, a degree generates some extra pull, and at the bottom end, that is, at the for profit colleges, the degrees may not even be worth the paper on which they are printed.
Returning to Friedman's admonition—"There is no such thing as a free lunch"—and examine the costs. First, and most obviously, there is a financial cost. Financial aid and scholarships are available, often depending on one's race and socioeconomic status; still, as the Huffington Post reported just over one year ago, "The average cost of a four-year, non-profit private college is $35,000, while cost for four-year public college comes in at just under $14,000."3 However, these numbers come from data comprising the 2007-2008 academic year. Tuition has increased since then; over the last ten years it has gone up at a rate of six percent annually. An online resource4 that assists students and parents in saving for college suggests that students can expect to pay $119,400 for a four year degree at a private college, as against $33,300 for students staying in state to attend a public university.
These figures do not include the cost of room and board, books, and other living expenses; these are not insignificant costs5. This also assume that the student will graduate in four years, a prospect that has become increasingly dubious for a variety of reasons, not least of which is the creative scheduling undertaken by colleges to ensure a steady stream of income. A staggeringly high 47% of students fail to graduate within six years.6
These numbers are vital because they help us gauge how much debt students must take on in order to obtain that important piece of paper. Even though college graduates do, on average, make more money than those who possess only a high school diploma, the former are awash in debt, while the latter should be able to stay relatively debt free. Moreover, not all college students work while attending class, but high school graduates have four or more years of accruing work experience and earnings. These years, coupled with student debt, constitute the chief opportunity cost of a college education today.
I'm going to run though a simple calculation to try to better quantify this cost. Again, numbers vary based on school, financial aid, degree, and so on, so it's best to run some of these calculations on your own, with your own numbers. Regardless, the exercise should prove worthwhile.
We'll say our hypothetical student took found a job making $1,038. But, because he was such an average student, he had $25,250 in debt upon graduating.7 The average debt for Minnesota students is actually higher8. Calculating an average interest rate is exceedingly tricky; there are a variety of different loans, with the rate on unsubsidized Stafford student loans coming down to 3.4% shortly, and private student loans carry a much higher rate. We'll use 7%, but this number may be too conservative.
CNN has a nice little calculator9 that requires the amount of debt as well as the interest rate; we're just missing the monthly payment. We're going to select an aggressive $412 a month, which is the effective bump in salary our average student obtained by graduating from college.
Based on these numbers, it will take six and a half years to pay off this debt. During this time frame, the student will be forced to live the same lifestyle he could have had with his high school job. Moreover, the high school student would have had the four plus years of college during which he was earning an income. At a minimum, it will take our average student ten years to surpass our high school graduate in terms of one's standard of living.
Yet most college graduates are not willing to make these aggressive payments, so let's run the numbers again based on a monthly payment of just $200. This time, it will take our student over nineteen years to pay off his loans. Compound interest is a powerful force and making minimum payments is a recipe for permanent indebtedness. If our student had reduced his payment by just $50 per month, it would take him over fifty-seven years to pay off his student loans. Students who take on one-hundred or even fifty thousand dollars in debt will find it virtually impossible to pay off their loans.
At some point then, college is no longer a bargain: it is an outright ripoff. But the tale gets grimmer still, due to a series of reforms enacted by the Obama administration, as well as that of the second president Bush. It is all but impossible to receive debt forgiveness on one's student loans. Commentator Vox Day utilized data from collegescholarships.org10 to summarize11 the all too typical process:
The private SLM corporation [Sallie Mae] provides a student loan.
The student defaults on the loan.
The federal government pays the balance of the loan and its interest to SLM.
The government sends the debt to a collection agency which adds a collection fee and a commission totaling more than 50 percent to the total. The agency is owned by SLM.
The collection agency garnishes wages, income and even Social Security checks. The former student, now a debt-slave, will literally be paying until he dies.
This holds true, even for those unfortunate students who never obtained a degree. This is deeply troubling, as there is very little economic value for attending classes without graduating. Real reform is imperative, but it will not be forthcoming since the universities and the private loan companies receive the money irrespective of the performance of the student; the government, meanwhile, has made things worse for students, while making sure that schools and corporations never suffer for enrolling students who cannot graduate. Regrettably, then, students will have to fend for themselves.
Unfortunately, I am not capable of rendering an informed judgment as to whether or not someone should attend college. No doubt many of you are feeling pressure to enroll in a university and continue your education. For some of you, this is probably the right step to take. But for others, it would be a dreadful mistake. It would actually worsen your prospects by swamping you with debt. Before you make this decision, I encourage you to do all you can to determine the true costs of education. The benefits are well known, but the sometimes hidden costs are equally important.
1 http://www.bls.gov/news.release/empsit.t04.htm
2 http://www.bls.gov/emp/ep_chart_001.htm
3 http://www.huffingtonpost.com/2010/08/25/the-average-cost-of-colle_n_693226.html
4 http://www.savingforcollege.com/tutorial101/the_real_cost_of_higher_education.php
5 http://www.thefiscaltimes.com/Articles/2011/06/15/Hidden-Costs-of-College-Raise-Total-to-Extreme-Levels.aspx#page1
6 http://www.usatoday.com/news/education/2009-06-03-diploma-graduation-rate_N.htm
7 http://www.dailyfinance.com/2011/11/03/average-student-debt-hits-record-high-in-2010-25-250/
8 http://www.twincities.com/ci_19255431?IADID=Search-www.twincities.com-www.twincities.com
9 http://cgi.money.cnn.com/tools/studentloan/studentloan.html
10 http://www.collegescholarships.org/research/student-loans/
11 http://www.wnd.com/?pageId=254821
Saturday, November 05, 2011
Sweet, sweet default
I recently read This Time Is Different: Eight Centuries of Financial Folly as part of my attempt to gain a better understanding of the ongoing economic crisis. It's a very fine book, with an impressive amount of data relating to the many calamities which have wrecked economies throughout history. There are many takeaways, but the one on which I'd like to focus is the frequency of sovereign default. It would be very easy to extract a libertarian lesson in sound money from the propensity of nations to default on their debts, but I wish to focus on another, albeit related, lesson from the book.
Sovereign default is not the end of the world. No doubt it causes great harm for those who were dependent on the state fulfilling its obligations, i.e. creditors and beneficiaries of government largesse. For America today, the former are mostly foreign governments, though most banks throughout the world are invested in American treasuries. The latter is made up of the recipients of social security and medicare payments, as well as retirees with government pensions, along with any company with its hands in the pockets of Uncle Sam, from military contractors to the large banks. If the United States defaulted, there would be significant and far-reaching consequences for a large number of disparate parties.
But this does not mean it's a bad idea. The alternative is to double down on an over-leveraged banking system in the hopes of spurring economic growth to get us out of this mess. There are a variety of problems with this approach, not the least of which is that with out present ratio of debt to GDP, growth is exceedingly unlikely. The authors of the aforementioned book note that 90% is the key ratio, beyond which default becomes all but certain. We passed that Rubicon some time ago.
Incidentally, default makes growth more likely, albeit after a painful period in which debt deleveraging can occur. Karl Denninger does an excellent job of explaining the details in his book, Leverage, but I can offer a short explanation here.
Under our system of fractional reserve banking, banks are only required to keep some portion of deposits on hand. The rest can be lent out. Credit is created when banks lend out these "excess reserves." This credit creation facilitates a boom, during which everyone appears to be making money hand over fist and the economy seems to be doing well. Yet this growth is largely illusory. When deposits dry up--usually due to a tightening of the money supply of the central bank--asset prices begin to fall. The over-leveraged banks, i.e. almost all of them, are in trouble, for leverage is a cruel mistress: it multiplies profits on the way up, and multiplies losses on the way down.
The various government bailouts were intended to shore up the accounts of the banks and stave off the deleveraging process. This has only served to postpone the process. Fortunately, here in the United States, the Tea Party and Occupy Wall Street movements make future bailouts less likely, unless the Federal Reserve surreptitiously gives money to various banks. On a related note, this is precisely why Ron Paul has focused on auditing the Federal Reserve, and why anyone who fails to see the necessity of such an audit--such as Herman Cain--merits no consideration as a presidential candidate by anyone who understands economics.
Although no one can be certain of the day nor hour, default is in our future. The sooner we embrace this solution, the sooner the bad debt can be cleared from the books and the sooner we can return to real economic growth--as opposed to the increase in GDP which is a direct result of taking on more debt and, therefore, does nothing to employ more Americans.
While Greece is contemplating whether to accept another "solution" which purporting restores solvency to a bankrupt country, the example set by Iceland is illustrative of the benefits of default:
Iceland, whose banks defaulted on $85 billion in 2008, completed a 33-month International Monetary Fund program in August. The Washington-based fund expects Iceland’s economy to grow faster than the average for the euro area this year and next. It costs less to insure against an Icelandic sovereign default than it does, on average, to hedge against a credit event in Europe’s single currency bloc, debt derivatives show.
Since we have spent the last three years pretending to solve a problem by doubling down on our bad debt, 33 months is far too conservative for the deleveraging process. Yet this time period can only increase if we continue to delay the inevitable.
Sovereign default is not the end of the world. No doubt it causes great harm for those who were dependent on the state fulfilling its obligations, i.e. creditors and beneficiaries of government largesse. For America today, the former are mostly foreign governments, though most banks throughout the world are invested in American treasuries. The latter is made up of the recipients of social security and medicare payments, as well as retirees with government pensions, along with any company with its hands in the pockets of Uncle Sam, from military contractors to the large banks. If the United States defaulted, there would be significant and far-reaching consequences for a large number of disparate parties.
But this does not mean it's a bad idea. The alternative is to double down on an over-leveraged banking system in the hopes of spurring economic growth to get us out of this mess. There are a variety of problems with this approach, not the least of which is that with out present ratio of debt to GDP, growth is exceedingly unlikely. The authors of the aforementioned book note that 90% is the key ratio, beyond which default becomes all but certain. We passed that Rubicon some time ago.
Incidentally, default makes growth more likely, albeit after a painful period in which debt deleveraging can occur. Karl Denninger does an excellent job of explaining the details in his book, Leverage, but I can offer a short explanation here.
Under our system of fractional reserve banking, banks are only required to keep some portion of deposits on hand. The rest can be lent out. Credit is created when banks lend out these "excess reserves." This credit creation facilitates a boom, during which everyone appears to be making money hand over fist and the economy seems to be doing well. Yet this growth is largely illusory. When deposits dry up--usually due to a tightening of the money supply of the central bank--asset prices begin to fall. The over-leveraged banks, i.e. almost all of them, are in trouble, for leverage is a cruel mistress: it multiplies profits on the way up, and multiplies losses on the way down.
The various government bailouts were intended to shore up the accounts of the banks and stave off the deleveraging process. This has only served to postpone the process. Fortunately, here in the United States, the Tea Party and Occupy Wall Street movements make future bailouts less likely, unless the Federal Reserve surreptitiously gives money to various banks. On a related note, this is precisely why Ron Paul has focused on auditing the Federal Reserve, and why anyone who fails to see the necessity of such an audit--such as Herman Cain--merits no consideration as a presidential candidate by anyone who understands economics.
Although no one can be certain of the day nor hour, default is in our future. The sooner we embrace this solution, the sooner the bad debt can be cleared from the books and the sooner we can return to real economic growth--as opposed to the increase in GDP which is a direct result of taking on more debt and, therefore, does nothing to employ more Americans.
While Greece is contemplating whether to accept another "solution" which purporting restores solvency to a bankrupt country, the example set by Iceland is illustrative of the benefits of default:
Iceland, whose banks defaulted on $85 billion in 2008, completed a 33-month International Monetary Fund program in August. The Washington-based fund expects Iceland’s economy to grow faster than the average for the euro area this year and next. It costs less to insure against an Icelandic sovereign default than it does, on average, to hedge against a credit event in Europe’s single currency bloc, debt derivatives show.
Since we have spent the last three years pretending to solve a problem by doubling down on our bad debt, 33 months is far too conservative for the deleveraging process. Yet this time period can only increase if we continue to delay the inevitable.
Tuesday, October 25, 2011
A modest prophecy
My computer is finally working again, so I can throw together a quick post. Unless the market tanks hard, and soon, it doesn't appear that Hillary will be pushing Obama aside. We can't quite count it out yet; a former Goldman employee is actually facing charges, so if Obama proves serious about holding the banksters accountable, the elites could replace him with a more palatable figure. Still, until we receive more information to the contrary, it's safe to say that Obama will remain a Wall Street candidate.
Only one of the Republicans candidates interests me in the slightest, but I find amusement in handicapping the race. Huntsman, Bachmann and Santorum should wash out soon. Perry has plenty of establishment cash, but he can't manage to string together more than a couple of sentences. He looks presidential--and yes, pathetically, that does matter--at least until he opens his mouth.
That leaves Newt, Cain, and, of course, the frontrunner himself, Romney. Gingrich has a certain appeal; he's coherent, and consistently bashes Obama, which plays well with the base. But he has nothing in the way of specifics to offer; trimming waste and reducing regulations were goals he should have achieved during the Contract With America. However he may campaign, he remains a Washingtonian insider. When this election cycle ends, Newt will be back on television, arguably where he belongs.
Cain is presently challenging Romney for the lead. This says more about the lack of fervor for Romney than does about Cain, whose pro-life credentials are, shall we say, dubious. Moreover, Cain, like Romney, was in favor of the TARP bailouts. With the still bankrupt banks looking like they could use another injection of cash, the last thing the Republican base wants is a candidate who will support a bailout. Last, but not least, Cain's vaunted 999 plan will increase taxes for most Americans. His plan is catchy, but does not stand up to scrutiny.
This leaves Romney alone. Actually not quite. Ron Paul's appeal is limited; he has been marginalized when he has not been ostracized as crazy. Moreover, despite their purported desires for limited government, many Americans still cling to Empire; Paul's insistence that we mind our own business, paying only for defense is too often seen as isolationism.
Still, Paul has offered $1 trillion in spending cuts--in one year. Romney promises that he will create all sorts of jobs, but cuts will come to a mere $20 billion. Now the raison d'etre of the Tea Party was opposition to government spending, which has left out country deeply in debt, and impoverished children not yet born. If the Tea Party is serious, they will have to support Ron Paul. His other views are simply not relevant given the enormity of the debt problem.
I have no doubt whatsoever that the Republicans will spurn Paul for the "more electable" Romney. But if the chance of a Paul nomination remains remote, it is less remote than it once was. Perhaps the Stupid Party will, just this once, fail to live up to its name. If they make the right choice, I will offer a very joyous mea culpa.
Regardless, a choice we shall have, between yet another lackluster establishment candidate and one who has a lengthy history of consistent opposition to that opponent of life and liberty, the State. Such is more than we could have expected this late into the republic's decline. May we choose wisely.
Only one of the Republicans candidates interests me in the slightest, but I find amusement in handicapping the race. Huntsman, Bachmann and Santorum should wash out soon. Perry has plenty of establishment cash, but he can't manage to string together more than a couple of sentences. He looks presidential--and yes, pathetically, that does matter--at least until he opens his mouth.
That leaves Newt, Cain, and, of course, the frontrunner himself, Romney. Gingrich has a certain appeal; he's coherent, and consistently bashes Obama, which plays well with the base. But he has nothing in the way of specifics to offer; trimming waste and reducing regulations were goals he should have achieved during the Contract With America. However he may campaign, he remains a Washingtonian insider. When this election cycle ends, Newt will be back on television, arguably where he belongs.
Cain is presently challenging Romney for the lead. This says more about the lack of fervor for Romney than does about Cain, whose pro-life credentials are, shall we say, dubious. Moreover, Cain, like Romney, was in favor of the TARP bailouts. With the still bankrupt banks looking like they could use another injection of cash, the last thing the Republican base wants is a candidate who will support a bailout. Last, but not least, Cain's vaunted 999 plan will increase taxes for most Americans. His plan is catchy, but does not stand up to scrutiny.
This leaves Romney alone. Actually not quite. Ron Paul's appeal is limited; he has been marginalized when he has not been ostracized as crazy. Moreover, despite their purported desires for limited government, many Americans still cling to Empire; Paul's insistence that we mind our own business, paying only for defense is too often seen as isolationism.
Still, Paul has offered $1 trillion in spending cuts--in one year. Romney promises that he will create all sorts of jobs, but cuts will come to a mere $20 billion. Now the raison d'etre of the Tea Party was opposition to government spending, which has left out country deeply in debt, and impoverished children not yet born. If the Tea Party is serious, they will have to support Ron Paul. His other views are simply not relevant given the enormity of the debt problem.
I have no doubt whatsoever that the Republicans will spurn Paul for the "more electable" Romney. But if the chance of a Paul nomination remains remote, it is less remote than it once was. Perhaps the Stupid Party will, just this once, fail to live up to its name. If they make the right choice, I will offer a very joyous mea culpa.
Regardless, a choice we shall have, between yet another lackluster establishment candidate and one who has a lengthy history of consistent opposition to that opponent of life and liberty, the State. Such is more than we could have expected this late into the republic's decline. May we choose wisely.
Thursday, October 06, 2011
Assassinating Americans
My computer situation has been rather dicey as of late. I'm in the process of obtaining another copy of Windows 7 to reinstall; in the meantime, I've been running Fedora, booting from my DVD drive. It's not terribly stable.
So I'll make this short. I'd like to put something together later about the lawlessness of American society. We seem to be in a state of anarcho-tyranny. Large crimes go unpunished, but the citizens are held culpable for a seried of bizarre and insignifcant infractions. The fact that no one has been held accountable for the financial mess is a good example of this. Not only should the regulators who failed to detect any malfeasance be fired, but an investigation should be started to determine the extent of the fraud perpetuated by the banks.
Another example of anarcho-tyranny is the assassination of the American citizen Anwar al-Awlaki. Conventional wisdom has is that he was a terrorist and as such deserved to die. But we really don't know if he was a terrorist, both because the term as used by our government is sufficiently broad enough to cover a panoply of behaviors, but also because the government has not released the information it possesses which proves that he is, in fact, a terrorist.
Yet this obscures the greater point, which is this: the rule of law is an intregal component of any well-ordered society. It separates civilization from barbarism. As such, any attempts to go around our legal system should be viewed with a modicum of skepticism. Our justice system is far from perfect, but circumventing it hardly constitutes an improvement.
Anwar al-Awlaki was not charged with a crime. He was not tried and found guilty. He was executed at the discretion of our President. Awlaki is an exceptional citizen in many regards. Yet there is nothing to prevent the President from issuing similar orders against any other citizen. He may very well have been a terrorist, but since he was never charged with a crime, he is not objectively different from any other citizen.
This is an alarming precedent. We will come to regret that we stood silently by as our government abrogated our constitutional right to due process under the guise of fighting our never ending War on Terror.
So I'll make this short. I'd like to put something together later about the lawlessness of American society. We seem to be in a state of anarcho-tyranny. Large crimes go unpunished, but the citizens are held culpable for a seried of bizarre and insignifcant infractions. The fact that no one has been held accountable for the financial mess is a good example of this. Not only should the regulators who failed to detect any malfeasance be fired, but an investigation should be started to determine the extent of the fraud perpetuated by the banks.
Another example of anarcho-tyranny is the assassination of the American citizen Anwar al-Awlaki. Conventional wisdom has is that he was a terrorist and as such deserved to die. But we really don't know if he was a terrorist, both because the term as used by our government is sufficiently broad enough to cover a panoply of behaviors, but also because the government has not released the information it possesses which proves that he is, in fact, a terrorist.
Yet this obscures the greater point, which is this: the rule of law is an intregal component of any well-ordered society. It separates civilization from barbarism. As such, any attempts to go around our legal system should be viewed with a modicum of skepticism. Our justice system is far from perfect, but circumventing it hardly constitutes an improvement.
Anwar al-Awlaki was not charged with a crime. He was not tried and found guilty. He was executed at the discretion of our President. Awlaki is an exceptional citizen in many regards. Yet there is nothing to prevent the President from issuing similar orders against any other citizen. He may very well have been a terrorist, but since he was never charged with a crime, he is not objectively different from any other citizen.
This is an alarming precedent. We will come to regret that we stood silently by as our government abrogated our constitutional right to due process under the guise of fighting our never ending War on Terror.
Tuesday, September 20, 2011
Quantitative Easing III
Here's my quick take on Bernanke's announcement, to be made tomorrow just before market close, leaving us plenty of time for a bloodbath if he doesn't give the robots precisely what they're looking for. I'll list the possibilities, coupled with my short term prognostications. In the long run, Bernanke will be unable to prop up the markets forever, and we will enter into a depression, but this will occur regardless of tomorrow's announcement.
1) Nothing. In Bernanke speak, we're keeping an eye on indicators, and we have tools, but the recovery is proceeding, albeit slower than expected. This should trigger a huge sell off. In all likelihood the markets have priced in QE3 already, at least partially. Also, tanking the market is the best way to get Helicopter Ben to use his "tools", i.e. print more money to give to corporations and bankers.
2) Operation twist. We should see a short run before a healthy sell off. This seems to be where the prevailing wisdom is heading. The problem is that the markets almost assuredly have this priced in, so it's unclear how it could help for more than a few days. If he pursues this route, the FOMC will have to consider using its tools again, at least if it wishes to save Obama from a disgraceful defeat in the coming election.
3) QE3. Or: more money for the plutocracy. This will help the markets, at least for a few months--say, through Christmas. Of course, depending on the amount, the markets could have this priced in already, which means we're looking at a shorter run before a sell off.
With the political front gridlocked--the Republicans are in full on stonewall mode, and Obama is finally pandering to his base, giving some evidence of a backbone--tomorrow's announcement is actually quite important. Bernanke can't fight economic gravity forever, but he might have a few rolls of the dice left. If we see QE3 stocks will indeed rise, but the real winners will be commodities like silver and gold. The real losers, as per usual, will be the American people.
UPDATE: The markets got the twist, whereupon they tanked. I fully expect Bernanke to announce QE3 once it is clear that: 1) Europe is in a very bad way; and 2) Obama's fifth stimulus plan is dead on arrival in the Republican controlled house. I also expect gold and silver to rebound on the news, the steep drop due to a recent margin hike notwithstanding.
1) Nothing. In Bernanke speak, we're keeping an eye on indicators, and we have tools, but the recovery is proceeding, albeit slower than expected. This should trigger a huge sell off. In all likelihood the markets have priced in QE3 already, at least partially. Also, tanking the market is the best way to get Helicopter Ben to use his "tools", i.e. print more money to give to corporations and bankers.
2) Operation twist. We should see a short run before a healthy sell off. This seems to be where the prevailing wisdom is heading. The problem is that the markets almost assuredly have this priced in, so it's unclear how it could help for more than a few days. If he pursues this route, the FOMC will have to consider using its tools again, at least if it wishes to save Obama from a disgraceful defeat in the coming election.
3) QE3. Or: more money for the plutocracy. This will help the markets, at least for a few months--say, through Christmas. Of course, depending on the amount, the markets could have this priced in already, which means we're looking at a shorter run before a sell off.
With the political front gridlocked--the Republicans are in full on stonewall mode, and Obama is finally pandering to his base, giving some evidence of a backbone--tomorrow's announcement is actually quite important. Bernanke can't fight economic gravity forever, but he might have a few rolls of the dice left. If we see QE3 stocks will indeed rise, but the real winners will be commodities like silver and gold. The real losers, as per usual, will be the American people.
UPDATE: The markets got the twist, whereupon they tanked. I fully expect Bernanke to announce QE3 once it is clear that: 1) Europe is in a very bad way; and 2) Obama's fifth stimulus plan is dead on arrival in the Republican controlled house. I also expect gold and silver to rebound on the news, the steep drop due to a recent margin hike notwithstanding.
Sunday, September 11, 2011
Cultural Suicide
The most important development of the twenty-first century is likely to be the great extinction of peoples and cultures. Like Greece and Rome, Europe has lost faith in itself; though incomparably richer than the peasants who built the Cathedrals, the denizens of what used to be Christendom spend only on themselves, with no thought for the morrow. They have failed to attend to the most elementary task of a successful civilization: raising children. In no European country is the birthrate at replacement level. As David P. Goldman, Spengler of Asia Times Online, tells it, not only is the old world dying, it has reached the demographic point of no return.
The title of Goldman's book is How Civilizations Die, but the addendum, And Why Islam is Dying Too, may be more important. For there is almost no awareness that the Muslim world is following in the footsteps of western civilization. Indeed, a popular narrative among those who seek to revive Europe has it that Muslims will soon rule the continent. But while European Christianity eventually lost the fight with modernity, Islam has fared worse.
Iran proves illustrative. "An educated twenty-five year old Iranian woman today probably grew up in a family of six or seven children, but will bear only one child." As of 2010, Iran's fertility rate stands at 1.7 children per woman. Decadence has enveloped the nation; drug use is rampant, and a sizable portion of the women work willingly as prostitutes. Paradoxically, this makes the Islamic world more dangerous, at least in the short term: "For in their despair, radical Muslims who can already taste the ruin of their culture believe that they have nothing to lose."
Of considerable interest was Goldman's account of the Thirty Years War, which ravaged Germany in the 17th Century. The German population declined "from 21 million to perhaps 13 million, mostly due to starvation." Ostensibly, the war was fought to decide whether the German people would become Protestant or remain Catholic. But there was considerably more afoot: Protestant armies were bankrolled by Cardinal Richelieu and Father Joseph du Tremblay, two French clergymen who had no trouble putting State ahead of Church. Their plan was to gain hegemony over Spain by bankrupting her. It worked. The senseless slaughter continued long past the point when battles decided anything—as in the American Civil War after Vicksburg. As Goldman tells it, nationalism was never fully subordinated by the Church; this failure, which first manifested itself under Richelieu, would haunt Europe until the middle of the twentieth-century.
Goldman finds two exceptions to the ennui that will lead so many nations to destruction in the coming century. The first, Israel, is well established; even secular Jews who live in Israel have children, and the ultra-Orthodox have large families—eight or nine children on average. His second example, America, is less convincing. True, religious Americans have proven less susceptible to the siren song of modernity. This has given the country a birthrate which remains at replacement level: 2.1 children per woman. Although he offers reasons for American demographic exceptionalism, I am forced to charge Spengler with too much optimism.
He is on firmer ground when he notes that: "America's demographic momentum offers a generation's grace period." Yet what evidence is there that we will do anything but fritter it away? For that is the approach America has taken with her debt problem, one that is not altogether different from its demographic dilemma. A nation does not run up too much debt for the same reason it raises children: it believes in its future. Presently, America lacks the political will to bequeath a worthy culture to its progeny. The demographic data tell a slightly different story—for now.
The title of Goldman's book is How Civilizations Die, but the addendum, And Why Islam is Dying Too, may be more important. For there is almost no awareness that the Muslim world is following in the footsteps of western civilization. Indeed, a popular narrative among those who seek to revive Europe has it that Muslims will soon rule the continent. But while European Christianity eventually lost the fight with modernity, Islam has fared worse.
Iran proves illustrative. "An educated twenty-five year old Iranian woman today probably grew up in a family of six or seven children, but will bear only one child." As of 2010, Iran's fertility rate stands at 1.7 children per woman. Decadence has enveloped the nation; drug use is rampant, and a sizable portion of the women work willingly as prostitutes. Paradoxically, this makes the Islamic world more dangerous, at least in the short term: "For in their despair, radical Muslims who can already taste the ruin of their culture believe that they have nothing to lose."
Of considerable interest was Goldman's account of the Thirty Years War, which ravaged Germany in the 17th Century. The German population declined "from 21 million to perhaps 13 million, mostly due to starvation." Ostensibly, the war was fought to decide whether the German people would become Protestant or remain Catholic. But there was considerably more afoot: Protestant armies were bankrolled by Cardinal Richelieu and Father Joseph du Tremblay, two French clergymen who had no trouble putting State ahead of Church. Their plan was to gain hegemony over Spain by bankrupting her. It worked. The senseless slaughter continued long past the point when battles decided anything—as in the American Civil War after Vicksburg. As Goldman tells it, nationalism was never fully subordinated by the Church; this failure, which first manifested itself under Richelieu, would haunt Europe until the middle of the twentieth-century.
Goldman finds two exceptions to the ennui that will lead so many nations to destruction in the coming century. The first, Israel, is well established; even secular Jews who live in Israel have children, and the ultra-Orthodox have large families—eight or nine children on average. His second example, America, is less convincing. True, religious Americans have proven less susceptible to the siren song of modernity. This has given the country a birthrate which remains at replacement level: 2.1 children per woman. Although he offers reasons for American demographic exceptionalism, I am forced to charge Spengler with too much optimism.
He is on firmer ground when he notes that: "America's demographic momentum offers a generation's grace period." Yet what evidence is there that we will do anything but fritter it away? For that is the approach America has taken with her debt problem, one that is not altogether different from its demographic dilemma. A nation does not run up too much debt for the same reason it raises children: it believes in its future. Presently, America lacks the political will to bequeath a worthy culture to its progeny. The demographic data tell a slightly different story—for now.
Friday, September 09, 2011
Spengler's Universal Laws
I've been reading David P. Goldman's new book, How Civilizations Die: (And Why Islam Is Dying Too). For the last decade or so, Goldman has been writing brilliant columns under the nom de plume of Spengler, the German historian whose Decline of the West offers the supreme example of the fatalist view of history.
Unsurprisingly, Goldman's book is excellent, at least so far. I hope to finish it and post a review sometime this weekend, but I'd also like to enumerate Spengler's Universal Laws, which are scattered throughout this book. Some of these laws have already been featured in Spengler's columns, in which case I have provided a link to the original formulation. In any event, I thought it might be useful to have them all in one place.
Spengler's Universal Law #1: A man or a nation at the brink of death does not have a "rational self-interest."
Spengler's Universal Law #2: When the nations of the world see their demise not as a distant prospect over the horizon, but as a foreseeable outcome, they perish of despair.
Spengler's Universal Law #3: Contrary to what you may have heard from the sociologists, the human mortality rate is still 100 percent.
Spengler's Universal Law #4: The history of the world is the history of mankind's search for immortality.
Spengler's Universal Law #5: Humankind cannot bear mortality without the hope of immortality.
Spengler's Universal Law #6 (courtesy of Warren Buffett): You don't know who's naked until the tide goes out.
Spengler's Universal Law #7: Political models are like automobile models: you can't have them unless you can pay for them.
Spengler's Universal Law #8: Wars are won by destroying the enemy's will to fight. A nation is never really beaten until it sells its women.
Spengler's Universal Law #9: A country isn't beaten until it sells its women, but it's damned when its women sell themselves.
Spengler's Universal Law #10: There's a world of difference between a lunatic and a lunatic who has won the lottery.
Spengler's Universal Law #11: At all times and in all places, the men and women of every culture deserve each other.
Spengler's Universal Law #12: Nothing is more dangerous than a civilization that has only just discovered it is dying.
Spengler's Universal Law #13: Across epochs and culture, blood has flown in inverse proportion to the hope of victory.
Spengler's Universal Law #14: Stick around long enough, and you turn into a theme park.
Spengler's Universal Law #15: When we worship ourselves, eventually we become the god that failed.
Spengler's Universal Law #16: Small civilizations perish for any number of reasons, but great civilizations die only when they no longer want to live.
Spengler's Universal Law #17: If you stay in the same place and do the same thing long enough, some empire eventually will overrun you.
Spengler's Universal Law #18: Maybe we would be better off if we never had been born, but who has such luck? Not one in a thousand.
Spengler's Universal Law #19: Pagan faith, however powerful, turns into Stygian nihilism when disappointed.
Spengler's Universal Law #20: Democracy only gives people the kind of government they deserve.
Spengler's Universal Law #21: If you believe in yourself, you're probably whoring after strange gods.
Spengler's Universal Law #22: Optimism is cowardice, at least when the subject is Muslim democracy.
Spengler's Universal Law #23: The best thing you can do for zombie cultures is, don't be one of them.
Unsurprisingly, Goldman's book is excellent, at least so far. I hope to finish it and post a review sometime this weekend, but I'd also like to enumerate Spengler's Universal Laws, which are scattered throughout this book. Some of these laws have already been featured in Spengler's columns, in which case I have provided a link to the original formulation. In any event, I thought it might be useful to have them all in one place.
Spengler's Universal Law #1: A man or a nation at the brink of death does not have a "rational self-interest."
Spengler's Universal Law #2: When the nations of the world see their demise not as a distant prospect over the horizon, but as a foreseeable outcome, they perish of despair.
Spengler's Universal Law #3: Contrary to what you may have heard from the sociologists, the human mortality rate is still 100 percent.
Spengler's Universal Law #4: The history of the world is the history of mankind's search for immortality.
Spengler's Universal Law #5: Humankind cannot bear mortality without the hope of immortality.
Spengler's Universal Law #6 (courtesy of Warren Buffett): You don't know who's naked until the tide goes out.
Spengler's Universal Law #7: Political models are like automobile models: you can't have them unless you can pay for them.
Spengler's Universal Law #8: Wars are won by destroying the enemy's will to fight. A nation is never really beaten until it sells its women.
Spengler's Universal Law #9: A country isn't beaten until it sells its women, but it's damned when its women sell themselves.
Spengler's Universal Law #10: There's a world of difference between a lunatic and a lunatic who has won the lottery.
Spengler's Universal Law #11: At all times and in all places, the men and women of every culture deserve each other.
Spengler's Universal Law #12: Nothing is more dangerous than a civilization that has only just discovered it is dying.
Spengler's Universal Law #13: Across epochs and culture, blood has flown in inverse proportion to the hope of victory.
Spengler's Universal Law #14: Stick around long enough, and you turn into a theme park.
Spengler's Universal Law #15: When we worship ourselves, eventually we become the god that failed.
Spengler's Universal Law #16: Small civilizations perish for any number of reasons, but great civilizations die only when they no longer want to live.
Spengler's Universal Law #17: If you stay in the same place and do the same thing long enough, some empire eventually will overrun you.
Spengler's Universal Law #18: Maybe we would be better off if we never had been born, but who has such luck? Not one in a thousand.
Spengler's Universal Law #19: Pagan faith, however powerful, turns into Stygian nihilism when disappointed.
Spengler's Universal Law #20: Democracy only gives people the kind of government they deserve.
Spengler's Universal Law #21: If you believe in yourself, you're probably whoring after strange gods.
Spengler's Universal Law #22: Optimism is cowardice, at least when the subject is Muslim democracy.
Spengler's Universal Law #23: The best thing you can do for zombie cultures is, don't be one of them.
Wednesday, September 07, 2011
Burke as gold bug
In his famous Reflections on the Revolution in France, Edmund Burke takes a swipe at fiat currency:
Burke's argument may seem insubstantial, yet he was right to distrust the French currency. For the Assignat was destroyed through hyperinflation. Napolean replaced the worthless currency with the Franc in 1803, shortly after he came to power.
If one were to argue in favor of fiat currency, one would be compelled to insist upon government restraint. So long as the government could be trusted to refrain from debasing the currency, even worthless paper could serve well enough for a period of time. But governments do debase the currency if those who govern believe it will serve their ends.
On a related note, our own master of the Assignats is to speak tomorrow night, before giving way to our Napolean who will also speak. The president's plan is irrelevant since the Republicans house will stonewall anything which originates from the desk of the chief executive. Bernanke could conceivably announce QE3, but I think this unlikely--at least for now. Regardless, we will be entertained by some fine political theater, after which the NFL season begins.
But if I were looking to invest, I would follow Burke, and move my fiat currency into "the two great recognized species... that represent the lasting, conventional credit of mankind."
They have found their punishment in their success: laws overturned; tribunals subverted; industry without vigor; commerce expiring; the revenue unpaid, yet the people impoverished; a church pillaged, and a state not relieved; civil and military anarchy made the constitution of the kingdom; everything human and divine sacrificed to the idol of public credit, and national bankruptcy the consequence; and, to crown all, the paper securities of new, precarious, tottering power, the discredited paper securities of impoverished fraud and beggared rapine, held out as a currency for the support of an empire in lieu of the two great recognized species [i.e. gold and silver] that represent the lasting, conventional credit of mankind, which disappeared and hid themselves in the earth from whence they came, when the principle of property, whose creatures and representatives they are, was systematically subverted.
Burke's argument may seem insubstantial, yet he was right to distrust the French currency. For the Assignat was destroyed through hyperinflation. Napolean replaced the worthless currency with the Franc in 1803, shortly after he came to power.
If one were to argue in favor of fiat currency, one would be compelled to insist upon government restraint. So long as the government could be trusted to refrain from debasing the currency, even worthless paper could serve well enough for a period of time. But governments do debase the currency if those who govern believe it will serve their ends.
On a related note, our own master of the Assignats is to speak tomorrow night, before giving way to our Napolean who will also speak. The president's plan is irrelevant since the Republicans house will stonewall anything which originates from the desk of the chief executive. Bernanke could conceivably announce QE3, but I think this unlikely--at least for now. Regardless, we will be entertained by some fine political theater, after which the NFL season begins.
But if I were looking to invest, I would follow Burke, and move my fiat currency into "the two great recognized species... that represent the lasting, conventional credit of mankind."
Sunday, September 04, 2011
Back to Barbarism
Regnery Publishing makes a pretty penny putting out books written by conservatives which are, judging from the paucity of substantive negative reviews, read almost entirely by the choir. Although the appetite for books of this type appears to be significant, their corresponding value tends to be slight; one's progressive uncle is not going to see the light by reading After America. There's enough Obama bashing that an inattentive reader will be able to conclude that this is simply more political pap, meant to fire up the base for another meaningless election.
This is too bad, because Steyn's book is actually much more than that. Sure, it contains an obligatory plan to roll back Big Government, filled with the sorts of empty promises Republicans have reneged on for nearly a century. But Steyn's heart isn't in it: he tells us that this will prove "difficult", which is a little like explaining that Sisyphus has some hours of work to do.
After America highlights the recklessness of the present administration, but it does so by noting that "Barack Obama is a symptom rather than the problem." If the president does not value life, liberty and limited government, this is equally true of the citizenry that elected him. A government that steals from generations unborn to finance its profligacy and views entrepreneurs as annoying hindrances to the business of government is problematic. Yet it is only a manifestation of a much larger flaw: its citizens no longer value those things which—Steyn argues—have made America so great.
The book is less a defense of things American than it is a critique of the soft socialism typified by Great Britain and Greece. Since FDR at least, the US has sought to shed its Jeffersonian trappings for a Big Government patterned on those of Europe. This trend has only accelerated as of late, not simply under Obama, but also under Bush, the "compassionate conservative" who gave the American people Medicare Part D and the TSA, which now gropes granny lest it be found guilty of profiling.
Greece and Great Britain are both doomed, and for essentially the same reasons. Government debt is overwhelming demographic reality. The people have lost the will to thanklessly perpetuate civilization. Both have middling productive sectors, upon which a large parasitic class feeds. And what feasts! In Greece, public sector employees retire at fifty-eight, whereupon they receive fourteen monthly pay checks until death. That was the plan, anyway. With the Greek birthrate at 1.3 children per couple, the math doesn't work. One can only run a Ponzi scheme if there are ever more suckers from whom to appropriate funds—as the soon to default Greeks are about to realize.
Great Britain may actually be in worse straits: "The United Kingdom has the highest drug use in Europe, the highest incidence of sexually transmitted disease, the highest number of single mothers, the highest abortion rate; marriage is all but defunct, except for toffs, upscale gays and Muslims." And this was before the London riots. Technically this makes Steyn something of a prophet, as does his insistence that America will soon see its credit rating downgraded. The remarkable thing is not that Steyn can point out the obvious consequences of liberalism, but that so many remain oblivious even while its fruits are rotting before our eyes.
The paradox of progressivism is that the creation of a social safety net has rendered man ever more fearful of risk. Instead of starting a business or raising a family, corpulent westerners curl into the fetal position in the gentle hands of government. This is not the way of civilization: it is the path to barbarism, shortly coming to the post-American world near you.
This is too bad, because Steyn's book is actually much more than that. Sure, it contains an obligatory plan to roll back Big Government, filled with the sorts of empty promises Republicans have reneged on for nearly a century. But Steyn's heart isn't in it: he tells us that this will prove "difficult", which is a little like explaining that Sisyphus has some hours of work to do.
After America highlights the recklessness of the present administration, but it does so by noting that "Barack Obama is a symptom rather than the problem." If the president does not value life, liberty and limited government, this is equally true of the citizenry that elected him. A government that steals from generations unborn to finance its profligacy and views entrepreneurs as annoying hindrances to the business of government is problematic. Yet it is only a manifestation of a much larger flaw: its citizens no longer value those things which—Steyn argues—have made America so great.
The book is less a defense of things American than it is a critique of the soft socialism typified by Great Britain and Greece. Since FDR at least, the US has sought to shed its Jeffersonian trappings for a Big Government patterned on those of Europe. This trend has only accelerated as of late, not simply under Obama, but also under Bush, the "compassionate conservative" who gave the American people Medicare Part D and the TSA, which now gropes granny lest it be found guilty of profiling.
Greece and Great Britain are both doomed, and for essentially the same reasons. Government debt is overwhelming demographic reality. The people have lost the will to thanklessly perpetuate civilization. Both have middling productive sectors, upon which a large parasitic class feeds. And what feasts! In Greece, public sector employees retire at fifty-eight, whereupon they receive fourteen monthly pay checks until death. That was the plan, anyway. With the Greek birthrate at 1.3 children per couple, the math doesn't work. One can only run a Ponzi scheme if there are ever more suckers from whom to appropriate funds—as the soon to default Greeks are about to realize.
Great Britain may actually be in worse straits: "The United Kingdom has the highest drug use in Europe, the highest incidence of sexually transmitted disease, the highest number of single mothers, the highest abortion rate; marriage is all but defunct, except for toffs, upscale gays and Muslims." And this was before the London riots. Technically this makes Steyn something of a prophet, as does his insistence that America will soon see its credit rating downgraded. The remarkable thing is not that Steyn can point out the obvious consequences of liberalism, but that so many remain oblivious even while its fruits are rotting before our eyes.
The paradox of progressivism is that the creation of a social safety net has rendered man ever more fearful of risk. Instead of starting a business or raising a family, corpulent westerners curl into the fetal position in the gentle hands of government. This is not the way of civilization: it is the path to barbarism, shortly coming to the post-American world near you.
UPDATE: As a commenter from Amazon pointed out, Steyn's publisher is Regnery, not Regency.
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