Saturday, March 20, 2010

The Real Tipping Point: It's The Economy, Stupid

There is a segment of our population which claims that man's activities have brought us near a climatic tipping point, after which abrupt and unalterably negative changes to our climate will occur.  There is no evidence of this--only fear and prognostication. Ironically, with so much misplaced attention focused on our natural climate, we ignore clear evidence of a real tipping point--the collapse of the United States economic climate. We are stupid to focus so much effort on the wrong problem.


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Alexis de Tocqueville, a Frenchman who toured the United States in the early 1830's, observed this about democracies:
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largess from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by dictatorship. The average age of the world's greatest civilizations has been 200 years.

Nearly every state in the United States prohibits felons who are serving prison sentences from voting. Only after they have completed their sentence (in most cases) are their voting rights restored. In a similar manner, should the right to vote be taken away from someone whose income comes predominantly from the government, only to be restored after they get back on their feet economically? Such a measure sounds harsh, but it might help us avoid the economic tipping point that is upon us.

People who receive handouts from the government are much more likely to vote for someone who will continue to ensure that those handouts keep coming. Radio talk show host Jason Lewis calls our governmental leaders--those who proffer the handouts--the economic equivalent of "a nation governed by adolescents, willing to hand out candy" to just about anyone in order to perpetuate their power. Based on the number of people who receive largess out of the United States treasury, our democracy is on the verge of collapse.

In an interview with Jason Lewis on March 18, 2010, Representative Paul Ryan cited the following statistics:
  • 20% of Americans get at least 75% of their income from the federal government
  • Another 20% of Americans get at least 40% of their income the federal government
  • 60% of Americans get more benefits from the government than they pay in taxes
  • These statistics will get much worse if the health care plan passes that is currently before the Congress
  • The Medicare program has current liabilities of $38 TRILLION dollars, which equates to a debt burden of almost $120,000 for every single person in the United States.
  • The current health care plan steals half a trillion dollars from Medicare in order to give the lie to how much the plan will really cost
  • Similarly, monies required to pay out Social Security benefits have been raided in order to hide the costs of the proposed national health care plan

The federal government already devotes 22 percent of its budget to two programs--Medicare and Medicaid, and that percentage is growing. The greatest economic mental mistake being made today is to compare the cost of U.S. health care with "socialized medicine" from other countries. The real comparison should be between their socialized programs and that portion of our health care system that has been socialized--the Medicare/Medicaid portion.  When you make that comparison, it becomes clear that we've got to come up with a different plan, and that plan must involve austere debt reduction.

A debt crisis is on the horizon. The U.S. government, with you and I as proxy, is on the hook for about one hundred trillion dollars in entitlements and other obligations that it does not have. Perhaps unsurprisingly, loons and goons in the federal government think that it is safe to add to this monstrous burden of debt. If a corporation acted as irresponsibly as the federal government does (and if that corporation were not in bed with the federal government, as some are) all the major players in that corporation would be throw in prison for a very long time.

Collectively, America has become an addict, hooked on the mirage of free and easy money. It is unsustainable. Forget about the climate dragon. It's not real.  It's the economy, stupid!

At some point, China, India, and other countries that hold mountains of American debt will think it no longer profitable to do so.  When those chickens come home to roost, there will be nearly instantaneous economic cataclysm. We can't just sit here and pretend this isn't happening.

3 comments:

  1. Normally I enjoy your posts, Frank, but this one, I couldn't get past your first paragraph?

    "NO" evidence? Hardly. No "empirical" evidence, sure, but such a sweeping claim of "no" evidence just puts you on the "other" side of those who claim certainty of proof. Anyone claiming certainty of knowledge on the issue of climate change is difficult to take seriously.

    In fact, one could reasonably make the argument there is, in fact, MORE evidence we are near a tipping point on climate change than their is evidence we are at a tipping point economically (being that economic prognosticating is reliant just as much on "hypothetical" model building as climate projections are... and there being more visible consensus in climate science fields than there ever has been or will be in economic fields of study).

    Your argument in the first paragraph is a classic example of what happens when we choose a philosophy, and then seek to back it up. Doing so then subjects each subsequent argument to a lack of credibility.

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  2. Jason: It seems when I hit a raw nerve about global warming with you that you go apoplectic. But there REALLY ISN'T any evidence that we're at a tipping point. Here's the evidence that we have:

    1. CO2 in the atmosphere has been increasing at a VERY slow rate.
    2. The earth may or may not have warmed slightly.

    I've written more about that here.

    How that equates to a tipping point is beyond me, but if you have evidence of it, then I will write an entire article retracting this one. Granted, we have some pretty heavy opinions on both sides, but there is NO EVIDENCE that I have seen.

    Now, if you can get past my first paragraph, I'd be curious if you think the American economy is at a tipping point. Or are we just fine? Because it doesn't really matter about the people think who are beholden to this or that cause (Exxon, Government, etc.) It matters what the people who are NOT beholden to causes think. It matters what the people who predicted things with uncanny accuracy the first time think. It matters what YOU think. Never simply choose the biggest side in a popularity contest.

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  3. The American economy is at a tipping point all right. It's just that your diagnosis of the cause is wrong and your proposed solution will only make matters worse. The problem is not that the government still has some remaning vestiges of the social programs that we enacted after the Great Depression, the problem is that our government is run entirely for the benefit of the wealthiest Americans and the largest multi-national corporations. Privatization, de-regulation, and "trickle-down" tax cuts have robbed the government of its ability to function and robbed the American people of the ability to provide a better life for their children.

    We have an unemployment rate that is nearly 20% when the statistical gimmicks are removed, banks that aren't lending money because they can make so much more trading in unregulated financial instruments, thanks to de-regulation. Most of our manufacturing jobs have been shipped overseas permanently, and our education system, health care system and infrastructure are falling apart. We cannot get back on the right track until businesses start hiring, and they won't do that until there is a market for their products and unemployed folks don't spend a lot at the store. The government is the only entity that has the ability to raise us out of the muck and get America moving again, but it doesn't have to be accomplished entirely on borrowed money.

    We can and should repeal the Bush tax cuts on the wealthy and the Reagan tax cuts as well and make those who have made a fortune out of impoverishing their fellow Americans pay the piper. We can and should stop the wasteful government spending on useless military hardware and imperial armies based around the world. We can and should stop paying corporations to act responsibly and simply order them to do so. There is a way out, but our "leaders" in Washington have been bought and paid for and aren't about to do anything useful (witness the ridiculous mess they made of health care reform), and half the country is so misinformed, they think the victims are the aggressors and the aggressors the victims.

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