»  Taki's Magazine

July 1, 2010

  The National Debt: Apocalypse Now

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The car has already hit the tree and the bumper is already in the process of buckling inward, so there is no time to turn the wheel or fasten seatbelts. It is too late to do anything but scream.

Thus Vox Day in his recent book The Return of the Great Depression. Are things really that bad? And going to get that much worse?

I'm betting that they are. That's a novice bet, as I am not a trained economist. I base it on a complete lack of seriousness among our political classes. It is obvious that our governments, at all levels, are spending far too much; yet there is little evidence of anyone being willing to do anything about it.

Item:  New York state legislature, after years of chronic financial crisis caused by overspending, has just approved another budget bloated with spending increases. This was in the teeth of opposition from Governor Paterson, who has sworn to veto every single slice of pork in the budget. (There seem to be around 6,900 of them.) The Governor is a Democrat, and Democrats dominate the legislature.

Item:  The U.S. Department of Labor has a new program called We Can Help. In a promotional video on the department's website our current Secretary of Labor, Hilda Solis, assures us that "every worker in America has a right to be paid fairly, whether documented or not." Her department will hire 250 new field investigators to make sure that standards are enforced.

Item:  Pat Quinn, the Governor of Illinois, is boasting of having confronted his state's problem of unfunded pension liabilities. (Which is also, of course, the problem of many other states.) The retirement age for state employees has been raised to 67, and the salary used to compute pensions has been capped at $106,800 a year, indexed for inflation. However, says the New York Times, "Nearly all of the cuts so far apply only to workers not yet hired." So for the tens of thousands of workers currently on Illinois payrolls, it's "Party on, dudes!"

Item:  The big news event of the past few days has been the dismissal of General McChrystal as commander in Afghanistan, with General Petraeus taking over. Petraeus is said to be a "long war" man, who will press for the administration to drop its plans for a winding-down of the war next year. I have read at least thirty articles about this, written by commentators of the deepest brow and highest respectability. Not one of them mentioned the cost of the war, currently around $100 billion per annum. All assume blithely that we can afford any war we care to fight, even a war as pointless as the one General Petraeus has just acquired.

Item:  The youngest of the Americans who fought in Korea are now in their mid-seventies, yet we still have 28,500 military personnel there at a cost to us (South Korea chips in) north of a billion a year. Nobody talks about that, either. What's a billion any more, in the age of the trillion?

Item:  Vox Day's not an outlier. Nor, any longer, are Peter Schiff nor even Marc Faber. Here's Paul Krugman in the June 27 New York Times: "We are now, I fear, in the early stages of a third depression … The cost — to the world economy and, above all, to the millions of lives blighted by the absence of jobs — will … be immense."

Item:  California's state-employee pension funds are short half a trillion dollars. State legislators don't care, any more than New York's do: "Mr. Schwarzenegger pointed out that he proposed pension initiatives a year ago, but lawmakers never followed through."

Item:  With unemployment nudging ten percent, we're accepting the now-normal million-plus a year legal immigrants for permanent settlement. We are also taking in the usual 65,000 "regular cap" H-1B visas for "specialty occupations." An example of an H-1B visa holder would be Times Square bomber Faisal Shahzad, sponsored by Elizabeth Arden to do "a low-level accounting job." You may not mention this. To speak in public about illegal immigration is just barely borderline respectable; if you try to start a discussion about legal immigration, people just stare blankly, as if you had lapsed into Tibetan. What is he, crazy?

And on, and on, and on. There's a 40-foot tsunami in plain sight on the horizon, and we're playing beach volleyball. Can Petraeus turn Afghanistan around? How unpopular is the healthcare bill? Will the feds sue the state of Arizona? (What's that distant rumbling sound?) Is Turkey a friend or an enemy? Should Rahm Emanuel go? Is Elena Kagan gay?

A few days ago I wrote a column critical of the FDA, which is trying to stifle personal-genomics startups on the grounds that (a) big biotech firms, fearful of competition, are pressing them to, (b) the political Left harbors a strong suspicion that the less we know about the human genome, the better for their ideological coherence, and (c) like the scorpion in Aesop, they can't help being what they are — an enterprise-hostile governmental bureaucracy.

That column got me one of the most depressing email-bags ever. This is now a simply terrible country in which to start an imaginative new enterprise. Several readers reminded me of the quote (which I can't find on the internet, but seems to be well-known) by one of the founders of Home Depot, that such a business could not get off the ground today. The iron triangle of regulation, taxation, and litigation is killing off American business, fast.

From just one of those emails, sent by a very successful entrepreneur now living abroad: "Capitalism is dead in the US … The US was not destroyed by the Russians, the Chinese or even the militant Islamists. They did it to themselves … The $104 trillion debt is beyond any possible means of repayment. The only way out will be to monetize the debt by hyperinflation … I'm now watching the final days from 8,000 miles away … In November 2008, half of the US electorate put a loaded ballot in their mouth and pulled the trigger …"

I favor aerodynamic analogies over Vox Day's merely automotive ones. So: Heads between knees, arms over heads, hold that position. Pray if you're inclined to. Brace for impact!