The Once and Future Kingdom of Austerity

American liberals are big fans of the European welfare state. They point to European models of national health care, rich pensions and generous unemployment benefits as worthy of emulation in the United States. Europeans may not make as much money as Americans, the liberals say, but they have created a more humane way of life.

What you don’t hear from the American left these days is much acknowledgment that the Europeans are backpedaling as fast as they can. There is a reason that transportation and oil-refinery unions have been striking in France and government workers are rioting again in Greece. When Greece nearly defaulted on its national debt last year, governments got a glimpse of what would happen when the money ran out, and they began enacting some of the toughest austerity measures of the post-World War II era.

While France and Greece have grabbed the headlines – protesters setting things on fire makes a visual the media can’t resist – the most important case study in austerity economics may be the United Kingdom. Taking out the carving knife, the newly elected Conservative Party government is dissecting government with a vigor not seen since Margaret Thatcher’s heyday.

The secret to restoring the United Kingdom’s economic vitality, says Prime Minister David Cameron, is to slash public spending and reinvigorate the private sector. The Conservative Party plan calls for a combination of spending cuts, tax increases and targeted tax cuts for business that would reduce Britain’s borrowing by $180 billion a year by 2015 – a fiscal consolidation equivalent to 6.2 percent- of that year’s expected gross domestic product (GDP).

The draconian measures defy the Keynesian doctrine that the best way to jump-start the economy during an economic downturn is to increase deficit spending. While deficit spending may give the economy a short-term jolt, evidence is accumulating that large ongoing deficits cause serious long-term damage, especially when the national debt is already high. Carmen M. Reinhart and Kenneth S. Rogoff have argued famously that when the national debt of advanced nations exceeds 90 percent of GDP, economic growth tends to slow considerably. A more recent study published by the World Bank identified a tipping point at a 77 percent debt-to-GDP ratio.

With a 2010 debt-GDP ratio of 72.7 percent, the United Kingdom is near that tipping point. (The United States is well past it.) Preaching that the nation faces an “age of austerity,” Mr. Cameron has called upon Britons to show restraint (no riots, please) and adopt the spirit of self-sacrifice their forebears displayed during the two world wars. Expecting to sack more than 600,000 government jobs, Conservatives are gambling that whacking state spending in a weak economy will restore market confidence and encourage private businesses to step up their investment and hiring.

Because government spending accounts for such a large share of the economy in some depressed regions of the United Kingdom, Conservatives hope to prime the pump of private investment by pumping funds into regional industry clusters. The track record of such industrial policy is not encouraging, but politically, it may be necessary to prop up the economy beyond the confines of the prosperous London metropolitan area. With the exception of the regional stimulus spending, however, the United Kingdom is hewing to a budget discipline that U.S. conservatives can only dream about.

No political figure of Mr. Cameron’s stature has spoken as honestly to Americans, nor has anyone prominent – outside of Wisconsin’s Republican Rep. Paul Ryan – offered a cost-cutting program as far-reaching. The House Republicans’ Pledge to America would roll back spending by roughly $100 billion a year, to pre-stimulus, pre-TARP levels. But to achieve budget balance over the course of an economic cycle would require spending cuts on the order of $1 trillion yearly. Meanwhile, the U.S. political class and its intellectual enablers remain in steadfast denial. Progressives such as Robert Reich and Paul Krugman argue that the United States needs more government spending, not less.

Americans should watch the outcome of the English experiment closely. Republicans likely will spend the next two years crossing swords with President Obama, a dogged defender of the leviathan state. The key electoral test will come in the presidential election of 2012. By then, the results of the English experiment should be in. Either it will be a model worth emulating or it will prove to be an economic and political failure. I’m betting austerity will pay off for the United Kingdom. I can only pray that the United States can embrace serious cost-cutting before the gravitational tug of our massive debt pulls the economy into oblivion.

(This column was published originally in the Washington Times.)


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51 responses to “The Once and Future Kingdom of Austerity”

  1. Not being a liberal but often accused – I'll respond by saying that I NEVER thought that the European welfare state was economically sustainable and was inevitably headed for resets.

    That's a separate deal from health care where their system obviously and irrefutably performs more fiscally effectively than ours as all of their people are covered and pay 1/2 what we do and they all have longer life expectancies than us AND their goods and services sold worldwide are cheaper than ours because they do not have embedded health care costs.

    The Europeans use a VAT which is a better tax system than ours because it taxes consumption.

    But they have overrun their finances – plain and simple – as we have also.

    Out of 131 countries in the world – only a precious few have not pushed themselves to the limits of their finances.

    In fact.. many individual Americans .. have done the same thing with their own personal finances.

    But countries and people do not die when they overspend.

    They are forced into more sustainable patterns – over time.

    For instance, the solution to Medicare and SS is really simple in terms of fiscal.

    raise the retirement age, means test the benefits, require co-pays for things not life-critical – prescriptions, etc.

    Homes like the Baptist Home – a private institution will take you in your old age … in exchange for your home.

    Should we do that for SS & Medicare?

    I think so.

    there is no free lunch.

    but the Republicans are totally dishonest in this.

    They profess to be the fiscal conservatives who advocate tough-love policies but instead of leading by telling the American people their vision of what we have to do – what do they do?

    They want to be elected on a generic "we will cut" platform.

    Mind you – these are the same YAHOOs that perennially run on that platform but when elected to a majority – do what?

    No tough love. NADA. ZIP. ZILCH.

    At least give the Conservatives in Great Britain some credit.

    They are telling the truth to the citizenry … a necessary part of leadership.

  2. Anonymous Avatar

    More rocks at empty pigeon holes from Mr. Bacon.

    Again Mr. Gross wins big.

    Observer

  3. The value added tax taxes "consumption" by taxing production: the value added at each step of manufacture from mining to final retail sale.

    It is a cumbersome and expensive to administer fancy sales tax and we wouold do well to stay away from it.

    That said, i agree that the only taxes that makie sense are taxes on transactions, and that means income taxes and sales taxes.

    Taxes on property are silly and not equally applied: you pay tax on a 150,000 home – even if you don't own it yet – but not if you have 150,000 in the bank.

    I do not agree with means testing medicare. You pay in for your whole life and you should be able to count on getting something back, and not lose all of your contributions to medicare just because you made some money elsewhere. We already have a sliding scale on income taxes and if it is not eneough we should fix it. But means testing medicare is an off the books income tax increase and such an idea is fundamentally dishonest, in my opinion.

    Otherwise, Larry is right, we have a choice of big government now with the democrats or big government later with the republicans.

  4. James A. Bacon Avatar
    James A. Bacon

    Observer — rocks at empty pigeon holes? Really? Tell me how you're going to reform human settlement patterns, much less transform the governance structure of the United States, if the federal government is broke.

  5. Ray – Medicare is INSURANCE.

    you don't pay near enough into it to do you any good taking it out for benefits.

    You're paying INSURANCE for benefits – not BENEFITS.

    It's appropriate to means test ANY ENTITLEMENT where you will be getting more in benefits than you ever paid into it.

    That's one of the big differences between the Republican philosophy and the current system.

    Their philosophy is for you to set aside your own money – to use later on.

    The problem with that is that many people could not begin to build a big enough fund to cover their costs later on – so we have INSURANCE.

    and you KNOW it is insurance – because if you croak before collecting – your heirs get NOTHING – because it's not a FUND.

    Capische?

  6. Property Tax is the foundation of local funding…. for infrastructure and citizens services including schools.

    Would you be in favor of a local sales tax to replace the property taxes?

    would that work if the adjacent jurisdiction stuck with property taxes and people moved to where there were no property taxes but bought cars and food and stuff where there were property taxes but no sales taxes?

  7. Groveton Avatar

    I am in London today.

    This is a huge deal over here.

    One article says:

    "The public sector now spends more that 48% of our national wealth every year (an astonishing 10 per cent more than in 1998) and it employs 6 million Britons (one million more than in 1997).".

    If you want to see where Obama's path leads you need look no further than England.

  8. Groveton Avatar

    Daily Mail headline, "One in 10 public sector workers faces axe".

  9. Ray – Medicare is INSURANCE.

    Right, so why should it be means tested? If a poor person or rich person sustains $5000 damage to their car do we pay the rich person less?

    We already have an extra medicare tax for those earning over 200k, me3ans testing is doubling down, and it is an off budget tax.

  10. Property taxes are a dumb idea, and it was dumb to allow them to become the mainstay of local taxation. Tax on property is just a proxy for tax on income, the assumption being that if you own valuable property you must have the income to support it.

    Its a bad assummption, and that is why some areas have caps on the amount tax can increase each year.

    I knew a man who had proerty that had been in his family for 300 years. One day the property next to his sold for an exhorbitant amount, and he could suddenly no longer afford the taxes on his own home, and he had to move away.

    There is something wrong with that system, even though he made a killing when he moved away.

    I think only the sales and income taxes make sense. They are both transaction based and they guarantee that taxes and the economy are closely linked.

  11. Ok, so the government lays off 600,000 people aqnd saves 4.5 percent.

    Then what?

  12. Lets assume that the UK hasn't got any shortages of anything of importance. Government lays off 600,000 people who are now on unemployment and cut back their spending accordingly.

    Where is the PE incentive to expand?

    600,000 more people are clamoring for a relatively fixed number of PE jobs, and competion sends labor costs down.

    Average labor rates across the entire country drop by 3 to 5% and government income drops along with it.

    Where is the inceentive to PE to see to it that people are as well off as before?

    There is none. Pretty much the same amount of stuff and services will be needed and PE will have to pay less to labor to provide it.

    What's not to like? The wealthy will feel wealthier because the income gap has widened.

    And for the workers who are now poorer there is less government safety net, depressing labor still further.

    Darwinian economics at its finest.

    Lacking of course the essential element of natural selection.

  13. A lot of the british cuts will be in the Military. Think we will follow?

  14. Gooze Views Avatar
    Gooze Views

    Yo Bacon,
    Getting chummy with your Anglo ancestors, eh?

    Well, while you are waxing eloquent about the British Conservative government's budget tear about, consider this headline from the "Guardian" (probably not a newspaper you have book marked):

    "Spending Axe Falls on the Poor"

    http://www.guardian.co.uk/politics/2010/oct/20/spending-cuts-george-osborne-axe

    Just to point out that there are always contrarian ideas even in so jolly a spot as England.

    Peter Galuszka

  15. re: military spending

    when you consider that we spend 10 times as much as Great Britain on the military – over $2000 per capita compared to Britain at about $1000 per capita…

    7 times what China and Russia spends,

  16. You know.. what we have been discussing hot & heavy really has little to do with taxing and spending and balanced budgets.

    This disagreement is not about deficits per se.

    We can fix deficits. Deficits will eventually fix themselves – at some point your creditors "fix" your finances for you.

    Clinton balanced the budget and we can do it again but there is much more than taxing and spending and deficits going on here.

    It goes to the philosophy of what govt's role should be.

    The taxing/spending/deficit is a surrogate for the philosophy issue.

    There was never a serious attempt to keep the budget balanced during the prior 8 years by paying for the extras costs of war and homeland security.

    It was categorized as an "emergency" that justified deficit spending.

    So.. in that case because of what we were spending the money on – it was acceptable to have a deficit.

    but it's NOT acceptable to have a deficit for ..a welfare state….

    Guns – yes. Butter – hell no.

    If you take "welfare state" SS/Medicare out of the discussion because they are not funded from income taxes – what is basically left is military, homeland security and general govt and it IS in deficit by one trillion.

    But you could wipe out virtually every single cabinet agency other than Defense and Homeland Security and still barely cover the trillion dollar deficit.

    and this is why – there is no discussion of specific cuts from the Republicans – they can do math also and they see the number problem.

    So the discussion shifts towards the fears that we are slding towards European-style welfare states – and the fact that we could do that with FICA and not have a deficit – is not germane to the bigger issue of whether or not we ought to be having a govt running FICA/SS/Medicare in the first place.

    but now.. we're totally off the budget range having left behind the real problem – the trillion dollar non FICA/SS/Medicare deficit.

    What the Republicans are opposed to is not the fact that SS/Medicare could be a self-sustaining FICA funded program.

    They're opposed to the CONCEPT of FICA in the first place.

    They believe that FICA should be given to the employee and the employee use that money for their own Social Security and Health Care and not have the govt doing it.

    They are simply opposed to the idea of the Govt being in charge of Pensions and Health Care – to start with because they consider that to be a European welfare-state approach.

    That's why they are so reactive to ObamaCare.

    CBO says that ObamaCare will pay for itself… and not be in deficit.

    That assessment is no better and no worse than many of their analyses that may turn out to be not 100% on target (including with tax cuts) but that argument is secondary to the bigger one that they are simply opposed to the idea that Govt would essentially expand Medicare to everyone.

    So.. we're not really ever going to reach agreement on deficits to start with because it really is about much, much more than simply matching revenues with expenditures – for the things we want to pay for.

    Nope.

    It's about what we should be paying for or not to start with.

    This is why there are few specifics other than Paul Ryans blueprint which last I heard as a dozen or less supporters out of all the Conservatives who say we need to cut the deficit.

  17. James A. Bacon Avatar
    James A. Bacon

    Peter, I don't expect the Labor Party to go down without a fight. Yeah, when you cut back a *welfare* state, the poor are going to take hits. But, then, if the UK ever defaulted on its debts and had its own Boomergeddon, the poor would take even bigger hits. There are no easy choices.

  18. More sighns the world is not ending and economy is improving. National highway traffic levels are up.

  19. An effective rate of 15% unemployment with almost half the home sales in some areas being short sales… and a substantial number of people underwater on the mortgages – trapped and unable to even move to take a new job ……

    … is not good…..

    As the Republicans and the the Dems have been saying – with different emphasis – the recovery is not working for the average American….

    in terms of the stock market – 6 months ago, I moved SOME funds from Govt Securities to Mutual Fund Stocks – and only this week has it broke even again after initially diving.

    If I was counting on that money to retire – I'd be looking at delaying retirement and if I lost my job and I lived in a small town in Va – I'd be screwed.

    This is happening all across the country in the smaller towns that used to have local manufacturing plants.

    The American Dream to get a high school education and go to work at the local plant… eventually make enough to buy a home and get health care and a pension ….is gone for many with no prospects for replacement employment.

    This is why the Dems are going to lose in Nov.

    I'm not focusing on the half-empty glass – I'm pointing out that the mood of the country is not good in many areas and telling those folks that the stock market is doing well.. is not going to reassure them at all.

    Our non-urban manufacturing workforce is in big, big trouble.

  20. to revisit the liquidity trap.

    "..you’re in a liquidity trap when conventional open-market operations — purchases of short-term government debt by the central bank — have lost traction, because short-term rates are close to zero."

    That Krugmans definition

    Here's Wiki:

    " Under the narrow version of Keynesian theory in which this arises, it is specified that monetary policy affects the economy only through its effect on interest rates. Thus, if an economy enters a liquidity trap, further increases in the money stock will fail to further lower interest rates and, therefore, fail to stimulate."

    Both of these definitions presume that the Fed will manipulate (stimulate) the economy by adjusting the prime rate.

    This is not a "Democratic/Obama" idea – it's, in fact, the actual policy of every nation in the G20 no matter whether their current leadership is Conservative or Liberal.

    The problems arise when lowering interest rates (even to zero) will not result in increased demand for money.

    so the banks themselves have very little demand for loans from the business community and that should not be a shock because demand for goods and services is still weak.

    The next step from the conventional monetary failure to for the govt to directly stimulate out of the Liquidity Trap by spending money itself (agreed – money it does not have and is borrowing from the future).

    So that is what "stimulus" really is.

    It's not only the stealth tax cuts that Obama did but it's money spend on a wide variety of things from roads and other infrastructure to keeping deputies and teachers employed and not laid off.

    The whole point is to attempt to arrest the economic contraction and hope that enough time is bought for the markets to recover – and to begin to pay back the deficits created by the stimulus.

    If you stop the stimulus – the concern is that the contraction will continue.

    More jobs lost.. less and less demand for goods and services… and then more layoffs, etc.

    In that regard – what does "Austerity" measures have to do with anything?

    If the economy is still in danger of contracting… instituting austerity measures would seem to me to accelerate the contraction.

    I understand the concern about the structural deficits won't austerity measures right now lead us to even more contraction?

    What is the goal of those who want to stop the stimulus?

    I find it hard to believe that even if the Republicans take over one or both houses of Congress that they know how to reverse the contraction.

    I think their plan is that the markets will eventually right themselves…. and the govt should stay out of it.

    I have a hard time reconciling that viewpoint with their continued support of the Fed manipulating interest rates to stimulate the economy.

    I don't fear the argument to debate that.

    what I fear is what is going on right now – which is no debate … "put us in office and then find out what we will do".

    So the current election basically falls down to this.

    They do not like what Obama is doing … or to be more precise…they do not like the results of what he is doing.

    And…they do't really care exactly what the Republicans will do instead … just get them into office so that something other than Obama's plan is followed… even if we have no clue what the alternate plan really is.

    I have to say… that's an ignorant approach to change…

    Why would you ever vote into office ANY politician who whose primary promise to you is to "trust me" and "I'll tell you what I'll do after you elect me"?

    Many voters in the country appear to have taken a collective stupid pill.

    No.. they have a prescription for a whole bottle of them…..

  21. "…An effective rate of 15% unemployment with almost half the home sales in some areas being short sales… "

    ==================================

    Well of course half the home sales are short sales, or outright foreclosures: that's where the bargains are. The important thing is tha homes are selling.

    As for the 15% unemployment, I don't see how you can hope for less massive overconsumption and full employment at the same time.

    Pick one and get behind it.

  22. "The plan, by Rep. Paul Ryan (R-Wis.), would reduce benefits by gradually raising the retirement age and gradually trimming benefits for the top 70 percent of earners.

    Together, the two provisions would slice initial benefits by about a quarter for middle-income Americans who turn 65 in 2050, according to the analysis. Wealthier retirees would see even deeper cuts, losing about a third of scheduled benefits in 2050 and more than half of scheduled benefits if they turn 65 in 2080."

    Today's WAPO

    ==================================

    looks like you are safe for now, Larry.

  23. "…telling those folks that the stock market is doing well.. is not going to reassure them at all…"

    ================================

    You are right, the stock market is not the economy for many folks. For may of them it is too bad, too.
    In the last six months I made more in the market than I did going to work every day, and I am conservatively invested.

  24. "The problems arise when lowering interest rates (even to zero) will not result in increased demand for money."

    ===============================

    Well yes, but when there is no profitable place to park your money you get more creative about how to put it to work.

    So, maybe you go buy a couple of short sale homes.

  25. "More jobs lost.. less and less demand for goods and services… and then more layoffs, etc.

    In that regard – what does "Austerity" measures have to do with anything?

    If the economy is still in danger of contracting… instituting austerity measures would seem to me to accelerate the contraction."

    ===============================

    One of the richest guys I know is a self-professed slumlord. He taught me long ago that the esiest way to get money is to take it from poor people.

    Conservatives WANT more contracton because it makes more poor people competing for jobs, which means the jobs pay less, even if they still earn the same, ergo the business owners make more.

  26. " As for the 15% unemployment, I don't see how you can hope for less massive overconsumption and full employment at the same time."

    less personal consumption – more employment…

    but in a elective government – the acceptable level of unemployment is decided by the voters ..right?

  27. " gradually trimming benefits for the top 70 percent of earners"

    " Together, the two provisions would slice initial benefits by about a quarter for middle-income Americans who turn 65 in 2050, according to the analysis. Wealthier retirees would see even deeper cuts, losing about a third of scheduled benefits in 2050 and more than half of scheduled benefits if they turn 65 in 2080."

    remember – "scheduled benefits" for most people is way more than you paid into it – and it is – not a retirement fund – but insurance for your old age.

    You can pick your poison (or not) but the simple facts are that we cannot pay out more benefits than FICA is generating.

    That's the problem in this country right now – people say they don't want or like deficits but when it comes to their own "benefits" they really don't care if it causes deficits or not – they want.

    there is a huge disconnect between what people say they want the govt to do and what they expect the govt to do for them…

    I am all for Mr. Ryans plan or equivalent and I'm totally opposed to any philosophy Democratic or Republican or Tea Party that simply refuses to recognize the fiscal realities – on the ground – as they impact us personally.

    we want pain at the national level but no pain at the personal level.

    dumb.

  28. For every short sale home that helps one person – there's another person whose life is in financial tatters…

    that's not going to cut it as a national policy.

  29. " Conservatives WANT more contracton because it makes more poor people competing for jobs, which means the jobs pay less, even if they still earn the same, ergo the business owners make more. "

    ha ha ha

    I'd love to see Jim Bacon or Groveton respond to this….

  30. "but in a elective government – the acceptable level of unemployment is decided by the voters ..right?"

    ================================

    I've never seen "desired unemployment level" on a ballot.

    I've seen a lot of politicians making promises they cannot deliver.

    UK tried to keep unemployent low by having the government hire people: that worked for a while.

    Unemployment is determined by the economy, not by how people vote. ONE constraint on the economy is excessive regulation, but conservatives would have you believe it is the ONLY restraint.

    When people will work for cheap, there will be jobs for them. Whether they can live on the wages rovided, is something else.

  31. I'd love to see Jim Bacon or Groveton respond to this….

    ================================

    One of my Tea Party friends was explaining to me just the other day why it is that we NEED an underclass.

    It boiled down to making rch people richer, and he wasn't kidding.

  32. For every short sale home that helps one person – there's another person whose life is in financial tatters…

    ===============================

    Yes, but it is better than having one in tatters and no sale.

    One of my co-workers lost his roof in Florida – four times, so he moved to Indiana, just before the market crashed. He short-sold in Indiana and bought a (more expensive) home in NOVA.

    He has had bad luck with housing, but his life is not in tatters.

    LOTS of short sale homes are going to investors, not homeowners.

  33. Ask Obama after Nov 2 if unemployment was on the ballot.

  34. somebody has to serve burgers…and clean bathrooms…

  35. " Yes, but it is better than having one in tatters and no sale."

    not from the point of view of those who lost their home ….

    but yes.. in our county…for the first time in a decade… school teachers and deputies are able to afford a home…

  36. not from the point of view of those who lost their home ….

    ===============================

    Right, so here is a guy who lost his home because he bought one he could not really afford, but it waas all that was avaialble, so he took the risk and made the stretch.

    Turns out he is a deputy, and now there are lots of homes he can afford.

    ==================================
    The sahdow of unemployment will loom over the ballots, making it difficult to read what is really on the cards.

  37. Turns out he is a deputy, and now there are lots of homes he can afford.

    I would imagine. Especially when the deputy gets a 50% discount on an already discounted home. Heck, they can get first dibs on every house they process serve. No wonder so many of our public servants are flipping houses on the side.

    So a deputy or schoolteacher has a right to a home that others of lesser profession doesn't?

    Question: Am I Eligible for the GNND Sales Program?

    Answer: Law enforcement officers, teachers and firefighters/emergency medical technicians and who meet all other requirements of the program are eligible to purchase an available home.

    Question: How Much of a Discount Can I Get on a HUD Home?

    Answer: You can get a 50 percent discount off the HUD appraised value. For example, if HUD lists a home at $100,000, you can buy it for $50,000 provided, you occupy the home as your personal residence for the required occupancy period. If you qualify for any FHA-insured mortgage program, your downpayment is only $100 and you may finance closing costs.

    Ask your buddy how many of his co-workers are in investment pools.

  38. Groveton Avatar

    What we need is reasonable jobs for people other than those with substantially above average intelligence and motivation.

    Technology and special interests have eaten away at America's blue collar world. Instead of unionized janitors being able to support a family with a union job we have illegal aliens working under the table for half the price.

    Instead of large global companies paying US taxes they make their campaign contributions and have their purchased politicians write loopholes into the US tax system. They end up with Double Irish and Dutch Sandwich strategies. Most citizens don't know a thing about this. Every executive in a global company and every member of Congress understands it just fine.

    The Republicans only answer is to shrink government. The Democrats only answer is to raise taxes.

    How about enforcing the immigration laws AND making it easier for lower wage workers to unionize?

    How about shrinking government AND eliminating the mutli-national tax avoidance?

    How about "ringfencing" education spend AND allowing more parental choice in schools?

    The way out of this mess won't come from the Republicans or the Democrats. However, I do believe that the Republicans will ruin the country at a slower rate.

  39. ""Step 1: "Let's spend on infrastructure [ignoring diminishing returns] so we can stimulate economic activity."

    Step 2: "Let's tax economic activity to slow it down because it causes negative externalities like pollution and global warming."""

    Comment from Seth on Carpe Diem.

  40. "What we need is reasonable jobs for people other than those with substantially above average intelligence and motivation."

    ================================

    So that's what, 15% of the population?

    And the other 85% are either underemployed or unemployed?

    What if we figure out that we only need 85% of people working and 15% unemployment is the new normal?

  41. "The way out of this mess won't come from the Republicans or the Democrats. However, I do believe that the Republicans will ruin the country at a slower rate."

    Yep, big government now or big government later.

    Has everyone forgotten how we got all these regulations and interference? Business/private Enterprise screwed up, that's how.

    Their innovations in technology, and marketing are only matched by their inovation in wriggling around regulation.

  42. not sure what "ringfencing" is but I find agreement with Groveton.

    The standard – "get a high school education and then a blue-collar union manufacturing job" is not extinct – yet – but the handwriting is on the wall and Groveton got the next tier down correct – it's now occupied by people willing to work for far less.

    What that means is – for a lot of people – your basic high school education is a high risk approach to a career these days and if you don't graduate from high school or even if you do but your diploma is a "show up" diploma than your options are downright terrible.

    That's bad for all of us because the more people who don't earn enough to pay income taxes, need entitlements and assistance.. or worse need a prison cell – we fund.

    So it's is imperative that we get our education system straightened out or all of us – including the highly educated and the small business entrepreneurs are in trouble.

    I have said before..multiple times.. to where I could be rightly accused of blathering… that it is a scandal that the country that used to lead the world in education now ranks 15th- and it's worse than that because we have essentially a bifurcate system where the good kids are really good and the others – not good at all – and those kids – if we do't do something are going to grow up requiring entitlements out the wazoo paid for by a smaller and smaller group.

    That's my Boomergeddon… forget the boomers.. it's the 15 year olds who think their future is as a running back or center or …nothing…

  43. I don't think the deputies and teachers in our area get a break on mortgages and homes.

    Fill us in Darrell on what goes on in your neck of the woods.

  44. I did not understand all of Farrell's comment, either. I do know I have lost two tenants who bought foreclosures and moved out.

  45. That's my boomergeddon.

    ——————-

    We can't all be upperclassman and above average.

    That only happens in Lake Woebegone.

  46. High school diploma my foot.

    Secretariat made more money in three years than I will make in my life. Then he retired to be a sperm donor.

    No one talked about cutting his benefits.

    Then again, he was only a laborer who worked for a bucket of oats.

    Management got all the money, and Secretariat was euthanized for a hoof problem.

    What's wrong with this picture?

  47. re: welfare states, health care, retirement, etc.

    Both Medicare and SS are under attack now along with ObamaCare because they are said to be 'broke' and that being 'broke' is inevitable because the government is incapable of running an entitlement program effectively and fiscally sustainably.

    Despite the fact that many economists state that fixing social security and Medicare are relatively easy – technically – i.e. increase FICA, increase the retirement age, means test benefits and for Medicare – sliding co-pays according to the cost of the treatment and the statistical outcome – i.e. full payment for well-recognized treatments that "work" at a high percentage and sliding co-pays for more expensive procedures that don't provide clear advantages over the less expensive treatments.

    The Conservatives are – given the reason of incompetent govt but SS/Medicare have operated for a long time on a fiscally balanced basis and only with the advent of boomer demographics have the wheels started to come off.

    So the Conservatives are basically opposed – ideologically – for the same reason they basically oppose Obama-Care – they do not believe government should be providing these plans because it constitutes a "welfare-State".

    I apologize for taking several paragraphs to get to this point but it was important to delineate the issues because when put forth by conservatives the issues are not made clear and often are commingled and conflated.

    So – why don't we go to a voluntary, privatized system?

    This is a very important question.

    The "money" question that follows the "what if" question is this question:

    What happens to people who do not voluntarily put aside money for retirement and health care in our system?

    Do we institute a "welfare state" for those who did not set aside money for their retirement and health care?

    and the answer is that – yes – we do.

    We have a "welfare state" that says that anyone who shows up at an ER will get free health care. If that's not a welfare state – what is?

    And then elderly people who do not save for their retirement would be given vouchers and subsidized housing – again – as a country – we simply do not have the political and moral will to watch 80-year old couples pushing shopping carts with all their earthly belongings.

    So.. this country has proven that despite all the tough talk about not having a 'welfare state' – we, in fact, would not have it any other way.

    The question is – then – is it better to have programs to force people to set aside money – i.e. FICA than it is to not – but then later on provide them with taxpayer-funded assistance?

    And we already have the answer in our health care system.

    People that won't set aside money for health care will wait until their illness progresses past the point where a primary care physician can treat it – and instead go to an ER where treating that illness will cost 2-4 times as much …

    .. and this is the best part..

    …. continued….

  48. …. continued ……

    WE PAY THOSE COSTS – as part of our "Welfare STate" – otherwise known as EMTALA – the original welfare state law – signed into law by Ronald Reagan.

    We say we don't want a welfare state – but in reality we provide it – but some of us would want to provide it in a cost-effective manner that imposes personal responsibility on those who don't exercise it while others want to essentially pretend that we can tell everyone to save for their retirement and health care and everyone will.

    That's the basic conundrum from my perspective.

    whatever path we choose – shouldn't we recognize that if we choose "welfare state" even as a post-circumstance that we not pretend otherwise?

    It seems to me that in terms of "austerity" – that there are two kinds.

    The kind you have when there is no welfare state safety net and the kind where there is.

    There is "austerity" in both paths.

    And "austerity" – that is the direct result of policies that actually promote inefficiency and waste inherent in reactive policies to the needs of people who did not personally and responsibly plan is actually more harmful to the people who are taxed to provide the reactive "welfare state" rather than fund a proactive "welfare state" that institutes forced personal responsibility.

    If we actually would refuse to help those who were elderly and poor due to their own irresponsible behaviors – we'd not be providing Medicare to start with.

    Right?

    Which is worse?

    Institutional Govt Austerity or Mass Personal Austerity?

  49. – i.e. full payment for well-recognized treatments that "work" at a high percentage and sliding co-pays for more expensive procedures that don't provide clear advantages over the less expensive treatments.

    =================================

    Can we apply the same standard to environmental programs that work and those that don't?

  50. in a word – yes. but a lot depends on performance metrics but I'd not disagree with the premise at all.

    I'd like to see that applied to congestion reduction efforts.

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