In U.S. Could Face Debt Crisis, Gretchen Morgenson of the New York Times explains that, according to a recently-published study, government deficits and the attendant accumulating debts, might just pose a problem one day:
SAY this about all the bickering over the federal debt ceiling: at least people are talking openly about our nation’s growing debt load. This $14.3 trillion issue is front and center — exactly where it should be.
Into the fray comes a thoughtful new paper by Joseph E. Gagnon, a senior fellow at the Peterson Institute for International Economics, which studies economic policy. Written with Marc Hinterschweiger, a research analyst there, the report states plainly: “That government debt will grow to dangerous and unsustainable levels in most advanced and many emerging economies over the next 25 years — if there are no changes in current tax rates or government benefit programs in retirement and health care — is virtually beyond dispute.”
Now even the New York Times, or at least one of its business editorialists, is on board with the idea that the manner with which the US, in the person of its all-pervasive government, is now living is economically unsustainable. Given the prevailing view of the paper that government almost always offers better solution to problems than can be found in the private sector, admitting that this gargantuan and growing federal government resource-consuming monster must be somehow checked is tantamount to a Nazi skinhead admitting that Jews and blacks are perhaps not the only sources of evil in the world; it is the equivalent of having a hard-core Tea Party activist admit Obama is a citizen; it’s like having E.J. Dionne warn of Medicare solvency. You get the idea, if even the New York Times recognizes the problem, the problem must already be irresoluble.
Morgenson’s normal routine is to excoriate private individuals and corporations for their blunderbuss and malfeasance in their business dealings. She’s made a living these last few years exposing the self-dealing, hypocrisy and overall wretchedness at the core of the financial system, particularly that part of it engaged in the business of selling, originating, funding, collateralizing and foreclosing on residential real estate mortgages. She rarely ever identified the true source of the financial system’s problems, i.e., that all of its nefarious conduct and actors had been specifically incentivized by the structure of the system; a system that had been created and nurtured by the very federal government she now observes is going bankrupt, at least partly for the financial sytem of its own creation. She always just seemed to think it was bad people acting badly, when in fact, it was ordinary people acting rather ordinarily in the system in which they operated.
But now, as the federal government has assumed the ultimate risk of further financial system malfeasance to the tune of six trillion dollars or so in residential mortgages and another five trillion or so dollars of bank deposits and trillions more in fashioning its financial system around saving “too big to fail” institutions; as it has, through Treasury and Federal Reserve monetary hijinks, assumed a basically limitless indemnification for generalized economic malaise in every industry from car manufacturing to health care; as it is on the hook for providing old-age pensions and medical care for a growing population of aging, it is clear to anyone paying any attention at all that this will end rather poorly. There is no way in hell that the federal government can keep the promises it has made. It is, even now, structurally bankrupt.
But what to do about the problem? Nothing much right now, it seems:
The authors do not suggest that policy makers should hurry to raise taxes or cut spending right now. They acknowledge that the economic recovery is still fragile and propose that lawmakers wait to implement budget cuts currently under discussion until 2013 to 2015. Additional cuts would ideally go into effect in 2016.
The very cause of the problem is a refusal to face reality, so postponing any real structural changes until later–always later–does nothing more than ensure the structural changes will not happen until there is no other choice.
It is not only the US that is going broke. Western Europe and Japan–basically the whole of the developed world–is in much the same situation. And for the same, unspoken, reason: The age of Western hegemony and economic growth is drawing to a close. The West (and Japan) is slowly dying out. The days of vigorous economic growth in the West and Japan are, for now, over. Aging and dying populations do not for vigorous economic growth make. Yet the premise supporting every promise Western governments and Japan have made to their people is that growth will indefinitely continue, which, if nothing else, shows in them all an incredible myopia concerning history. Neither trees, nor economies, nor populations, nor housing prices (it sounds silly to say now) grow to the sky. That Gretchen Morgenson, and by extension, the New York Times, now at least implicitly recognizes the fragility of the premise underpinning the social welfare states of the West and Japan is quite remarkable. Very few others seem to get it.
I wonder, in some not-too-distant future when it is finally clear that government, except in a few limited instances (defense and communications facilities and little else), creates more problems than it solves, will folks at the Times, and others like it, finally accept the verdict, which even a casual examination of history could have provided a priori? When all that these governments have promised lies in a shambles on the ash-heaps of history, will it then be obvious to all those that believed in the improvement of man through government action that they bought a naive lie? Or will they continue to believe, if only they had the right government processes in place, man could ultimately be perfected, once and for all? In other words, will any lesson be learnt? History, a matter rarely known and almost never understood by those that are in constant thrall at the promise of government to improve the lot of mankind, says the chances that any lesson will be internalized about the limits of collectivist action are quite slim.