Wednesday, November 05, 2008

Serenity Now

All right, well, it is what it is. That's democracy for you.

Much to the chagrin of the people who are currently drinking the kool-aid, the world still is what it is, and despite what "change" will look like here, there is no fundamental change in the disposition of our enemies (although there will be in their strategy), nor more importantly in fundamental human nature. And fundamental human nature doesn't favor the long-term viability of the nanny state envisioned by the government headed our way.

That said, luck has a lot to do with life, and this is no less true in politics. Obama could make all the wrong moves and the country could still get lucky, and we should prefer that to bad times that prove out our theories. That is what loyalty to your country demands, no matter who is President, and the fact that I think it has been woefully lacking on the part of the Left over the last 8 years is no reason to be guilty of this ourselves. There are many who actively wanted the surge to fail because they wanted their opinions to be vindicated rather than their country to succeed. It's not exactly justice that their candidate won, but again, it is what it is.

I hope to post on a host of issues over the next few weeks, but let me start with an observation on the likely extension of the welfare state to healthcare, more redistribution, etc. It simply will not work. It already isn't. And in fact it really isn't working anywhere in the world. People who complain about the current budget deficit seem to ignore the structural deficit, which is a comparison of what our future obligations under the various entitlement programs (Social Security and Medicare) compare to the likely tax receipts in the coming years. In the old days, your social security was your kids - you tended to have a lot of them, you invested heavily in raising them, and they took care of you in your old age. If you couldn't have kids, you realized you had to squirrel away some savings to provide for yourself, and this was feasible because you saved a lot of money not raising kids. Enter Social Security and Medicare. Suddenly the burden of providing for you in your old age is shifted from you or your kids to other people's kids. This reduces your own incentive to save for retirement, as well as your ability to do so given the incremental taxes.

It also, tellingly, reduces your incentive to have kids, and most every nation that has significant social security benefits has long ago stopped having them. The U.S. is almost alone among the developed world to still management a replacement birth rate, but we still face the expectation of steep growth in our tax burden to support the current promises of social security and medicare. We face this for two reasons - one, our birth rate has nevertheless fallen, so that the ratio of people in the working generation to those in the Baby boomer generation is much less than it has been in the past; fewer workers to support the same obligations implies the need to somehow extract more and more of their income. Second, people are living longer, implying the obligation per retired person is growing. When social security was first implemented, the average lifespan fell 2 years short of when you were able to collect. Now it goes about 15 years beyond and growing.

Even if we assume current economic growth rates (which are no doubt effected by marginal tax rates) can be sustained in the face of increased taxes, the tax increases necessary to close the structural defecit are way beyond what any politician would ever in his wildest redistributionist dreams suggest. And even if he did and managed to pass them, there would likely be devastating effects on growth, implying the tax revenues would still fall short. So there is really no getting around this fact - the nanny state cannot be sustained. Eventually it will crumble, and those who somehow relied upon the promises of the state and failed to account for the fact that it cannot fulfill its obligations will be most affected.

Now, the structural deficit is not of Obama's making, and in fact Bush in one way exacerbated it, although he also tried to address it and was basically stymied by a Congress which is best served by preserving the lie that we can fulfill these obligations as currently constructed. But Obama will nevertheless make it worse to the extent that any of the things he's talked about - nationalized healthcare, etc., are institutionalized. He basically wants to double down on a pair of 2s. So don't kid yourself that he is ushering in a country that will, for the first time, care for its sick and poor.

3 Comments:

Anonymous Jim O said...

Pfft. When has it ever cared for its sick and its poor? As you say, anyone (especially of our generation) who counts on SS is dreaming. I just wanted a government where the office of the Vice-President was part of the Executive branch, and where federal prosecutors aren't hired based on loyalty to the political party.

Now I just have to hope that we can maybe have that sometime soon, and not a Left wing version of the same ol same ol

10:30 AM  
Anonymous Jack O. said...

Your points are understood. However, I don't believe I saw anything in the other party's party's plan that addressed SS or Medicare either.

It is true there were probably narcisist who hoped for failure of the surge in order to prove themselves right...this type of political posturing is the same as Karl Rove predicting a big win for Obama yesterday. If he's right, he's right. If he's wrong, he's happy.

It does not pass the smell test, and that kind of mentality will not sustain itself in the Obama Biden administration. I truly believe that they truly desire to get this right. No "cut & run" withdrawal, or any other buzz words you have heard, but a better approach then "the burden of Iraq rests on the next president".

The other thing I don't quite understand is the concept of Medicare as it exists vs. Universal healthcare. By all accounts, our medicare and medicaid systems are incredibly expensive, inefficient, and still requires a for-profit insurance company's oversight. Doesn't the concept of Universal Healthcare already exist?

11:00 AM  
Blogger Alec said...

John,

Shame on you...

You do really ramble in this post, probably out of disappointment for the outcome. What's worse, you really use hyperbole and inaccurate representation, so common in the McCain campaign, to make false assertions. Apparently, all the democracy-loving morons out there also felt this way.

1) The left wanted the surge to fail: interesting statement, John, When in fact we BOUGHT peace. The surge is only a tiny reason there is less violence. Yes John, it was YOUR taxes and mine that bought the peace. THANK YOU FOR THE DONATION. So, I think it makes sense that you back an ideology that wants us there indefinitely. Its the only way to buy the peace. The surge didn't work, your cash and mine did.

2) On Redistribution, well, you know that it is just bull. You know that john. You may not want to acknowledge the level of Corporate Socialism of the last 8 years, including your lovely war in Iraq and the countless $billions that have gone to special interests in its name. But what's worse, and you know this too, is that any income growth in the last 8 years has gone primarily to the wealthiest 1% of this country (I'm willing to bet that you're in that category, and congratulations). So don't play the whiner on redistribution...that's such blatant bullshit to barely deserve a response.

I'd much prefer to hear your opinions on taxes and revenue generation, and under what circumstances. That would be a service to us all, but apparently you're more interested in repeating the rhetoric of a failed ideology.

3) Universal Health Care (which I am not a fan of) is not nationalization of health care. That's funny, given your background in economics. There is nothing in the Obama plan about nationalization of an industry. It is the wrong plan, but it isn't nationalization, as you incorrectly assert. Ohhhh, how you tried to use this in the end, and all the dumb, democracy-loving morons weren't buying it.

I am saddened by your lack of intellectual honesty, your adherence to fear and demonetization of alternative views, and unwillingness to acknowledge the failures of the last 8 years as a representation of the big government Republican ideology you so clearly endorse.

Hang on to this fear-based ideology John. Its all you have left.

It didn't work.

9:12 PM  

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