The Great Wish across America is to resume the life of comfort-and-convenience that seemed so nirvana-like just a few short years ago, when the very constellations of the heavens might have been renamed after heroic Atlanta realtors and Connecticut hedge fund warriors, and the boomer portfolios groaned with earnings, and millions of graying corporate salary mules dreamed of their approaching retirement to a satori of golf and Viagra, and the interior decorators grew so rich installing granite countertops that they could buy their own houses in the East Hampton, and every microcephalic parking valet in Las Vegas qualified for a bucket full of Ninja mortgages, and Lloyd Blankfein could dream of divorcing his wife to marry his cappuccino machine.
At the moment, there is tremendous hoopla and jubilation over the start-up of so many "shovel-ready" highway projects around America ― as if what we need most are additional circumferential freeways to enhance the Happy Motoring lifestyle. How insane are we? Is this the only thing we know how to do?
I remain confident that the months ahead will introduce the American public and our leaders to a range of horrors that will begin to penetrate our addled collective imagination. We're far from done with the crisis of banking and money and the related fiasco in mortgages ― which translates into the very real situation of many people becoming homeless. It remains to be seen what may happen on the food production scene, but the current severe shortage of capital and the intense droughts shaping up around the world will resolve into a much clearer picture by mid-summer. The price of oil has resumed marching up and has now re-entered a range ($50-plus) that spun the airline industry into bankruptcy last time around. Enough carnage has already occurred on the jobs scene that the next act among many chronically jobless may tilt toward desperation, anger, and violence. The sporting goods shops aro und the nation are already rationing ammunition.
It's not just the stock markets that have decoupled from reality as we enjoy the fragrant vapors of spring ― it's the entire conscious consensus of everybody holding the levers of power and opinion. To put it as simply as possible, we're still sleepwalking into the future.
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The wishes of the "green shoots and mustard seed" crowd really hinge on whether the various organs of the suburban economy can be jump-started back to life ― the production home-builders, the granite countertop outfitters, the mall and strip-mall gang, the national chain discount retailers, all the people who make Happy Motoring possible from the factory to the showroom, and, of course, the banks who shovel money into these enterprises.
All these organs of our now-former economy are gravely impaired, and a realistic appraisal of them would have to conclude that they've entered the zone of congestive failure. The choice we face really comes down to this: do we put our dwindling resources and "hopes" into resuscitating those dying systems, or do we move forward to the next chapter of American life, cut our losses, and make new arrangements more consistent with the realities on offer from the universe? To take it a step further, can we remain one nation, a common culture, without such a conscious re-purposing of our collective spirit?
The bizarre spectacle being played out right now by President Obama and his team only adds layers of mystery and mystification to this big question. It is so dispiriting to see Mr. Obama's White House mount a campaign to sustain the unsustainable in the economic realm. Everything they've done for four months involving money management and enterprise policy ― from backstopping hopeless banks, to gaming the bankruptcies of the big car companies, to the bungled efforts to prop up artificially-high house prices ― amounts to a gigantic exercise in futility. Worse, it gives off odors of dishonesty or stupidity, since the ominous tendings of our system are so starkly self-evident.
Not least of the problems entailed in all this are the scary political consequences. It's one thing for a business such as a bank to fail; its another thing for the public to lose confidence in banking, or their own currency, or the credibility of all the people who work in banking, or the authority of those charged to regulate these activities, or the courts and their officers who are supposed to adjudicate misconduct in them. When faith in all these things starts to go, all bets are off for even larger social constructs like democracy, justice, and the destiny of a federal republic.
The Obama White House has very quickly painted itself into a corner on these things. The so-called bank "stress test" couldn't have backfired more completely. Rather than bolster confidence in our money system and the people who run it, it only made the system appear more obviously corrupt. It made the Treasury Department (and the White House by extension) look idiotic for concocting it. Worse, the game of allowing the banks to audit themselves, and cook their books under newly jiggered accounting rules, only made them look less sound and trustworthy, and their executives more venal and mendacious. The stress test scam also virtually guaranteed that the banks will not get another dime out of congress ― even while it is common knowledge that they will desperately need quadrillions more dimes in the months ahead.
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Who knows what the point of this ludicrous exercise was? Observers in all corners of the media saw through it, and the public has only been made more cynical, and is now so furious over related stunts like AIG using taxpayer money to pay back swaps bets to Goldman Sachs that there is a whiff of revolution in the American air for the first time, really, since 1861. A lot of reasonable people see a good chance that our society will sink into disorder if these trends continue, and these fears could beat a path into radical politics, even the frightful prospect of coup d'etat ― not something that I advocate, by the way.
The president is playing with fire on all this. The old economy is not going to recover, and so far he has not used his rhetorical talents to articulate what the next economy is likely to be about. It is reasonable to wonder whether he even really has a clear sense of it ― and, based on the fatuous utterances of his economic mandarins like Larry Summers and Austan Goolsby, this team is really behind the curve.
There are plenty of things you can state about the economy past and future with some confidence right now:
Cheap energy is over and our wishes for alt.energy are currently inconsistent with reality, meaning we have to live differently.
We have to downscale and re-localize our major economic activities: food production, commerce and manufacturing, banking, schooling, etc.
We can't hope to have a stable money system unless we allow a workout of unpayable debt to proceed.
Even if we can do this, universal easy credit is a thing of the past. From now on, we have to save for the things we want and run our businesses and households on accounts receivable.
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Major demographic shifts are inevitable as it becomes necessary to let go of suburbia and reactivate our derelict towns and smaller cities (and allow our giant metroplexes to contract).
We have to face the truth that our major social contracts cannot be met, namely the continuation of social security as we know it and probably all pension arrangements. We'll probably have to change household arrangements to make up for these losses.
Health care will have to go through a revolution more comprehensive than just changing how we pay for it. Like everything else, it will have to downscale, re-localize, and become more rigorous.
We're not going to rescue the banks. The collateral for their loans is no good and it will only lose more value. All those tract houses on the cul-de-sacs of America and scattered on the out-parcels of our tragically subdivided farming landscape will only lose value, one way or another, in the years ahead. Right now they're simply losing inflated cash value ― and that has been bad enough to sink the banks. In the months and years ahead, they'll lose their sheer usefulness as the distances once mitigated by cheap gasoline loom larger again, and the jobs vanish and incomes with them, and the supermarket shelves cease to groan with eighty-seven different varieties of flavored coffee creamers, and one-by-one the national chain stores shutter, and the theme parks, and the Nascar ovals, and the malls, and the colossal superfluous cretin-cargo of consumer nonsense that we've bee n daydreaming in gets blown away in a hurricane of change that we were not ready to believe in.
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Lots of great responses today and I weep just a bit because I just don't have room to publish them all.
Hi Gary-
Like a good scotch, your column just gets better with the passing of time. Count me among those for whom Whiskey & Gunpowder is an eagerly anticipated daily break…whether a columnist resonates with me or not.
Speaking of resonance, you've undoubtedly noticed that whenever a lively discussion with a liberal leads him into a corner from which he has no logical egress, he becomes bellicose, storms away in an indignant huff, and/or resort to hurling non sequitur invectives. I believe this is a defense against that which their subconscious knows is rational, but their conscious level cannot come to terms. This is equivalent to a kid putting his fingers in his ears and yelling "la la la" in order to keep some fact at bay. It isn't always tidy to have your worldview sullied by another. But better the person who listens, considers and learns...
Straight up, room temperature and with a good cigar…
Thank you. I have indeed noticed that fiscally liberal world-improvers tend to respond to logical arguments about liberty and the state with something along the lines of "you're an awful, selfish meanie who doesn't care about his fellow man."
Despite the truth of this, it does nothing at all to validate theft, redistribution and interventionism.
And while I truly relish the idea of my fellow bipeds getting what they got coming, I adore puppy dogs and wish them only the best. I'm no ogre.
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Dear Gary,
May you drown in uncollected garbage, break your bones from bumpy potholes, catch infectious diseases from no more free public vaccinations, and be surrounded by illiterates who have no free education. But please don't stop voicing your opinions. They may seem absurd in the 21st century, but they are refreshing and they have entertainment value. Every century needs a little surrealism.
And you think what? That only government could ever collect my garbage or fix roads I walk? Only government could educate me or take care of me medically? Do you believe that anything is really "free"? Do they have you that brainwashed? But I do see your point and I'll address it after this letter in the form of an intelligent series of questions…
Hi Gary,
I agree in principle with your views on taxes, but I wonder about the practicality of running a modern, complex society (granted taxation is a large component of the complexity) without taxes. From what little history I know of income taxes, it seems they were often implemented as a "temporary" means of funding a war. If we could all learn to just get along and stop fighting, would income taxes be unnecessary? Yes, I'm joking...
But seriously, while most major necessities (infrastructure) could be funded on a user-pay basis, how would we pay for services that are required to keep said modern, complex society operating securely and effectively? How would firemen be paid, for example? Do they respond to enough fires in a year to earn a living wage on a user-pay basis? If that's so where you live, you need to start looking for the arsonist among your neighbours ― perhaps the under-employed fireman would be a good place to start. And when was the last time you personally needed the services of a member of the armed forces, homeland security, FBI, NSA, CIA, etc.? Never, I would guess, or certainly not often enough to have contributed your fair share to those peoples' wages without taxation forcing you to do so ― and the same goes for the vast majority of citizens. So how would people in those types of services be paid without taxes? Or, do you think we could actually do without the m in today's world? What about political leaders, members of local councils, etc.? Can we do without them, too? Do we really need Presidents and Prime Ministers?
Would eliminating all these services not just result in anarchy and chaos? Would you trade that in exchange for being able to keep all your hard-earned money? Would your employer be able to function in such an environment? If not, I guess you wouldn't have any hard-earned money to worry about and taxation would be a moot point with you.
If you or your readers can suggest a viable way to do all this without taxes, I'd like to know about it. Because, frankly, much as I hate taxes, the consequences of foregoing them in today's world ― at least for the essentials ― seem rather less attractive than enduring them. We need be wary of the Law of Unintended Consequences, aka the road to Hell being paved with good intentions.
The definition of "essentials" is, of course, a whole other discussion.
Ah! Excellent questions. This is the sort of thing that libertarian minarchists and libertarian anarchists argue about all the time. I've spent a lot of time arguing with myself over these very matters.
You may read some Rothbard and some Murray for book-length musings, but allow me to say right now that we ought to start with consideration on the proper size and reach of the state. If I had my druthers, states would be no larger than cities…and cities wouldn't be the hundred-square mile conurbations they are today.
Some things just seem to lend themselves to tax-funded, state-run monopolies…like war…but infrastructure immediately leaps to mind. How do you support competition and for things that require long-standing permanent equipment: water, power, communications, and roads?
The need for national defense is largely a result of having a nation-sized nation-state in the first place (or in times past, an especially ambitious and imperially-minded city state). War is the primary business of big governments; defense is the justification they give for taxing the tar out of you and actual hot wars are usually the reason they debase the currency till its worthless. The rest of the time states like to keep busy redistributing wealth from productive citizen-subjects to malingerers with votes for sale.
States are naturally inimical to personal liberty. Any benefits in the form of state services even at the local level that I grudgingly accept come at the cost of some personal liberty…because in this universe you can't get something for nothing.
Cities themselves are just urban fiefdoms. Or perhaps more accurately, the city is a cooperative corporation, a moneymaking operation in pursuit of profit and growth whose citizens (literally and instructively "city dwellers") may vote in new mayoral leadership at regular intervals. Cities are a bit collectivist by their nature, but it's capitalist entrepreneurialism that makes them wealthy and great if exceedingly economically stratified (such is life in the big city).
City residents relinquish gobs of personal sovereignty and no small amount of privacy in exchange for urban conveniences, which often include all sorts of tax-nourished monopolies. Well and good because the city itself doesn't cover the earth. One is free to choose other modes of living with increasing amounts of liberty and its attendant hardships and risks…or at least one used to be able to do so.
The alternatives to the city and its tyranny have been the smaller town, the village and the farm…and if you have the means, the manor. These options require more effort on the individual's part when it comes to basic needs ― like clean water ― and personal security. The city may forbid guns within its borders but it will provide police and emergency services and make sure the municipal water is plentiful and clean…while the private farmer or rancher would be a fool not to have a private arsenal and some basic first aid skill and would have to dig his own well.
When the state metastasizes into its nation-state form, then there are no alternatives, nowhere to go to get away from the leviathan. It's that centralized control that the framers of the Constitution feared ― except for that bastard Hamilton ― but with which we all live today.
The bureaucrats reach into all our pockets no matter where we are to redistribute the wealth as they see fit, fueling inefficiencies and distortions that the market would never allow…and then blame the inevitable misery born of continent-sized centralized planning on capitalism! Or maybe you hadn't noticed?
Here's just a bit from the end of another email:
When one chooses to live under a particular government s/he also chooses to live with the long run policies and customs of the country and its government. That is your freedom of choice!!! Once that choice has been made, some freedoms have been voluntarily relinquished; one has chosen to adhere to the laws of the country. In this case, taxation is a legal function of the government. If one's objection to government taxation of personal income is central to his/her life and being, then that person should exercise their right to choose and get the hell out of this country!!
And go where?
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This sums up the dilemma, Shooters. The state is everywhere. I condone those pockets of state monopoly commonly called cities, but that's with the expectation that I have but to walk beyond the city walls to start regaining my liberty. There is no city wall anymore; nothing to hold the state in check; no place to go where Leviathan doesn't make its weight felt to one degree or another.
If you are also weary of that weight, traveler, then you can rest awhile at this here Whiskey Bar. We're glad for the company.
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