The haunting laugh you hear is from Keynes’ grave and it is directed at Europe and the United States.
Just a few years ago the Europeans scoffed at economists like Nouriel Roubini who predicted that growing debt in places like Greece, Spain, Japan and the U.S. were going to cause grave damage and destroy the economies of those nations. Politicians, instead of reacting to the obvious writing on the wall, reacted instead to the clamoring cries of the proletariat groups who demanded more government benefits. Now look at what appeasing the ignorant has brought the world.
Social programs in Greece were among the most generous in Europe. Hair dressers, for instance, were listed under the “hazardous jobs” category which allowed them to retire on a pension at 50 years of age. No doubt, politicians gave in to the mobs of barbers armed with sheers for fear of their careers being halted. Those same glorified scissor wielders are now facing a 3 year freeze of benefits to be followed by a 14% cut – if they’re lucky. The retirement age is being raised, the benefits are being cut, taxes are skyrocketing, and employment is shrinking. After decades of depending on the government, there are few places for individual redemption to sprout.
This is just one more illustration of the free market’s compassion compared to the socialists’. The citizens of Greece are going to suffer as a whole with the ironic exception of the rich. The socialists (to include the “progressives” here in America) argue against free markets behind the premise that the free market helps the rich alone. This class warfare doesn’t float well in the waters of our current reality. It is in places like Greece, Spain, and even America that we are seeing the rich doing well as the poor suffer, not because of the free market, but because the social programs have become unaffordable and the overregulated economies have suffered under the tutelage of the governments.
More depressing is that the reaction isn’t to turn from the root problem, but to take a second dose – perhaps with the magic “reform” chaser. Greece plans to make temporary cuts, raise taxes, and pray that they can prey on the rest of the EU’s citizens in the form of bailouts. The result will be a temporary relief at best. The rich will not bail out the country, they will bail on the country and, in the end, citizens will have nothing and nobody to turn to but themselves. Perhaps in a generation or two they will prosper again having been forced to learn the lessons in self-reliance.
One would think that this sort of stuff would be transparent enough for government officials to make immediate and necessary changes – but not so. The wonderful dialogue between U.S. Treasurer Geithner and Rep. Paul Ryan displayed the denial that our progressives have in regard to our debt crisis. Here is a bit of that conversation in the context of a skyrocketing budget and the President’s current budget plan.
Geithner has come out and publically said a few things here. Allow me to list them.
1) This administration doesn’t have a long term solution to our debt problem – they don’t even have a plan.
2) This administration’s short term plan does less over the next 10 years than Ryan’s over the next 10 years. Geithner points out that the gap between their plans between 2010 and 2020 is “a pretty small gap”. Of course, small is relative to the insane climb that the debt, as a percentage of the economy, will take in the years following 2020. In 2020 our debt will be around 90% of our GDP – on the same path (Geithner’s path) it will be 400% by 2040. (see 2:45 in video)
3) This administration is aware of the CBO’s finding that, on our current path, the economy will shut down by 2030 (see 2:30 in video) – but Mr. Geithner only speaks to this by saying “we’re going to have some work to do”.
4) This administration understands that the future debt problem is a real threat and on a path that is unsustainable (sees 1:32 in video).
5) This administration understands that the reason our future debt problems are going to skyrocket is because of increased costs for social programs (see 1:32 in video again).
6) This administration, understanding the premises above (point 3, 4, & 5), and in the present context of the economies of Greece, Spain, and other nations, and after the downgrade of our credit rating, still isn’t willing to make cuts on our “benefits” (see 1:50 in video).
There you have it. They are going to continue to spend and they are unwilling to cut social programs in spite of the tremendous unrealistic sustainability of those programs. If the administration is going to keep the programs then where are the cuts going to come from? On that, this administration is silent. If this administration is going to keep the programs then how will we pay for them? The administration is silent on that as well.
Sec. Geithner keeps defending his lack of a position on those issues on the fact that he is dealing with the here and now. That, friends, is the problem with progressive socialism – it doesn’t have a hope in the future and those who pull the strings are only concerned with feeding the mouths that keep them in power RIGHT NOW. They don’t care about your children because your children won’t line their pockets or keep them in power. That is for another generation to worry about – hopefully one that is conservative (aka more compassionate about humanity).
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