Chapter 1
The New Economic Order
America Triumphant
November 1989
saw the fall of the Berlin Wall and the end of the Cold War. The United States
after an exhausting forty year period stood alone and triumphant as the world
hegemon. Yet underneath the surface, new political and cultural imperatives
propelled by the turbulent 1960s era were undermining its economic edifice.
With the end
of World War 2 the United States, as well as the rest of the developed
democracies, sought to construct a safety net through a combination of generous
welfare programs and corporate benevolence. These new policy trends were
carried quite far in socialist Europe and corporate paternal Japan with virtual
guarantees to the right of permanent employment. This was, of course, made
possible by the defense umbrella paid for by the United States. One result was
high European unemployment rates as employers were reluctant to take on
additional workers. America did not immediately follow the European path, but
the trend over the last few decades has been in that direction.
High aspirations
inevitably disappoint. To quote financial columnist Robert Samuelson: “Those
who claim they can cure business cycles, dramatically accelerate economic
growth, or sharply reduce inequality are usually exaggerating.”[1]
As long as the economy is growing neither the private nor the public sector
crowds the other out. However, when economic growth slows or the rate of
government spending is greater than economic growth painful choices
surface. The American commitment to
equality and to diversity, with its powerful cultural imperative kept
expenditures for social welfare programs growing irrespective of the health of
the economy.
The economic
problem remains unsolved and has, in fact, worsened in recent years. Since the
mid-60s there have been seven recessions: 1969-70, 1973–75, 1980, 1981-82,
1990-91, 2001 and 2007-2009. Of more importance is the slowing of economic
growth even in most periods between the recessions. The 1973 and 1981 deep
recessions followed periods of massive inflation; such recessions were the
required cure. The recession of 2001 put an end to the internet bubble. The
most recent recession is quite different; it has not followed inflation
except for the government created housing bubble which is much more intractable
than the usual inventory and overproduction cycles for ordinary goods. And
unlike the internet bubble recession, the subsequent recovery has been
virtually non-existent.
At their best
government policies have been unable to end the cycles of recession and
inflation. In fact flawed policies, as in the recent housing bubble have served
to increase economic instability. Public policy expert Allen Schick has
a skeptical view of government. He notes the existence of entitlements, subsidies,
tax credits and other items that do not directly appear in government budgets.
To control private behavior government has lost control of itself. The growth
of such off budget items he contends is due to “the striving of government to
strengthen its control of the economy, the distribution of income, investment
policy, and the supply of goods and services. The paradox is that in its effort
to extend its control over the private sector, government has surrendered a
good deal of its control over the public sector.” Mathematically, one cannot
have simultaneous maxima in opposing directions as in the famous cliché the
greatest good for the greatest number.
“Varying the level of spending to help modulate swings in the economy,
or to redistribute income, or to strengthen family finances is not wholly
compatible with controlling departmental behavior.”[2]
The massive
expansion of government spending combined with the political imperative of not
inflicting pain has led to an explosion of debt. Between 1977 and 2010 the
Federal debt has increased from $570 billion to $9.4 trillion, a sixteen fold
increase. The orgy of debt has affected all sectors of the economy; household
debt has increased from some $950 billion in 1977 to over $13.3 trillion in
2010. Business debt has gone from $1 trillion to almost $11 trillion and the
debt of state and local government has increased tenfold from $250 billion to
$2.5 trillion over the same period.
Source: http://www.federalreserve.gov/releases/z1/current/z1r-2.pdf
Federal
Government debt continues to increase after 2007 even while debt for the other
sectors has flattened. As a percent of GDP Federal debt went from 28% in 1977
to 65% in 2010. It had previously peaked in the early 90s and then flattened
and declined in the later Clinton and early Bush years. In the last four years
it has turned up sharply. Total debt went from 139% of GDP in 1977 to 248% of
GDP in 2010. One prescient view of the difficulty of reducing public
spending was made in the late 17th century by Member of Parliament Narcissus
Luttrell: “excises are not likely to be got off again when the occasion ceases,
they take root by their many officers … and tho necessity raised them at first,
they are apt to find occasion for their continuance.”[3]
Appendix 1 shows the debt and GDP
numbers.
Source: http://www.federalreserve.gov/releases/z1/current/z1r-2.pdf
http://www.usgovernmentrevenue.com/us_gdp_history
America was in the fortunate position of having a large part of
its debt assumed by foreigners. The last decade has seen foreign holdings of
long term debt balloon from some $3 trillion to $7 trillion. While the holdings
of Japan and Europe have doubled, China has increased its U.S. holdings almost
six fold. Treasury debt has increased continuously, while agency debt has
turned down after peaking in 2008 due to the financial meltdown. (See chapter 2
for more on foreign debt.)
Foreign holdings of U.S. long-term debt securities $billions
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
| |
|
Total
|
2,939
|
3,501
|
4,118
|
4,733
|
6,007
|
6,494
|
6,240
|
6,921
|
|
U.S. Treasury
|
1,116
|
1,426
|
1,599
|
1,727
|
1,965
|
2,211
|
2,604
|
3,343
|
|
U.S. agency
|
586
|
619
|
791
|
984
|
1,304
|
1,464
|
1,196
|
1,086
|
|
China, mainland
|
250
|
320
|
485
|
678
|
870
|
1,075
|
1,226
|
1,479
|
|
Japan
|
514
|
736
|
814
|
827
|
901
|
986
|
1,019
|
1,100
|
|
Europe
|
1,007
|
1,289
|
1,507
|
1,707
|
2,334
|
2,346
|
2,154
|
2,256
|
|
Middle East oil-exporters
|
26
|
34
|
54
|
92
|
125
|
173
|
176
|
14
|
Report on Foreign Portfolio Holdings of U.S. Securities as of June 30,
2010
Department of the Treasury, Federal Reserve Bank of New York, Board of
Governors of the Federal Reserve System
April 2011
With its power to create money and ultimately monetize
its debt, the Federal government can defer the day of reckoning for some time.
This is not the case for states and localities, a situation made even worse due
to their more inelastic revenue base. In ancient Rome a welfare program was
maintained by a land tax; when productivity was low the smaller food dole
resulted in urban riots. “Although modern American cities do not collect taxes
in kind as the Roman emperors did, they must finance an increasing variety of
social services out of the relatively fixed revenues derived from taxes on
land. Even before the tax revolts, municipal revenues from property taxes, in
states like California and Michigan, did not keep up with inflation, or with
increases in fixed costs resulting from local welfare programs.”[4] Furthermore, in the last few decades of the
twentieth century the high costs associated with social services, congestion
and crime afflicting many urban centers, spread to the once tranquil suburbs.
There may be a historical inevitability to the economic situation
of late twentieth century America. Business economist Michael Porter identifies
a stage in the evolution of advanced economies:
The wealth-driven stage is a
stage of drift and ultimate decline because the range of industries in which
competitive advantage can be sustained becomes inadequate to employ the
workforce in productive jobs and support a rising standard of living. … it Is a
‘rich’ nation with some cash-rich companies and some wealthy citizens enjoying
the fruits of the successful industries and accumulated past national
investment. It is often a nation with lofty social goals.[5]
A nation
living on its accumulated wealth while indulging in lofty social goals is one
that is bound for a rapid decline.
Two lofty social goals are cutting-edge health care and
educational achievement for all. Medical science is constantly identifying new
treatable conditions and new advanced technology with which to treat them. The
resulting skyrocketing costs in meeting the rights of everyone to such state of
the art care are adding an enormous fiscal burden to the swollen federal and
state budgets.
The enormously expensive, yet failing, education system is
an even more obvious example of an ill-considered lofty social goal. The
failure of American education has been evident since the early 1990s. In 1966 entering
freshmen averaged 466 on the verbal college boards, in 1992 it was 422; this
despite a 25% inflation adjusted increase in school spending.[6]
The costly ineffectiveness of American
education is a direct result of decades of social engineering. Politicians and
administrators, willfully oblivious of group differences and obsessed by the ideology
of “diversity“, have embraced the notion that “disadvantaged” students must be
put on the path to higher education. At the same time resources are shifted
away from gifted students. A Rand
Corporation study found that low-achievers benefited slightly from being placed
in mixed-ability classrooms, but at the expense of the high achieving students
who fared much worse. A 2008 teacher survey found that 60 percent of
respondents acknowledged that less able students were the top priority, 23 percent
said that talented students were the priority. Moreover, an overwhelming
majority of respondents reported that the stragglers and not the achievers
received the teacher’s personal attention.[7]
The explosion in elementary and secondary school spending
is accompanied by an explosion in expenditures for college. From 1982 to 2007 tuition
and fees increased 439 percent, three times the increase in median family
income. The driving force behind this increase is the very idea that has
infected elementary and secondary school education, namely that all students
should attend college. In addition taxpayer guaranteed student loans have
enabled colleges to massively hike tuition. And the higher tuitions then
trigger even more taxpayer funding. Such a positive feedback loop has caused
student loan debt to skyrocket.[8] Moreover, as noted by columnist Heather
MacDonald, “rising tuitions funnel straight into the preposterously unnecessary
diversity bureaucracy and the rest of the burgeoning student-services
infrastructure, as well as into the salaries of professors who teach one course
a semester, the arms race of ever more sybaritic dorms and social centers, and
the absolute monarchies of the football and basketball programs.”[9]
One sign of economic decline is a slowdown in income accompanied
by poor productivity growth
The post-World War Two record on productivity growth from
the Bureau of Labor Statistics (http://www.bls.gov/lpc/prodybar.htm) is as
follows:
Productivity change in the nonfarm business sector, 1947-
2011:
Average annual percent change
1947-1973 2.8
1973-1979 1.1
1979-1990 1.4
1990-2000 2.1
2000-2007 2.5
2007-2011 1.9
The first half of the postwar period showed the highest
growth in productivity followed by a dismally slow rate until the 1990s. The
pickup starting in the 90s is emphasized by the data from the manufacturing
sector:
Productivity change in the manufacturing sector, 1987-2011:
Average annual percent change
1987-1990 1.8
1990-2000 4.1
2000-2007
3.9
2007-2011 2.2
Financial economists Nouriel Roubini and David Backus
list the following as possible causes for the post-73 productivity slowdown:
1970s energy crises, end of postwar technological boom, low investment and
savings along with high taxation, burdensome regulations, deteriorating
infrastructure and decline in research and development. They also include two
additional factors without elaborating on them: sociological explanations and decline
in quality of education.[10]
We have seen how the decline in education may contribute to economic decline.
The intriguing sociological explanations category may easily include the
affirmative action drive and the diversity obsession. These are elaborated in
the section below and in subsequent chapters.
The apparent productivity rebound after 1990 may be
caused by corporate restructuring, reengineering, and downsizing as well as by
the new computer and information technologies. However, a new statistical
method of measuring productivity beginning in 1995, the chain-weight method showed
that such productivity growth may have been greatly overestimated.[11]
Indeed, some analysts have raised questions
regarding the accuracy of the most recent post 2007 reported productivity gains
contending that the actual
productivity gains were in fact almost zero.[12]
The postwar stagnation that first struck Great Britain
and later the United States stands in contrast to the experience of Japan and
Germany. One observer, Mancur Olson, contends that by losing the war Japan and
Germany were able to experience record growth, while the US and Britain did
not, because in the first two the vested interests with excessive benefits
stifling the economies were destroyed. “He sees a gradual but pervasive cause
of economic decline in the political organizational mechanisms of modern
democracies – especially the desire of broad spectrums of the population for
goods available to all, without the necessity of paying for them.”[13]
As shown below and in subsequent chapters this pervasive cause of decline is
largely the result of the ideology of diversity accompanied by various forms of
affirmative action and the immigration induced growth of poverty.
One result of economic decline has been to change the
very map of prosperity with affluent and impoverished areas increasing at the
expense of the middle. A recent study of census data shows that between 1970
and 2007 families living in middle income neighborhoods declined from 65 to 44
percent while those living in either affluent or poor neighborhoods rose from
15 percent to one third. [14]
The causes of this changing income structure will be further explored in
subsequent chapters.
While the economic time bomb continued to click away,
their full extent remained hidden for many years. By the mid-90s even acute
observers like Robert Samuelson did not fully apprehend the damage:
“We are warned
that we are being ‘taken over’ or that a flood of cheap imports is depressing
American living standards. None of this is true.”[15]
At that time imports were at 11%, and exports constituted 10%, of the GDP. But
now 16 years later the rise of China has become a major factor. The mid 90s was
the calm before the storm. It could be said regarding the economy that it “seems
sounder in the mid-1990s than it has in years. Workers … have near record
incomes. Inflation has subsided and productivity growth has modestly improved.”[16]
However, even in such calm waters Samuelson was quite
concerned about America’s ability to deal with nuclear proliferation,
terrorism, protecting energy supplies or a global financial crisis.
Successfully navigating these troubled waters was critically dependent on
national strength and social cohesion. A
nagging sense of disquiet about the future did lead Samuelson to a chilling and
accurate prognostication. “Perhaps we
are being hurled toward some future crisis, whose shape we cannot perceive and
whose occurrence would permanently change us. Perhaps that crisis will be
domestic, but it might also be foreign, because there is an obvious connection
between how Americans handle themselves at home and how they conduct their
affairs abroad.” [17]
And we have indeed been hit first by a crisis originating abroad and then by one
of domestic origin. And as with the vast sums spent on education that does not
educate, there are also vast sums devoted to defense that does not defend.
The Breaking of the Social
Contract
One thing above all else characterizes the new economic order. That being
an outright war waged against the great American middle; the middle class and
the productive working class. Financial commentator Lou Dobbs frames the issue well:
“America has become a society owned by corporations and a
political system dominated by corporate and special interests, directed by
elites who are hostile -- or at best indifferent to -- the interests of working
men and women of the middle class and their families.”[18] In
addition to corporate special interests, the country’s middle class is also
under assault by media and academic elites; those who prior to the 1960s were
among its staunch defenders.
The social
contract between American business and workers that had evolved in mid-20th
century America provided basic health and retirement benefits. These covered
over half the workforce by 1990. But the Clinton-Bush trade deals destroyed
that compact forcing thousands of companies into bankruptcy. Many others to
survive, including socially conscious firms such as Levi Strauss, were forced
into outsourcing production; in many instances closing all of their U.S.
factories. For many of the firms keeping facilities in the U.S., workers were
required to train their low cost replacements with their severance pay held
hostage. All of this left the Pension Benefit Guaranty Corporation with an
unfunded liability of $19 billion by 2007. Millions have been left with no
pension plans or health insurance.[19] Hence
the way was paved for the new health insurance legislation with all of its
attendant problems.
The mainstream media, self-appointed enforcers of the new
orthodoxy, are quick to demonize any who dare question or simply allude to the
assault on the middle. Thus Lou Dobbs lost his platform on CNN as a result of
his staunch defense of the interests of the American middle class. More
recently, Republican candidate Mitt Romney ignited a firestorm with the
following remarks: “I’m in this race because I care about
Americans. I’m not concerned about the very poor — we have a safety net there.
If it needs repair, I’ll fix it. I’m not concerned about the very rich —
they’re doing just fine. I’m concerned about the very heart of America, the 90
to 95 percent of Americans who right now are struggling.” When pressed by his
zealous interlocutor he added: “I said, I’m not concerned about the very poor
that have a safety net, but if it has holes in it, then I will repair it.” He
added a specific concern about the middle class as being “the people that have
been most badly hurt during the Obama years.” Media outlets reveled in the
opportunity to pile on Romney’s “callousness” toward the poor. For once, a politician expressed some concern
regarding middle class America and was immediately pilloried by the elitist
media.
The plight of the middle class is expressed by increasing
income inequality, a condition that first became apparent in the early 1990s.
Under the new economic order inflation was controlled by holding wages in check
via job insecurity. This was accompanied by a growing income gap between the
wealthy, the middle and the poor. Under this new order the compensation of the
top corporate elite exploded through bonuses and options which depended on
short term income and stock prices; and these were subject to gimmickry and
manipulation.[20]
The gap between those at the top and those at the bottom
and between college and high school graduates has increased greatly since 1980.
The share of income at the very top has increased dramatically. Some of the
increase in inequality may be due to demographic changes such as more single household heads and two earner
couples; however a large proportion of this is due to other causes. One cause,
to be explored in a subsequent chapter, is America’s eroding manufacturing
base. Another factor is that of mass immigration which has been “bringing in
people at both the top and the bottom, widening the gap between the two.”[21]
Income inequality and the immigration dimension are examined in chapter 3.
The inflation of the 1970s was another factor in the
breakdown of the postwar social contract with its better working conditions,
health insurance and secure pensions. The
inability of government to continue adequately managing the business cycle
ignited the restructurings, buyouts,
layoffs and early retirement packages that became common in the 1980s. Economic
insecurity became pervasive along with a lingering distrust of government
economic management. Financial historian
James Macdonald describes the situation briefly but accurately:
High inflation could, perhaps, be excused in time of
war, but not in a time of peace and unparalleled prosperity. … Perhaps the most shocking thought was that
governments were profiting at the expense of the unsophisticated, whose savings
it had hitherto been their appointed role to nurture and protect.[22]
Once inflation
was tamed the expansion of domestic and international finance became a source
of both growth and instability. A great real estate bubble was engendered by
new methods of securitization. However a continuing series of financial crises
resulted: the 87 stock market crash, the Asian financial crisis, the Long Term
Capital Management failure, the bursting of the internet bubble and finally the
great real estate bust.
Thus, even
during periods of relative macro stability individuals and companies have
become less secure. The early Post WW2 period saw the commitment to stability
and security but gradually the idea of security was shed to re-establish
stability. And now there is neither stability nor security. Some twenty five
years ago financial economist Henry Kaufman observed
that “a democracy oriented toward an unaffordable egalitarian sharing of
production, rather than toward an environment of equal opportunity, makes it
virtually impossible to impose the ongoing discipline required for long-term
stability and growth.”[23]
At one time, previous to the social movements of the
1960s, such concerns were not limited to fiscal conservatives like Kaufman, but
were widely held. The provision of entitlements without any requirement for
individual responsibility was viewed as destructive. Even the liberal icon
Franklin D. Roosevelt asserted that “the
lessons of history, confirmed by evidence immediately before me show
conclusively that continued dependence upon relief induces a spiritual and
moral disintegration fundamentally destructive to the national fiber. … It is inimical to the dictates of sound
policy.”[24]
Unfortunately the Great Society Democrats from the 1960s have discarded the
notion they used to hold that help must be focused on the deserving poor just
as the Republicans have abandoned the principles they once had that working
Americans must be protected from unfair foreign competition.
The opposing
ideas originating in 19th century financial policy are still
current: liberal trade vs. protectionism, balanced budgets vs., deficit
spending, low taxation to encourage investment vs. steep progressive taxation
to support redistribution. “Altered conditions often lead to their application
in circumstances and for purposes that their original proponents never intended
and could not possibly have foreseen. A stream of unintended consequences is as
old as society itself.”[25] Economic
historians Webber and Wildavsky trace the roots all the way back to ancient
times. As King Rehoboam splintered ancient Israel through an excess tax burden
so it is clear that heavy taxation can forfeit the allegiance of a substantial
portion of a population:
Protecting a way of life, modifying it, or rejecting
it in favor of another, are the global objectives of political regimes. Taxing
and spending are adjuncts to these objectives, not the objectives
themselves. … Though rulers may govern
to tax (and spend the proceeds, of course) rather than tax to govern, this says
as much or more about the social order embodied in political institutions than
it does about budgetary practices. … Had Rehoboam and his advisers merely been
foolish, we might criticize their personal shortcomings. … But Rehoboam’s actions represent an
intensification of his father’s policies; and Solomon’s reign offers a
paradigmatic example of the institutionalization of hierarchy. Bureaucracy,
through a minute division of labor, greatly expanded the royal household. … The
classic abuses of hierarchy appear: public opulence and private squalor;
spending commitments requiring ever increasing revenues; entangling foreign
alliances.[26]
The great entitlements that have become most fiscally
problematic revolve around retirement and health care. In 1979 62% of pensions were defined benefit, 16% defined contribution
and 22% a combination. In 2005 these figures reversed with 63% defined contribution,
10% defined benefit and 27% a combination. “The web of formal and informal
guarantees that protected many workers from joblessness, steep health-care
costs and poverty in old age has shredded. The major corporations that once
bore these risks have transferred them to the workers themselves, pensions
being a clear example.”[27] Even
so most companies still make sizeable pension contributions, most full time
workers are still covered; the exposure of the ultimate guarantor, the U.S.
taxpayer has increased in these times of stagnation. One obvious way of easing
the burden on both companies and social security would be for people to
work longer. Life expectancy has increased and work has become physically
easier. It can also be expected that many workers would be happy to feel that
they are still socially useful even in their seventies. One great obstacle is
the welfare state and its resulting inflexibility and mentality. Samuelson
recommends increasing the full Social Security retirement age to 70 by the year 2015 with age of minimum benefits
gradually raised to 64. “People live longer; they ought to work longer. As a
society we need to maintain our productive base.”[28] One
might also suggest that accompanying such changes should be the same sort of
zealous commitment to equal opportunity and affirmative action for the older
population as government has pursued for other more favored groups. In
addition, there should be a drive to make working conditions friendlier for
older workers – flexible hours, more part time work etc. – just as there was a
drive toward the seven day 35 hour week.
Regarding health
insurance, portability, and extending COBRA would have been simpler fixes than
the cumbersome and problematic legislation that was recently passed. These
would have reduced the health insurance problem down to more manageable
proportions. And also reducing the illegal alien population would cut down the
problem still further. But such policies
would not conform to the diversity cult and the leveling obsession which requires
not that health care be available to all, but that equal health care be
provided to all as well as to all those abroad with the wish to come here.
Rise of the New Elites
The new
ideologies underlying the transformation of America arose in the turbulent
period of the 1960s and early 70s. These were, of course, not wholly original.
They represented a creative re-working of social and economic philosophies
originating in the Enlightenment. The principal strand of thought was the “new
left” which received its impetus from the civil rights and anti-Vietnam war
movements. The rise of a class of alienated intellectuals in an affluent
capitalist society was noted by economist Joseph Schumpeter. The very affluence of America supported a cadre of social critics who
pressed for government to solve an ever expanding list of social problems while
attacking the very pursuit of profit underlying that affluence. Schumpeter
predicted that “social sympathies” would grow in direct proportion to revenues
leading to such a mania for spending other people’s money that excessive
taxation would eventually cause economic decline.[29] This
adversary culture underwent a hothouse growth among academics, students and
members of the media. Accompanying their social activism was the more private
drive toward “self-fulfillment”, leisure and the abolition of inhibitions
resulting in the growth of the drug saturated “hippie” movement along with a
variety of experiments in new social arrangements such as communal living.
In the documentary film Generation Zero the producers
show how this spoiled and self-involved generation which came of age in the 60s
and 70s marched through the institutions transforming themselves from idealists
to greedy power and wealth seekers and ignited the current economic unraveling.
In the summer of 1969 there were two competing visions of America; one
represented by the moon landing, the other a few weeks later by Woodstock. In
the period 1966 to 1986 the “children of plenty” with all of their moral
self-righteousness came of age. While one strand of thought resulted in the “therapeutic
movement”, another strand had a distinctly harder edge. This was represented in
the teachings of Saul Alinsky and Cloward and Piven who had little use for
hippie self-indulgence. These writers emphasized attaining power and advocated using
the regulations of the “system” and bureaucracy to create bankruptcy, crisis
and ultimately revolution. Disruption should come from within as well as from without
the system. And the pursuit of power ultimately propelled the members of the
60s generation from the streets and campuses into the corporate suites and
government offices. By the 90s the “elites from the 60s” had captured the
institutions of government and the unraveling was set in motion.[30]
Thus the crisis of depression and war was followed by the
stable but emotionally “deadened“ 50s and then the awakening of the 60s and the
rise of the “me” generation. Beginning in the late 80s this generation assumed
the leadership role in society and, ironically these “anti-materialists”
ushered in the “money culture”. The hippies became yuppies. The Democratic
Party became the “Party of Davos”, a party of global financiers who set out to
transform American society and an incestuous linkage developed between Wall
Street money and Washington. In the 90s the baby boomers now set out to
corporatize the Wall Street partnerships. Thus individual risk was eliminated
and fell on the shoulders of the shareholders and taxpayers. The baby boomers
allowed their greed to run rampant. For example, the Bear Stearns “exception”
allowed the expansion of leverage for the five large Wall Street investment
banks: Bear Stearns, Morgan Stanley, Merrill Lynch, Lehman Brothers and Goldman
Sachs. The new political class looking out only for bankers, Hollywood
producers and the high-tech community abandoned large sectors of manufacturing.[31]
By the beginning of the year of crisis 2008, social
engineering was shot through the entire economic and financial system. Big
business served the social agenda of big government; the various elites have
joined forces. The overprotected 60s generation brought about the very crisis
that their parents had desperately tried to spare them from. That generation created the financial
Armageddon. It was a real world demonstration of the 60s ideas; an abdication
of responsibility. That generation squandered the wealth that had been so
carefully accumulated for decades.[32]
So it was that the 60s generation of radicals completed
their long march through the institutions. Protected by the economic boom of
the 80s and 90s many one-time 60s radicals became quite content living the good
life while they, supposedly, dispensed social justice. The ex-radicals joined
with an older strain of postwar entitlement liberalism that believed in
America’s ability to maintain prosperity, promote racial understanding and
establish world peace. Happiness itself, not simply its pursuit, became a
right. In addition, equality of outcome in employment and education replaced
equality of opportunity as the goal. Samuelson in 1995 pointed out the illogic
of this extension of “rights” as follows:
Advancing
happiness, preserving liberty, and promoting equality are not just objectives.
They are ‘rights’. Government exists to advance and protect these rights.
Nothing could be hostile to limited government. Happiness and equality are hard
to define and harder to attain. They are not specific tasks such as defending
the country or collecting the garbage. They are deeply subjective and
infinitely elastic. A government expected to make its citizens happy and equal
faces an impossible mission. It can succeed at many of its appointed roles and
still fail at its overarching purpose. Such a government is utterly open-ended,
because the obstacles to happiness and equality are unending.[33]
Furthermore, since “equality is an unrealistic goal, its
attainment remains permanently elusive. Successive remedies seem fraudulent, as
new forms of inequality are discovered. If poverty persists, despite the
government’s efforts and pledges to end it, then the poor must be victims of
unequal schools, or health care or housing that perpetuates their poverty.”[34]
Differences in ability or intelligence as between groups must be discounted;
indeed the very thought that such differences might exist must be turned into a
societal offense. Nor was it only the former radicals and old-time liberals
that fostered the new progressivism. They were joined in a government-business
alliance to “end poverty” and promote “social justice” by many in the Republican establishment as well.
Globalism was another major theme of the new American
elites; a theme shared by their counterparts abroad. One factor enabling the
new globalization was the restored strength of the dollar in the 80s which
renewed its position as the reserve currency. One of the goals of globalization
was the integration of the former Communist and socialist countries into the global
economy after 1989. It did not take long for the good-intentioned members of
the elite to discover that they could use globalization to do very well for
themselves.
The leaders of the transnational corporations enabled by
Clinton and the two Bushes found that cheap foreign labor held the potential
for great profit. Nor was it only businessmen who benefited. Politicians,
regulators and government officials at all levels shared in the booty. These
often passed through a revolving door becoming lobbyists or executives in large
global firms. This was a particularly
acute problem when it came to Wall Street firms. Former ambassadors have become
lobbyists for the very nations they were once posted to. Saudi Arabia and China
are particularly notable for employing this squad of one-time diplomats. The
growth in the salaries of top executives and lobbyists constitutes a perpetual
lure for many one-time public servants. The new elite has taken advantage of a Washington
political environment that openly tolerates influence peddling. Politicians are
tempted to sell out U.S. national interests for campaign contributions from
both global corporations and foreign interests. Chinese diplomats along with banks
and corporations doing business in China have been foremost in exerting
influence at congressional hearings, think tank briefings and public policy
events.[35]
The members of the new elite, whether ex-radicals turned
moderate, old-fashioned liberals or “compassionate conservatives” share a
common globalist vision. Furthermore, members of this elite have now turned
into a permanent governing class as illustrated
by the fact that a Bush or Clinton has been at the head or near the top of the
federal government for the last 30 years. There was Vice President and then President
GHW Bush, President Clinton, President GW Bush and Secretary of State Clinton.
There have been other political dynasties over the past half century, most
notably numerous Kennedys and Rockefellers with younger members still waiting
in the wings. The different elite factions and dynasties may shift in and out
of power but they are always present in government and major corporations with
only slightly nuanced differences in their commitment to globalization.
And this policy commitment has accelerated over the last
quarter century resulting in growing
U.S. dependence on other nations for energy, technology and even food. Economist
Pat Choate notes the result of these growing transnational economic webs on
American economic independence. “The succession of presidents from Eisenhower
through Reagan never allowed other nations to manipulate these webs in a way
that made the United States dependent on them for technologies or goods
essential to America’s security or economy. Yet the elites who have dominated
the administrations of Presidents George H.W. Bush, Bill Clinton, and George W.
Bush have actively pursued policies that have pushed the United States into
that dependency trap.”[36]
Much to the chagrin of the new elite globalization was
not without its opponents. On the left were those unreconstructed 60s style
radicals who stubbornly refused to accept the project pushed by their one time
colleagues in the Democrat Party. There were also those who held to a belief in
national sovereignty and others with a quaint notion of patriotism. A report
under the auspices of the Trilateral Commission illustrates the anxieties the
moderate liberal elite had regarding their globalist projects. Written in 1975
early on in the globalization drive this shows a general distrust of existing
populations; it is noteworthy that Director of the Trilateral Commission,
Zbigniew Brzezinski wrote the introduction. The European viewpoint is presented
by Michel Crozier in the following passages; a view shared by American globalization
advocates:
It
will be necessary, therefore to resort to manipulation, compromise, and even
coercion in order to arrive at a decision. …. In order to achieve
implementations of these decisions, bureaucratic means are supposed to insure
accurate and impersonal compliance.[37]
But
the advocates of European unity have stumbled too long on the obstacle of the
central states’ nodal power, which the present crises have reinforced even
more, to maintain hope for the near future. Investments in a European common
capacity remain nevertheless indispensable not only for Europe’s sake but for
each country’s capacity to overcome its own narrow determinisms.[38]
Even the American realist Samuel Huntington echoed these
concerns, bemoaning the loss of confidence in government and excess democracy,
noting that “a strong government will not necessarily follow more liberal and
internationalist economic policies, but a weak government is almost certain to
be incapable of doing so.” However, he expresses the reasonable fear that a
government “which is committed to substantial domestic programs will have
little ability, short of a cataclysmic crisis, to impose on its people the
sacrifices which may be necessary to deal with foreign policy problems and
defense.”[39]
Huntington expresses a fundamental principle of the new
elite when he states that “in many situations the claims of expertise,
seniority, experience, and special talents may override the claims of democracy”.[40]
Still more disturbing is the implicit view in the following quote that
importing whole new passive and non-active populations would be useful, a view
that Huntington later in life, with his concern over the clash of civilizations,
would have likely repudiated:
Second,
the effective operation of a democratic political system usually requires some
measure of apathy and noninvolvement on the part of some individuals and
groups. In the past, every democratic society has had a marginal population, of
greater or lesser size, which has not actively participated in politics. In
itself, this marginality on the part of some groups is inherently undemocratic,
but it has been one of the factors which has enabled democracy to function
effectively.[41]
The various globalist factions, ranging on the left from the radical or former radical elite to moderate mainstream liberals through
mainline fiscal conservatives and free market libertarians on the right, are
united by the ideology that the late
economist John Attarian calls economism. This is the belief that all aspects of
life can be reduced to one involving only production, exchange and consumption
with all individuals being interchangeable objects and that neither culture nor
history are of any importance.
A
corollary is that noneconomic phenomena, such as national sovereignty,
autonomy, identity, cultural continuity, or even simply maintaining one's way
of life undisturbed, are far less important- or even nefarious. More affluence
therefore not only compensates for loss of noneconomic values, but makes one
better off. Those who dominate our economy and politics treat the noneconomic
values of others as expendable, and the consent of those whose noneconomic
values suffer as purchasable with economic betterment.
This presupposes that people are essentially
economic agents whose noneconomic characteristics do not matter -
interchangeable parts in mechanisms of production, exchange and consumption.
This presupposition also informs free marketeers' perennial brag that
capitalism is the best cure for discrimination.[42]
Economism became
a particularly popular viewpoint among extreme libertarians. Most of those are
also a product of the 60s ‘TV generation’ worldview. Ayn Rand’s philosophy
became a fashionable alternative to the new left Marxist ideologies.
Libertarianism was also attractive to some new left anarchist types once they
became disillusioned with tyrannical Communist central economic control.
Another former new left group turned their disillusionment with communism and
their concerns for national security into neo-conservatism. Economism also
appealed to those mainstream Democrat liberals who rejected Marxist extremes.
Hollowing Out of the American
Economy
Under the
rule of the new elites and their ideologies of equality, diversity, globalism
and economism, the U.S.
economy has been progressively hollowed out. Samuelson highlights three factors
that have subverted the American economy: the welfare state,
the democratization of credit and globalization.[43]
We have already seen the deleterious effect of the welfare state,
particularly when combined with the propensity to discover ever new
entitlements and to require equality of outcomes for all groups. The economic
impact of this new welfare imperative along with its chosen implements,
diversity and affirmative action, are examined in the section following. The democratization
of credit has played the decisive role in triggering the housing collapse and
resulting recession; chapter 6 will examine this in detail. The push toward
globalization in combination with economism has resulted in the great American
obsession with free trade. This is responsible for the erosion of American
manufacturing capacity. The globalist ideology in combination with those of
equality and diversity has resulted in the greatest mass immigration in U.S.
history; an immigration with seemingly no end that continues even in the face
of mass unemployment. The deleterious economic effects of trade and immigration
are examined in subsequent chapters.
There is one additional factor behind America’s
hollowed-out economy; the extreme orientation on the short-term. This stands in
stark contrast to the East Asians; with their long-term orientation they easily
outcompete U.S. companies. The excessive concentration on short-term results
has become increasingly acute over the last two decades with the rise of the
hedge funds. These new playthings for the elite have become one of the most
important forces in stock trading, corporate
takeovers and restructurings. In 1980 institutional investors held 37% of U.S.
equities; by 2005 this had increased to over two thirds. They have also caused
a great increase in stock turnover. In 1970 the turnover rate was less than 20%
per year; by 2000 it was 103%.[44]
Hedge fund
executives receive enormous compensation; in 2005 the top ten managers were
paid more than $7 billion. They are also well poised to take advantage of tax
loopholes holding out the carrot of campaign contributions to politicians and
jobs for former employees of regulatory agencies. Some hedge fund
multibillionaires, now that they have made their money, are ironically great
advocates for ‘shared sacrifice’ on the part of others. In addition, without
any acknowledgment of the contradiction between their words and their deeds, they
have also persuaded various congresses and administrations to exempt them from
reporting on many of their activities. These funds exercise enormous influence
on the national and global economy. The myopic investment policies of the funds
in favor of short-term results lead to a diversion of capital from long-term
production into short-term speculation.[45]
The inability to
consider future consequences afflicts all members of the elite, government and
academic as well as business, and determines our trade, immigration and social policies.
The warning of Sir James Goldsmith about the hollowing out of the economy
has come to pass; millions of workers have been forced out of good-paying jobs
into low paying positions without benefits.[46]
The prospects are concisely summarized by Choate: “These companies and
financiers and the campaign-fund driven politicians they support are
transforming the United States into a corporately governed nation, the mass of
whose citizens face an increasingly bleak future.”[47]
Cost of Diversity
Diversity is yet another major obsession of the contemporary elite. Of course, endlessly
pressing diverse groups together must ultimately end not in diversity but in a
dreary monotony. But long term vision, as we have seen, or simple logic for
that matter, has never been a strong suit on the part of the new elite. Apart
from that diversity is rather costly in an economic sense.
Immigration policy is one obvious area affected by the cult of diversity.
The costs of mass immigration have been evident for over twenty years; yet
nothing is done to stem the flow. Samuelson acknowledged this cost but ends on
a hopeful note. “More single-parent families and immigrants
have aggravated inequality. For example, two fifths of the increase in poverty
… since 1980 has occurred among Hispanics – often immigrants or their children.
With time, many will move into the middle class.”[48]
However since this was written in 1995, there has been no indication of a move
into the middle class for the great bulk of Hispanic immigrants. It has not
been happening and many of the experts have seen their expectations regarding
Hispanic immigrants not fulfilled. Any movement into the middle class and into
assimilation has been quite diminished by further waves of unskilled Hispanic
immigrants. Moreover, immigration has added to the effects of trade in
increasing the unemployment of native workers with all of its associated costs.
These costs are examined in detail in chapter 3.
A little discussed but massive economic drain is the cost
pursuant to affirmative action. This initiative, a result of the diversity
mania combined with the entitlement mentality, pervades all levels of
government, business and academia. Originally the idea was to insure that equal
opportunity be provided to a much discriminated against group. Affirmative action was than deemed necessary
to bring African-Americans into a level playing field with the rest of the
population. What was deemed as a temporary expedient, however, turned into a
permanent program and rapidly spread to other aggrieved or disadvantaged groups
including that of recently arrived immigrants. Affirmative action entails not
just equal opportunity but equal group outcomes and is enforced through
mandated quotas. These quotas often result in the advancement of the less over
the more capable. In fact, as Samuelson pointed out almost twenty years ago: “The
resort to government in the postwar era was an effort to erase some of the
worst forms of inequality and unfairness, and if the effort is now choking on
its excesses, we should not think that all unfairness and inequality will
miraculously vanish if we implore people to be more responsible.”[49]
Affirmative action imposes additional direct and indirect
costs on the economy. The myriad of
subtle hidden costs are illustrated by the principle of comparative advantage.
For example, a comparative advantage argument may be applied to affirmative
action job differentials as in the qualified chemist who works as a medical
technician while an under qualified chemist, who should work as a technician is
hired as a senior researcher. The recipient of affirmative action would have
lower productivity in both positions; however his lower productivity is more
than compensated for by the much greater productivity that would result if the
qualified chemist were in the more demanding job.
To be sure, these indirect and hidden costs, while
undoubtedly quite large, are difficult to measure. On the other hand, the
direct costs of affirmative action are more quantifiable; but even these can be
difficult to estimate. One economist who makes a stab at estimating the entire
cost of affirmative action is Edwin Rubenstein in his 2007 paper “Cost of
Diversity”. He updates a calculation from Peter Brimelow who calculated
cumulative affirmative action costs as four percent of GDP or $225 billion, for
the year
1991. Projecting forward to 2007 the current cost of affirmative
action programs would be $540 billion. Moreover if the cost of affirmative
action compounds annually it could now amount to eight percent of GDP for a
$1.1 trillion loss.
Rubenstein then estimates the approximate total and per family cost by
ethnicity[50]:
|
Affirmative Action Costs and Benefits by Race
| ||||
|
2007
| ||||
|
($
billions except per family)
| ||||
|
Costs
|
Benefits
|
Costs-Benefits
|
Net costs- Benefits per family
| |
|
White
|
$1,408.10
|
$96.80
|
($1,311.30)
|
($24,165)
|
|
Black
|
$26.90
|
$186.10
|
$159.20
|
$17,589
|
|
Hispanic
|
$30.50
|
$210.90
|
$180.40
|
$18,284
|
|
Asian
|
$134.50
|
$6.20
|
($128.30)
|
($40,002)
|
|
Total-all races
|
$1,600.00
|
$500.00
|
($1,100.00)
|
($14,400)
|
Clearly the table confirms the view that affirmative
action has a large negative impact on whites as well as those of Asian descent.
Even if the cost of affirmative action were one half or one quarter of this
estimate it would still represent an immense economic burden.
To be sure, the above estimates of total costs include
many which are extremely large but difficult to estimate directly. These
include, as in the example given above, the costs of misallocated resources and
various opportunity costs, as well as costs related to fraud. It is easier to
obtain an estimate of the direct costs of administering the various affirmative
action programs. The cost of running the primary federal affirmative action
agency, the Equal Employment Opportunity Commission was some $324 million in
2007. He estimates that the expenditures of all of the agencies involved in affirmative
action monitoring and enforcement would be $1.8 billion. In addition the Center
for the Study of American Business estimates that 20 dollars is spent for compliance
by business and other private institutions for each dollar spent by the
enforcement agencies giving a total cost of some $36 billion. Finally, it is
also possible to obtain an estimate of the premium over competitive bidding
that must be paid on contracts to minority and female-headed enterprises; these
may have cost taxpayers an extra $3 billion.[51]
In the case of expenditures for transfer payments, these
are in direct proportion to the increase in “diversity”. Impoverished
immigrants and refugees with the accompanying increase in population along with
increased native unemployment all lead to a large expansion of the welfare
state and a strain on the social safety net. To this must be added
globalization induced job loss and the demands of native groups to be kept on
par with newcomers. As in the case of the opportunity costs of affirmative
action, government outlays financing transfer payments have absorbed resources
that might have built up permanent capital. Kaufman affirms this effect of
transfer payments. “Huge social claims have come into existence in the form of
transfer payments of governments, private and public pension funds, and
government regulation, with little regard for the ultimate impact these social
costs will have on our productivity, on our international competitive position,
and on our individual economic behavior.” [52]
Closely related to diversity is the doctrine of multiculturalism
which has become entrenched in U.S. culture and education. The assumption
underlying multiculturalist thought is that the values of numerous different
cultures are to be cherished and can coexist equally and harmoniously within
one society. Multiculturalism has become a rather expensive societal whim.
For one thing, the lack of trust inherent in the
existence of many different cultural groups has a direct effect on the
transactions costs of doing business. A study by political scientist Robert
Putnam with data adjusted for class, income and other factors showed that loss
of trust was directly proportional to the number of people of different races inhabiting
the same community.[53]
Rubenstein notes the work of a number of
scholars quantifying the deleterious economic effects of cultural diversity:
There
are scholars who have assessed empirically the influence of cultural diversity
on economic
development.
The primary argument—which can be traced to Aristotle—suggests that diverse
statesare more susceptible to development-inhibiting internal strife than their homogeneous counterparts
are…. Following Tocqueville (1873), Duetsch (1953), and Banks and Textor (1963), Adelman and
Morris (1967) gather the data for 74 less developed countries from 1957 to 1962 and rank each
country on a 10-point ordinal scale of diversity. Their results, based on factor analysis, support their
hypothesis: homogeneous countries typically had higher growth rates. Haug (1967) finds a negative
correlation between per capita GNP and cultural diversity based on the data of 114 countries in
1963. Reynolds (1985) compares 37 less developed countries from 1950 to 1980 and, again, indicates
that cultural diversity results in lower growth rates. He suggests that this may be due to a sense of
alienation among peoples. In other words, reaching a consensus on policies favorable to economic
development, especially for the long run, may be difficult when groups have different interpretations
of the past and different goals for the future.[54]
On September 11, 2001 the orthodoxies of diversity and
multiculturalism exacted a very high price indeed. Michael Tuohey, the Portland
Maine ticket agent who checked in 911 terrorist ringleader Muhammed Atta for a
connecting flight to Boston testified that he was suspicious of Atta and his
companion’s demeanor, angry behavior and one-way tickets to Los Angeles. Tuohey
later explained that he put his doubts, aside.
“I said to myself, ‘If this guy doesn’t look like an Arab terrorist,
then nothing does.’ Then I gave myself a mental slap, because in this day and
age, it’s not nice to say things like this. … I felt kind of embarrassed.”[55]
Censoring his own thoughts and feelings, not detaining Atta for further
investigation, was a direct result of America’s incessant indoctrination into
political correctness. The type of diversity training that resulted in the
willful blindness to the suspicious behavior exhibited by the terrorists is
ubiquitous in government, corporations, military, and civil service. The events
of 911 and its aftermath are a dramatic instance of the high cost of diversity
and the other factors that have, in more insidious ways, served to hollow out
the American economy. The terrorist
attacks that day are a culmination of the combination of the globalization
orientation, multiculturalism, excessive sensitivity, the victimhood cult,
uncontrolled immigration and the affirmative action mentality.
The immediate cost of the attack on the World Trade Center
was estimated in 2002 by the New York City comptroller's office to be $55
Billion. This amount consists of $8 billion for the destruction of the World
Trade Center buildings; $5 billion for the destruction of nearby buildings; $6
billion for computers, furniture and cars; $6 billion for PATH, subway, phone
and electrical facilities. The imputed cost of the loss of life based on
government actuarial guidelines was $24 billion with an additional $5 billion
for injuries. The final bill for site cleanup was estimated at $1 billion.[56]
An estimate of the economic impact of the attacks made by
researchers at the University of Southern California amounted to $123 billion. This
amount consists of $22 billion for the length of recovery and relocation time
of businesses damaged in the attacks; $39 billion for the decline in air travel
through 2003 all other factors equal; $61 billion for other travel reduction
and $1 billion for event cancellation.[57]
Greater still was the increase in the amount devoted to
homeland security and domestic intelligence concerns. Researchers at Ohio State
University have estimated the increase in such spending at $589 billion. This
amount consists of $360 billion for the
Department of Homeland Security and other federal security spending; $100 billion for the extra waiting time in
airports at approximately $10 billion a year; $19 billion for car accident
deaths due to the fear and the inconvenience of flying and $110 billion for domestic
national intelligence.[58]
Military expenditures on the wars consequent to the
attack amount to twice as much as all of the domestic costs. The following
table gives the estimated breakdown:[59]
|
War Expenditures $billions
| ||||||||||
|
Afghanistan
|
Iraq
| |||||||||
Military
|
402
|
803
| ||||||||
Local security
|
39
|
28
| ||||||||
State Dept., US aid
|
27
|
41
| ||||||||
Total
|
468
|
872
| ||||||||
Total Afghanistan and Iraq
|
1,340
| |||||||||
|
Unallocated:
| ||||||||||
|
Other including $.5 billion Pentagon repair
|
42
| |||||||||
|
Medical care for veterans
|
8
| |||||||||
|
Disability payments
|
18
| |||||||||
|
Indirect defense costs
|
185
| |||||||||
|
Value of life lost: US forces
|
56
| |||||||||
|
Total Unallocated
|
309
| |||||||||
|
Total
|
1,649
| |||||||||
The total cost to date is some $2.4 trillion. In addition there are
projected future war and veterans' care costs of some $867 billion.
Early withdrawal will cut back on these costs; however some $589
billion are projected for future medical, disability and retirement benefits.[60] Another
estimate that is reasonably close is the Financial Times $2 trillion
price tag for the U.S. response to the 9/11 attacks.[61]
A higher cost estimate from the National Priorities Project is $8 trillion.[62]
In any event, the ideology that has arisen over the last half century enabled
the enemies of the U.S. to leverage a minuscule expenditure into an enormously
costly impact on the economy. Furthermore if anyone is under the illusion that
anything has changed in the decade since 911 consider the case of Amine El
Khalifi an illegal alien from Morocco who on February 17, 2012 was arrested and
charged with planning to bomb the U.S. Capitol. As Dan Stein of the Federation
for American Immigration Reform observes:
The
world has changed — and not for the better. Ten years ago, news that an illegal
alien planned to bomb the U.S. Capitol would have triggered a searching public
inquiry into the policies that allowed this person to remain here “out of
status” for so many years. Why, reporters would have asked, was this person
allowed to remain in the U.S. so many years after a visa expired? … The cable networks should be asking what
must change to prevent a recurrence. After the 9/11 attacks, there were calls
for an entry-exit system, robust interior enforcement, state-local cooperation
and stepped-up document security. A commission laboriously studied the
loopholes that allowed the hijackers to enter and remain — recommendations were
issued and ignored.[63]
The terrorist attack of 911 was the first, but not the
last, catastrophe resulting from the diversity and globalist mania. Later in
the decade a second blow was struck, less physically devastating but even more
economically disastrous, to be discussed in a later chapter. But first we will
turn our attention to two less acute but more longstanding causes of economic
attrition: so-called free trade and ceaseless mass immigration.
[1]
Robert Samuelson, The Good Life and its
Discontents, New York, Random House, 1995, p. 131.
[2]
Carolyn Webber and Aaron Wildavsky, A History of Taxation and Expenditure in
the Western World, New York, Simon and Schuster, 1986, p. 603.[4] Webber and Wildavsky, A History of Taxation and Expenditure in the Western World, p. 151.
[5] Michael Porter, The Competitive Advantage of Nations, New York, The Free Press, 1990, p. 559.
[6] Samuelson, The Good Life and its Discontents, p. 175.
[7] Michael Petrilli and Frederick Hess, “Closing the achievement gap, but at gifted students’ expense”, http://www.washingtonpost.com/opinions/closing-the-achievement-gap-but-at-gifted-students-expense/2011/11/21/gIQAe76ywO_story.html
[8] Arnold
Ahlert, “The Next Trillion Dollar Bubble”, http://frontpagemag.com/2011/12/15/the-next-trillion-dollar-bubble/
[9]
Ibid [10] Nouriel Roubini and David Backus, http://people.stern.nyu.edu/nroubini/NOTES/CHAP4.HTM
[11] Ibid
[12] Mike Mandel, “How much of the productivity surge of 2007-2009 was real?”, March 28, 2011, http:/innovationandgrowth.wordpress.com/
[13] Webber and Wildavsky, A History of Taxation and Expenditure in the Western World, p. 578.
[14] Jessica Kourkounis, Middle-Class Areas Shrink as Income Gap Grows, New Report Finds,
http://www.nytimes.com/2011/11/16/us/middle-class-areas-shrink-as-income-gap-grows-report-finds.html?_r=1
[15] Samuelson, The Good Life and its Discontents, p. 134.
[16]
Ibid[15] Samuelson, The Good Life and its Discontents, p. 134.
[17] Samuelson, The Good Life and its Discontents, p. 237.
[18] Lou Dobbs, The War on the Middle Class, New York, Viking Penguin, 2006, p. 1.
[19] Pat Choate, Dangerous Business, New York, Knopf, 2008. p. 132.
[20] Robert Samuelson, The Great Inflation and its Aftermath, New York, Random House, 2008, p. 183.
[21] Ibid, p. 191.
[22] Macdonald, A Free Nation Deep in Debt, p. 468.
[23] Henry Kaufman, Interest Rates, the Markets, and the New Financial World, Times Books, 1986, p.65.
[24] Samuelson, The Good Life and its Discontents, p. 181.
[25] Webber and Wildavsky, A History of Taxation and Expenditure in the Western World, p. 356.
[26] Ibid, p. 561.
[27] Samuelson, The Great Inflation and its Aftermath, p. 186.
[28] Ibid, p. 222.
[29] Webber and Wildavsky, A History of Taxation and Expenditure in the Western World, p. 577.
[30] Stephen Bannon, Generation Zero, Citizens United Productions.
[31] Ibid
[32] Ibid
[33] Samuelson, The Good Life and its Discontents, p. 144.
[34] Ibid, p. 173.
[35] Pat Choate, Dangerous Business, pp. 84-86.
[36] Ibid, p. 79.
[37] Michel Crozier, Samuel P. Huntington, Joji Watanuki, The Crisis of Democracy, Trilateral Commission, New York University Press, 1975, p. 40.
[38] Ibid, p. 56.
[39] Ibid, p. 105.
[40] Ibid, p. 113.
[41] Ibid, p. 114.
[42] John Attarian, Economism and the National Prospect, Social Contract Journal, Summer 2005, p. 236.
[43] Samuelson, The Great Inflation and its Aftermath, p. 209.
[44] Choate, Dangerous Business, p. 90.
[45] Ibid, pp. 88-89.
[46] Ibid, p. 4.
[47] Ibid, p. 5.
[48] Samuelson, The Good Life and its Discontents, p. 71.
[49] Ibid, pp. 230-31.
[50] Edwin Rubenstein, Cost of Diversity: The Economic Costs of Racial and Cultural Diversity, http://www.scribd.com/doc/7995006/Cost-of-Diversity, pp. 1-2.
[51] Ibid, pp. 2-4.
[52] Kaufman, Interest Rates, the Markets and the New Financial World, p. 65.
[53] Rubenstein, Cost of Diversity, p. 14.
[54] Ibid
[55] Allan Wall, Ten Years After 9/11—Can We Have Israel-Style Airport Security Profiling Now, Please?,
http://www.vdare.com/articles/memo-from-mexico-by-allan-wall-ten-years-after-911-can-we-have-israel-style-airport-securit.
[56] Shan Carter and Amanda Cox, One 9/11 Tally: $3.3 Trillion, New York Times, September 8, 2011.
[57]
Ibid[56] Shan Carter and Amanda Cox, One 9/11 Tally: $3.3 Trillion, New York Times, September 8, 2011.
[58] Ibid
[59] Ibid
[60] Ibid
[61] John Hudson,” Putting Price Tags on the 9/11 Attacks”, Sep 08, 2011, http://www.theatlanticwire.com/national/2011/09/putting-price-tags-911-attacks/42240/
[62] John Stossel, “Looking back on the 9/11 anniversary”, September 8, 2011, http://reason.com/archives/2011/09/08/ten-years-after
[63] Dan Stein, FAIR Warning: News Coverage Failure Regarding Case of Amine El Khalifi Puts the Public at Risk, February 22, 2012, http://immigrationreform.com/2012/02/22/fair-warning-news-coverage-failure-regarding-case-of-amine-el-khalifi-puts-the-public-at-risk/
Appendix 1
Credit
Market Debt Outstanding by Sector
Billions
of dollars; quarterly figures are seasonally adjusted
Domestic
nonfinancial sectors
$ Billions
Total
|
Households
|
Business
|
State & local
|
Federal
|
|
1977
|
2,826.70
|
946.70
|
1,054.40
|
256.20
|
569.40
|
1978
|
3,211.20
|
1,105.30
|
1,188.40
|
295.60
|
621.90
|
1979
|
3,603.00
|
1,275.30
|
1,347.80
|
322.20
|
657.70
|
1980
|
3,953.50
|
1,394.40
|
1,479.70
|
344.40
|
735.00
|
1981
|
4,361.80
|
1,504.70
|
1,664.50
|
372.10
|
820.50
|
1982
|
4,783.50
|
1,574.00
|
1,813.90
|
413.80
|
981.80
|
1983
|
5,359.20
|
1,728.50
|
2,002.60
|
461.10
|
1,167.00
|
1984
|
6,146.20
|
1,943.80
|
2,324.60
|
513.60
|
1,364.20
|
1985
|
7,123.10
|
2,277.70
|
2,577.60
|
677.90
|
1,589.90
|
1986
|
7,966.30
|
2,536.70
|
2,871.60
|
752.10
|
1,805.90
|
1987
|
8,670.20
|
2,754.60
|
3,123.20
|
842.60
|
1,949.80
|
1988
|
9,450.70
|
3,044.10
|
3,408.70
|
893.00
|
2,104.90
|
1989
|
10,152.10
|
3,319.10
|
3,641.40
|
940.40
|
2,251.20
|
1990
|
10,834.80
|
3,581.10
|
3,768.20
|
987.40
|
2,498.10
|
1991
|
11,301.40
|
3,769.50
|
3,676.90
|
1,078.60
|
2,776.40
|
1992
|
11,816.40
|
3,970.40
|
3,670.60
|
1,095.10
|
3,080.30
|
1993
|
12,391.40
|
4,210.50
|
3,691.40
|
1,153.00
|
3,336.50
|
1994
|
12,973.60
|
4,531.70
|
3,842.10
|
1,107.50
|
3,492.30
|
1995
|
13,667.30
|
4,841.20
|
4,142.70
|
1,046.70
|
3,636.70
|
1996
|
14,399.90
|
5,177.00
|
4,415.00
|
1,026.20
|
3,781.70
|
1997
|
15,210.80
|
5,478.40
|
4,850.70
|
1,076.90
|
3,804.80
|
1998
|
16,216.40
|
5,902.70
|
5,417.70
|
1,143.80
|
3,752.20
|
1999
|
17,291.40
|
6,394.90
|
6,034.50
|
1,181.00
|
3,681.00
|
2000
|
18,165.40
|
6,985.80
|
6,596.60
|
1,197.90
|
3,385.10
|
2001
|
19,297.50
|
7,657.60
|
6,957.00
|
1,303.40
|
3,379.50
|
2002
|
20,716.10
|
8,482.40
|
7,148.80
|
1,447.90
|
3,637.00
|
2003
|
22,443.90
|
9,509.00
|
7,333.40
|
1,568.40
|
4,033.10
|
2004
|
24,445.00
|
10,576.10
|
7,791.40
|
1,682.50
|
4,395.00
|
2005
|
26,770.90
|
11,765.00
|
8,449.50
|
1,854.50
|
4,701.90
|
2006
|
29,181.20
|
12,944.30
|
9,343.40
|
2,008.20
|
4,885.30
|
2007
|
31,700.80
|
13,807.60
|
10,571.70
|
2,199.20
|
5,122.30
|
2008
|
33,606.00
|
13,842.60
|
11,151.20
|
2,250.70
|
6,361.50
|
2009
|
34,641.00
|
13,617.10
|
10,858.20
|
2,360.30
|
7,805.40
|
2010
|
36,068.20
|
13,379.30
|
10,836.10
|
2,467.20
|
9,385.60
|
http://www.federalreserve.gov/releases/z1/current/z1r-2.pdf
GDP*
|
Debt as % of GDP
|
||
$ billions
|
Federal
|
Total
|
|
1977
|
2,030.10
|
28.05%
|
139.24%
|
1978
|
2,293.80
|
27.11%
|
139.99%
|
1979
|
2,562.20
|
25.67%
|
140.62%
|
1980
|
2,788.10
|
26.36%
|
141.80%
|
1981
|
3,126.80
|
26.24%
|
139.50%
|
1982
|
3,253.20
|
30.18%
|
147.04%
|
1983
|
3,534.60
|
33.02%
|
151.62%
|
1984
|
3,930.90
|
34.70%
|
156.36%
|
1985
|
4,217.50
|
37.70%
|
168.89%
|
1986
|
4,460.10
|
40.49%
|
178.61%
|
1987
|
4,736.40
|
41.17%
|
183.05%
|
1988
|
5,100.40
|
41.27%
|
185.29%
|
1989
|
5,482.10
|
41.06%
|
185.19%
|
1990
|
5,800.50
|
43.07%
|
186.79%
|
1991
|
5,992.10
|
46.33%
|
188.60%
|
1992
|
6,342.30
|
48.57%
|
186.31%
|
1993
|
6,667.40
|
50.04%
|
185.85%
|
1994
|
7,085.20
|
49.29%
|
183.11%
|
1995
|
7,414.70
|
49.05%
|
184.33%
|
1996
|
7,838.50
|
48.25%
|
183.71%
|
1997
|
8,270.50
|
46.00%
|
183.92%
|
1998
|
8,727.00
|
43.00%
|
185.82%
|
1999
|
9,286.90
|
39.64%
|
186.19%
|
2000
|
9,884.20
|
34.25%
|
183.78%
|
2001
|
10,218.00
|
33.07%
|
188.86%
|
2002
|
10,572.40
|
34.40%
|
195.95%
|
2003
|
11,067.80
|
36.44%
|
202.79%
|
2004
|
11,788.90
|
37.28%
|
207.36%
|
2005
|
12,554.50
|
37.45%
|
213.24%
|
2006
|
13,310.90
|
36.70%
|
219.23%
|
2007
|
13,969.30
|
36.67%
|
226.93%
|
2008
|
14,270.50
|
44.58%
|
235.49%
|
2009
|
14,014.80
|
55.69%
|
247.17%
|
2010
|
14,551.80
|
64.50%
|
247.86%
|
*http://www.usgovernmentrevenue.com/us_gdp_history
No comments:
Post a Comment