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August 08, 2011

The Return of Debate

Janet Daley writes:

Contrary to what the Obama Democrats claimed, the face-off in Congress did not mean that the nation’s politics were “dysfunctional”. The politics of the US were functioning precisely as the Founding Fathers intended: the legislature was acting as a check on the power of the executive.

...

The Tea Party faction within the Republican party was demanding that, before any further steps were taken, there must be a debate about where all this was going. They had seen the future toward which they were being pushed, and it didn’t work. They were convinced that the entitlement culture and benefits programmes which the Democrats were determined to preserve and extend with tax rises could only lead to the diminution of that robust economic freedom that had created the American historical miracle.

And, again contrary to prevailing wisdom, their view is not naive and parochial: it is corroborated by the European experience. By rights, it should be Europe that is immersed in this debate, but its leaders are so steeped in the sacred texts of social democracy that they cannot admit the force of the contradictions which they are now hopelessly trying to evade.

...

We have arrived at the endgame of what was an untenable doctrine: to pay for the kind of entitlements that populations have been led to expect by their politicians, the wealth-creating sector has to be taxed to a degree that makes it almost impossible for it to create the wealth that is needed to pay for the entitlements that populations have been led to expect, etc, etc.

The only way that state benefit programmes could be extended in the ways that are forecast for Europe’s ageing population would be by government seizing all the levers of the economy and producing as much (externally) worthless currency as was needed – in the manner of the old Soviet Union.

That is the problem. So profound is its challenge to the received wisdom of postwar Western democratic life that it is unutterable in the EU circles in which the crucial decisions are being made – or rather, not being made.

Debt and population growth have long permitted America to avoid making difficult, binary-type decisions about which path to choose: low-tax, dynamic capitialism or high-tax, redistributive socialism.

We chose both, and hence did not choose at all. The only reason the math worked (to the extent it worked) is that we were constantly screwing over a cohort that had no voice in our politics -- our children, but also, our future selves.

We were taxing our future selves. Our present selves did not pay for all the accumulated debt. Our future selves would.

People have a bad habit of screwing over their future selves. They procrastinate, for example, even though they know at the end of the day they'll wind up doing all that work anyway, but now under the gun to boot; but people do this to themselves every day.

For years the county refused to make a choice because it felt there was no need to; at the end of the day, the Republicans could secure their top priority (lower taxes) by simply agreeing to debt on the future citizens of the county, and Democrats could secure their top priority (more socialist welfare spending) by doing the same, and it all worked.

Until it didn't. Until we simply could not borrow any further.

Now, finally, we are having to choose.

It's going to be a difficult debate, but it will be the first time these issues have been truly debated since maybe the 1930s.

So of course there will be acrimony. Of course there will be tough talk.

The media's preferred political model of "everyone agree to just move a little bit more to socialism, in a quiet, dignified tone of voice" will not work any longer.

Because we've been avoiding cutting anyone's kitty for a long time -- choosing instead to punt the debt to our older selves, our children, and their children -- we just really haven't had this kind of debate in a long time, in which there will be clear losers in this process.

For a long time we've just chosen to spare currently living people any loss and instead throw all of the loss on to ourselves at some future point.

But the future is now. There's no one else to shift the losses to. The losses will have to come out of someone's skin, because we've already piled up $16 trillion in debt (and rising).

There is going to be acrimony, because at some point someone is going to take a haircut.

And not in the future, either.



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posted by Ace at 05:27 PM

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