Do Not Go Gentle into the Post-American Era

When the U.S. was a developing nation, we expended our efforts and capital in developing the infrastructure for industry. Our government provided incentives for the development and extraction of natural resources to be used as raw materials to build, not just products, but a thriving national economy. — And that’s exactly what China and other developing nations are doing today.

But, today, the U.S. is doing the opposite. Increasingly, over the past several decades, our government has been restricting the extraction of natural resources and dismantling the infrastructure for industry. Overregulation, combined with exorbitant and ever-increasing union demands, has succeeded in driving much of our industry offshore. If we want to recover our economy, we need to reverse that trend.

The recently published White House Plan to Revitalize Manufacturing, which focuses on federal funding for “green” technology R&D, is not likely to have a significant impact on our national productivity. This administration is thoroughly beholden to the unions and environmental lobbies. In true Chicago style, this administration has used the stimulus package to pay off political debts and, from every indication, will continue the trend of dismantling the economy in favor of political correctness and payback.

Every nation has a historical trajectory. This nation has apparently passed its apogee, and is now in decline. We no longer have the drive to overcome. We’ve become complacent and, instead of striving for ever greater industrial innovation and economic strength, we are focused myopically on the niceties that developing nations cannot afford to consider.

The problem is, there’s no such thing as stasis. A nation, a corporation, a species, an individual, must either advance or decline. That’s nature. And, as we sink into complacency, whining effetely about our declining economy, there will be others advancing to take our place as the dominant world power, industrially, economically, and (eventually) militarily. That’s a historical inevitability. The same pattern can be observed throughout nature and the history of civilizations. The only question is when.

At this point, we could still reverse that trend by, once again, becoming a developing nation ourselves — one can always develop further, if one is motivated to keep striving — but we, as a nation, lack that motivation. We’re apparently content to rest on our laurels as we sink into national senescence while other countries, like China, rise up on the international horizon. The world is always changing. It’s the nature of all things. The only question is, will we, as a nation, go gentle into that good night? Or will we rage, rage against the dying of the light?   (Apologies to Dylan Thomas.)

Unfortunately, I believe I know the answer to that rhetorical question. History is being written even as we go about our daily lives. You can see it in our relations with other nations, as we make concessions that cede our sovereignty in so many minor ways. Stepping back and observing from a historical perspective, we see a once-great nation, that no longer has the will to sustain its rank as the leader of the free world, stepping aside and leaving the field open to whoever will step up and take its place. Sadly, there’s no way to choose our successor. Once we step aside, we can only watch and hope for the best. And if we don’t like the way the world is shaping up in the post-American era, we will just have to suffer the consequences.

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Entitlement, Dependency, Control

Responsibility isn’t something people are born with. It’s learned. It’s learned by prioritizing, making tradeoffs, weighing the benefits, costs, and risks of alternative courses of action, and dealing with the consequences of one’s decisions.

When an overprotective parent spoils their child by shielding them from hard lessons, or gives the child whatever it wants so the child will love them more, they fail to instill in the child a sense of responsibility. Instead they encumber it with a false sense of entitlement to whatever the child desires. Later, the child is faced with a rude awakening when thrust into a world where it has to compete with others who are accustomed to making hard choices and working for the things they desire.

Once a sense of entitlement is engrained in someone’s belief system, it’s difficult to overcome. Developing a sense of responsibility is counter to their conditioning, and they cannot easily grasp the notion that they are really not entitled to anything they haven’t earned. When something doesn’t come easily, instead of getting fired up with a sense of determination to work harder and make the necessary sacrifices to achieve their goal, they feel resentful that it isn’t provided for them. Whatever nominal effort they put into it seems like it ought to be enough. They feel a deep sense of personal injustice that they can’t have things that other people have, oblivious to the tradeoffs and sacrifices others have had to make to acquire those things.

In the real world, nobody is entitled to own a house. If you can’t afford a house, the responsible thing to do is to work and save and sacrifice until you can afford to buy one. By encouraging people to buy houses they really can’t afford, the government sets them up for failure later on when the house payments become a burden they cannot sustain. And when that time comes, the “homeowners” won’t consider that, until their mortgage is paid in full, the house isn’t actually theirs. Instead, they’ll feel entitled to the house in which they’re living, and deeply resentful of losing it.

A person who buys a house incurs a responsibility. If they’re shielded from the full impact of the responsibility they’re incurring, by making it easier than it would be (in a free market) for them to assume it, it gives them a false sense of security and makes the responsibility seem lighter than it is. That is not a wise thing to do. And the current economic crisis is a perfect illustration of that folly. Yet the government is going down the same path again, with the FHA taking on the role once played by AIG.

This is just one of many examples of the government fostering an entitlement mentality in its citizens. Perhaps, like the parent who spoils their child in an attempt to buy its love, politicians see this as a way to buy votes. But, like overprotective parents trying to make life easier for their precious dumplings, when government shields people from the onus of personal responsibility, it does not strengthen them; it weakens them. And it not only weakens the individual beneficiaries of the government’s largesse, it weakens the entire economy, and the underlying moral fiber of our nation.

For years, our government has been actively encouraging people to become less and less self-reliant. By the same token, it has been making us more and more dependent on government. The flip side of dependency is control. The more dependent one is on another, the more control the other has over them. Perhaps the underlying motivation is not so innocent as politicians trying to buy their constituents’ love. Perhaps it’s far more insidious.

The current crisis in our nation is not just an economic crisis. It has far broader implications. The only way out of this crisis is to bring about a fundamental change. — Not the kind of change that accelerates the crisis, leading to ever more weakness, dependency, and state control, but a return to the once deeply-held values that made this country great: personal responsibility, individual sovereignty, and economic freedom.

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Sometimes Nothing is the Right Thing to Do

I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.
John McCain

Despite the fact that Senator McCain has said the economy isn’t his strong point, he has a lot stronger grasp of basic economic principles than anybody else running for president, not to mention a lot of other people in Washington who ought to know better.

In addition to the Bear Stearns bailout, since the beginning of the year, the Fed has loaned over $260 billion to banks that got into financial trouble by making bad mortgage loans. The Foreclosure Prevention Act of 2008 is on the horizon, and there’s another bill lined up behind it to extend an additional $300-400 billion in federally guaranteed (that means guaranteed by you and me) mortgages for people who overextended themselves to buy houses that were well beyond their means.

Senator Obama talks about “folks [being] tricked into purchasing loans they can’t afford.” Both Senators Obama and Clinton think we need to kick in a $30 billion dollar emergency housing fund (at taxpayer expense) to help bail out these poor victims, never mind that they’re victims of their own greed and irresponsibility. Senator Clinton also wants to freeze subprime mortgage rates and impose a 90 day moratorium on foreclosures for the poor dears. And, earlier this week, Senator Clinton suggested that perhaps the government should start buying up foreclosed homes. It’s not enough for the government to be in the healthcare business, now she wants to get it into the real estate business, too. (Is there any business Mrs. Clinton doesn’t think the government should be in?)

While Senators Clinton and Obama are leaping over one another trying to come up with more innovative and expensive ways for the government to manipulate the housing market, Senator McCain is quietly saying it isn’t the role of the government to bail out either the banks or the borrowers. The Democrats scoff. Democratic National Committee Chairman Howard Dean sneers that McCain is taking “the same hands-off approach that President Bush used to lead us into this crisis.”

What the Democrats fail to understand is the basic principles of economics. (But what else is new?) It was not a “hands off” policy that got us into this mess, but a “hands on” policy of lowering interest rates and expanding FHA, FNMA, and FHLMC financing to encourage unprecedented (and unwarranted) growth in the housing market. The government got us into this situation by meddling in the free market. It isn’t going to get us out by meddling more. What needs to happen is the market needs to find a balance where the demand meets the supply. The only way for that to happen is to let it occur naturally. Yes, it means housing prices will drop. They’re doing that anyway. Yes, it’s painful. But it has to happen.

Federal policies aimed at making it easier for first time home buyers to buy houses before they could actually afford those houses led to an artificially high demand, which artificially inflated prices. People (and financing companies) started playing fast and loose, speculating that the manic spiral in home prices would continue indefinitely. But it couldn’t. Supply increased to meet demand, interest rates went up, people who overextended themselves couldn’t meet their payments and started defaulting, demand fell off just as supply was peaking, and the market was oversaturated. Now it has to correct.

The laws of economics weren’t made up by economists, any more than the laws of physics were made up by physicists. These “laws” are based on observation and analysis of naturally occurring phenomena. They can’t be changed or wished away. Imbalances do occur but, over time, they correct themselves. The housing market is self-correcting now. It will eventually reach equilibrium. Any measures that attempt to forestall that will only postpone the inevitable. A problem deferred is not a problem solved.

The Democrats insist that the government can’t just stand by and do nothing. Something bad is happening. We must do something! Anything! They have no idea how to solve the problem, because the problem can’t be solved by more government meddling, and government meddling is the only thing they know how to do. But, since they can think of nothing more embarrassing than standing around doing nothing, they’re leaping over each other trying desperately to show us that they will do something. (Not nothing, like Senator McCain.) And what they’ll do is what they always do. When they see a problem, they throw money at it. Your money. My money. Everybody’s money. Unfortunately, that won’t solve the problem. Because, sometimes, nothing is the right thing to do.

The Democratic response, as usual, is like a parent with a spoiled child. They think it’s their job as parent to prevent their child from ever experiencing any pain, so they go to any lengths to shield it from the consequences of its own actions. But a child who never faces consequences never learns. Sometimes pain is necessary, especially when it’s a natural consequence of irrational behavior.

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