Wednesday, April 7, 2010

Betting Against America?

All of my life I have been optimistic about the future and a firm believer that we live in the greatest country in human history. When I was only ten years old, my uncle was repeating some of the stupidity in Paul Ehrlich's "The Population Bomb" and trying to frighten me into believing I would be dead before I was 30. My argument at the time was simple, we always invent new stuff. As I grew older I came to understand that we in fact "invent new stuff" because of the freedom we enjoy in America. We use technology to solve the problems created by older technology. (As an aside, Norman Borlaug, the father of the green revolution in Indian agriculture probably saved hundreds of millions of lives. He was awarded the Nobel Peace prize in 1970, one of the picks the committee got right.)

We interrupt this post to show a picture of one of the greatest Americans of all time.

This bullishness on the future led me to put our savings primarily in the stock market, after we purchased a home. I always felt that investments like gold, commodities or Treasuries were a bet against the ingenuity and entrepreneurial spirit of Americans, and that always seemed like a bad bet to me. (Similarly, I have never shorted a stock.) After the election of Obama, Mrs. Daddy was in a fine fiddle. She was very nervous about the combination of Obama in the White House and Pelosi leading the House, smart woman. But I cautioned her that the country is great and the people would only stand for so much. The rise of the Tea Parties confirmed my optimism, even though Obamacare was slammed through. I am also optimistic that it can be undone. We significantly reformed welfare after all.

However, today my optimism is under assault not by specific policies of Obamacare or cap and trade but by the looming problem of government bloat at all levels. When we examine the unfunded liabilities of employee pensions at the local and state levels and federal unfunded liabilities in social security and medicare. I haven't the energy to trot out the mind numbing numbers, but the graphs I displayed for the federal problem in a previous post tell only one unsettling story of a government borrowing to pay current expenses (that's like using your credit card to buy groceries and pay the rent every month and not being able to make payments.) One story at Bloomberg estimates the collective state problem at $3 trillion. A number being bandied about for local pensions underfunding is $2 trillion.

The public employees unions have significant power, influence and even sympathy from the public. Locally all politicians seem to vie for the police and firefighters unions endorsement, even if that is disqualifying in the eyes of B-Daddy. But ultimately this financial path is unsustainable and we all know it. Compare our situation to Greece (as has Dean); here in America economic hard times gave rise to a movement that called for dramatic reductions in the size of government. In Greece, there has been a childish demand by the public to save themselves from their own folly of voting for leaders who refused to balance the books and engaged in some Enron style accounting.

Will there be some pain as we work out how to reduce the size of all of our government? You betcha! But am I going to bet against America? No way, I am counting on the same ingenuity to work out these problems as well. Not without pain, because we have dug ourselves a hole, but dig out we will. The Tea Party's emphasis on the need for smaller government is VERY important. As the house of cards starts to topple, the prescience in identifying too much government as the source of our ills will swell our ranks and provide the power needed for reform.

1 comment:

  1. Keep up the optimism, B-Daddy, and remember to pray. We need some divine intervention to shake things up and move the bad politicians out.