I hate to do this, because I will never hear the end of it, but my colleague David Karki may have seen something before most others.
Dave has been prattling on for some time about the inevitability of social breakdown, a veritable second civil war, between the producers in society and those who have never known anything other than government dependency.
America, youre next!
Once it is simply impossible for government to continue doling out the goodies, and the producers are no longer willing to finance this racket . . . well, at this point, Dave usually quotes that section in the Declaration of Independence where the Founders talk about throwing off such government and establishing a new one.
Yeah. He means revolution.
For four years, I have published Dave’s stuff, thinking, “No one will consider me crazy as long as I have him around.”
Enter Greece. But before that, enter General Motors.
GM, as some of us pointed out at the time, was and remains a microcosm of the very sort of unsustainable system on which we are doubling down at the national level. And at the heart of GM’s massive, collective corporate suicide (you don’t really think it’s been saved permanently, do you?) was not bad planning or bad products or even bad management or labor. It was fantasy and denial.
GM killed itself by instituting obscenely generous retiree health benefits, with no consideration of how to finance that mountain of benevolence as more and more workers retired, lived longer and milked the system. The thinking was that the Big Three automakers ruled the industry, and GM sat atop the Big Three, and that this could and would never change. Unassailable market share alone would be enough to cover the cost of the benefits, which were offered to buy labor peace and keep factories humming.
Ultimately, GM wanted no problems with anyone. No strikes. No bad publicity. And the easiest way to do that was to promise everyone everything they ever wanted, and don’t stop believin’ the money would somehow magically appear.
GM is still going to die. You do realize that, don’t you? GM’s new management has not grasped reality any better than the old, which is why it recently drew funds off a government line of credit and claimed it had paid off its government debt, which was funny not only in a borrow-from-Peter-to-pay-Paul sense, but also in the sense that GM was touting a “repayment” of $5.8 billion when it actually received $51 billion from Uncle Sam.
For now, anyway, GM has staved off the sort of austerity that would be necessary to actually secure its future. Greece hasn’t, because the international financiers who are its last and only hope, won’t stand for it. Greece’s system of social benefits is different from America’s only insofar as it is further along toward insolvency, and Greece’s demographics are even worse than ours, which is not to say ours are great.
Greece is broke, and it’s had no choice but to tell its massive population of dependents that it can no longer keep its obligations. The result? Riots, of course. How could it be otherwise? You don’t expect people who have never fended for themselves to suddenly initiate entrepreneurial start-ups, do you? If they know anything, it’s agitating for the continuation of their lifeblood, which is their share of the government dole. That is scarcely their fault. The government bred them to be this way.
They’re reacting like the members of the United Auto Workers some day will – when they too will have to be told that the jig is up, and that they will have to find a way to fend for themselves, which they will not know how to do.
The United States is different from GM, and different from Greece, only in matters of scale and progression – neither of which is much consolation. We have promised more than we can deliver, with the federal debt having already soared above $14 trillion – about the same as the entire gross domestic product – and new spending adding more than $1 trillion to it every year. Of course, this pales in comparison to the unfunded entitlement obligations that are now soaring past $60 trillion.
Note to those of you expecting to receive these benefits: You will not. The money does not exist. We have already passed the point when we should have put our own austerity measures into place, but because independent voters were in a snit about a war they didn’t understand and a financial meltdown they couldn’t comprehend, they decided to elect a left-wing administration and Congress who couldn’t wait for their opportunity to spend, spend, spend! The short- and long-term consequences be damned. There were political constituencies who hadn’t been paid off since the last time these same Democrats tried to socialize health care and got run out of town for doing so.
Write big checks. Backed by the full faith and credit of the United States government. Set new spending baselines. Wheeeeeeeeee!
The public is catching on to this. It is not for no reason that President Obama spent the weekend bemoaning all the new media that, he says, complicates the function of governance. Back when the government only had to spoon-feed a handful of national establishment lapdogs, it was easy to keep the public from understanding the fraud being perpetrated against it. Now it’s not only difficult, it’s impossible, but one suspects this too is a subject of denial on the part of Democrats and many Republicans as well.
This isn’t going to end well. Democrats will be replaced by Republicans in November, but there is no guarantee the Republicans will lay the hard truth before the public and take the steps necessary to reverse the spiral. They’ve not done so in the past when they had the chance.
And if the fixes are not somehow put in place, we are going to reach the point where the electorate will no longer have faith in either party to govern responsibly, and states will no longer accept mandates from Washington to fund benefits, cover debt or otherwise accede to this accelerating and unsustainable Ponzi scheme.
And when that happens, why should anyone think that the examples of Latvia, Lithuania and Estonia will not be followed by Florida, Texas and Ohio? Who would remain on a sinking ship when their own lifeboat is perfectly seaworthy?
This would be a very sad end to a very wonderful story, not to mention a tragedy for the entire world, but if anyone thinks the United States can remain viable on its current GM/Greece path, he or she is every bit as much in denial as the perpetrators of those frauds. And this one.