Category Archive 'End of the Entitlement State'

11 Jul 2011

“If You Ain’t Got No Money, Take Your Broke Ass Home”

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The American Progressives’ project of erecting a European-style welfare state is over, and it may be ending in default.

Chriss W. Street points out what the country’s real budget looks like (before Obamacare):

The Federal government’s spendable tax revenue of approximately $170 billion per month; is roughly just enough to cover legally required Social Security / Medicare payments ($90 billion) and debt service (ranging from $10-40 billon per month) – and the most politically sensitive payments for military and unemployment ($40 billion).

Read the whole thing. He has some good explanations of how we got here.

13 Jun 2011

Progressivism Jumping the Shark

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Walter Russell Mead
mixes his Animal kingdom metaphors, but nonetheless delivers another important essay, arguing (from a position sympathetic to Progressivism) that the Progressive political movement has passed through a natural life cycle into the final stage in which it has become sclerotic and destructive.

..Fannie Mae represents a special problem for the Democratic Party and Democratic ideas. It is not just a vitally important institution led by prominent Democratic figures and part of a broader Democratic patronage network; Fannie Mae is one of the original New Deal institutions and the vision it was intended to serve stands at the heart of the concerns of the Democratic Party of the 20th century.

The fall of Fannie Mae is bigger than just another politicos run wild scandal. It stands as one of several signs that our current way of life is reaching its limits and that big changes are on the horizon. The Fanniegate debacle tells us that the progressive ideal is in the process of jumping the shark.

Jumping the shark, as many readers know, is an expression from the wonderful world of TV. When the original premise of a show has gone stale, producers try to recapture audience interest by putting familiar characters in outlandish settings where strange things happen to them — notoriously, when Fonzie literally jumped over a shark as Happy Days moved into its sunset years. When something jumps the shark, the death spiral has become irretrievable; the show has nowhere to go but down.

The progressive ideal of the last 100 years is reaching that point. In its day the progressive ideal was a revolutionary and even a noble one. A bureaucratic and professional elite would mediate social conflict between rich and poor, improving the lives of the poor while engineering the best possible administrative solutions to pressing social problems. Keynesian macroeconomic management would ensure lasting prosperity; progressive taxation would spread the benefits of prosperity as widely as possible. Levels of education would rise as more and more Americans spent more and more years in school.

Progressivism held out the hope that capitalism, democracy and history itself could all be tamed by competent professional management. Victorian capitalism had been brutal, disruptive, competitive. Society became more unequal even as living standards gradually rose. Democracy was irresistible, but the masses were uneducated. The modern progressive era was born at times of great violence and upheaval. World War One, the Russian Revolution, the Great Depression, the rise of fascism, World War Two, the invention of nuclear weapons and the start of the Cold War: it was against this background that progressives sought to turn modern life into something safe and tame.

I cannot blame four generations of progressive intellectuals for trying to make life a little less brutal and unpredictable, nor should we overlook the successes they had. Nevertheless, the Fonz has left the building; the progressive paradigm today can no longer serve as the basis for sound national policy. …

The problem today is that we are looking not just at one or two government programs that have succumbed to elephantiasis or turned into sharks; the progressive complex of social and economic policy as a whole has reached this point. Today many of our New Deal and Great Society programs are either elephants or sharks. They either lead us to misallocate scarce resources in ineffective ways or they threaten us with ruin by becoming politically untouchable budget busters.

Progressivism itself, and not simply the individual government programs it spawns, is moving through the same cycle of life. The most urgent social problems that progressivism set out to solve have been dealt with. Child labor and lynch mobs are no longer common in the United States. The greatest natural and scenic treasures of the country are protected by the National Park system. Food is much less dangerous, buildings are better built, cars are safer, the air and water is in better shape and the charismatic megafauna (big interesting animals) have been saved from extinction. Many more people have much more access to education today than was true 100 years ago; ditto for lifesaving medical treatment.

The progressive vision morphed from Great White Hope and Great White Father into Great White Elephant over the years. Early progressives picked the low-hanging fruit; they addressed the most important problems that were most susceptible to progressive interventions. Increasingly they are left with more expensive, less effective approaches to big problems (like Obamacare) or the agenda moves from issues of great moral and political significance like equal rights for African-Americans to less consequential issues like wider social acceptance of the transgendered. To raise the percentage of young Americans attending college from 2 percent to 20 percent is a significant achievement; to extend it from 40 percent to 60 percent will likely cost much more and accomplish much less in terms of raising social productivity.

We now see the progressive agenda dealing with issues like high speed rail, where the gains are so small and the rationale are so weak from the beginning that the program is a white elephant before it is fully set up.

The fierce commitment of progressive lobbies today to dysfunctional institutions and programs has brought matters to a crisis stage; the progressive legacy is morphing from white elephant to shark. Fierce attacks on anyone seeking to reform dysfunctional institutions combine with unreasoning devotion to unsustainable entitlements. “Progressives” today are too often grimly determined to achieve two incompatible ends: an indefinite expansion of entitlements and benefits on the one hand — and the preservation and even the extension of inefficient organizations and methods on the other.

Read the whole thing.

05 Jun 2011

Changing Times

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Walter Russell Mead (who has recently been on a roll, producing a series of very intelligent articles) argues that the imminent end of the entitlement era marks as profound a change in the American way of life as the century ago passing of the family farm and the transition to majority employment in towns and cities.

The death of the family farm didn’t kill the American republic for several reasons. First, to some degree Jefferson was wrong and Hamilton was right. A strong manufacturing and financial sector can strengthen democracy under the right conditions; ancient, slave-holding Rome was less like modern capitalist New York and London than Thomas Jefferson thought.

But under American conditions there was something else: the end of the family farm did not mean the rise of a propertyless proletariat in the United States. Bankers like A.P. Giannini made the argument that the thirty year mortgage was a weapon against Marx: if the average American family no longer owned a farm, it could still own a house.

Thanks to home ownership, post-agricultural America remained a land of mass property ownership and that experience continued to inform American political and social values. American neighborhoods are still schools of political engagement; it’s clear who keeps up their property, who takes the lead in community activities, who leads the PTA and who coaches the youth league. Property ownership continues to serve as a political tutor; American voters want better municipal services, and they don’t like high property taxes. They have to think about the relationship between the two in every election, and their experience in local affairs continues to inform their ideas about national policy.

At the same time, the fact that most Americans buy their homes through mortgages, and that they have to keep those payments up or lose the old homestead, teaches responsibility and steady habits. If the farmer didn’t get up at dawn to plow the north forty, there was nothing to eat in the winter. If the suburbanite doesn’t get in the car and head onto the freeway every morning, the bank balance sinks and the repo men will come and take the house away. Home ownership also teaches people about investments and compound interest (although lately it has been giving us a painful introduction to bubbles and downturns).

Both versions of the American Dream had this in common: the farm in the valley and the box in the burbs helped the American people develop the skills and the values necessary for successful republican government.

From this standpoint, suburban America looks like a watered down but still potent blend of the original American farmer’s republic. The inherited values and culture coming to us from the old days plus the still potent force of mass home ownership have kept the United States from retracing the steps of older democracies on their slow decline. So far.

But our consumer republic is clearly in trouble. Economically, as I wrote earlier this week, the model is breaking down. The consumer republic is based on debt and depends on high consumption. We are nearing the limits of that kind of economy. The country’s external debt, the explosive growth of federal debt and the weak balance sheets of consumer households are all pointing in the same direction.

The cultural and social weaknesses of the consumer state are if anything more troubling. While suburbia is not the kind of alienating horror show that Marxist critics make it out to be, it is a less effective school for citizenship and character than the family farm. Daniel Bell wrote about the cultural contradictions of capitalism more than thirty years ago; life in a consumer society does not support the virtues and ideas that a healthy society requires.

More broadly, Huck Finn was right and the Widow Douglass was wrong: a holistic life in which family, work, education, leisure and production are all blended and mixed is healthier than an existence in which every sphere of life is rigidly set off from the others. it is not good for children to work long hours in textile mills; it is also not good for them to grow up without participating in and learning about the productive labor that is such a big part of what it means to be human. Family bonds are weaker now that husbands and wives spend so much less time together and mostly cooperate to spend money rather than working together to make it. The family is less of a unit because the real business of each member of the family takes place in some other environment be it the office, the factory or the school.

The special shape of modern and suburban family life is part of the blue social model I’ve been posting about on this blog and the hollowing out of blue society is increasingly felt within as well as around the contemporary American family. The suburban consumption based nuclear family is increasingly under stress; family budgets and time are increasingly on the edge.

More, the very entitlements most under pressure economically are those that have allowed the multigenerational family to yield to the suburban nuclear idyll. Defined benefit pensions, Social Security, home equity and Medicare allowed older Americans to live independent lives and reduced the need for solidarity between the generations. The generations, like the widow’s vittles, were all cooking in their separate pots. …

The one thing I do know is that change is on its way — more fundamental, more challenging, and also perhaps more exhilarating than many of us are ready for. The health of the American economy is going to require us to move away from the credit card economics of the consumer republic. The health of American society and democracy require that we move beyond the life of the last eighty years.

Read the whole thing.

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