If we are to survive the looming catastrophe, we need to face the truth - Telegraph
 

If we are to survive the looming catastrophe, we need to face the truth - Telegraph

Which of these is the most important question to ask in the present economic crisis: how can we promote growth? Should we pay off government debt more or less quickly? Is the US in worse trouble than Europe? Answer: none of the above.

The truly fundamental question that is at the heart of the disaster toward which we are racing is being debated only in America: is it possible for a free market economy to support a democratic socialist society? On this side of the Atlantic, the model of a national welfare system with comprehensive entitlements, which is paid for by the wealth created through capitalist endeavour, has been accepted (even by parties of the centre-Right) as the essence of post-war political enlightenment.

This was the heaven on earth for which liberal democracy had been striving: a system of wealth redistribution that was merciful but not Marxist, and a guarantee of lifelong economic and social security for everyone that did not involve totalitarian government. This was the ideal the European Union was designed to entrench. It was the dream of Blairism, which adopted it as a replacement for the state socialism of Old Labour. And it is the aspiration of President Obama and his liberal Democrats, who want the United States to become a European-style social democracy.

But the US has a very different historical experience from European countries, with their accretions of national remorse and class guilt: it has a far stronger and more resilient belief in the moral value of liberty and the dangers of state power. This is a political as much as an economic crisis, but not for the reasons that Mr Obama believes. The ruckus that nearly paralysed the US economy last week, and led to the loss of its AAA rating from Standard & Poor?s, arose from a confrontation over the most basic principles of American life.

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.

No, it is not just the preposterousness of the euro project that is being exposed. (Let?s merge the currencies of lots of countries with wildly differing economic conditions and lock them all into the interest rate of the most successful. What could possibly go wrong?)

Also collapsing before our eyes is the lodestone of the Christian Socialist doctrine that has underpinned the EU?s political philosophy: the idea that a capitalist economy can support an ever-expanding socialist welfare state.

As the EU leadership is (almost) admitting now, the next step to ensure the survival of the world as we know it will involve moving toward a command economy, in which individual countries and their electorates will lose significant degrees of freedom and self-determination.

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.

The solution that is being offered to the political side of the dilemma is benign oligarchy. Ignoring national public opinion and turbulent political minorities has always been at least half the point of the EU bureaucratic putsch. But that does not settle the economic predicament.

What is to be done about all those assurances that governments have provided for generations about state-subsidised security in old age, universal health provision (in Britain, almost uniquely, completely free), and a guaranteed living standard for the unemployed?

We have been pretending ? with ever more manic protestations ? that this could go on for ever. Even when it became clear that European state pensions (and the US social security system) were gigantic Ponzi schemes in which the present beneficiaries were spending the money of the current generation of contributors, and that health provision was creating impossible demands on tax revenue, and that benefit dependency was becoming a substitute for wealth-creating employment, the lesson would not be learnt. We have been living on tick and wishful thinking.

So what are the most important truths we should be addressing if we are to avert ? or survive ? the looming catastrophe? Raising retirement ages across Europe (not just in Greece) is imperative, as is raising thresholds for out-of-work benefit entitlements.

Lowering the tax burden for both wealth-creators and consumers is essential. In Britain, finding private sources of revenue for health care is a matter of urgency.

A general correction of the imbalance between wealth production and wealth redistribution is now a matter of basic necessity, not ideological preference.

The hardest obstacle to overcome will be the idea that anyone who challenges the prevailing consensus of the past 50 years is irrational and irresponsible. That is what is being said about the Tea Partiers. In fact, what is irrational and irresponsible is the assumption that we can go on as we are.

http://www.telegraph.co.uk/comment/c...the-truth.html

catastrophe, shamsatastrophe.

Anyone that think the US is actually a "free market" society anymore is a fool.

It is an excellent article but the message will be lost on everyone here.

Stop big government funding of the military, NASA and foreign wars.... oh no thats OK...


Education, Health and stopping people fro starving in the streets ...oh its an attack on our freedom...



Just continued to let the financial sector arse rape your economy into the stone age.

Great idea... err, oops.. the military is a core government function, per the US Constitution --ever heard of it?

:upsidedow

well, it is difficult to read. :pimp

If that windbag journalist wrote the truth she would be fired in 2 seconds and her career would be over.

It appears you aren't facing the truth, because there is just as much welfare to big business that is supported by the right wing as there is "social" programs that the left supports. Each group supports giving your tax dollars away to others, so quit crying about Obama.

http://t2.gstatic.com/images?q=tbn:A...dKdLXM9Sha-cQj

There is the problem.

His stated goal was "to see to it that Obama is a one term president".

Making Obama fail is his only goal.

Much the same with the Republicans when Clinton was in office. It wasn't work with the other party to see what they can get done.. Na it was do anything possible to stall shit til they couldn't anymore.

Interesting. I can see it from both sides of the equation.

Speaking specifically to the article though, the challenge at hand is that the general populous (on both sides of the pond) has not been educated collectively to a sufficient level nor properly socialized to comprehend the real economic ramifications of the social programs that many have come to depend on.

The resulting effect of the shock of removing social systems for those presently using them (or those hoping to use them in the future when they get older or sicker) would be epic. The prevailing mindset is too entrenched for some to see any other alternative. There would be much finger-pointing at big business and/or military operations as being the wasters of funds (among other things) and the resulting debate would be an endless whirlpool of confusion.

The EU is failing drastically, that's certain, but what will be the end-game? If social systems are eliminated or reduced significantly, there would be instant mayhem in the streets. There is a set class who prefer to suck on the teat of the government at the expense of the government (or more precisely the funds from those who actually work and pay taxes - usually the middle class). That set class of persons is not collectively cognizant that their reliance on such services makes them highly susceptible to the inefficiencies, incompetency and varying grotesqueness which plague government-run/funded systems.

Oh well, let it burn. There are numerous other factors in this global equation which no doubt will complicate getting a clear, concise message out to the public without serious kickback and neither side appears to trust one another to a level which would allow them to agree on a clear-cut and permanent solution. Thus they will keep patching the problems, leaving it for the next generation to solve.

The only way that all parties concerned honestly will become aware of the seriousness of this global situation will involve things in the global economy getting much worse before they get better. That is certain.

I'm not reading that.

but lemme guess... right wing conservatism is the answer to all of our problems?

Where in the US constitution does it say you have to have US bases in hundreds of countries over the World, fight 3 wars .....

You don't mind spending tax dollars to kill foreigners just not to help Americans - strange.

In a nutshell...

Too many people, too few jobs.

So what are the options...?

* Create more jobs and opportunities.
Seems so easy, but not when considering globalization and automation

* Reduce population growth.
China planners had the foresight to what was coming 30+ years ago

* Eliminate some of the population.
Extreme, but some people, including in the power-elite, ponder that as a serious option.

* Paying under-employed / unemployed people - welfare, the dole, etc.
Much of Europe embraces this model - and increasingly the U.S. too, as unemployment / lack of opportunity becomes more like Europe's

What other options are there?

Imho, long political diatribes, such as the first post, are meaningless.

Bickering about Conservative, Liberal, Republican, Democrat, etc is a waste of time, since the major political parties are primarily populated by people with similar motivations - ego and lining their own pockets - nothing new there - that's the nature of politics.

As for the Free Market ... a myth! The U.S. is not even close to a free market. And be glad it's not - for if it was, unemployment would be even higher and working conditions far worse - the 19th century, child labor, Standard Oil, etc comes to mind, as well as, offshore nations of today - is that the kind of country one really wants to live in.

Anyways, as for the "truth" ... we are in this together - a truly modern society recognizes that and seeks to raise standards, not lower them. As of the moment, the U.S., as like most everywhere else, is caught up in the race to the bottom; lowering standards - a race in which most everyone, except the power-elite (people with wealth, often measured in billions, on direct dial with top political and business leaders), ultimately loses.

Ron

This whole debate on whether or not our entire system is sustainable is just stupid, as is that article.

If we kept the Clinton tax rate for the last decade and didn't start two pointless and endless wars, our deficit would be totally within acceptable margins. Add in the fact that if the banking industry wasn't allowed to sell phony loans 20 times over until the entire world economy collapsed, unemployment would be around 6%.

The system is totally sustainable, it's just that a few idiots made some insanely stupid decisions and fucked everything up. It doesn't mean you ditch the whole system.

In politics, everyone has their own version of the facts but those are the real facts. Two of the longest wars in American history, unnecessary tax cuts, and an unchecked financial industry are the reasons the deficit is so large. It really is that simple.

and links pulled :thumbsup

someone with common sense!

shit... if i wanted to read that much i'd buy a book

not 1 single country in the world right now has anything that comes even close to a free market.

And how do you propose to do that? It's great to say it but I doubt if you have a clue on how to achieve it. I do and so does everyone else of my age. That will give you a clue.

Stop buying in goods from overseas and export more.

Stop buying in goods from overseas and export more.

The people who think retail spending is a solution like lots of shoopers. Pretty fucked up idea as most shops are full of foreign goods. But WTF it looks like policy.
Yes that might go down well in the Bible Belt. :Oh crap

Stop buying in goods from overseas and export more.

Telling them to go starve isn't an option. Not for a Christian country. :upsidedow

The writer is so biased it's a joke.

A "free market" means a boss of a company can move his entire production to a third world country and then import the goods for 20% ish of what it used to cost and sell them to the population of where his production used to be to those who still have jobs. At a better price. Because all those screaming about the debt will buy them.

The problem is the more jobs you export, the less people at home to buy them. No worries, the "Service Sector" will replace the money lost. We'll support those who lost a job maybe "making cars in Detroit or Dagenham" with Social Security paid by people who have jobs and businesses making a profit. And all will be fine. :thumbsup

Except to get into power, people promised to lower taxes. They just made up the difference with borrowed money.

Then the shit hit the fan. The "Service Sector" which was mainly financial. Made themselves a ton of money by fucking the rest of us and the house of cards collapsed. All of a sudden it was clear many countries had borrowed too much. some had debts they could manage, some had debts they couldn't manage and some had to be rescued.

Rescued with more borrowed money. :Oh crap :Oh crap :Oh crap :Oh crap :Oh crap

Simplistic explanation, but it's true. We put ourselves into the hands of the bankers. When they fucked us the alternatives were simple. Bail them out and go into a recession or let them throw themselves out of their windows and have another 30s style Depression.

$5 submissions the way to achieve your aim is so simple to answer. In 1965 when I started working there was no "ENTITLEMENT MENTALITY" because everyone could find a job. A lot of those jobs were producing goods for export. When I went to a shop most of the goods had "Made in Britain" labels. Marks and Spencers boasted that something like 90% of the goods they sold were made in the UK. Today you would be pushed to find anything made in the the UK or US.

1967 I was in the dress making business, in East London. There were loads of factories everywhere making clothing. Dagenham had a big car making plant.

That's 36,000 people out of work, not spending money and on benefits. As it the factory now. It wasn't just the bosses fault. The workers in those factories loved to go on strike and were a nightmare to deal with. I knew workers and bosses there.

Detroit. Didn't the unions push the owners into a benefits package for medical and pensions that made it cheaper to move the plants or bankrupted the plants?

Everyone is to blame for the mess we're in.

If you want low taxes and low prices, where does the money come from to support your lifestyle.

mynameisjim :thumbsup

Problem is the voters wanted it. Tax cuts and armies wandering the world looking like they rule the world. Have you seen some of the political rallies?

:bowdown
some of the reasons I am always screaming about "reform, regulate and investigate"

[QUOTE=Paul Markham;18339094]

It wasn't just the bosses fault. The workers in those factories loved to go on strike and were a nightmare to deal with. I knew workers and bosses there.

[QUOTE]

It wasn't the bosses fault. really, why are they called the bosses then, why do they take 100 times the wage of a normal worker?

Workers love to go on strike, really ? and lose the wages for that period? Have you worked on a production line in a car factory?

How about a situation where there is $3000 for a job, and the worker (a girl ) does all the work and is paid $500 and the boss ( a pornographer ) does a shitty job and takes $2500 ?

Is it the boss's fault then ?