( Some Random Musings on the forth of July )
Thomas Paine – July 2010
Our country is in a mess. We are being bombarded from every direction with conflicting solutions to the mess. We are even seeing astoundingly bad solutions that seem to be saying the mess is not bad enough yet…..we should make it worse and the clarity that situation provides will then make it easier to apply an as yet undetermined solution in the somewhat distant future. How many times have we recently heard from our elected representatives….” We know it is a new law with some problems but we will fix them later. It is better to pass a bad law than no law at all!” In order to believe such a moronic statement one must be willing to ignore the question “If you really intend to fix it why did you not do so the first time?” Do we even uniformly understand what a mess is? Is a big mess the same as a terrible mess or are they different messes?
Where Has Common Sense Gone?
Let’s not get too bogged down in solutions before we understand just what the mess is that we are in. We should focus on a limited number of facts, instead of notions.
Saying the country is in a mess does not make it so! Let’s not be too hasty! True, things could be better, much better. One merely needs to ask one of the 17 million persons currently out of work in order to get confirmation that the country is in a grand mess. On the other hand over 8 million persons were out of work when things were going well. According to them we have been in a perpetual mess…..or perhaps they have not upgraded themselves to be employable in today’s world, or they are not willing to work for a pay rate commensurate with their skill level. This is unfortunate for them but a fact never-the-less. The mess will not be resolved for them until they become more skilled in some area of useful endeavor. This is one of the issues resulting from an economy having evolved from largely agrarian to manufacturing to service oriented. In a service economy the ease with which an individual’s skills can be judged against those of another person virtually guarantees the lesser skilled person will be the last to be employed and the first to be laid off. This hardly seems fair……and now we have arrived at a word (fair) which requires even more scrutiny than does the word mess.
The word fair can be used as an adjective, an adverb or as a noun. The dictionary provides one bit of clarity to the word with the following definition….[ fair: something that is fair ]. Now I get it. Fair means just about anything I want it to mean. It is sort of a short hand I can use to prove the point I am wishing to make without actually having to prove the point. It also powerfully disparages any sentiment contrary to the one which is “fair”. The only more definitive statement I can think of is ….”It’s just not fair.” Not fair conjures up a situation which is not even worthy of any additional discussion or consideration. My four and one-half year old grandson learned some months ago that any statement, request or action not in total harmony with his own persuasion was unquestionably unfair and he so states this sentiment regularly. In conclusion one might say “Fair is fair.” What could be more definitive? My personal conclusion is the word fair has been so overused it no longer has any meaning or substance when used in the social or political arena.
If only our elected representatives could grasp this situation we might not be in “such a mess”. What if we had no Fair Labor Standards Act? What about fair trade agreements? What even is social fairness? Is it possible these terms could be replaced with a more understandable definition? But what would our elected representatives do if they had to apply exactness and correctness to the platitudes they so freely utilize when trying to convince the lesser informed electorate that after all “This is only fair!” Does fair for one person by definition mean fair to another person? Have we lost sight of the fact government needs to first take away from one in order to give to another?
WHERE HAS COMMON SENSE GONE?
Therefore my admonition to you the reader is you should look closely at any political pronouncement with the word fair in it. If your personal persuasion is either more liberal or more conservative than the person utilizing the word fair, you can be guaranteed the two of you are not applying the same meaning to the word in any particular context. You can further be guaranteed if you should question the meaning of the other person’s position you will surely be deemed, (or dammed as appropriate) as being grossly unfair.
I believe the word fair and any of its derivatives should be banned from all political discourse or other political communication.
Now let’s return briefly to the mess our country is in. We should at least discuss the economy because in a capitalist society all other things are invariably linked in some manner to the economy; things such as religion, war, equality of opportunity, elections, the American Dream, immigration, unemployment, the stock market, taxes etc. etc.
There has of late been copious writings addressing the economy and what is right or wrong with it. No doubt some of the writings will be proved accurate while others will be found wanting. It is hard to determine what is important and what is not. I believe there is one salient element of the economy which overshadows most of the other elements. That element is best described by a single word: leverage.
The dictionary does a much better job defining leverage than it does when defining the word fair. Leverage is: “The use of borrowed money in the expectation its application will derive profits of greater value than the interest owed on the borrowed money.” It does not take much imagination to then understand what the terms overleveraged or deleverage must mean.
The country is in an overleveraged mess linked to lack of personal responsibility. Deleveraging will be long and it will be painful. Just ask any of the 17 million unemployed. They will verify significant pain is being experienced. Yet deleverage will inexorably take place. It has already started, in the price of houses for example, but it still has a very long way to go. Time is also of consideration. We surely do not want to deleverage at a rate that starts to accelerate sufficiently to be classified as another great depression. We also do not want to delay the inevitability of deleveraging to the point that recession with inflation and high unemployment persists for years and years. This latter path seems to be the one our elected representatives are presently advocating.
What should we do? WE SHOULD STOP ENCOURAGING EVEN MORE LEVERAGE! We must insist the government stop providing housing subsidies. The housing subsidy is franchised by the government and the housing industry to maintain more construction jobs. Yet all it is accomplishing is to encourage more debt by many persons who cannot afford it. The government must in fact stop any subsidy that encourages the creation of additional debt; even the hidden subsidy to banks that encourages them to take on more newly created government debt. This activity could well be classified as a Ponzi scheme were it not for the fact the taxpayers who are being handed the debt have no way of ever realizing any profit whatsoever and little chance of paying it off in their lifetime.
Then there is the generation of individuals who have been raised to believe debt is the fastest way to a secure future. In some cases, this belief is not working out very well, but hey there are ways around this. If your house is worth less than your outstanding mortgage, just quit paying on the note. The banks usually have no recourse other than repossession, besides they already have so many repossessed houses they are slow to act on even more repossessions. Besides by being slow to act the banks can persist in the illusion that things are not as bad as some would have us believe and at the same time the home owner can enjoy a “rent free” environment for many months until they are finally forced to move on to the next government subsidized house.
What if one owes the government back taxes? There are numerous advertisements on television for firms which claim they can help you avoid most of what you owe. I am certainly not a lover of taxes, but if they are owed they must be paid…….unless of course you are a high ranking government official. What about credit card debt? Again there are copious advertisements guaranteeing you can be forgiven at least half of any amount over $10,000. It is obvious the need to adequately discharge one’s debts in a timely manner is now often viewed as merely a matter of choice. To have it otherwise would be unfair. Besides it is only fair that lenders who take advantage of our desire to leverage our future should not be allowed any significant profit at our expense. It’s just not fair. The government must intercede in the interest of fairness. Individual responsibility must not be allowed to impinge upon the fairness of social responsibility, because so long as society is responsible for the mess we are in then none of us has to assume personal responsibility and the government can be utilized to cure the mess.
To this view I merely say “Good luck!”
So there you have it. In my opinion the economy must deleverage as quickly as possible while maintaining stability. To do otherwise will invite indefinite but lengthy continuation of the hardships which accompany deleveraging. However there is one significant obstacle to a successful deleveraging process. Our elective representatives and the general citizenry must be made to recognize the destructive debt path they are following. They must be brought to the point of accepting personal responsibility. They must be willing to honor their legitimate debts and manage them properly. Otherwise they will have no true respect for themselves, their family, their neighbors or their country.
Respect for our country is accepting other citizens with a diversity of differing cultural, ethnic and religious backgrounds while also accepting a single national language, acknowledging a single constitution that can be changed only in the manner it self-prescribes and insisting that all elective officials follow the letter of the law just as ordinary citizens are required to do. This certainly sounds fair to me. Respect for country requires individuals to accept and act on their own responsibility. The Federal Government must retreat from overriding the rights of the several states and the citizens of those states while conscientiously honoring in full the specific duties of the Federal Government. This irresponsible attitude by government has done more than any other single thing to convince many individuals they can do whatever they wish and usually get away with it. This attitude must be changed and the place to start is with our elected officials. The time to start is now!
T.P.- July 4, 2010