Thursday, January 14, 2010
Random thoughts from a warped and fevered mind...
A study by Carmen Reinhart of the University of Maryland and Kenneth Rogoff of Harvard University point out the perils of the level of debt we have in this country. Entitled "Growth in a Time of Debt", the study looked at economic data from 200 years of history and from 44 countries. The conclusion: when you owe as much money as we do in this country, the economy is not going to growth rapidly, if at all. The study showed that when a country's debt exceed 60% of Gross Domestic Product (GDP), which is the value of all the goods and services we produce, growth rates drop dramatically. When debt as a percentage of GDP exceeds 90%, growth in the economy comes to a stop and in many cases, contracts. Where is the U.S.? Currently, our national debt is at 84% of our GDP, and that is before socialized medicine and an honest recognition of the true costs of Social Security and Medicare. This does not bode well for those that are out of work today and looking for a job. If the trend does not change, economic growth will be very anemic going forward. If you have children or grandchildren, be very concerned for their economic future.
Someone once said life is like a box of chocolates. I think it's more like jalapenos. What you do today can burn your ass tomorrow.
And while we are on a discussion of GDP, I think it is important to get right to the heart of the debate about the direction of our country. Remember that I said that GDP is the value of all goods and services that we produce. Now here is the critical point: we will typically produce those things we want to use or consume, those things that are beneficial to us. And this presumes that the free market-you and I- are going to make decisions about what we want and be in charge of what is produced and will be in charge of our money. What if less and less of the money is being spent by the people- by you and me- and instead, a larger and growing percentage is being spent by the government? In 1900, government spending accounted for just 3% of all economic output in this country; today it accounts for 46%. That means that the government is spending enormous sums of money that you and I no longer have to spend and controlling more and more of the economy. And the simple fact is this: government spending does not raise your standard of living one bit. And when any government starts controlling a larger percentage of the economy, less resources are available for individual incomes and standards of living begin to fall.
We have a department of counter-intelligence in this country. How about a department of counter-stupidity?
So now I get to the last point of my economic rant (didn't intend for this post to turn out that way, but it did). Please don't misunderstand, there is a need for government programs. I, for one, am glad we have the best military in the world. The question has been asked over and over in these modern times "How do we control government spending?", and lip service has been given to sunsetting defunct programs (they are not) and eliminating waste (uh, get back with me on that one), but no real and effective measures have been implemented. And most of just roll along with this. Perhaps if we ask the question a different way, it would get our attention and stir us to action. I think the salient question to ask is simply this: "Who do we want spending OUR money?" Do we want a vast, inefficient government beauracracy and 535 members of Congress telling us- you and me- how to spend OUR money? Or do I want to control the spending of the money I earn on the things I want and need? Once each of comes to the realization this is OUR money that is being spent- money that you could spend to improve your standard of living and money that is coming out of your pocket, then it becomes more personal and we get more involved. And our involvement is desperately needed to reverse some very dangerous trends.
If you can smile serenely when everything is going wrong, then you already have someone in mind to blame.
And that, my friends, is my view.