2008 and Beyond: “I Can’t Afford That”

In a poignant and understated opinion piece, called “The Courage to Choose” Minyan Peter helps us understand why 2008 and beyond are likely to be a very difficult years. Peter writes:

I believe that in time, historians will define the last twenty years in America as the “Age of Aspiration” where, thanks to unprecedented levels of credit, Americans could become anything they wanted.

Well, I, for one, believe that our Age of Aspiration is ending. And, with its conclusion, we must, for the first time in almost a generation, begin to reconcile our wants with our means. We must choose what to do without, rather than what more to do with.

Peter goes on to observe:

We are going to have to separate what is most important from least, and act accordingly. Where life was once limitless, it will now be constrained.

And, like it or not, all of us will need to return to our vocabulary a simple phrase that I believe has been lost over the past twenty years: “I can’t afford that.”

Unfortunately, social trends do not reverse easily. This “age of aspiration” that Minyan Peter describes could also be called an “age of entitlement.” The illusion of unconstrained choices is a mindset that will not be easily reversed. Collectively as a society, we do not currently have “the courage to choose.” Given that, it is easy to forecast certain social trends for 2008 and beyond.

  1. More and more bailouts will be demanded by individuals, households, and organizations that have lived beyond their means. The demand for housing bailouts has only just begun and will begin to spread to credit card and other consumer debt.
  2. Governments, at all levels, have lived well beyond their means. Because they have coercive power, they will be the last to say, “I cannot afford that.” Thus, it is almost a certainty that taxes will go up.
  3. More and more dangerous populists, like Mike Huckabee, will seek office. Populists are especially dangerous because they are without any identifiable principles. This makes them especially prone to totalitarianism. As the economic situation worsens and fear goes up, in years to come, politicians like Mike Huckabee will seem like relatively benign candidates.
  4. At the same time, because more of the population will be willing to look at root causes, more principled candidates, like Ron Paul, will seek office. Unfortunately, for the foreseeable future, support for unprincipled populists will exceed support for principled candidates. Polarization will increase.
  5. Demand that income be redistributed from the “rich” will increase. The crowd that populists pander to will reason: “After all they must have attained their money unfairly and it’s only right that that money be redistributed to those who need it more.”
  6. For the foreseeable future (next five years), we will move further away from our framework as a constitutional republic, which was founded with defined and limited powers granted to government.
  7. As the social mood deteriorates, the threat of more ruinous foreign adventures will increase. Recently in New Hampshire, John McCain said that the United States military could remain in Iraq for “maybe a hundred years.”
  8. Demands to limit cheap, foreign imports will increase. In the short-term, there is little chance that trade liberalization will be reversed; but in the coming years, the populist threat of ruinous tariffs and quotas will increase.
  9. Demands that something be done about energy prices will increase. This will provide political cover for continued subsidization of ethanol and other forms of energy, such as nuclear, which are not viable on the free-market. This subsidization will further raise energy prices; drain capital away from viable, emerging, alternative energy sources; raise food prices; and create even more environmental disasters, like the current draining of aquifers in the mid-west.

    4 Responses to 2008 and Beyond: “I Can’t Afford That”

    1. E says:

      This writer concurs with the Command Master Chief of the Blog. XO, come about to one-three-zero degrees, fifteen degrees on bow-plane, zero bubble. Crew, Make ready for ascent of Chinese nation and Greater European Economic Power.

    2. E says:

      Seriously, what’s troubling about this trend is that the government, the institution that we entrust to manage peace and order, has started playing fast and loose with the public on issues of finance governance. Take gambling and slot machines for instance. Personally, I have nothing against them. However, if a State decides to employ gambling to raise revenue (instead of reducing expenditures), they should at least have the courage to say so outright. Instead, state officials in many instances will stand behind the shield of phrasing similar to “while we don’t condone gambling, the corporate interest in gaming is compelling”. Just tell us the truth. Tell us that you need the money. USA Today just had an article today on this. The US had a record 767,418 slot machines and video poker games in operation on New Years Day, up 6.4% from a year earlier, according to Casino City Press, an industry publication. The nation now has slots in 37 states — up from 31 in 2000 — and the equivalent of one machine for every 395 residents. Moreover, “slots are considered an easier tax to impose” than income or sales taxes, says Alan Meister, an economist at Analysis Group in Los Angeles who studies gambling. In the Commonwealth of Virginia, because we do not believe in gambling, we instead have “abusive driver fees.”

    3. Bob Gast says:

      An observation based on historical precedent:

      Tyranny is the slow and slippery slope of often well meaning but ignorant rationalizations that support and ultimately implement laws and policies that cannot reasonably be kept by the governed and society in general.

      These are, upon objective analytical inspection, nothing more than re-distribution of wealth schemes. They create contradictions in logical alignments of the common good (e.g. cigarette taxes to fund education, red light cameras/ speed cameras with artificially low speed limits or rigged yellow light times or abusive driver fees to fund better and safer roads). These are designed primarily extract additional monies from the public to support an insatiable appetite for spending public dollars by those who benefit from spending them. They are initially well disguised as being about safety and solving problems.

      There is enough truth, to the naive and indoctrinated, to sound reasonable enough initially for these “needed” government programs. Have you ever heard the brain dead say something to the effect of “… hey, I’ll trade some rights for security – If you’ve got nothing to hide, you’ve got nothing to worry about…?” By the time the truth is obvious to most, the inherent self-interest of government to maintain and grow itself is almost impossible to overcome.

      The dumb-downed public gets beat down by the petty and capricious power of entrenched and protected bueracrats. Politicans do the work of special interests and in the process make sure that they do well themselves. The pay-offs for earmarks are often-times lucrative! Party affiliation makes no distinction.

      Champions will emerge occasionally and even make a hint of denting the progress of the beast. But they do so at great risk and many are consumed along the way.

      The game is rigged to favor the “beast” of government control, spending and re-distributing your wealth and rights. It is rigged against those who would challenge such a racket. It will take a convergence of circumstances, will-power and ever more flagrant tyranny in order to change the current course.

      Bob G.

    4. E.

      I can appreciate your frustration but what else can we expect?

      H. L. Mencken wrote:

      The government consists of a gang of men exactly like you and me. They have, taking one with another, no special talent for the business of government; they have only a talent for getting and holding office. Their principal device to that end is to search out groups who pant and pine for something they can’t get and to promise to give it to them. Nine times out of ten that promise is worth nothing. The tenth time is made good by looting A to satisfy B. In other words, government is a broker in pillage, and every election is sort of an advance auction sale of stolen goods.

      Mark Twain wrote:

      Sometimes I wonder whether the world is being run by smart people who are putting us on or by imbeciles who really mean it.


      Sadly, I think that you are all too correct. We are far from hitting bottom and our failure to wake-up will result in more tyranny before we do.

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