We are approaching the 70th anniversary of the end of World War II, that point in time when America emerged intact from the ruins of a ravaged world as the most powerful nation in the history of our planet. We had an industrial base in place that had served as the arsenal of democracy—and which now stood ready to bombard both friend and foe with consumer goods. We sold, sold, sold—and we build up wealth on a scale that was so unprecedented as to seem virtually unlimited. Later, with the help of our easy generosity, the world rebuilt itself, and our customers slowly transformed themselves into our competitors. We were still enormously wealthy—but we gradually found ourselves spending our wealth instead of creating it.
Eventually the dollars ran out, so to continue to enjoy the lives we had been led to believe were our birthrights, we began fool ourselves—both as individuals and as a nation—into believing the ability to borrow money was the same as actual wealth. Even worse, we began to believe that debt was the key to creating prosperity, so it seemed both reasonable and prudent to borrow more and more to plow into increasingly risky “investments” that seemed a fool-proof way to get rich by “leveraging” credit into a lifestyle that approached the financial ease our grandparents enjoyed.
Today we are busy assigning blame and sorting out degrees of culpability for our foolishness. Although it is certainly true that we all had a role in causing our financial problems, it is equally obvious that Wall Street financiers and their shills who saw us as easy marks, politicians who were happy to look the other way while we were fleeced, and a pervasive atmosphere of greed that provided the feverish underpinning of the many years of obscene extravagance leading up to the financial crash of 2007-2008 all played their parts.
We now have many pressing national needs and little money in hand to meet them. Continuing to live on credit is simply no longer possible, and there is likely little to be gained by continuing to shake the average taxpayer upside down by the ankles for a bit of loose change. Given our breathtaking level of income inequality, it seems to make perfect sense to ask the wealthiest to pay more, but various ideas for more “progressive” taxation seem to forget that handing more dollars to elected officials who daily display their dysfunction isn’t a very attractive—or perhaps even sane—solution to the problems we now face. The money any new taxes collect will simply be handed straight over to our creditors, wasted by government officials who have no incentive to economize, or blown on someone’s overly complicated and ill-considered idea to improve our lives by adding yet another government program to the millions that already exist.
Those who counsel against austerity are absolutely correct that bringing government spending under control will reduce our standard of living, but they need to remember that prosperity build on public debt is no prosperity at all—just ask Greece. Those who urge more—and more expensive—government programs to “stimulate” the economy also fail to note that these programs will also stimulate yet more public debt that will require repayment. We could, of course, simply return to the Eisenhower-era of steep taxes rates on all, with the very highest rates falling on the richest, but we must consider that those tax rates were woven into a much more affluent era when the economy was far less globalized and wealth—and the means to produce it—far less mobile than today.
Nonetheless, we need to find a way out of the mess in which we now find ourselves trapped, but any reasonable suggestion to move forward seems to be stymied by the interest group politics now baked into every level of our government. Everyone seems to be hunkered down to protect their own little program, perk, and privilege—all the while loudly insisting it is someone else’s job to sacrifice for the greater good. It is also difficult to make any progress when our legislators so brazenly busy themselves collecting campaign donations in exchange for their complicity in creating never-ending deadlock in the halls of government.
Perhaps the first part of the challenge is to convince everyone to recalibrate their expectations. Government programs and benefits created in a post-war environment of wealth creation and disbursement are much more difficult to justify in an era of high debt, stagnant or falling wages, and intense global competition. Even those programs we deem necessary must learn to do more with less. It is not a matter of fair or unfair, humane or cruel, or promises or betrayals; it is simply high time we began living within our current means instead of those of an earlier period when government could promise and spend with no thought regarding the future.
I realize the obvious problem with all this: Special interests and their political servants are experts at manipulating public opinion to make us angry, fearful, and insular. In addition, it is difficult for any candidate to win election by promising to cut programs and benefits for a broad range of voters. Add these two together, and we would seem doomed to a future of shrill partisanship, shortsighted thinking, and unending gridlock. We might, truth be told, already be at this point—and nothing we do can change this.
However, I prefer, as Thomas Jefferson once said, to “steer my [ship] with hope at the head, leaving fear astern.” It is, of course, an open question whether enough of our citizens feel the same, but perhaps we all need to work to make long-needed changes so we can escape the trap where we find ourselves and begin to clean up the mess created by those in government who claimed to be doing nothing other than looking out for our best interests over the past decades of overpromising, overspending, and overconfidence.