Is This Time Different? ... Tough Choices Ahead

Is This Time Different?

A serious debate between placing a heavier emphasis on either (1) individual responsibility or (2) collective responsibility is starting to heat up in American politics.

Although perhaps the four most overused words ever are "this time is different," the world, including us, has some very tough choices to make about what our future course will be.

Different or not, we're going to have to decide about taking on more debt or starting to pay it off, accepting more personal responsibility or choosing to rely more on others. All this means getting serious about living within our means, both personally and as a society.  As we make those decisions, we will have largely determined what kind of self governing society we'll be leaving behind for future generations.

And this fall's elections offer a great opportunity to make the views of We the People known to our fellow citizens, the politicians and the rest of the world, too.

You see, due to the worldwide debt bubble which has now burst and left us with a sick global economy, high unemployment, huge deficits and enormous bills to pay, we're facing some extremely difficult choices as a world. But choose we must.

And depending on what future road we Americans choose to take travel, the U.S. will either strengthen or weaken our position as a world leader, both with respect to national security and financially as well.

So maybe the phrase "this time is different" does apply.

Although most of the world's current attention is now focused on the possible futures of Greece, Spain and Europe as a whole, let's first shine the spotlight on the U.S.

In a few weeks, it will be election season in Greece, but this fall will be voting time in the U.S. as well. Thus, we'll begin here at home.

U.S.

The Bain Ads Are About Spending says this about the choices confronting We the People this autumn and beyond:

"In a presidential re-election race, the formula (telling the electorate that all's well and there's no need to face reality and make hard choices) is inconvenienced by the existence of a very public record of things done and said, of persistent joblessness and sluggish growth, and one big issue that threatens to dwarf the Obama allure altogether—the entire industrial world's rendezvous with insolvency.

Here's the real message of the Bain ads. The ads may invoke classic private-equity slurs like looter and stripper, but the real message is that private equity is exactly what it says it is: a bringer of efficiency and rationalization. Mr. Romney, the ads say, wants to take things away from you that he claims no longer are affordable; Mr. Obama, the ads say, will fight whoever tries to take things away.

To the less sophisticated voter, the Obama message is a soothing "nothing has to change." To the more sophisticated, President Obama proposes himself as the defender of every spending interest, never favoring a cut, always pushing for higher taxes.

Look at Europe. Look at California. This strategy can work electorally. As policy, it may be unbelievable, irrational and misleading—like Gov. Jerry Brown clinging to his bullet train. But it makes a kind of political sense.

Mr. Brown's politics in fact are worth studying. His state is flirting with fiscal collapse. Businesses and workers are fleeing its high taxes. Yet he defends a perfectly senseless plan to build a $68 billion high-speed rail to nowhere. His message to his state's spending interests: "I'm your guy. No compromise." As in Greece, where austerity has meant the private sector shrinks but the government doesn't, so in California, if Mr. Brown has anything to say about it.

Politicians who work this vein are careful not to be heard actually saying "everything is affordable."

But voters get the message "the rich will pay." If the proceeds of the Buffett tax were proportional to the noise Mr. Obama has made promoting it, the Buffett tax alone would solve our fiscal problems (in fact, it's impact would be negligible).

The . . . campaign, then, is not about the legitimacy of capitalism, which isn't really in question. It's about Scott Walker in Wisconsin; it's about Chris Christie in New Jersey. The symbolic victims in Obama's Bain ads are steelworkers only because a 50-year-old retiree living on a government pension doesn't make a compelling victim. The villains are rich bankers because the average taxpayer doesn't make a good villain. The Bain ads are about the spending wars, and those who benefit from government largess and those who foot the bill.

Mr. Romney should be happy to fight on these grounds. A lot of voters—known as taxpayers—worry about the economic future. Mr. Obama's stance of "let's preserve and expand the handouts and to hell with tomorrow" frightens them. Quite possibly some decipher the Obama ads exactly as Team Obama intends, but like the ring of Mr. Romney's private-equity history. It has nothing to do with putting profits above people—and everything to do with stopping the rot."


Greece

In Europe, a Dispute Over Facts and Fairness hits the nail on the head as well.  It all sounds pretty much like the discussion in America:

"Part of Europe’s problem is that Europeans can’t agree on some basic facts about the continent’s financial crisis. Consider the striking results of a recent poll by the Pew Research Center:

Pew Research Center

In most large European countries, a plurality of people say Germans are the hardest-working Europeans, with a substantial share also saying that Greeks are the least hard-working. Greeks, on the other hand, say Italians are the least hard-working — and view themselves as the hardest working.

Pew explains:

The crisis has exposed sharp differences between some Europeans. Germany is the most admired nation in the E.U. and its leader the most respected. The Germans are judged to be Europe’s most hard-working people. And the Germans are the strongest supporters of both European economic integration and the European Union.
Greece is the polar opposite. None of its fellow E.U. members surveyed see it in a positive light. In turn, Greeks are among the most disparaging of European economic integration and the harshest critics of the European Union. And they see themselves as Europe’s most hard-working people.

James Surowiecki’s column in this week’s edition of The New Yorker touches on similar themes:

Europe isn’t arguing just about what the most sensible economic policy is. It’s arguing about what is fair. German voters and politicians think it’s unfair to ask Germany to continue to foot the bill for countries that lived beyond their means and piled up huge debts they can’t repay. They think it’s unfair to expect Germany to make an open-ended commitment to support these countries in the absence of meaningful reform. But Greek voters are equally certain that it’s unfair for them to suffer years of slim government budgets and high unemployment in order to repay foreign banks and richer northern neighbors, which have reaped outsized benefits from closer European integration. The grievances aren’t unreasonable, on either side, but the focus on fairness, by making it harder to reach any kind of agreement at all, could prove disastrous.

 Discussion and Analysis

The first article points to the reality of "the entire industrial world's rendezvous with insolvency."  Europe is the prime front burner story, and the leading examples within Europe today are Greece and Spain, respectively.

The second article suggests that the European focus on perceived "fairness" may prove "disastrous" and make it impossible to reach any continent wide agreement at all. Especially revealing is the  belief by Greeks that they are the hardest working people in Europe. For obvious reasons, nobody else agrees with the Greeks' point of view about themselves.

Summing Up

The most difficult part of resolving any argument or disagreement is to first arrive at a consensus on what are the REAL FACTS. Before later getting to a better reality than the existing one, we must initially come to terms with what is the current reality. And that's tough to do all by ourselves, let alone with others involved.

Some obstacles to getting to a shared reality in the U.S. are the following. They're intended to be illustrative only.

The public sector takers versus the private sector makers.

The public sector unions against the taxpayers, aka the Democrats against the Republicans.

The haves versus the have-nots, however defined.

The private sector unions against the private sector companies, such as the Caterpillar example. (See " yesterday's post "Caterpillar Strike and its Larger Story ... Some Questions I have")

The young against the old.  And so on.

But we do have to arrive at a consensus as to where we are.  Time's a wasting.

To repeat, we simply can't ignore getting to an agreement on our reality much longer.

Our debts will soon be coming due and interest charges on that debt won't remain at historically low rates forever. The creditors will see to that.

But we can fix our problems and move forward to a better future for all Americans if we can come to grips with a shared reality.

But first, let's all start talking honestly and openly about both where we are and where we want to go.

Thanks. Bob.