Monday, August 27, 2012

Saving, or is it Bribing, the Middle Class ... Where It Leads ... Nowhere Good

We're hearing lots of noise these days about which political party is more interested in, and capable of, fighting for and saving America's middle class. All in the name of fairness. What a crock!

What if we merely substituted the word "bribing" for "saving?" Of course, bribing doesn't necessarily mean that the one being bribed is totally aware of what's taking place. In other words, the members of the middle class are allowing themselves to be bribed and their votes bought in the name of fairness. But fairness to whom?

Here's the point. What we're doing to future generations of Americans by living beyond our means and allowing the pols to "save" us is what's unfair. In fact, it's totally unfair.

My perhaps overly simplistic view is that government bureaucrats aren't capable of providing more expertise and acting in the interests of We the People any better than we as individuals are.

Accordingly, when we want or vote for government to do for us those things that unnecessarily grow government, it's because we're getting a "better deal" from government's involvement than we could if government wasn't involved in "saving" us.

And that brings us to the 'bribery" part of the story. If government is going to give me more than I contribute, somebody else is going to indirectly provide me with that money. Government is the intermediary only. So when politicians talk about saving the middle class through government programs, what they're really offering are free lunches.

And these free lunches are often generational. By that I mean that we elect to borrow and spend today what future generations will be held accountable for tomorrow. And it won't end pretty, even if our generation manages to escape the consequences of the shameful "let's bribe ourselves" behavior.

Debt is debt and someday, someone, somehow, and in some way, will have to pay it off.

Let's use the example of Spain to see where the road of excessive spending, borrowing and indebtedness can and will ultimately take us if we don't start using some common sense about all this.

For Spain's Jobless, Time Equals Money describes the eventual dead end of the debt laden, live and spend beyond your means road to oblivion:

"Even though she's one of millions of young, unemployed Spaniards, 22-year-old Silvia Martín takes comfort in knowing that her bank is still standing behind her. It's not a lending institution, but rather a time bank whose nearly 400 members barter their services by the hour.
Ms. Martín, who doesn't own a car and can't afford taxis, has relied on other time-bank members to give her lifts around town for her odd jobs and errands, as well as to help with house repairs. In return, she has cared for members' elderly relatives, organized children's parties and even hauled boxes for a member moving to a new house. . . .

As Europe's leaders struggle with a five-year-old economic crunch that has saddled Spain with the industrialized world's highest jobless rate, young Spaniards are increasingly embracing such bottom-up self-help initiatives to cope. The diverse measures—some commonly associated with rural or disaster-zone economies—supplement a public safety net that is fraying under government austerity programs. . . .

The growth of time banks revives a concept pioneered by 19th-century anarchists and socialists in the U.S. and Europe, who wanted to test their philosophy that prices of goods and services should more closely reflect the labor involved in producing them.

"It's a step backward not only for a euro country, but also for a developed country," says José García Montalvo, an economics professor at the University of Pompeu Fabra in Barcelona. . . .


Spain's economy has been in dire shape since a real estate bubble burst in 2008. Unemployment hit a record of nearly 25% in the second quarter, and the government sees the economic contraction continuing into next year.

Meanwhile, Spain's public-assistance system has been battered by national and state budget cuts aimed at soothing financial markets. As jobless benefits run out for long-term unemployed, the percentage of out-of-work Spaniards receiving assistance has fallen to 65% from 78% in 2010. Last month, the national government announced the most severe budget austerity plan in the country's modern history.

The crisis has been an especially tough blow to people in their 20s and 30s.... They were the first Spaniards to enjoy the fruits of a strong welfare state that included universal health care, accessible higher education and generous worker protections, says Rodolfo Gutiérrez, a sociologist at the University of Oviedo. They watched their parents' living standards rise dramatically, and entered the workforce in the late 1990s and early 2000s, when jobs were plentiful and credit and consumer goods readily obtainable, he says.

Today, workers 16 to 24 face an astronomical 53.3% unemployment rate. For 25- to 34-year-olds, the rate is 27%. It tapers off for older workers, who can be costly to lay off under Spanish labor law.

Half of the young unemployed have been seeking work for at least a year, according to Spain's national statistics bureau, and the few jobs that are available are often low-paying, temporary positions. The number of people in their 20s and early 30s who live with their parents began to tick up in the past 12 months after declining for years.

"It's not a lost generation, it's a frustrated one," says José Ortuño, a 35-year-old film writer and director. He recently made an animated Web series called "Treintañeros," or Thirtysomethings, featuring a fast-food worker, Pedro, with four college degrees who represents a generation "living off their parents until they can afford to live off their children," Mr. Ortuño says. . . .

 "I think the model of the welfare state has reached its limit, and it's up to individual members of society to pull our chestnuts out of the fire," says Laia Serrano, 38, an economist who last September created a nonprofit organization called BarcelonActua, Barcelona Acts, which connects those in need with people who can donate a good or service. . . .

Of course, even the architects of these self-help actions recognize that they won't solve the fundamental problems of the euro or bring long-term stability to the Spanish economy. . . .

Ms. Martín, the unemployed 22-year-old, says she has struggled to find work in the career she studied for, caring for the physically incapacitated, and has had to settle for temporary jobs. She adds that it's dispiriting seeing her friends with degrees emigrating or working at very menial jobs.

But she sees hope in projects like the time bank and thinks they are the wave of the future in Spain.

"There has to be a change in the mentality for there to be a change in the country," she says. "We can't continue to spend resources we don't have. We have to learn to live with less." 

Summing Up

Spain is proving once again that if something can't go on forever, it won't.

Spending more than we have by borrowing more and more and more from others, including foreign countries, and especially from our future generations, is something that can't go on forever, so it won't.

Sooner or later we will have to learn to live within our means. For far too many years now, we've recklessly borrowed and spent money that we don't have. We've in essence deluded or even bribed ourselves into acting as if we deserve everything we've bought with borrowed money and that we shouldn't have to pay it off by ourselves.

Unfortunately, however, government can't pay for it either. Only future generations of Americans can do that, but since we all agree that that's totally unfair and unacceptable, we don't discuss our "self bribery" for what it is. We vote for saving the middle class instead. 

We call this delusion being fair to ourselves, in other words. As a result, we allow our votes to be purchased by politicians seeking election and talking about being fair and saving, rather than bribing, us.

So the political debate in the U.S. and the rest of the world, too, has now deteriorated to the point that we are arguing about who will best take care of the middle class.  Well, I know one thing for sure. The political class won't take care of the middle class for one simple reason. It can't.

In the end, only the middle class will be able to take care of the middle class.

But in the interim, I guess we can keep "bribing" ourselves, or allow the politicans to bribe us on our behalf, by running up deficits and debts and assuming that future generations will be happy to pay for our wasteful ways. 

So let's just call a spade a shovel and change the political slogan "saving the middle class" to "bribing the middle class." It's more accurate.

Debt is debt, deficits are deficits and failure to accept responsibility for our actions is failure, pure and simple.

There's no saving involved with piling on unsustainable debts just to be able to continue our spendthrift ways for another few years. And letting the politicians say otherwise is just allowing ourselves to look the other way while accepting the bribe.

Thanks. Bob.

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