The Demographic Tipping Point has Arrived ... Since We're Living Longer, Can We Afford Not to be Working Longer?

We've reached the tipping point between longevity and work. Until recently living longer added to a country's GDP as adding more young people to the work force increased workers as a percentage of the population. Now that as a society the oldsters are living much longer and therefore spending more years in retirement, the reverse is true.

Financially, we can't afford to fund the overall demographic based transition underway of more older consuming years to fewer younger producing years. Things have changed dramatically demographically, and it will have profound implications for future retirees and workers alike.

Simply put, we're living longer and retiring earlier. That's a calculation that doesn't work economically over time, assuming we don't want to lower our living standards while working. Let's look objectively at the situation today.

First, if we live longer and work longer, so much the better. But if we live longer and work the same or fewer years, that will place an enormous strain on future workers unless we have saved enough for our own retirement years while working.

And if we were willing to work longer, what could we oldsters do? How about, among other things, doing the government's administrative work, taking teaching positions and performing clerical office based jobs, to cite just a few examples?

And what would those current workers that we'd displace from the public sector then do? How about building businesses or just plain working in the private sector? But we need more jobs to do first, and that can't come from the public sector which is already bigger than we can afford, assuming we don't want to raise taxes dramatically. And we don't.

So that, in turn, brings us straight back to the need for solid economic growth and the related creation of millions of new jobs.

Economic Pros and Cons of Longer Life Spans says this about the current demographic situation in the U.S. and its connection to our underfunded and unaffordable welfare entitlements system:

"Once upon a time, longer life spans paid a clear demographic dividend: More kids made it to adulthood where they could produce goods and services and more younger adults survived. That meant more working age folks, and that led to higher economic output per capita.

 

But something different is happening now. “Instead of additional years of life being realized early in the life cycle, they are being realized late in life,” Stanford University economists Karen Eggleston and Victor Fuchs write in the current issue of the Journal of Economic Perspectives with the usual complement of charts and tables. {NOTE: Please take some time to review  the referenced article's contents.}

In the first half of the 20th century, the decline in death rates was more salient for infants and children; in the second half, it was more salient for those over age 70. At the beginning of the 20th century, they calculate, about 20% of the increase in life expectancy in the U.S. occurred after age 65. 

At the end of the 20th century, more than 75% occurred after age 65.

That’s good in a lot of ways — especially to those who live longer and their families. But it does turn out to have big economic implications. If it means people work later in life, that boosts economic output. If it means a growing fraction of the workforce lives longer and longer in retirement, it doesn’t.

“As people foresee longer lives, they might choose to work longer, save more and/or invest in human capital in sufficient amounts and innovative enough ways that longer lives continue to contribute to increased prosperity,” Profs. Eggleston and Fuchs say. “It is not clear, however, that the U.S. or other high-income countries even further along in the new demographic transition are reshaping their policies and institutions sufficiently in response to the longevity transition.”

In other words, the typical age of retirement isn’t rising nearly as fast as life expectancy. Public policy, they argue, should encourage more of those over 65 to work (and more employers to hire them), to encourage healthier lifestyles so older people are more productive and to encourage saving more for retirement.

As another Stanford professor, John Shoven, puts it: “People cannot expect to finance 20-25-year retirements with 35-year careers. Not in Greece [or] the United States.”"

Summing Up

Facts are stubborn things, as the elder President Bush was fond of saying.

We need jobs. We also need economic growth in the private sector to provide those jobs.

And in the future people either will have to choose lower standards of living and a much higher savings rate during their working careers, or elect to work longer as they age.

Choosing lower standards of living will mean weaker economic growth. On the other hand, choosing longer working careers will result in greater economic growth. The math is that simple and straightforward.

Let's recap.

Old days --- Here's how it used to work. Increasing longevity as a society meant more workers and greater GDP. More younger people working as a percentage of the entire population.

New days --- All other things being equal, getting older as a society means fewer workers, longer retirements and lower GDP. Fewer older people working as a percentage of the entire population.

In sum, something's gotta give. And relatively soon, too.

Thanks. Bob.

Bob's Views on the Blessings of Liberty ... Government Schools, Health Care, Retirement Funding and Free Choice ... Any Individual Freedoms Left?

I believe in natural rights and John Locke's view that we're all born free and retain that freedom until we either give it away or have it taken from us. I also consider myself extremely fortunate to have been born in America and to be possessed of such unalienable rights as "Life, Liberty and the pursuit of Happiness." I buy the whole American self governing and individual freedom and opportunity story and always have.

On the other hand, others have different views, of course. For instance, the philosopher Plato circa 400 BC believed that philosopher-kings and the smartest guys in the room were the most capable and best positioned decision makers for any society.

Late in the 18th century, our nation's Founding Fathers rejected that elitist and paternalistic view, basing the American republic on the belief that free self governing people were perfectly capable of making their own decisions and doing so in a manner which would be much better than any government elitists could.

Here's the punch line for me. We've strayed very far from that simple starting point in the latter 18th century.That's one of the main reasons I write this admittedly amateurish but candid blog. If it only helps make people stop to think think about life in America, past, present and future, well, that's good enough for me.

So here we go.

Today, our schools are mostly government run, and heavily union influenced. Lots of politicians, including most Democratic Party leaders, are willing accomplices in this assault on our individual freedoms. Free choice isn't allowed.

By that I mean simply that individual parents and children can't take the money spent per pupil in public schools and elect to spend it elsewhere. It's government knows best elitism all the way. Plato and his philosopher-king enthusiasts -- aka rulers or Guardians -- would be proud.

Thinking about all that school choice stuff, I wonder how many of us as parents don't feel as capable as the government knows best gang about deciding where our kids should attend school. Not many, I would guess. But we're denied that choice, and more important, we allow ourselves to be so denied by our government and union rulers -- er -- public servants and teacher representatives.

Thus, I believe, as I would guess you do as well, that many if not most people send their kids to their zip code based area public schools because of the expense that would be involved to do otherwise. But why should there be any expense factor as long as the subsidy is limited to the amount spent per pupil in the public schools? We're already paying, aren't we? And they're our kids, aren't they? So why can't we each choose where our MOM goes and how it's spent to educate our youth?

Let's get the government officials and unions out of the way.

Same with health care decisions and the retirement benefits we "receive" from the government. Why aren't we allowed to choose for ourselves? Is it because we're getting "too good of a deal" or free lunch from the government?

And if that's the case, why not just pass that good deal, aka free lunch, through to each of us by giving us the money being spent by the government rulers on our behalf? And if that doesn't cover the whole bill, isn't it time to acknowledge the simple fact that we're asking our kids and grandkids to pay in the future the excessive bills we're running up today and not willing to pay for in our own generation?

The political "progressives," and lots of Republicans, too, won't tell the truth about these things. To do so would expose the simple facts. We're not paying for all the money we're spending today.

To live within our means as a society will require us to make choices and prioritize how and on which priorities we will choose to spend our limited funds.

Do we want more government, and therefore more taxes imposed on all of us? Even if we stick the rich with the bills, there aren't enough rich people to take care of our overspending problems.

Or do we want more personal freedoms and the personal responsibilities that go along with those freedoms?

Or do we instead choose to place unsustainable and unaffordable financial burdens on future generations? If we do, let's at least have the decency to admit it.

Or do we really want to encourage private sector growth and investment, including accepting and even enjoying the fact that some of our fellow citizens will prosper individually as Sam Walton, Steve Jobs and Mitt Romney have done? And that there will be much material inequality in America as a result of the personal choices we make and the personal responsibilities we assume.

More government schools, health care, retirement subsidies and rules inevitably will mean less economic growth and less employment. It will also mean a lower standard of living, as well as more deficits and burdensome debt. And this will happen for sure and indefinitely, and at least until the fit finally hits the shan financially and a deep and lengthy recession, high inflation or even worse results.

Big spending Keynesianisn is now and has been the rallying cry of the "progressives" for many decades. But when the views of John Maynard Keynes first came to the forefront in the Depression era of the 1930s, the world wasn't already awash in debt. That came later and largely as a result of all the Keynesian attempts to "stimulate" economic growth and promote "fairness" throughout Europe and the U.S. over the subsequent decades.

Now we have what we have and we are where we are. Awash in debt and deficits and with heavy government intervention in our economies. But Keynesianism hasn't worked. It's only brought the world bigger and more intrusive governments, and low growth, high unemployment Plato-like societies and economies.

As in the case of the boiled frog, too many of us are smiling now as the government acts to "help" us.

Here's my takeaway lesson.

More government will only mean a weaker society. And a weaker society can't possibly result in a fairer society. American progressivism as it exists today is a ruinous, lost and hopeless cause.

This wasn't intended to be an ideological argument or political statement of any kind. I believe strongly that it's grounded on fact based historical evidence. So I wanted to share it with you.

At least that's my personal "believing is seeing" view of the world.

Have a great Labor Day weekend.

Thanks. Bob.

Debt, Deficits and Economic Growth

We hear lots of noise these days about living within our means. That's a great idea.

However, first we need to figure out exactly how we're going to go about doing just that.

We've been used to spending and borrowing for so long now that living within our means simply isn't something we know how to do as a nation. In fact, we have to find a way to both live within our means and live with the accumulated debts we have while reducing our deficits as well.

First, let's state the completely obvious. Substantial and sustained solid economic growth is the only way out of this economic mess. It's also the only way we'll have a legitimate shot at being able to balance the budget and live within our means. And create the millions of jobs that we need to create, too.

In business, it's a simple truism that you can't save or cut your way to prosperity. It's the same with nations. Growth is essential, and it comes from private sector investment, output and productivity gains. That said, over time we can't spend more than we produce. Borrowing to spend can't last forever. The creditors will simply stop lending at some point.

Thus, economic growth is, always has been, and always will be job #1 for America's prosperity. That said, we have to learn how to walk and chew gum at the same time. Thus, cutting our nation's deficits and debt down to some reasonable portion of our economy's total size is also essential to our nation's future economic health.

Is the Deficit Urgent, or a Distraction? is a short series representing five separate points of view about U.S. growth, deficits and debt. It's well worth reading as five debaters take different views of the difficult economic issues we're facing.

While I hope you'll take a few minutes to read all five, highlighted below is a short excerpt from what one of the five contributors has to say.

Thanks. Bob.

..................................................................................................

{NOTE: One of the five debaters is Erskine Bowles, a Democrat and former White House Chief of Staff under President Clinton.

Along with Republican Alan Simpson, Mr. Bowles recently served as co-chair of President Obama's National Commission on Fiscal Responsibility and Reform.

The following is part of what Mr. Bowles had to say as one of the five above referenced debaters concerning our country's crucial need for growth and debt curtailment.}

• 
  
  "Getting our economy growing is our most pressing economic problem. But there can be no sustainable economic growth as long as we face America’s enormous debt overhang. If we don’t put our nation’s fiscal house in order, we face the most predictable economic crisis in history. . . .
  

  We should be careful not to cut too deep too soon. But failing to deal with the debt is the real risk we just plain can’t afford."

Chicago Teachers' Union and Teachers/Parents/ Students/Taxpayers ... The Story of Being Involved versus Committed

There's an easy way to think about the difference between being involved and being committed. It's about breakfast and bacon and eggs. The chicken was involved but the pig was committed.

And so it is with teachers' unions compared to teachers/parents/students and taxpayers. While the union leadership is involved, the others are committed.

Chicago teachers may or may not strike soon, but one thing is certain. Illinois actually has an unfunded public sector retirement liability of ~$83 billion and a long track record of being unable to balance its annual operating budget as well.

So why shouldn't Chicago's teachers strike? Well, I can think of at least $83 billion in reasons and the well being of millions of parents, teachers, students and taxpayers as well.

On the other hand, it's a free country so why not let them strike? If or perhaps when they do, will Illinois Governor Quinn come to the picket line and give the strikers a $10,000 check, as he did during the Caterpillar strike in Joliet? And if not, why not? Doesn't he like teachers as much as he does Caterpillar workers?

Or is there a difference between taxpayer money for public schools and shareholder money for a private company?  Of course, there is.

And if the public sector teachers strike, will Chicago hire replacement teachers and fill in with administrative workers, as Caterpillar did in its Joliet private sector strike?  Or will the students and their parents be given vouchers and allowed to go to other schools, including parochial and private institutions? And if not, why not?

Chicago Teachers Give Notice of Possible Deadline for Strike says this:

" CHICAGO — As parents here prepare to send their children back to school next week, the union representing Chicago Public Schools teachers gave a 10-day notice on Wednesday of its intent to strike, the next legal step in a series of maneuvers amid continuing contract bargaining with the city.

“C.P.S. seems determined to have a toxic relationship with its employees,” Karen Lewis, president of the Chicago Teachers Union, said at a news conference announcing the move. “We have been belittled, bullied and betrayed by this administration.”

While the latest posturing in this conflict between the city and its teachers’ union does not necessarily mean that a strike is imminent, it places the union a little closer to such action less than a week before most of the city’s 400,000 public school students return to class on Tuesday.

The prospect of a strike in the nation’s third-largest school system puts a strain on the first term of Mayor Rahm Emanuel, who has listed improving the public schools here among his administration’s top priorities. A teachers’ strike would be the city’s first in 25 years. The union made threats in 2003 but ended up settling without a strike.

“We’re willing to stay at the table and keep negotiating every day needed,” said Becky Carroll, a spokeswoman for the Chicago Public Schools, which will face an estimated budget deficit of $665 million this year and $1 billion next year. “A strike would only hurt our kids.”

With a contract expiring on June 30, the talks over a new one have been escalating for months. The union says its concerns include job security, wages, teacher evaluations and the impact of a newly imposed longer school day.

Beginning this year, the Chicago school system, which had one of the shortest school days in the country, extended its academic day to seven hours from 5 hours 45 minutes for elementary schools and to seven and a half hours from seven hours for high schools. The move added more instructional time for subjects like reading, art, math and science, according to district officials.

Addressing concerns that teachers would be saddled with the extra load, an interim agreement was reached in July to hire additional instructors from a pool of the teachers laid off in the district during the past three years.

But union leaders are unhappy with the way talks are going. On Aug. 22, delegates from each of the 675 schools in the district overwhelmingly voted to give union leaders the power to give notice for a strike at any moment.

Calling the strike notice on Wednesday was the only way to “show them we are serious,” Ms. Lewis said.

Union leaders will meet on Thursday to discuss their next move, which could include selecting a strike date, though it can be no sooner than Sept. 10. Should a walkout occur, the city is expected to make its libraries and park districts available to students."

Summing Up

While my best guess is that there will be no teachers strike in Chicago, the entire situation is a telling display of the dysfunctionality of Illinois politics in general and Chicago's public school situation in particular.

If Illinois has an ~$83 billion public sector unfunded retirement liability, and it does, probably $40 billion or so is attributable to Chicago based employees, a large part of whom are teachers, or so I would guess. But I'll bet the ranch that that $83 billion subject isn't even being discussed in the negotiations between the teachers and the city. They'll skip over that little detail and argue over other stuff instead.

So if that's the case, let's return to our breakfast example of bacon and eggs. $10 can be spent several ways, but only $10 in total can be spent. So if Chicago teachers take part of that $10 in the form of hiring more teachers or paying teachers more in salaries, that takes away from the initial $10.

But, of course, Chicago doesn't have $10 more to spend on more teachers, higher paid teachers, bacon and eggs or anything else, for that matter. In fact, Illinois is short about $83 billion now, breakfast costs excluded.

So where will Illinois and Chicago look for the additional money they will grant teachers to settle this gun against the head contract dispute? To the taxpayers, present and future, of course.

So if we want more teachers, higher paid teachers, more eggs and more bacon, we'll need to come up with more money. Otherwise we'll have to prioritize and perhaps go on a diet, too.

Illinois taxpayers are going to be paying for many more decades the delinquent bills that the teachers' unions, Chicago politicians and Illinois state government officials have run up already. My guess is that the delinquent bills of the past are about to go up even more.

First, we'll see some back-and-forth theatrics, then a contract settlement either at the midnight hour or after a very short work stoppage. The union and city officials will agree, hold hands and congratulate themselves on doing such great work at saving Chicago's schools and students. The TV cameras will capture it all and the taxpayers will get the bill.

Meanwhile, the schools will continue to do a genuinely poor job of educating Chicago's youth and the financial status of Euro-Nois will continue on its rapid downward trajectory.

The lessons for We the People are simple ones. Familiar ones, too.

Politics sucks, public sector unions suck and government failing to face up to our deeply serious financial issues sucks most of all.

Finally, and unlike Caterpillar, don't look for Governor Quinn to be handing out any $10,000 checks to the striking teachers any time soon. He doesn't have any taxpayer money left to give.

Besides, they probably aren't going to strike, but even if they do, it will be a short one.

Just long enough to nail the taxpayers once again.

Thanks. Bob.

Euro-fornia and Euro-Nois?

Perhaps California and Illinois should be renamed as Euro-Fornia and Euro-nois. At least that's my view. They're functioning more like European sovereigns than American states these days. Two once great U.S. states are fast becoming two basket cases with no serious efforts underway to "right the ship."

In fact, they seem to be a microcosm of the progressivism laced and unaffordable debt laden Euro-U.S. which is developing in Washington.

A Downgrade for Illinois says this:

"In recent years a wave of new reform Governors has washed over the Midwest, but it did skip a few states. Among them is Illinois, which now has the worst credit rating of any state besides California.

Voters may want to pay attention.

On Tuesday, Standard & Poor's downgraded Illinois bonds to A from A-plus, with a continuing negative outlook. The credit rating agency singled out five years of budget deficits ranging from bad to worse to way worse. It now stands at $44 billion—another national record. S&P was also more troubled than the Springfield political class about $83 billion in unfunded pension liabilities. The legislature ended a special session on pension reform this week without, well, passing any reform.

S&P praised Democratic Governor Pat Quinn's "significant measures in the past two years to improve structural budget performance," meaning his 67% boost in personal income rates and raising the corporate tax to 9.5%. Credit raters never object to tax increases, even if they never solve the budget problem. But that's another story.

The tragedy is that Illinois is surrounded by states showing a better way. For example, all three major raters have been upgrading Ohio's ratings after years of chronic fiscal problems. Governor John Kasich hasn't imposed fearsome austerity—he simply streamlined the budget. Mr. Kasich and other GOP Governors have prominent speaking places at this week's Tampa convention. Will Mr. Quinn next week?"

And Sacramento's Pension Scamble says this:

"Television viewers were treated to a string of speeches (Tuesday) night by reform-minded governors—including Scott Walker of Wisconsin and Chris Christie of New Jersey—who addressed the Republican National Convention in Tampa, Fla. We hope that California Gov. Jerry Brown tuned in because his state could use some pointers.

Mr. Brown announced yesterday that he's reached a deal on pension reform with his fellow Democratic legislative leaders, state Senate President Darrell Steinberg and state Assembly Speaker John Perez. But what took so long?

Last October Mr. Brown proposed a 12-point pension reform plan, which called for shifting new workers to hybrid pensions that include a defined contribution component and require all workers to split the normal cost of their pensions with their employer over time. Mind you, that doesn't include the cost of paying down the state and local governments' one trillion dollar unfunded liability.

Democrats shelved the governor's plan because it was too bold for their labor friends. Plus, they supposedly had more important things on their agenda, such as passing high-speed rail and crafting a new state-administered retirement system for private sector workers. Republicans introduced the plan as legislation in the spring, but it continued to collect dust until a couple of weeks ago when Mr. Brown reminded lawmakers that they were running up against an Aug. 31 deadline, after which all unpassed bills turn into pumpkins.

The biggest impetus behind the pension deal, however, was the governor's income and sales tax initiative this November. Mr. Brown believes that voters will be more inclined to raise taxes if lawmakers show they're earnest about reforming the state fisc. Are they?

The deal is better than many reform advocates anticipated, but that's partly because their expectations for Sacramento are so low. The legislation modestly adjusts payment formulas for new workers and requires new municipal employees to pay half of the normal costs of their pensions. So pension contributions would be taken off the bargaining table, at least for new workers. This should help some municipalities rein in their labor costs, though it won't significantly reduce their unfunded liabilities.

What's more, the legislation will save the state little money in the short-term since it doesn't touch current workers, at least not in any meaningful way. By contrast, reforms recently passed in Rhode Island, New Jersey and Minnesota all affect current workers. So while the reforms aren't significant enough to pull California back from its fiscal cliff, the governor did beat expectations."

Summing Up

Tax and spend, tax and spend and then more tax and spend.

Or if you prefer, borrow and spend, borrow and spend and then more borrow and spend.

Or maybe better yet, we could try some different combinations of the above ways to grow the government and reduce individual freedoms in the ongoing OPM versus MOM story.

Tax and spend, and then delay, seems to be the preferred kick the can process underway in Illinois and California, as well as in Washington today.

But here's the deal. This crap won't work. This dog won't hunt.

It hasn't worked in Europe, it won't work in Euro-Fornia or Euro-Nois, and it certainly won't work in Euro-U.S. either. There are real choices to be made: more government or more personal freedom and responsibiity.

Will We the People force the politicians to adhere to the living within our means set of behaviors so vitally necessary to our nation's health and prosperity, or will we choose the government as saviors false security?

Soon we'll see as taxpayers react to tax increase proposals and government spending reductions, including entitlement spending, in the states and cities across America. And in Washington, too.

Thanks. Bob.

Progressivism, Working Hard, Playing by and Changing the Rules ... Hypocrisy in Action

Progressivism is the Fundamental U.S. Economic Problem

Progressives have a problem, even though they can't or won't admit it. The progressive formula for economic progress, as used herein, is simple and essentially looks to more government intervention to make our country function better. It's largely based on Keynesianism and promotes an active role for government in solving our economic problems.

With the progressive movement, there is no going back toward more personal freedom and free markets. There is only the forward movement.

And to progressives forward always means more government, which in turn means more taxes and fewer personal freedoms, less economic growth, weaker economies and so forth. An endless downward spiral and a trap set by the liberals and from which they can't escape. Their constituents, such as public sector unions and  those benefiting directly from government programs, won't allow that, being aligned with and dependent on bigger and bigger government themselves

In that vein, history teaches that U.S. Government expenditures were approximately 3% of GDP prior to the Great Depression in the 1930s. Then they grew increasingly and consistently to a level of 18%-19% by the 1980s. Now they're 24% or higher, even after the "peace dividend" of the 1990s. Note the trend?

In basic economics more individual freedoms and adherence to free market principles require less government control and intervention. And vice versa. There's always only 100% to split. The more government takes, the less people get to keep. MOM starts at 100. OPM starts at 0.

So MOM + OPM = 100. And 100 - OPM = MOM's Remainder. Period.

Today's Progressive Dilemma

Some people wonder what the progressives plan to do to get our country out of the economic mess we're in today. The answer is simple, because there's only one play in the progressives' playbook. Have the government do more. And that's exactly what has been occurring for the past eight decades.

Our national debt grows exponentially each time our economy falters as government runs to the rescue. As a result, over time our economy has become more and more dependent on government, and our nation has gone deeper into debt.

As have our citizens. But as the government does more each time hard times hit, there is less freedom the next time for the magic of the free market system to work its wonders. So we go deeper in the fiscal and debt hole each time we use government to get us out of the hole. Short term fixes turn into long term economic growth inhibitors.

Playing by the Rules

To take just one current example of playing by the rules and the ongoing progressive need for more and more money to fund government operations, Mitt Romney pays all the taxes he owes, and nobody has disputed that simple fact. Yet progressives say he doesn't pay enough. Why's that? Well, it's not because of anything he's doing or has done. It's because as a result of "progressive progressivism" we are running escalating and dangerous fiscal deficits each year while piling up more national debt.

And due to progressivism, we have no credible plan to halt the growth of our national debt levels, let alone ever repay those debts. Nor will we ever have any concrete plan for doing so from the progressives. It's simply not in their "grow the government" playbook nor is it ever in the best 'SHORT TERM' interests of their constituents.

The real reason we keep adding to the deficits and debt each year isn't because Romney doesn't pay enough taxes, although he may not. It's simply due to the fact that our U.S. economy isn't growing sufficiently. And it can't grow at anywhere near its potential as long as government takes an increasing share of the nation's economic output. Thus, it's an endless downward spiral as a weak economy coupled with an ever growing progressive government system makes for an overly indebted nation.

Accordingly, the rules need to be changed to encourage individuals to act and restrain the progressives from expanding government's role and entitlement/redistribution  programs continuously. Otherwise, the bubble of all economic bubbles will keep growing --- until it finally and inevitably bursts.

But how to change the rules when times are tough is the problem, even though that's precisely when the rules are in the greatest need of being changed.

Progressive Hypocrisy

Hypocrisy comes in lots of shapes and forms. Progressives seem to have mastered it.

In baseball, it's three strikes and you're out. Why not make it five?

Donations to charity, mortgage interest and local property taxes are tax deductible? Why?

The answers to why three strikes and deducting property taxes from income before paying income taxes are simple; because those are the rules. We all play by the rules, even if we wouldn't have made those rules the way they are had we been able to choose the rules ourselves. That's how a free and fair society operates. Work hard and play by the rules --- remember?

So since we're all members of the same larger community of Americans, we follow the rules. So what's the problem? What's the conflict between playing by the rules and trying hard to change them at the same time? I can't think of any. But read on.

The House That Government Built tells a great story about the hypocrisy of the progressives and the rules by which we play, and some of us hope to change:

"Gotcha.

Ever since Republican convention officials announced their We-Built-It theme for Tuesday night, pundits have been gleefully pointing out that the GOP festivities will be held in an arena constructed with 62% government funding. Just shows what hypocrites these Republicans are, goes the received wisdom.

Maybe not. It's true that the Tampa Bay Times Forum was originally constructed with $86 million from local taxpayers. It's true too that the Tampa Convention Center just two blocks away, where reporters covering the GOP gathering will be working, offers an even more egregious example of government subsidy. Still, it's also true that finding a sports facility these days that would meet a convention's needs and hasn't in some way been underwritten by government largess is no easy thing.

Which provokes the great unasked question: What does it say about America circa 2012 when even those campaigning for less spending find themselves the beneficiaries of that spending?

Lord knows Republicans have more than once dropped their own snouts in the federal trough. How often have we watched the same Republican who decries the expansion of some welfare program happily go on to vote for more federal funding for ethanol? This brand of imposture was vividly on display in the highway and farm bills passed in the 2000s by a Republican House under the leadership of then-Speaker Dennis Hastert.

Nevertheless, the hypocrisy Republicans now find themselves accused of is of a different order. The idea behind the snarks about the publicly financed Tampa arena is that people are somehow guilty of hypocrisy when they benefit from an environment they did not create and might have opposed on principle had they had the chance.

Back in February, the New York Times gave us a taste of this when it profiled a hard-working tea partier who turns out to have used the earned income tax credit, to have signed up his children for federally subsidized school meals, and to have an 88-year-old mother who twice had hip surgery paid for by Medicare. "Even Critics of Safety Net Increasingly Depend on It" ran the headline, implying that people such as this man are phonies or too stupid to realize the contradiction.

It's not only people at the lower ends of the income scale. In college, this columnist paid tuition with student loans guaranteed by the federal government. I deduct my mortgage interest on my taxes. I drive on highways improved by President Obama's stimulus. I do and have done all this even though I believe that prices would be lower and most people would be better off if we didn't have these subsidies.

Or take Paul Ryan, who's become the newest example. This month the GOP's vice-presidential candidate found himself accused of hypocrisy when the press found that he'd sought stimulus funding for his own congressional district—after having voted against the bill.

Surely the real issue here is whether people have any meaningful choice. Because government funding tends to crowd out private funding, it leaves fewer and more expensive options in its wake. Generally that means you have to be as rich as Warren Buffett or living in the most inaccessible Ozarks backwoods to be in a position to forgo federal dollars.

That goes for institutions as well. In education today, almost every university, private as well as public, is heavily involved with government, not least through student loans. The rare, noble exceptions tend to be small liberal arts colleges such as Grove City or Hillsdale.

The same goes for medicine. Americans used to start up private hospitals all the time. Does anyone imagine you could build a hospital today to serve the entire community and keep it all private? If not, haven't we lost something?

The political reality, alas, is that the existing dynamic works to the advantage of those who want even more government. That's because it imposes an impossible standard for purity.

Under this standard, a congressman who votes against a spending bill that passes is deemed a hypocrite unless he then stands aside as federal dollars are doled out to everyone but his constituents.

In like manner, a husband and wife who believe the government should get out of housing face the same charge if they take the mortgage-interest deduction on their taxes. Almost no one can meet that standard, which is the whole point of initiatives such as ObamaCare: Where once federal programs targeted the needy, they now are designed to implicate us all.

So here we are in Tampa in August of a presidential-election year, where the advocates for small government find themselves in the dock because Florida officials once spent millions of taxpayer dollars to subsidize the wealthy owner of a hockey team. Definitely there's a "gotcha" here. It's just not what the champions of Big Government think it is."

Summing Up

Progressives always want more, bigger and more intrusive government. As more and more government has become the rule, some of us want to reduce its size. We want to choose a new normal.

The individual exercise of free choice is also sometimes known as freedom. But even though free, as members of the greater society, we still play by the existing rules while those rules remain in effect.

That's only common sense. If I believe as a batter that I should be allowed five strikes, or even only one strike, before being called out on strikes, that's my prerogative. However, unless and until I can get the rules makers to change the three strikes rule, that's the one I must and do follow.

There's nothing hypocritical about me lobbying for a five or even a one strike rule while playing by the three strikes rule. But there is something very hypocritical about others criticizing me for advocating changing those rules which I believe need changing while conforming to them at the same time.

Otherwise government could never get smaller than it is today. Now wouldn't the big government guys love that?

And neither could taxes be reduced --- only increased. Nor could existing government programs be eliminated. Nor could federal spending be cut? And wouldn't the progressives love that, too?

But isn't that pretty much where we find ourselves today? Having been bribed, aka "saved," one too many times?

It's time to change the rules in a serious way and put We the People back in charge.

That's where I'll place my trust --- in We the People and not the progressive do gooders spending OPM and driving us into the poor house as a result of a government based, stalled and weak economy.

Thanks. Bob.

Breaking News ... The 1.7% Economy ... Progressivism Leads to Weakness which Leads to Government Intervention and More Weakness .. and On and On

We need 3% real economic growth to do marginally better than treading water.

We need 4% to get back on track and the jobs back that we've lost.

So what do we get?  1.7% growth in the second quarter of 2012.

U.S. GDP Revised Up Slightly has the details:

"U.S. economic output increased a little more than initially thought in the second quarter, though the overall pace suggests growth will remain sluggish ahead of November's presidential election.

The nation's gross domestic product--the broadest measure of goods and services produced in the U.S.--grew at an annual rate of 1.7% between April and June, the Commerce Department said Wednesday. . . .

The Obama administration has highlighted continued growth out of the depths of a recession that began under a Republican administration. GDP has expanded for 12 consecutive quarters.

Still, unemployment remains above 8% and the economy has slowed from the first quarter's 2.0% and the fourth quarter's 4.1% annual growth rate, complicating Mr. Obama's efforts to win a second term.

While politicians debate appropriate responses to slow growth, officials at the Federal Reserve are weighing another round of stimulus.

In minutes of their latest meeting, released a week ago, officials signaled that they are readying new measures to boost the recovery unless data point to "a substantial and sustainable" pickup in activity.

The Fed's policy makers next meet formally on Sept. 12 and 13. In the meantime, Chairman Ben Bernanke may offer new insight on the central bank's thinking when he speaks Friday at its Jackson Hole, Wyo., conference.

Wednesday's report offered some latitude for the Fed to act. The price index for personal consumer expenditures--the Fed's preferred gauge for inflation--rose a modest 0.7% from the previous quarter. Year-over-year inflation is up 1.7%, below the Fed's 2% target.

Stripping out volatile food and energy, the price index for personal consumer expenditures rose 1.8% from the prior quarter.

The revision to second-quarter GDP figures follows better-than-expected exports, fewer imports and stronger personal consumption. The improved consumer spending, though, partly reflected heavier outlays for services like electricity and natural gas rather than goods.

Government spending has been a drag on the economy--though not as much as initially thought.

Other areas were weaker. Business spending was revised lower on smaller inventories.

Real final sales--GDP less changes in private inventories--increased 2.0% in the second quarter, down from a 2.4% gain in the prior period.

The latest quarter's small overall gain is consistent with the recovery as a whole, which is the second-weakest rebound of the post World War II era.

Summing Up

The economy continues to suck.

That will bring calls from the progressives for more government knows best policies and intervention.

That will make things worse, which in turn will bring more calls from the big government guys for more progressive govwernment intervention. 

That will make things worse.

And so it will go until the progressives no longer rule the roost, whenever that may be.

More government = slower growth = more deficits and debt = more government = slower growth and so on.

Get the picture? Let's hope the rest of our fellow Americans do, too.

Thanks. Bob.

Free Markets versus Government Subsidized and Controlled Monopolies ... Newspapers and News

Free markets are all about innovative entrepreneurs finding new ways of doing old things. The result of creating the new way of doing is often the elimination of the old way of doing those things.

Government monopolies don't engage in what Joseph Schumpeter called the process of "creative destruction." Therefore, the post office pretty much functions as it has for many decades. So do the public school system, Medicare and Social Security systems.

By preventing higher quality and lower cost, aka more productive, methods from entering the buy-sell equation, monopolies become antiquated, costly and wasteful compared to the "could and should be" state of doing things. Through government intervention and the passage of time, what "is" isn't what "ought" to be.

Newspapers and delivering the news are a great example of the out with the old, in with the new process of dynamic private sector improvement in contrast to the stasist government approach.

Newspapers in Syracuse and Harrisburg, Pa, to End Daily Distribution highlights the enormous change in how the news is delivered today and sets the stage for what may become tomorrow's norm. 

Of course, the newspaper industry won't make that determination. Free consumers making free choices about MOM and their abundance of differing opportunities for getting the news will do that.

In any event, here's what the aforementioned article has to say about the old and the as yet undetermined but evolving new way of getting the news:

 

The Patriot-News, which won a Pulitzer Prize for coverage of the Penn State sex scandal, intends to print three days a week.

"Newhouse Newspapers, which earlier this spring announced that it would stop printing a daily paper at The New Orleans Times-Picayune and its Alabama newspapers, said it would end the daily distribution of two more of its newspapers, The Post-Standard in Syracuse, and The Patriot-News in Harrisburg, Pa.

The papers will merge their content with local news Web sites and deliver the printed newspaper only three days a week.

Starting in January, The Post-Standard will publish on Tuesdays, Thursdays and Sundays. The Syracuse Media Group, the company formed to oversee The Post-Standard, is still considering whether to publish a newspaper that it would not deliver to homes and businesses on the other four days.

The news prompted more than 100 comments by readers on the Web site Syracuse.com who expressed their concerns about life without a daily newspaper.

One reader wrote: “If we lose the ‘fourth estate’ which slowly appears to be diminishing, government at all levels will run wild. Hopefully, the new business model will work and I would be willing to pay a reasonable fee to retain local reporting.”

It’s even less clear what the future publishing schedule looks like for The Patriot News. According to the Web site PennLive.com, executives still have not decided what days they will publish a newspaper (other than Sunday) and are doing more research on what are the best days to print. But they plan to introduce a new publishing schedule in January.

John Kirkpatrick, president and publisher of The Patriot-News, wrote in a letter to readers that he planned to increase the amount of online coverage and continue producing higher quality journalism. “The plan to reinvent ourselves into a digitally focused organization with a quality print product three days a week is aimed at making sure that kind of work continues long into the future,” Mr. Kirkpatrick wrote.

Sara Ganim, a Patriot-News crime reporter who won a Pulitzer Prize for her coverage of the Penn State scandal, shared details about the announcement from a live meeting for the newsroom on Twitter. She said the paper planned to keep just as many pages, only condensed into three days. But it appeared that many details still had to be worked out.

Ms. Ganim wrote: “There are unanswered? s. price of paper, which days will publish, no. of positions, organization mode.”

While readers lamented the end of their daily paper on PennLive.com, they also pleaded with executives at the new publishing company to improve the quality of the Web site.

One reader wrote, “I hope before this begins (January) that you do something about the bouncing when you scroll down a page, the LONG time for opening a page and general confusion on some pages. My PC is up-to-date and high-speed, so that’s not the problem.”

David Farre, editor of PennLive.com, told readers that there will be improvements to the Web site soon."

Summing Up

Free speech is alive and well.

In the news industry, so is freedom of choice.

Thus, improvements in quality, cost and delivery will occur continuously in the news delivery systems such as hard print, TV, radio and the internet.

Consumers will be the winners and determine the ones who get to deliver us the news.

Technology is a great tool when used by entrepreneurial innovators trying to serve customers in better ways.

Postal delivery, public schools and colleges, medical care, retirement funding and a whole host of other monopolisitc government knows best, stuck in the mud, subsidized government sponsored entities wouldn't last long in their current form in a free market ruled by free choosing consumers.

Maybe we ought to try a little more freedom and a little less government, especially since we can't afford to keep going the way we're headed. Broke.

Thanks. Bob.

Political Uncertainty as the Economy's Fundamental Problem ... Makes for an Uncertain Future ... What's NORMAL?

We have record low interest rates and are running huge fiscal deficits at the same time, which taken together mean that the U.S. economy is being "stimulated" to the hilt.

Why then do things continue at a crawl economically?

{NOTE: As reported in prior posts today, consumer confidence is at a nine month low and housing prices, while finally bouncing off the bottom, are still 31% below their peak levels in 2006. See today's earlier posts or Consumer Confidence falls to nine-month low and Home Prices Post First Gain in Two Years.}

What's going on? What's the problem? When will things get back to normal?  Good questions, one and all.

But let's ask one more. What will normal be in the future -- will it be the same as it was in the past or will it be replaced by a "new normal?"  In other words, will we choose to have even more big "bribe the middle class government" until we can borrow no more, or will we instead choose more "self reliant live within our means" individual freedom and the more limited  government of the past? The choice is ours.

One well respected economic commentator attributes the current malaise to the enormous amount of political uncertainty. What's really wrong with our economy is appropriately subtitled 'Politics lies at heart of problem:'

"Before you can fix something, you have to know what’s wrong.

Judging by all the attention being paid to utterances by central bankers these days, you would think that monetary policy is the key to fixing our economy. The stock market jumps on days when there’s the slightest hint of ease; it falls when these hopes are dashed.

To ease or not to ease makes for good headlines, but it is totally irrelevant to what ails us. You see, interest rates are not the problem; they’re about as low as they can go.

Lack of liquidity is no issue, either. Reserves are up sharply as the Federal Reserve’s balance sheet has ballooned.

Meanwhile, the banks are reluctant to lend, lots of consumers are trying to pay down their debts — and many firms are actually sitting on a mountain of cash.

Anyway, as I have pointed out before, you can’t push on a string. In other words, you can’t expect easy money alone to stimulate economic activity.

What is more, too much money coursing through the economy can eventually lead to a pickup in the rate of inflation. Therefore, we don’t need QE3 or any other loosening of monetary policy.

What about fiscal policy, you might ask. After all, the emphasis on deficit reduction instead of on job creation is not exactly the prescription most serious economists would recommend to strengthen our fragile economy. Neither is trying to tighten fiscal policy when it should really be loosened.

However, the size of the budget deficit currently being run by the government suggests that there is no lack of stimulus from this sector. Thus this is not the reason for sluggish growth and high unemployment.

For example, business won’t hire because applicants lack the requisite skills, yet they don’t want to train prospective workers because they fear losing them. And consumers are unable to spend until their net worth recovers, but if people don’t spend, business won’t hire, making it difficult for households to straighten their finances.

In addition, the depressed housing market makes it problematic for people to take jobs in another part of the country.

Overseas developments could be playing a role. Europe’s recession is no doubt affecting many exporters, stateside. The strains on the euro are also a factor.

Notwithstanding all these issues, I think the main thing that’s wrong with our economy is partisan politics.

Don’t take my word for it — polls show that Congress has a record-low 5% approval rating. This is less than telemarketers and way below used car salesmen. It is the least productive Congress in over 60 years.

This traces to an inability of both parties to compromise. As far as both sides are concerned, it’s my way or the highway.

As a consequence, two distinctly different views on taxes, spending and the role of government, combined with a close race for the presidency, has led to widespread fears of the unknown.

Business people don’t know what to plan for in the way of taxes, health care, and government contracts, to name the top three worries. The spillback effect is what is harming our economy.

All this could have been avoided if the parties had sought common ground and worked together for the common good. Dare I even say compromise?

That said, what will it take to jolt the pols into cooperating? Why the elections, of course, so don’t forget to vote.

Maybe the next Congress will remember why it was sent to Washington."

Summing Up

He very well may be right. We need to clean up our act as a people and set a clear direction for the future. What we will come to call normal, if you will.

Are we going to look to continue bigger and bigger government and all that entails, or are we going to look within ourselves and all that entails?

We either have to choose more government or more personal responsibility and individual freedom. With more government will come a false sense of security and with more freedom will come a true sense of greater personal reponsibility.

This really is all about saving the middle class --- from ourselves --- and from the politicians as well..

And, most importantly, it's about saving the country we love so future generations can enjoy the abundant freedoms and opportunities that we've enjoyed.

I guess we have good reasons to be lacking confidence at this time. The air is full of uncertainty.

And the lack of clarity about the true meaning of NORMAL is real.

Thanks. Bob.

Consumer Confidence Down ... Not a Good Omen

Housing apparently has bottomed, and that's a good thing. Not so with consumer confidence, however, and that's a bad thing.

Consumer confidence falls to 9-month low is subtitled 'Americans more worried about economy, job prospects.'  Here's the story:

"Consumer confidence fell to a nine-month low in August as Americans grew more worried about the economy and the chances of finding a job, according to a survey released Tuesday.

The Conference Board said its confidence index dropped to 60.6 last month from 65.4, marking the lowest level since November. . . .

 

Lynn Franco, director of economic indicators, said “consumers were more apprehensive about business and employment prospects.”. . .

The decline in confidence coincides with a series of economic indicators that indicate U.S. growth slowed over the spring and summer.

More anxiety among Americans also suggests growth might not pick up anytime soon. Consumer spending accounts for as much as 70% of U.S. economic activity, but people tend to spend less when they are worried about the future.

  

Less consumer spending, in turn, deters businesses from hiring and investing as demand for their goods and services decline. The lack of hiring has kept the nation’s unemployment rate above 8% for 42 straight months, shackling the economy to below-average growth.

Economists were surprised by the decline in light of somewhat stronger hiring and retail spending in July. They suggest that concerns about the presidential election and so-called fiscal cliff may be making consumers more nervous. Deep spending cuts and higher taxes are set to kick in on Jan. 1 unless Washington acts to rescind current law.

The threat of the fiscal cliff has prompted some business leaders to warn that they may delay major projects or freeze hiring plans until they know whether U.S. lawmakers will reach a compromise.

“This will keep consumers on edge and the economic growth sluggish,” economists at Bank of America/Merrill Lynch said in a note.

The board’s future expectations sub-index sank to 70.7 last month from 78.4, while the present-conditions index was basically unchanged at 45.8.

Yet while consumers are less hopeful about the future, they say they’ve seen little deterioration recently in the economy, either."

Summing Up

People are worried about the future and should be.

If we keep government growing at the expense of encouraging private sector investments, trillion dollar deficits and an ever expanding national debt will be the result.

So will our politicians ever start acting like they work for We the People?

My answer is a qualified yes, but don't look for any serious business to be conducted until after November's elections.

Of course, there's no guarantee the political dysfunctionals will become functional even then.

But that's the best we can hope for, at least as I see things.

Thanks. Bob.

Home Prices Off the Bottom .. Breaking News

Home Prices Post First Gain in Two Years says this:

"U.S. home prices in June posted their first year-over-year increase in nearly two years as more buyers chased fewer homes for sale during the first half of 2012, according to an index released Tuesday.

The S&P/Case-Shiller index of 20 metropolitan areas showed home prices rose 0.5% from a year ago in June, ending a streak of 20 straight monthly declines. Home prices are still down by nearly 31% from their 2006 peak, returning to mid-2003 levels.

Since prices began their steep decline in 2006, they had previously posted year-over-year increases in just eight months during 2010, when home-buyer tax credits fueled a burst of sales activity.

Today, prices are rising amid sharp declines in the number of homes for sale as banks are taking back fewer foreclosed homes and traditional sellers have held out for better prices. Meanwhile, record-low mortgage-interest rates have dramatically increased the purchasing power of buyers. Also, investors have scooped up bargain-priced foreclosures that can be converted into rental properties....

Case-Shiller's index measuring national prices recorded year-over-year price gains of 1.2% from one year ago and increased by 2.2% from the first quarter on a seasonally adjusted basis. The quarterly gain was the largest since late 2005.

"We seem to be witnessing exactly what we needed for a sustained recovery; monthly increases coupled with improving annual rates of change," said David Blitzer, chairman of S&P's index committee. "The market may have finally turned around.". . .

The housing market still faces stiff headwinds, including tight lending standards, an economy that isn't producing large job or wage gains, and high levels of homeowners who are underwater, or owe more than their homes are worth.

But rising home prices will help shrink the glut of underwater borrowers and could help buoy consumer confidence. It is also minimizing the feared damage from the "shadow inventory" of mortgages that are in some stage of delinquency or foreclosure."

Summing Up

Finally, the bottom may be in for housing, and if so, that's a good thing.

That said, it will be many years before the pricing peak of 2006 is regained.

At least we're apparently no longer moving in the wrong direction. 

As with holes, we can't get out until we stop digging. 

Apparently we've now done that in housing.

While no cause for celebration, it is good news.

Thanks. Bob.

GM's Chevy Volts ... Government Motors and Taxpayer Subsidies

Have you seen the TV commercials advertising the wisdom of happy consumers buying the Chevy Volts, going green and not needing to buy gasoline for weeks at a time?

Well, perhaps it's because the government knows best gang "encouraged" GM to advertise and try to sell more of these heavily taxpayer subsidized electric powered cars to prevent further embarrassment to the government. There's ample evidence that consumers aren't buying the Volt story, even though some of We the People as taxpayers are offering others of us as consumers thousands of dollars each time we do buy the Volt.

So GM goes broke, taxpayers bail them out, government tells GM to sell more green cars and hits up taxpayers to subsidize the sale of them, GM spends bailout money to advertise subsidized Chevy Volt, consumers say no and GM lays off employees and taxpayers subsidize unemployment compensation paid to affected employees.

Economy stays stuck in the mud and economic growth remains stalled. National deficits and debt continue to escalate, and government acts to "save" the middle class. Maybe we need another 'cash for clunkers' program for the Chevy Volt. Oh, that's right. We already have one.

Government rules can't make consumers choose what the government is "encouraging" them to buy. Not in a free society.

Now if we could only convince government to keep its hands out of our pockets and stop interfering with which automobile companies succeed in convincing free choice consumers to choose among their various offerings. Maybe then they'd stop advertising what we're not inclined to buy and save that money for more appropriate uses. That would save We the People as taxpayers lots of money, too.

GM Curbs Volt Plant Production has the latest on the Volt saga at Government, aka, UAW Motors:

"General Motors Co. said it plans to suspend production of its battery-powered Chevrolet Volt for 26 days as part of a move to pare excess inventory.

Production of the Volt at its Hamtramck, Mich., plant is set to stop Sept. 17 and resume on Oct. 12, a GM spokeswoman confirmed. It is the second time this year output has been idled due to soft demand for the electric vehicle. . . .

About 1,400 hourly workers will be affected by the production suspension.

The Volt has been heavily promoted by GM as an example of the company's technological prowess. But it also has been criticized as a boondoggle by critics of GMs 2009 financial rescue by the U.S government. Supporters of the bailout, including President Barack Obama, say the Volt represents an innovative step forward. Detractors point to the Volt's weak sales as an example of the government pressing GM to build a car that meets policy goals but isn't in sync with U.S. consumers. GM shut the Hamtramck plant for five weeks earlier this year after a prolonged holiday shutdown.

The company has sold 10,666 of the about $40,000 vehicle year-to-date through the end of July, according to researcher Autodata Corp. At the end of last month, Chevrolet dealers had 6,450 Volts in stock, enough to last 84 days at the current rate of sales. Auto makers generally consider 60 days of inventory optimal, although they usually have tighter inventories of specialty vehicles like the Volt.

Volt uses a lithium-ion battery to power the car and has a small gasoline engine that kicks in when the battery runs low. Automotive News earlier reported the plan to slow production."

Summing Up

Couldn't our government leaders find a better use of their time? Perhaps work on not wasting all the money they waste by picking the pockets of the taxpayers on postal service operations, ethanol, sugar subsidies, Chevy Volt subsidies and other wasteful endeavors.

The consumers sure aren't buying what the government knows best gang is selling, even though as taxpayers the consumers are paying through the nose to help the government help Government Motors advertise something we aren't buying.

Maybe someday we could try the free market approach and let taxpayers keep their money and consumers make their choices freely and let the poor performing companies and individual product offerings focus on pleasing customers and not the government.

And maybe allow the private sector to drill for more oil, natural gas and extract more coal, too.

Then they'd employ more workers, pay more taxes, lower prices and help We the People eliminate the deficits and debt.

Now that's a happy thought.

Thanks. Bob.

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.