Thursday, August 11, 2011

Life in the Dependency Economy

The vast majority of Americans now are "dependent" upon others for the most significant parts of their economic life. The entitlements are just the beginning. Most Americans feel "entitled" and don't ask who pays. Somehow, "the government" is an adequate answer to this question. Young folks emerge from American universities with the idea that "the rich" and the "big corporations" can somehow provide funding for all manner of projects that they find worthy. All of this is economic absurdity.

As long as most folks believe they don't have to pull on the oars, they won't pull on the oars. That's why the Greek riots (and now London riots) are so instructive. These folks do not believe that they need to work themselves to provide the elaborate lifestyle that they plan to live.

Compare the attitude of Asians. No one in an Asian culture believes that they are "entitled" to anything. The modern Asian attitude is similar to the attitude of Americans in the nineteenth century. They see opportunity to work, to save, and to improve the lives of themselves and their children. They see this opportunity as something that they can create, not something that are "entitled to." That is why the Chinese savings rate exceeds 50 percent while western savings rates are, at best, single digits.

So, what will be the outcome? The western nations no longer have the energy to move the dial. They expect the dial to settle comfortably somewhere that will provide for their needs. It won't. The rude awakening is that the Asian nations will not provide indefinitely for the lifestyle the western countries think they deserve. Instead the Asian nations, by individual effort not by government largesse, will grow and develop and surpass the West.

The idea that Americans, left and right, cannot even agree to move the age of eligibility of social security and medicare out to reflect the obvious demographics that are crushing these systems shows the welfare mentality in clear relief. By the time the US figures out that the entitlements need to be reigned in, it will likely to be too late to reign them in without directly reducing benefits for folks that depend upon them. This is the legacy of the welfare state -- a state of denial bordering on idiocy. No rational human remotely familiar with the facts would take the current line espoused by Obama and Pelosi. The entitlements cannot be saved by taxing the rich. That is pure idiocy.

The US is a pampered society that refuses to face the cold hard numbers that promise economic stagnation and economic decline. Fortunately for the world, there are other countries that don't see things this way.