Decline and Fall: A View From 2089 by Ben Stein
Daniel Makowski
Sunday May 24, 2009
It seems approprate for this newsgroup!
Decline and Fall: A View From 2089 by Ben Stein
THE future is now. To see how history might look back on our economic
crisis, we bring you this excerpt from "The Decline and Fall of the United
States of America," Beijing University
Department of Western Hemisphere History (Beijing Press, 2089):
The demise of an economy as mighty as that of the United States as of 2000
cannot be accounted for by anything less than deeply mistaken and foolish
decision-making within that nation's ruling circles.
No amount of foreign competition or resource shortage has historically
caused such a catastrophe. However, policy actions undertaken without proof
or even evidence of their efficacy have historically done so. (See "The
Decline and Fall of the Roman Empire," Gibbon, 1776.)
Starting from an extremely strong economic and fiscal position in the year
2000, with surpluses running far into the future in the federal budget
and a
highly positive outlook for its ability to handle its future pension and
health obligations, the United States, under the administration of
George W.
Bush, a Republican, undertook one of the most mystifyingly self-destructive
policy actions yet seen in a democracy.
Taxes were lowered sharply for well-off and other taxpayers, while
government expenditures rose in almost every area, civil and defense. This,
in short order, led to a multiplication of the size of the federal budget
deficit.
The theory behind this puzzling behavior was known as "supply-side
economics." Magically, it was supposed to increase productivity, the number
of hours worked, and tax receipts to the point that the losses in federal
revenue were more than offset. There never was any historical evidence that
this would happen, at least not as a consequence of the tax cuts, and the
deficit, in fact, grew. So did class antagonisms over the ever-larger share
of the national income taken by the wealthy.
There was also a steep increase in liquidity after the notorious terror
attacks of Sept. 11, 2001. This combined with federal regulations that
virtually eliminated regulation of lending and banking in general, led
tithe
great Credit Collapse stagflation in the period after 2006.
At this time, the nation's finance sector had to become a virtual ward of
the state, with public shaming of the leaders of the banking sector in
front
of Congressional committees - a sort of Great Cultural Revolution in
America.
There was a spectacular constriction of credit, despite the flooding of the
economy with dollars.
Whether this had to do with the fear generated by the Credit Collapse or
fear of further public shaming is still in debate.
The Credit Collapse and the government's conflicting response to it -
shoring up the banks and expanding reserves on the one hand, while putting
lending officials at risk for aggressive lending on the other - led to a
prolonged slowdown in the economy.
At the same time, the confidence that American lenders had in the rule of
law, probably one of the main pillars of the economy, was demolished by
government actions that invalidated some lenders' long-held legal rights in
favor of ad hoc attempts to please various political constituencies.
Confidence was further eroded as the government embarked upon unprecedented
"stimulus" moves costing trillions of dollars in the aggregate. These were
rushed into law as a crisis measure immediately after the inauguration of
Barack Obama, a Democrat, as president in January 2009. Most of the
startling sums involved, however, were not spent until years later, by
which
time public confidence was so low that even these measures were not
meaningful in stimulating the economy.
In retrospect, it is not clear upon what evidence the stimulus packages
were
based, because no one had ever been able to prove that taking money from
taxpayers, and having the government spend it instead, would meaningfully
enlarge the scale of economic activity. (See "John Maynard Keynes and the
Suicide of the West," 2039, Hong Kong Press.)
By 2012, after a substantial victory by President Obama over Jeb Bush of
Florida, brother of George W. Bush, the United States had been mired in
recession for six years. (The Obama victory was greatly aided by the
unopposed se cession of Texas and Alaska from the nation.)
The flood of liquidity into the economy had translated into unnerving
inflation as sellers constantly anticipated higher prices, while labor
demand remained soft as buyers resisted buying, especially durable goods.
The heavy industry and refining segment of the American economy, once by
far
the largest in the world, atrophied further as environmental and other
regulation made it impossible for executives to compete with the
industry of
countries that ignored such issues as the environment.
By 2014, the federal government's debt had reached $25 trillion, while the
economy had shrunk to roughly $10 trillion in annual output (at 2006
prices). At that point, the Treasury began to announce that it would
suspend
payment of interest to foreigners on United States federal debt except by
the issuance of so-called P.I.K., or payment-in-kind, notes of the
Treasury.
These were' simply payments by promises instead of by money.
At that point, only the Federal Reserve remained as a buyer of United
States
Treasury debt. Foreign holders sold as quickly as they could. The dollar
collapsed, and the Yuan replaced it as a global reserve currency. The
resulting hyperinflation in the United States and the accompanying collapse
of the republic are by now known to every schoolchild....
Ben Stein is a lawyer, writer, actor and economist.
Greg Goss
>Ben Stein is a lawyer, writer, actor and economist.
Also right-wing ideologue and comedian.
He had no objection to the Bush years at the time. Even now, he
doesn't mention Bush by name while specifying Obama.
He says nothing about the expensive bail-outs if Fanny, Freddy and AIG
under Bush's term, even in this context. The stimulus started with
Obama in his view.
If he was unable to say anything about the fiscal suicide in the Bush
years, he doesn't have much standing to say it now.
--
Tomorrow is today already.
Greg Goss, 1989-01-27
eatfastnoodle
Well, according to him, "prove that taking money from
taxpayers, and having the government spend it instead, would
meaningfully
enlarge the scale of economic activity", how about it's the fact that
it's the government that landed human on the moon, it's the government
that invented the internet which subsequently changed the world, heck,
the computer was invented with government's money. What can
"taxpayers" do with these money? Buy 1 million iPhones and 50000
Hummer? Please, it's pathetic. If government's record of spending
money were dotted with failure and misfires, so called "folks" record
of spending money has absolutely zero to show for.