Third world America: The decline of a superpower?
www2.macleans.ca
www2.macleans.ca
It is possible that the US is finished forever, but there is nothing in this article that convinces me.
Laying off police officers.. Good idea - They probably don't provide enough to be worth their pay over a certain point.
Maybe being forced to fill less pot holes will encourage us to come up with cheaper ways to do the job.
Perhaps if we cut back on teachers and educational spending we'll be able to do more with less... Money isn't the problem in education... if it was then we wouldn't have this data mashup: http://www.datamasher.org/mash-ups/spent-student-and-sat-sco... - It looks like spending more money per student isn't working.
Thinking that cutting back = massive failure is why most American's have massive amounts of personal debt that they will never get out of.
The reason why USA has no money is because you keep cutting the taxes for the richest people and going to wars that you've got no money for... and when finally the shit hit the fan you had to throw money after bankers and companies.
This process usually takes two phases: phase 1, during a boom: "We've got plenty of money, let's cut some taxes" phase 2, during the crisis: "We've got no money left, let's cut some services"
When we have some states and local governments getting tot he point where they must shut down nearly all services the problem isn't money. The problem is they didn't reduce expenditures sooner. The problem is they run fiscally irresponsibly budgets with massive debts.
Bailing out banks and companies - A terrible idea. Cutting taxes - I'm pretty much in favor of this for everyone - especially since those top 5% of earners end up paying 70+ % of the total income tax. But that's not the point here. The point is that we HAVE to figure out how to spend less. Spending the same amount of money when you make half isn't an acceptable strategy.
If during a boom you've cut taxes, why now that money is needed shouldn't you raise them again? Didn't Clinton leave office with a surplus? So if at that time you had a balanced budget, and now you can't even pay to fill your pot holes, and one of the reason is because of your massive cuts in taxes... wouldn't that suggest that to fix you books you need to raise them again?
No.
http://research.stlouisfed.org/fred2/graph/?chart_type=line&...
which is based on this: http://www.cbo.gov/budget/data/historical.pdf
as confirmed by factcheck.org: http://www.factcheck.org/askfactcheck/during_the_clinton_adm...
Actually this was (from the site you linked) show positive saving too (though I am not sure if it's relevant): http://research.stlouisfed.org/fred2/graph/?chart_type=line&...
Could it be because you sent data for gross change in debt? Or maybe because those numbers include the extra interest rate paid by the debt (i.e. the government started saving, but the debt was so huge that the extra interests from the previous year compensated for it?).
Dunno, I am just trying to put the two pictures together.
Obviously one can debate the exact definitions of what should constitute debt, but I'm using the following definition: promises to pay out money in the future which will be politically very difficult to renege on.
If you want to look at debt held by the public, Bush had surpluses too (though not as large).
http://research.stlouisfed.org/fred2/graph/?chart_type=line&...
The mood of this thread suggests I will be modded down but: 1) How much is the real tax on the top 5%? 2) How much of the national income do the top 5% of earners make? 3) How much of the income do they make because of the unique situation they find themselves in the USA?
A wiki-search revealed the following: In 2007, the top 5% of income earners paid over half of the federal income tax revenue.[36] However, as of 2004, the top 5% hold 59.2% of wealth. The top 1% of income earners paid 25% of the total income tax revenue.[37] Again however, the top 1% hold 23.5% of wealth. Forty seven percent of Americans pay no federal income tax.
(The 47% thing includes children / housewives / househusbands / etc.., hence it holds no interest to me as a figure. That said, you're welcome to try to change my mind).
The rich are paying a fair share, especially considering how difficult it is to accomplish the same task outside the US.
Take Flint, for example. Instead of cutting 23 of 88 firefighters, why not keep them all but reduce their compensation by 26%? It's Flint Michigan, they don't exactly have other employment options. Besides, it's unlikely Flint even needs that many firefighters - their population dropped by about 10% since 2000.
The same could be done for teachers - NYC pays entry level teachers roughly the same salary as entry level engineers (total comp per month worked, not per calendar year). Rather than laying them off, why not cut their comp down to liberal arts grad entry level?
[edit: replaced word "pay" in second paragraph with "compensation". Thanks chrisbolt.]
It isn't the recession itself destroying these budgets. It's the recession causing an honest assessment of recent and future growth and calling into question the feasibility of old debts, old promises, ways of life taken for granted, assumptions that drive the very basis of our society. (growth=success, bigger=better)
Granted, I live in Michigan, where we've been given a free preview of waking up to the cold realities of sprawl economics juxtaposed with a debt load based on eternal-growth expectations.
So I can understand why most people will experience a few years of denial, cherry-picking 'evidence' from an ever-shrinking number of still-growing cities to prop up their pre-existing world view. I did the same thing. I get it.
But when the evidence is finally at your door-step, utterly unavoidable, you'll realize it isn't a left vs right issue, or a government vs business issue. But an American lifestyle vs reality issue.
I was a little bit surprised to hear such a strong opinion. It is clear the federal reserves do have now better tools to avoid private institution collapse which could have severe impact on the economy. On a bigger scale, like states it seems not all that clear what regulation mechanism are available. But reading repeatedly the warning signs from several known analysts about the debt issue and upcoming correction I am wondering if such collapse scenarios will take place.
In relative terms, the US has been in decline since the early 1960s. It benefitted from an unprecedented situation after WWII when all it's competitors were reduced to bankruptcy and physical ruin, not to mention political turmoil and the yoke of Communism. America had a growing population and the best infrastructure in the world. Americans became accustomed to effortless growth and weak competition, while the rest of the world learned to compete with tooth and claw while rebuilding their economies and infrastructure from scratch.
The current recession is a shock, but it's hardly the cause of America's decline. The decline was inevitable--as other countries become more competitive, the US becomes less so by definition. What's almost unique about America is the refusal to face that fact and address it. I honestly don't think that American society as a whole is capable of acknowledging that other countries can be superior in certain ways. At best, there's always a nebulous suspicion that foreign systems must possess some fatal flaw that will ultimately tell against them. Hence, there's this obsession about which jobs Americans are naturally advantaged at. There aren't any. Those are exactly the jobs non-Americans covet and are working to acquire.
Those of us outside the US are privileged in a sense, because we can never delude ourselves that success is possible without determined competition among equals. If nothing else, we're always in competition with the US--whether you know it or not.
Of course it's always more complicated than that, but this country strikes me as one that demands to have its cake and eat it too. It's too bad that it could take a slide into "third world" status (whatever that might be) before the masses realize how entitled and illogical they often seem to act.
Hah, that's certainly something you wouldn't see in Canada (and I say this as a Canadian). Go Team America?! :)
Once the USA wasn't like this. Once it had a big government who looked after its citizens and did what no private investor could or would do.
In Australia the government is building fiber optics to all houses. In Europe governments are building a network of fast trains. In China government is building pretty much everything.
Are the Americans sure that they are backing the right politics?
The program has surely been billed as socialist by one of America's 300 million plus citizens, but it has not as of yet been scrapped.
I do not know whether we are backing the right politics.
It was enough to talk about socialism and having a bigger governmental role, and people (on both parties) seemed to start distancing themselves from Obama.
If he doesn't succeed, I am not sure there will really be another chance in time to make a real difference (i.e. to keep USA as no.1... I have no doubt USA will continue being a rich country for a long time to come).
I think foreign observers think that the American public is atavistically motivated by invocations of "socialism" because they view the US through the lens of their own politics. In reality, Obama is unpopular because the economy is in the shitter and unemployment is running near 10%. It doesn't matter whether that's fair or not.
My impression of cause and effect was that it started pretty much from the beginning, when Obama tried to push for economic stimulus first and universal health service later.
And now the teaparty are a force to be reckoned... and their whole point is to have a small government, and they don't want stimuli or similar (as well as no health service).
But please tell me more. American politics is quite interesting. :)
When?
He also stuck us with Social Security and Medicare, which are the main drivers behind the intergenerational debt we're facing now.
So, I mean, big government isn't always the best.
Anyway I am not arguing that big government are always the best. I am arguing that big government sometimes are. Or to put it another way I am arguing that SMALL government isn't always the best.
SS and Medicare are programs intended for older people which are funded by current workers. As time has passed and SS/Medicare eligibility has increased, more SS/Medicare taxes from current workers are paying for fewer people's benefits. This problem has worsened as baby boomers have reached retirement age--we've never seen SS/Medicare enrollment like this before.
Point being: my generation is paying a large chunk of taxes that it will probably never benefit from, as SS/Medicare will likely occupy too large a portion of the budget and would thus need to be scaled back (or closed down).
[1] http://www.cms.gov/ReportsTrustFunds/downloads/tr2009.pdf
What politician would scale back SS/Medicare when retirees are one of the largest voting blocks in America?
Governments also don't necessarily experience more corruption over time. Just look at overthrown dictatorships. If you said democratic governments, like the US, I'd agree with you, since the accumulation of wealth shifts power around.
http://super-economy.blogspot.com/2010/03/super-economy-in-o...
So maybe the US is doing something right after all.
By that meter then Nokia is doing things right too.
That said you could very well end up with a future with very powerful and very competitive american companies... in a country with no middle-class and a strong divide between managers and those with money, and the labour force with little privileges.
Edit: I think USA got to where it is for a certain pragmatism that it seems to have lost. Now ideologies (free market, socialism, God, etc...) seem to be all that matter, and society is suffering for it. GDP is not a good indicator of the society's wellbeing and even less is current GDP for tomorrow's society's. At the end of the day the richest man in the world is Mexican, but Mexico is hardly a first world country.
They elected a president who's decidedly a pragmatist (I think McCain would have been one as well, though not his VP candidate..), and one of the most talked about issues here is the disappearing middle class. My view is that they ultimately do have a good system in place to discuss and hopefully improve on these problems.
Their core strength is flexibility. I still remember talk of Japan overtaking the US in the 80s, and Japanese companies are still strong in the markets they dominated at the time - but the Americans have moved on to lead in software/Internet industries. That's not coincidence, in my opinion.
As a retort, here's Hans Rosling on narrowing GDP/capita and the first world's role in this 'new economy':
Secondly, stop giving MBAs a bad name.