Friday, November 17, 2006

America's Decline: Is It Fanciful?

The brilliant political observer and columnist Mark Steyn recently opined that over the last 40 years America has proven that she has no stomach for backing her rhetoric with action. Rather than stand up and fight she has opted to flee confrontation. It started with Vietnam and surrender has wound its way through to the 2006 elections where the populace irritated that the war of civilizations was upsetting their "soaps" and taking too long they again decided to flee; this time Iraq.

Daniel Pipes added to Steyn's piece writing that "Europe is Lost". Pipes posits that Europe is slowly becoming "Eurabia". Its ever-expanding Muslim population has become a problem so acute that the culture of Europe is being challenged by Islam.

The scenario is quite simple. The United States essentially won WWII. In the aftermath Europe had a "peace dividend" as it didn't have to spend the money to defend itself. America footed that bill. So it voted to spend that dividend on a nanny state that provided for cradle-to-grave dependence on a government essentially dedicated to socialism "light".

Those entitlements have "feminized" their populations, secularized their spirituality, plummeted their birth rate and neutered their self-reliance. All this made them ripe for a Muslim takeover because to keep their economy going they had to import workers from other countries; and those workers came from Islamic countries. It is estimated that Europe will be populated by a Muslims majority in 30 years unless a sea change is made and their native birth rate radically increases.

Faced with a similar need to fuel its economy and maintain its growth rate America has turned a blind eye to an influx of Christian Latinos primarily from Mexico. There is little fear that this influx will turn Muslim anytime soon. Likewise the fear of America becoming a part of the Islamic "caliphate" is remote. Yet that is not our only concern. Radical Islam is planning our demise by incineration if you read the papers. A nuclear winter is in our future as I don't believe Islam is willing to wait for our religious conversion to their 7th. Century dogma.

Faced with these many concerns Pipes made the following summation of Steyn's prescription for America:

Pared to its essentials, he counsels two things: First, avoid the "bloated European welfare systems," declare them no less than a national security threat, shrink the state, and emphasize the virtues of self-reliance and individual innovation. Second, avoid "imperial understretch," don't "hunker down in Fortress America" but destroy the ideology of radical Islam, help reform Islam, and expand Western civilization to new places. Only if Americans "can summon the will to shape at least part of the emerging world" will they have enough company to soldier on. Failing that, expect a "new Dark Ages" a planet on which much of the map is re-primitivized."

So how do we avoid becoming a "bloated European welfare system", "shrink the state" and "become self-reliant". Well as I sit here what we have to do is repeal Social Security, Medicare and various other entitlements and replace them with programs that rely on the capitalist system. Enacting personal accounts would be a giant step in making that a reality. First of all it will make the nation so much richer than it already is and that wealth in turn will eliminate so many of our social problems.

Recently I have run into so many intelligent people that are confused as to what America can do. Without exception I run into people who believe if China decides to sell it US securities (bonds) that will bankrupt America. They also believe America is up to its ears in debt. All things considered they believe we have no national net worth. This is such a fallacy it is downright laughable. If that were the case why are we still the world's reserve currency? Why is the stock market surging and setting new records every day. Why? Does that sound like an impending bankruptcy to you?

The confusion lies in the simple fact that America is so tolerant that it lets its politicians promise so much largesse to its citizens that if we let it they would sell our future for a vote. They would let us become a bloated European welfare state. Current history tells us that this problem is a problem of both political parties irrespective of their rhetoric.

These promises are not fatal. They universally present no problem if they are addressed. These promises are made to Americans (the people) from other Americans (the government which is the people). They have absolutely no effect upon the net worth of America. If they did our economy and stock market would be in the tank. The promises to the elderly (Social Security and Medicare) are promises from the young to the old; all Americans. The young work to pay for the benefits granted to the old. It is quite unfair considering that could all be avoided with personal accounts.

Personal accounts will empower the people. It will make them self-reliant. The fact that we won't need half of the budget (presently burdened with entitlements) means we would get the biggest tax cut in history (no need to fund that puppy). All of which begs the question can we afford the transition. Well that takes us back to the beginning. How much is America worth.

The Federal Reserve says households by themselves are worth upwards of $63 Trillion. The fact that consumer debt is owed to other Americans means for my analysis other Americans hold that receivable. Against this small fraction ($63 trillion) of America's real net worth we must subtract $2.2 Trillion which we owe real foreigners (like the Chinese (12%) and Japan (31%)). The balance of our $8.5 Trillion national debt is either a debt from one government agency to another ($3.7 Trillion) or debt owned by Americans ($2.6 Trillion).

So without considering the immense net worth that America possesses the net household net worth alone is at least $60 Trillion (after deducting the $2.2 Trillion owed foreigners). So if we replace Social Security and Medicare and install personal accounts we sure could finance the transition. All your Senators and all your Congressmen together with 3.3 million Federal workers already have personal accounts so what is the problem with our having them?

Don't be confused by 24/7 news. They need dramatic headlines to retain their ratings. They have distorted the belief of Americans in America so badly that 60% of the people believe the economy is going in the wrong direction in the midst of the biggest economic boom in history. The fact that Congress promises doesn't mean those promises will be fulfilled. We can change the law with a stroke of the pen and that is what we should do.

Which leads us back to Steyn's prescription for survival of self-reliance, shrinking government and repealing the welfare state. Enacting personal accounts will accomplish much of that. Standing up against your enemies will then be a lot more urgent when everyone has a nest egg to protect and a religious dogma to defeat.

by Dick McDonald

No comments: