My response to fransgeraedts.
This was too long of a reply to be lost in the blogosphere, so I thought that I would repost it for discussion in another post. My original blog post was here.
(1) The democracies enable our individual pursuits of freedom, wealth and happiness. (Think both about traditional societies and modern totalitarian systems to see how unusual that is.)
Up until a point in time this was correct, but since the political process has been sold to the highest bidder, the opposite has started to happen. Individual liberties are being suppressed more and more in the name of security. Consumers fall prey to corporate lobbyists. Subsidies warp the free market and amount to corporate welfare. Political fraud has grown rampant to the point that it amounts to treason and the media is impotent on reporting against it. Morality has become dictated by law. The accumulation of wealth has been taxed to the point the it disrupts productivity. The average citizen is fat, dumb, lazy, and deep in debt and that is exactly what our government wants.
(2) The democracies have lowered the amount of warfare in the world immensely (Because wars between democracies occur only seldom.)
This is is not true, and if it was true, we made up for it by imposing our will on other nations to the point that we are hated by a majority of the worlds population.
(3) The democracies have won two world wide wars against totalitarian systems.(Fascism, Communism;we will win the third one against religious fundamentalism as well.)
This is contradictory to your statement that we don't fight war as much. We fought in the 2 biggest wars ever to be fought. As far as winning against religious fundamentalism, this will only be done on the battlefield if it is done on a scale of another world war. We simply can't afford to fight fundamentalist countries individually in a manor that will be accepted by our population. They are fighting a guerrilla war much like we did when we fought for our independence. To win against that, you have to be willing to wipe out a large part of the population and break their will over a short time frame or be willing to occupy the country for a very long time frame and break their will that way. Neither is acceptable to our population and would be repugnant if repeated over and over again with multiple countries
(4) The democracies have maintained the monopoly of violence of the state and brought its use under the rule of law and due process. (Think police-state to see the difference)
See Cuba, Venezuela, Iran, North Korea, Syria and countless other countries that don't submit to a violent rule of law.
(5) The democracies have maintained the monopoly of taxes of the state and brought its use under the rule of law and majority rule.(Think tax-farming to see the difference)
Taxes have nothing to do with promoting the individual anymore and exist only to make politicians wealthy. Social programs are perverted to line the pockets of our elected politicians.
(6) The democracies support our pursuits of freedom, wealth and happiness with collective facilities like, among others,the army, the justice system, education, infrastructure, city planning, cultural institutions, the arts, the sciences and the democratic institutions themselves. (Imagine to create and maintain a park in a purely marketdriven town to see the necessity of statebased collective facilities; think of "the problem of the commons" and "the problem of the free rider")
That's what they should be doing, but all of the institutions above are not supported as intended and are in decay. Even the military that we spend more money on than most countries combined is in decay due to political fraud. Our infrastructure is a joke and and we are less free to pursue freedom, wealth and happiness.
(7)The democracies learn and adapt.That makes it possible to enhance continually the collective facilities and the policies that try to steer the development of the pursuits.(Look at the problems traditional and totalitarian systems have to accomadate the new to see the difference.)
Some democracies do learn and adapt, but not the most powerful ones. The most powerful ones eventually fail because they eventually they reach the point that they can no longer buy the votes of the masses by spending future productivity.
(8) The democracies have created and supported open societies where people can think and speak freely and where forms of collective learning are always ongoing. (For example Caps.)
This is still true in most cases, but I believe that this will crumble in the end as well. It isn't totally true in even this age though.
(9) The democracies serve justice. They do so quiet well when it comes to freedom (Think the abolishement of serfdom and slavery, the constitution of the liberties as fundamental rights for everybody, the emancipation of women and gay's, the secularisation of the political sphere and the right to belief -or not to belief.)They have begun to do so when it comes to wealth. (Think private property, contract-law, minimum wage, social security, health care) They begin to have an inkling what justice should be about when it is about happiness.
I'm glad you brought up serfdom and slavery. Arkansas must really feel free that they are being sued by the federal government for passing a law that basically allows them to enforce the federal law that is already on the books. Their freedom to protect themselves should be an inalienable right, but our government prefers them to become victims to kidnappers and drug smugglers. Our tax system is supposed to be voluntary and everyone knows what a joke that is. The only way that you can limit your tax is to limit your livelihood. You can't even move totally out of the country and make your entire income abroad to avoid tax. The government owns you at birth. You have become a slave to debt that was created before your birth and your children have become slaves to an even greater and most certainly an unsustainable debt. The only way to prop that debt a little longer is to inflate the currency and erode their chances for prosperity until the bubble actually bursts.
Ok, now for the second part..
Wow!, this is getting to be a long rebuttal but here goes...
There is nothing magical that is created here that can't be created somewhere else.
(from Donnernv's blog.)
(1) Do you see farming disappear to china? And mining in all its forms? And harvesting the sun on the rooftops of the cities and the floor of the american deserts?
China is already a bigger producer of food than we are, but it still isn't enough. Remember that our food production is heavily subsidized and it will be hard to maintain those subsidies when taxpayers don't have enough jobs to pay the taxes. There's alot of other fertile places in the world that can easily produce when the subsidies end. China is also farther ahead than we are on solar power and they don't have to go into debt to pursue it even farther.
Do you see the building of houses and offices disappear? or the building of roads and bridges and railways and ports? of the public buidings and spaces that make a city? of the grid of water and waste and electricity and information?
Maybe you should see what's happening with Detroit. Where does the money come from to build these things without jobs? I doubt we are going to sponser any more debt created housing bubbles any time soon.
Do you see retailing disappear to china?
Have you shopped at Walmart?
The local entertainment?
The internet is already global and Netflix, Hulu, Universal Theaters, heck even the local news can be broadcast from anywhere.
Do you see the care for young and sick and elderly go to the far east?
See the Panama Pensionado Program
The connected transport industries? The driving of the bus, the collecting of the garbage, the cleaning of the street? The hairdesigner (grin)?
Again if the economy as a whole can't keep pace globally, spending on all of these things is going to be less and not more.
Do you see education go? The schoolsystem? The universities?Do you see the police go? The justice-system? Social security? Cityplanning? The army?
Quite frankly yes! These are all taxpayer supported and take a look at the very people getting laid off in states like California right now.
Collegefootball? People without jobs can afford to put their kids in College?
Ok enough with Donner's thread and back to the rest of your post in mine.
A very large part of an economy -the parts that are connected to place and to people cannot be moved. Can we agree on that?
Partially, we are a service economy and a lot of those service jobs cannot be outsourced, but some can. The computer that you own probably was made in China. Although it may our may not have an American company's label on it, you probably bought it a Best Buy or similar store, so a couple of kids with retail jobs are probably thankful for your purchase. If it does have an American label, A corporate exec or 2 may have a job due to 10,000 or so purchases like yours. If it doesn't, than those corp executives are probably in China, Japan or Taiwan. Regardless of the label, more and more of the engineering of that computer's design is being done overseas. Yes somebody transported it from the dock to the store and as long as consumption stays high, that person still has a job. (Even though that with NAFTA, I can now get it shipped to a dock in Mexico and have a Mexican truck driver deliver it right to your store and get rid of the cost of that over-paid Teamster driver all together.) But wait? There's still those customer service jobs right? Funny how all those people have Indian accents. It's got to be repaired right? Well that customer service person is going to tell you to ship it to the overseas repair shop and they will ship it back to you in 6 to 8 weeks.
What about that food monopoly that we have? Well chances are those strawberries that you're eating were picked by an illegal alien that is shipping at least part of his paycheck back to Mexico to feed his family.
What you see is a net loss of dollars. Since we can't compete globally, the only way that we can get those dollars back is to print more and more dollars. That makes things more and more expensive domestically and erodes the purchasing power of the people that still have jobs left, which also means that our tax revenues shrink and we have to cut more tax payer supported jobs.
This is not magic. To continue to have the consumption that this country has, we have to produce more than we consume. For every hairdresser that has a job in our country about 50 have a job in China making the razors, scissors, hair gel, talcum powder, cash registers, light bulbs, barber chairs, building materials, window glass, mirrors, brooms, aprons, ect...
You might argue that the skilled jobs won't go away, but as you can see above when the domestic consumption leads to fewer and fewer domestic jobs, then it leads to fewer and fewer domestic consumers, which means even less domestic jobs. The cycle doesn't break until our output exceeds our input again.
Let me put it this way: we cannot compete with China on wages -therefore we should not -in actual fact we are not.
China can't compete with Ethiopia on wages either and somehow it manages to grow while Ethiopia stagnates.
The reason is not just wages, but China's cost of what it produces and the fact that it still produces more than it consumes. The problem with US is that we don't have the same same commitment to basic economic success anymore. We could have diverted the spoils of some of our previous production to assuring that we had an economic surplus right now rather than an economic debt. Rather than save for a rainy day though we decided to fire up the printing presses and we can't save ourselves if we tried at this point
A third way: if a guy in China earns a dollar a day does it make any difference at all in competition terms wether a guy in the states makes 40 dollars, or 60, or 80?
Yes, that 1 person employs 40, 60, or 80 Chinamen respectively and their economy gains on ours at the same rate.
A fourth: yes indeed all the labor where transport capital knowledge society and happiness -costs dont play a significant role will move out of the western economies -in fact most of them already have! But the flip side of that is that for all the labor that remains wages can rise -and should rise.
Wrong again. It's not a matter of can rise and should rise, it's a matter of absolutely will rise and absolutely should not rise. As we lose more and more jobs, we rely on fewer and fewer working people to maintain the economy. We therefore have to give them more and more money to spend and hope that money "trickles down" (Have you heard those words before?) to the greater and greater number of people being supported by government. This is a losing proposition though because a greater and greater portion of those dollars will get exported to China because we consume more than we make.
A fifth and last. The real reason people are against raising wages is that it would mean that profits would diminish and profitrelated incomes would go down/stay flat. So CEO's would earn less, and QandA advisers, and hedgefundguys and girls, and celebrities, and artdealers, and soccerplayers (grin) but primary school teachers and busdrivers and plummers (remember joe?) and nurses and even wallmart employees would earn more. Would that be so bad? I do not think so.
I'll be the first guy to line up and vote for a law that says that a CEO can't make more than 30 times his lowest paid employee (including all perks and benefits). CEO's and corporate executives are overpaid in my opinion as well, but shareholders don't hold companies accountable for that.
I don't have a clue who you mean by Q and A advisors, so I'll skip that one. Hedgefund guys and girls will still make their money no matter how much you screw up the economy.
Celebrities, Art Dealers, Soccer Players, primary school teachers, bus drivers, plumbers, nurses, and even Walmart employees all fall into the group that gets screwed the most as you inflate the dollar. Yes you hand them a bigger paycheck than you handed them before , but it buys them less and less each time as their jobs disappear one by one. China is still taking our debt funded dollars for now, but soon it will out-grow us and won't need them anymore. If anyone else thinks that another western democracy will step up when they walk away and buy our debt for us, they are absolutely nuts.
(And it would put the western economies back on a sustainable growthpath!(But that is something for another post.))
At this point, you can't put the US economy back on a sustainable growth path until after a long and painful depression. Our best bet is to renounce our debt and suffer the consequences for a decade or 2 before China dumps our debt on the market and we hyper-inflate.
China has grown to the point that we can no longer hope for mutual dependence on the dollar.