The Absence of Political Leadership

In their acceptance speeches at the respective political party conventions in 2016, the problem of unfunded liabilities for social welfare programs, primarily Social Security and Medicare, was not mentioned by either of the candidates for the office of President of the United States. Other than avoiding war and defending against terrorism, there is no bigger issue and problem for the American people. Where is the leadership? Why will neither of the two nominees for election as President say anything about the unfunded liabilities of the United States for social welfare programs?

Social Security and Medicare are essentially programs that benefit middle class people who have reached retirement age. Generally, they fail to provide a safety net for the  poorest of the poor, who are destitute or even homeless. There likely would be near universal agreement in America that

  • Any overhaul of social welfare programs to make them sustainable over the long run should also include provisions to provide a real safety net for those who presently are left out of state organized welfare programs.
  • Insofar as feasible, welfare programs for the poorest of the poor should be designed and administered to help people become independent, working, and productive individuals if they are capable of that.

In 2011, Congressman Paul Ryan persuaded Congressional Republicans to propose some modest steps to address the problem and mitigate it. His proposal was promptly characterized as ridiculous and heartless by a widely read economist and columnist, Paul Krugman. The editors of a leading newspaper, The New York Times, said that the proposal would do enormous damage to all Americans.

Economist Laurence Kotlikoff is an expert on this subject, with two books to his credit on the problem of unfunded liabilities of the United States for social welfare programs. Kotlikoff asserts about Medicare, Social Security and other welfare programs that $210 trillion is the true amount of the unfunded liabilities of the U.S., including social welfare program liabilities. What does that mean in terms of the ability of the American people to pay it? By calculating how much the $210 trillion comes to on a per household basis, for the 116 million households in the United States. It comes to $1.8 million per household. That is an overwhelming amount compared to the resources of the American people.

According to an article in a popular journal, U. S. News and World Report, “While the typical household headed by someone age 65 or older had a net worth of  $170,128 in 2010, most of that wealth is in the form of home equity . . . If home equity is excluded from the calculation, the median senior-citizen household had a net worth of just $28,518 in 2010.” That is doubly significant: first because senior citizen net worth is so small compared to the liabilities discussed herein and second because senior citizens on average have more assets than the average for all Americans.

According to the National Institute on Retirement Security, the typical working class household in America has just $2,500 saved for retirement. How are the American people  going to be able to save for retirement during their working careers if they have to pay for hundreds of trillions of dollars in social welfare benefits already promised by the United States Congress?

The fiscal gap of $210 trillion includes the much smaller amount known as the public debt of the United States, referred to generally as the national debt. As of 2016, the public debt consists of the bonded debt of the United States, amounting to some $13.9 trillion or about $114,000 per household.

Professor Kotlikoff says that to cover the fiscal gap would require an immediate, permanent 59 percent increase in federal tax revenue or an immediate, permanent 38 percent cut in federal spending; and that if Congress does nothing for twenty years, the requisite federal tax increase would be 70 percent or the requisite spending cut would be 43 percent.

Paul Ryan and Lawrence Kotlikoff are not alone in voicing concern about these unfunded liabilities. In 2004 the International Monetary Fund made similar assertions in a report entitled “U. S. Fiscal Policies and Priorities for Long-Run Sustainability.”

A debt that is impossible to be paid will not be paid. The history of recent world affairs shows that. Nazi Germany, Adolf Hitler, and World War II was the German answer to unacceptably heavy debts imposed on the German people by the combination of the Treaty of Versailles and protectionist policies of other countries that prevented Germans from earning money in foreign trade to service their Versailles Treaty debts. Argentina’s default in 2001 on sovereign debt was the outcome of decades of irresponsible spending by the Argentine state. Argentina’s government had accumulated debts it could not pay, so it repudiated them.

The debts accumulated by the United States are not unique to it. Debts so large that they cannot and will not be repaid are a problem of political states, businesses, and individuals around the world, according to a thoughtful analysis by economics columnist, Philip Coggan.

In the United States it is absolutely certain that politicians in or seeking high federal office know full well of the U.S. debt problem. They know that the United States has incurred long-term liabilities it cannot pay without unacceptable consequences. Where is the political leadership? Who in a responsible position politically will address this problem? What do Presidential candidates Hilary Clinton and Donald Trump propose to do about U.S. debt? Nothing. What do they say about it? Nothing. They are silent. They are supported in this disregard of distasteful facts by supposed authorities and experts such as Paul Krugman and the editors of The New York Times who denounce any remedial proposal as ridiculous, heartless, and enormously damaging to the American people.

That is the opposite of the truth. Doing nothing will be cruel and heartless to future generations, damaging to the American people and damaging to the political institutions by which the American people are ruled. 1

 

 

Notes:

  1. The sources for this post are Wikipedia, The Path to Prosperity; Kotlikoff, Laurence, America’s Hidden Credit Card Bill, The New York Times, July 3, 2014; “Retiree New Worth Declines,” U.S. News & World Report, July 23, 2012; “The United States of Insolvency,” by James Grant, Time, April 15, 2016; Coggan, Philip, Paper Promises (2012); International Monetary Fund, U.S. Policies and Priorities for Long-Run Sustainability (2004); “State [of California] to offer retirement accounts to workers without pensions, 401(k)s,” by Aaron Kinney, Bay Area News Group, reported in Eureka Times-Standard, August 31, 2016.
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The Voyage of Laura Dekker–Part 2, her book One Girl One Dream

This is follow up to the original post entitled The Voyage of Laura Dekker, posted here on September 2, 2014. Continue reading

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Legally sanctioned highway robbery and other thefts by law enforcement

The Washington Post reported in 2014 that under U.S. and state laws, in a federal program known as “Equitable Sharing,” since 2001 state and local police have seized $2.5 billion from people who were not charged with a crime.  1 Continue reading

Notes:

  1. Reported in “Stop and seize: Aggressive police take hundreds of millions of dollars from motorists not charged with crimes,” by Michael Sallah, Robert O’Harrow, Jr.,and Steven Rich, Washington Post, September 6, 2014, 2 http://www.washingtonpost.com/sf/investigative/2014/09/06/stop-and-seize/#
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Bank account seizures by the IRS

Reproduced below is a recent article from the New York Times about the Internal Revenue Service program of seizing bank accounts of people who are never charged with any illegal act—except making too many cash deposits of less than $10,000. Continue reading

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The Voyage of Laura Dekker

In August 2009, a thirteen year old girl, Laura Dekker, announced her plan for a two-year solo ocean sailing voyage around the globe to begin the following year. Solo sailing voyages around the world had been done before. However, it was Laura’s goal to become the youngest person to sail alone around the world. Continue reading

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America still the land of opportunity

America is a true world country, made up of people from every other country. America is unique in its rapid acceptance of immigrants who are readily assimilated into the population with no stigma or ill will attached to their foreign origins, although perhaps Australia is not far behind America in  welcoming immigrants. Continue reading

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Sign of the times—pay your bills by mail

“Pay Your Bills by Mail,” is a neatly printed bumper sticker on U. S. Postal Service (USPS) trucks, as of summer 2014. A sticker like that does not appear on USPS trucks at the whim of an individual mail carrier. It must be the product of a decision in management of the USPS. Continue reading

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Government Regulation, Crony Capitalism, and Public Safety

Many people believe that protecting the safety of the public is an indispensable service of the state that cannot be provided by free and private enterprise; and that the state protects safety in health care by licensing and regulating physicians, dentists and other health care providers such as hospitals. Unfortunately, government regulation does not work that way, as illustrated in the following example of federal regulation of hospitals. Continue reading

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Illegal Immigration and Private Security

The Los Angeles Times reported on August 1, 2014 that members of “militias” are patrolling the U.S. Mexico border on private lands at the request of the landowners. See “Militias patrolling Texas border draw scrutiny, concern,” by Molly Hennesy-Fiske, Los Angeles Times, August 1, 2014. 1

Continue reading

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The Sharing Economy–Innovation, Technology and Freedom

On July 26, 2014 we published a new chapter of Capitalism: The Liberal Revolution (CTLR), entitled Credit and Reputation, http://www.capitalismtheliberalrevolution.com/chapter/credit-and-reputation/

On July 29, 2014 we noticed a column in the Los Angeles Times directly relevant to part of the CTLR chapter on Credit and Reputation. The Los Angeles Times column is “In the front seat at the ride-sharing revolution,” by Sandy Banks, Los Angeles Times, July 29, 2014, http://www.latimes.com/local/la-me-0729-banks-uber-lyft-20140729-column.html Continue reading

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Inflation, booms and busts, politics, and the Federal Reserve, part 2

In a prior post we pointed to the Federal Reserve System (the Fed) as the engine of inflation and the source of repeated booms and busts. See “Inflation, booms and busts, their pathology and their cure,” at http://www.capitalismtheliberalrevolution.com/blog/inflation-booms-and-busts-their-pathology-and-their-cure/

In this post, inspired by responses of readers of the prior post, we augment our comments about the Fed and the U.S. banking industry as follows.

Continue reading

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Inflation, booms and busts, their pathology and their cure

Never in history has a country that financed big budget deficits with large amounts of central-bank money avoided inflation. The Federal Reserve (the Fed) has been creating enormous amounts of money for years. The Fed is playing with fire, risking enormous price inflation in its efforts to stimulate the economy and avoid deflation. Inflation in producer and consumer prices always starts with and is caused by a preceding inflation in the supply of state fiat money. 1 Continue reading

Notes:

  1.   For a discussion of state fiat money and inflation see Chapter 21, Money, in the book/website to which the blog is a companion, at http://www.capitalismtheliberalrevolution.com/chapter/money/
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Argentina’s political rulers learn nothing from past mistakes

National socialist political actions have been the ruination of Argentina. The Peronist political party is a parasite which has attached itself to the Argentine nation and continually eats away at the economic life of the people. Argentina, like Venezuela, is an extreme case of the political pathology which affects even as vibrant a society as America. Continue reading

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Questions addressed to a Marxist college professor

David W. Harvey is a professor at The City University of New York. He is an avowed Marxist. The Wikipedia biography of Dr. Harvey states that in 1961 he was awarded a Ph. D. degree by Cambridge University. His field of teaching is anthropology and geography. According to the Wikipedia biography of Dr. Harvey “. . . he positioned himself centrally in the newly emerging field of radical and Marxist geography.” Continue reading

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To protect and serve–failings of state police

The official motto of the police department of the City of Los Angeles is “To protect and serve.” 1 The Mission Statement of the Santa Barbara County Sheriff states that “We, the members of your Sheriff’s Office . . . are committed to protecting persons and property.” 2 Unfortunately, neither the Los Angeles police nor the Santa Barbara sheriff, nor police in any other city or town in America actually have shown that they can protect people from harm. Continue reading

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The decline and fall of political democracy and the rise of human misery in Venezuela

On May 17, 2014, Lufthansa, the flagship German airline, suspended ticket sales to Caracas, the capitol of Venezuela, joining ten other airlines that have taken similar actions due to Venezuela’s currency controls. As of April, international airlines had an equivalent of US $3.9 billion stuck in the rapidly depreciating bolivar, the Venezuelan monetary unit. The $3.9 billion cannot be taken out of Venezuela because of the Venezuelan state’s currency controls. Continue reading

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Your money and your life–Part 3

“Prediction is very difficult, especially about the future”—Niels Bohr

The quotation from the great physicist Niels Bohr begins this post, as acknowledgment that the forward-looking statements below include both explicit and implicit predictions of rising inflation and a corresponding rise in the market value of assets that cannot be inflated in quantity by the actions of the state in debasing its monopoly supply of money. In the view of the author of this post the predictive problem is not whether, but when Americans will see large-scale price increases due to the federal state’s manipulation of its monopoly supply of money. Continue reading

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America’s health care catastrophe

We know very well a married couple who traveled in spring 2013 to vacation in Ireland and England. While on the first part of their trip, in Ireland, each of them contracted a bad case of influenza, part of the flu epidemic of 2013, which is considered the worst in recent history. The symptoms started with a sore throat and headache followed by a runny nose and significant fever combined with extreme fatigue that made even getting out of bed a chore. Continue reading

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Your Money and Your Life–Part 2

In our blog post of March 22, 2013, entitled “Your Money and Your Life,” we said that the U.S. Congress, the Department of the Treasury, and the Federal Reserve are pursuing a policy of debasing the U.S. dollar. The continuous debasement of the U.S. dollar propels a long-term upward movement of the dollar price of real assets—that is assets such as precious metals, petroleum, and shares of companies that are called “real” in contradistinction to paper money created by the state. Continue reading

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Techniques of Tyranny—Persuade people they need the tyrant for defense

Following the introductory comments in the first two paragraphs immediately below, there are quotations from “When North Korea roars, South Korea yawns,” by Jung-yoon Choi and Barbara Demick, Los Angeles Times, April 6, 2013. Sub-title: “Decades of living next door to an erratic, menacing neighbor have made the South nearly deaf to the saber rattling.” Continue reading

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America: Still unique and a uniquely desirable place to live

In recent years there has been a plethora of negative articles about America. The tenor of these articles is that America is not what it once was; that America is on a downward trend in global influence and prosperity;  that economic disaster lies ahead for America. Continue reading

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Your Money and Your Life

In the book of which this blog is a part, Capitalism: The Liberal Revolution (CTLR), the discussion of freedom would be incomplete without a discussion of money, for which a full chapter would be appropriate. Such a chapter is planned. Continue reading

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Conscious Capitalism book

John Mackey is the co-founder of Whole Foods Markets, which has grown from a single store in Austin, Texas in 1978 to a group of 343 stores in the United States, Canada, and the United Kingdom. The Harvard Business Review Press has just published a book by John Mackey and co-author Raj Sisodia entitled Conscious Capitalism.  Continue reading

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The Price of Politics

In the just concluded presidential election campaign in the United States, the candidates and their party allies spent a combined $2 billion according to a report on Reuters on November 7, 2012. Journalist Bob Woodward has published a book entitled The Price of Politics (2012). The $2 billion of spending by the presidential candidates is just the tip of the iceberg represented by the idea behind the title “The Price of Politics.” Continue reading

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The American Dream

Whether Americans have cause to give up on the historical American dream of an ever better future is the subject of the cover story by Jon Meacham in the June 21, 2012 issue of Time magazine. Continue reading

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Education and compulsory schooling

People exposed to the ideas of this website—that everything in society should be on a voluntary, non-coercive basis–sometimes ask how, without the state and taxation, education would be provided to children of impecunious families. Continue reading

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Electricity shortages in the third world of the U.S.A.

August 2012

“Rotating outages” of electricity happen routinely in third world countries. Now parts of the U.S., including Southern California, are in danger of periodic loss of electricity for extended periods of time. Southern California Edison is notifying its customers to “start planning now for potential rotating outages [which] can occur whenever SCE is urged by state officials to reduce the energy load.” Continue reading

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Federal election 2012 in America: both political parties are incompetent to solve the financial problems of the U.S.

A  YouTube presentation [link below] shows that all the taxes the U.S. federal state will collect in the year 2012 are used up by mandatory entitlement programs (Medicare, Social Security, etc.) and interest on the national debt. So Congress has no recourse but running a $1.3 trillion deficit to pay for everything else the federal state does. Continue reading

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Announcement: Publication of Taming the Violence of Faith by Jay Stuart Snelson

Jay Snelson spent many years compiling material and marshaling his ideas for a book which has just been published: Taming the Violence of Faith: Win-Win Solutions for Our World in Crisis (2011). Although the copyright date is 2011, actual printing and distribution occurred only in mid-2012. The book may be purchased from Amazon.com and Barnesandnoble.com Continue reading

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Understanding America’s Economic Doldrums (2008-2012)

We reproduce below a letter from Jeff Herman of Bell Canyon, California to the editors of The Wall Street Journal published online on August 1, 2012 and in the print version, Opinion section, on August 2, 2012. It is published here as it is about as clear a statement as can be made about the cause of the lingering unemployment problem in America. Continue reading

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Happy Birthday America–July 4, 2012

America is spacious and beautiful. It is the birthplace of the idea that people do not need a king to rule over them.

America has enormous strengths of which often its own native-born residents are either unaware or which they take for granted. Among these strengths is the continual enrichment of the country by immigration from abroad. America is truly a world country, perhaps, along with Canada, being the prototype of a country built up in large part by immigration. Continue reading

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Our Lives—Thoughts on Freedom

It is the time of the  summer solstice, a daily reminder of the life-giving energy that comes to us from the sun at this time of year in the temperate latitudes when the sun is with us through most of our day.

Our sun, as Giordano Bruno was the first to say, is one of a perhaps infinite number of stars. Our sun’s energy supports life on earth  because it is so relatively close to us–just a little over eight minutes away at the speed of travel of the energy that comes to us from the sun as light and heat.

Andrew Galambos and Jay Snelson taught us one of the precepts of the wisdom of the ages–that in our lives we are all free as long as we hold on to the freedom of our primary property, our property in our thoughts, ideas, and actions. Continue reading

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Jay Snelson V-50 lectures available in DVD format

After delivering the V-50 lectures for fourteen years, in 1977-1978 Jay Snelson presented his last V-50 lectures. Thanks to the endeavors of Charles Holloway, those lectures were reproduced in DVD, MP-3 format in the year 2008 and published with the consent of Jay Snelson. The publication consists of a set of six compact discs and an illustrated booklet setting forth the background and summarizing the content of the lectures. Continue reading

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Political Democracy in America, a new chapter, added June 21, 2012

On June 21, 2012 there has been added to the website, Capitalism: The Liberal Revolution, a new chapter entitled “Political Democracy in America.” The link to this new chapter is  http://www.capitalismtheliberalrevolution.com/chapter/political-democracy-in-america/ Continue reading

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The Futility of Higher Taxes on High Incomes

Buffett Rule Tax Increase Would Not Put a Dent In U.S. Debt and Deficits

A currently debated idea of the incumbent President of the United States of America is to  impose a 30% income tax on all income of individuals with $1 million or more of taxable income in a year. This proposal, known as “the Buffett Rule,” is based on ideas espoused by multi-billionaire Warren Buffett, whose proposal was previously described in an entry in this blog dated August 25, 2011. Continue reading

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Building a defense that defends

Thoughts on building a defense that actually defends, on this tenth anniversary of the successful terrorist attacks of September 11, 2001 (9/11)

The most successful defense is one that makes it unnecessary to strike back at an enemy, because the enemy is either unable to mount a successful attack, or is deterred from doing so. Continue reading

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Taxing the “Super-Rich”

Master investor Warren Buffett published an Op-Ed essay in the New York Times of August 15, 2011, entitled “Stop Coddling the Super-Rich.” Buffett said that his income tax rates are lower than tax rates on the other 20 people in his office. Buffett overlooked the fact that 99% of his wealth is invested in his company, Berkshire Hathaway, where corporate income is taxed at a rate about twice as high as Buffett’s personal tax rate and about as high as individual tax rates on Berkshire’s office staff. Buffett advocated significant tax rate increases on the “Super-Rich,” a group that he says includes 236,000 Americans generating $1 million or more of annual income. Continue reading

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Health Care Added to Chapter “Replacements for the Political State”

Today we have added an essay on health care to the chapter of the book entitled “Replacements for the Political State.”

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Famine — Its Source in War and Politics

While famine can be caused by extremely adverse climatic conditions, the most severe examples over the past century have been man-made via coercive politics and warfare. Sources for statements below are provided at the end of this post. Continue reading

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Book Continual Editing

Taking advantage of the unique characteristics of Internet publishing, we have already made editorial changes in the Book section of this site, and expect to do so in the future. If you have already read portions of the book, they may have been expanded since your last visit to the site.

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