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America is rich and powerful because we can borrow. Will this debt build a stronger America?

5 June 2012

Summary: This was originally intended as a follow-up to The Titanic’s lessons for us about the coming economic crisis. But as so often the case on the FM website, it changed while being written.  Instead of a discussion about the importance of choosing good leaders, it asks what we think we’re doing — thoughtlessly borrowing and spending trillions?

The Federal government — us, America — have borrowed $5.9 trillion dollars since the recession began.  What do we have to show for it?  With such a vast sum we could have rebuilt much of our infrastructure, putting tens of thousands of unemployed people (especially in the construction-related industries) back to work — and laid the physical foundation for an America that can compete in the 21st century (instead of the decaying, often 2nd world infrastructure we have now).

Equally important, infrastructure can generate economic returns on the investment — sometimes direct, sometimes indirect — that can help pay back the debt incurred.  Building valuable facilities while costs are low, borrowing at low rates and putting the unemployed to work.

So what have we done with the money instead of this?  Much of the borrowed money went to offset lost tax revenue for the Federal, State, and local governments. Much went to benefits for the unemployed, such as food stamps and Medicaid.

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Falcoln HTV-2

During this period we spend roughly a trillion dollars per year on military, intelligence, and homeland security (beyond conventional law enforcement).  Lost in delusions of omnipotence (without our no-limit national VISA card), to fight a rag-tag band of jihadists we invaded and occupied two nations, deployed our finest troops to fight in other nations, and bomb others.

In addition, we’ve built massive conventional forces — with no clear opponents — and invested incredible sums developing even higher-tech weapons to fight unknown foes in the future (for details see this article, with photos).

Our leaders did not do this over our objections.  There were no protests.  No letter-writing campaigns. Nothing.  Just the wealth of a great nation poured down the toilet.

Space Based Infrared System (SBIRS)

This is madness. This is America.

How can we recover our former wisdom?

For more information

  1. Everything you need to know about government stimulus programs (read this – it’s about your money), 30 January 2009
  2. Government economic stimulus is financial heroin, 28 December 2009
  3. Our government’s finances are broken. How do we compare with our peers?, 8 April 2010
  4. A status report about the US economy (we party so hard we cannot hear the alarms ringing), 27 March 2012
  5. About America’s economic recovery: the good news and the bad, 1 May 2012
  6. Capitalism Lost: America goes broke because we forgot how to be capitalists, 24 May 2012
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15 Comments leave one →
  1. 5 June 2012 5:13 am

    Nice, short succunct Post, FM. And then this to end it:

    “Our leaders did not do this over our objections. There were no protests. No letter-writing campaigns. Nothing.” (maybe a bit hyperbolic….some of us did engage in civic displays etc.) “Just the wealth of a great nation poured down the toilet. This is madness. This is America.” (YES, it is exactly that!) “How can we recover our former wisdom?”

    I do not think we do recover with the current mass of adults.

    We somehow reached a critical point where enough of us just did/do not care enough about this, about our own lives and the “others”, anymore. Studies show 60% of people will follow orders from a superior to the point of visibly causing pain to another via electric impulses…..”human nature”? Very few % simply refuse to particpate.

    As an individual all you can do is to engage as often as you see fit and are able to turn the tide in your own world and bear witness to the right way, the good and the seemingly hard to see community we inhabit.

    Thank you for the Siren Calls, sir.

    Breton

    Like

  2. Thomas Moore permalink
    5 June 2012 6:08 am

    They left out some of the truly wacky military delusions, such as Rods From God and the hafnium bomb and, of course, DARPA’s starship project.

    But it’s all good. Remember: Han shot first!

    Like

    • 6 June 2012 6:28 am

      Reading the comments at FP’s site was trully sad.It’s the everyday evidence of the reason why America is at this turning point.

      Like

    • 6 June 2012 6:55 am

      I often feel the same reading comments on the FM website. The comment sections in the posts about torture were terrifying, making me despair about America. The comments in early 2008 to my posts about the recession (but with Bush as President there could be no recession; it was a lie by liberals) were tangible ignorance. The posts in 2009 about the powerful effects of benefits to the unemployed (money, food stamps, Medicaid) — both reducing misery and stabilizing the economy — received a torrent of bitter mercenary selfish comments. Overwhelmed, I turned them off for a several months. I still have not recovered a balanced response to them, but am working on it.

      Tanner, Please tell us what you see in the comments at Foreign Policy!

      Like

    • 7 June 2012 4:44 am

      The majority of the comments {at Foreign Policy} portrayed people that completely missed the point that the article tried to make. They seemed oblivious to the irony of it all, seriously debating why X or Y weapons weren’t included in the list, or how silly of the author it was not to realize that aliens could defeat humanity just by using gravity. A majority of blind people.

      And, there were the others, which actually are the ones who drain most of my hope… the ones who understood the point the authors were making, and decided it was offensive and that it had to be oppossed. As if they were so indoctrinated that just the slightest suspicion that their commonly held beliefs might not be as true as they’ve been told was such a dire threat. It’s the hostility to ideas that i find so disheartening. A minority who are too afraid to open their eyes, so they’ll fight for their blindness if they have to.

      “I think we are blind. Blind people who can see, but do not see.”
      ― José Saramago

      Like

    • 7 June 2012 5:25 am

      Thanks, that’s very interesting. Much like Plato’s story of the people chained in the cave, resisting the truth about the world.

      Like

  3. 5 June 2012 1:21 pm

    “Just the wealth of a great nation poured down the toilet. This is madness. This is America. How can we recover our former wisdom?”

    Is this reasonable, sane, wise , forward pointing? “Wall Street CEO Pay Rises 20% With KKR’s Kravis No. 1“, Bloomberg, 5 June 2012.

    Breton

    Like

    • 5 June 2012 1:28 pm

      That’s a great article! People do what they’re incentivized to do. A strong social systems rewards behaviors that promotes growth and stability. A dysfunctional one does the opposite. No need to guess which we have today.

      Like

  4. 5 June 2012 7:31 pm

    I’ve taken a company through bankruptcy and out the other side. It’s an amazing experience. The most amazing part was how long we were able to exist as an ostensibly going concern when internally we knew for many many months that the jig was up. Riding the functional death spiral into bankruptcy, holding vendors at bay (by stretching the truth), using factoring to get short term cash while sealing our own fate, studying the exact legal rules of IRS and of claw backs in bankruptcy, was quite an experience. Let me just say: when the cracks are showing a little bit on the outside, the rot on the inside is , oh, I don’t know, maybe 100 times worse on the inside. That should be the take away object lesson of this post.

    Like

  5. 5 June 2012 10:47 pm

    Everything is okay. We’ll grow out of it all eventually. It’s just going to take some time.

    What’s with all the pessimism? Optimism is the way through this!

    Like

  6. 6 June 2012 4:34 am

    I’ve seen a few projects around here with the ‘Stimulus’ signs on them. The closest one the repaving of University Avenue –one of the main streets of Berkeley. I suppose that’s nice, but I don’t think this is going to trigger much growth. It’s really just a maintenance issue. The one project that was a stimulus project that is actually useful is the 4th bore of the Caldecot Tunnel. This strange tunnel had 3 bores of 2 lands each, and one set of lanes was switched back and forth depending on the time of day. This worked well back in the 60′s when people commuted to San Francisco from the suburbs, but nowadays, people are just as likely to commute out to the suburbs from the inner city, so basically the reverse direction on this freeway is always a nightmare. I’m on board with this one.

    I’m not sure if this is stimulus or not, but Cal Berkeley is spending $321Million for a new football stadium. This just seems crazy to me to put so much money into a football stadium. The neighbors overlooking the place don’t allow any night time use of the stadium due to noise, so really it’s only good for a few games a year.

    The most famous project, and this one did get stimulus money is the California High Speed rail. Voters approved this rail line from San Francisco to LA, so there’s State money to go with it. The problem is that the line won’t actually serve LA to SF until the year 2028. The plan is, right now, to build the line from Bakersfield to Merced, which really is from nowhere to nowhere. It’s going to be billions and billions of dollars to replace about one or two Greyhound buses that make the same trip. Even still, the Greyhound bus will take you into downtown. This is a case where a bit of compromise has resulted in a system that is going to fail. Either they should fund the entire route, and get it going within, say, like 10 years? Is that so hard? Or just forget it. There was an article that came out about how the political support for HSR in California is plummeting. It’s easy to understand why.

    Like

    • 6 June 2012 1:55 pm

      Simulacra. Sadly much of what passes for Governance at the local levels enagges in simulation of serving the Common Good. Decisons are made and the Public be damned; sadly all too common. Evidence mounts yearly. Results in cynicism as the result of insults to basic understanding.

      Breton

      Like

    • 6 June 2012 2:09 pm

      Look at it unemotionally. Governments tend to effectively serve their stakeholders. Sometimes there are many stakeholders; sometimes there are few. Throughout history the average size of the circle has been quite small. In Western societies the circle has widened during the past few centuries; quite a bit during the past two.

      Sometimes the circle narrows. Let’s hope its a temporary phase on the way to something better. That’s true only if we make it so.

      Like

  7. 6 June 2012 1:08 pm

    “Overwhelmed, I turned them off for a several months. I still have not recovered a balanced response to them, but am working on it.”

    In retrospect I understood why you “turned comments off”. It was a loss for me. Re-introducing them has been an addition to your blog, in my view. Here (and other comment allowed Blogs) is the one situ where I can get a sense of the mood of a populace. Yes, it can be horrifying but that in itself can be instructive.

    In a country like the USA where the level of social and political discourse is so muted and banal, I have been convinced from this blog in particular that one of the best (if perhaps only) ways to help gather the voices of sanity to turn the Public around and buffer the head long rush to more suffering and loss is to deciminate posts and ideas with references etc.

    My experience is that a few people of reasonableness and sane discussion by them can and do have a great influence. Over time. It can gather others and can evolve into a place where leadership can arise!

    Breton

    Like

Trackbacks

  1. The costs of infrastructure development. « The Urban Edge

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