Is America’s economy really booming? Yes, the economic indicators all show the economy is booming. Sure, unemployment is at a record low. The stock market is seeing record highs. We can see wages are up, and taxes are down.
We are feeling the effects of stifling regulations are being lifted. Things seem to be working just fine. But…
There is much truth in this perception of a boom. Part of this can be attributed to less government interference and taxation. Unnecessary government regulation and spending always hurt the economy. When markets are freer, profits tend to come galloping back. And much has galloped back. Those things are happening.
But work remains
However, beneath the surface, we have major problems. They threaten the boom. These problems have long plagued the nation. There just isn’t much being done to address these problems. We have become people who assume that if ignored long enough, our problems will go away. Life just doesn’t work that way. Decades of cheap, low-interest fiat money makes it easier to paper over them. But, it’s there.
The big problem the boom does not address is debt. America has a lot of federal debt. We are now approaching $23 trillion of it and that does not include the much larger unfunded liabilities. Boom times normally pay off debts. But that is not happening. Our government lacks the perspicacity to do so. The government is still spending money like a drunken sailor.
Deficit spending is now expected. We have not passed a budget in 23 years. Annual trillion-dollar shortfalls are the new normal. Artificially low-interest rates make this borrowing less painful. Hardly anyone resists the temptation to spend other people’s money. But the music will stop.
National strength is a moral issue
This problem is exasperating because the bad habit of overspending makes no economic sense. Since 1961, only five years have seen budget surpluses. This problem should not exist in the first place. Now that we have it, our debt issue is still fixable. America’s capacity to overcome practical obstacles is prodigious. The fracking turnaround is an example of how Americans can make it happen when we put our minds to it. There is no practical reason why federal debt cannot and should not be resolved.
Deep down, federal debt involves a moral problem. It is caused by a lack of restraint. Moral problems involve the fight against passions taking people toward intemperate excess. They cause disunity. This moral issue is inviting people to think only in terms of self-interest.
When there is a national consensus, people easily agree on positive goals. We move toward a place where everyone profits. When was the last time we had a national consensus? Why is that? The test of a nation is agreement on the sacrifices all must make for the common good. When all are convinced of this need, the resulting suffering serves to bond people together. In the past America did not divide in times of trouble. History shows Americans are capable of heroic sacrifice for the nation in times of adversity.
Where there is no consensus, no one agrees on what to sacrifice or why. Each of us wants the burden to be carried by others. The individual reigns supreme. There is no common good. Sacrifice serves to create division and resentment. Such times of disunion are the settings for revolutions. “The rich” are targets for excessive taxation or even confiscation. Such is the sad state of the nation today. No one can agree on the unifying moral issues that forge a people. Unifying moral issues are what keeps a nation from coming apart.
People today refuse to follow the norms of courage, duty, courtesy, justice, and charity. These permanent things owe their existence and authority to a power higher than the markets. The founders knew such things flow from God, not men. These things help people think in terms of the common good. Have we really lost these things?
Today the common good has morphed into a war of one individual’s passion against every other individual’s passion. The result is a disintegrating social fabric. The symptoms we ignore are finding expression in divorce, drugs, alcohol, and suicide. Maybe each individual having instant gratification all the time isn’t the answer. Maybe we need to struggle together, work together to reweave our unraveling social fabric. Our social fabric isn’t only dollars… is it?
The nation is polarized. It seems agreement on the painful issue of spending is impossible. Each side faces off against the other. Cynical and unscrupulous leftists promise to give everything, to everyone, for free if elected. Such claims are puerile. The consequence has become that fiscally conservative politicians resort to authorizing more and more improper expenses. It is the only means to get re-elected.
For this reason, leftist mob pleasing measures have become entitlements. This comes at the expense of the federal government’s constitutionally articulated responsibilities. Efforts to introduce commonsense into the overblown budget process leads to the melodrama of closing down the government. Our government operates like it is run by a bunch of spoiled, pre-pubescent, tantrum-prone kids. If you listen to them talk they are all demands and no recognition of the limits of reality.
The quest to have the government pay for everything knows no bounds. Leftists seek to expand the lists of “free” things to include healthcare for all citizens or not, college education, guaranteed basic income, reparations, a global carbon-free society, and on and on and on.
The grasshopper or the ant
The economy is booming, in part because of unleashing individual self-interest from excessive government regulation. The market system still works. It is based on human nature and the rule of law. The American practical spirit is capable of amazing things. The economy is also booming, at least in part, because the government is pumping hundreds of billions of dollars of borrowed money into the economy to smooth things over.
That has to stop. Money works much better in the private sector. Government debt is crowding out private investment. It takes huge amounts of money out of the credit markets. This weakens productivity and growth. This inefficiency is of governmental creation. We are using it to compensate for the lack of national unity.
The situation is dangerous. The American economy is built on the social capital collected over generations.
The U.S. dollar is the dominant world’s reserve currency. That came to be because America assumed the responsibility of leadership, stability, and trust. This is a responsibility we are now dishonoring. It is the single largest reason why America has so few friends around the globe.
As the federal debt spirals past 100% of GDP concern grows. These are uncharted waters. If the intemperance of federal spending continues unabated the whole system global system may collapse under the weight of its own debt. It all comes down to a moral problem of restraint. Few want to face facts. Is America’s economy really booming? Yes, but things that go boom, well, they explode.