Imperial Suicide (U.S. Committing)

The Daily Reckoning ^ | 07/08/11 | Bill Bonner

[Errant]

We are sitting in our favorite café in Paris…listening to the Beach Boys and reflecting on the decline of the US Empire. Back in the ’60s, the Beach Boys celebrated a country that was young, growing, optimistic…and a winner. Now, what we see is the whole kit-and-kaboodle of life in the US giving way to desperation, delusion and an irresistible impulse to commit imperial suicide. The economy turns sour. The military becomes malignant. Households are corrupt, bankrupt and dependent. Even the churches sing their hallelujahs to Caesar now.

[truthguy]

Sorry, but you are completely wrong in your analysis. I have a good friend who did his masters in Economics on this same subject and he's crunched the numbers. And this has been studied to death. I don't have the data in front of me and you will have to trust my memory but the analysis goes something like this.

Social Security Taxes are a flat rate tax that levels off to a max. Take a hypothetical best case study.

Take someone who retired today at 65. Go back in time 47 years to when that person was 18 and then put in the maximum amount into social security that could have been contributed. Using that amount, calculate the amount that you could have made by saving that money in the best interest bearing account offered. (Never mind buying IBM stock back in 1958 or Apple in 1983) We are talking about safe interest bearing accounts. Now total that money and reverse amortize in such as way as to pay out what social security is paying out as a maximum. If you follow this best case scenario, you will get all of what you have paid in in about 3-1/2 years.

I'm working from memory but I think this is the general thrust of the exercise. Very few people pay the max in social security taxes for 47 years. So this best case example is just meant to demonstrate that most are getting back far more than what they contributed. The error most people make is to believe that they put in the same amount of money when they first started paying social security as they did just before retirement. This is why so many believe that they are not getting defacto welfare.

[truthguy]

There's such a thing as 'interest'. For example, if a person in their 20's were to put $4,000 a year into a total market fund for 5 years, then NEVER put in another dime, they would retire with over a million dollars. It's the miracle of compound interest.

Sorry but there's no such thing as miracles in economics. Only reality. (See my post at 41) So many people make the mistake you have made. They use the word "IF". If I had put in $4K/year back 47 years ago, I'd have so much now. But 47 years ago $4K was a lot of money and you have to look at the interests rates that were offered at that time and not make them up retroactively. Very few people put away $4K/year and do it year after year after year. It would be great if we did but we don't have many. Also recognize that 401K plans have only been available since the 1980s. Before that you were taxed on your interest income even if were to be set aside as a retirement fund. So you do not get to compound all that interest. Over time that makes a difference.

[TheOldLady]

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[Nowhere Man]

Great points. I for one, believe Social Security payments to the elderly (except for defense in time of war) who’ve paid into the program should be the last to loose their checks in the case of a government default. Critical government and bondholders next based on criteria.

For better or worse, we do need to see the needs of the people who currently need the system as it is now, but we can make a lot of cuts elsewhere.

[Nowhere Man]

IOW, we’re faced not with a France vs. Germany boundary, 95% homgeneous on each side of the border. We’re faced with a Yugoslavia-like division, except worse because in Yugoslavia at least most villages were homogeneous. Here even individual streets and neighborhoods would contain significant majorities.

The only way for us to attain geographical consistency would be “ideological cleansing,” expulsion of dissenters, which I’ve seen some propose here on FR.

I keep thinking our future would be like the dystopia shown in Back to the Future II where Biff ran everything in an "alternate 1985" and the town became a Hellhole where Principal Strickland had to defend his home with his shotgun every night. Now imagine 75 million "Stricklands" in 500,000 neighborhoods, towns, cities, etc.

As to "ideological cleansing," we might need to do that. Give every dyed in the wool lib compensation for their properties and perhaps a little more and send them to the socialist paradise of their choice. If they want to turn us into Holland, don't let them, send them to Holland instead. Otherwise, I'm afraid that if we do get into a war, it will either us or them, hopefully we can make them say "uncle" before too much blood is shed.

[Sherman Logan]

As to "ideological cleansing," we might need to do that. Give every dyed in the wool lib compensation for their properties and perhaps a little more and send them to the socialist paradise of their choice.

I'm really unclear how this could be done while still having America be a country of "government by the people, of the people, and for the people."

Unless you want to do a whole Jacobin bit with the "General Will of the People" determined by a select group of Leaders.

IOW, I see absolutely no way to accomplish this while holding onto the principles for which we are theoretically contending.

Let's look at just the logistics for a moment, leaving aside moral issues.

Let's assume 20% of the population would have to be expelled. That's 60M people. What other country or countries would take them? How much money would compensating them for their property take? Where would we get that much money? How would we root out those who pretended to accept the new system while in reality working against it behind the scenes?

[ansel12]

Professional military do not have the incentive to end wars like draftees do. Imagine 10 years of continuous fighting pitting the world's greatest force against a bunch without a world class military anything. Compare that with length of WW II using draftees who were told they wouldn't come home until it was all over.

I don't know how the Indian wars, or Vietnam, fit into your description, or the troops in Korea for 60 years at high tempo, or the mass of 350,000 American men on stationed in Europe in 1980 peacetime, or the deaths of 2500 men a year in cold war peace time military training, fit in with your ideas.

Fighting low casualty, low conflict, military operations and guerrilla operations can take a very long time, haven't we been involved in the Philippines, for many generations, it is different than fighting total war when the deaths of the draftees mean nothing to you and can be thrown away by the many 100s of thousands and the goal is to conquer advanced, civilized nations that more or less fight and stop fighting based on rules and treaties.

When you were doing winter reforger operations with 50,000 American based troops joining forces with the permanent 350,000 American troops in Europe, you did not think that WWII had been all wrapped up with a nice neat little bow after only 6 years of war that killed 55 million people and created a broken world dominated by bloodthirsty communism and guerrilla movements that would kill tens of millions more people and be continued in global wars and conflicts that we are still dealing with today.

[ansel12]

By the way, in 1953 during the Korean War, we had 400,000 American troops stationed in Europe, how many do we have in Iraq and Afghanistan?

Our peacetime deaths, used to be far higher than our wartime deaths today, think more than 7,000 dead GIs in three years of no war.

[Nowhere Man]

I see your points, the only other way is maybe if we Red Staters secede and let them go their own way, or alternately, if we are on top, kick out the Blue States, it is probably the "best" way to do it. All I can say is that we have two diametrically opposing views and as time goes on, getting more and more irreconcilable if we are not there already. I hate to say it but if this goes on, it will be time to rumble.

I just think that we have bred or allow to breed certain groups of people that expect something for nothing all the time and it is incompatible to what this country should be all about.

[Nowhere Man]

I see your points, the only other way is maybe if we Red Staters secede and let them go their own way, or alternately, if we are on top, kick out the Blue States, it is probably the "best" way to do it. All I can say is that we have two diametrically opposing views and as time goes on, getting more and more irreconcilable if we are not there already. I hate to say it but if this goes on, it will be time to rumble.

I just think that we have bred or allow to breed certain groups of people that expect something for nothing all the time and it is incompatible to what this country should be all about.

[Nowhere Man]

I see your points, the only other way is maybe if we Red Staters secede and let them go their own way, or alternately, if we are on top, kick out the Blue States, it is probably the "best" way to do it. All I can say is that we have two diametrically opposing views and as time goes on, getting more and more irreconcilable if we are not there already. I hate to say it but if this goes on, it will be time to rumble.

I just think that we have bred or allow to breed certain groups of people that expect something for nothing all the time and it is incompatible to what this country should be all about.

[Nowhere Man]

Sorry about the double post, I’ve been getting that lately. (shrugs shoulders)

[Sherman Logan]

I don’t disagree with you as to the severity of the problem, I’m merely pointing out that “ideological cleansing” cannot be implemented without throwing the Declaration of Independence and Constitution under the bus.

Such issues cannot, IMO, be settled using laws and the power of the state without creating a totalitarian dictatorship, which, if you goal is to restore the America that should be, sort of defeats the whole purpose.

The only way such issues can truly be settled is by changing public opinion. If there weren’t great demand for such policies they wouldn’t be being implemented.

[Colonel Kangaroo]

Domestic spending is obviously out of control, but the fact is that our budgets were in good shape when Clinton left office. The anger I have over a hyper-interventionist foreign policy is over the missed opportunity to take advantage of our geographical isolation by conserving our wealth and manpower by letting the rest of the world weaken themselves in conflict and arms races. It's sad that so much of the conservative outlook these days has more in common with Woodrow Wilson and FDR than with Robert Taft.

[GOPJ]

There used to be some 20 Americans working to support the one in retirement and his wife. There are still 20 needed but 17 are in other countries since we exported the jobs held by Americans. The system was designed for Americans supporting Americans. Now the 17 do not pay into social security nor does their employers. This is a considerable loss to the SS system. The answer is to assess the SS payments to imported goods and the system will function as intended.

Interesting... never thought of it in those terms.

[Nowhere Man]

I don’t disagree with you as to the severity of the problem, I’m merely pointing out that “ideological cleansing” cannot be implemented without throwing the Declaration of Independence and Constitution under the bus.

Such issues cannot, IMO, be settled using laws and the power of the state without creating a totalitarian dictatorship, which, if you goal is to restore the America that should be, sort of defeats the whole purpose.

The only way such issues can truly be settled is by changing public opinion. If there weren’t great demand for such policies they wouldn’t be being implemented.

Yeah, I see your point but I do thin that many of the takers, looters and parasites are beyond the point of no return, unless we divide the country into two parts, we might have to do what ancient societies like Greece, Egypt and others did where they sent them into exile. I know the British did much the same by sending their troublemakers, first to Georgia, and after the Revolution, Australia. Today, I'd go for the Moon since the world is filled up now but we have nothing there.

I sometimes wonder if we do need a strongman who wants to restore the Constitution totally after a period of reconstruction, I did make such a plan for a thought experiment. I'm no a fan of President Lincoln, I think the South was right in the Civil War, but I understand Lincoln became a near dictator if his goal was to preserve the Union. If I was in Lincoln's shoes, I'd let the South go but that's for another time. Maybe we are beyond the point of no return so far that there might be a time we might have to "burn the village in order to save it."

I just think that many of our opponents would be better off in another country that "jives" with their views. Maybe I'm harsh, but I want us to survive and if it came down to them or us, I choose us. I know the exile ideas are harsh, but it is the option that is least bad out of many others and my idea of giving them compensation for their property plus some extra will give them a golden parachute to start a life somewhere else.

I always thought that we should give them the corridor from Boston to DC with the Appalachians to the West and another one from Seattle to LA for a liberal land and we take the rest. In that case, they will have their homeland and we will ours. I fear there is no way to win them over, although maybe they could wise up if there is a collapse, so hence my take on the issue.

[Sherman Logan]

the fact is that our budgets were in good shape when Clinton left office.

That's no difficult when you're in the upswing of a financial bubble. A little more difficult after the bubble bursts.