How Vulnerable Are Americans to the Great Default?
A site member posted this.
If we assume that Social Security FDIC and Pensions default, and Medicare fails (as mentioned here), I am truly a loss to see that even 10% of our American population will be able to survive long, even in a basement bunker,with the other 90% going after them like Zombies after the Apocalypse.I fail to see why the best solution won't be a self-administered bullet in the head for those who didn't get out of Dodge on his already-fueled (long-range) corporate jet to his 200,000 acre estate in New Zealand protected by a well-supplied (and fed) private security force.
And yes, I AM perfectly serious.
Am I missing something here?
What is missing is this: the United States is probably second only to Switzerland in terms of personal wealth and lifestyle.
In terms of the cost of real estate, the United States has more inexpensive real estate available than any other Western industrial nation.
In terms of low federal taxes, it is also a bargain. Productivity is high.
Anyone who would be forced to go back to what a middle-class American lived on in 1929, before the Great Depression hit, would regard himself as living in a poverty-stricken nation. Yet people in 1929 flourished. That was the tail end of the Roaring '20's. Optimism was everywhere. Poverty was there, especially in the deep South, but if you were white, and if you had a job, 1929 was a great year.
In other words, Americans could easily go back to the lifestyle of 1929 without dying in the streets.
Americans have ownership of their homes, unless they were so stupid as to borrow against their equity. There is a huge amount of housing available in the United States. You can buy a used mobile home and move into a mobile home park, and you can live inexpensively. Food is incredibly cheap. Never in the history of man has food been so cheap. You get basic amenities, meaning public utilities, at very low rates. If somebody reads, he can buy a Kindle for $99, and he can read public domain literature for the rest of his life without spending a dime. Entertainment is taken care of, at least for literate people.
People can go to a library and spend the day in front of a computer. They can take along a pair of $8 headphones, and they can watch YouTube videos, read books, visit websites, keep up on the news, and do pretty much whatever they want. If people want these things, they are available. They really are not that expensive.
If retired parents move into their kids' households, and the grandkids are forced to sleep in bunk beds because the grandparents are in one of the bedrooms, so what? This is how most Americans lived until after World War II. The whole world lives in this situation now, except for Western Europe. Even in Japan, they live this way.
Then there is this: Americans are amazingly resilient. They are adaptable. The very essence of the American character is adaptability. We are entrepreneurs as a nation. We adjust. We make do. This has been fundamental to American character ever since the early 17th century. It has never changed.
This character has been compromised since the late 1960's by certain aspects of the welfare state. If the American welfare state really does go completely belly-up, I would not want to live in the inner-city. But I would not want to live in the inner-city anyway. Yet even there, people are resilient.
We live in a society in which there is widespread addiction to welfare state benefits. But I do not regard this as a life-threatening addiction. It is an addiction which is going to be broken, and the result will be a stronger America.
Even in the Soviet Union, where the welfare state was extensive, and where there is not a tradition of entrepreneurship, there was no mass starvation when the Soviet Union went bankrupt.
In fact, there has not been mass starvation or anything like it in the West since the Irish potato famine of the 1840's. People have had this in Third World countries run by military dictators, when these dictators take them to war, but we do not have a anywhere else. Starvation is a thing of the past. That is one of the greatest developments since the mid-19th century. We literally do not face starvation anymore.
So, I do not think there is any significant threat to the breakdown of the federal welfare state. I think, overwhelmingly, a complete bankruptcy of the federal welfare state would be a positive development in American history. It would unleash productivity on a scale that we have not seen ever since 1910. If the Great Default cuts the federal government to 20% of what it is today, our economic growth would be higher a decade later than we have seen in a century.
People who are addicted to a drug as powerful as cigarettes have withdrawal pains. That is the price of getting rid of the addiction. Addictions are difficult to break. But rarely are they life-threatening.
Somebody who is an alcoholic, and who figures out that he had better sober up, probably is not going to be able to sober up. The overwhelming majority of people who are ever addicted to alcohol do not reclaim sobriety. But, at some price, they can do it. I think these people are the model for Americans who are addicted to government checks.
Then there is this: gramps and granny can go back to work part-time. The new world of Uber -- services on demand -- is going to spread to the entire economy. It is happening now.
We are back to the fallacy of the things not seen. I have been writing about this every week in my chapters on Christian economics in one lesson. It is an extremely powerful concept, once you understand it, but people do not understand it. Even conservatives do not understand it. It works both ways. It looks as though a government project is productive, because we do not count the cost of the project. We do not investigate the things not seen. We do not follow the money conceptually, so we do not see that money the government spends would have been spent by the people who had the money prior to the taxation of their wealth by the government.
The same thing is true in the other direction. When the government stops sending out money, this wealth does not disappear. The wealth is simply retained in the hands of the people from whom it had been stolen every month. These people will spend this money. They will spend it on consumer goods, or else they will spend it on investment goods. But they will spend it. If 20% of this money will be spent on production goods, this will increase the productivity of the American economy.
Never forget the fallacy of the things not seen. Always follow the money, including the money that did not get spent because the government confiscated the money.