The Age of Austerity
Over at what maybe the last outpost of intelligent political thought left, the American Conservative, Nicholas Von Hoffman has made an intelligent observation in his latest screed “Red State.” Rising energy prices, the collapsing value of the US dollar, the shrinking market for US government securities and the collapse of the US real estate market will probably usher in an era of private and government austerity in the US.
This doesn’t mean we’re going to face anything like a new Great Depression but an era of diminished expectations and spending. Americans aren’t going to be standing in breadlines they’ll simply be spending less. That is Americans will be buying their coffee at McDonalds rather than Starbucks, shopping at Wal-Mart, taking the bus rather than driving and vacationing in Florida rather than Tuscany.
Particularly hard hit by the era of diminished expectations and austerity will be government. Government simply won’t be able to do everything it’s done in the past. On the federal level that will probably mean massive cutbacks in our military forces, our international commitments and foreign aid. On the state level it will mean more potholes in the highways and on the local level fewer hours at the library and fewer cops on the streets. Government services we take for granted will either disappear or get shifted to private industry. Already in Colorado we have privately operated toll roads and talk of placing toll booths on free highways.
Hurt most by the new austerity will be the poor whose government benefits are always cut first and restored last. It will be the schools in bad neighborhoods that will have the leaky roofs and old textbooks. The rich will be able to send their kids to private schools with new textbooks and patched roofs.
Democrats and Republicans alike will be hurt by the age of austerity for both parties exist largely to distribute government largess to their supporters. Without government largess to dispense the politicians will have little to do. The political battles will get more vicious and bitter because the spoils are drying up.
The politicians will have little control over the situation because they won’t have money to spend. This doesn’t mean they won’t try to deal with the situation, all sorts of crackpot ideas will come forward new kinds of taxes, adjustments to the money supply, government loans, the gold standard, tariffs, Keynesian economics and God knows what else.
So how do we deal with the coming age of austerity and the suffering it’ll generate? Two things that won’t work will be forced austerity in the form of government imposed austerity such as rationing or prohibition and political leaders trying to set an example of austerity. Rationing and prohibition only promote the black market and conspicuous consumption by limiting freedom and turning the items prohibited or rationed into forbidden fruit that the public will want more. Leaders who try to set an example of austerity are always seen as jokes, hypocrites and failures, remember what happened to Jimmy Carter after he appeared on TV wearing a sweater to emphasize the fact that he had turned down the Thermostat at the White House? He became a symbol of political failure and remains so.
The only kind of austerity that works is the natural austerity of the free market because it is the only austerity that rewards thrift and hard work. More importantly, the free market always punishes greed and avarice. If we leave the free market alone and let it work the age of austerity will be painful but it’ll be necessary.
So should average Americans worry about the age of austerity that is coming? Not it isn’t going to be average Americans who suffer in the age of austerity but government and those who profit it. Average people aren’t going to be on the bread line instead it will be the politicians and the bureaucrats.
This doesn’t mean we’re going to face anything like a new Great Depression but an era of diminished expectations and spending. Americans aren’t going to be standing in breadlines they’ll simply be spending less. That is Americans will be buying their coffee at McDonalds rather than Starbucks, shopping at Wal-Mart, taking the bus rather than driving and vacationing in Florida rather than Tuscany.
Particularly hard hit by the era of diminished expectations and austerity will be government. Government simply won’t be able to do everything it’s done in the past. On the federal level that will probably mean massive cutbacks in our military forces, our international commitments and foreign aid. On the state level it will mean more potholes in the highways and on the local level fewer hours at the library and fewer cops on the streets. Government services we take for granted will either disappear or get shifted to private industry. Already in Colorado we have privately operated toll roads and talk of placing toll booths on free highways.
Hurt most by the new austerity will be the poor whose government benefits are always cut first and restored last. It will be the schools in bad neighborhoods that will have the leaky roofs and old textbooks. The rich will be able to send their kids to private schools with new textbooks and patched roofs.
Democrats and Republicans alike will be hurt by the age of austerity for both parties exist largely to distribute government largess to their supporters. Without government largess to dispense the politicians will have little to do. The political battles will get more vicious and bitter because the spoils are drying up.
The politicians will have little control over the situation because they won’t have money to spend. This doesn’t mean they won’t try to deal with the situation, all sorts of crackpot ideas will come forward new kinds of taxes, adjustments to the money supply, government loans, the gold standard, tariffs, Keynesian economics and God knows what else.
So how do we deal with the coming age of austerity and the suffering it’ll generate? Two things that won’t work will be forced austerity in the form of government imposed austerity such as rationing or prohibition and political leaders trying to set an example of austerity. Rationing and prohibition only promote the black market and conspicuous consumption by limiting freedom and turning the items prohibited or rationed into forbidden fruit that the public will want more. Leaders who try to set an example of austerity are always seen as jokes, hypocrites and failures, remember what happened to Jimmy Carter after he appeared on TV wearing a sweater to emphasize the fact that he had turned down the Thermostat at the White House? He became a symbol of political failure and remains so.
The only kind of austerity that works is the natural austerity of the free market because it is the only austerity that rewards thrift and hard work. More importantly, the free market always punishes greed and avarice. If we leave the free market alone and let it work the age of austerity will be painful but it’ll be necessary.
So should average Americans worry about the age of austerity that is coming? Not it isn’t going to be average Americans who suffer in the age of austerity but government and those who profit it. Average people aren’t going to be on the bread line instead it will be the politicians and the bureaucrats.
posted by great one at 4:50 PM
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