Third world America

Collapsing bridges, street lights turned off, cuts to basic services: the decline of a superpower

by Luiza Ch. Savage

Danny Wilcox Frazier/Redux/ Robert Galbraith/Reuters/ Shannon Stapleton/Reuters

In February, the board of commissioners of Ohio’s Ashtabula County faced a scene familiar to local governments across America: a budget shortfall. They began to cut spending and reduced the sheriff’s budget by 20 per cent. A law enforcement agency staff that only a few years ago numbered 112, and had subsequently been pared down to 70, was cut again to 49 people and just one squad car for a county of 1,900 sq. km along the shore of Lake Erie. The sheriff’s department adapted. “We have no patrol units. There is no one on the streets. We respond to only crimes in progress. We don’t respond to property crimes,” deputy sheriff Ron Fenton told Maclean’s. The county once had a “very proactive” detective division in narcotics. Now, there is no detective division. “We are down to one evidence officer and he just runs the evidence room in case someone wants to claim property,” said Fenton. “People are getting property stolen, their houses broken into, and there is no one investigating. We are basically just writing up a report for the insurance company.”

If a county without police seems like a weird throwback to an earlier, frontier-like moment in American history, it is not the only one. “Back to the Stone Age” is the name of a seminar organized in March by civil engineers at Indiana’s Purdue University for local county supervisors interested in saving money by breaking up paved roads and turning them back to gravel. While only some paved roads in the state have been broken up, “There are a substantial number of conversations going on,” John Habermann, who manages a program at Purdue that helps local governments take care of infrastructure, told Maclean’s. “We presented a lot of talking points so that the county supervisors can talk logically back to elected officials when the question is posed,” he said. The state of Michigan had similar conversations. It has converted at least 50 miles of paved road to gravel in the last few years.

Welcome to the ground level of America’s economic crisis. The U.S. unemployment rate is 9.5 per cent. One in 10 homeowners are behind on their mortgage payments. Home sales are at record lows. While the economy has been growing for several quarters, the growth is anemic—only 1.6 per cent in the second quarter of this year—and producing few new jobs.

Even with interest rates at unprecedented lows, there is anxiety about the possibility of a double-dip recession. Sales of existing homes are at their lowest level in 15 years, and new home sales plummeted this summer to the lowest levels on record. Property and sales tax revenues have shrunk. And nowhere is this more apparent than at the local government level, where officials are being forced to roll back the everyday hallmarks of modern civilization.

Cincinnati, Ohio, is cutting back on trash collection and snow removal and filling fewer potholes.

The city of Dallas is not picking up litter in public parks. Flint, Mich., laid off 23 of 88 firefighters and closed two fire stations. In some places it’s almost literally the dark ages: the city of Shelton in Washington state decided to follow the example of numerous other localities and last week turned off 114 of its 860 street lights. Others have axed bus service and cut back on library hours. Class sizes are being increased and teachers are being laid off. School districts around the country are cutting the school day or the school week or the school year—effectively furloughing students. The National Association of Counties estimates that local governments will eliminate roughly half a million employees in the next fiscal year, with public safety, public works, public health, social services, and parks and recreation hardest hit by the cutbacks. A July survey by the association of counties, the National League of Cities, and the U.S. Conference of Mayors of 270 local governments found that 63 per cent of localities are cutting back on public safety and 60 per cent are cutting public works.

In August, the U.S. Congress passed a US$26-billion stimulus extension bill, aimed in part at saving teacher jobs. But it’s a finger in the dike. Jacqueline Byers, director of research for the counties association, said many local governments have yet to confront the full impact of the real estate crisis on government revenues because they do tax assessments only every third year. A fundamental transformation is under way. “When we come out of this recession we’re going to see government functioning very differently,” says Byers. “We are seeing more public-private partnership than we ever had for things like recreation and parks. We are seeing some of them privatize libraries. They lease the library to a private corporation that employs the workers who don’t carry retirement or health benefits.” Or they could wind up like Hood River County, Ore., which in August closed its three libraries altogether.

Some governments are looking for creative ways to replace plummeting property and sales tax revenues. Facing a US$1-billion budget shortfall, Montgomery County in Maryland appealed for corporate sponsors to step up and adopt porta-potties in its public parks. In the end, the privies were saved by a combination of park employees taking early retirement, a few private sponsorships, and a negotiated discount from the supplier, Don’s Johns. Meanwhile, Montgomery County’s school system, banking on its reputation for high standards and test scores, took the unusual step of selling its curriculum to a private textbook publisher, Pearson, for US$2.3 million and royalties of up to three per cent on sales. As part of the deal, county classrooms can be used as “showrooms”—which critics said effectively turns students and teachers into salesmen for a corporation. But the superintendent, Jerry Weast, told the Washington Post, “I tend to look at this from the perspective that we are broke.”

These cuts in infrastructure and education are more than just a temporary belt-tightening in response to a recession. They threaten long-term damage to American’s economic foundation—a foundation that has long been eroding. When the eight-lane Interstate 35 bridge collapsed in Minneapolis in 2007, killing 13 people and injuring 145, the American Society of Civil Engineers warned that the infrastructure deficit of aging postwar highways and bridges amounted to US$1.6 trillion. More than a quarter of America’s bridges were rated structurally deficient or functionally obsolete. Steam pipes have exploded in New York City and the levees failed in New Orleans.

Despite its position as the world’s unrivalled superpower, international comparisons show the U.S. slipping on a number of fronts. On education, the United States has been falling behind, in everything from science and engineering to basic literacy. The U.S. once had the world’s highest proportion of young adults with post-secondary degrees; now it ranks 12th, according to the College Board, an association of education institutions. (Canada is now number one.) In 2001, the U.S. ranked fourth in the world in per capita broadband Internet use; it now ranks 15th out of 30 nations, according to the Organisation for Economic Co-operation and Development. “We have been involved for three decades now in paring back public commitments and public spending, and that started with the Reagan revolution. We are living with the outcomes and consequences,” says Michael Bernstein, an economic historian at Tulane University in New Orleans.

Meanwhile, prolonged rates of high unemployment are taking a toll on families today, and will for years to come. Studies have shown that the longer a person is unemployed, the more difficult it is to find a job—partly because skills deteriorate, and partly because employers become suspicious of why someone hasn’t worked for a year. “The United States is expanding its underclass of a whole group of individuals who will become less employable, less integrated, more subject to criminal and other deviant behaviour—and probably become part of the larger problem of structural poverty in America as well,” says Sherle Shenninger, director of the economic growth program at the New America Foundation, a Washington think tank.

Arianna Huffington sees an even starker big picture emerging from the reams of bad economic news. “As we watch the middle class crumbling, for me this is a major indication that we are turning into a Third World country,” said Huffington, founder of the Huffington Post, in an interview. “The distinguishing characteristic of the Third World country is you have the people at the top and the rest—you don’t have a thriving middle class,” says Huffington, whose new book is entitled Third World America: How Our Politicians Are Abandoning the Middle Class and Betraying the American Dream.

America is moving “from the Jetsons to the Flintstones,” she argues. “The American dream was already based on the idea you could work hard and do well and your children will do better. Now we are confronted with downward mobility across the board. You have the phenomenon of unprecedented numbers of college grads who can’t get jobs.” The current public sector cutbacks in education and infrastructure will only make things worse, Huffington says. “You are both hurting people in the present, and basically undercutting your economic growth and prosperity in the future.”

But the problem isn’t simply a product of the current recession or the 2008 financial crisis. It is now well understood that for years Americans lived beyond their means on borrowed money.

The real estate bubble enabled many homeowners to borrow against inflated house prices, giving families the feeling that their wealth was increasing. It was all a mirage. Low interest rates and easy credit allowed consumers to spend enthusiastically, masking the fact that the standard of living and incomes were stagnating, and public and private investment was lagging.

Over the past decade, private sector job growth was sluggish. Combined with recession job losses, there are now only as many private sector jobs as there were in early 1999, a decade ago, while the population continues to grow. And incomes stagnated for a full decade—the longest such period since the U.S. Census Bureau has been keeping track of household income.

“There is certainly a serious erosion of both the American social contract and the American dream for a great majority of Americans,” says Shenninger. “There is a worrying trend that the private sector has not been able to generate jobs for now more than a decade.”

While business productivity increased—workers created more output per hour of work—that did not follow the traditional model of translating into higher wages. “Eighty to 90 per cent of productivity gains went to corporate profitability—which means that in order to make up for the gap in demand, working families resorted to relying on rising housing prices and debt,” says Shenninger. Workers lost the ability to bargain for wage increases as they competed with lower-wage workers in Europe, Asia and other emerging markets. Meanwhile, corporate earnings exploded.

Clyde Prestowitz, a former Reagan administration trade official and president of the Economic Strategy Institute, says the scope of the problem came into focus for him one day last year when he read, in the same newspaper, that China was launching a new 240-mile-an-hour high-speed train, and then an article about city leaders in Pittsburgh considering a tax on university tuitions in order to fund the municipal employees’ retirement pension plan. “I thought, the Chinese are building world-record trains and we’re taxing kids who go to school!” says Prestowitz. “We’ve been in decline for quite some time—we haven’t recognized it and have been fooling ourselves. But we’ve gotten to the point it’s hard to not see.”

There are numerous theories about the path America took to get where it is. Prestowitz blames the American approach to trade and globalization. A former trade negotiator who worked on NAFTA and advised Ronald Reagan’s commerce secretary, he argues that at the root of the problem is a long-term American naïveté about global trade, a case he makes in his book The Betrayal of American Prosperity.

American jobs are being lost not only to low-wage competition from emerging economies, but to strategic policies by foreign governments to dominate critical sectors of the economy, or to keep their currency values low to promote exports. “Other countries recognize the importance of economies of scale and promote the development of certain industries, whether solar panels, or semiconductors, and we don’t,” says Prestowitz.

High-tech plants and research labs of companies such as Intel, Applied Materials, General Electric and BP have been moving to China because the Chinese are offering subsidies in the form of free energy, free infrastructure, reduced taxes and discounted utilities. Prestowitz made the argument earlier this year to a meeting of White House economists who were debating the administration’s funding for alternative energies such as battery technologies. “My position was, if you spend all this money and not do anything about currency manipulation by China, South Korea, Singapore, Taiwan, Malaysia, Thailand, if you don’t do anything about the investment incentives being offered to companies like Applied Materials, if you don’t deal with all those things and just give money to some battery company—forget it, that’s money down the rathole.”

Prestowitz accuses successive American administrations of sacrificing trade issues to geopolitics. “The highest priority for the U.S. government is national security. We need a base somewhere or a vote at the UN, and we make an economic concession,” he says. Exhibit A: “The Obama administration has bent over backwards to avoid calling China a currency manipulator,” he noted.

Huffington blames politicians’ domestic economic policies: first, Republicans for tax cuts and deregulation that favoured top earners and corporations, and now Democrats for failing to undo the damage. As a candidate, Barack Obama accused George W. Bush of ignoring the middle class, she notes. But now Huffington criticizes Obama for campaigning on prioritizing the middle class and then failing to do so in the White House. “What happened is he picked an economic team whose primary focus has been Wall Street and who dramatically underestimated the depth of the crisis,” she says. “The emphasis has been on fixing Wall Street, which was bailed out without any strings attached, and which turned around and cut lending instead of lend more.”

Shenninger points in part to foreign policy: waging expensive wars overseas rather than spending the money at home. “Our priorities are horribly distorted,” he says. “We spent billions on new energy plants in Iraq and most of the money got siphoned off. We are spending billions of dollars trying to build schools in Afghanistan. But we are not willing to borrow at historically low rates to keep teachers at work or improve public infrastructure at home.”

Whatever the causes, the way out is not clear. While some critics are calling for a major program of reinvestment in public infrastructure and reviving parts of the U.S. manufacturing base, the politics do not favour it. In a speech in Milwaukee on Monday, Obama asked Congress to pass a US$50-billion infrastructure spending program to refurbish roads, runways and railways. But concerns about government deficits among Republicans and some Democrats make it unlikely that any large spending package could pass Congress—especially after the gains the GOP is widely expected to make in the mid-term elections on Nov. 2.
Republicans are calling for aggressive spending cuts. When Democrats pushed through their spending bill for local governments, Republicans called it a “bailout” of profligate local governments that overindulged public sector unions with generous salaries and benefits. House Republican whip Eric Cantor called Obama’s latest call for infrastructure spending “another play called from the same failed Keynesian playbook,” adding, “We need to cut spending immediately and end the environment of uncertainty that continues to impede real private-sector job creation and growth.” The GOP members on the House budget committee have identified US$1.3 trillion in potential cuts to federal spending. House minority leader John Boehner calls federal spending “a job killing agenda.” “ We have to remember that, even when spending is not at record-setting levels, each dollar the government collects is taken directly out of the private sector,” Boehner said in a recent economic speech. He added: “I’m not afraid to tell you there’s no money left. In fact, we’re broke.”

But where does that leave people like the good citizens of Ashtabula County, Ohio? How can they be safe from criminals without a fully staffed local police force, TV station WKYC asked a local judge in April. “Arm yourselves,” came the reply from Ashtabula County Common Pleas Judge Alfred Mackey. “Be very careful, be vigilant, get in touch with your neighbors, because we’re going to have to look after each other.”

And so they did. In July, a group of farmers removed the safeties from their shotgun triggers and surrounded a trailer in which a suspected house robber was hiding while they waited for the county’s last, lone squad car to arrive.




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Third world America

  1. Shenninger: But we are not willing to borrow at historically low rates to keep teachers at work or improve public infrastructure at home.

    WHAT??!!!??? Not willing to borrow? How can anyone so stupid coordinate inhale-exhale?
    http://www.usgovernmentspending.com/debt_deficit_

    • I know, there's a lot of nonsense in there. It's plying the usual craziness that it's okay when small businesses go bankrupt, but a laid-off teacher is a national tragedy. Bye bye Chrysler, AIG, Lehman Brothers and GM, farmers and forestry workers, house builders, electricians and renovators. Johnny's middle school teacher? Untouchable.

      The underlying themes are:
      1. Private sector earnings may go up and down, but the costs of the public services they support must always go up – even to the point of sending the government into bankruptcy if necessary.
      2. Private sector workers are subject to the laws of supply and demand. But no matter how inefficient, out-of-touch, anachronistic or ineffective a public employee may be, he must never be laid off.

      • Since you want to cut public services, then it is obvious that you won't mind if we cut the ONE TRILLION DOLLAR imperialist war machine in half, cut out all corporate welfare and raise taxes on earnings over $250,000.

    • More borrowing is the last thing the US needs. They need an improved economy and more revenue. Raising corporate or income taxes would be suicidal. The economy is just too fragile. That leaves a national value added tax (like every other developed country has) and perhaps higher fuel taxes to fund infrastructure. No politician in the US has the stones to suggest either of those solutions, so they'll likely end up raising income taxes on higher income earners, instead of consumption and fuel taxes across the board. Politically less painful, but self-defeating. The revenue increase won't be nearly enough, and the economic damage caused by steep increases in income taxes will likely negate the revenue gains. I'd hate like hell to be an American right now. Three layers of government that are structurally insolvent, and not a single politician with the brains to realize it. The Democrats think they can solve everything with more program spending. The Republicans think they can solve everything with cutbacks and tax cuts. The fact is, they need massive cutbacks in some areas and the introduction of a national consumption tax. But nobody gets elected on such a platform, so it won't happen.

      • Ron Paul

      • Tax middle income earners more? You don't know what you are talking about! Keynesian spending has proven to be the way out in this situation. We could also force the big banks to start lending the ONE TRILLION DOLLARS they have squirreled away for take overs of smaller banks that are being forced to pay more for the FDIC insurance shortfall caused by the big banks.

        • Keynesian spending has proven to be the way out in this situation.

          Someone else without foresight, or kids, or at least any concern for their future welfare.

  2. Libertania!

      • Go to Somalia then.

      • Home schooling – bring them up right. Keeps the youngins away from all the those lefty homosexuals.

        • Not to be confused with all of those hypocritical righty homosexuals who vote against their own best gay marriage interests.

          • "It's like a finger in a dike."

            I know, but still…

  3. This was pretty dire effort to explain what is happening in America. Astonishing that Savage could not even find space for one paragraph about unions and how they are significant player in turning America into third world country. America is going broke to pay for union members who have become accustomed to life of wealth and leisure.

    "A study in 2005 by the nonpartisan Employee Benefit Research Institute estimated that the average public-sector worker earned 46% more in salary and benefits than comparable private-sector workers. The gap has only continued to grow. For example, state and local worker pay and benefits rose 3.1% in the last year, compared to 1.9% in the private sector, according to the Bureau of Labor Statistics (BLS).

    But the real power of the public sector is showing through in this economic crisis. Some five million private-sector workers have lost their jobs in the last year alone, and their unemployment rate is above 9% according to the BLS. By contrast, public-sector employment has grown in virtually every month of the recession, and the jobless rate for government workers is a mere 2.8%." WSJ, May 14, 2009

    • Yeah, all those union workers at the big 3, and in the steel plants and so on are just raking it in, right?

      And now the teachers.

      I'm no fan of unions, but they aren't responsible for the mess.

      • No, but their line of thinking is…

        • “…their way of thinking?” What might that be?

          I hope you’re aware that PUBLIC employees comprise roughly 7% of TOTAL union membership in the USA and roughly 5%-6% of total PRIVATE sector employees comprise union membership. I hate to tell you this, but those folks are NOT the ones who are creating this problem. You seriously need to look at other factors and quit focusing on the trail of crumbs being fed to you.

        • What that workers have a right to organize?

      • Not the union people, the leaders…they're betraying their own memberships.

        • Yeah, American union leaders created a world crisis…..riiiiiight

    • "America is going broke to pay for union members who have become accustomed to life of wealth and leisure."

      Ah yes. Massive tax cuts for billionaires? No problem.

      Two simultaneous wars and ballooning defense spending? If you wanna make an omelet, etc. etc.

      Unions holding out against the steady erosion in middle- and lower-class wages? That must be why America is going broke.

      bergy, I think your assessment is a little myopic. Take a look at figure 1 here: http://www.cbpp.org/cms/index.cfm?fa=view&id=… and tell us again why the US is "going broke".

      • "Unions holding out against the steady erosion in middle- and lower-class wages?"

        Unions are feather bedding their nests off the backs of middle and lower classes who don't belong to unions.

        You are arguing that people in private sector who don't belong to union aren't working hard enough to keep private/public union members in the champagne and caviar life style they are accustomed to.

        However, I agree it is not only unions that are at fault. Union members are dim as well and a State that is going bankrupt should not be building $578 million schools.

        "A study in 2005 by the nonpartisan Employee Benefit Research Institute estimated that the average public-sector worker earned 46% more in salary and benefits than comparable private-sector workers." WSJ, May 14, 2009

        " Earlier this month, Secretary of Education Arne Duncan heaped praise on Congress for including $10 billion for “EduJobs” in a state-aid package that it had enacted. The move to subsidize teacher salaries and avoid layoffs was so admirable …. Duncan, who singled out for praise the $1.2 billion that EduJobs is funneling to California, also might want to consider the recent Pepperdine study of 52 California school districts. This study reported that spending rose 21.9 percent from 2003–04 to 2008–09, outpacing both state income growth and inflation. On a per-pupil basis, spending actually jumped 25.8 percent over that period, while classroom spending as a share of total outlays declined from 59 percent to 57.8 percent. Where did the money go? Pay rose by 28 percent for certificated supervisors and administrators and by 44 percent for classified supervisors and administrators." National Review, Aug 2010

        "The most expensive public high school in the nation's history will open its doors to students next month in Los Angeles, but critics say the $578 million school is already teaching a lesson on wasteful spending." ABC, Aug 2010

        • "You are arguing that people in private sector who don't belong to union aren't working hard enough to keep private/public union members in the champagne and caviar life style they are accustomed to."

          Wow – you sound like scf. He too likes to misstate other peoples' arguments into comically self-serving twaddle.

          And given that health insurance is included in US benefit calculations and is usually the largest benefit, I think any direct comparison that doesn't distinguish between workers with/without healthcare is not especially useful.

        • The $578 million school may be excessive, but as plenty of others have said, what about the massive defence budget? If you want to talk about public servants, well why not talk about the soldiers? They're paid by the government. And they're paid well, and they would certainly be the last (at the moment) to have cuts to expenses. Well, that being said Obama has said he will start removing troops, but if you're looking for areas to cut public spending, I think you got it in the Military.

    • Yes, it is obvious to anyone that if their salaries were aligned with the rest of society, that instead of salaries 46% larger, they would have normal salaries and the government would have the ability to hire 46% more workers. The math is simple.

      • Yes, because upper management is certainly leading the charge. reducing their own salaries and removing golden parachutes from executive pay. Not.

    • What about the part of the article talking about the erosion of the middle class, and the degradation of wages, causing the problem? If anything, we should be looking at public sector employees and asking why private sector wages aren't there. This is part of the reason why it is almost impossible to have a single wage earner in a family.

      Look, its fair to say that government bureaucracies are inefficient, and that public sector workers are paid more than they should be, but that doesn't change the fact that the United States is spending $663 billion on defense this year. $663 billion. And they have spent that kind of money for the last 20 years, despite the conclusion of the Cold War.

      But, of course, you're right. Its the unions.

      • Could both be factors?

        • Of course. I'm just tired of the Steynian anti-union nonsense. Definitely, as we've seen in Greece, when the public sector is larger than the private sector, it makes it difficult to continue paying for the public sector. But to suggest that the only problem facing the western world is unions, is completely ridiculous.

          • It is ridiculous. But I think public-sector unions are of a more damaging nature than many want to realise/admit. An important part of prices is that they need be able to fluctuate to reflect changes in demand. An economy in recession is an economy that needs a major reallocation of productive resources, and a major readjustment in prices. The prices of public-sector works not only can't go down, but have built-in annual increases. This results in the need for further tightening of the private-sector to support the, relatively massively, expanding public-sector.

            I would like to share with you, if I may, a YouTube clip I particularly enjoy of Governor Chris Christie of New Jersey discussing public finance pressures with a local teacher.

          • Uh, ok, but when a fraction of workers (say, public-sector employees) see stable wages during a recession, that's counter-cyclical. That's a good thing, it means that fraction of the economy does not go into recession.

          • That is not a good thing.

            What you are calling "counter-cyclical" is actually non-cyclical, ie. public-sector wages always go up. Now, in a recession, people have to cut-back on their consumption to bring their living within their means. People might cancel their vacation plans, reduce their nights out to the movies, buy more generic brands of food, wear their clothes a little longer before replacing them, etc.

            However, because of the "counter-cyclical" (ie. permanently expanding) nature of the public-sector, a great portion of people's expenses cannot adjust, cannot shrink. People cannot, for example, decide to have their mail delivered just once or twice per week, have their parks mowed less frequently, reduce their expenses at public golf courses and skating rinks (people can choose not to go, but the staff will be there either way). People cannot shop around for the cheapest bus to take to work.

            What all of this means is that, as individuals' personal revenues go down, the portion of their incomes spent on public-services (ie. their taxes) go up, giving them less and less decision making power over where their wealths will be spent at a time when every penny matters.

            Furthermore, government revenues are not even covering the costs of the public-sector. This means that governments have to borrow money from the private-sector (money desperately needed to re-tool the economy) , just to keep paying for their public-sectors (many would say "over-paying"). Of course, the interest on that debt is just an added burden on the tax-payer.

            What you are seeing as a benefit is the ability of the members of the public-sector to keep spending even in tough economic times, due to the public-sector's "counter-cyclical" nature. What you are failing to see–or failing to ask–is at what cost.

          • "What you are calling "counter-cyclical" is actually non-cyclical, ie. public-sector wages always go up."

            Not true. If wages stay the same in absolute dollars, they decline in real terms after inflation. It's not uncommon for politicians to pursue wage freezes, as Ontario is doing now.

            "People might cancel their vacation plans, reduce their nights out to the movies, buy more generic brands of food, wear their clothes a little longer before replacing them, etc."

            …all of which deepens a recession. If public sector workers are subjected to the same reductions in employment levels, that will drive the recession deeper.

            "However, because of the "counter-cyclical" (ie. permanently expanding) nature of the public-sector, a great portion of people's expenses cannot adjust, cannot shrink."

            Except that our progressive tax system applies a lower rate to taxpayers whose income shrinks. Taxpayers don't need to shop for cheaper bus service, their taxes are automatically lowered.

            "Furthermore, government revenues are not even covering the costs of the public-sector.

            Well they were, until a certain drunk sailor took power. Same thing south of the border. Except the current Canadian deficit is largely due to: 1) the unfunded GST cut, 2) the decline in tax revenues due to the economic downturn, and 3) stimulus spending. I don't see how you can attribute the deficit to public sector wages that failed to collapse with the rest of the economy. There's a lot more to the federal budget than wages.

          • Not true. If wages stay the same in absolute dollars, they decline in real terms after inflation. It's not uncommon for politicians to pursue wage freezes, as Ontario is doing now.

            And the public-sector union reps keep walking out of talks whenever the Ontario Government brings up the subject of wage freezes. The unions have built-in wage increases, indexed to inflation, and are refusing to give any of it up. "If wages stay the same in absolute dollars…" Maybe you should come back when that is actually the case.

            …all of which deepens a recession. If public sector workers are subjected to the same reductions in employment levels, that will drive the recession deeper.

            What you are failing to realise is that a recession is not merely a drought of spending, but a period of adjustment, correcting the mis-allocation of resources that occurred during the boom. Many businesses that were viable in the boom phase were viable only in the boom phase. What needs to happen is for the unviable businesses to end so that capital can move to where it is needed most. On the other hand, your cure for the recession is to dump money into the hands of consumers so that they can continue to keep the unviable businesses going. Such a system cannot go on forever; the longer it goes on, the uglier it ends.

            Now let us pursue your logic that the recession is made less deep because some people (public-sector employees) are not subject to the same belt-tightening as others. If this is the case, then our way out of recession would be to have our various levels of governments hire massive amounts of more people. Even better would be to give each member of our massively expanded public-sector a massive raise, as this would mean even greater purchasing power, perhaps enough to not only keep the recession from deepening, but to drive it shallower.

          • "And the public-sector union reps keep walking out of talks whenever the Ontario Government brings up the subject of wage freezes.

            Yes, because that's their job. The point is that they're not 100% successful, and public sector wages are not wildly out of line with private sector wages.

            "Maybe you should come back when that is actually the case.

            Maybe you should resist the temptation to apply needless snark.

            " On the other hand, your cure for the recession is to dump money into the hands of consumers so that they can continue to keep the unviable businesses going."

            I think that's a pretty poor description of the intent, and the effect, of stimulus spending. Plenty of (long-term) viable businesses scale back operations when demand declines. Stimulus spending can reduce that scaling-back and mitigate a recession.

            Better still, stimulus spending tends to target capital public works that are required anyway, not entrenching new opex as you seem to suggest in your final paragraph.

          • …public sector wages are not wildly out of line with private sector wages.

            How out of line do you think they are?

          • Does it matter what I think?

            What do you think?

            It's difficult to find analyses from credible sources; I haven't seen the case made successfully that public-sector wages are significantly higher or lower than private-sector wages, especially over the long term.

            That kinda suggests that they're close overall. I can speak from personal experience that people in advancing careers are reluctant to join public organizations (I'm in private business myself) due to associated stigma and a perception of fewer long-term opportunities.

            That reluctance drives up the cost of talent. I've seen it in the private sector too with lower-tier players.

            Do you disagree? Do you think that public-sector wages are "wildly" out of line with private sector wages?

          • The Ontario Sunshine List — which lists Ontario government employees "earning" $100 000 and over — grew by 19% last year, in a time of recession!

            http://network.nationalpost.com/NP/blogs/toronto/

          • how much more? How much do wages take of the entire budget? 80% maybe? so cut out everything else 100% and you still have 80%, no 81%,because it grew overnight!

          • Odd. I never saw their wages go down during the booms.

            UPDATE, a minute later: Never mind. Justin did a far superior job addressing how damaging the public sector can be to a struggling economy. It's a lengthy comment, because the public sector has a long list of damaging attributes.

          • It doesn't make any sense at all. Public sector spending is exactly like private sector spending and has the same effect. Both sectors borrow money and spend it. The ONLY difference is who decides which dollars get spent on what. The public sector spends money on public services (of course there are always boondoggles, but there are also private sector boondoggles, too — just ask the National Post owners — but mostly government spending is spent on services, instead of heavy advertising — unless your Harper — and extremely high executive salaries. AT the end of the day, the handful of people who make most of the money and own most of the assets don't like the rest of us deciding how to spend their money via taxes and government spending. So they make up stories about how public spending is a drag on the economy. That is simply untrue in theory and fact. It's all political.

          • Public sector spending is exactly different from private sector spending. The latter is directed to making a profit. The former can make losses almost indefinitely.

          • None of which has anything to do with the world crisis.

    • Public Sector Pensions are bankrupting many states.

      With California facing a structural $19 billion budget hole, Governor Arnold Schwarzenegger has argued that the state will need to tap its general fund for billions to prop up faltering public-employee pension funds."

      "A recent Stanford University report pegs the state's unfunded pension liability—or debt—at a scary $500 billion. The situation has become particularly dire at the local level. As the Los Angeles Times reported in August: “The cost of retirement benefits for Los Angeles city employees will grow by $800 million over the next five years, dramatically eroding the amount of money available for public services to taxpayers. . . . By 2015, nearly 20% of the city's general fund budget is expected to go toward the retirement costs of police officers and firefighters, who now have an average retirement age of 51. The figure was 8% last year. Once civilian employees are factored in, nearly a third of the city's general fund could be consumed by retirement costs by 2015.”

      These kinds of numbers are happening everywhere, Greece, California and soon in Ontario.
      http://www.city-journal.org/2010/eon0909sg.html

    • Hint: Union != Public Sector

    • That's one of the stupidest comments i've heard in a while, the US has one of the lowest rates of unionization in the developed world while countries with much higher rates of unionization are doing far better, there is a connection though, unions are resisting the attack on the middle class which is disappearing while management rakes in ever increasing massive profits and the wealthy in the US pay a tiny tax rate. Unions keep workers making a decent wage so they can afford to buy goods and pay taxes, all the sorts of things which drive and improve economies, the rush to the bottom in non-unionized industries results in people who can't afford to spend money buying stuff and make too little to pay much of any taxes. Its the Walmart effect where their employess are paid too little to afford to spend money which would return to the economy while the owner's profits grow huge. Concentrating wealth in the hands of a few is a recipe for disaster, except for the few, unions created the middle class and unions are protecting the last vestiges of the middle class. Anti-union bigotry is a recipe for financial disaster like we've seen in the US.

      • Ironic your name is rich.

        Unions have indeed caused the mess.

        The wealthy pay a tiny tax rate? What a joke! 50% of income earners pay no taxes. The top 1% of taxpayers pay 45% of the taxes and the top 5% pay over 60%.

        Unions artificially raise wages beyond what the market would otherwise sustain. This was great in the 50s and 60s when other countries were not really industrialized. But now that China and India (with half the world's population) are in the game, the American worker has priced himself out of the market. It is really that simple.

        • Every wage earner in the U.S. pays payroll taxes; families with the median income pay more in Federal payroll taxes than they do in Federal income taxes.

          Oh, I guess you forgot to mention that you meant income taxes only! Not that there's any significant difference from the worker's point of view, but by focusing exclusively on income taxes with their progressive rates and deliberately ignoring payroll taxes where the guy with a million-dollar annual income pays 11% the tax rate of the worker with an average income, you can push the entirely fraudulent right-wing talking-point that half the public lives tax free.

          • I just find it astounding to hear people make such statements with such conviction, as if there couldn't possibly be any other reasons to the structural problems our economy faces. Nothing is that simple, sorry. We are in a race to the bottom and it has been occurring for a long time. Back in 1994, while America was doing their best to pass NAFTA and GATT, a fairly unknown guy went on Charlie Rose and warned us what these policies would lead to. Watching his interview today makes him look like a prophet. James Goldsmith – http://www.youtube.com/watch?v=4PQrz8F0dBI Watch for yourself, tell me he is wrong and what he said would happen hasn't actually happened.

    • Bergkamp, you are 100% on target with your comments. Because so many people do not want to face the truth, you have gotten so many thumbs down comments.

      You are exactly correct. It was the forklift driver with an 8th grade education at a big three plant making $85,000 a year (and the entire entitlement mentality of american labor that spawned him) that drove jobs overseas.

    • Life of wealth and leisure? My Dad's a union member and he doesn't lead a life of wealth or leisure. Unions were the only thing that stopped the slave worker mentality business owners had towards their workforces. Nafta and Reaganomics are the direct causes of America's third world slide down.

    • You may expect too much from Macleans. It's part of the ruling class media that is still in love with totalitarian socialism. Quoting Huffington gives it away.

    • You should read the book "The Great Divergence". Unions promoting better wages for more people is not killing America, its unbridled greed fueled super rich and corporations causing too much wealth in too few hands and not diverting it back to the majority of people. This is happening because well PR's rich Republicans and the like have convinced most people that saving $200 or so a year is better than paying for good teachers so the many benefit.
      By supporting weakening of unions you are willingly or unwillingly supporting an economic structure already too skewed to the .01% of American society. Beyond the simple moral wrongness of too much wealth in too few hands it is also hurting America by taking away the buying power of the many. Read "The Great Divergence" written by a Nobel Laureate.

    • "Unions" aren't the same thing as "public sector workers". Please go back to school, and pay attention this time. I'm sure it's lots of fun listening to rightwing radio hosts as you commute, but they're not very factually accurate.

    • When a house is reposessed by a bank isn't the bank required to pay taxes on the house it now owns at the rate for the price at which it sold the house to the former owner? Why are property tax revenues of local governments going down when the banks are more capable of paying taxes owed than jobless broke ex-owners. Especially schools are usually run on property tax intake. Since the repossessed houses are not torn down and have the same value at which they were sold until resold, the property tax coming in to fund schools should be increasing not decreasing.

    • The unions are a non-issue in the US. American unions are very weak. The big problem is the money they are wasting every year on 2 wars – it is bleeding the US economy dry. There is a huge problem of greed and mismanagement – the middle class is being wiped out by low wages and no benefits. The wealthy refuse to pay more taxes and don't care about those less fortunate. It is amazing how they can find money for a sport stadium and subsidize millionaires but nothing for the poor.

  4. The article is a non-starter. It seems to equate the solvency of America with the solvency of America's bloated, inefficient, and overpaid governments. It is caused primarily by overpaying government employees.

    The whole idea that in America large corporations can come and go (Xerox, Kodak and Compaq) but the number of firefighters in a firehouse can never be reduced, that is absurd. It is caused primarily by the fact that firefighters refuse to acknowledge economic reality and align their salaries with the rest of the citizens of America when a downturn arrives. So you end up with smaller numbers of employees earning even more gargantuan amounts of money.

    • Capitalism doesn't work the way you seem to think it does.

      • Public service employees don't follow the rules of capitalism. Their earning are not determined by supply, demand, or any other measure that is tied to economic realities. Obviously, when you look at their insane earnings.

        • There are no rules in capitalism. That's the problem.

          • There are plenty of rules, but people like you cannot decide what they are. Try an economics 101 course. Rule no. 1: you cannot buy what you cannot afford. rule no 2: you won't get paid for doing nothing of value.

          • Debating with you is not something I revel either, it's also too easy and also entirely pointless. You've even managed to turn your name into a verb. A lobotomy would be more enlightening. Therefore, I'm moving on.

          • You aren't debating. Mostly you're whining because other people are paid better than you are.

            I haven't turned my name into anything….I simply provide proof of what I say.

            Apparently you can't cope with that.

          • You should go to Cuba or N.Korea to see how communism work.Both countries can't feed the people.
            In Cuba you get 1/2 kg of meat per person each month. If you lucky. Avrege wage in Cuba is $17 per month. and free health care is a joke,the hospital are filthy,no drugs or modern medical equipment.People have to sleep na beds with no sheets on filthy matracess.
            Comrade Castro will lay off 1/2 milion people next year,he said himself that communism doesn't work.
            There is a joke in Cuba – when people die then they turn to skeleton,but in Cuba people turn to skeleton and than thay die !

          • There are at least 3 major differing economic systems….none of them work anymore.

          • Capitalism and Communism both died in 1989. The Soviets had enough sense to throw in the towel. The Americans continued to borrow, and live off years of that borrowing. A Potemkin Village of an economy where the skelton frameworks are now becoming visible in al their rust.

            The EU is now dealing with the ungluing of Socialism, trying to hold things together.

            No, none of them work anymore I'm afraid. They were products of the industrial revolution, and that's now over with. We need a new kind of economy for the knowledge revolution.

          • Capitalism died in 1989, Emily ? So what kind of system we have in Canada?
            You don't have clue what you talking about. Are you 12 year old?
            My former country of Czechoslovakia rejected communisum in 1989,and now have full fledged capitalist system with free elections and market economy.And doing very vell thank you very much.Recent elections was won by center right, market economy friendly parites. And can I ask you what of new kind of economy you're advocating? I am very curious.

          • We have a failing system in Canada, same as everywhere else. It's actually called the 'Third Way', so it's still struggling along, but it will go with the American crash.

            No dear, I'm 64, and I've seen them all come and go. And whether you're a Czech or a Slovak your former country will get hit too.

            We are already in the Knowledge Economy…at least at the beginnings of it….which is why we're having all the chaos….it's called 'economic dislocation' and it will continue for quite awhile. Same thing as the chaos produced when we switched from the Agricultural era to the Industrial one.

          • Dear Emily,I am 65 and I lived both in communism & capitalism ,living in Canada since 1968.So I know way more about world than you ! Your "3rd way" is bunch of bullcrap, I never head of it .Did you just made it up ? LOL

          • No, you have no knowledge of what is occuring in the world, you are simply going by your own personal life.

            And just because you haven't heard of something doesn't mean it doesn't exist.

            The Third Way has been around for quite some time, time enough in fact to develop many variations
            http://en.wikipedia.org/wiki/Third_Way_(centrism)

          • Emily, an economic system really handles the problem of allocation and distribution of resources. I don't know what you mean by "Knowledge Economy", though I know any description will likely contain the words "alternative" and "energy". But the problem of allocation remains. It seems to me that "Knowledge Economy" is not an economic system, but merely a direction for industry to take within some (any) economic system.

          • We started out as hunter-gatherers.

            We moved to the Agricultural age

            Then to the Industrial age

            And now to the Knowledge age

            Each of the old ones had their own type of economies…so will this one.

            It doesn't involve people working in 'industry'. It involves people working in information and knowledge.

            If you want muscle, you use a robot.

          • But how many of what robots should we build?

          • Hey, it wasn't me that killed the census. LOL

          • That type of question is exactly what makes it a knowledge economy. Where knowledge of the most efficient means to produce and distribute the resources becomes more important than simply the ability to produce them(aka, the industrial economy) In a sense, we're finally overcoming the problem of scarcity (for instance, we now produce enough food to fully feed every living being on the planet) and instead running into the problems of distribution (how do we get that food to those who need it, in a manner that is sustainable (ie, continues to provide enough incentive to keep producing))

          • If anything, knowledge of the "most efficient means to produce and distribute" is less important in our supposed post-scarcity world. If we have truly "overcome the problem of scarcity", then efficiency isn't really an issue. However, for a tribe of way-back primitive men on an undeveloped island, the most efficient means of catching fish could very likely be the difference between life and death.

          • You can have enough food for everyone, but only one person has access to it, that's not a problem with scarcity, it's a problem with distribution. That's what I was trying to get at above.

            Was I unclear?

          • You can have enough food for everyone, but only one person has access to it, that's not a problem with scarcity, it's a problem with distribution.

            Of course it's a problem of scarcity. The scarcity is just of the distribution channels and not of the finished product (food, in this case).

            Of course, delivery is a production cost (ie. a cost that must be accounted for). That is, if I have a brilliant new way for manufacturing widgets, but have no way to get them to consumers, then I do not have a viable business.

            If you are telling me that making decisions about how best to allocate resources is somehow a modern problem that necessitates a "Knowledge Economy", what I am telling you is that those decisions always had to be made. Determining how best to combine land, labour, and capital for manufacture is no different than determining how best to combine land, labour, and capital for transportation.

            Decisions about the allocation of resources will always be required. The economic system will determine if those decisions are to be made by profit-seeking individuals, or by benevolent Party members.

          • Oh please. That's like saying that death isn't a problem of dying, it's a problem of scarcity of life. Pretty lame attempt to recast the argument into your terms. Distribution is distribution, scarcity is scarcity.

            It's a typical supply-sider's/industrial age viewpoint. But in case you haven't noticed, we're literally killing ourselves with overproduction. Obesity here vs. starvation overseas isn't a "scarcity of distribution channels" problem. It is *purely* a distribution problem, and it is driven by the supply-side beliefs — where building it better for cheaper is all we need worry about. Except we have a multibillion dollar industry devoted entirely to making people feel they need crap that they don't. Not just making people aware of it, but specifically designed around promoting the idea to people that they need these things — because if they didn't do that, the crap wouldn't sell, and the supply-sider who invested in it would go broke. I'm sorry, but there's no way you can tell me that's a scarcity problem.

            Of course the decisions always had to be made.. but using that same argument, you could suggest that the industrial age is no different from the agrarian age. And you'd be just as wrong there as well. While there is overlap, that does not mean things have remained the same. A knowledge economy will trade mostly in ideas. "What can we produce here?" becomes far less important than "What *should* we produce here?"

            This is difficult to explain, because your last paragraph makes it clear that the industrial era mode of thinking is still firmly engrained in you. Decisions about how best to combine land, labour, and capital for manufacture will become of lesser importance. What will rise in importance are the decisions about what exactly we're combining land, labour, and capital for manufacture for — and *why*. The distinction is rather subtle, but hugely important.

          • I'm not too picky about the details, as long as they obey Asimov's three laws. And are available in pink.

          • They will look like humans.

            NO pink!

            And no 3 laws of robotics either, I'm afraid

          • You are describing the type of work people were doing at various times. People can do each of those types of work in a capitalist or in a communist economic system.

          • No, they cannot.

          • I find that puzzling. I would have thought, for example, that an individual could be a farmer in a capitalist system or in a communist system.

            I'm going to need you to explain to me why I am wrong.

          • Ever see a Soviet farm?

          • In Soviet Russia, wheat harvests YOU!.

          • TECHNICALLY Canada is a Constitutional Monarchy

          • That's the political system, not the economic one.

          • But there are incentives that result from the balancing of greed and fear.

          • Why would we be balancing those two things?

          • These are what a profit-seeking individual must weigh in his decision making over how to employ his capital. For example, if a woman was considering investing in a new arena for Quebec Nordiques come-back, she would have to weigh the potential for profit (greed) against the potential for loss (fear).

          • Which is neither here nor there in the knowledge economy.

          • Are you telling me that there is no potential for loss in a "knowledge economy"?

      • What do you base that statement on?

        • No idea who this is meant for

    • "…but the number of firefighters in a firehouse can never be reduced, that is absurd."

      Yeah, I remember when my infant son stopped breathing a few years ago. In four minutes, there were three firefighters in my living room saving his life and I was all like "Why are there three of you here? What a waste of public resources!"

      I hope you never have such an experience, scf, but if you ever do, I hope a full crew of firefighters shows up and not your ridiculous "economically aligned" crew.

      • Such an intelligent comment. Typical of your calibre. Perhaps you could actually make the slightest attempt to actually address my comment rather than constructing the most ridiculous straw-man in history. Yes, scf has advocated the elimination of firefighters, and he's in favour of dead children. What a terrible person, that scf.

        If you think we have a shortage of firefighters, why don't you become one? You could have been the fourth one in the room. By the way, you might try learning CPR. That way you don't have to wait for the firefighters to arrive. And next time, call the ambulance, not the fire department.

        • My "calibre", eh?

          I never said you were "in favour of dead children" (speaking of strawmen), but cutting firefighters will lead to more destroyed property and fewer saved lives.

          Cutting bridge maintenance will lead to more collapses, imperil more people and cause more economic disruption.

          Cutting road maintenance will lead to a drag on the economy.

          Cutting teachers will further degrade the quality of education and undermine long-term prosperity.

          The US can't cut itself to prosperity. If its basic civic foundation is allowed to erode, it will have long-term consequences.

          • For sure. In fact, they should just make everyone a public employee and build bridges and roads all day long. What a great idea. Maybe we could call it 'communism', a system where the government runs the show. Nobody is ever fired, and everybody works for the government. Everybody will live in wealth and prosperity, everyone will become a genius, and accidental deaths will never happen.

            Aren't you clever.

            BTW, you did say I was in favour of dead children. Your comment stated that if we cut the number of firefighters as I advocated, your child would be dead. Ergo, my position was in favour of dead children.

          • Speaking of strawmen, you just totally slayed an argument I never made.

            The argument I actually made was: " If its basic civic foundation is allowed to erode, it will have long-term consequences."

            And hey, this is two posts in a row you've gone out of your way to insult my intelligence. Could you at least try to be civil?

          • Actually, let me restate your "civil" argument. I actually got it wrong, considering I've never said anything about cutting the number of public workers, I've just said their salaries should be reduced to align with the rest of the country.

            So, your argument was actually that if we reduce the salaries of firefighters as I advocated, your child would be dead. Ergo, my position was in favour of dead children.

            And if you argue that the civic foundation is eroding, then you are insinuating that I was advocating the erosion of the civic foundation, when I was acutally arguing that their pay scales are exorbitant. Such a "civil" argument. Thanks for the "civility".

          • scf, above: "The whole idea that in America large corporations can come and go (Xerox, Kodak and Compaq) but the number of firefighters in a firehouse can never be reduced, that is absurd."

            You were saying?

          • Exactly. You've copied my statement. You've mastered the art of copy and paste. Very good. I hope you did not retype the whole thing.

            Very good job there. Let me try it: "my infant son stopped breathing a few years ago".

            Yep, copy and paste. Quite an invention. Good luck to your son, I'm glad he's well.

          • Ok, so that's a "no" to civility.

            You said: "considering I've never said anything about cutting the number of public workers, I've just said their salaries should be reduced to align with the rest of the country."

            Just shortly after you said "The whole idea that in America large corporations can come and go (Xerox, Kodak and Compaq) but the number of firefighters in a firehouse can never be reduced, that is absurd."

            Obviously I'm wasting my time here. You're blatantly contradicting yourself, misstating my arguments and insulting me. You do have a style, scf, I don't know why anybody bothers engaging with you at all.

          • This is typical of intellectual dishonesty. You accuse the speaker of making a claim against you that you simply inferred (that you are in favor of dead children). The speaker never made any claims about your position on if children should live of die, only that if there had been less firefighters, his child could have died. That in no way says that you would prefer his child dying instead of not reducing the firefighters available. If you wish to argue a point, then argue on the merits. As for his arguement, your post specifically advocates for the reduction of the number of firefighters in addition to the reduction of salaries.

          • The point being made against you was that if the number of firefighters were reduced, then those 3 that arrived at his house might not have been available, and his child could well have died. You continue to make light of that by stating that he accuses of being in favor of dead children, apparently to avoid having to clarify yourself as being for a reduction of salary, and not a reduction of firefighters. Refusing to admit a mistake is another sign in intellectual dishonesty. Alternately, you do advocate for reducing the number of firefighters, and all of the hazards that presents such as not having enough people on hand to deal with an emergency. If that is the case, then you are "in favor of dead [people]", the result of not having enough emergency personnel available.

          • Anyway, back to the topic, you missed this part:, "It is caused primarily by the fact that firefighters refuse to acknowledge economic reality and align their salaries with the rest of the citizens"

            It was the next sentence. Not sure how you missed it.

            Anyway debating with you is not something I revel, it's too easy and entirely pointless. Therefore I will stop.

          • Also: "So, your argument was actually that if we reduce the salaries of firefighters as I advocated, your child would be dead. Ergo, my position was in favour of dead children."

            Using the word "ergo" doesn't fix logical fallacies. I never claimed you were "in favour of dead children", I was pointing out a consequence that you seemed not to have considered.

          • Yes, the consequence that I would cause your child to be dead. Such a "civil" argument. Perhaps you might consider the fact that it's not a consequence at all. You could try the word "ergo" or "therefore" as well, but I can assure you, your child will survive if you use the head on your shoulders to care for him properly, rather than state that the position of scf and like-minded citizens would be responsible for his demise.

          • Being short-sighted and stupid about a consequence doesn't have any implication that you would approve of such a consequence, as you're trying to attribute to TJ.. it just implies that you're short-sighted and stupid.

          • Ice Burn.

        • Firefighters provide a needed, wanted, service, and it's a dangerous job. They aren't allowed to strike.

          That's why they qualify for a decent salary.

          And no, unless an area has a sudden massive reduction in population, you don't reduce the number of firefighters you have.

          • So you are saying that laid-off workers who are having their home foreclosed should continue to pay taxes so that firefighters will save that home from the fires that will occur while nobody lives there anymore. Great point.

          • If nobody lives there anymore, these invisible people won't be paying taxes.

          • Though the argument from unionists/liberals always seems to be that as long as there is a taxpayer, tehy can pay up, and up, and up, and up!

            Don't matter if the taxpayer have no income. Only matters if there ain't no taxpayer no more. But even then, considering the fantasy land that they live in, they might still somehow manage to tax the invisible people.

          • The argument "always seems to be" huh? Do you have any examples of this argument being made by anyone?

          • Besides, invisible people can still be taxed. It won't be easy, but it can be done.

            It's taxing the imaginary people that becomes a real chore to get em pockets.

          • I guess invisible people are the ones committing all those unreported crimes then.

            Well at least we'll know who to put in our unbuilt prisons then.

          • That home might be right next to yours. Fire tends to spread and it's best to just put it out before the whole mother burns down.

        • Firemen are first responders. Are you planning your heart attack at an emergency ward?

          • Ever heard of something called an ambulance? They arrive at your door when you have a medical emergency. That's what happens when you call 911 and you tell them you have a medical emergency. They have extensive medical training. They also have vehicles that have no fire hoses attached. Their vehicles are also capable of transporting you to a place called the hospital, the place where ambulances go with severe medical emergencies. Fire engines would need to place you on the roof, and then take you back to the fire station, a place that can't help you so much.

          • My local firehall also houses the ambulance. If the ambulance is unavailable fireman respond to medical emergencies in a red vehicle with Fire Department' on the side. They are trained to do this. I'm guessing you think nurses are overpaid too?

          • Nurses are not overpaid in Canada. In fact, Canada does not have nearly the same problem as the US (although we have it to a lesser degree, but not so much with medical personnel). Nor are they overpaid in the US (where nurses are not even public workers).

            The ambulance is unavailable? How can that be? Are you saying that your municipality is unable to afford another dozen ambulances and ambulance technicians in your world of unlimited budgets? Clearly there exists another evil villain, other than me, who lives near you. Otherwise you'd have dozens of ambulances at your beck and call, day and night, no matter which day of the year. An ambulance for every household. Why, someone might die due to this shortage of ambulances that you describe. Ambulances have far more equipment and their personnel are trained much more extensively in emergency medicine compared to firemen, who are trained in basic medical services.

    • You choose an odd group of public servants to complain about. Certainly some bureaucracies are bloated, and certainly some pencil pushers get paid too much. But emergency services aren't the kind of thing you want to be cutting back on. True, they spend a fair bit of time doing nothing. But that is to ensure that when calls come in, there is someone to respond. The last thing I want to hear when I call the fire department is, "We're sorry, but all our firefighters are busy right now. Please try again." Sure, you could trim back fire and police departments so that they would spend more time actually working. But having a certain percentage of your force idle at any one time is what allows them to respond quickly to emergencies. The slack in the system is absolutely vital for the system to work properly.

      • Firefighters was an off-hand choice. However, my underlying point is that there would be no layoffs if the salaries were reasonable. Savage has listed umpteen examples of upcoming layoffs, all of which could be avoided if salaries were in line with reasonable standards. However, unions have such clout that layoffs have become the only option, and even then it's not easy.

        Anyway, here's what I mean:

        Jones said he's asking the council to take action in closed session after learning 27 Redding employees earned between $200,000 and $300,000 in total compensation and benefits in the past year.

        All told, 183 Redding employees earned at least $150,000 in total compensation and benefits from July 2009 through June, according to information requested and obtained by the Record Searchlight and shared by city administrators with council members this week.

        “To me it's astounding and alarming,” said Jones, who took his annual $7,200 council stipend from the city last year along with a $300 cell phone allowance but is alone among council members in not accepting the group health insurance, which cost $15,926.76.

        “Anything over $200,000 is excessive for Redding, California,” Jones said. “We've got way too many making over $200,000. We've got way too many making over $100,000. When you start adding that up, it affects our ability to staff correctly.”

        Six Redding workers earned more than $40,000 in overtime in the past year. A fire captain topped the overtime list at $66,916. That's 75 percent again of his $88,873 salary and enough to make him the city's third-highest compensated this past year. Four of the 10 highest compensated employees in Redding were fire captains and fire battalion chiefs earning more than $40,000 in overtime last year.

        • All the more reason for progressive taxes.

        • So it's okay to pay a CEO of an Investment bank millions, even if they are part of a small group whose unchecked greed nearly destroyed the capitalists system they say they love? But it is a crime to pay a man or woman who at any moment may have to go up five or more flights of stairs in a burning building, drag someone to safety and then start CPR on them $160,000? Your right that makes big sense. Start and keep paying people who do real work real money and start attacking these money voodoo artists who are making millions with all of our money; including tax dollars; but really not contributing much except enriching their small group.

      • The slack in the system is absolutely vital for the system to work properly.

        Like our hospital emergency rooms. How's that working out?

        • Our medical system problems wouldn't exist if we had enough doctors.

    • So there's a problem with government workers, but it's okay for CEOs to make 500 times what the lowest paid employee of a company makes? CEOs and other high-level executives are getting raises and bonuses when the regular employees of private sector jobs get little to nothing in the way of anual increases, or are even being threatened with layoffs to convince them to take pay cuts. The problem with America has as much to do with wasteful government spending as it does with the people at the top of the private sector taking all the money for themselves and only barely handing enough crumbs to the rest of the working Americans to keep us from storming the corporate offices with torches and pitchforks because we're told to be happy that we still have a job.

    • What rubbish! A corporation makes products that generally are more wants than needs, we don't need fancy cars by the dozen. We do need people available at a certain historically validated amount to attack fires and aid with medical relief. If we as a society don't think that is as important as saving GM than we are whacked.

    • This post condemning the working class is absurd. America is awash in astonishing wealth but it is intensely concentrated in the top 1% of the population. That 1% has more combined wealth than 95% of the rest of Americans combined (and more than numerous other nations).

      It is absurd to say that working people with a middle class income and negotiated retirements that will allow them to stay in the middle class are busting America. The obscene concentration of absolutely phenomenal wealth in the hands of the top 1000 Americans is bringing the country to its knees. The US is neck deep in the Big Muddy, but the big fools say to push on. And the kings of Wall St. soar free and easy high above the rest of us.

  5. The US is the only developed country without a value added tax (GST) of some sort. They need one badly, since raising income and corporate taxes is only going to put a further squeeze on the economy. They should also go with higher fuel taxes to fund infrastructure renewal.

    • Personally, I agree.

      scf, on the other hand, thinks you're a communist.

    • But a value added tax doesn't squeeze the economy…right? And fuel taxes don't squeeze either, because no one uses energy in manufacturing or the service industry…right?

      Of course the right medicine for the economy is more taxation when part of the competitive disadvantage Americans face has to do with tax incentives other countries are giving American corporations to manufacture their intellectual products abroad.

      The United States Congress should pass a law requiring that a portion…call it 55%…of all products sold in the United States must be made in the United States.

      • Well then there would be a massive Depression, unlike anything we've ever seen in history.

      • Passing such a law would cause an almost instant depression when you look at their trade deficit. It would start with a good number of the factories remaining in the US having to shut down for lack of raw materials.

      • The United States Congress should pass a law requiring that a portion…call it 55%…of all products sold in the United States must be made in the United States. Administered by thousands of newly hired federal employees to audit the production trail. Maybe you could create a cap-and-trade market where producers using foreign materials can buy "protectionist" credits from totally within-country producers. Administered by thousands more brokers, traders, accountants, lawyers. Armies of highly-paid lobbyists could seek to push that number (55%) up or down according to the whims of their clients. Ooooh — Look at all the jobs!! And all that to chip further away at the single most important development to reduce poverty, suffering and war: freer trade.

        Yup, actually, that sounds like something the US Congress might try to pull off. Third World America, indeed. No man's life, liberty, or property are safe while the legislature is in session. Gideon J. Tucker in Final Accounting in the Estate of A. B. (1866) Credit to Wikiquote

    • Imagine the furor if Obama ever suggested a VAT. There'd be rioting in the streets.

      • 'Cuz it would be linked to the *cough* cost-saving health care reform that's gonna cost 'em a fortune. "Them dumb hick Yankees" can still be trusted to put two and two together.

        • No, actually they can't.

          • Your right, the one's on the left are thick as posts, the further left on the scale, the fewer active brain cells.

          • Thanks Great post I needed a good laugh. Dummocrooks what we need is more taxes. LOL

    • Good luck with that. They might need it, but any politician that even hinted at such a move wouldn't have a hope in hell of being elected. Even with a majority in Congress and the House, Obama still has to fight for everything. In November, the odds will be even worse in his favor when the short sighted, amnesiatic Americans vote back in a bunch of Tea Party Neanderthals who will go for more cuts.

      Evenentually America will tear itself apart. The hate that is pouring out of that country towards each other is enough to heat our houses for the next decade. Pray for your children they don't vote in some theocratic demagogue. Picture it: a failing, third world country with the nuclear capacity to destroy all of us on their way down.

    • A value added tax would allow the abolishment of income taxes.

      • probably not . it would just be an addition to current taxes.

    • why the name " Value Added Tax"? what "value" is added by the tax?

    • What are you pucking out…….income is not the problem,,,,,for govt's or families……SPENDING is the problem…!!!!
      smaller incomes are ok when "need" only spending is in place……"want it" spending is the problem !!!!
      Wake up people…and RagingRanter….get a brain !!!!

    • Some of us already have high state sales taxes, with additional local taxes at the local level. A national VAT would kill us in California, and I say this as one who has generally voted in favor of a half-cent here and a half-cent there to fund transit projects in L.A. County.

  6. Ohio and Michigan have had economic problems for more than a generation. They are charter members of the Rust Belt.

    Huffington has it right…incredibly…America's political class has made too many mistakes. It is time to dismiss them en masse.

  7. More like a combination of all this author's points, commenters points, plus more cause such huge problems in the US economic downfall. To single out one cause is too simplistic for such a big downfall.

    • Point taken. Nearly every society that has assumed the responsibility for "stability" in the international system…however, defined…eventually has ended up exhausted and broken. It's time for another people to take on the job. I nominate China.

      • How about multi-polar….global…and not any one country….

      • It is very difficult to second your nomination, when the human rights record of such country has so many question and negative marks. I would rather second Emily's suggestion, but we know that partisanship is very difficult to avoid in such setting. We do not need to look further for good intentions but bad examples multi polar, and global institution than UN. What a dysfunction. Another thing, why do we need one country to play a top honcho role anyway?

        • Well the UN is a step up from the League of Nations…..nothing works perfectly from day one.

          There will be lots of starts and stops before we get it right.

        • I would have added regionalism among many others into the mix why, such multi polar organization will become unwieldy and dysfunctional.

          • We've moved up from tribes to regions, from regions to countries, from countries to trading blocs…and eventually we'll be totally global.

          • That is good in theory but you can't take a person's loyalty to his/her country/region/trading bloc. It may work for few years but will have high risk of bogging down the road. Look at UN, too much indecision because of conflicting interests, resulting in inaction. So why spend so much money on creating a new bloated bureaucracy? Each country has to develop its own way, for no one model fits all. I think diversity will be good compared to a monolithic system. Let each country, region, trading bloc negotiate trading/ economic contract (and the responsibilities and obligations just like any contract) with each other. The only thing we need is an international court system (like WTO) to mediate and give rulings on international disputes.

          • Gee, they said the same thing when we were moving from tribes to regions….and at every stage since.

            The UN is a step better than the League of Nations…we'll have starts and stops but we'll get there.

            Nothing is perfect from day one you know.

            Yer kinda behind the times on this….we already have…and have had since WWII…global trading systems, banks and financial institutions. They just need an upgrade to deal with an even bigger world.

          • It is not only UN, but look at EU. Each country lose a part of its sovereignty and will be facing more problems later. I hope I am wrong, and you are right on this one, but globalization might not be the saving grace as we were lead to believe.

          • Here's a big hint…yes, there will be a loss of sovereignty. That's what moving to blocs involves.

            Nation-states are obsolete.

            When were we ever told about globalization at all, much less about it being a 'saving grace'?

            It's simply reality.

  8. When discussing public expenditures, often people forget that just because you pay more for something, does not mean you get more.

    Texas is a low tax state and has been ridiculed for having awful services, but high tax California now has worse roads and schools.

    Emily, I am happy to hear your son is well, but if only two EMTs showed up, would he have died? Did they show up in a million dollar fire truck? Or did they show up in a half million dollar ambulance?

    With all of the advances in technology, why can't we live with fewer firefighters? My house was built with fire resistant wood panels, my electronics all have auto shut off devises when they over heat, and fewer people smoke cigs then in the past. So perhaps we need fewer firemen?

    50 miles of road being allowed to return to gravel? Perhaps fewer people live in the area, and paved roads are no longer needed.

    We (USA Canada the 'West') have problems, but the rest of the world would love to have our problems.

  9. I think we haven't seen the worst yet, in Canada or the United States.

  10. Aw come on! I understand your point and it is well taken, but saying that American is headed toward becoming a "Third world" nation… that's way over the top. Take it from an American who is and has lived in a "Third World" country for the past 10+ years.

    These glitches and troubles are absolutely laughable compared to what people who truly live in poverty deal with each and every day.

    The top 90% of wage earners in the U.S. are still among the wealthiest 10% of people in the world.

    I get your point, but you go over the top and thus detract from your argument. Perhaps you should actually try visiting a third world country before you start making outrageous claims.

    • Savage isn't the only one making the point. Many economists and other world observers are doing so as well.

    • The wealthy have a knack for survival, but how is your middle class doing? You need them well off enough to buy all that stuff you're bringing in from China.

    • Wealthy upper class doesn't mean it's not a third world country, in fact it's one of the definitions of a third world country. Put simply America's rich are too rich and their control of the government means they'll never be taxed appropriately. If you look at actual first world countries are (by some metrics America is already a third world country by the way!) the rich are far closer to the middle class in assets.

      • YOU SAID IT. There are just not enough ways in the US to get the amassed wealth at "the top" back into the economy.

  11. CA does have a very high tax burden, prop 13 has kept property taxes in line with the rest of the country. Income sales etc. are very high.

    No fire proof houses exist, but after 100 years of fire safety, and other trends like not using candles for lighting etc. have reduced the incidents of fire. In fact most fire calls are for injuries not fires.

    Dirt roads are ok if as I mentioned fewer people live on those roads. Also 50 miles out of the entire US road system is hardly a fraction of a fraction of the total road inventory.

    BTW, down here where I live in FL, (see I must be stoopid I live in FL) some communities have protested the paving of their neighbor roads in order to preserve the country lifestyle the wish to have.

    • California killed itself, and I have no sympathy for them.

      Fire death tolls are still way too high.

      Dirt roads, gravel roads, asphalt roads full of potholes….or sinkholes…falling bridges, breaking overpasses, gas explosions….is that how you see the future of the US?

      Country lifestyle won't be 'valued' when they need an ambulance, and there is bad weather…..it's just a nice sounding excuse for no taxes.

    • Did you miss that natural gas explosion the other day? Old infrastructure covering the country. But, that would take tax money to fix. Can't have that.

      • Or it would take cutting the ONE TRILLION DOLLAR Department of War Mongering and Imperialism down to size. Can't have that either.

  12. “We have no patrol units. There is no one on the streets. We respond to only crimes in progress. We don't respond to property crimes,” deputy sheriff Ron Fenton told Maclean's. The county once had a “very proactive” detective division in narcotics. Now, there is no detective division. “We are down to one evidence officer and he just runs the evidence room in case someone wants to claim property,” said Fenton. “People are getting property stolen, their houses broken into, and there is no one investigating. We are basically just writing up a report for the insurance company.”

    Here is a perfect example of the problem, inefficient use of resources, does it really make sense to have an equal ratio of property officer to patrol officer. I mean really what is the purpose of the police? If I were a citizen of this city I would have serious questions to ask of my city manager as to why it is so important to protect property but not my house that is getting burglarized.

    The other comment are 100% correct the problem is not a lack of funds it is that the funds that are available are being wasted on salary and benefit promises that could never be met. The solution is not more taxes on productive workers but rather the abolition of public sector unions.

    • Yeah, police depts are disappearing, kindergartens, whole schools, paving and infrastructure repair….downhill all the way.

      Yes, it's lack of funds.That's what taxes are for.

      Your house IS property.

      Stop blaming unions for the Pentagon.

      Always Americans try to find a scape-goat instead of using logic

      • Emily – Thank you so very much for your reply. My response is to present clear evidence if you would care to understand my position. California is a perfect example. I have laid out the following supporting documentation.

        Here are the quick numbers.

        FY 1997-1998 FY 2003-2004FY 2007-2008
        State spending $68.5 billion $104.2 billion$144.8 billion
        Spending Growth: 1998 – 2008: 111.3%

        Population: (Via US Census)
        1998: 32m
        2008: 36m
        Population Growth: 12%

        Now that I have presented the facts I ask you where has all the money gone? If California's population has not exploded than there should be more money for schools and roads. As a person who lives in California I can tell you this is certainly not the case. I await your informed response.

        Sincerely,
        CommonSense
        http://sunshinereview.org/index.php/California_sthttp://www.census.gov/

      • Sorry Emily, but there would NO CUTBACKS if public employees received public sector salaries rather than the obscene benefits they receive today. I will agree with you on the Pentagon – huge amount of waste and lots of "crony capitalism".

    • "Here is a perfect example of the problem, inefficient use of resources, does it really make sense to have an equal ratio of property officer to patrol officer. I mean really what is the purpose of the police? If I were a citizen of this city I would have serious questions to ask of my city manager as to why it is so important to protect property but not my house that is getting burglarized. "

      The true purpose of the police is to clean up the mess, determine culpability and write reports. In a free society crime cannot be prevented because the citizens are not engaging in illegal activity until the crime is committed. That is where the Second Amendment to the Constitution comes into play. In 1787, when the Constitution was ratified, there were no organized police forces as we know them today. These have their origins in the late 19th century and the Industrial revolution. The real responsibility to defend your family, yourself and your property lies with you.
      Constitutionally this sheriff is using his resources in exactly the right way and putting the responsibility of property protection and personal safety back on the individual. This doesn't sit well in a nanny state but it is the natural order of things.

    • Condemning the working class is absurd. America is awash in astonishing wealth but it is intensely concentrated in the top 1% of the population. That 1% has more combined wealth than 95% of the rest of Americans combined (and more than numerous other nations).

      It is absurd to say that working people with a middle class income and negotiated retirements that will allow them to stay in the middle class are busting America. The obscene concentration of phenomenal wealth in the hands of the top 5000 Americans is bringing the country to its knees. The US is neck deep in the Big Muddy, but the big fools say to push on. And the kings of Wall St. soar free and easy high above the rest of us.

  13. You can't fight two wars and try to buy your way out of a recession without having the guts to raise taxes. Bush started the downward spiral and Obama is so scared of the right wing wackos that he is letting the country go to hell in a hand basket. No one is at the tiller. The U.S. is drifting. Maybe not a third world country, but like an old prize fighter they are certainly stumbling and drolling. They need leadership but they are caught up in a "TEA PARTY" Knee jerk, grab a headline type of environment.
    Hopefully everyone will sober up after the mid-terms and realize that some serious surgery is needed to restore the health of this economy. I don't believe Pallin or Boenher have the answers.

    • Bush was an idiot that got the US into unnecessary wars and Obama is a wacko Socialist that seems intent on finishing the job of destroying the country.

  14. Americans have been living beyond their means for decades now. It's even written down: "the pursuit of happiness" is a constitutional right. And the politicians have been doing all they can to allow that to continue, so that they would become elected and re-elected. All the economic and social problems of the United States can be traced to the individual's pursuit of a life beyond one's economic and social means. And now it's 300,000,000 people living with such expectations. Naturally it's going to die a slow death.

    • "Pursuit of happiness" is in the Declaration of Independence. It isn't a "constitutional" right. The problem is two-fold: Government policies that perversely create incentives for corporations and people to live beyond their means and the lack of consequences for the corporations who do. The people who lived beyond their means are feeling it. Lesson learned. The corporations (Wall St. in particular) are not. So why should their behavior change? Add to that an administration that wants to spend, spend, spend (where exactly does the money come from? all the wealth that's been lost in the past 2 years?), and the US economy (local and federal) is a stagnant mess.

    • It is the banksters who have been living beyond the economic and social means of the rest of their co-citizens to provide for it. So when we could not pay anymore, the system crashed. They are mostly still living beyond our means to keep them living in the manner to which they have become accustomed. The government is borrowing our future money to keep them solvent. I think we can not afford the milk-it-off-the-top banking system we have. We are living beyond our means, as you say–but beyond our means to keep paying the bankers.

  15. America is caving in due to intractable corruption in political and business spheres. Our two party system is a false choice with both parties working only for special interests and their own cowardly choices that preserve themselves. Our government has been hijacked by the power of the wealthy controlling the decisions that are undermining the American middle class. Meanwhile the middle class believes the lies and propaganda as they work harder to try and keep from falling behind faster than their neighbors. Our income inequality has grown to levels equivalent of the 1930s. It was an unworkable plutocracy then and the same thing is happening all over to a complacent population still looking for an easy way out while they watch American Idol soon to be American Idle.

    • So lemme see

      Corruption….special interests…the wealthy…the gullible…the complacent….the lazy….hmmm

      Everything but the kitchen sink.

  16. The New American Dream is to eat until you're disabled and then have the government buy you an electric scooter so you can get more food, perhaps they borrowed this dream from Canada because it's the same here.

    Liberals are entitled to their entitlements, because they're liberals, not because they've done anything to deserve them. That's the problem.

    • Ahhh somebody else doing better than you eh? Tsk tsk

      Well dismiss them all as welfare moochers, while you are 'poor but honest'

      It'll help you sleep nights.

      • You seem confused.

        • No, I'm quite clear. You are looking for scapegoats.

    • I'm almost 100% sure that very few people have such lofty ambitions.

      Oh wait, this is supposed to be a metaphor or something. About how liberal social policies enable lazy people to drain all our precious tax dollars!

      THOSE FIENDS!

      • Are you one of them?

    • FINALLY someone with a common sense position

  17. Either way the American people have let this happen to themselves through ignorance, apathy and the complete disregard for the future and the only way they will get out of this is to drop the
    “we’re number one!” B.S and get with reality, duct tape all the far left and far right loonies mouths shut and the centrists have to get off their lazy rears and take over and allow themselves to be governed in a responsible, respectable way. They have to admit to past errors, admit to foolhardy foreign policy that cannot be supported any longer and admit that in order to move forward they HAVE to stop blaming each other and each and every adult American has to take personal responsibility for their lives and for the life and future of their country. No more imaginary wars against imaginary figures, no more letting the rich eat the poor and middle class, no more tax breaks for people who don’t need them, no more lies and no more stupidity. I believe they can do it but fighting both sides of the poltical extremes will be hard and bloody. Good luck and best wishes America and I hope you get over this bad flu soon.

    • While I generally agree with the sentiments expressed, you've really missed the mark on the "far left loonies" nonsense. Everything you've suggested exemplifies what has been termed the "far left".

      Wake up the rest of the way, pal…and you'll be making sense.

    • You are correct. We in the United States need a centrist government. The far right is loony tunes and the far left needs to be realistic.

    • "foolhardy foreign policy" Sir, you blaspheme! That would entail cutting Israel loose, and and as we all know, Israel and the US are one.

    • Agreed, but I think things are going to have to get much worse before they get better…sad to say.

  18. This is the race to the bottom at work FREE TRADE is nothing but selling us all out. Canada is next its time to kill the NAFTA WTO and the other criminal conspiracies to steal our jobs for the enrichment of the Rockafellers

    • Is this from the time capsule? I thought we weren't to open it for a 100 years.

    • NAFTA hasn't helped the Mexicans either. Horrible idea.

    • Protectionist equal stagnation….equals death….ie North Korea

      Trade equals prosperity.

      Give the Dipper sh*t a decent burial eh?

      The 'Rockafellers' are ancient history.

  19. Wow! What a skewed perception!

    I'll enjoy watching you eat your words.

  20. One other thing – part of the reason people tend to overstate the degree of American decline is that the US is most successful in the service sector. However, if you look at global value-added by sector of the economy, service sectors are pretty important:

    Value added (billions):
    Service sector: 14,007
    Manufacturing: 7,196

    The distribution of value-added in i-pod production illustrates this point well. Value accrues to the home country, and to places which are able to conduct blue sky research, or to countries that produce technologically intensive components, not to mere assemblers.

    US: 77.4%
    Japan: 12%
    S. Korea: 0.4%
    Taiwan: 2%
    China: 1.8%

    If you look at the division of value-added, the US continues to do reasonably well (and it is the EU, not China, that is the real competition).

    Value added by country
    USA: 5,055
    EU: 6,142
    Japan: 2,103
    China: 1,544

    • But will that proportion of value-added by service sector change if the U.S. citizens lose their purchasing power? The U.S. citizen's ability to purchase seems to exist only because the manufacturing nations keep lending him money to buy the goods they make.

      • And when the world (aw, who am I kidding, make that "when the Chinese") finally wake up and realize they should stop extending evermore unsustainable credit to the USA, it's gonna get ugly.

        • At some point, the US will tackle its deficit. At the level of private citizens, many Americans are already increasing their level of savings (the savings rate has gone from a low of about 1% in 2005 to 6-7% since the financial crisis hit). This process will enable the United States to start making serious headway on its current account deficit.

      • Value-added is a production-side issue, so consumer buying power is not a huge issue. The real impact of declining US purchasing power would be in that it would limit the ability of the US to invest abroad. However, I don't see a major collapse in the near future. As the global reserve currency, Americans can spend abroad much more easily than anybody else – sustained current account deficits do not necessarily bring about a declining dollar for the US. The moment of truth will come when the US can no longer sustain this. However, I don't see a lot of alternative contenders to be the global currency. The EU has even more problems than the US, while China not only lacks the monetary power to do the job, but also has a long reputation of currency manipulation.

        The more likely doomsday scenario would involve the emergence of regional currency blocs, probably coupled with a surge in protectionism.

        • Value-added is a production-side issue, so consumer buying power is not a huge issue ?
          You have never visited Europe then. No big deal my arse.
          You people that think a VAT would be good, just visit Europe for a week and see how much you can afford.
          hosertohoosier your a idiot !

          • VAT would be an absolutely horrible alternative. Wake up America – we have a spending problem. The public sector unions need to be gutted and an economic collapse is the only way to gut them. It will be a difficult road to travel but the U.S. will be better for it in the long run. What happened to limited government?

    • McDonald's to the rescue!

  21. Is that what "starving the beast" looks like? Why, crumbling infrastructure is Republican heaven!

    • This is not starving the beast. This is the beast eating up all the food and the seeds so there is nothing left to plant. Starving the beast will have no choice but to follow.

  22. And we should feel sorry for them. I think NOT. They still spend billions on their war machine. I would not be suprised if they are not the ones to drive the world into war to sustain their failing econonmy.
    It will not be to many more yeras before we are reading the book " The rise and fall of the US". A nation that see itself as lord and master of the world soon crumble into dust. Unfortunately they will take some of us down with them.

    • I agree with your sentiments. As a US citizen and former soldier, I say that we should get out of all current military engagements and cut foreign aid to all recipients.

  23. Some interesting facts that I find relevant to the ongoing debate on this board relating to where the money goes and if there is enough of it. California is a perfect example. I have laid out the following supporting documentation.

    Here are the quick numbers.

    FY 1997-1998 FY 2003-2004FY 2007-2008
    State spending $68.5 billion $104.2 billion$144.8 billion
    Spending Growth: 1998 – 2008: 111.3%

    Population: (Via US Census)
    1998: 32m
    2008: 36m
    Population Growth: 12%

    Now that I have presented the facts I ask you where has all the money gone? If California's population has not exploded than there should be more money for schools, roads, police and firefighters. As a person who lives in California I can tell you this is certainly not the case. If the money is not going to services than it must be going somewhere. It cannot simply disappear down a black hole. The outlet for all of the tax revenues in California are wages and benefits of public sector employees. According to the California governor 80% of every dollar collected in taxes in California goes to pay wages and benefits of public employees. This must stop.

    Sincerely,
    CommonSense
    http://sunshinereview.org/index.php/California_sthttp://www.census.gov/

    • Before asking where the money goes, ask where it came from — and what money is.

      Are you a taxpayer or a citizen? Do you know the difference?

      perfecteconomy.com, usurykills.blogspot.com

  24. Without getting into numbers and figures, and by having lived in the US as a Canadian for the last twenty years, my observation of America is that it has money but it is redirected towards private corporations and away from the individual person. The USA is a purely capitalist country.
    America spends more money for the Military and for Wars and in “defending” itself than any other country. And since Americans hate taxes, they deprive themselves of government services including healthcare services. Health Insurance companies are rich because they charge the individual a lot of money for getting sick. Americans also hate and don't trust their government. This is an anti-social society, in many ways, and not enough money is directed for the individual person for proper living standards.
    I live in the US because of the good weather in California and for my relatively high paying job in the medical field but ideally I'd rather also live in Canada for six months out of the year.
    Just looking around me from day to day, I see a lot of people struggling just to make ends meet and a lot of ignorant and hillbilly backward way of thinking, i.e. Tea Party.

    • The USA is a purely capitalist country? Not quite. In a purely capitalist country, "too big to fail" would not exist. No bailouts – not even for highly leveraged sociopathic speculators. The too big to fail would…fail, period.

      For several decades, America has been an emerging fascist country – i.e., mega-corporations, govt., and banking elite are in the same bed together. The American govt. was hijacked a long time ago, but not by capitalists. In the not-too-distant future, it will be blatantly obvious to all that America has transitioned to fascism.

      As for a "hillbilly backward way of thinking," there are some parallels between that line of thinking and the type of thinking that existed in America in the late 1800's – which happened to be the time of America's highest real growth. Nope, I'm not a "tea party" member or advocate – their thinking has its flaws, too. I simply avoid allowing indoctrination to cloud an assessment of others' ideas. The indoctrination spans essentially the entirety of the two pre-packaged mindsets that serve as traps into which the majority of sheeple easily fall – "left" vs. "right," which the ruling elite find trivially easy to exploit.

      Back to work…

      • Worker exploitation, racial segregation, vigilante "law", fires that destroyed entire cities, and families starving and freezing to death because they had no money — these characterized late 1800's / early 1900's America.

        For those who hate unions — unions would never have come into existence if worker exploitation wasn't such a severe issue. Balance is necessary in worker / manager relationships, and unions help provide that. Yes, they can also be corrupt and too demanding — just like management. But when it's every worker for him/herself, and regulations are lax and unenforced, things get ugly fast.

    • Your claim that America is a capitalist nation is laughable. Capitalism died in 1913 with the enactment of the Federal Reserve Act. California's problem is that it shares a border with Mexico, which has been offloading its surplus poor into the U.S. for 50 years now. Why did the U.S. issued 1.31 million green cards last year at a time of historic unemployment? It makes no sense to me. As for you Tony, you can help solve the problem by moving back to Canada.

    • You live in the US because you could not enjoy the same standard of living in Canada. US military spending
      goes towards protecting countries like Canada. These so called ignorant hillbillies represent main stream America. They still believe in the constitution and limited government. Unlike Canadians, they do not need the Government to tuck them into bed every night.

      • Oh yeah, because, like John Wayne, you think you have to police the world. Well, did you ever stop to think that nobody asked for your protection? The last time I checked, your government was so far in debt, that it should be tucking you in bed every night.

    • "These so called ignorant hillbillies represent main stream America. They still believe in the Constitution
      and limited ($16T deficit debt dead busted flat broke 100% of GDP ) government", …which just awarded
      its 'Defense' (sic) Corporate a +95B RAISE, that +14% budget increase in the middle of the worst US
      recession since GDP1 is more than TWICE total Fed spending on Education across the entire country,
      that's not counting the $155 B every year for 'UNDISCLOSED national security (sic) purposes', stealth
      deficit-tapping Americans to underwrite their dead busted flat broke minus real interest US Treasuries.

      We're so hosed it hurts when I laugh.

  25. This article as well as others I have read recently confirms my belief that America is indeed a society in crisis. There is an economic crisis, a political crisis – grid lock, Tea Party, Sarah Palin, Glenn Beck – , a crisis of confidence, a decline in American values, religious extremism, a disappearing middle class, a crumbling housing market, intellectual erosion and the list goes on.

    Indeed, will Americans be living in a Third World America?

    BoomerWarrior

  26. A lot of good comments from readers here! I must add that while the facts of declining standard of living in the US are accurate, the prescriptions presented by the author are not! Living beyond our means are what got the US where it is – more obscene spending by government will only make things worse.
    I won't even mention the fact that (as is occurring in Canada) public employees in the US have plundered government at all levels and are receiving obscene salaries and benefits. Most of the cuts mentioned in the article would not have taken place if government employees were receiving compensation similar to that of the private sector. That's why many in the US say "fire them all"!!!

  27. Some airheads think a balanced national budget, lower taxes, strong national defense, Competitive Free Enterprise, individual responsibility, favorable balance of trade, Congressional Term Limits, Freedom of Speech, the Constitution, etc. is crazy. Who are the lunatics here who have been brainwashed so long by the collectivists they don't have a clue as to "The Road to Serfdom" the country is headed on?

    Question Social Security and/or Medicare and you are a kook. I back tested a social security recipient who worked for 40 years and if his taxes would have been invested 50% in U.S. Treasury 5 year notes and 50% in the S&P 500 his annuity would be over $8,000 a month instead of the $1,400 he gets. What do you think the politicians did with the $6,600 a month he will never get? If your dumb enough to believe what politicians tell you they are going to give (they have to take from another sucker) you you deserve what you get.
    Where did they get their educations as they should sue for a refund.

    • Strong national "defense"? You must be referring to the USA- a "Christian" nation that has bombed some 25 other countries since WW2. If this is your definition of "defense", what's your definition of "offense"? Further, how many nations would a "Godless" country bomb?……….Do yourself a favour and start thinking before you start speaking

    • In Canada the conservatives fumbled massive quantities of cash in the 80s and now the entire country is at risk of not even having a pension program. Clearly these sorts of financial issues should be managed by professionals and not politicians.

  28. as a college student, i am seriously and gravely worried about my future in america. its terrible to think about what will happen will the majority of the public realizes that we are no longer THE superpower, but a once powerful nation that boasts with nothing to back it up. i sense a revolution will happen by the end of this century.

    • End of the Century?? How about within a decade?

  29. Historically, US overspending really began in the 1960's when we tried to finance the Vietnam War and the Great Society. these were projects initiated by Democrats. the Nixon was elected in 1968 and rather than deal with hard fiscal questions resulting from these programs , he continued the war and the expensive social programs and when the bills started coming due , he took the US off the gold standard in 1971 in order to continue the over spending. Successive Republican and Democratic administrations have continued the practice of trying to have their cake and eat it too. In this environment it is not surprising that many private citizens have taken a cue from federal and state governments and lived well beyond their means. there are few people in America who are innocent in the creation of this mess.

  30. AND we have to "Settle" for Franklin DeMan0 Rusevelt!

  31. That's a great article, well researched.

    The US pain will also be felt by Canada since we rely on them for trade.

  32. America isn't benefitting. We're going down the tubes. Our jobs are being outsourced and the progress of our students blocked by foreigners. We aren't working for Americans anymore. Protectionism 100% and I will vote for whichever party fights for American jobs and BLOCKS the Chinese and Indians.

  33. Yet the FED has all the money it could ever want, and the drug war continues to waste money like a bus full of coked-out rock stars.

    • Correction: all the money it could ever PRINT.

  34. Unless america sheds its destructive world-stradling military, expect things like this to increase. Unfortunately(for americans), if they actually did manage to pare down there military and start behaveing like a civilzed nation, there wouldnt be a lot left. America has shed its industry, its factory food is toxic, it energy system primitive and dirty, its government hopelessly corrupt and inefective. The party is pretty over for the american empire and the hangover is just starting to kick in…

  35. we have to keep sending money to israel though. matter of national security
    screw the public system

  36. One only has to look to Ontario to see how the private sector is shouldering the load while the public sector continues to enjoy job security, wage increases, and an entitled attitude.

    McGuinty has purchased labour peace on our credit card. We're starting to see the chickens come home to roost as the Liberals will no longer be able to afford to give in to every union demand. The Ford effect, it seems, showcases that people are starting to realize that we're all paying more and receiving less. Our present situation is both unfair and unsustainable.

    There is something horribly wrong with the likes of the TTC toll collectors making upwards of $100k a year. As the GTA pushes ahead with automated transit cards, the TTC continues to object as they realize it was cost union jobs. This is a case example of our public sector unions putting their members ahead of the interest of the taxpayer. So, instead of money going towards crumbling infrastructure or subway expansion, we're paying for an uneducated, self-important individual doing the job less efficiently than a machine. Anyone who has experienced the TTC versus other transit systems will know exactly what I'm talking about. Visiting Shanghai, Beiijing, Taipie, Seoul, etc., you never see employees – toll collectors don't exist.

    Self-entitled unions, Luddites, and pandering politicians will be the ruin of us. Governor Chris Christie of New Jersey has the right idea – he is a beacon of hope.

    • You are right. The unions evince the same public be damned attitude as the rich- in fact they ARE the rich.

  37. Anything we can't afford we are going to get rid of. A war we can't afford (on drug in Iraq), health care we can't afford because there is no incentive legally to improve (people that perpetually receive welfare food stamps) – they just sell drugs and perform illegal activities that the government can't record, now police departments that don't serve or protect, fire departments (this sucks), schools (screw it my kids are getting private school), and finally you receive from the world what you put into it. The US has been putting a lot of war on the world and not producing a lot of things (China and India are good for them). We send aid to countries that are culturally adapted to third world conditions and are made worse because we increase their populations. Screw it third world America bring it on and don't bring anyone down with you.

  38. Post-Peak Oil collapse. It comes.

  39. More on the Unions…Obama's most important contingent,

    When Chrysler was going under, bankrupcty rules which have stood for a century, which if followed would have seen the auto makers forced to become leaner and more efficient (they would have never dissappeared as millions still demand their product),

    the solution was to stick it to the bondholders (those who took the risk to invest in the company) and hand ownership to the unions. A clear violation of basic laws of priority where thrown out the window, and their interests were handed to Obama's group – the Unions.

    Yet the dishonest leftist media dares not delve into such an obvious reason as to why "the rich" have decided to park their capital.

    This is just one example of Obama's class warfare against "the rich". (not to be outdone by his touting the "tax on the rich" , forced Obamacare, and other policies hostile to business). That "the rich" make up "investors" and more importantly "small business owners" – those who actually generate jobs, matters not.

  40. What's remarkable is how Obama's leftward lurch, empowering government unions, putting money into massive government programs while quadrupling the deficit,

    comes at a time when his model countries in Europe are just realizing that their cradle to grave nanny states are unsustainable.

    It seems the American public are also finding this remarkable. Thankfully for all of us, who wish to have a vibrant trading partner to the south (rather than the ignorant anti-Americans celebrating the decline and oblivious to the harm to our own country), the reversal begins Nov. 2.

    • Celebrating? More like out and out gloating, I'd say, And why not? Empires' fall have been a source of gratification ever since greed and hubris were first invented. And if they suck Canada down the same rathole, who's to say we don't deserve it after drafting in their puffed-up self-importance for far too long.

  41. One more thing.

    President's have veto power. Spending bills come from the house. Bush's greatest failing was not vetoing enough bills by the drunken sailors' in the house, occupied by big spending Dems for many years.

    How ironic that it took Obama's failed "hope and change" to bring real hope back to the people on November 2nd.

  42. Of all the pictures that had to be shown it was of a teachers union protesting for more money. Since JFK signed into legislation the unionizing of the government civil service workers the money that once went to infrastructure and private sector job creation has now been diverted to their hiring, their pay, their buracracy, their benefits, their healthcare, their retirement and worst of every raise in compensation is legislated into law. This is why municipalities, counties and states are bankrupt.
    Now subtract the tax revenue from the de-industrlialization of the US by offshoring and outsourcing.
    Now add in the additional spending of social services for uncontrolled immigration
    Now add in foreign proxy wars for India and Israel in the middle east and you get a complete bankrupt nation.

  43. At least 5 percent of the population now consists of anchor babies and taxpayer-supported illegal aliens who get free health care, free education, and free jail while paying hardly any taxes. Stop the invasion from Latin America and put real Americans back to work.

    • So let them work already. Then you'll have nothing to complain about.

  44. The first thing that needs to be done is for the United States to stop playing cop for the rest of the world. Bring the troops home and cut drastically the military budget, next cut the size of federal spending to the bone. We only need about 6 to 9 percent of the government that we now have. Next stop giving money to all the dictatorships in the world in order to "make them our friends" . After that slash the regulations and taxes on small business in order to grow jobs. That should be enough for the first day.

  45. I am utterly astonished.

    Here is a problem manifestly caused by spending too much money, and most answers are a variation on "spend more money". That hasn't worked and ISN'T working.

    The other big problem is "Free Trade" with people who subsidize key industries in their country. The simple solution to this is to slap on a tariff in the exact amount of the subsidy they receive. If they want to undercut prices, they can use that money to pay our taxes for us.

    So there you go – but then again I solve problems for a living. If they don't get solved, I get fired – not like some government drone who gets re-elected unless he's a baby-raper.

  46. Why are the cuts always in things like libraries, police, teaches. There is enough management deadwood ( making > $150k) in every government operation to pay for the front line employees. Then what about cuts in the sacrosanct public services there are plenty of marginal programs serving as outreach to targeted minorities that could be cut to keep public safety for ALL.
    The pol's always cut the most visible and public employees to scare us into paying more taxes so we can get these services back. Well this time the money is not there to pay for another increase in taxes, maybe this time we will see real cuts in the government "fat".

  47. THIRD WORLD AMERICA should be a must read for all Americans….
    Once again, the naked, unadulterated, transparent truth about the state of the union of America is being presented by the media of the United States but from media outlets from a friendly ally exhibiting old-fashioned, time-tested principles of journalism.

  48. Um, anyone know how to remove the safety from your shotgun trigger? Is this poetic license, or is the author ignorant of firearms operation?
    Anyway, this is all moot. the United States will collapse, although it will be a slow fall. It is inevitable. They are trillions in debt that can never be repaid. They will either default, which the central bankers will never allow, or they will inflate their money supply to worthlessness, and tie the value of commodities like gold, oil, silver, wheat, corn to the dollar, all of which will explode in value, thus making the bankers even richer.
    Only then will America be allowed to rebuild, only after they have suffered greatly. Nobody rebuilds better than Americans after a crisis. This is what happens in every financial crisis. History is your guide. The richest will profit, everyone else will suffer until it is advantageous for the richest to allow Americans to start over and rebuild their economy from scratch.

  49. The woman in the picture has a sign: "the port has $$$, the banks have $$$, why not schools?"

    Idiot. Where does she think half our property taxes go to?

  50. "Cincinnati, Ohio, is cutting back on trash collection and snow removal and filling fewer potholes."

    Yes, this is better than cutting back on the fat union pensions.

    Q: If the city cannot "afford" to pick up trash, why not hand the job over to some companies that can?

    A: because they still want to pocket the money from the city residents, that's why.

  51. whining will fix the infrastructure so will blaming others the way from a downturn to be upturn is in the opposite direction and is located between the protruding specimens and below the protein known as hair…

  52. there's something inevitable about the United States' position. It reminds me of a Greek Tragedy . We seen it before. Anyone who has read about the decline of the Roman Empire will have a sense of déjà vu. The best best book I can recommend is the book by Joseph Tainter on the collapse of complex societies. I would also recommend Chalmers Johnson's book.

  53. The problem will work itself out. Who cares why the United States is going to fall. The fact is there is no stopping it. Prepare for the worst and the Romain analogy is pretty accurate except we have more people and less resources now. The sad part is that the planet will suffer from manifest destiny. We are still having more children then we should and poor families that can't afford children are having children because our government funds them. Two problems: Stupid people are breeding and limited resources. The fall of almost every country is due to resources. The United States is no exception and we are draining the worlds resources. Governments that are producing things like China are just feeding our debt until we implode. Maybe the next large power won't take care of it's dumb population that way there is a little natural selection and more resources like nature intended…

    • Regarding having more children than we should, you might be interested in a short documentary called Demographic Winter. The fact is, across the globe, humanity is failing to have enough kids to replace the last generation. It’ll be interesting to see how that plays itself out….

  54. I am really surprised that people here are arguing over who did what. You all act like this was not the plan from the start. If you want to blame someone blame the US Treasury, US FED, and Too-Big-Too-Fail (as if there was ever something more contrived) banks. Blame them because they all got together and decided hey, we run this place. We can do whatever we want, THEY gave out the bad loans, THEY created the derivatives market (now worth over 1.5 quadrillion dollars, actual value = 0), subprime, credit crunch, EVERYTHING was planned. If you morons actually think they are trying to get us out of this 'problem' then you are wrong. It is not a problem for them, they made it, they wanted it. Get a freakin clue. This is all leading up to something else, we are not going to ever go back to normal 'America'. Think about what the 'carbon tax' is going to do, you pay it to a WORLD BANK. Its World Government , also called the New World Order. The world bank and the carbon taxes are just the start of the order of the New World. If you think i am some crazy conspiracy theorist then you need to look at the news…

  55. When is anyone in the various forms of the media going to expose the Comprehensive Annual Financial Report (CAFR) funds that each and every form of government – our alleged (un)public (dis)servants – has compiled in violation of the Constitutional restrictions regarding the fact that if government needs funding it MUST tax and not save or put aside monies for it's own personal usage?
    The total amounts of monies put aside by all forms of government is way up into the trillions of fundings; see CAFR1.com, CAFR.com, or CAFRman.com and realize that absolutely no form of government should be financially insolvent nor should there be any form of debt either national or local – period!
    Wake up america, as the last paragraph showed in the classical satire, Animal Farm, All animals are created equal. oops, , except some are MORE equal than others!!!!!!!

  56. I scanned this entire article. It failed to mention the actual illegal hispanic third world aliens which our State and Federal gov's allows to live and steal at the expense of taxpayers. Failed to mention the unrelenting amount of work visas given to third worlders that populate our cities. Failed to mention how charitable organizations (ie churches) sponsor third worlders into our neighborhoods. All these third worlders now reside in large swaths of former low to middle class white suburban neighborhoods. Our country even now superficially resembles an indigent third world nation. Anyone else notice the neighborhoods going exponentially to the dogs?? Couple all of that with subprime mortgages and section 8 in these areas. It's becoming pure chaos everywhere!

    • Everywhere? Except the gated communities where the journos and pols and corpos hide out.

  57. The answer to our financial woes has been communicated to every single President (and viable candidate) since and including Gerald Ford. Mathematically Perfected Economy(tm).

    The author of this theory is now in talks with the government of Iceland, and other European countries. MPE is viable.

    All of this misery could literally end tomorrow. We just need to understand that the flaw in Greenspan's "paradigm" was outright legalized theft via usury. Nobody likes a thief.

    perfecteconomy.com, usurykills.com

    Money is infinite. Interest is stealing. Usury kills.

  58. Hows that ''hopey''… ''changey''… thingy working fo ya??

  59. Not to worry all. The US has been building up a successful prison state. Soon we will all either be in or working at US detention centers….

    • Haven't you heard? They charge you room and board now for being a prisoner the States.

      • As they should. Why should you get free room, board, medical, clothing for killing, raping stealing?

  60. There is so much nonsense funded by our governments and lorded over by internationalists, unions and activists, it is insane. So first they cut police protection which reminds me of Washington's democrats, a long time ago, threatening to close the Washington Monument if the government union bureaucrats at Department of Interior was not given the budget they demanded. Or the time they screeched that Big Bird was being murdered when some politicans questioned the wisdom of the government funding a leftist and quite elitist television station. When such debt and economic disaster loom, kill Big Bird before you cut basic services.

  61. Taxing university students to prop up fully indexed pensions for government workers – wrap your head around that for a moment. That is ludicrous, to say the least, and is a complete non-starter.

    The kind of cuts being implemented by local governments in the U.S. are painful, but not catastrophic. When times were good, it was heresy to look hard at the number of firefighters and police officers, but now it simply has to be done. The reality is that the numbers could probably do with a haircut. (I don't have a problem with how much we pay public employees – I have a problem with the endless growth in the number of them. That is the problem.)

    Ditto for not paving every last rural road, etc. A lot of these things were "nice to have", not, "need to have". The state of California, for instance, is probably going to have to take the axe to its "untouchable", the state university system.

    Sacred cows are going to have to be sacrificed, and you know what? When pressed to the wall, governments will do it, and we will all live through it.

    • You know what world do you want, quite a few with indexed pensions of a middle class nature or a very few benefiting from tax cuts so they don't have to pay their workers so much or their machinery cost less? Henry Ford, not exactly a Communist, knew that if you pay many a decent respectable wage they will be able to buy cars, etc. Kill the middle class and no one is left to buy big screens TV, etc. There is a concentrated effort by the wealthy to attack defined benefit pensions because they are afraid it might make their millions less, pure sick greed. Stop attacking indexed pensions of the middle class and instead fight for their expansion at the expenses of the out sized rich so our economy will be stronger.

  62. I think Americans expect that when the Recession ends (supposedly it has) that things will pick up and be just like they were in the good ol' days. Those days are over. The economy cannot recover because America hasnt done anything to keep up with the new emerging economic powers. It's the beginning of the end of the Superpower America.

    You think its bad now…just wait until oil prices skyrocket in the future and America's abysmal public transportation system fails the suburban citizens. Again…America doesnt look to the future, just has been trying to hold on to what it has/had.

  63. Why would they remove the safety mechanisms from their shotguns instead of just selecting FIRE?

  64. ''Obama asked Congress to pass a US$50-billion infrastructure spending program to refurbish roads, runways and railways. But concerns about government deficits among Republicans and some Democrats make it unlikely that any large spending package could pass Congres''

    Funny, they had no problem 'passing' a bill to supply Israel with $30 billion in 'aid'; who comes first? I wonder.

  65. ONLY ONE PROBLEM ABOUT LOOKING TOO YOUR NEIGHBORS FOR HELP! HERE IN MONTANA YOUR NEIGHBORS ARE JUST AS LIKELY TO ROB YOU AS HELP YOU!

    ANYONE LOOKING TO MOVE TO MONTANA BE AWARE… THE LOCAL WHITE TRASH HERE WILL ROB YOU!

    IT'S NOT A QUESTION OF IF… ONLY A QUESTION OF WHEN HERE IN MONTANA.

    AND TO ANYONE MOVING TO COLUMBIA FALLS MONTANA – DON'T IT'S THE GETTO OF THE FLATHEAD VALLEY MONTANA FILLED WITH LOCAL WHITE TRASH… BUYER BEWARE TO ANYONE MOVING HERE.

  66. Hey, whats this all negative about USA? Having been to both countries, both which I like, want to look at the negatives of Canada? While looking at a property across from the police department in London Ont., Found the town so run down. Even had 2 drug treatment centers there in front of the police station. In Toronto had a gun put in my face and found a lot of bad areas that at night had shootings. Even in Chinatown had a kids head blown off while dinning, just couple of weeks ago. Look at the run down areas of Canada! See you can find it anywhere! Americans are nice and so are Canadians. Just wish you would attack others in the world as hard as you do America. As am American friend of mine says here, Canada is not a friend, just a good Neighbor. Have to say I see what he means.

    • Friend? Neighbour? Mister, we used to be your little brother, but now we've grown up and learned that most of big brother's stupendous accomplishments were just a bunch of bullying lies.

  67. And when America reaches that exploding point that the commonwealth countries pray for, The Americans will ride into Canada to take Canada back into their American arms and we'll all be screaming God Save The Queen as we get hoarded onto ships and tankers and sent back across that ocean we came from. Then they'll redevelop Canada back into their image, use all their natural resources that belong to them anyhow, regroup and become The America that the backward countries of Canadas occupiers fear so much. It's the hard pill we all know we have to swallow, but that's how it will be, de facto.

    • Don't forget our secret weapon: poutine! We'll clog all their arteries before they can yell medicare.

  68. Actually the USA spends more of it's GDP than most countries on education. Quality of education is not directly tied to amount of money spent. Your sentiment about spending on education may be genuine but it is not very well supported by the facts. Also, we test and give opportunities to all of our students instead of the select few who tested well enough to continue on the college track. That makes a big difference. Having said that, there is always room for a lot of improvement. Secondly, our current financial problems are due to the collapse of a debt bubble in a fractional reserve monetary/banking system. Times are good when the bubble is inflating and not so good when it's deflating. This is why the government encourages borrowing and lending. (student loans, cash for clunkers, mortgage deductions, etc.)

  69. In the US and Canada, the only way back is to get stronger unions. An employee without a union and no health care is living in fear and desperation. We need to Increase minimum wage, have universal health care and secure pensions for everyone. You do that and America will rise again.

    • Is it possible that employers will hire fewer people at higher wages?

    • And how exactly would this be paid? Secure pensions? How? Retirement is a false lie made up by people that are now dead.

      Minimum wage means higher inflation…go to mass and see how higher unemployment works as we have the health care plan before the rest of the country.

      Unions? O yes another boss. Unions eat their young. Unions don't always win contracts so then what.
      The real answer is to buy local and form coops as that means there is no division of labor and management

  70. We need to be a third world country………..in government salaries.
    We need to be a third world country………..in overseas expenditures.

    Are these reduced police/fire departments putting forth self-help seminars on how to make your home and property less available to our third world youth's?

    Are the police department creating self defense/firearms training seminars? maybe if they started to help "prevent" criminals from having a field day the people they were hired to "protect and serve" would be better able to act as a solid community, standing fast against our homegrown third world element.

    Its better than getting this fear mongering drivel printed up. Poor overfed federal/state/union people. Boo Hoo.

  71. The US was so blinded and brainwashed by the radical rightwing, Bush et al and greedy corporate executives (who the Bush administration allowed and encouraged) no matter the public is now paying their price as they sail away in the sunset. Canada needs to keep a sharp eye on its rightwing lead govt (spending $20B in 72 hours) and its other spendings on their propoganda, warmongering & media machines so that we are not lead down the same dark hole.

    • So how were these companies any different under Clinton?

      This isn't about left or right here…here's just a few common facts with history

      1) The US economy and to a lesser degree the rest of the western world was built post ww 2 by the buying power of baby boomers. Tens of millions of people at the same age at the same time created booms in baby food in the 50's, muscle cars in the mid 60's, education in the 70's, real estate in the 80's and investments in the 90's

      2) There is NO historical presedent for "retirement". Otto von Bismark made up this age 65 thing at a time when the average german only lived until the age of 45! Europe picked up on it and later the USA. How can we believe in retirement at 65 when the life expectancy has grown so much. There is no civilization on the planet that had "retirement" other than having children and having them take care of you when you became elderly. Romans, Goths, Incans, Phoenicans, Tartars, Hans, Hmoung, Nubian, Arabs…take your pick..NONE believed in retirement.

      3) The population growth of the USA is largely based on immigration…not native births. I'm 30..I grew up with roe vs wade…condoms came into schools by the time I graduated. Heck I don't even want kids if I can't find a decent job.

      4) When the USA sneezes the rest of the world catches a cold. When the slowdown started in 2008 we had oil drop nearly 75% within a half year. In short the USA was never a nation of savers while the rest of the world was never a nation of shoppers (probably because of a lack of banking insurance). While it is true there is a middle class in China and India they don't exactly have the same faith as in the USA. I've been to china and they trust foreigners more than they trust themselves…that's odd.

  72. Amazing that Ashtabula County Sheriff's department has 49 employees and only one patrol car. What is everyone else doing??

    • Walking.

  73. The public sector unions and beuracracies are killing us. The huge military is killing us. And our allegience to unfettered free trade and open borders and unlimited immigration is killing us.

  74. Shucks, I thought deficits didn’t matter — The GOP’s mantra until a democrat took over the White House, then all of a sudden it now matters…..HMMMMMMM What am I missing here?

  75. The US is slowly getting worse, year by year. It's moving so slowly, in fact, that each year they don't realizes anything is wrong, and still believe that they are as powerful as they ever were.

  76. Yes, America will be a victim of her own success. And we all know when the USA gets sick, Canada catches a cold too.

    Hey Karnesy, you nailed it on the head.

  77. I'm not sure what "Third World" means to Savage or should mean to us.

    Is the Third World a place where there are people who are abjectly poor? Plenty of that everywhere, including the North America and Europe.

    Uneducated or under-educated people? A global problem/concern.

    Badly governed by stupid, corrupt officials? One finds that everywhere, including in the United States, and if what I read in Macleans is true…it is a problem in Canada, too.

    No National Health Service? Then, most of humanity is in the Third World.

    If you are a human being, you probably live in the Third World.

  78. Trust me, my wife and I have already thought of how to smuggle ourselves into Canada. Things get worse here, and they will, we are going to upper BC.

  79. 9/11 inside job

  80. Excellent article. And this is only the tip of the iceberg.

    Just recently, I watched a show on this very topic on the History Channel, it was titled "The Crumbling of America" – It is the scariest thing I've ever seen…well, not counting the warmongering, of course. The program starts by describing the empire (in those words) – which I thought was enlightening in by itself for them to recognize this monstrosity for what it is. It then drew a comparison between the Roman Empire and the [USan] Empire. They first explained how Romans built the most modern, advanced and wonderful aqueduct known to humanity but as soon as the warmongering started to rage, they let it go to pieces. They pointed out that deterioration of the infrastructure is always what marks the beginning of the decline of any and all empires. American infrastructure (roads, bridges, the electrical grid), they explained, earned the US its superpower status. However, although it was built with the best and most advanced technology of the time, it was only supposed to last 50 years. It's now been over 50 years since that expiration date. At the rate we're going, won't be back till we have dirt roads again, horse and buggies and we light ourselves with candles. But let the wars rage on for they are, after all, the ones making the rich richer and the poor poorer.

    The end of the USan Empire is in sight in more ways than one.

  81. Stop your spin, Prestowitz. US is going down because it's evil, and it's evil because it's run by evil scumbags.

  82. Apple i-PAD
    Service-sector (sic) value added:
    US: 77.4%
    Steve Jobs $70M salary
    Corporate HQ $1.23B operating costs
    231 American retail mall stores $3.4B operating costs
    Passive Investor dividends $0 B
    Cash on hand $40B
    American mall service worker salaries $41M ***(0.1%)*** <— worker share
    Japan: 12%
    S. Korea: 0.4%
    Taiwan: 2%
    China: 1.8%

  83. While the USA has been playing the superpower and spending enormous amounts of money of chasing Bin Laden and Saddam, and offsourcing its' manufacturing industry to China for the benefit of some happy few on Wallstreet, it has betrayed it's own people.
    Luckily the fourth power is on the side of those on the benefitting end of the current policy to keep the people ignorant about what's been going on. Everyone who has travelled the world, has seen and knows the US has been in decline since 20 yrs. Only when one walks around Washington the feeling is as how Rome must have felt a couple of years before the end. The place is not connected to the USA reality, but to the superpower status. It's a sham.

  84. Bob Dylon said it best with "sundown on the union" nobody paid attention,,,its time to revive that 30 yr old message,,,,yes why not have a good old revival,,,,Americans are good at revivals,,,,,

  85. Americans don't care about education or the future…..They're waiting for `Rapture` and then all will be okay !

  86. In Canada, there are a lot of taxes. I support that. I am coming from the middle class. Not the poorest, or the wealthest one. America has made a lot of mistake by spending on a lot of money and borrowing a lot of money from the world. That's how they are going to be third world. I am sure, the third world sound horrible. Canada might be next. I wish there'd be someone else like Jean C, the prime minister to help save Canada. Paying a lot of taxes is going to help to save Canada in some way because Canada owe over billion to the world. If Canada already owed to the world, and getting rid of the debt then Canada would be safe and won't be going to Third World. WAKE UP PEOPLE!!!!!!!!!!! If Canada is going to be in Third world, then all of us, good citzens will be broke and becoming like Amercian. Stupid Government and people. I'd rather die than see the world collapse.

  87. Many people seem to forget that Barack Obama is president of the US, not King of the Universe. He can't just say "I want it this way!" and have it happen. He has to get a certain number of Republicans to agree to vote for any legislation he advocates, and they won't, so that's that. It was also sad so see how "his" Democrats, that herd of feral cats, refused to support the vision of their own clear leader, who had received such enthusiastic and widespread support from the voting public. Now they're just going to lose, lose lose in every upcoming election — which will probably, and sadly, include the next presidential one — and the nut cases will be back in power, but this time with ghouls like Sarah Palin leading the way. I am thankful that we live in Europe now so my kids will get to skip the resurgence of the TCR (Truly Crazy Right). I miss home for home's sake, but I definitely don't want to be around for that particular Tea Party.

  88. fact of the matter is…the U.S, and everything about it…SUCKS!!!!…

  89. If the US spend that money as a government rather than merely handing the funds over to corporations they'd go twice as far. Anything private will eat up huge sums as profits that never return to the economy.

  90. Many of the comments here show a total lack of macroeconomics. There is no such thing as a national debt in a sovereign country. The United States did not even have a budget until the administration of Warren Harding. The Secretary of the Treasury doesn’t even need the consent of Congress to erase the national debt. The only debt that a sovereign country can have is a balance of payments debt.

    MONEY = DEBT. Your money is a debt instrument “A Federal Reserve Note” backed by the full faith and credit of the American people. Likewise, Treasury Bills and Treasury bonds are government debt same as money. Treasury Bonds pay interest and have expiration dates in order to make it worth the bearers saving in order to gain interest.

    Treasury Bills and Bonds are redeemable in cash, otherwise known as Federal Reserve Notes or Treasury Notes.

    Cash or Treasury or Federal Reserve Notes are Credits on the bottom of the government balance under liabilities sheet. This same cash or Bills appear on private balance sheets as debits at the top of balance sheets as assets.

    This system was set up by Alexander Hamilton, our first Secretary of the Treasury.  

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