General

Your ‘downturn,’ their ‘upturn’

Still foolish enough to be in the private sector paying for the benefits of the public sector?

Your ‘downturn,’ their ‘upturn’

Image by Everett Collection

I can’t remember exactly when I first encountered a pop-culture jetpack. Was it James Bond’s, courtesy of Q, in Thunderball? Or was it some comic book? At any rate, I no longer have to wait for mine. Martin Aircraft of Christchurch, New Zealand, have put one into production, for the cost of a top-of-the-line automobile—or about $100,000. It’s not clear to me where you’d be able to fly it, since government air-traffic agencies don’t seem eager to contemplate a world of individual human flight patterns. But still: the Bond jetpack is belatedly here.

Other than that, the future seems unlikely to be quite as futuristic as expected. The problem facing the developed world isn’t so very difficult to figure out. We’re living beyond not just our means but everybody’s means. You can strap on your jetpack, but where would you go? In the United States, Andrew Biggs of the American Enterprise Institute calculates that if the federal government were to increase every single tax by 30 per cent it would be enough to balance the books—in 25 years. Except that it wouldn’t. Because if you raised taxes by 30 per cent, government would spend even more than it already does, on the grounds that the citizenry needed more social programs and entitlements to compensate for their sudden reduction in disposable income.

In Canada, the average household’s debt-to-income ratio reached an all-time high in 2009. Credit-card holders at least three months behind with their payments increased by 40 per cent.

In Greece, public sector workers are rioting over the right to continue retiring at age 58.

In Wales, Northern Ireland, and Scotland, government spending accounts for between 73 and 78 per cent of the economy, which is about as high as you can get without embracing full-scale Sovietization. In the English city of Newcastle, three-quarters of the working population are employed by the government.

The state spends too much. The individual spends too much. The state hires too many people on whom it lavishes too many benefits. Those foolish enough to remain in the private sector have to pay for the benefits of the public sector, and thus fund both their basics (housing) and their baubles (plasma TVs) through debt.

Nobody is going to raise U.S. taxes by 30 per cent—or at least not in one fell swoop, not when American businesses already labour under the highest corporate tax rates in the OECD. Washington’s approach to the runaway train is to shovel more coal in, on the grounds that the precipice is most likely further away than it looks. In economic terms, I’m not sure you can even call this “Keynesian,” since John Maynard of that ilk would surely be surprised at the claims on the public purse in the name of “stimulus”: $71,623 of said stimulus went to pump monkeys in North Carolina full of cocaine. Don’t ask me why. Vital work, no doubt, and maybe even socially beneficial, in that every line of coke hoovered up some chimp’s schnozz is one less going up yours. Nonetheless, it’s not to be sneezed at. You pay peanuts, you get monkeys. But, for coke-fiend monkeys, you need the best part of 72 grand.

Even if you’re not on federal cocaine, this is a grand time to be a government worker. You know that “economic downturn” you hear so much about? It goes away if you work for the government! Indeed, you get an economic upturn. USA Today reports that at the start of the “downturn” the U.S. Department of Transportation had just one employee earning more than $170,000 per year. Eighteen months later, it has 1,690. Another 1,690 federal orangutans with expensive drug habits would be a better deal for the taxpayer. A U.S. government employee gets an average $41,000—that’s not salary, that’s in additional benefits.

The new class war in the Western world is between “public servants” and the rest of us. In Greece, the bloated public service has leeched so much out of the economy that they’ve run out of Greeks to stick it to, and require an intervention by the European Union. Likewise, the debauched public sector of California is pinning its hopes on federal largesse. At a certain level, American public opinion understands this. It’s why Obama has fallen so far so fast. Fourteen months ago, it seemed like a smart move to make “trillion” a routine part of the Washington lexicon. Now all its many citations do is remind even the most innumerate that the Democrat project is a crock, and the word itself is merely shorthand for “money we don’t have and will never have.”

Your ‘downturn,’ their ‘upturn’

Photograph by Yiorgos Karahalis/Reuters

This isn’t “climate change,” dependent on this or that predictive model. This is the certainty of disaster. And yet the only certainty is that Western governments will continue to grow the state at the expense of the market: they will create more regulations requiring more agencies with more expensively paid public-service union employees. Not all of this growth will be intentional; much of it will happen under various desultory hiring and wages “freezes.” But, because government is immune to normal pressures, unless you’re actively shrinking it it always grows.

Much of the above is about numbers, costs, and other economic indices. But at least as telling is the psychology. A couple of years ago in this space, I quoted a reader who thought I should lighten up: “We’re rich enough that we can afford to be stupid.” This is presumably the thinking behind California public education. Its teachers are the highest paid in the United States, and its schools are among the worst. Since my reader’s cheery assurance, we’re a lot less rich but seem determined to be even more stupid. Americans spend more on education than anyone but the Swiss, and have the least to show for it. In London, New Labour ministers still fall back on stillborn invocations of “the knowledge economy” that will always make Britain an attractive place to do business because of the “added value” of its educated workforce. Are you serious? Have you set foot in an English state school in the last 15 years?

In The Time Machine by H. G. Wells, a fellow in late Victorian England saddles up the eponymous contraption, propels himself forward and finds himself in a world where humanity has divided into a small, soft, passive, decadent elite, the Eloi, among whom one can barely tell the boys from the girls, and a dark, feral, subterranean underclass, the Morlocks. This is supposedly Britain in the year 802,701 AD. That’s the only thing Wells got wrong: the date. If he’d set his time machine to zip forward a mere hundred years or so to the early 21st century, he’d have been bang on target. The historian Victor Davis Hanson thinks Wells’s tale sums up his fellow Californians, too. The new Eloi expect to be able to enjoy all the benefits of an advanced prosperous society while erecting a regime of sentimentalized regulation that will make its continuation impossible. The new Morlocks demand iPods and video games and other diversions they regard as their birthright but are all but incapable of making any contribution to the kind of society required to produce them. As for Canada, though not yet in the advanced state of decay of the formerly Golden State, those debt-to-income figures are following the same path. At the dawn of the Reagan era, America was the world’s largest creditor nation and its citizens had a 10 per cent savings rate. Not today. To Lord Keynes, a government treasury was not a family purse: the state, unlike the household, could go into debt to “invest.” Now, the family purse has caught up: governments and individuals alike borrow extravagantly—and to consume rather than invest in any meaningful sense.

Swimming into view come rising powers—India, Brazil, China and others, all with problems of their own, but not wedded to the proposition that great nations can squander both their inheritance and their children’s future without cost. Decline is a choice. The selfish pampered profligates of the postwar West made theirs, and for good measure and to ward off the day of reckoning consigned their kids and grandkids to it, too. It would seem to me unlikely that the next generation will be willing or so easily diverted by electronic novelties to reduce themselves to serfs in a vain attempt to sustain an unsustainable system. So something will happen: Greek riots? Total societal collapse? Best to keep the jetpack fuelled and ready. If you can find somewhere to go.