The Hard Way

74
Thu, Mar 19, 2015 - 8:30am

We had this dirtbag cold, and we knew his racket. The boys brought him in and McCluskey and I gave him a chance to come clean. “Alright Tico, listen carefully. You know what we want. We can do this the easy way, or we can do this the hard way.” I should have saved my breath.

They always choose the hard way.

The avoidance of pain in the short-term, otherwise known as kicking the can down the road, has been the default position of our politics and culture for several generations now, and has left us with a gargantuan can that is increasingly impossible to kick. We took the easy path every single time, narrowing our options with each and every choice until there were no longer any good choices to make. Now, all we are left with is the hard way.

Not only are the signs of this everywhere, public awareness of our untenable position is growing daily, despite the best efforts of the media/establishmentarians to suppress the disquieting reality of the situation. I have noticed that core parts of Turd’s famous “TEOTGKE” hypothesis (that the great seventy-year Keynesian experiment subverting free markets and the law of supply and demand through easy money creation and central bank control of the economy is grinding to an ugly and inevitable end) are becoming more and more common in the mainstream. Conspiracy theory turning to conspiracy fact. What was once the sole province of the tinfoil-hatted, the goldbugs, and other supposed “fringe” elements is now becoming mainstream knowledge. Indeed, many of the central ideas that have animated the PM community are now leaking out into the wider consciousness in ways that are increasingly visible.

AceofSpadesHQ is a highly trafficked Libertarian leaning blog with an anarchical comments section that calls itself ‘the moron horde’. One of the regular contributors, named Monty, blogs once a week on economic news in a series he cheekily titles “DOOM!”. A recent news round-up of his featured this side-note by Monty, which could very easily have been posted at TFMR:

Still no love for us goldbugs out there in econo-land. That's okay. I've become comfortable with being the crazy uncle at the family gathering. As long as it keeps the price of the barbaric yellow metal down to affordable levels, I'll indulge the foolish love of my peers for their fiat paper. (Every time I buy something with cash, I feel an atavistic little thrill of passing off what amounts to Monopoly money for real stuff. I feel like I'm getting away with something. But then I remember that my daily wage is also being paid in those federal IOUs, and my thrill fades.) : https://acecomments.mu.nu/?post=355004

People are noticing the cracks, and you see glimpses of it in places you never did before. Leftist Huffington Post writer David Russell just posted an article describing, contra the official Obama narrative, how actually crappy the economy has been for the majority of working people while benefitting the top 1%.

Unsurprisingly, he fails to come to terms with the inconvenient fact that 1. His party has been in charge of this economy for six-plus years and their policies have contributed mightily the situation he now laments, yet 2. He calls for more of the same as the solution. What did surprise me was that while Russell titled his article “It’s the economy, stupid”, the very first comment to this post simply replied “It’s the government, dummy”. Not a notion I would expect to see in the HuffPo comments section.

The fact that labor force participation rate has dropped to a 37-year low has now become common knowledge, receiving mentions even in mainstream outlets like Bloomberg and Barron’s .

Yet even this frightening metric vastly understates the true degree of precariousness of our present condition. Ask yourself this question: is it realistic in today’s economy for a single person to support him or herself, AND to totally support three other people at the same time? To produce so much surplus that they feed, clothe, house, pay for medical care and all the expenses of life for three other people in addition to themselves? Well I guess it must be, because we are all doing it right now.

Total US population is around 325 million people. Government assistance is at 107 million and is now larger than the working population, which is just 100 million. We have crossed the Rubicon. Additionally, 25 million of those 100 million counted on the ‘working’ payrolls are employed by the government (and therefore, by definition, do not create wealth, profits, or surplus), so what we are left with is a system in which 75 million people are supposed to toil to create enough total wealth to support the remaining 250 million.

So out of every 4.3 people in the US, only one works to produce a surplus. Or you could say that every working, surplus-producing person has to produce enough to entirely support 3.3 people in their every need, in addition to providing for themselves. These 75 million are all that remains of the once mighty middle class in this country, the shrinking foundation upon which everything else is constructed. These people drag themselves out of bed every day, down their cup of coffee, then slog off to work to earn their keep… plus enough for 3.3 others as well. A grateful nation rewards these 75 million brave souls by besieging them with new taxes, regulations, obligations, and laws, and treats them with scornful condescension though a media and intelligentsia that disdains their "retrograde" middle class culture, sports, hobbies, and religious beliefs.

People are noticing. Professor and classical historian Victor Davis Hanson commented trenchantly on the increasing “under siege” mentality of ordinary Americans on whose backs the entire edifice rests:

For bewildered and increasingly quietist Americans, the center holds mostly in family, religion, a few friends, the avoidance of the cinema and nightly news, the rote of navigating to work and coming home, trying to stay off the dole and taking responsibility for one’s own disasters — as the world grows ever more chaotic in our midst.

Efforts to escape from the madness are now epidemic. Home-schooling. Gun ownership. A second home in the mountains. A trunk of freeze-dried food. Kids living in the basement. A generator. Some gold coins. A move to Wyoming. An avoidance of the old big cities. A careful and narrow selection of channels on cable TV. A safe room or escape plan. And on and on.

There is a strange new and dangerous sentiment brooding below the spoken surface that whatever is going on in the world and in America today cannot go on much longer…

We all know what follows from this — either the chaos grows and civilization wanes and tribalism follows, or we see the iron hand of the radical authoritarian Left or Right, or a few good people in democratic fashion convince the mob to let them stop the madness and rebuild civilization.

I hope for option three. I fear option one is more likely at home. And I assume that option two will be, as it always is, the choice abroad.

.

At some point in the last 40 years or so, we could have chosen short-term pain (a brief recession, fewer entitlements, balanced budgets, etc) and secured long-term stability. Instead, we chose the easy way.... every single time. Now the consequences are settling in with a finality that is becoming increasingly evident to all but the most clueless observers. A baffled, besieged middle is waking up to the fact that both parties will fight any reforms tooth and nail, that change through political processes is impossible when there is no opposition party. They are slowly starting to hunker down, withdraw, husband their resources, and wait to see what happens. Those who aren't doing these things can deny the obvious all they want, but something tells me they will learn soon enough. The hard way.

About the Author

  74 Comments

AJwhiteshirt
Mar 19, 2015 - 9:50am

Wiki primer on China Bank

32 countries now signed on to use the bank including many US ally countries.

The bank will clear trade in Yuan and become operational by the end of this year.

This is getting interesting real fast.

https://en.wikipedia.org/wiki/Asian_Infrastructure_Investment_Bank

erewenguy
Mar 19, 2015 - 9:54am

"They are slowly starting to

"They are slowly starting to hunker down, withdraw, husband their resources, and wait to see what happens."

I live in a small town and admittedly it's sometimes hard to gauge the level of economic activity from my own window. But what I see:

Increase of second hand shops opening.

Little private sector building - only two new construction business facilities built within the past 3 years (one for social services, one was a dollar store). Some conversions of existing empty mini-mall type buildings to new use.

Restaurant business dropping off

Theater nearly empty.

No new entertainment or activity businesses opening.

State and local government paring services and benefits, but not taxes.

Increasing "nuisance laws" that carry the penalty of fines.

Definitely an "under siege" mentality.

boomer sooner
Mar 19, 2015 - 10:16am

Thanks Pining. What a great

Thanks Pining. What a great group of contributors!!! We are very lucky to have a group who can put their thoughts on "paper" in a way that is understandable and meaningful. Fantastic reads all week. Miss the podcasts tho. Can't get that tune out out my head.

Libertybella
Mar 19, 2015 - 10:17am

Work Force Metrics

Great article Pining!

With so many people out of the workforce maybe there is a "silver" lining ( no pun intended).

All of these people now have more time on their hands to get involved politically, make their voices heard, and demand big changes to our political process...UNLESS.....all of these people are just fine with losing middle class status and living off the governments dole. Time will tell which way it will go....and we will get what we deserve in the end.

Trying to remain cautiously optimistic.

-Libertybella

AIJ
Mar 19, 2015 - 10:29am

Clueless

Pining, a metaphor, "CRACK! , it's over the wall !"

"Now the consequences are settling in with a finality that is becoming increasingly evident to all but the most clueless observers."

Unfortunately, in my world, the vast majority are clueless.

So Cal, the last to fall?

It truly is like living in the matrix after you have taken the red pill.

Mar 19, 2015 - 10:35am

Thanks Pining

I'm wrapping things up today with LT#1 and traveling home.

Normal service will resume tomorrow. In the meantime, you can see that we are still battling that same downtrend line that was the border of the pennant tow weeks ago.

infometron
Mar 19, 2015 - 11:08am

From bad to worser

Sobering thoughts, Pining!

What has my head not only spinning but reeling is that of the 75 million, a significant percentage of those are engaged in a financial industry that has been sucking the life-blood out of the economy for at least three decades now!

Mar 19, 2015 - 11:14am

Fantastic Post, Eloquent, Somber, and Captivating

Pining my friend: that was a stunning post! It captures the essence of the situation perfectly.

Let me ask you this, and please weigh in when you can:

How have the past five years changed you and your outlook, personally?

I know I have changed dramatically, and I have the scars and stack to prove it. But it is more like a somber acceptance of the reality that helpless people, unaware of reality by choice or otherwise, are just unable to comprehend what awaits. I'm a bit more jaded, but also simultaneously much more empathetic because I realize many people simple have not the capacity to accept the truth of the situation. And I realize that many people do not want freedom of choice, they want freedom FROM choice.

Your writing reflects great wisdom and exceptional insight. Thank you for all you do!

goldcom
Mar 19, 2015 - 11:38am

Pining thank you

Thank you for your thought provoking article that is laid out in a way even some sheeple can grasp.

erewenguy your list of notable downturn examples is good, especially the:

"State and local government pairing services and benefits, but not taxes."

Not only is their no taxes but these government endeavors push out any private sector involvement that is of similar service.

In my left coast state of Washington many private Doctor Clinics are closing because the the insurance companies pay 30 to 40% higher fees to regional non profit community Hospitals for the same procedures as the private clinic might do. This obummercare this is dispicable!

Some years back a friend of mine had a transportation company that did some airporter services transporting people to Seatac some 80 miles away and he also got into taking people to medical appointments including vans that could service wheelchair patients. Soon the County bought some smaller wheelchair accessable buses and began the service for free to patients locally.

My friend proved he serviced the same as the county for half the cost but did have to charge a fee. My friend finally went broke as the airporter service wasn't enough by itself to keep him going. How can you compete with free?

I owned a trash collection business in the same rural county which I wasn't hauling a very high percentage of customers till I looked into the County owned Transfer Stations operations and found that they were only charging 15% fees to customers of what their actual cost was. 85% subsidized, practically free!! The county was receiving most of the revenue to pay for this service from the private landfill where my trucks unloaded. The county added on additional fees for themselves. So in essence I was competing with my own tax dollars.

I raised some hell with the county threatened to take it to the press and got them down to 60% subsidized and I gained a lot of customers after that, but I'm not sure that threat of taking it to the press would work anymore.

So when you see your state or local government doing a service it is probably because either regulation pushed out the private sector option or some jackass socialist politician with his abiding staff push these services out to the public for a much higher actual cost in most cases and the private sector can't compete.

It is no wonder State, Local and Federal government is half of our GDP. This trend couldn't happen if we didn't have government loving Progressives and a media corpse that investigates nothing anymore. We just need some accountability in our systems again. This trend also requires a monetary policy as we have to make it work.

CaptK
Mar 19, 2015 - 11:45am

The Hard Way

"So out of every 4.3 people in the US, only one works to produce a surplus. Or you could say that every working, surplus-producing person has to produce enough to entirely support 3.3 people in their every need, in addition to providing for themselves. These 75 million are all that remains of the once mighty middle class in this country, the shrinking foundation upon which everything else is constructed. These people drag themselves out of bed every day, down their cup of coffee, then slog off to work to earn their keep… plus enough for 3.3 others as well. A grateful nation rewards these 75 million brave souls by besieging them with new taxes, regulations..."

I believe that the above and other paragraphs following it are true only if the USA ran a balanced budget. If that were the case the system would be sustainable. Unfortunately the government does not take in enough from businesses and working people to do so and borrows heavily to bridge the gap. It is both the contribution of the workers and the debt that support "the 3.3 people in their every need". I do not know the percentage each supports. Am I missing something Pining?

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