Sclerotic America

A recent article in the New York Times reviews the dire straits of America’s Medicare and Social Security funding, with insolvency scheduled for 2017 and 2037, respectively. Piled on top of this is the question of how to fund broader public health care, with the apparently intractable problems of worsening demographics, inexorable rises in health care costs, the contradictory claims of restitution for malpractice and keeping insurance costs under control, and the varied and vociferous interests of the insurance companies, HMOs, corporate health plans, Big Pharma, doctors and nurses. But this impossible tangle – a conflation of the hydra and the Gordian knot – is just one of America’s many problems.

Immigration is just as bad: an impoverished population of about 100 million in Mexico and Central America, desperate to get in; a permeable border which cannot be controlled; the domestic cluster of a Latino voting block, left-leaning Dems, nativist Republicans, low-wage workers under never-ending pressure from even lower-wage illegals, the immigration bureaucracy, employers in meat-packing, fruit-picking and other low-margin businesses relentlessly seeking to cut costs even further, high-income earners (even in the upper reaches of government or progressive academia) who need cheap nannies and affordable domestic staff.

And then there’s crime. And prisons. Homeland Security. The insoluble problems of the underclass. Infrastructure, already underfunded by many years and trillions of dollars. Education, with its stagnant test scores, rising international competition, intransigent teacher’s unions, millions of kids with issues, millions of kids on pills, millions of kids who don’t want to be anywhere near a class room; no viable approaches to dealing with disruptive behavioural problems in class; a totally polarized debate about charter schools.

And the War on Drugs. A failure, to which the alternative is most likely just a different kind failure. The underlying issue is that America has, in spots at least, a deeply-rooted drug culture. As with guns, homicide and prison population, so with recreational drug consumption: the US is just running away from the rest of the developed world. While decriminalizing pot might be a sensible palliative option, for full effect complete legalization, including taxation, would be required; otherwise organized crime will retain the revenues. The question of what to do about crack, smack and crank is well beyond anything any elected official will even consider mentioning. The problem is that if there are enough people in the habit of taking these substances to be a problem, well, then you’ve got a problem . . .

Energy and the green economy. Holy. Switching the power consumption habits of a third of a billion people. Running mass transit on a suburban and exurban network built for the car. Nuclear liability insurance. Nuclear waste and NIMBY. Clean coal. Wind farms. Cutting CO2 while a certain large, well-known Asian nation roars ahead and sucks up even more manufacturing capacity. How to stop funding the gallery of quasi-criminal states (well, excluding Canada) who supply the oil; without making it even cheaper for foreign competitors, specifically aforesaid large country in Asia with extensive manufacturing capacity. Toss on expanding debts, bankrupt states, trillion-dollar deficits for as far as the political cycle can see. The military budget. Tort reform. The uncontrollably metastasizing tax code. Regulation. Banks right now are struggling with waves of mortgage refinancings and having to hire new staff to cope with the enormous amounts of paperwork for what should be an elementary financial transaction. Waves of financial regulation to come and armies of bureaucrats and bankocrats to implement them. Regulators for “systemic” financial risk. It might be unmeasurable, or even undefinable, but that doesn’t mean we can’t get our people on it. Lots of them. A 25-year expansion of credit, which has ended with financial sector debt standing at about 120% of GDP, compared to 20% in 1980. Overlevered governments, corporations and individuals who will need many years to delever their balance sheets, if in fact they ever do.

Which means, finally, that the robust growth which kept the system oiled over the last two decades is likely to dry up. No more consumers to keep it going. And without the extraordinary economic vitality which has hitherto covered up the multitude of its sins, America is suddenly going to start looking a lot less attractive. Some commentators have compared the US to GM – dynamic in youth, still robust in middle age, but finally overtaken by the sum of its misjudgments and all at once old, frail and perhaps incurably sclerotic. From California, arguably the quintessence of America, the rumour is that governor Schwarzenegger has grown sick of politics and can’t wait to get out, evidently recognizing that the tectonic gridlock is far beyond the power of a mere gubernator to affect in the slightest. America has deep and serious issues, a mass of politically intractable problems whose significance has been grossly underestimated during the long boom of the last two decades. As Jack Rebney would have it: no more.