Professor Schaff's recent post on SDP should cool the blood to the same temperature as the water in Aberdeen pipes. There is something very disconcerting in the sums of money that the government is already shelling out. When you add the trillion or so that Obama has promised to spend to the many trillions promised by social security, Medicare, and Medicaid, you almost need scientific notation.
But I am a simple minded fellow and all those numbers confuse me. So let me point out a couple of structural problems. One is that the United States has an aging population. Our social system has rested on younger workers paying into government programs, while retirees benefit. But since people stopped having babies, there are fewer of the former and lots more of the latter. Sooner or later that is going to catch up with us.
The more immediate problem is that the current crisis threatens to undermine the trust on which the modern economy is built. Anne Applebaum points her practiced finger at the hole in the dike.
Scene 1: We are buying an apartment in Warsaw, Poland, sometime in the early 1990s. At every stage of the transaction, both my husband and I have to show up in person, stand in line, and present identity cards. We appear at the notary's office more than once. We appear at the tax office more than once. Finally, we are asked to hand over a briefcase full of dollars. The seller will not accept a bank transfer and does not want to be paid in his country's currency, either.
Scene 2: We are buying a car in Washington, D.C., sometime in the early 2000s. We test-drive a few and tell the dealer which car we want. We hand him a personal check, which he accepts without asking for an identity card. My husband asks if he isn't worried the check will bounce. The dealer laughs, and we drive out of the dealership in a brand-new car.
That is the difference between a healthy, productive economy, and a retarded one. It is not something that can be weighed and measured. It is spiritual rather than physical. But it is the catalyst of all civilized economies: can you trust your partner in any exchange or contract?
Right now that basic trust is under assault from many directions, and both sides of the aisle deserve blame. Bernard L. Madoff's billion dollar Ponzi scheme, the product of one man's greed and self-deception, threatens to topple charities and banks across the world. This con job was so obvious that it should have been caught in its infancy. That it wasn't, is something Bush has to answer for. His federal watch dogs were asleep. The subprime loan crisis, on the other hand, originated in attempts to make more home loans available to minority lenders. That meant weakening the safeguards that were supposed to keep people from borrowing more money than they could pay back. That is something Democrats like Barney Frank, and liberals in the press, are responsible for.
Maybe Barack Obama should be less concerned about the American auto industry, and more concerned about the difference between contemporary America and 1990's Poland.
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