The Cycle of Regimes

The classical philosophers called it the cycle of regimes. An obscure polis rises out of its obscurity. We happy few, we band of brothers, kick the snot of out all the other brother bands in the neighborhood, and become great. Bred as much by the want of bread as by by eating it, the generation of heroes is leavened with a taste for exertion and is all but immune to the charms of luxury. They seek power for freedom first, and dominion only because it is the proper ornament for their sense of honor.

Power, however, transforms poverty into plenty. The sons and grandsons of the great generation shed their forefather's virtues like winter coats under a noonday sun. Plenty consumes the power gave birth to it. The blood of ancient heroes nourishes itself on its own seed corn. Shadows grow ominously both within the city and around its borders. Fatted bureaucrats and comfortable guildsmen become alarmed. They are willing to do anything to restore the health of the regime, as long as it doesn't involve exercise or a diet. They may fear the coming darkness, but they hate anyone or anything that speaks with the voice of their ancestors.

Okay, so I got a bit carried away there. I will let you guess how the tale turns out. Just right now it looks a lot like our story. From the 15^th century to the present time, Europe grew in power. It grew at a magnificent rate. It transformed the world by its growth. The three great wars of the last century were perfect testimony to the stamina of that power.

In the last half century, things have changed. Consider the news from France. Roger Cohen at the New York Times has this:

Labor unions are mobilized, high school kids are out in force, oil refineries are struggling and more than one million people have taken to the streets as France rises to confront the government's decision to lift the retirement age to 62 from 60. Yes, you read that right: to 62 (and gradually at that.)…

I found Christine Lagarde, the French economy minister, in a combative mood. "Yes, we are going to hold firm," she told me. Then she gave me the math: "There are 15 million pensioners — every year we add another 700,000 — and already 1.5 million of them, or 10 percent, receive pensions financed by debt. We just can't go on like that."

The French now live 15 years longer on average than they did in 1950. They exist in a globalized economy where the Chinese don't get the notion of retirement. As for financing lifestyles on credit, I suggest the French strikers ask debt-deluged Americans about the wisdom of that — and the Greeks about unbalanced budgets.

If you are financing pensioners with debt, you are eating your seed corn. Everyone ought to be able to see that this is unsustainable. The French government sees it, but it has to resist a very powerful wave of offended entitlement. Greece is much further down the road to disaster, and accordingly the wave of protest has been all the more furious and violent.

So where are we Americans? Our great pension program, social security, which we have pillaged for decades, is now going into the red. Just at this moment, when trillions have been spent to rescue a faltering economy, the President and Congress pushed through a health care reform bill that will add trillions more to the bill. All of this is being financed through debt. Our budget deficit this year is what? Well over a trillion dollars.

History isn't destiny. There is no reason that we cannot recognize the error of our ways and correct it. The United States is in many ways in a better position than our European allies. We have a Tea Party movement. The push for fiscal responsibility is coming from below here.

The fatted bureaucrats and comfortable guildsmen (see unions) have so far been protected with benefits that most Americans do not enjoy. They and their allies in the dreamy media hate anyone and everyone who says that we can't go on like this. Maybe, just maybe, the virtues of our fathers are not yet dead.

Comments

[A.I.]

You know KB, statements like the following make it difficult to engage in civil discourse:
"Our great pension program, social security, which we have pillaged for decades, is now going into the red."

You ignore the commission formed in the 80's to address long-term Social Security solvency. It was obvious then that the program would need to build up reserves to remain solvent when baby boomers began retiring. So reserves of some 2.5 trillion dollars were built up and invested in a special series of U.S. treasuries. You say the system is going into the "red" when in fact it is doing what was planned for years ago, it's drawing on reserves.

As for "pillaging", what exactly would be a better place to put the surplus money Social Security generated over the last quarter-plus century? I'll take financial instruments backed by the full faith and credit of the United States over Wall Street any day.

If you want to have a serious discussion of Social Security issues, start with facts. If you simply want to scare people with--harking to one of your earlier posts, "weaselly" talking points, keep doing what you're doing.

[Miranda Flint]

Reuters seems to have gotten the same talking points:
http://www.reuters.com/article/idUSTRE69E36L20101015

"Social Security faces increasing financial strains as the 77-million-strong baby boom generation retires. Social Security trustees said in August that the program's trust fund would be exhausted in 2037 and the program would only be able to pay out a portion of promised benefits."

Those Weasels! Don't they realize that the program is doing what it's supposed to be doing? And what about President Obama and Nancy Pelosi? Why are they writing checks to seniors? (http://content.usatoday.com/communities/theoval/post/2010/10/obama-seeks-250-checks-for-seniors-/1) Back off, guys! The system is working!

On a more serious note, when Dr. Blanchard says we have "pillaged" social security, he makes the same point that Democrats like Al Gore have made when they have said that the government had often used money that was supposed to be set aside for social security, and used it to fund other programs.
Gore was so distressed by the idea of this "robbery" that he said, repeatedly, that he would put social security money in a lockbox.

Now, maybe Gore was wrong. Maybe Obama and Pelosi are too. But just now, it seems like the left and the right have the same talking points. Maybe there's a reason for that.

[Donald Pay]

Hey, why don't you stop being a hypocrite and propose gutting the South Dakota retirement system? You don't need any of that money, and it should be returned to the taxpayers, according to how long they lived in South Dakota. The fatted bureaucrats and professors should realize they get benefits that most of us don't.

Boy, that Roger Cohen doesn't know much. The Chinese have a retirement age, and about 20 percent have a pension. There is talk of raising the retirement age and equalizing it (men have a retirement age of 55, women 50). People can, of course, work longer. In China the children are expected to provide for their parent's retirement. Children can be sued if they don't provide an adequate retirement.

[KB]

A.I.: my friend I love you and salute you. I miss the days when you were a regular contributor to these pages. Like my friends Bill F. and Donald, you made it a more interesting read. Also you kept me honest, which takes some doing.

On this matter, however, I believe you are confused. No doubt you have seen my more recent post replying at length about the Social Security Trust Fund. I also think you have a very jaundiced view of public financing. You think that government securities, backed by "the full faith and credit of the United States" is more trustworthy than "Wall Street." I hate to break it to you (actually I love it), but all the real wealth comes from Wall Street and from Main Street. Money is only real if it represents something worth buying. The latter is produced by the private sector.

States invest their pension funds. They have to because they can't print money to cover their obligations. Ponder that for a while.

At any rate, the full faith and credit of the U.S. is worth something only as long as investors have faith in and give credit to the U.S. Nearly three trillion dollars in debt accrued over two years might not contribute to confidence. That was my point.

Miranda did what I thought of doing, but did not. She referred to Al Gore's "Lock box" argument. If Al Gore knew that Social Security was in trouble, I figure that anyone could see it.

Donald illustrates why restoring Social Security to solvency is so difficult. Anyone who points out that the system is going belly up is accused of wanting to destroy social security or "gut the South Dakota pension system." I think that anyone who wants to make sure that these systems survive has to confront the reality facing them.

There is no guarantee that we will fix the system. Look at Greece now. They can hope for someone to bail them out. If the U.S. goes insolvent,well, after us, the deluge. That was my point.