Disquieting Observations on the State of Civilization

Victor Davis Hanson has penned an article worth reading (as is often the case with Mr. Hanson). I learned of it from Henry Mark Holzer (Ayn Rand's attorney). The Last Generation of the West and the Thin Strand of Civilization

(Edited by Steve Wolfer on 1/21, 9:39am)

Post 1

Tuesday, January 21, 2014 - 11:18am

Here is another Victor Davis Hanson column, Facts, Democrats and the JFK Legend. Although it is mostly about separating myth from fact regarding JFK, it ends with a paragraph or two about the evolution of the Democratic Party since the late 60's. I'm intrigued by the massive transformation that took place with so little fanfare, so little notice in the public space. I can only hope that the Republican Party transforms itself as completely into a party that supports the libertarian principles.

Post 2

Wednesday, January 22, 2014 - 5:00am

Objectivism holds life as the standard of value and a certain kind of life as a purpose in itself.

When that certain kind of life becomes impossible or at least highly unlikely, where leaves that condition ... us?

The more time passes and the worse things get, the more I am convinced of the rightness of my choice not to reproduce since I have no interest in subjecting others to what is happening right now.

(Edited by Luke Setzer on 1/22, 5:00am)

Post 3

Wednesday, January 22, 2014 - 9:53am

Luke,

It can be depressing at times to see that politically and philosophically things are getting worse. But more and more I am less interested in the general population's path. Thier self destructive policies may lead to thier end - the hard way. Maybe it makes our lives more exciting trying to succeed in such a world.

I still think my son can find happiness. I think he will have a great advantage learning from me all the things I had to learn on my own in the face of a society with misconstrued and manipulative ideologies.

(Edited by Dean Michael Gores on 1/22, 9:54am)

Post 4

Wednesday, January 29, 2014 - 2:48pm

Steve,

re post #1:

Yes, JFK seemed to have been a moderate, not a liberal. This is how he got elected. Stevenson, the connsumate liberal ,lost the two previous elections and the democratic party had had enuf'.

But what's interesting, still, is the context in which his moderate-centrism flourished. To wit, both he and Nixon, a Republican, moderately enough, both accepted the tax rates which, by today's standards were European, sky-hi, with 75% at top bracket.

So it's within this fundamental context of far-larger available tax revenue that debates over spending levels occured. And because everyone accepted the basic Keynesian principle, spending could be cut because the economy was humming along.

The left of the Democratic party, while obviously accepting Keynes, pushed for social-spending legislation as part of what the government's responsibliity was to its pooer citizens. Kennedy, oth, believed that the answer was a larger investment in the private sector--a posture that still defines the right-left divide.

Enter Johnson, the liberal: we have the resources to delare a war on poverty, so let's spend them. enter Vietmanam and 'guns vs butter'--not both, at the same time...

My theory, speaking as pro-private, is that the issue has drastically heated up because of the tax reforms--first Carter, then Reagan, '76-80. In other words because tax revenues have decreased, there's commensurately greater pressue on available resources and for the government to extend credit to itself--'deficit spending'.

What's curious is how the so-called socialists (scum?), that certain fissiles define as the 'Americamn left' have not uttered a peep that the tax bar should be raised to pre-1976 levels. Well, hooray for that; by far the largest consequence is that by literally halving the tax rate, pro-capital has won a significant victory.

As for what Kennedy or even Nixon would have done, it's moot. They both lived in another universe, far away...

Eva

Post 5

Wednesday, January 29, 2014 - 3:19pm

Eva,

...it's within this fundamental context [high tax rates of earlier years] of far-larger available tax revenue that debates over spending levels occured.

The Laffer curve principle tells us that higher tax rates may reduce tax revenues.

...because everyone accepted the basic Keynesian principle, spending could be cut because the economy was humming along.

Which 'basic Keynesian principle' is that? Hopefully, you aren't saying that big tax revenues or big government spending make the economy hum.

...the answer was a larger investment in the private sector

A small quibble here.... We shouldn't use the language of 'investment in the private sector' because "we" have no rights, as a collective, to the money of investors, producers, savers or other private individual. They choose how to invest. And they are really investing, as opposed to redistributing or just plain confiscating. It would be better to say that government should be funded as fully as needed to meet the minimun constitutional requirements but no more.

...tax revenues have decreased...

Tax revenues have increased, despite the decrease in tax rates. Partially due to the the laffer curve principle, and partially due to the population increase and other factors.

...by literally halving the tax rate, pro-capital has won a significant victory.

Yes, to a degree. But, as you pointed out, the big spending advocates have gone into heavy borrowing, and heavy creation of fiat money. And there are many, many more hidden taxes and higher state and local taxes, as well as more fees, and regulations - all of these add to the burdens businesses carry.

Post 6

Wednesday, January 29, 2014 - 3:58pm

Steve,

Keynes equally said that we should reduce government spending during good times, while fully using government tax resources (as credit against deficit spending) in bad times. This chestnut has been lost due to contemporary rhetoric as to what Keynes was about.

Laffer padoodled his function ('curve') on a classroom blackboard to offer a demonstration as to how mental modeling of a problem can obtain mathematical form. In other words, "As we can hypothesize a relationship between taxation and available funds for investment, here's what our thoughts would look like on a cartesian plane".

But to make a hypotheses real, you need numbers which, in this case, have never existed. In other words, we really don't know what a real tax/investment function would look like.

All we can say is that it's common-sense to suggest that either companys are taxed or possess said as untaxed--by which they may spend on, say, higher paid profits and dividends to self and stockholders, pianos on private jets, gambling on Wall Street or (!) investment in the comany's workable assets.

Laffer said that, too. Two-D models are annoyingly ceteris paribus, yes?

Talking about the 'morality' of government investment of tax revenues is not the lingua franca of contemporary tax policy, regardless of levels. The morality that 's used is strictly utilitarian: "given an assumption that such-and-such needs to be done, the necessity of getting it done superceeds your metaphor of theft. So either you'll do it (ie create more jobs), or will take it from you and do it ourselves".

That's why I confine my own espousal of free-markets to private effectiveness and to ostensibly question the heeds that liberals claim to exist.

The argument that the governmnet has no right to tax per a particular interpretation of the constitution would need to be addressed on the level of constitutional law per se. It's simply useless to discuss what one, personally, feels that the constitution means.

Eva

Post 7

Sunday, February 2, 2014 - 9:16am

Eva:

Can't let youget away with cherry picking JFK's America.

75% highest marginal tax rates?

1] What was the payroll tax paid by broad Americans(and not six guys with lousy CPAs in the 60s)

2] What was the size of the federal overhead that 180 million Americans supported? JFK's budget was about $100B, over half of which was for defense at the peak of the Cold War.

We can population (316/180) and inflation (now .49/.06) adjust JFK's $100B to about $1400B or $1500B today.

Normalization to GDP also does not fare well; JFK was well under 20%, we are well over 25% today. But normalization to GDP is only reasonable in centrally planned, command and control economies such as the failed USSR. In a free nation, it is not the function of government to spend a constant(or God help- us, increasing)fraction of GDP. In a free nation, as the result of increases in productivity, the sign of efficient self government would be an every year decreasing % of GDP as overhead on the nation's economies.

I didn't include productivity gains in the adjustment of JFK's $100B. JFK's era was 50 yeara ago, and even, 3 years before IBM introduced the 029 keypunch machine. If you want to include increases in productivity(as have occurred in the private sector over this same 50 years), then let me know how much smaller you think that adjusted $1500B/yr should be.

Yes, we lowered the highest marginal tax rates since JFK's era, but raised the payroll tax, and instead of $1500B/yr in overhead, our economies are stuggling under $3800B/yr in overhead.

It was indeed JFK's economies that roared.

That is some field experiment. So, what conclusions should I make about the efficacy of federal stimulus of the economies?

You are right about poor abused Keynes; there were two halves of his theory. The 'raise spending' half glommed onto by gladhanders in power, and the 'lower spending' half ignored like the plague.

regards,

Fred

Post 8

Sunday, February 2, 2014 - 9:38am

Fred,

I'm not sure how I was 'cherry picking since we both agree that JFK's economic decisions, by today's standards, are on face value 'conservative'.

My point is that he was following the Keynesian maxim that in good times, the government should back away from spending. This put him at odds with the left of his own party.

Today, Keynesian theory would say, 'deficit spending is in order'.

So if you're pleased that 1960-ish desicions followed Keynes, yet displeased that 2000-ish policy doesn't (Krugman), I'm afraid that you've kicked away your own epistemological ladder.

But don't worry, Wittgenstein--as early Keynesian collaborator--said that that's okay...

Eva

Post 9

Monday, February 3, 2014 - 1:53pm

Eva:

I'm not sure how I was 'cherry picking since we both agree that JFK's economic decisions, by today's standards, are on face value 'conservative'.

You just double downed, by cherry picking 'conservative.'

You even use the words 'by today's standards' -- without adjusting JFKs America to today's standards, which is what I provided for you above. So to help you cut through the apparent fog, you were 'cherry picking' when you highlighted the highest marginal tax rates paid by six guys with lousy CPAs in the 60s without also illustrating the context of JFKs federal overhead and adjusting it to 'today's standards,' which I gladly did for you.

I adjusted his $100B to todays standards using population and inflation. I did not include increases in productivity, so if you think I was unfair with that $1400-$1500B/yr characterization of JFK's federal overhead -- the burden supports by JFK's America as federal government overhead -- then let me know how much smaller you think I should make it to account for increases in productivity.

Having done so, the experiment in 'federal stimulus' is clear. We are currently 'federally stimulating' our today's standards economies with an extra $2.3T/yr above and beyond JFK's era, and indeed, it was his economies that roared, not ours.

Of course, if I unfairly neglected productivity in this 50 year analysis, you be sure to let me know how much larger that extra $2.3T/yr in federal stimulus really is. Then, I'll be able to accurately assess this theory about federal stimulus, the size and even sign of the 'multiplier' effect, and so on.

regards,

Fred

(Edited by Fred Bartlett on 2/03, 1:55pm)

Post 10

Monday, February 3, 2014 - 5:09pm

Fred,

You're corect to point out that all economic indicators under JFK were better than what we have today.

What's also known, however, is that JFK did not inherit a crisis like the one we still have, beginning in 2008.

What's likewise known is that JFK, through both his offical papers and private memors of others in governmnet, followed an explict policy called 'Keynesian', because he openly believed that the economists who espoused Keynes were correct.

So my point is obvious: If JFK followed Keynesian theory in 1960, why would he not follow it today?

Eva

Post 11

Tuesday, February 4, 2014 - 11:23am

Eva:

Poor abused Keynes and Kennedy. Hard to slide an Angstrom between the administrations of Eisenhour and Kennedy, they were perhaps the last two centrist US presidents. Maybe because they were both WWII era vets. Otoh, Bush 41 was the last, bur he was nothing like Carter. Perhaps it was the peak of the Cold War that aligned Kennedy and Eisenhour so effectively under an actual external global threat.

But, let's suppose we did jump Kennedy by fifty years into the future; would we ask him to ignore the intervening 50 years of how we got to a circumstance where his federal government(today's)is spending $2.3T/yr above and beyond his level of 'stimulus?'

Are we accusing that hypothetical Kennedy of cherry picking the facts, looking only at the sad state of the present economies, and concluding "2.3T/yr above and beyond my raging economies 'stimulation' is not 'enough;' Or would he instead be palm to face? I suspect the latter. Thankfully moot(he doesn't deserve to see what a mess America has become.)

We are -leaving- a long term period --many decades -- of demographic surplus subsidy to the treasury. The boomers -- not 30 million, but an -extra- 30 million in that demographic -- are just recently leaving the near peak of their earning and taxpaying years, attempting to beach on the shores of retirement. If there was any shred of evidence that those 50 years had passed with 'Keynsians' anywhere to be seen, our current state should not be one handing a broke busted credit card -- including an objectively downgraded treasury rating -- to the next generation.

It is as if, for 50 years, the definition of Keynes theory was interpreted as follows:

During boom time, borrow more from the future and spend it today.

During bust times, borrow more from the future -faster- and spend it -faster- today.

That isn't Keynes; that is just f'n nutz.

A profligate, out of all control tribal spending frenzy is and has been going on in DC. It has brought the balance of the nation to its knees. If Kennedy came back after 50 years, looked at the present mess, and concluded that the solution was to borrow and spend money even faster from the future, I'd hope someone would shoot him in the damn head.

2.3T/yr above and beyond JFK's level of stimulus; the relative results, not just pitiful but in the wrong direction. The experiment has been run, the results are obvious. The GDP 'stimulators' don't even have the sign right on their multiplication 'factor' much less the magnitude.

$2.3T. That signal is so far above the noise, that it would take an exceptional amount of noise to drown it out; not that a Krugman isn't capable of generating plenty of noise.

It isn't defense, by the way. We are at 72% of JFK's adjusted defense spending--at the peak of the Cold War, but over 250% of his total spending. It is, for certain, the butter.

regards,

Fred

Post 12

Tuesday, February 4, 2014 - 1:15pm

Eva:

I'm not going to argue that America doesn't love its butter; it does.

In JFK's America, the payroll tax was not 15.4% of earnings. As recently as 1949, it was 2%. By Eisenhour's last yeat, it had more than doubled to 5%. The next year, in JFK's America, it was 6%. And still, the elderly in JFKs era did not get the benefits that todays elderly treceive. Today's elderly are no doubt much better off, and are happy to be subsidized at a much higher rate by young working Americans that in earlier generations. We might even be able to keep this puppy flying, if we keep doubling the payroll tax every so often.

But realize; the increase from JFK's 6% to todays 15.4% occurred during the period of the Boomers earnings and tax paying years; they were -already- going to be paying a massive generational surplus into this 'pay as you go' system. So, what is the fiscal state of the program after those many years of generational surplus? Is our government rolling in assets to account for this long term period of surplus subsidy, or, instead, did it spend all that generational surplus immediately and replace all that with spending long gone, borrowed from this future?

On its face, is that increased transfer of wealth from the young today to yesterday's young increasing circulation in our economies relative to JFK's era? It doesn't seem to have done so. As well, the opportunities and fortunes faced by the class of 1962 look much different than the same for the class of 2012. And yet, this still begs the question: how did the class of 1962 end up building -this- world? Kind of moot, with so many of the class of 2012 advocating for even nmore of the same.

How is this going to work? Any ideas? We are leaving a long term period of what should have been inter-generational subsidy with a busted treasury and busted credit card and economies flat on their backs. We are currently spending $2.3T/yr more than JFK. We are in the midst of a current political struggle in which half of America at least is screaming for yet more federal crack above and beyond that $2.3T/yr in additional stimulus. Krugman claiming 'not enough.'

When you do finally crash onto the beach of old age, if you are very lucky, under what conditions do you hit the beach in a reasonable condition? One in which you labored your entire career under a 6% payroll tax plus income tax, or one in whcih you labored under a 15.3% payroll tax plus income tax? It seems to me that, in the latter case, you have almost 10% less of your earnings available to plan for your own retirement needs. Well, OK, so the government has stepped in, to take over that responsibility. So...how is the program's fiscal health? Where are those assets, needed now to fund the liabilities? Were there investments made in future economies, which are now bearing their fruit on any kind of sound accounting basis? Or...was all that just spent, to buy votes and political payoffs, decades ago, for politicians long gone? Will the next generation be impressed with the massive piles of IOUs we show to them-- "They said you and your economies would be good for these, that is how they planned for our easily predicable mass crashing on the beach."

The Boomers, already paying a generational surplus, were surcharge taxes up to 15.3% of earnings for their rntire working lives. So where is it, now that they are going to need it?

Who do we thank for this ... foresight and brilliant execution?

Don't blame me; I read Clark's book in 1979, and voted for him in '80, not Reagan. I sleep like a baby, I didn't vote for this tribal C.F.

Moynihan, on the floor of the Senate back around then: "God help us, when they realize what we have done to them." Well, apparently, no need to worry; they've barely figured it out, even today.

regards,

Fred

Post 13

Tuesday, February 4, 2014 - 3:31pm

Fred,

Yes, LBJ did not follow Keynes.

I agree that it's a serious problem because, yes, the Dems were the first to break ranks with what once was a bipartisain theory of how econ-thingz worked.

In other words, despite your tastelessly violent desire to shoot political opponents, deficit spending that's anticeeded by boomtime spending is like going back to the doctor with cancer that's grown the size of a grapefruit because one just 'forgot' to go to radiation

Keynes can only work if all the instructions are followed.

IMHO 72% of cold war defense spending is far too much.

Eva

Post 14

Tuesday, February 4, 2014 - 3:38pm

Fred,

Yes all minus thirtys understand that the baby boomers spent moneys that the next two generations would have to pay for.

Worse still seem to be the boomer children, our parents. By doing away with banking regulations (Glass-Steagall, etc, they finagled 'credit' against the debt that was left for them, and passed along the double indemnity to us...

Eva

Post 15

Wednesday, February 5, 2014 - 8:45am

Eva:

"All"under thirties.... 'the' Boomers.... and previously, 'the' people...

What deeply inculcated singular thinking.

Your instruction is showing. "All" under thirties understand no such thing. 'The' Boomers do not act and think en masse.

It will take decades to divorce yourself of your instruction, in thinking only in terms of groups and class. The instruction is that deep.

You want to try and make me feel guilty for voting for Clark in 80 instead of Reagan? Bring your lunch. I don't accept class guilt. I don't respect singular group think.

If you think 'polite' is everything, guess again; sometimes polite is the cruelest cut of all. I don't think you are a singular idiot; many of us, including me, were instructed at one point in our lives what to think and how to think. Some of us outgrew it, and began our education in the world. However, it's necessary to escape the Disneylands first, intact if possible..

regards,

Fred

Post 16

Wednesday, February 5, 2014 - 9:23am

Self-desribed out-of-the-boxers, who describe others as being only the product of indoctrination, are proverbial talking horses with nothing interesting to say.

Post 17

Wednesday, February 5, 2014 - 9:27am

Eva:

"The Boomers" ... of both aprties in an activist government. A tiny fraction of all Boomers. All Boomers, including those in government, were paying a surcharge above and beyond their generational surplus, supposedly to create a future asset that would prevent the young ins ome future economies from bearing a huge, easily predictable burdern. In fact, it was that easily predictable burden that was used as the very excuse to raise the payroll tax to 15.3%.

There is a political myth that the SS Trust fund is solvent to 2041 or whatever today's number is. The meaning of that date is, the date that your generation will have finished paying off the last IOU/bond , representing the amount that the Boomers were once surcharge overtaxed, and that amount spent immediately by Treasury. Think about that. And if only that were the only economic impact of this program. It is not a 'double whammy' -- it is a triple whammy, at least. Because for all those years that the Boomer generation was surcharge taxed above and beyond the already generational surplus, that subsidy was used to inflate the budget by way of the (politically) hidden surplus borrowing. So now -- immediately, today, not in 2041 or whatever -- as soon as SS inverted and that decades long subsidy vanished, it left a hole in the budget that must be filled via other means. That pain is immediate. So, not only must Treasury freshly pony up the funds to payoff those IOUs, but it must somehow also fill that hole in the budgetl left by the decades long subsidy. This implies, replacing the former #1 holder of US Treasury debt. This is the real issue behind blithely raising the debt ceiling as the only possible solution to a chronic fiscal crisis; not only must Treasuryt find brand, new willing debt holders for the additional debt, but at the same time, replace the former #1 holder of US Treasury debt. To think that this can be done forever without eventually raising interest rates is a pipe dream; our government, today, right now, is building a debt bomb with its crack dependency on low interest rates. (You are excellent at math...what happens to debt service when interest rates climb by just 1%, from 0.25 to 1.25%? Debt service increases by 1.25./.25 = a factor of 5.0. A not insignificant fraction of US debt is short term, meaning, a sudden strain on the budget.

This perfect storm is what our present government -- both parties -- is building for your generation to deal with. What floors me is, so much of your generation has accepted its instruction and is begging for even more. That circumstance has arisen because of abuse of our education system, which was politicized before I was born.

regards,

Fred

Post 18

Wednesday, February 5, 2014 - 8:12pm

>>>>What floors me is, so much of your generation has accepted its instruction and is begging for even more<<<<<

Huh?

Post 19

Tuesday, February 11, 2014 - 11:45pm