In this heated campaign season, housing prices are plummeting. Banks
write off billions of dollars in unrecoverable debt. The stock market
wildly fluctuates almost hourly. Candidates promise painless and near
But despite the politicians' rhetoric, it is not hard to understand why America is in trouble.
there has been too much madcap real estate speculation. In recent
years, housing prices were driven sky-high on the expectation that
almost anyone, often with little security, could profit by borrowing
easy money to buy and sell property.
Too many investors lost
the old pedestrian notion that the purpose of a house was to be a home
in which to live, to raise a family and to take pride in ownership. Its
acquisition used to be a multi-year, if not once-in-a-lifetime,
investment — not quite comparable to the easy buying or selling of
volatile paper stocks and bonds. Others did not have the means to
afford the type of home they purchased, once risky variable interest
Gasoline prices, meanwhile, are well more than
$3 a gallon in many places, sucking hundreds of dollars out of annual
family budgets. But how long did we really believe that oil-exporting
belligerents in the Middle East, Latin America and Russia, or our
economic rivals in China and India, would allow the United States to
continue gobbling up a quarter of the world's daily output at $20 a
American households have on average the largest
houses in the world, the most cars and plentiful conveniences like
big-screen televisions and DVD players. Yet there is a growing sense we
are paying the tab by borrowing trillions from the Chinese, Japanese,
Europeans and South Koreans.
Some economists might argue it
is a win/win situation to have others toil to send us their cheap
consumer goods, lend us the money to buy them and get little interest
back on their debt. But when in history has a debtor ever felt better —
in a moral, psychological or practical sense — than his lender?
candidates avoid that sort of honest tough talk. Republicans instead
want an indebted government to pump up the economy by interest-rate
cuts and tax rebates. And if we listen to Democrats, you would think no
American could survive another maxed-out credit card without another
new government bailout program.
Yet in truth, there are few options left to stimulate the already
frenetic economy. The United States is still racking up large annual
budget deficits and trade imbalances — while serially piling up
aggregate national debt. Soon America won't be able to meet its
ever-expanding Medicare and Social Security obligations.
interest rates are not historically high. So cutting them might well
convince our foreign borrowers to take their capital elsewhere for
higher returns. And we can't pay for the federal programs we now
provide, let alone expand them to offer universal health care or
heavily subsidized college tuition. What then can we do?
At this late date, Republicans shouldn't vote for any candidate who
promises another tax cut without first offering a matching slash in
expenditures. And Democrats should reject any candidate who promises
another multibillion-dollar entitlement without detailing how the
additional revenue is to be raised.
(2) Instead of demanding
new billion-dollar programs for health care and education, we should
take more responsibility for our own welfare.
to readjust their budget priorities. One might be able to believe that
a $200 dollar-a-month private catastrophic health plan is out of the
reach of most Americans — if we also heard that sales of video games,
cell phones and plasma televisions have crashed.
(3) We need
to ignore the alarmist hysteria, calm down and appreciate that life is
better than at any time in the last 5,000 years of civilization. People
are living longer; we're healthier; and millions of Americans have the
opportunities to travel, communicate and avoid physical drudgery that
were once reserved only for a tiny aristocracy. There is plenty of
excess in modern American life that can be shed without real hardship.
Finally, we must view our present economic challenges in a larger
philosophical and ethical framework — and redefine success as being
able to pay off what we owe, and spend only what we earn.
knows? Knowledge that we live in a nation with a strong currency, no
annual deficit and no aggregate debt to be passed on to our children
might bring Americans as much pride and joy as the next iPhone or trip