Just as a thought experiment, substitute the word neighbors for in-laws as you consider this bus shelter PSA which sprouted across the Valley this week. For it is a peculiar moment in which we have placed ourselves, as a nation. There are now fewer people working and paying into the system than not. Next year, there will be fewer still. Fully one third of able-bodied working age Americans are unemployed and living to a large degree a life subsidized by the state. Or to put it another way, by their neighbors. Except we usually don’t think of it in those terms. No one really says ‘I’m gonna walk across the street and ask John if I can borrow a cup of sugar and this month’s rent. I’m gonna go next door to Alice and ask her for groceries and this month’s 401K deposit.’ And yet….what are we doing, but precisely that? In a rational policy marketplace we could have come to a reckoning with our obligations and adjusted accordingly. Instead, we keep borrowing 40 cents on the dollar to postpone the inevitable for another year. Which is to say, we print money, i.e., sell Treasury bonds. And who has to pay the bonds off? Maybe us, maybe our neighbor’s children. Maybe his children’s children, not yet born. We have passed agreements paying out to retirees in public pensions far in excess of what was paid in. We know this, yet we cannot summon the political will to make even modest curtailments of benefits for the survival of the system. Even in the face of municipal bankruptcy we don’t do it, at least not in California. There’s a phrase for this. It’s called eating the seed corn.
This is not the Chinese way. The Chinese are working. They are saving. They are buying the bonds our grandchildren will be working to pay off. They are coming to our schools and dominating our STEM programs. Then they are taking what they learn and selling it back to us at a profit. Meanwhile, an unhealthy percentage of Americans are sitting at home watching TV and listening to appeals from personal injury lawyers and sucker bait payday/car title lenders, the subtext being you can painlessly obtain something for nothing. The conventional wisdom, particularly here in California, is deficits don’t matter. They can be rolled over indefinitely, or failing that, if push comes to shove and we really, really need to get serious, we can always reach deeper into the Magic Money Bucket that is Apple, Google and Facebook, and grab even more than we already are. As though these companies were a permanent extractable resource, like coal. Fifteen years ago, Apple was staving off liquidation. Google was not even a listed stock. Mark Zuckerberg was in high school. Microsoft and AOL were the dominant players, and look where they are now. No one in a world of Deep Think tome-wielders and stock pickers predicted what happened. Literally, no one. To hang the future of California on three new media companies when no one knows what the next 15 years will bring, is to cleave to hope. And hope is not a plan.