Sunday, October 30, 2011

Another Desperately Needed Obama Initiative!

Wisely and courageously responding to a grave crisis that the American People are facing, President Obama issued an executive order establishing a "Coordinated Government - wide Initiative to Promote Diversity and Inclusion in the Federal Workforce." Here are a few of the deeply troubling statistics that demonstrate the systematic exclusion of African-Americans from government employment:

1) African-Americans are 13.6% of the population, yet they only make up 17.5% of the federal workforce, which means they are over-represented by only 77.7%!

2) Nearly 21% of African-Americans are employed by the government, as opposed to 17% of white workers!

I am confident that this brave initiative to increase diversity in our painfully homogeneous government work force, he will further improve its unmatched record for efficiency and cost effectiveness! Thank you, oh thank you President Obama for transcending petty election time politics!

Irena Sendler: A Light In a Time of Darkness

The Second World War was a time of great horror and wickedness. Millions participated in or were indifferent to the extermination of Jews during the Holocaust. But in the time of terrible darkness, there were great lights of love, kindness and unparalleled bravery. Irenda Sendler, a Polish Catholic is one of the great examples. In spite of the penalty of death that hiding a Jew carried, she smuggled 2,500 Jewish children out of the hellish Warsaw Ghetto. In 1943 she was caught by the gestapo, severely tortured and scheduled for execution. Only a large bribe by the Zegota (Jewish Council) saved her life and forced her to remain hiding for the duration of the war. Afterwards the puppet Polish Communist Government persecuted her. In 1965 she was recognized by Yad Vashem as one of the Righteous Among the Nations. Sadly, a public campaign to have her receive the Noble Prize for her contributions have not been successful, which does not come as a surprise given the highly political nature of the committee. Perhaps if she was adept as President Obama in reading a teleprompter she would receive greater recognition?

Israelis Protest Against...The Laws of Supply and Demand

In spite of Israel's booming economy and low unemployment rate, widespread economic protests erupted across Israel. One central theme in these protests, is the rising cost of living, particularly in the housing sector. While I sympathize with anyone who must deal with the pressure of high housing costs, a brief analysis of Israel's housing market shows that rising prices are driven have largely been a product of supply and demand:

1. Between 1990 to 2011, Israel's population grew by 60% (from 4.68 million to 7.80 million), which translates into a huge increase in demand for housing.

2. To begin with, Israel is not a large country, but with desert covering 55% of Israel's landmass, the population is largely concentrated into a thin coastal strip, available land for housing is limited.

3.For economic and cultural reasons, most Israeli's eschew development towns and are drawn towards the vibrant area of Metropolitan Tel Aviv. And Israel's religious population is by and large drawn towards the city of Jerusalem. This has further exacerbated the rise in the cost of housing in the aforementioned areas.

4. Israel's withdrawal from the Gaza Strip and the stream of refugees that it generated, simultaneously decreased the supply of and demand for housing.

5. The government, via the Israel Land Administration, controls 93% of the land and has a notoriously heavy handed regimen of licenses and permits, which surely has limited the ability of Israeli developers to meet the ever rising demand.

6. And of course, rising wages among large sectors of Israeli society have further increased the demand for housing. And I suspect that has encouraged speculative investment, which has also contributed to the said phenomena.

7. The only legitimate complain of the protesters is that the government spends a disproportionate amount of its housing budget on the settlements in Judea and Samariah (the West Bank).

In spite of the tremendous benefits that market liberalization has brought to Israel, most of the protesters envision even greater subsidies and price controls as the solution to their dilemma, which 93% of American Economists agree is a terrible idea. The socialist economist Assar Lindbeck  went as far as stating "In many cases rent control appears to be the most efficient technique presently known to destroy a city - except for bombing." Sorry khaverim (friends in Hebrew), you can protest all you want, but you cannot overturn the laws of supply and demand.

Monday, October 24, 2011

$1 Billion Investment In Libyan Democracy!

Rejoice taxpayers of America, your $1 billion dollar investment in Libyan Democracy is already paying off! Libya's interim leader, Mustafa Abdel Jalil announced  that the constitution would be based on Islamic Law and polygamy would be reinstated. To demonstrate their commitment to due process and human rights, 53 Libyans were bound and executed in the Mahari Hotel in Sirt and  Black Libyans were indiscriminately assaulted by rebel troops. And last but not least, to demonstrate their respect for sexual diversity, Gaddafi was sodomized with a metal object before being executed. With any luck, the current regime will remain staunch allies to the United States, like our dear, dear friends in Pakistan and Afghanistan. Stay tuned for more exciting developments in tax payer financed nation building!

Sunday, October 23, 2011

Amazing Speech From Dr. Ron Paul

I cannot think of another politician who has the vision, courage and honesty as Dr. Ron Paul. This is an amazing, moving speech. I pray that more American people will wake up.

To The People of Greece (And The United States)

To the people of Greece - my heart goes out to you; unemployment is spiraling, wages are plummeting and your social safety net is being torn asunder. You can protest and riot against austerity all you want, but it is inescapable; those who live beyond their means and amass unsustainable debt, shall one day live beneath it. Your choices are to institute a regimen of harsh austerity now and pay your debt or default and cut off future credit and face even graver economic instability in the future. On the other hand, the size of the American Economy and the role of the dollar as the de-facto global currency gives us much greater leeway in amassing debt and pursuing monetary tricks, in order to put off our inevitable date with austerity. For decades the American people have accepted the bi-partisan platform of expanding the warfare and welfare state while slashing taxes. This is not the fault of the political establishment, but of the American People, for we elect the Democrats and Republicans, the Bush's and Obama's, who promise the impossible and write off the few voices of conscience and reason, like Dr. Ron Paul, as "kooks" and "radicals." And we as a people chose the path of spending, borrowing and of demanding impossible entitlements from the state. But, the die has been set and sooner than later we will be forced by the iron laws of economics to live beneath our means. If we can summon up the seemingly exhausted wisdom and fortitude of generations past, we can begin to toil, save and invest, so that perhaps our children or grandchildren can live well.

Monday, October 17, 2011

The Problem With Piecemeal Amnesty by Administrative Degree

The Obama Administration recently issued an administrative decree that would review the cases of and suspend the deportation of many, "low priority" violators of immigration laws, i.e. those not considered violent or dangerous. At least on an emotional level, this is positive, because it is heart wrenching to see an individual who unwittingly came to the US as a child face deportation after a routine traffic stop. And it does seem wise to prioritize on the arrest and deportation of dangerous offenders. But, for a host of other reasons which we will consider, this policy shift is quite problematic.

First, although there are arguments that can be made on behalf of an amnesty, it should be achieved openly through the legislative process, not by executive fiat, not by piecemeal administrative degrees. I suspect that the Obama Administration is taking this route because he knows that if such policies were subject to the vote, they would never get passed. Second, no matter how noble the purpose of this administrative decree may be, its aim is not to clarify the execution of the law, but to negate it's intended purpose.

Second, in many cases this will amount to the executive branch overriding the authority of the judicial branch. Although a judge generally has the authority to take an individual's record into account when passing sentence, I do not believe that the executive branch has the authority to mandate this. And to entirely spare a violator of law A from punishment because he did not violate law B and C, at least in this case seems to be more driven by political consideration, not by good jurisprudence. For example, I cannot imagine a judge, in good conscience not punishing a violator of a criminal, civil or regulatory code, because they had not committed other, more serious crimes. In this case, I highly suspect that this is flawed effort by the Obama Administration to shore up its faltering support among Latino Voters, while not alienating other demographic groups.

Last, but not least, the biggest problem with de facto administrative amnesty is that it leaves millions of undocumented immigrants in a legal limbo. Rule of law and common sense dictates that their status must be either be resolved either through a full, de jure amnesty, or the law must be unconditionally carried out, which in most cases would mean deportation. And in the end offering empty pronouncements that raise hope in millions of desperate people is a cruel and cheap political tactic. Mr. Obama, it's time for you to either "step out of the administrative shadows" and seek to change the law, by submitting a comprehensive immigration reform bill to the senate or to shut up and start enforcing the letter and spirit of the law.

Sunday, October 16, 2011

The Expansion of Entitlement / Death of Common Sense

The majority of "heartless conservatives" recognize the need for a safety net to protect our poorest and most vulnerable citizens. But, without vigilance, it is the nature of the welfare state to expand, addicting and enfeebling an ever greater portion of the populace, pushing the state closer to financial dissolution. An example of this is seen when the Detroit Public School System decided that all students, regardless of income would receive free breakfast, lunch and snacks, courtesy of the US Department of Agriculture's Community Eligibility Option Program. To feed the hungry is noble act, but to provide free meals to all students makes zero social and economic sense. It clearly constitutes a misallocation of limited resources that should be directed towards general school improvements or towards those who are unable to care for themselves. So, what could the motivation for this policy possibly be? According to Makr Schrupp, the Detroit Public School's Chief Operating Officer "one of the primary goals of this program is to eliminate the stigma that students feel when they get a free lunch..." So, now a student is entitled to have his well off neighbor fed at tax payer expense, so that they will not risk feeling stigmatized?!? The idea of fostering dependency and entitlement among students from self sufficient families defies common sense on so many levels. And although I draw no pleasure in having any human being feel shame for receiving public assistance, to entirely eliminate that stigma will prove to very costly to the public. Fear of stigma and sense of shame are strong social motivators, which for much of American history deterred a great many people from being too quick to turn to and remain on welfare. This provided a non-coercive, non-bureaucratic deterrent that moderated the use of the welfare state and encouraged self sufficiency. To intentionally eliminate it will result in a costly expansion of the entitlement state that we can scarcely afford during this deep economic downturn.

Hats Off To Howard Bloom!

Anyone who is interested in expanding their perspective on social, political and economic life must read The Lucifer Principle, written by the eclectic and insightful Howard Bloom. This citation rich work explores the evolutionary forces that have shaped social life for microbes, primates and humans alike. Not only does he demonstrates a staggering knowledge of history, biology and anthropology, but he creates a rich synthesis between these seemingly disparate fields. Mr. Bloom was one of founders of the International Paleopsychology Project, which gathers leading biologists, anthropologists, historians, explore the role of evolution in social and psychological life. And in my opinion, it ads much needed depth and understanding to the social sciences. Agree or disagree with his vision, you will be challenged.

Tim Geithner's Third World Mentality

In the 1970's 1980's third world despots would rant and rave whenever the IMF and other independent agencies would lower their credit rating and mandate austerity measures as a prerequisite to receiving more loans. Left wing intellectuals would decry "economic imperialism," failing to note that if the policies that the third world governments chose to pursue had resulted in economic growth, rather than spiralling debt and inflation, such loans would not be necessary. Treasury Secretary Geithner's rant against the S and P for downgrading our credit rating was eerily reminiscent of these third world losercrats. The most serious sign of a nation's decline is when its leaders and intellectuals abnegate personal responsibility and adopt a narrative of victims and victors.

Sunday, October 9, 2011

Brief Reflections on Teaphobia

From my personal experience at an early Tea Party protest, I can affirm that it initially began as an independent, largely decentralized protests against destructive, bi-partisan fiscal policies. In fact, not one attendee that I conversed with had anything positive to say about the Republican Party. The general sentiment was that fiscally they were barely above the Democrats and had to be held accountable. But, over time, a large segment of the movement were co-opted by the hierarchy of the Republican Party and the independent factions have been substantially weakened. Proof of this is the elevation of Sarah Palin within the organization, who during her tenure as governor was in no way fiscally conservative. In other words, I am not happy with the direction the movement has gone and no longer would consider partaking in a protest.

But, what I find interesting was the intense hostility, the "Teaphobia" that the movement generated since day one among large segments of the media and academic elite. I personally witnessed former CNN Reporter Susan Rosesgen express extreme bias and hostility during her interview with attendees, for which she was fired for. MSNBC's Chris Matthews and Rachel Maddow have incessantly reviled the protesters. Commentators have chosen to focus on the most extreme, unrepresentative fringe members to defame the entire movement, which is intellectually dishonest and misleading. 

I believe this is indicative that the protesters and social critics of the 1960's and their heirs, who have  assumed leadership roles throughout government, media, academia and (to a lesser extent) business institutions are now the keepers of the status quo. And they have grown even more intolerant than their predecessors to challenges to their vision. In their pompous minds, their leadership, their policies are infused with so much truth and moral worth than anyone who would challenge them must be retrogrades or racists. Tied in with this is a strong element of classism and elitism; comments posted on Huffington Post are filled with hateful rants against "rednecks," "hillbillies" and "white trash." Many of those who chant the mantra of respect for diverse cultures show no tolerance for diversity within their own culture and country. This does not surprise me, because history is filled with countless examples of "champions of freedom" quickly becoming more intolerant than the regime that they just deposed. The Bolsheviks opposed the use of the death penalty in Czarist Russia, at least until they had seized power. Islamists promoted free speech in the Shah's Iran, but after seizing the reigns of power they quickly clamped down on all dissent. Mr. Matthews, in no way am I comparing you to Khomeini, but a little more tolerance for dissent and challenges to your sacred cows would be in order, especially for a so called journalist. 

The Fruits of Arab Islamic Democracy

An article in the Huffington Post spoke of the 19 Indigenous Egyptian Christians who were killed by Muslim mobs, as well as the security forces. And riots broke out in the city of Aswan over the "unauthorized" construction of a church, even after the church officials agreed to remove the "offensive" cross from public view. Those who are familiar with the history of the middle east are aware that the few regimes in which the lives and property of Christians were respected, were secular, authoritarian regimes, such as Saddam Hussein's Iraq, Assad's Syria and to a lesser extent Mubarak's Egypt. In virtually every instant, the democratization of an Arab-Islamic nation was accompanied by a sharp deterioration in the status and safety of Christians. Such are the fruits of Arab Islamic Democracy. And to those who believe that all cultures and peoples are suited for democracy, I will order you a ticket via to the place were most progressives dwell: fantasyland.

Egypt Riots: Christian Protesters Attacked, At Least 19 Dead

Egypt Riots

CAIRO — Flames lit up downtown Cairo, where massive clashes raged Sunday, drawing Christians angry over a recent church attack, Muslims and Egyptian security forces. At least 24 people were killed and more than 200 injured in the worst sectarian violence since the uprising that ousted Hosni Mubarak in February.
The rioting lasted late into the night, bringing out a deployment of more than 1,000 security forces and armored vehicles to defend the state television building along the Nile, where the trouble began. The military clamped a curfew on the area until 7 a.m.
The clashes spread to nearby Tahrir Square, drawing thousands of people to the vast plaza that served as the epicenter of the protests that ousted Mubarak. On Sunday night, they battled each other with rocks and firebombs, some tearing up pavement for ammunition and others collecting stones in boxes.
At one point, an armored security van sped into the crowd, striking a half-dozen protesters and throwing some into the air. Protesters retaliated by setting fire to military vehicles, a bus and private cars, sending flames rising into the night sky.

After midnight, mobs roamed downtown streets, attacking cars they suspected had Christian passengers. In many areas, there was no visible police or army presence to confront or stop them.
Christians, who make up about 10 percent of Egypt's 80 million people, blame the country's ruling military council for being too lenient on those behind a spate of anti-Christian attacks since Mubarak's ouster. As Egypt undergoes a chaotic power transition and security vacuum in the wake of the uprising, the Coptic Christian minority is particularly worried about the show of force by ultraconservative Islamists.
Prime Minister Essam Sharaf, addressing the nation in a televised speech, said the violence threatened to throw Egypt's post-Mubarak transition off course.
"These events have taken us back several steps," he said. "Instead of moving forward to build a modern state on democratic principles we are back to seeking stability and searching for hidden hands – domestic and foreign – that meddle with the country's security and safety."
"I call on Egyptian people, Muslims and Christians, women and children, young men and elders to hold their unity," Sharaf said.

The Christian protesters said their demonstration began as a peaceful attempt to sit in at the television building. But then, they said, they came under attack by thugs in plainclothes who rained stones down on them and fired pellets.

"The protest was peaceful. We wanted to hold a sit-in, as usual," said Essam Khalili, a protester wearing a white shirt with a cross on it. "Thugs attacked us and a military vehicle jumped over a sidewalk and ran over at least 10 people. I saw them."
Wael Roufail, another protester, corroborated the account. "I saw the vehicle running over the protesters. Then they opened fired at us," he said.
Khalili said protesters set fire to army vehicles when they saw them hitting the protesters.
Ahmed Yahia, a Muslim resident who lives near the TV building, said he saw the military vehicle plow into protesters. "I saw a man's head split into two halves and a second body flattened when the armored vehicle ran over it. When some Muslims saw the blood they joined the Christians against the army," he said.
Television footage showed the military vehicle slamming into the crowd. Coptic protesters were shown attacking a soldier, while a priest tried to protect him. One soldier collapsed in tears as ambulances rushed to the scene to take away the injured.
At least 24 people were killed in the clashes, Health Ministry official Hisham Sheiha said on state TV.
State media reported that Egypt's interim Cabinet was holding an emergency session to discuss the situation.
The protest began in the Shubra district of northern Cairo, then headed to the state television building along the Nile where men in plainclothes attacked about a thousand Christian protesters as they chanted denunciations of the military rulers.
"The people want to topple the field marshal!" the protesters yelled, referring to the head of the ruling military council, Field Marshal Hussein Tantawi. Some Muslim protesters later joined in the chant.
Later in the evening, a crowd of Muslims turned up to challenge the Christian crowds, shouting, "Speak up! An Islamic state until death!"
Armed with sticks, the Muslim assailants chased the Christian protesters from the TV building, banging metal street signs to scare them off. It was not immediately clear who the attackers were.
Gunshots rang out at the scene, where lines of riot police with shields tried to hold back hundreds of Christian protesters chanting, "This is our country!"
Security forces eventually fired tear gas to disperse the protesters. The clashes then moved to nearby Tahrir Square, the epicenter of the uprising against Mubarak. The army closed off streets around the area.
The clashes left streets littered with shattered glass, stones, ash and soot from burned vehicles. Hundreds of curious onlookers gathered at one of the bridges over the Nile to watch the unrest.
After hours of intense clashes, chants of "Muslims, Christians one hand, one hand!" rang out in a call for a truce. The stone-throwing died down briefly, but then began to rage again.
In the past weeks, riots have broken out at two churches in southern Egypt, prompted by Muslim crowds angry over church construction. One riot broke out near the city of Aswan, even after church officials agreed to a demand by ultraconservative Muslims known as Salafis that a cross and bells be removed from the building.
Aswan's governor, Gen. Mustafa Kamel al-Sayyed, further raised tensions by suggesting to the media that the church construction was illegal.
Protesters said the Copts are demanding the ouster of the governor, reconstruction of the church, compensation for people whose houses were set on fire and prosecution of those behind the riots and attacks on the church.
Last week, the military used force to disperse a similar protest in front of the state television building. Christians were angered by the treatment of the protesters and vowed to renew their demonstrations until their demands are met.

Oh, Where Art Thou Eric Holder?

During the Wisconsin State Fair in Milwaukee mobs of young African-American males randomly assaulted white attendees. In no way is this indicative of a general problem; the majority of African-Americans are good, law abiding citizens. However, we can be certain if the situation was reserved, if a mob of hateful, unruly whites assaulted black attendees, Mr. Holder and quite possibly President Obama would hold a press conference and conduct an investigation. Oh, where art though Eric Holder? Thine cat has taken thy tongue?

Why I Like The Hourglass Figure: Socialization or Evolutionary Psychology?

Ask most feminists why men generally prefer women with an hourglass figure and they will most likely respond: "oppressive, artificial standards of beauty derived from the patriarchy." An article in the BBC presents biological research that casts serious doubts on this explanation. It found that the hourglass figure is highly correlated with fertility, which would come as no surprise to anyone who has read works in the field of Sociobiology and Evolutionary Psychology, which we will briefly explore in the latter part of this post. This brings us to the source of much of my reservations about (what we now refer to as) liberal philosophy and political movements: their underlying, explicit or implicit vision of human nature.

A brief survey of liberal thought reveals a strong inclination towards a vision of man as a create whose vices and virtues, whose very nature is largely determined by socialization and civilization. In the writings of Rousseau we see an emphasis on man as a tabula rasa, a blank slate that is shaped and ultimately corrupted by civilization. In Marxist thought we see strong reservations about the existence of human nature that transcends social circumstances. These philosophical impulses became more acute with the establishment of Marxist Regimes. Both the Soviet Union and Socialist Cuba, believed that the state could reshape the malleable nature of man and create a New Soviet Man, a selfless being, not driven by egotism and the desire for personal gain that "infected" capitalist societies. Che Guevara believed that the new man could be driven to dazzling heights of hard work and productivity, not by material incentives, but by revolutionary zeal and moral incentives. A large portion of feminist thought emphasizes that gender differences as being socially constructive and not being derived from innate human nature.

On the other hand, my knowledge of history and biology have led me to believe that much of human nature, including gender roles is to a large degree the innate products of biology and evolution. While human beings are certainly shaped by the social, cultural and economic forces, our natures are not nearly as malleable as most Marxists and Feminists would have us believe. Of particular interest is E.O. Wilson's works on sociobiolgy, which is:

"a field of scientific study which is based on the assumption that social behaviorhas resulted from evolution and attempts to explain and examine social behavior within that context. Often considered a branch of biology and sociology, it also draws from ethologyanthropology,evolutionzoologyarchaeologypopulation genetics, and other disciplines." 
Tied in with this is evolutionary psychology, which:

"seeks to identify which human psychological traits are evolved adaptations, that is, the functional products of natural selection or sexual selectionAdaptationist thinking about physiological mechanisms, such as the heart, lungs, and immune system, is common inevolutionary biology. Evolutionary psychology applies the same thinking to psychology, arguing that the mind has a modular structure similar to that of the body, with different modular adaptations serving different functions. Evolutionary psychologists argue that much of human behavior is the output of psychological adaptations that evolved to solve recurrent problems in human ancestral environments."
Related to this is research in Brain Differences Between Men And Women, which further supports the view that gender roles and preferences are not simply the product of socialization and indoctrination. I cannot stress how importance of reading up on these topics, because social and political philosophy that is divorced from a full understanding of man's nature is destined to be flawed at best and dangerous at worst.

Last Updated: Tuesday, 4 May, 2004, 23:53 GMT 00:53 UK 

Hourglass figure fertility link

Jayne Mansfield
Jayne Mansfield was famed for her hourglass figure
Men have long held up women such as Marilyn Monroe as icons of female attractiveness.But researchers now say this isn't just a superficial judgement - women with hourglass figures are more likely to become pregnant.

Writing in a Royal Society journal, they say this is because women with large breasts and narrow waists have higher hormone levels.

They say this offers a biological reason for Western views of beauty.

The study, in the journal Proceedings B, looked at 119 Polish women.
Their weight and body fat was checked, and researchers also measured the circumference of their waist, hips, breast and under their breast.

They were categorised as large breasts/narrow waist, large breasts/broad waists, small breasts/narrow waist or small breasts/broad waist.

Researchers also took morning saliva samples from the women throughout one menstrual cycle which were measured for levels of two hormones; 17-b oestradial (E2) and progesterone.
High levels of these hormones are good indicators that a woman will successfully become pregnant.

'Good nutrition'
It was found that women with higher breast to under-breast ratios (large breasts) or low waist to hip ratio (WHR) had higher hormone levels.

 In Western societies, the cultural icon of Barbie as a symbol of female beauty seems to have some biological grounding 
Dr Grazyna Jasienska,
Harvard University
Women with both had 26% higher levels of E2 on average, and 37% higher E2 levels mid-cycle than women with in the other three categories.

Women with low WHR also had higher progesterone levels.
Writing in Proceedings B, the researchers led by Dr Grazyna Jasienska of Harvard University, said the hourglass figure was popular in Western cultures, but not in others across the world.

She said men in non-Western societies did not seem to favour women with hourglass figures, and broader figures, indicating good nutritional status, were considered most attractive.
"However, in Western societies, the cultural icon of Barbie as a symbol of female beauty seems to have some biological grounding," added Dr Jasienska.

Dr Martin Tovee of the University of Newcastle, who has carried out research into what makes people attractive to others, told BBC News Online the Royal Society paper was not conclusive.

"What the results of this paper suggest is that the ratio of bust-to-waist may predict hormone levels.

"This is in turn may predict fertility, and this might be a reason why the bust-waist ratio might predict attractiveness."

He added other studies of female attractiveness showed that when images of real women are examined, whether their figure is in proportion was considered the most important feature.
Height, bust size and waist-to-hip ratio were considered less important, he said. 

Monday, October 3, 2011

West's Mid-Life Crisis Points To Power Shift East?

Interesting article that proposes something that I have come to suspect: the downturn that the United States and Europe is experiencing is not part of a normal economic cycle, but points to a permanent, eastward shift of economic power. The primary cost is most of the west's inability to deal with crushing debt and unfunded liabilities. I believe that beneath the economic and political distress is a more serious cultural crisis; a voracious sense of entitlement has made large segments of the population resistant to pursuing necessary changes in policy, as well as personal conduct. Rather than living within their means, by reducing their consumption and / or increasing their productivity, too many individuals and nations have chosen the path of unsustainable debt. And many of our most educated citizens have adopted a world view completely divorced from basic economics and accounting realities. From this vision, the same failed policies are pursued year after year, consequences be damned. Traditional institutions such as family, community and the church have weakened, especially for marginalized populations, just when the social and economic support they offer are most needed. More subtle, but significant none the less is the fact that political correctness has greatly constrained public discourse, just when intellectual honesty and open discourse are most needed. Perhaps it's time for me to learn Chinese and Korean?

West's mid-life crisis points to power shift east

Related Topics

NEW YORK/SINGAPORE | Wed Aug 3, 2011 6:46am EDT

(Reuters) - The world's industrialized nations, burdened with aging populations and deeply in debt, face years of slow economic growth that could speed the shift of economic clout to the East.

The United States has no coherent plan to pay for supporting a retiree pool that is about to overflow with the so-called "babyboom" generation, and lawmakers missed an opportunity to address that during the debt debate that dragged the country to the edge of default this week.

Its economy is too weak to create enough jobs for young people on whose shoulders the debt will ultimately rest.

In Europe, economists warn of a "lost generation" as youth unemployment soars as high as 40 percent in some countries. The average public debt of the 27-nation European Union stands 20 percentage points higher than it did before the financial crisis struck in 2008.
Across advanced economies, the average debt per person is $29,600 in 2011 and is expected to reach $40,400 in 2016, said Brookings Institution economist Eswar Prasad.
For Americans, the debt burden per capita is $34,200 in 2011 and will rise to $49,100 by 2016. Japan's is projected to hit $85,000 per person in 2016, the highest in the world.
Some of today's fiscal trouble is a consequence of the 2008 financial crisis, which drove millions of people out of work -- some of them permanently -- and shifted an enormous private debt burden onto the public sector.
The crisis struck at the worst possible time: at the leading edge of a retirement wave that will drive up healthcare and pension costs across virtually the entire developed world.
If public debt is not lowered to pre-crisis levels, potential growth in advanced economies could decline by more than one-half percent annually, the International Monetary Fund estimates. Project that out over a decade or so and it is easy to envisage both the United States and Europe limping through decades of Japan-style stagnation.
It does not have to be that way. Germany cut spending on welfare and jobless benefits in the 1990s which helped revitalize the country as the powerhouse of Europe. Canada and Belgium also offer examples of how to turn around debt-heavy industrialized nations.
Nonetheless, the challenges look immense. The U.S. economy nearly stalled in the first half of 2011. Data on Tuesday showed consumer spending fell in June for the first time in nearly two years. It is not clear what will generate healthier growth in the future.
In Europe, despite cuts in spending and tax hikes, concern is acute about the ability of countries to tackle debt. Italian bond yields hit their highest level in the euro's 11-year lifetime on Tuesday, prompting emergency government talks.
With interest rates at or near record lows in the United States, Britain and the euro zone, policymakers have limited options to spur faster growth.
Reuters posed a crystal-ball question to economists and political scientists around the world: what happens if the 20th Century powerhouses can't pull their weight?
"Our society is in a mid-life crisis," said Allen Sinai, president of DecisionEconomics in Boston. "The jury is out whether we, as a nation, can come to grips with what is needed to find our way out of this in a reasonable way."
Three themes carried through the conversations:
* Debt burdens will weigh on economic growth in the United States and Europe for years to come, and Washington is still far from addressing the root causes of its fiscal problem.
* Emerging markets have the growth prospects and the public savings to start to supplant the United States as the world's consumer of last resort, driving the global economy. What they lack is the political will and experience to set the agenda, which means the West won't merely fade into the background.
* It will take a long time to clean up the fiscal mess.
"Assuming both the U.S. and Europe can have multiple years of sound fiscal management, which is a huge assumption, it will still take probably the majority of the rest of my career -- and I'm not that old -- for them to bring debt levels down to stable levels," said Kenneth Akintewe, a portfolio manager with Aberdeen Asset Management in Singapore.
The U.S. budget battle was symptomatic of a country deeply divided over the role of government, its responsibility to its citizens, and who should pay for which benefits.
Until those questions are answered, lawmakers cannot and will not address the long-term fiscal strains, which come primarily from rising retiree healthcare and pension costs.
Social Security and Medicare will gobble up an estimated $1.3 trillion this fiscal year and $2.3 trillion by 2021. In 10 years, those programs will account for 9.6 percent of gross domestic product, more than defense and discretionary spending combined, according to the Congressional Budget Office.
The U.S. deficit reduction package, which was signed into law on Tuesday, includes $2.1 trillion in cuts over the next decade, far short of the $4 trillion many economists say are needed to stabilize the U.S. debt-to-GDP ratio.
Yet if lawmakers had used a sharper knife, they might have inflicted more damage on the economy in the short term. Just as over-tightening of monetary policy is blamed for prolonging the Great Depression in 1937, some economists see a risk that deep budget cuts now will trigger a double-dip recession.
"Those demanding spending cuts now are like medieval doctors who treated the sick by bleeding them, and thereby made them even sicker," Nobel-prize winning economist Paul Krugman wrote in the New York Times.
In April 2009, at the depths of the global recession, President Barack Obama put the world on notice that it could no longer rely on "voracious" U.S. consumers.
A look at second-quarter growth shows the United States is far from fully achieving that goal. Exports and domestic investment accounted for virtually all of second-quarter growth, but a drop in non-defense government spending erased a third of that gain, underscoring the short-term economic cost of cutbacks.
European countries entered the 2008 financial crisis with higher government spending levels than in the United States, and will emerge with a smaller public sector, fewer civil servants, higher retirement ages, and elevated unemployment particularly among the young and old.
The region was already headed for slower growth because the baby boom generation, born in the years after World War Two, is hitting retirement age and life expectancy is rising.
There are fewer working-age people to support those retirees. Only France and Britain boast growing populations among the biggest European economies.
Indeed, the demographic numbers are problematic across advanced economies. In 2008, there were 4.2 working-age people per retiree in the 34 countries that make up the OECD. By 2050, that figure will be cut in half.
The financial crisis cut Europe's economic growth potential by an estimated one percentage point from about 2.5 percent to 1.5 percent due to unemployment, cutbacks in public spending and investment and the shrinking of the financial sector.
In the hardest-hit European countries, youth unemployment is now around 40 percent of the 16-25 age group.
"Youth unemployment is becoming a huge social and economic problem. We are facing a lost generation," said Andrew Watt of the European Trade Union Institute.
By force or by choice, European countries are paring back government spending even further. Not surprisingly, bailed-out Greece underwent the most radical adjustment and suffered the deepest recession.
Many European countries are ahead of the United States on the austerity path and have dared to raise taxes as well as cut spending, something that was beyond the politically riven U.S. Congress even though tax levels, especially on rich Americans, are lower than the European average.
Europe offers a glimpse of the battles that could come as Washington rewrites its social contract. Credit rating agency Moody's warned last year that the budgetary decisions facing advanced economies may "test social cohesion".
An angry mood of "why should we pay for them" has dominated the response to the Greek, Irish and Portuguese fiscal crises in northern European countries, particularly Germany, the Netherlands, Finland and Austria.
History provides a handful of success stories when it comes to repairing severely damaged public finances. In the early 1990s, Belgium's debt hit 137 percent of its GDP, and it faced the prospect of not qualifying for euro zone entry. It cut spending and raised taxes to hit its target.
Canada faced a similarly daunting task in the 1990s, exacerbated by the Mexican peso crisis, which sent the Canadian dollar tumbling.
"I went out for more than a year talking to Canadians so they could see how difficult the choices were and that everyone had to take part in the sacrifice," said Paul Martin, who was Canada'sfinance minister at the time.
He told Reuters his strategy was to try to ensure there were no winners or losers. He made a point of not meeting with special interest groups individually.
"People also have to see there is an end point in sight, that their sacrifices are not in vain," he said.
U.S. policymakers have options for tackling longer-term fiscal issues without too much pain, such as raising the retirement age to 67 and they must invest more in research and higher education, said Sharyn O'Halloran, a professor of political economy at Columbia University.
"If you are not investing wisely in your infrastructure and your people you are undermining your ability to compete globally," she said. "We still have the most creative computer technology. You still have Googles and Apples in the U.S. rather than elsewhere."
For Asia, the prospect of two of its best export customers trudging through decades of slow growth is not as problematic as it might have been just five years ago.
Although exports to the United States have soared in recent years, for most countries in the region it represents a shrinking share of the economy.
In China, for example, the exposure through U.S. exports has roughly halved since 2006 even though the dollar value of shipments has risen by 27 percent. For a graphic showing Asia's trade exposure to the United States, see
As for Europe, the bulk of Asia's trade exposure flows to Germany, where growth has held up well.
The best hope for Asia's sustained growth lies within Asia itself. Household income is rising in emerging markets, creating a burgeoning middle class that can consume at least some of the goods the United States or Europe no longer want.
China's latest five-year economic plan included provisions to raise the minimum wage by some 84 percent by 2015.
Per capita average income is still far below Western norms but adjusted for purchasing power, private consumption demand in the "BRIC" economies of Brazil, Russia, India and China is already 93 percent of the U.S. market, said Deutsche Bank global strategist Sanjeev Sanyal.
"Emerging markets as a whole and Asia in particular can now generate consumer demand on a scale that can compensate for stagnation, albeit not a collapse, in advanced countries," Sanyal said.
China has already replaced the United States as the world's largest automobiles market, Sanyal noted. China and India combined boast a movie industry that rivals Hollywood by some measures. In sports, the Indian Premier League for cricket is the second-highest paying sports league in the world, behind only the U.S. National Basketball Association, Sanyal said.
Emerging Asia has only begun to tap its potential. China's consumption accounts for just a third of its gross domestic product, less than half the level in the United States.
China showed off its potential in 2008, when it quickly ramped up a large stimulus program to counter the global recession, said Pieter Bottelier, a professor of China studies at Johns Hopkins' School of Advanced International Studies in Washington. Not only did its economy come roaring back, it was credited with helping to restore global growth.
"I was one of those who predicted prolonged unemployment" in 2008, Bottelier said. "I was dead wrong."
But China's current strength may be its longer-term weakness. The wage growth that lifts its consumption potential makes it less competitive as the world's low-cost factory. Even its population advantage is fading as the one-child policy adopted 30 years ago means it may begin facing labour shortages within five years.
The big emerging markets have so many domestic challenges that they are not yet prepared to take the lead on politics or policy. When the IMF sought a new leader this year, emerging economies could not agree on a candidate from among their own.
China's reaction to the U.S. debt crisis showed it does not relish the idea of a fallen superpower. State-run news agency Xinhua chided the United States for dallying with default and reminded its big trading partner that others would be hurt by inaction.
"Developing economies would suffer a traumatic blow, and the world economy would plunge into yet another recession on the heels of the one that struck in 2008, and (which) also originated in the United States -- only the mess could be much nastier this time," Xinhua said.
(Additional reporting by Paul Taylor in Paris and Saeed Azhar in Singapore; editing by William Schomberg)