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In 2000, when he was running for president, George W. Bush said he wanted to encourage “a culture of responsibility.” He wanted to be “the responsibility president.” Then came 9/11 and the thrust of his presidency changed. At any rate, Jay recalls Bush in this conversation with David L. Bahnsen, the author of “Crisis of Responsibility: Our Cultural Addiction to Blame and How You Can Cure It.” This has to do with money, drugs, immigration, and a lot more. Bahnsen is a foe of bogeymen and scapegoats. Jay says that Bahnsen’s words are music to his ears, and they may be to yours, too. In any case, Bahnsen is a man worth listening to, for he goes to the heart of America’s problems.
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Bush also started the “Ownership Society” crap right before the housing crash.
Terrific discussion, guys!
I would say this lack of responsibility ethos that we seem to be living through today can partly be blamed on the drivel that we are a Populist Nation. We are not now, and we never have been. A good part of the rotten degeneracy of Populism is that it encouraged the idea that there are these bogeymen that we can blame our problems on. That thought then stutifies us and renders us unable to grow and take responsibility for our own lives. Populism is a very pernicious idea.
There is a dynamic of nonresponsibility and bad behavior that comes from having so much centralized government and a non-libertarian financial and monetary system. Politicians will never be accountable in aggregate and in the right way, but if they don’t make the financial system pay a penalty for screwing up this is what you’re going to get. People are going to behave badly. Keynesianism makes graft and rent seeking pay. Honesty and productivity is for suckers.
People are doing dumb and corrupt things because the market and the government is sending them phony signals. NASDAQ bubble, housing bubble, overpay for higher education or you’ll never make it, trust that the FICA money the government steals from you will be there in your old age. The Illinois pension system literally has to be paid for by the Federal Reserve or old people are going to die. I’ve seen the pension assumptions in Minnesota. There is no way in hell this is going to work, and we are in the middle supposedly.
The GOP really blew it when they had their chance to overhaul Obamacare and they didn’t take it.
We are going to get a bond market collapse and/or socialism the hard way. That is what is going to happen.
And people wonder why Bernie and Trump are popular.
***These are comments as I listened. ***
“The moral concept of thrift.” We have a Keynesian System, they don’t want you to save money; they want you to speculate and be dependent on the government. Asset inflation and CPI inflation are required so the government can tax it. It doesn’t work in reverse. In fact, we would have a collapse. This is all as stupid as anything GOSPLAN ever did. The Fed can’t guess the right interest rate and they never could.
You can’t get any interest on your money now. You’re 65 and you can’t get any interest. You did the right thing. But you’re “bad” if you vote for Trump or Bernie.
Why do people want to extract equity from homes? It’s how you get paid when the government and the Fed are blowing housing bubbles. How about not blowing asset bubbles in the first place? All of the other solutions are way more problematic. (I used to be a bank regulator, so I know something about this.) Alan Greenspan was a menace.
“Globalist” The Fed and the government are doing every single thing wrong in the face of automation and globalized labor. Free trade is a scam right now, in that sense. If we had a more fair, libertarian style economy there would be far fewer social problems from immigration. There just isn’t enough distributed prosperity to keep stuffing people in this place in the same way we have been doing for decades. The problem is Medicare will collapse without immigration. This is how you do it.
“The media.” You can’t be serious.
“Opioids” They make you feel better in a fragmented society with a non-disbursed prosperity. Tucker Carlson had a psychiatrist on that was very compelling in this way. Here the guy is saying that the the opioids are affecting the economy, so the economy affects the opioid use. Everything is like that. Until we get leaders that talk and act like that, it’s going to get worse.
“Education and public unions” The purpose of the education system today is for graft and largess on the backs of borrowers and tax payers. Feel free to argue with me.
“Nationalism” There are a lot of semantical issues around this. I like what Dr. Joseph Salerno says about “Mises and Nationalism”, but that clearly isn’t the only vector that that word is used in.
George Bragues On How The Financial Markets Are Influenced By Politics
FRA: How does that happen? How does democracy distort the financial markets? Could you give some specific examples?
BRAGUES: The big example that I discuss in the book is the money supply. The main argument that I make is that democracies tend to oversupply money into the economy, and that has an impact on the financial system. I distinguish two factors that drive democracy’s overproduction of money, this excess liquidity. One factor is this class conflict between taxpayers and tax consumers. This notion of a class conflict between taxpayers and tax consumers is a notion within Austrian economics and it is meant to replace the Marxist view that the fundamental class divide in society is between bourgeoisie, the capitalists who own property, and the labour working classes who don’t own property. The Austrian view is that the main class division is between those who on net pay more taxes than they receive in services from the government – this group would be the taxpayers – and the tax consumers are those who on net receive more from the government than they pay. In terms of what a tax consumer can receive, this can range to anything from unemployment insurance payments, social assistance payments, favors provided by the government in terms of inhibiting competitors in your industry. The argument is that in a democracy, if a politician wants to get elected, the name of the game is to get 50%+1. Given that the distribution of the income in modern commercial societies tends to be such that there’s a few rich and wealth tend to be a small segment of the population, and the middle class and lower classes tend to be the majority, the best way to get elected is to offer mostly the middle class all sorts of public goods in terms of social programs and so forth, and then have those financed by the well-to-do who would function as the taxpaying class. That way you get your majority and get elected.
All politicians, whether the left or the right, both sides of the political spectrum do this. Perhaps the left does this with a bit more conviction guiding their efforts, but on both sides of the political spectrum this happens. So politicians engage in this bidding war every time election time comes, trying to offer the majority all these goodies with the idea that they don’t have to pay for it, someone else will. What ends up happening, I argue in the books, is that after a while of this bidding war where politicians offer more and more public goods, someone has to finance this. Eventually you run out of taxpayers or you run into taxpayer resistance. At that point politicians then resort to the bond market and the bond market has proven historically quite eager to lend funds to the government. Government bonds are very attractive investments for a lot of folks because of the safety. This is money that’s backed up by the power of the state, unlike corporate bonds which are not. Corporate bonds are only paid ultimately if the corporation is successful at attracting people to voluntarily buy their goods and services.
I argue in the book that we now have a kind of financial market-government complex, or a bond market-government complex. The bond market has emerged as a kind of handmaiden to the welfare state, this growth of government. At a certain point, even the bond market will say ‘we can’t lend more’ and at that point politicians will appeal to the money press and they will enlist the central bank to print money, essentially, though it’s more complex how liquidity is injected into the economy, but that’s basically what happens. So essentially democracy leads to fiscal profligacy, too much spent relative to the revenues politicians are willing to collect from people. They then have to go to the bond market; public debt rises. And then to increase their options of financing this deficit that is inherent to democracy, they require control over the monetary supply. My argument in the book is that the gold standard, which existed for a good part of the 20thcentury in one form in another, which ultimately ended in the early 1970s – August 1971 if you want to get exact – that was in a way written in the DNA of democracy; that democracy ultimately is intentioned with a monetary constraint like the gold standard. That’s one of the ways I make this argument that democracies do damage to the financial markets.
Good luck fixing all of that.
Diagram #1
Diagram #2
The fact is, we have an immoral, stupid regime (system). Then we expect the sheep to behave morally and intelligently. Again, good luck.
The big problem is, our system got changed way too much, and way too fast under Woodrow Wilson. It continued to “work” under certain conditions, but now it doesn’t. Now we are all paying for it.