All Costs Are Opportunity Costs. Projections Do Not Include The Alternatives.

This article by a local democratic group led me to this CBPP article, which is a response to a paper by the Heritage foundation.

Some critics continue to assert that President George W. Bush’s policies bear little responsibility for the deficits the nation faces over the coming decade — that, instead, the new policies of President Barack Obama and the 111th Congress are to blame. Most recently, a Heritage Foundation paper downplayed the role of Bush-era policies (for more on that paper, see p. 4). Nevertheless, the fact remains: Together with the economic downturn, the Bush tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years

Which is another example of pretending that the long-cycle view of the republicans, from the sixties through the previous administration is selfishness rather than a REACTION to the socialist policies and socialist social system that conservatives were fighting for the majority of the 20th century. It was the conservative perception that without reinvigorating business and in particular entrepreneurship, that the american quality of life would perish, as it had appeared to by the 1970’s.

If you think the european model is better, go live there for a while. Life in europe is expensive, cramped, dirty and urban. People look, act, and feel poor by comparison. The pretty part of europe seen by tourists was built in prior centuries under the great monarchies. It has nothing to do with the post war model. European cities are vast rings of urban blight, Los Angeles style, around small downtown cores of ancient monarchical elegance. By and large, no matter what social class you live in, america has offered better opportunities to its citizens. People have more choices. Add to their costs the necessity of rearming, and that they have a social problem with muslims on the scale of our post-slavery problem with blacks, and they have tremendous future costs to bear for their model. So go live there. Really. For a while. Life in europe is expensive. An expensive life neutralizes many class status differences. And that’s really the point of those models.

But that aside, what bothers me most about the CBBP analysis, regardless of the figures presented by the heritage foundation, is the belief that our country would not endure OTHER costs, often strategic costs, that are NOT expressed in the numbers, if republican policies were not undertaken.

We have accomplished much of our ambitions with the wars, which is to neutralize Iraqi expansionism, and punish afghans for hoteling terrorists. that we continue to attempt to create democracies is an ideological problem. It would be cheaper to reduce pakistan and iranian capabilities as we have iraqi and afghani capabilities. But we will not do that because we feel that we must be ‘nice’ to people who attack us, rather than punish people who attack us.

But unless we forecast the republican view of the future, which was one in which even worse outcomes existed for the USA’s budget, and in particular, energy costs and decreased entrepreneurship, and decreased competitiveness,

The dirty secret underneath our lack of competitiveness is our education system. We are paying vast competitive costs by forcing education into the private sector, and producing inferior goods, because we do not teach disciplined excellence in schools as do the germans. We don’t teach it for political reasons. We’re dumbing down our citizens. And it’s that cost that republicans are trying to fight as well.

So most of the forecasts based upon assumptions made by both sides are complete nonsense.

All that said, I responded with:

I have absolutely no idea how you are coming up with this chart, and what assumptions it’s based upon. But it’s correspondence with reality approaches zero.

Our tax revenue problem is far deeper and far more structural than whatever assumptions you’re relying upon. These include the dollar, the world economy, structural unemployment, and demographic changes.

Most importantly they involve the class and race issues involved with different occupational distributions, and the resulting difficulty in putting vast numbers of our population (in particular, males) into industries that are permanently lost to us. We have expanded enough of the bottom end of the labor force through immigration, that we cannot push down our existing labor force into less interesting, but certainly productive, jobs. No society can survive 20% of the male population living in frustration. This anxiety will be directed somewhere.

The country, as both a domestic and international empire, is too insufficiently homogenous to permit higher taxation and redistribution. It is contrary to human nature. There is no evidence of it in history. There is no evidence of it in behavioral testing.

The costs of conducting these poorly managed external wars do not account for the cost of not prosecuting them, which are not insubstantial, and perhaps greater.

Our domestic political mythology is a conflict between the erroneous assumptions of the twentieth century, and the expired political technologies of the eighteenth century.

Neither side is going to get their desired future. We are headed toward the south american model of class and racial segregation of urban centers and a powerless central government. This pattern is evident in immigration and emigration moving patterns, demographic changes, domestic trade, domestic cash movement, re-regionalization of identity, and a loss of confidence in both the government and the nation itself.

Conservatives live in a fantasy that the colonial republic is possible to reinstitute. Liberals live in a fantasy of the homogenous egalitarian society. But democratic republican government cannot function at our current scale for the same reason socialism cannot function at scale – information and incentive problems. Even if politicians want to make good decisions, law and taxes are insufficient tools for doing so. Only credit and banking and provide sufficient granularity of management, and our state is not structured any longer to assist in building the economy, only in resolving conflicts between interest groups. Furthermore human beings do not, never have, and never will operate in an egalitarian fashion across status class and race boundaries because status is more liquid and valuable in-group than extra-group. And because epistemologically, human beings do not possess sufficient perception, information, and intelligence to operate as creatures without status signals to tell them which actions are good and bad for them, any more than they can cooperate in large numbers without pricing signals to tell them what actions are good and bad for them.

I am sorry if this is to complex an analysis for a posting on tax and spending policy. But I am speaking to the false assumptions that underly the graph that you presented here.

I would love to live in an egalitarian redistributive society. But to accomplish that goal, you will have to fragment the empire into regions, reduce the federal government to banking and military functions, return the legislative control to the localities, and allow the natural preference that people express to associate within race and class. And that is antithetical to the underclass fantasy – a fantasy which is more concerned with status than it is with money.

But every society is composed of classes. Not just economic classes, but social classes, and ‘greater and lesser productive classes’. And each of these groups pursues its own interests. And because those interests are epistemological in nature ( people need to know how to act ) they are permanent. And as permanent features, they will, especially under prolonged economic duress, be expressed by citizens. Either openly or in black markets, racism, and corruption.

You will never achieve equality outside of a few million people of very similar racial and cultural preferences, with very similar economic interests.

Otherwise, The only equality is in poverty.

And that set of problems underlies the reason why people will become more conservative. ie: they will express sentiments of group persistence and attempt to implement those sentiments by legislation.

So, we are destined to decades of political hostility.

Because the US is now an empire, both domestically and internationally. And while internationally the government has lost legitimacy. THat is irrelevant compared to the loss of legitimacy of the government here at home.

The only thing we can do is contract the empire and attempt to get our people employed in, while getting the upper and middle classes to try to create jobs and we may have permanently displaced our society by trade policy. THe germans build their society to produce disciplined craftsmen. This is important, because craftsmen can create exportable hard goods. But we have tried to create a service economy. And a service economy must bring people INTO the country in order to serve them. We can create a medical tourism industry. But that is not sufficient. We can close our educational system to foreigners. but that is not sufficient. We can devote vast labor to building nuclear power plants, a new power grid, and electric automobiles. And that might be enough. But we can never put people back into building houses. It creates expensive sprawl. But most importantly, it doesn’t make people ‘skilled’. It’s the intellectual equivalent of ditch digging, and as such it is a vast loss of human capital.

Thats the reality of it.

So your deficit prediction is based on the assumption that the nation was not at a structural crossroads by the fall of socialism in 1989. It is based upon the assumption that american productivity will continue as it has. But neither the society we call america, or the advantage that was western, or the advantage that was american, persists any longer.

We are in for another decade of this economy, and if history is any measure, we are also in for something unpleasantly disruptive in the next generation. And neither side has a plan for getting us out of it.

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