Thursday, June 30, 2016

Economic Growth Remains the Sine Qua Non

For all the political rhetoric flowing around, the overwhelming issue for the US and Europe is economic growth.  There is no economic growth in either region, there hasn't been any substantive economic growth for a generation.

The absence of economic growth means those at the bottom of the economic pile will find their situation deteriorating.  That's what we've been observing. 

So what are the politicians advocating?  Virtually all of the proposals from western politicians involve finding more ways to slow economic growth.  Since we've reached zero, these proposals imply negative economic growth in the future.

Negative economic growth means: (i) the stock market rally is over, perhaps for good; (ii) the economic plight of lower and middle incomes will continue to worsen; (iii) the situation for minorities will become dramatically worse.

What does negative economic growth mean for the wealthy, the bureaucrats and the elite?  The best analogy is Venezuela.  In the early years of the Hugo Chavez' regime, the Chavez gang lived well and parts of the public lived well by expropriating assets that belonged to someone else.  This theft, reminiscent of the old Soviet regime, perpetuated the regime of Chavez and his successors. 

Today the wealthiest person in Venezuela is Hugo Chavez's daughter.  She did great!  Meanwhile, ordinary citizens battle each other daily in the streets of Maracaibo to try to find food to eat.  This food fight has become a daily spectacle in what was once one of the most properous countries in Latin America.  Now Venezuela is a country and a society that is unraveling.  The economy has fallen apart and civil society has completely disintegrated.

In America, the next shoe to fall is the state of Illinois.  Both the city of Chicago and the state of Illinois are bankrupt.  The state of Illinois has unpaid, immediate bills due in excess of $8 billion.  This is a city that was run for decades by one family -- the Daley family.  There used to be the idea that Mayor Daley made things work.  Daley mortgaged Chicago's future with massive debt, he caved in to any and all demands of public employee unions, and managed a process that could only end in the bankruptcy of Chicago.  Now that process is approaching its inevitable end.

Other cities and states are not far behind Illinois.  High on the list is the state of California, which has zero chance of avoiding eventual bankruptcy.  Meanwhile, California, squandering it's marvelous climate and geographic advantages, continues to drive businesses from it's state, with the conceit that California will always be able to survive regardless of how punitive the anti-business climate.  That conceit is wrong.  California will go bankrupt.  And, the end game is not far down the road.

The majority of American states and almost every large city are on a pathway to bankruptcy.  There are a lot of reasons, maybe the biggest is the public pension debacle -- but, even without the public pension debacle, there are plenty of other reasons for the coming bankruptcies.  Meanwhile, the infrastructure in most American cities is crumbling and there are no resources left to do anything about it.

What does the current American administration think is the biggest "threat" to American welfare?  Climate Change.!  Guess what, climates change.  Earlier geologic ages had over sixteen times as much carbon dioxide in the atmosphere as we have today with absolutely no discernible impact upon global temperatures.  That's what the facts show, as opposed to the current clamor to further shut down economic growth by punitive, irrational, anti-business measures being promulgated in the name of the absurd battle cry of battling "climate change."  Climate change is the "Y2K" of the current generation, but much more damaging to the economic prospects of the vast majority of persons living on today's planet.

Unless there is a return to a concern for economic growth, only the rich and the comfortable and the bureaucrats of the world have a bright future.  The vast bulk of mankind has little to look forward to as long as the elites preserves their hegemony over the peoples of the world.

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