When the State plays god

When a government tries to control every aspect of life, the Law of Unintended Consequences isn’t far behind. Exhibit A: China, which from 1980 to 2015 ruthlessly enforced a “one-child policy:”

China’s population shrank last year for the first time in 70 years, experts said, warning of a “demographic crisis” that puts pressure on the country’s slowing economy…

China’s median age was 22 in 1980. By 2018, it was 40. That will rise to 46 in 2030 and 56 in 2050. In the US, the median age was 30 in 1980 and 38 in 2018. In 2030, it will be 40, and 44 in 2050. India, by comparison, had a median age of 20 in 1980 and 28 in 2018.

Get that? By mid-century, half of China’s population will be 56 or older. There will be many more years of population decline ahead. Why? Because after two generations of using everything from fines to abortion and forced sterilization to enforce one child per family, single-child or childless families are now the Chinese social norm:

Northeast China – Heilongjiang, Liaoning and Jilin provinces – has a population of about 109 million, and its socio-educational level is several years ahead of the country average. The fertility rate in northeast China was only 0.9 in 2000 and 0.56 in 2015. This means that the next-generation population in this region is only a quarter the size of the last generation.

Demographers consider a fertility rate of 2.1 (children per woman) to be the “replacement” rate, neither increasing or decreasing a country’s population.  A fertility rate of 0.56 roughly means only 1 in 4 women of childbearing age have a child!  Absent an extraordinary event, China is well established on the road to demographic and economic decline previously pioneered by Japan.

Japan’s economic crisis was essentially a demographic crisis. The decline in young people in the labour force has led to a shortage in manufacturing: the workforce employed in industry decreased from 22.9 million in 1992 to 17 million in 2017, and the workforce is ageing, leading to a decline in production and innovation. As a result, Japan’s manufacturing exports as a share of the global total declined from 12.5 per cent in 1993 to 5.2 per cent in 2017, and the number of Japanese firms ranked in the Fortune Global 500 fell from 149 in 1994 to 52 in 2018.

In any society, an increase in the number of elderly leads to a drop in savings, and a decrease in the labour force leads to a decline in return on investment, which reduces the investment rate…

Since 2000, China’s total fertility rate has been lower than that of Japan. The average in 2010-2016 was 1.18 in China and 1.42 in Japan. This means China’s ageing crisis will be more severe than Japan’s, and its economic outlook bleaker.

In Japan’s case, the demographic crisis was precipitated by cultural changes. Women found new opportunities outside the home and began marrying later… if at all.  Unwed parenting still carries social stigma in Japan, so this had a dramatic effect. Add to that the notorious Japanese work ethic of self-destructive loyalty to a corporation, and it’s easy to understand why professional couples have been also reluctant to have children for more than a generation.

China, however, will have to face the fact its government prevented or aborted the next generation. But before we look down on our noses at them, it’s important to recognize the impact of our own government’s actions. Since the Roe v. Wade Supreme Court decision, millions of babies have been voluntarily aborted in the United States. In this era of heated debate over immigration, legal or otherwise, it’s significant to realize that without such immigration, the population of the United States and of most Western European nations would be in decline as well.  That doesn’t mean I support the ongoing invasion of the U.S., however.

The future belongs first to those who show up.  It looks very likely the world powers of today have sown the seeds of their own overthrow, and are destined to be replaced.  Groups have been dispossessed of their patrimony and replaced before.  Perhaps reservations await the descendants of those who developed the concept for the original Native Americans.  History has a knack for that kind of irony.

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Uncle Sam’s debt is getting “interest”ing

That which cannot go on forever, ceases:

Interest payments will make up 13 percent of the federal budget a decade from now, surpassing spending on Medicaid and defense.  Finding the money to pay investors who hold government debt will crimp other parts of the budget. In a decade, interest on the debt will eat up 13 percent of government spending, up from 6.6 percent in 2017.

Within a decade, more than $900 billion in interest payments will be due annually, easily outpacing spending on myriad other programs. Already the fastest-growing major government expense, the cost of interest is on track to hit $390 billion next year, nearly 50 percent more than in 2017, according to the Congressional Budget Office.

Some members of Congress want to set the stage for even more red ink. Republicans in the House want to make last year’s tax cuts permanent, instead of letting some of them expire at the end of 2025. That would reduce federal revenue by an additional $631 billion over 10 years, according to the Tax Policy Center.

Despite the tax cuts pushed by the Trump administration, the Federal government collected a record amount of tax revenue from October 2017 to August 2018. Washington doesn’t have an income problem. It has a spending problem.  Roughly a third of the Federal Budget in any given year is financed by borrowing money.  A family that ran its household budget that way would soon be bankrupt.  The Federal government has creative ways of masking its increasing insolvency, but it’s there nonetheless.  The spending spree of the past two decades was possible mainly due to low interest rates across the economy.  As the economic outlook in the U.S. turns upward, so will those interest rates.  A single percentage point increase equates to about $160 billion, given the official government debt of just shy of $16 trillion.  (Counting the ongoing raid of Social Security Funds — listed innocuously as “intragovernmental holdings” — the actual debt is over $20 trillion.)

In short, next year the government will spend close to $400 billion just to service the debt.  Not a penny of that amount will improve the infrastructure of our nation, modernize our military or provide services for our citizens.  It will simply go straight into the pockets of those who hold pieces of our country’s debt.

That debt has increased eight times faster than the government’s annual budget.  In 1981 — 37 short years ago, the U.S. debt hit $1 trillion for the first time.  That was an accumulation of more than two centuries.  In less than 40 years, that debt increased 1,600%.  The Federal budget over the same period increased from $1.9 trillion in 2015 dollars* to $3.8 trillion in 2015 — a “mere” doubling in spending.

We’ve been running like the cartoon coyote in thin air after leaving the cliff.  Gravity — in the form of normal historical interest rates — is about to kick in.

It will not be pretty.

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* People are so used to hearing about inflation, and the need to “adjust for it” when comparing years, that few stop to ask what drives it.  The standard explanation is that basic market economics causes it.  Not true — government deficit spending does.  By flooding the market with dollars to enable his spending sprees, Uncle Sam diminishes the value of each individual dollar.  It is, in effect, a “stealth tax” on the spending power of Americans.  The value of a U.S. dollar remained remarkably stable from 1787 to 1913, with a directly convertible exchange rate of $20 to an ounce of gold.  Only after creation of the Federal Reserve, which enables this gorging on debt, did that change.  As of this writing, one ounce of gold is worth about $1200.  That represents an 85% loss of dollar value in just over a century.

This ‘n’ that

A few notes to hopefully provoke your thinking today:

I’ve thought for some time that our nation’s enemies use our desire for civility and decorum to handicap us in the culture war.  When the other side says “have you no decency,” it’s usually a dodge to avoid being accountable for their own actions.  It seems I’m not alone in thinking so:

…while appropriate restraint is always a part of this consideration, we go too far when we decide that we must always adhere to every aspect of a dying civility no matter the cost. Failing to openly defy the Left’s blatant aggression does not preserve civility — it only emboldens the uncivil and betrays their victims.

…civility is not a moral absolute and its form is always adjusting along with culture, it’s requirements are determined primarily by social contract — the kind of behavior we all implicitly or explicitly agree to when interacting with one another.   …when one party violates a contract, the other party is no longer bound by all of its terms. If you sign a contract to buy a car, and the dealer refuses to turn it over you, you aren’t “sinking to their level” by refusing to hand over your money. If you contract an employee who never shows up for work, you aren’t “repaying evil for evil” by withholding his wages. The same is true when dealing with people who are deliberately uncivil to civil people — it fundamentally changes what the rest of society owes them.

We need to stop taking the lazy road of “be civil though the heavens fall” and begin being deliberate about when to be civil — and when not to be.  For starters, I suggest the following guidelines…  (read the whole post here)

One of the biggest areas in which ‘civility’ and emotional blackmail is used against us is in the area of immigration.  So it’s nice to see the rest of the world COMBINED recently took in more refugees than the U.S. for the first time in 38 years.  Keep that little factoid handy for the next time your Leftist acquaintance decries the supposed ‘heartlessness’ of the U.S.

Leftists also demand expensive judicial proceedings for everyone who shows up on our borderlands, in order to accord them “due process rights.”  Turns out the Supreme Court has ruled consistently since the late 1800s that non-citizens are not entitled automatically to the same expensive access to our judicial system that citizens have.  Another handy note to have in countering our enemies’ talking points (and yes, I’m calling them enemies now.  Their actions show it’s an accurate term, whether using it is civil or not).

One reason the media are held in such contempt today is the realization they, too, have broken the social contract.  Presenting slanted information while claiming to be impartial is hardly being ‘civil.’  Yet the Associated Press seems to have done it again, trying to tug heartstrings by claiming the military is ‘discharging’ immigrants rather than allowing them to become citizens.  But it turns out there is more to this than the AP would have you know, including the fact that ‘discharge’ is not the appropriate word for someone who hasn’t even been to Basic Training yet.  But remember, kids, “fake news” is only a Trump laugh line…

Finally, for those of us who aren’t tired of winning yet, the economy is strengthening to the point labor is becoming in short supply — and hence, more valuable and lucrative.  Could it be that allowing thousands of people to flow into our nation unchecked each month helped depress wages for decades?  Inquiring minds should want to know…

Slowing traffic both ways

Since the 2016 election Americans have been focused on the debate over whether to build a wall on the southern border to staunch the flow of illegal immigrants into the country.  (For those new here, this is a proposal I wholeheartedly support.)  The debate, however, usually fails to note the significance of what is leaving the country at the same time:

Asylum is in large part a colossal scam designed to provide Latin American countries with both a safety valve and a cash cow of foreign exchange.  In 2017, remittances sent back to Honduras totaled $4.33 billion and make up a significant part of the Honduran economy… Remittances comprised 17 percent of the nation’s gross domestic product (GDP) in 2011, according to World Bank estimates, the second largest share of any country in Latin America or the Caribbean…

Overall,

Immigrants in the United States in 2016 sent home ((worldwide)) more than $138 billion – a sum that exceeds the entire gross domestic product of Kuwait – according to a new report from the Pew Research Center[.]

This is essentially involuntary foreign aid from the United States — on a scale three times larger than the official foreign aid budget! — to a host of nations that are less inclined to reform their basket-case economies because of this parasitical safety valve.

Since both flows — inward and outward — need to be addressed, today’s linked article makes a solid case for taxing these remittances to build the wall, noting one Congressman has already proposed to do just that:

Rep. Mike Rogers (R-Ala.) sponsored a bill in March that would slap a 2 percent tax on all money transfers from the United States to Mexico, Central America, the Caribbean, and South America.

If Rogers expanded the idea to include all transfers to countries outside of the United States, it would generate $2.76 billion, based on the 2016 remittance totals.

“Over 10 years, there it is… There’s your wall.”

The means to achieve better national security and control of our own sovereignty exist.  The question is whether we will exercise the will to use them.  I don’t support building the wall because I hate foreigners (far from it).  I support it because I love my country, and can see what lawless immigration and economic colonization are doing to it.  I can also see how other nations in the world are less motivated to solve their own problems when they can simply shift their most restless populations to the U.S., all while taking a cut of their economic good fortune.  All of this needs to come to a stop, for everyone’s long-term sake.

 

In other news: water is wet

It appears humanity continues to need examples of why certain cherished economic theories simply don’t work:

A Panera Bread Co. restaurant in the St. Louis area where patrons have paid as much or little as they want for a meal for almost eight years is closing its doors.

Panera founder and executive chairman Ron Shaich told the St. Louis Post-Dispatch that the St. Louis Bread Co. Cares Community Cafe in Clayton, Missouri, is closing Tuesday because it was on a month-to-month lease and the store would have required a big investment. St. Louis Bread Co. is part of St. Louis-based Panera, which operates more than 2,000 bakery-cafes.

The nature of the economics did not make sense,” Shaich said.

The cafe opened in 2010 in an existing Panera-run restaurant blocks from the St. Louis County government buildings. The idea for the Clayton cafe was that people who could afford to pay the suggested price or more would do so, subsidizing those who could pay just a portion of the price or none at all.  ((i.e. “from each according to his ability, to each according to his need…”  — Jemison))

In the seven years since, “we served probably a half-million meals through this cafe, all at no set prices, as a gift to the community,” Shaich said in a phone interview with the Post-Dispatch. He said customers paid, on average, about 85 percent of the suggested price, proving, he said, “that people are fundamentally good.”

“We loved it, it worked well, it proved that the idea would work,” Shaich said.

No, it proved that the operation could continue only until it required an infusion of new capital, and those who could provide it decided not to throw good money after bad.  If they only averaged 85% of the suggested price, it was probably bleeding cash the entire eight-year run.  Heck, even the Soviet Union managed to stumble along painfully for 70 years until the contradictions of its economics caught up with it.  That doesn’t mean they were on to something.

By the purse strings

Since leaving the military, former Chairman of the Joint Chiefs Admiral Michael Mullen has spoken often about what he considers to be the biggest danger to U.S. security: the national debt.

China may be about to give us an object lesson in that assessment:

China added to bond investors’ jitters on Wednesday as traders braced for what they feared could be the end of a three-decade bull market.  Senior government officials in Beijing reviewing the nation’s foreign-exchange holdings have recommended slowing or halting purchases of U.S. Treasuries, according to people familiar with the matter.

China holds the world’s largest foreign-exchange reserves, at $3.1 trillion, and regularly assesses its strategy for investing them. It isn’t clear whether the officials’ recommendations have been adopted. The market for U.S. government bonds is becoming less attractive relative to other assets, and trade tensions with the U.S. may provide a reason to slow or stop buying American debt…

Most Americans who pay attention to government spending habits are happy merely to see the deficit fall.  But even if the deficit were brought to zero (i.e. the government miraculously balanced its budget) the outstanding debt still has to be renegotiated periodically, as old bonds mature and new ones are issued.  When there is less demand for new bonds, the yield (interest) has to rise in order to become more attractive.  Thus, even with a balanced budget, our roll-over debt is a potential time bomb.

For the last decade, the U.S. has been able to take advantage of record low bond yields as the Federal Reserve held interest rates at historic lows in the wake of the mortgage debt crisis in 2008.  This, incidentally, is why your bank pays you next to nothing on your savings any more — the same policy that keeps the government’s borrowing costs low essentially robs individual savers.  Unlike taxes, people don’t immediately recognize this fiscal effect the debt has on them.

If forces beyond the government’s control — say, the largest holder of U.S. debt decided not to roll over its holdings — caused bond yields and interest rates to rise faster than desired, the results would bankrupt the U.S. Treasury overnight:

Given its sheer size, if the interest rate on that debt were to rise by even 1%, the annual federal deficit rises by $200 billion. A 2% increase in interest rate levels would up the federal deficit by $400 billion, and if rates were 5% higher, the annual federal deficit rises by a full $1 trillion per year.

The only way to begin mitigating this risk is to not just balance the budget but to start paying down the debt.  Think that will happen?

Me neither.  The day may be fast approaching when the government, in order to service its creditors, has no choice but to cut many of the programs people have become entirely dependent upon.  It may also impose confiscatory taxation, seizing the property of those who’ve managed to save and invest during these irresponsible years.  In both cases, the social consequences will be enormous.

As the Instapundit likes to say, “things that can’t go on forever, don’t.”  The exponential rise of our national debt can’t go on forever.  It’s simply a question of when an event will occur that undeniably shows the emperor has no clothes.

Much more of this — now!

The Justice Department announced today that it filed a lawsuit against Crop Production Services Inc. (Crop Production), headquartered in Loveland, Colorado, for allegedly discriminating against U.S. workers in violation of the Immigration and Nationality Act (INA).

The complaint alleges that in 2016, Crop Production discriminated against at least three United States citizens by refusing to employ them as seasonal technicians in El Campo, Texas, because Crop Production preferred to hire temporary foreign workers under the H-2A visa program.  According to the department’s complaint, Crop Production imposed more burdensome requirements on U.S. citizens than it did on H-2A visa workers to discourage U.S. citizens from working at the facility.  For instance, the complaint alleges that whereas U.S. citizens had to complete a background check and a drug test before being permitted to start work, H-2A workers were allowed to begin working without completing them and, in some cases, never completed them.  The complaint also alleges that Crop Production refused to consider a limited-English proficient U.S. citizen for employment but hired H-2A workers who could not speak English.  Ultimately, all of Crop Production’s 15 available seasonal technician jobs in 2016 went to H-2A workers instead of U.S. workers.

The U.S. should not simultaneously have unemployment and programs to permit the hiring of foreign workers.  It’s long past time to take all the incentives out of the “guest worker” programs by making them prohibitively expensive for U.S. companies.  Guest worker visas should be so difficult to obtain that companies find it cheaper to offer retraining opportunities to American citizens than to import Indian or Chinese laborers. As retraining becomes more widely available, the government should also make clear that Americans who fail to take advantage of the opportunity will no longer be allowed to draw unemployment benefits.

This may all be part of the “dismal science,” but it’s certainly not rocket science.  Where globalists went wrong was in applying the principle of comparative advantage to international trade without taking into account that money, like water and electricity, takes the path of least resistance.  “Free trade” cannot be fair trade when one party (like China) doesn’t offer a minimum wage or the basic economic protections we’ve come to take for granted.  By allowing such lopsided relationships, we’ve sold our economic inheritance for pennies on the dollar at WalMart, while allowing practices we find abhorrent to flourish overseas.  This is hardly the U.S. leading by example.

Protecting American jobs may cause the prices of some goods to rise, but that’s literally a small price compared to allowing our economy–and its workers–to be undermined fatally by current practices. As Toby Keith sang:

“He’s got the red, white and blue flying’ high on the farm,
Semper Fi tatooed on his left arm,
Paid a little more in the store for a tag in the back that says USA

Hire American.
Buy American.
BE American.

America first.