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Our treasured colleague Kulak is at it again with another post on his Substack.
I know that a slow-moving budget crisis is not the spiciest meatball, but the fiscal situation in the United States is looking bad. Debt to GDP is now above the previous high set at the peak of WWII. But whereas the post-wars years saw demographic and technological tailwinds, the current epoch is characterized by low fertility and productivity growth.
It gets worse:
While it might be possible to split a shrinking pie and remain friends, it is definitely IMPOSSIBLE to split a pie when more than 100% of the pie has already been promised to one person or another. Give a person a dollar, they are mildly happy. Take a dollar away and they are FURIOUS.
At this point, I'd encourage you to find a nearby senior citizen. Please explain to them that they don't deserve their social security check. You see, the money that was supposedly SAVED was in fact already SPENT. Far from saving money, their generation actually left a sizeable DEBT to future generations. So not only would seniors have to give up their government checks, they would have to pay hundreds of thousands of dollars in additional taxes just to get to even.
I'll wait.
Just how irrational are the expectations of our Boomer rulers? Slobodan Milošević understood.
The last politician to even contemplate reforming Social Security was George W. Bush, who claimed to have earned "political capital" shortly after his re-election in 2004. By March of 2006, his approval rating had fallen from the high 50s to just 31. Nowadays, politicians in either party don't even mention Social Security except to praise it effusively and promise to defend it at all costs.
We are well and truly fucked. The Federal government will be forced to default or inflate away its debts within the next 10-20 years. And this is BEFORE the numerous suggestions to somehow EXPAND the welfare state, whether they be student loan forgiveness, payments to favored racial groups, or universal basic income. After all, ours is a great laboratory of democracy. So while the Federal government enters a slow fiscal doom loop, some states like Illinois, California, and New York seem to be attempting a speed run.
How do we get out of this? Kulak has a few ideas, but I'm a little less dramatic.
AI. Maybe we will somehow thread the needle between doom and nothingburger. 🤷
Immigration. The U.S. could escape this problem by cherry picking the best citizens from other countries and telling everyone else to GTFO. We are still, after all, the best country (>10 million population subdivision). This would work, but it would never happen and it's probably a bad thing for the world at large.
Inflation. Many liabilities are indexed to inflation such as Social Security and Medicare. But we could inflate away all the existing debt. Debt to GDP actually decreased in 2022 because of 9% inflation. That level of inflation for a decade or two could make the problem less bad. It would also be helpful if the official inflation numbers were even more fake.
Things are just shittier in the future. Brazil is still a country. This is your future.
You're missing 5.: we manage to cut the fat successfully and take out the people who are currently kept in power by a combination of Boomer social standards (education spiral is 100% their baby- remember, their parents were GI Bill recipients) and luxury (natural resource development). There's a lot of ruin in the nation, but there's also a lot of possible reform, provided the people currently profiting from the ruin aren't able to keep a grasp on that power. And being that the countries most affected by this are the US (too well-armed and too large for DC to maintain order) and Canada (Laurentian Elite too strategically isolated to prosecute a Canadian civil war + 25,000 active duty servicemen not from Western Canada) they, in my opinion, have the best chance of any nation to turn out OK. All the US has to do is not get too dramatically wrecked as far as its economic inputs go (like, for instance, losing a war over Taiwan).
Problem areas currently include:
It's noteworthy that all of these things are progressive goals; fortunately, as far as a peaceful transition of power goes, that group generally has a very hard time raising legions to fight for them given their politics are literally "you're fighting for your own oppression, which is right and just" (rather than along ethnic or religious lines).
I take it this is a deeply misleading graph that fails to account for the Flynn effect/IQ being renormalized over the decades. A 100IQ in the 1930s is equivalent to around an 80IQ circa 2000.
"The numbers used to be bigger" is less impressive when you know that the scale changed.
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