Things to Come 1 - No Recovery

What we won't be getting - a real recovery.

Americans have always looked to the future for hope.  Our Founders proudly proclaimed the motto on America's Great Seal which you can see on the back of a dollar bill: "Novus Ordo Seclorum," which means "A New Order of the Ages."  They believed that the new concept of a nation founded on absolute liberties granted "by Nature, and Nature's God" would be an example that, over time, the rest of the world would follow.  They believed that the United States they were founding would be the first modern nation.

And so it was; there have been fits and starts, but for two hundred years the long march of freedom triumphed over tyranny.  When the Berlin Wall fell in 1989 and Communism collapsed, Americans and much of the world believed that final victory had been won; some even proclaimed "an end of history."

Today, we know that belief was not merely false but delusional.  No, the people of the world don't want to be oppressed and constantly watching their back lest they be whisked off to the gulag.  But they clearly don't want to take responsibility for their own lives either: they truly do want to be cared for by an all-encompassing "cradle-to-grave" big-government welfare state.  From Greece across Europe to, now, the United States, the voters have risen up to demand that their bottles and blankies not be taken away even if there's no money to pay for them.

Thus we step forward into Four More Years of what the last four years have brought, and the last four decades have given Europe.  It is not yet a dictatorial tyranny nor an all-encompassing police state, though every trip to the airport raises questions of what exactly that constitutes.

The Saddest Words: "It Might Have Been"

One of the reasons socialism is so persuasive is that most human beings have a hard time properly acounting for potential future benefits given up vs. solid benefits available right now.  Countless psychological studies have shown that most people would rather have a dollar today than two dollars tomorrow.  Wouldn't you think that doubling your money overnight would be appealing?  For most people, apparently, it's not.

That is precisely the problem confronting the cause of conservatism today.  Americans, and really the entire Western world, are consumed by an existential fear and dread.  Every member of the famous 99% has, quite rationally, no real confidence that their current way of life can be continued indefinitely.  There is nobody outside of the plutocratic governing classes who might not very well find themselves living on the street this time next year after a series of relatively unlikely but all too plausible Unfortunate Events.

This simple fact doesn't promote rational thought.  Instead, it provokes desperation, clinging to what we've got.  Who represents "what we've got" more thoroughly than Barack Obama's Democrats with their dire warnings of Granny being shoved off a cliff, foodstamps being slashed, and unemployment benefits being cut?

It takes someone with an ice-cold rational mind and nerves of steel to understand that the only hope for real economic stability is to embrace the instability of the market.  Economic history has shown over and over that market instability is the only road to a growing economy and increased job openings.  In today's world, no job is safe; the only safety is in an economy where a replacement job can be readily found, which is not the case today.

Unfortunately, most people have a hard time imagining the jobs not made available, factories not built, companies not founded, inventions and medicines not developed, or future opportunities not made available.  Instead, they only see the job they now have, visibly hanging by a thread, and the government benefits under threat from Those Evil Republicans.  They'll do anything to try to not lose those things, including give up any hope for something better for all of us.  That's what happened in this recent election: America was scared stupid.

We know now what's not going to happen.  There won't be a recovery.  There certainly won't be a balanced budget, serious spending cuts, job growth, or anything else conservatives want.

Instead, this series sets out the grim litany of what will be happening, and in most cases, sooner rather than later.  Some or all of it could have been avoided, but America didn't choose that road.  The time has come to examine the unpleasant truth and to set aside the comforting fiction of silver linings that are of no practical relevance today and tomorrow.

The next installment in this series will examine the subject of most pressing concern to most Americans, which contrary to Bill Clinton's wise counsel was almost entirely avoided by both sides in the 2012 campaign season: the economy, and specifically employment.  Or rather, the lack thereof.

Petrarch is a contributing editor for Scragged.  Read other articles by Petrarch or other articles on Economics.
Reader Comments

As long as we have an illiterate electorate we will have what we now have, socialism, fascism, statism, etc. Will that change between now and 2016? Probably not. This time around the Ron Pauls and some of the religious right sat out the election on principle. Had they come to the polls there would still be law suits galore over tight elections. obama had 8-9 million fewer votes than the first time around so he didn't win a mandate by any stretch of the imagination. He won by default.

So what is going to happen? Petrarch says no recovery. How can you argue with that? We were told that all that the companies wanted was certainty. Now they have certainty and it certainly does not look good for business. Does anyone want to stand up and start a new business or expand an old business? Very unlikely. The only ones that might expand will be the large fascist companies that are guaranteed business and profits by the government. Corporate capitalism will prevail to maybe allow the economy to limp along at a 1% growth rate but it will be a false growth. Anyone with walking around sense knows that these companies favored by the companies are charging rates that are not sustainable. If they had to compete for business they would go under. Guess who gets to pay for these higher rates? That's right, the taxpayer and the debt gets larger and larger and we kick the can down the road again. So we get higher taxes that are hidden by higher costs, more hidden taxes with a 1.6% 10 year bond and the politicians are asking us to pay more and more. These DC rock stars always say that something has to be done about the deficit so they find a cloak and dagger way to tax us. They never mention that they are the ones that caused the deficit in the first place. We have a spending problem. It is that simple.

November 26, 2012 8:38 PM

The go government indoctrination centers have brought us to this point. We have bought into the idea that the government can take care of us.
I disagree that it is fear that is driving the populace to vote, if the voting was honest, for a failure. It is laziness. It is the desire for something for nothing, that keeps us on the downhill slide, a slide that is getting faster and faster each day.
I had the opportunity to help with a start up internet radio site. Three of the four people involved had the idea that once the business got rolling, there would be no need to go to work. The checks would come in on a regular basis. They didn't want to work. They wanted something for nothing. I was the fourth person. I sold out to the other three, and went on my way. The business never really got started. Two of the four were already on the dole. That is the mindset of the people of America today. Let's get something for nothing. That mindset comes from the schools. Children today are taught that the government will provide -- EVERYTHING!
One cannot teach in a State run school without buying a license from that State. That is pure foolishness, and I put it here as an example.
There will be fewer inventions because the government has made it illegal to tinker in your own garage. You need "permission" from the government to repair a car in your driveway. It is an interference with interstate commerce.
It has been surmised that the black people voted for the fool in the White House, and that swung the election. The blacks comprise 13% of the population. What about the other 87%? The surface of the problem has barely been scratched. Peace, Robert Walker

November 27, 2012 10:46 AM

I agree wholeheartedly with Bassboat. Literacy is the issue. A significant portion of the electorate haven't read the constitution, and don't invest any time or effort, in learning about important issues that confront our country.
I've become extremely frustrated, that when asked by reporters, numerous individuals, can't name nor recognize the Vice-President.
Should an individual, who can't name the Vice President, be able to cancel out my vote?
Obama and the Democratic Party are actively seeking to neutralize the vote of the informed taxpayer, by a continual lack of border enforcement, not requiring a photo I.D to vote, and "Comprehensive Immigration Reform" which is nothing more than increasing the percentage of individuals who take advantage of entitlement programs, which will in turn increase the voter rolls of the Democratic Party.
Lastly, the biased mainstream media is a cancer, which is slowly killing our freedom.

November 27, 2012 12:34 PM

The Wall Street Journal reports that uncertainty has been reduced - businesses know that the economy will do nothing but decline, so they're cutting back in investments they'd put on hold until they say how the election worked out:

U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery.

Half of the nation's 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls.

Nationwide, business investment in equipment and software—a measure of economic vitality in the corporate sector—stalled in the third quarter for the first time since early 2009. Corporate investment in new buildings has declined.

At the same time, exports are slowing or falling to such critical markets as China and the euro zone as the global economy downshifts, creating another drag on firms' expansion plans.

Corporate executives say they are slowing or delaying big projects to protect profits amid easing demand and rising uncertainty. Uncertainty around the U.S. elections and federal budget policies also appear among the factors driving the investment pullback since midyear. It is unclear whether Washington will avert the so-called fiscal cliff, tax increases and spending cuts scheduled to begin Jan. 2.

Companies fear that failure to resolve the fiscal cliff will tip the economy back into recession by sapping consumer spending, damaging investor confidence and eating into corporate profits. A deal to avert the cliff could include tax-code changes, such as revamping tax breaks or rates, that hurt specific sectors.

President Barack Obama called a number of business executives over the weekend, including Warren Buffett, Apple Inc. AAPL -0.81% Chief Executive Tim Cook and J.P. Morgan Chase's JPM -0.32% James Dimon, to promote his solution to the looming budget crisis. All sides in Washington, in a departure from a year of deep divisions, have pledged to work together and compromise to avoid going over the cliff.

"The whole world is looking for stability and clarity from the United States," said David Seaton, chief executive of Fluor Corp., FLR -1.30% a large engineering and construction firm. If uncertainty isn't removed, he said, "people will sit on their war chests of cash and return it to shareholders. You'll have a retarded growth trajectory."

Should the White House and Congress strike a deal to avoid the fiscal cliff, the economy could get a boost. "You might very well get a burst of pent-up demand coming at the start of next year," said Paul Ashworth, chief U.S. economist at Capital Economics, a consultancy.

"Given the timing of the drop-off in business investment," he said, "you have to think it's not just a coincidence with the timing of the fiscal cliff."

Unless the business investment slowdown reverses quickly, it could weigh further on growth prospects and the stock market.

Collectively, the members of the Standard & Poor's 500-stock index spent $580 billion on plants and equipment in 2011, according to calculations by the Journal from data supplied by S&P Capital IQ. Spending has run ahead of that pace throughout the year but has slowed in recent months. The latest retrenchment includes such household names as Wal-Mart Stores Inc., WMT -0.59% Ford Motor Co., F -0.05% Boeing Co., BA +0.30% Intel Corp. INTC +0.23% and Walt Disney Co. DIS -0.88%

During the 2007-09 recession, businesses cut back sharply on all kinds of spending. But investment helped propel the recovery, growing faster than the rest of the economy from the second half of 2009, once the recession ended, through the first half of this year. That helped many companies boost productivity and profits without adding new workers.

November 27, 2012 9:11 PM
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