Constitution

Type A Voters and the Simple Fix

June 7th, 2012 // 2:23 pm @ Oliver DeMille

Raghuram Rajan of the University of Chicago recently said in Foreign Affairs (May/June 2012):

For decades before the financial crisis of 2008, advanced economies were losing their ability to grow by making useful things.

“But they needed to somehow replace the jobs that had been lost to technology and foreign competition and to pay for the pensions and health care of their aging populations.

“So in an effort to pump up growth, governments spent more than they could afford and promoted easy credit to get households to do the same.

“The growth that these countries engineered, with its dependence on borrowing, proved unsustainable.”

Now many of the nations in Europe, North America and leading Asian countries are facing the consequences of their reliance on debt.

We call it the economic crisis of 2008, or the Great Recession, but it began long before the Bush or Obama administrations.

Indeed, during the Ford and Carter eras of the late 1970s, constitutional scholars widely warned of this very problem.

Sadly, their recommendations went unheeded.

It now falls to our generation to deal with the realities of over forty years of bad policy, and the economic challenges ahead will likely be worse than economists are admitting.

The problems will likely still plague our children and grandchildren in their earning years.

Raghuram Rajan suggests the following fixes:

Stop using debt as the solution to increasing demands for government and private spending
Educate or retrain the sectors of workers whose jobs are being mechanized, replaced, or sent abroad
Create government policies that encourage entrepreneurship and innovation
Reduce regulations that hurt competition
Shrink government as needed to reduce unnecessary and unproductive functions
Move beyond attacks on bonuses and “the one percent” and emphasize the need to provide more entrepreneurial opportunity
Avoid calls for stimulus

Of course, not all nations will follow identical policies, but these are the general principles of overcoming our economic challenges. Rajan’s article outlines needed changed in more detail, and one quote is worth repeating:

Americans should remain alert to the reality that regulations are shaped by incumbents to benefit themselves.

If only we could stitch this quote in needlepoint, frame it and hang it in every American living room.

And get every voting citizen to read each issue of Foreign Affairs.

We have less of a Washington problem and more of a citizen problem. Too many citizens are on vacation from our duties. We want to be Type B citizens who vote, attend jury duty and watch the news, and to look down on Type C citizens who don’t do any of these.

But freedom depends on Type A citizens, who closely watch what government does and make their influence felt.

Imagine an America where the first branch of government consists of thousands of unelected citizens who study history and the great classics, read proposed treaties, important court cases, executive orders, budgets, and top bills proposed at the local, state and Congressional levels. That’s the formula for freedom, and no other formula has ever worked—in America or in all of history.

When the people don’t actively watch out for their freedoms, they lose them.

When Presidents, Senators, Governors, Justices and CEOs have an entirely different level of education than the average citizens, freedom will decline.

Again, there are no exceptions in history. In fact, there is a word for such a divide between the education of the leaders and the education of the masses. The word is Oligarchy.

As Christopher Hayes wrote in Twilight of the Elites, “In reality our meritocracy has failed not because it’s too meritocratic, but because in practice, it isn’t very meritocratic at all…. In other words: ‘Who says meritocracy says oligarchy.’”

Hayes also noted that, according to Pew Research, Canada is almost 2.5 times more economically mobile than the United States, Germany is 1.5 times as mobile, and Denmark is 3 times as mobile.

So a young person in Denmark is three times as likely to rise from the middle to the upper class as our children in America. Indeed, the only advanced nation where such progress is less likely than in the U.S. is Britain—the modern icon of class divides.

Again, the solutions are relatively simple: reduce regulation that dis-incentivizes economic growth, adopt policies that encourage entrepreneurship and innovation, and stop relying on debt.

This will cause governments and households to tighten their belts in the short term, but long-term free enterprise will rekindle economic growth and widespread prosperity.

If only our leaders would take notice. As Hayes wrote in dystopian terms:

It would be a society with extremely high and rising inequality yet little circulation of elites.

“A society in which the pillar institutions were populated by and presided over by a group of hyper-educated, ambitious overachievers who enjoyed tremendous monetary rewards as well as unparalleled political power and prestige…, a group of people who could more or less rest assured that now that they have achieved their status, now that they have scaled to the top of the pyramid, they, their peers, and their progeny will stay there.

“Such a ruling class would have all the competitive ferocity inculcated by the ceaseless jockeying within the institutions that produce meritocratic elites, but face no actual sanctions for failing at their duties or succumbing to the temptations of corruption….

“In the way bailouts combined the worst aspects of capitalism and socialism, such a social order would fuse the worst aspects of meritocracy and bureaucracy.

“It would, in other words, look a lot like the American elite circa 2012.”

All of that would be fine, if the rest of the people lived in a society with true free enterprise. Let the super-elite act like elites always have, but let the regular people live in freedom.

Over time, freedom creates growth, opportunity, socio-economic mobility and widespread prosperity.

Alas, the elites seldom ever make such changes on behalf of the people. If we want to be free, regular people must start behaving like Type A citizens.

***********************************

Oliver DeMille is the co-founder of the Center for Social Leadership, and a co-creator of Thomas Jefferson Education.

He is the co-author of New York Times, Wall Street Journal and USA Today bestseller LeaderShift, and author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

Category : Blog &Citizenship &Constitution &Featured &Foreign Affairs &Government &Independents &Leadership &Politics &Statesmanship

Next…?

May 14th, 2012 // 10:16 am @ Oliver DeMille

THE NEXT BIG TREND: Pooled Sovereignty
by Oliver DeMille

I recently spent two days in a Barnes and Noble reading the bestsellers on current trends and issues. I do this as often as I can—at least three times a year.

Sometimes I emphasize business bestsellers, and other times I focus on political books.

When I was too ill to do these visits for a time, I used Amazon to order the bestsellers every four months. But I prefer the bookstore, because in addition to books it has all the leading periodicals.

How to Read a Book(store) in 4 Easy Steps

I usually find a comfortable chair and stack 20-30 volumes and magazines on the table or floor next to me. Then I skim everything that looks interesting. That’s Step 1.

Step 2 consists of reading the books and articles that really pique my interest. I read them closely, and take notes in my notebook. Step 2 takes at least three hours and sometimes a lot more. If needed, I go back for a second day of reading.

Step 3 is buying the books and periodicals I want to have in my personal library, and Step 4 is re-reading them and organizing my notes from the trip and writing as needed.

On this trip, my travel plans got delayed, so I ended up staying longer than expected. I perused the business bestsellers and added more books to Step 2. Then I skipped to Step 4 and studied three books I’d already read over the last two days.

When I do these bookstore research trips, I’m always looking for something special. I want to see developing trends, new directions, and significant key words that signal where cutting-edge thought is headed. Only once in a while do I find a truly Big Trend, one which promises to remake the future. “Pooled Sovereignty” is just this kind of trend.

Sovereignty Broken Down

Sovereignty is the final say on something, or, having the ultimate power. The American framers were so concerned with the abuses caused by the limitless power of the British government that they established America with split sovereignty.

This meant that the federal government had just twenty powers, all listed and numbered in Article I, Section 8 of the Constitution. The final say, or sovereignty, over everything else was left to the states, or to the people – and the states were limited in their respective constitutions.

The people were ultimately sovereign.

Moreover, just in case the federal government tried to ignore the Constitution and usurp sovereignty from the states and the people, the framers divided the smaller portion of sovereignty given to Washington D.C. into three branches and established checks and balances to keep too much power from accumulating in any one place.

For decades scholars, students and interested citizens from both Left and Right have warned that sovereignty is centralizing in Washington, that split sovereignty is being replaced by a massive centralized sovereignty—all power in one place.

Pooled sovereignty is even worse. This occurs where international organizations or treaties make the final decisions for the people, regardless of what national governments say. Indeed, some of the most damaging choices being made today are decided without the consent of Congress or the Supreme Court – not to mention the states or the people. They are made by treaties, the United Nations, G-20, World Bank, International Monetary Fund and other international organizations.

Most Americans turn off their thinking when they hear this list of international agencies—but the elite perk up with interest. This is where the buzz is.

The breeding ground for a global system that supports pooled sovereignty is found in top universities, and it is promoted by the bureaucratic elite in many nations. Much of what occurs in Washington only makes sense to those who understand this drift toward globalization.

The Grand Design

For example, a push for increased government spending, debt and regulation on small business (even in the face of recession and a struggling economy) make perfect sense if the goal is to shift the American economy away from international leadership to global participation—to make the U.S. economy and government more like those of Europe and Asia.

Stimulus, universal health care, less entrepreneurship (through increased levels of government regulation)—all are necessary to create an American economy that can fit seamlessly with the industrialized European/Asian nations.

Another step in this process is to end the use of the U.S. dollar as the world’s reserve currency and replace it with an IMF or other currency. The IMF has already proposed this change, and international support for it is growing.

Just to be clear: When the dollar replaced the British pound as the world’s reserve currency in the 1970s, the average net worth of nearly every home in Britain fell more than 30% the day after the change. The British economy has still never fully recovered, nearly forty years later.

If the same change comes to the U.S., we will likely experience a worse economy for the next four decades than we have over the past four years.

Unfortunately, as Forbes reported, “It’s hard for the State Department to imagine an international agreement to which America is not part.”[i] Republican and Democratic presidents since FDR have drastically decreased American freedom using treaties. This is bad for Americans, good for pooled sovereignty.

Ultimately, there are two types of leadership that can turn this around: presidential leadership, and citizen leadership.

We Need You to Lead Us

Sadly, few presidential candidates (from either party) and exactly zero elected presidents since 1959 have effectively pushed back against this growing threat.

As for the American citizenry leading the charge: find out what percentage of your friends can tell you the details in the Law of the Sea Treaty, the Rome Statute, or UN Agenda 21, and that is a predictor of how likely the people are to effectively lead.

In fact, this lack of citizen leadership means there is little incentive for presidents to take action against pooled sovereignty. Or to put this in practical terms, a half-century with a bad economy is likely ahead.

Unless something changes…

We need citizens who study what our government is doing, who read treaties and court cases and executive orders, etc. Without this, the age of American prosperity will continue to decline.

Where to start? The three books I closely studied at Barnes and Noble are an excellent beginning. If you are liberal, try Drift by Rachel Maddow. Conservatives will probably prefer Dick Morris’s book Screwed. If you’re an independent, read them both. In addition, everyone should read How Do You Kill a Million People by Andy Andrews. Just reading these books and the documents they cite would be a great study on current America.

The future belongs to our citizens—and the level of our citizenship will determine what happens in the years and decades ahead. If we are Type B citizens (who vote, go to jury duty, and watch the news), we’re going to witness the decay of American freedom and prosperity.

We need Type A citizens, who in addition to voting and jury duty also deeply study the issues, government documents and decisions our government officials are making. We can only influence things if we know what’s really happening.

And: Next?

The second day at Barnes and Noble, the intercom announced that children’s reading time was starting. I took a break from reading and walked over to see America’s future. One mother brought her small son, and she read a thick book while he enjoyed reading hour alone. I was surprised they went ahead with the reading hour when only one child showed up. I don’t know why others didn’t bring their children, and I wonder what kind of America this boy and his peers will inherit.

I asked his mother what book she was reading. It was titled—no lie—City of Lost Souls. I wish that boy had been joined by an army of his peers—preparing to lead.

All through history, free people have been nations of readers. When the people oversee the government, they remain free. When they don’t…

[i] Quoted in Screwed: How Foreign Countries are Ripping America Off and Plundering Our Economy – and How Our Leaders Help Them Do It by Dick Morris and Eileen McGann, HarperCollins, May 8, 2012.

Category : Aristocracy &Blog &Book Reviews &Citizenship &Constitution &Current Events &Foreign Affairs &Government &Independents &Leadership &Statesmanship

The Summer of 2012

April 10th, 2012 // 8:37 pm @ Oliver DeMille

What to Expect as the Year Heats Up

The temperatures are rising for summer, not just literally but also in politics, economics and culture.

There are several important trends that are sure to influence the months ahead, and indeed the summer of 2012 promises to be both historic and memorable.

Each of us should consider these significant trends and keep an eye on how they develop:

1. There is a great debate occurring in the United States about the proper role of government.

One side argues that the government should do whatever it can to make a positive difference in the world, the other that it must be limited to its constitutional roles and leave everything else to the private sector.

Both believe in an important role for government, but disagree on its scope and especially its scale.

This debate is making its way through the entire 2012 election, but it is actually bigger than politics.

It is cultural, and it literally permeates our societal views on economics, education, health care, business, transportation, information, technology, entertainment and beyond.

The disagreement gets to the very heart of how we define freedom in our society.

In this debate about the ideal role of government—especially the federal government—the two big parties are widely divided.

The summer contest will cause more Americans to consider this great question: What is the proper role of government?

Is it to do what the Constitution says, or to do whatever it deems desirable at any given time?

2. Between these two sides, independents find themselves frequently frustrated with the ideological stances of both major parties.

Independents want the government to do better in some things and to be more limited in others.

Independents are less of a bloc than either conservatives or progressives, so it isn’t clear how they will vote.

3. There are three major branches of the Republican Party: the Establishment (which often calls itself the Rockefeller Republicans and is labeled Nixon Republicans by its opponents), the Tea Party or Right Wing populists, and the Reaganites or old-style conservatives.

Mixed into these is a fourth group, the neo-cons, who emphasize America’s role as the world’s sole superpower.

In the 2012 political environment, the one person who speaks with credibility to all four groups in the Republican community is Representative Paul Ryan.

What this means for the future is unclear, but at this point Ryan is the most uniting figure in the GOP.

Moreover, Ryan is credible to a large number of independents. Senator Marco Rubio is also credible to all these groups as well as many independents.

Expect to hear more from these two men over the course of the summer and well into the fall.

4. While the Democratic Party is also divided into at least three major groups (liberals, progressives and proponents of various—and at time conflicting—special interests), all three are united behind President Obama in the 2012 election.

Many non-Democrats may find it surprising that the liberal wing of the Democratic Party is less enthusiastic about President Obama than the progressives and many proponents of special interests.

The reality is that the President has governed more as a progressive than a liberal, and is therefore seen as centrist by many on the Left.

Again, this is a shock to many who get the majority of their news from conservative sources.

The Obama campaign must choose whether to swing left or to the center in the 2012 election, or find some way to appeal to both Left and Center.

This will be a major theme of the summer. So far the campaign has pivoted left and emphasized the message of class division.

It remains to be seen whether this will be the gist of the campaign or simply a feint to be followed by renewed centrism.

5. The campaign of 2012 is being framed by both sides as an attack on each other.

President Obama’s major message isn’t a vision of the future but rather an attack on what Republicans have done, what the Ryan budget means for America, and how we must avoid a return to what he calls the failed Republican policies of the Bush Administration.

So far the Republican message has followed the same playbook: it isn’t yet about a vision of the future but instead emphasizes the failures of the Obama Administration.

Americans are notoriously focused on the future (David Brooks called “Futurism” the American religion), and the winning candidate may well be the one who effectively connects with American voters on a shared vision for the future.

If this does come, it likely won’t happen until fall. The summer may shape up to be deeply negative—at least in political circles.

Attack ads have worked so far in the election, and this will likely continue.

The sooner a top candidate can effectively pivot to a moving positive view of the future, the more support such a candidate is likely to garner from independents.

6. This summer’s Supreme Court decision on Health Care may turn out to be bad for President Obama’s campaign.

If the Court upholds the law, the Republicans will make it a rallying point for the November elections.

If the Court strikes it down, the Obama Administration will probably look vulnerable and ineffective.

If the Court rules the entire law unconstitutional, it could hurt the Republicans as twenty-somethings are taken off their parents’ insurance and other changes occur.

But if the Court simply strikes down the individual mandate, it will most likely hurt Democratic candidates.

7. The Ryan budget may be the crystallizing division in the 2012 debate and election.

Likely most Democrats will be against it, most Republicans for it, and independents will determine America’s future as they analyze and decide whether or not to support it.

Every American should study this budget.

8. Iran… Need I say more? What happens in the Middle East could have drastic impact on fuel prices, inflation and employment rates, all of which will significantly influence the year ahead.

9. Debt crisis? Credit rating? Inflation? Jobs? Credit availability? Small business regulations? Economic upturn or recession? It is unclear where the economy will go in the coming months.

Welcome to the summer of 2012. Temperatures are rising, and the months ahead will make a real difference in America’s future.

In this sputtering economy, will most Americans enjoy a summer of vacations and good times or will a growing frustration heat up as we approach election day?

Whatever happens this fall, our summer will have lasting impact on the history of the United States and our world.

***********************************

Oliver DeMille is the co-founder of the Center for Social Leadership, and a co-creator of Thomas Jefferson Education.

Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.

Category : Blog &Citizenship &Constitution &Current Events &Featured &Government &Independents &Leadership &Politics

American Decline

November 3rd, 2011 // 3:00 pm @ Oliver DeMille

Is it Avoidable or Inevitable?

“We’re not going to bail our way out of this crisis, we’re not going to stimulate our way out of this crisis, we are only going to educate, ultimately, and imagine and invent our way out of this crisis.”
—Thomas L. Friedman, Meet the Press

“By 2020, the U.S. will be spending $1 trillion a year just to pay the interest on the national debt.
Sometime between now and then the catastrophe will come. It will come with amazing swiftness.”
—David Brooks, The New York Times

On the same week[i] the White House released its prediction that unemployment will get even worse every year in 2012, 2013 and 2014, Friedman and Mandlebaum’s book entitled That Used to Be Us focused the national dialogue on the deepening decline of the United States.

Fortunately, Freidman and Mandlebaum also outline a plan for how America can come back soon.

Harry S. Dent’s newest book, The Great Crash Ahead, further elaborates on this topic.

Friedman and Mandelbaum’s argument goes something like this: the United States is in serious trouble because of four great trends that are bringing massive change.

Our decline didn’t start with the housing crisis in 2008, but back in the late 1980s at the end of the Cold War.

Four Trends

First, according to Freidman,[ii]

“We made the worst mistake a country or species can make, at the end of the Cold War, when we misread our environment. We interpreted the end of the Cold War as victory…not understanding that it was actually the onset of one of the biggest challenges we’ve ever faced as a country.

“We had…unleashed two billion people just like us. But the nineties turned out to be quite a party thanks to the peace dividend, thanks to the massive productivity boost of the Internet and thanks, most importantly in many ways, to the collapse in oil prices, which was like a huge tax cut.”

Second,

“9/11 set us on a really bad course. We spent the last decade—in many ways necessarily, in many ways excessively—chasing the losers from globalization rather than the winners.

“And we made up for a lot of the fall behind…by basically injecting ourselves with steroids. Just as baseball players did it to hit home runs, we injected ourselves with credit steroids, creating a huge housing boom and construction boom to create jobs.”

Third,

“The number of people who can compete, connect and collaborate exploded in the last decade. You know,”

Freidman continued,

“I wrote a book in 2004 called The World is Flat, which was about this connecting of the world. We’ve gone from connected to hyper-connected…. When we sat down to write this book, I actually went back to The World is Flat, I looked in the index, and I realized that Facebook wasn’t in it.

“When I said ‘the world is flat,’ Facebook didn’t exist, or for most people it didn’t exist, Twitter was a sound, the Cloud was in the sky, 4G was a parking place, Linked In was a prison, Applications were what you sent to college, and for most people Skype was a typo…

“That all happened in just the last seven years. And what it’s done is taken the world from connected to hyper-connected. And that’s been a huge opportunity, and a huge challenge.”

Fourth, we’ve witnessed a huge generational shift.

“We went from the Greatest Generation, whose philosophy was basically to save and invest, and we are still living off their saving and investing, to basically the Baby Boomer generation, whose philosophy turned out to be ‘borrow and spend.’

“And we’ve really shifted from a generation born in the Depression, World War II and the Cold War—these were serious people, they wouldn’t think of shutting down the government for a minute—to a generation…that is much less serious.

“We’ve gone from basically the values of the Greatest Generation…to a Baby Boomer generation whose values are situational….

“You put them all together, and I think you really account for a lot of the hole we’re in right now…”[iii]

The book goes in more depth on each of these themes. More importantly, the book outlines some well-considered solutions.

For example, major employers, according to Friedman, are “all looking for the same kind of employee now: Someone who can do critical reasoning and thinking…who can adapt, invent, and reinvent the job, because in this hyper-connected world change is happening so fast. You know, there are companies now in Silicon Valley that do quarterly employer reviews…because their product cycle is changing so fast. You can’t wait until the end of the year to find out you have a bad team manager.”[iv]

Clearly, Freidman argues, education has got to change—it’s been too rote, and now it needs to prepare thinkers, leaders and innovators.

This is a hard job for an industry made up of mostly non-entrepreneurial, deeply security-minded types.

“What we argue in the book…going forward there really are just going to be two kinds of countries in the world: HIEs and LIEs: High-Imagination-Enabling countries and Low-Imagination-Enabling countries.

“Forget Developed and Developing….

“We’re not going to bail our way out of this crisis, we’re not going to stimulate our way out of this crisis, we are only going to educate, ultimately, and imagine and invent our way out of this crisis.”[v]

Friedman and Mandelbaum’s analysis is much needed in our current nation.

We train our youth not to take risks, and to get the “right” answer rather than the wise answer.

These two big problems are a serious challenge.

Without wise risk, prosperity and leadership are impossible.

Friedman’s 5 Pillars

The authors of That Used To Be Us note that the United States won at every major historical turn because we followed what Friedman called “the 5 Pillars”:

1-“Educate our people up to and beyond whatever the level of technology is…

2-“Immigration. Attract the world’s most talented and energetic people…

3-“Have the world’s best infrastructure…

4-“Have the right rules for incenting, capital formation and risk taking…

5-“Government-funded research.”[vi]

Note that these five form a powerful private society where the government maintains the right rules and incentivizes free enterprise.

All five have significantly decreased since the year 2000, really since 1989, and today the Right is strongly against 2 and 5 while the Left is adamantly against 4.

Both are caught in the trap of trying to accomplish 1 and 3 using the same old methods that haven’t worked for over two decades.

No wonder we’re in decline.

We’ve stopped doing the most important things that brought America’s original and lasting successes.

The Left pushes too strongly for government-only solutions while the Right rejects any government role.

As journalist Paul Gigot noted,

“The irony is, of the past thirty, forty years, that the prestige of government has collapsed most rapidly when government has tried to do…far more than it is capable of doing.

“Government prestige increased under Ronald Reagan, the great supposed enemy of government, because he showed when you focused on a couple of things and did it well, and got the economy growing, that people said, ‘You know what, they’re competent there. It’s working.’”[vii]

We need government.

We need it to protect equal rights for everyone and maintain a system where all are treated equally before the law.

This encourages free enterprise, economic growth and improved prosperity.

Societies without such governments have little freedom.

Of course, the danger is that good government can become overbearing and put a damper on economic growth and success.

Today we have government that has clearly over-reached in a number of ways, and a backlash from the Right that wants little or no government.

We need to adopt a middle approach, good government that is, in a phrase used in the American founding, “strong and limited.”

Actually, in The Federalist Papers the term was frequently “vigorous and limited.”

We want a strong government, and at the same time we want a limited government. That is what good constitutional government is all about.

Many from the Right may consider the Friedman/Mandlebaum book a push for too much government just as many from the Left will wonder that it doesn’t push for more government solutions.

American citizens should take a step back and consider the proposals on their merits, however.

I don’t agree with every suggestion in this book, but I find a number of them to be well considered.

On the big topic, the broad concept that both government and the private sector must work together in their proper roles in order to get our nation back on track, I think the book is right on.

On the subject of education, this book is especially valuable. In truth, as the authors affirm, bailouts and stimulus packages—as necessary as they may be in certain crisis situations—will not solve America’s problems.

Real solutions depend on wise policy from government and mostly from innovation and leadership in the private sector.

Indeed, the best government can do is remove the current regulatory pressure on small business and allow the entrepreneurial American spirit to get our economy growing again.

Another recent book addresses these same issues from a different perspective.

Doom-and-Gloomers

I have long been a fan of the work of Harry S. Dent because his predictions, like those of John Naisbitt and Alvin Toffler, have been strikingly accurate even though they have been more specific, and therefore more likely to fall short, than those from most other forecasters.

Dent argues in his latest book, The Great Crash Ahead, that “the great economic crisis of 2008 will likely return in 2012, or 2013 at the latest, and will be even worse.”

His analysis is alarming, but interesting. Note that Dent is not a doom-and-gloomer.

Remember, when multiple authors in the mid-1990s were predicting a major crash ahead, Dent published The Roaring 2000s, which forecast that the stock market would boom for the next decade.

He also said that the boom would increase until a shock and downturn in 2008.

For most of his career, Dent has taken on the doomsayers and offered a counter-intuitive forecast of economic boom ahead.

The fact that he said the cycles would turn in the other direction in 2008, and that now he says they’ll get even worse, should concern every American.

Dent wrote:

“Debt and stimulus is like any drug: it takes more to create less effect.”
“Deflation is the only possible scenario in the decade ahead.”
“The U.S. Dollar will appreciate and be the safe haven—not gold, silver, the Euro or the Swiss Franc.”
“Home prices will fall by 55% to 65% from the top before this crisis is over.”
“Stock [will] crash to between 3,300 and 5,600 on the Dow by the end of 2013, or 2014 at the latest.”
“Also, the crash will be worldwide, not just in the United States and Europe, as the dramatic China bubble comes to an end.”
“The trends for the coming decade are crystal clear: we are going to experience a deeper downturn and deflation in prices, not inflation. We call this the Winter season; it comes predictably once in a lifetime, currently every 80 years, which means that very few people will understand what is happening.”[viii]

Whether we face massive inflation ahead, as Ken Kurson has argued,[ix] or the deflation Dent predicts, the economic future promises to be challenging.

As Dent notes, from 1775 to the year 2000 Americans accumulated $20 trillion in private debt.

From the year 2000 to 2008 (latest numbers), we accumulated $22 trillion more—for a total of $42 trillion.[x]

No doubt this trajectory has increased since 2008.

Since the economic difficulties ahead follow patterns that we haven’t witnessed since the 1930s, most of the current common wisdom on economics is lacking or just plain wrong.

“Unlearning is the key to times of change and transition,” Dent wrote. “What worked in a boom does not work in a downturn.”[xi]

Here are some of the things which have changed:[xii]

“It is your father’s economy”!
Don’t buy a bunch of new stuff—get out of the spending habit.
Make do with what you have.
Expect lower wages and lower prices.
Realize that debt is going to get a lot more expensive than it used to be.
Realize that assets and savings will be worth more over time.
Start thinking in terms of multiple streams of income.
“In the new world, management is the problem, not the solution.”
Entrepreneurship is in: “the coming decades and century will be seen as the age of the individual and the entrepreneur.”
Keep your business “lean and mean.”

Dent’s charts, arguments and analyses are a great read.

Add to this view the following thoughts from Friedman and Mandelbaum’s book, and we have an important look at the probable future in the years just ahead:

“No one should ever have to say ‘I am moving from America to Singapore because it is more hospitable to innovation and entrepreneurship.’ Just the opposite should be true. ‘You will know you’re successful,’ said PV Kannau, the India outsourcing entrepreneur, ‘if new companies in China and Brazil say, ‘We want to move our headquarters to America because that is the best place in the world to do business.’’

That’s not happening right now, because our regulatory and tax scheme is far from the best in the world….

“Twenty years ago, even ten years ago, a report such as this one would never have been commissioned. The United States was the best country in the world for business of any kind, the one with the largest and most open market, the most transparent legal system with the strongest property rights, the biggest and most efficient financial system, the most modern infrastructure, and the most dynamic ongoing research and development in almost every field. It was a magnet for capital and talent. No company of any size, indeed no company that merely aspired to international growth, could afford not to operate there, and none needed a consultant to tell it that.

“Now, alas, things are different. Over the past decade especially, American has changed, and not for the better.”[xiii]

How many more voices need to say the same thing before Washington listens?

Until we free up the American economy, reduce the red-tape and taxes on small business, and become the most inviting economy on earth, our economic problems will continue.

Many believe they will get worse—much worse.

The real tragedy is that all this is avoidable.

Free enterprise works.

America knows how to incentivize and encourage business growth. It’s time to get serious about restoring our free-enterprise economy—and soon!

The United States has one of the highest business tax rates in the developed world, and one of the most burdensome regulatory schemes.

Of course we can’t compete in such circumstances.

The question every American should ask is simply, why?

Why would the country that stands most for freedom in all world history now turn its back on the principles of freedom that made it great?

Why would we put our trust in bureaucracy, regulation and government rather than the proven dynamism of American enterprise?

We Can Only Ask, “Why?”

Whatever the answer, unless we make changes quickly the economic forecast ahead is dismal.

Friedman said America is like a nation turned upside down.

At the bottom is an enterprising people passionately seeking to overcome economic challenges with innovation, ingenuity and tenacity, while at the top is a government consistently blocking the entrepreneurial efforts of its people.[xiv]

Again, we can only ask, “Why?”

When Paul Kennedy wrote The Rise and Fall of the Great Powers over two decades ago, many scoffed at his prediction that American hubris was leading to our eventual downfall—in the way so many great nations and empires of history have declined.

Even the leading voice of anti-decline, Joseph S. Nye, has suggested that many of Washington’s policies are making it difficult for the U.S. to remain the world’s economic leader.

Hopefully the solution won’t be as drastic as Friedman, Mandelbaum and Dent predict.

“Shock therapy,” they suggest, may now be the only effective way to change our country.

If this is true, we are in for rocky times ahead.

One thing is certain.

Friedman and Mandelbaum rightly argue that the best way out of this is not so much to study the fall of Rome, the Ottoman Empire, or other historical examples of what not to do, but to make a national focus of studying what worked best in our own American history.[xv]

We know the answers, because they are part of our national heritage.

It is time to put aside our modernist sense of superiority and admit that we want what past generations had economically and learn what worked for them.

It will work again, if we are willing to learn and make the needed changes, because the principles of freedom are timeless and powerful.

Decline is not inevitable, but only a wise people well-studied in the principles of historical success can avoid it.

We must become such a people.

[i] September 1-7, 2011

[ii] Meet the Press, September 4, 2011

[iii] Ibid.

[iv] Ibid.

[v] Ibid.

[vi] Ibid.

[vii] Ibid.

[viii] From Harry S. Dent, The Great Crash Ahead.

[ix] See Ken Kurson, “Let Them Eat iPads,” Esquire, May 2011.

[x] Op. Cit., Dent.

[xi] Ibid.

[xii] Ibid.

[xiii] Thomas L. Friedman and Michael Mandelbaum, That Used to Be Us.

[xiv] Op. Cit., Meet the Press.

[xv] Op. Cit., Freidman and Mandelbaum.

Category : Aristocracy &Business &Citizenship &Constitution &Culture &Featured &Government &Leadership &Liberty &Politics

Definitions That Matter, II

September 26th, 2011 // 10:49 am @ Oliver DeMille

As I have said before, one mark of ruling classes in society is the understanding of nuanced definitions. In American society, the original design was for the regular people to be the rulers.

Here are some words that need to be closely considered, understood and discussed by the regular people who care about freedom: