Products of the Past

by Bill Bonner.Posted Jan 17, 2011.

You know what else is a product of the past? Solar panel manufacturing in Massachusetts. The state gave Evergreen Solar at least $45 million in subsidies. “Green” technologies got help from the federal government too – in the form of tax breaks. But last week, the company said it was moving its manufacturing business to…China!

And guess what else is a product of the past – Paul Krugman. The New York Times columnist tries to explain the division in US politics as a split between Republicans, who want less government and more liberty, and Democrats, who want more government and more fairness.

Yeah, yeah…

In Krugman’s simpleminded world…it is a struggle between good and evil…smart and dumb…progress and backsliding. He sees the democrats as the good guys. The republicans are bad guys.

Such a simpleton’s world must be a comfort. You don’t really have to do much thinking. Everything is black. Or it is white.

Too bad for Krugman, but most of the world is actually gray. If the republicans were so squarely in favor of limited government and liberty, how come they didn’t actually cut government spending when they had the chance? They ran the show for years. And during those years government spending went up faster than it did under the democrats.

A look back over the last 100 years finds trends that go way beyond republican or democratic administrations. Almost every year, the reach of the federal government expanded. More people were covered by more programs…with more debt and spending obligations pushed farther into the foggy future. Now, according to Prof. Laurence Kotlikoff, the full measure of that unfunded, largely off-the-books, debt is over $200 trillion – making the US government, effectively, insolvent. And that didn’t get there just because of democrats.

Nor will electing a republican make it go away.

And guess what else. If you look at the situation here in France, you see much the same thing. The cultural references are different. The debaters use different words and different concepts. There are no republicans…no democrats. And yet…except for the fact that France no longer has imperial aspirations…the situation is much the same. The government has promised everything to everybody.

Look…according to our new Daily Reckoning theme…political parties, voting, the blah, blah of partisan debates…as well as Paul Krugman…

…they are all almost irrelevant…all “products of the past”…

…relics…emblems…icons…symbols…

…full of sound and fury, but signifying nothing.

The real trends are bigger than that. What is at stake here is a model of government that began with Otto von Bismarck. It is a model in which the state supposedly serves the interests of the citizens. (Under the previous model, there were no citizens…just subjects who owed a duty of obedience to the sovereign…and in exchange received protection.) In Bismarck’s model, citizens give up a portion of their output…and stand ready to protect the state with their lives. In return, the state gives them the right to participate (through elections etc)…provides protection from foreign states and domestic outlaws…and makes sure that their physical needs are taken care of.

This model seems to be headed for bankruptcy. The big question is: when the state is unable to provide the benefits it has promised…what will happen? Will the masses accept less? Or will they revolt? Or will a new model evolve…peacefully?

Stay tuned.

Regards,

Bill Bonner,
for The Daily Reckoning

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America's most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind The Daily Reckoning. Dice Have No Memory: Big Bets & Bad Economics from Paris to the Pampas, the newest book from Bill Bonner, is the definitive compendium of Bill's daily reckonings from more than a decade: 1999-2010.

kenn

Government is like a train. No way are you changing its course unless you uproot the tracks. Doubtful that it going to happen peaceably because so many people are receiving govt assistance they simply won’t know how to survive. They’ll get angry, go out and blow up some tracks.
steverino

if the bismarck model is bankrupt—we are DOOMED!

zola’ portrayal of the franco-prussian war shows the military prowess and statesmanship involved in getting bismarkian
nationalism a toehold in france.
Bruce Walker

Sorry to hear about the departure of yet another manufacturing venture to China. What this country really needs is a new technology no one else wants to steal. Something like manfacturing rigid airships or zeppelins.
Star 2011

200 trillions of funding gap!!! For every credit, there is a corresponding debit, and vice-versa. External debts total a couple of trillions only, the rest of the debits should have been balanced internally in credit color. Exactly where is the mysterious missing trillions. Suspended somewhere under mattresses or carpets??? Loose exchange control rendering freeflow of fund and consequently forging an open internationalised accounts, whereby regardless of internal or external stuffs all are equivalent to assets or liabilities in the possession of earthian???

Anyway, the couples of trillion external stuff is next to impossible to write-off.
And, the entire industrialisation is east moving. Couldn’t it be smashed down further, so that a vision to rebuild it from ashes is in the horizon??? What holds the future seems to be the shiny metal.
phelps who cant swim

I wonder what the new model would look like? If another democracy it will not take long before it looks like what we have now.

Will it come about peacefully? Hell no! The left will not accept having to work, or compete for work with others. They have held power for far too long to let go now. The parasite has to be plucked from the host and destroyed or it will find another host. This is democracy in action.
BraceYourself

Finally someone has said it,,,,the truth! We are in an untenable position! The we is of course the USA. We are half socialistic government with subjects and capitalists swirling around the permeniter!
Will the misguided socialist leaning fuzzy minded ones join the producers to a large enough extent so as to control the situation!
My guess is probably not. If Obama and the Dems/Progressives have as Obama suggested in a Colorado speech in 2007 formed a police force for the President we are in for a fight! That would be the worst seneraio!
Hope for the best, Prepare for the worst!
Lagirl

This is Bonner’s second reference this week to a possible revolution.
jmr bayou bobby

“as well as Paul Krugman…

…they are all almost irrelevant…all “products of the past”…

…relics…emblems…icons…symbols…

…full of sound and fury, but signifying nothing.”
_______________________________________

other names come to mind: Schumer, Sharpton, Jackson, Dean, and the 534 other MofC’s

except mine, he’s a good old boy
John

“Lagirl said
This is Bonner’s second reference this week to a possible revolution.”

It is a sad fact of life that when empires collapse, things like this can happen. America could go out with a whimper or a bang, we’ll soon see. The one thing that is becoming abundantly clear is that we are on our way out and nothing appears able to save us from our rendevous with fate. Bill’s not the only one talking like this, some of the rhetoric I’m hearing on the internet is downright scary.
Waldinger Brown

Yes, empires collapse, John, but that’s no reason to assume there will be a revolution.

The British Empire collapsed in the 1940s. So? There were no violent upheavals, nor was there a peaceful revolution. The British simply got on with being a first-world nation that was no longer a superpower.

The same will likely happen to the U.S. in the coming decades. We will turn into Belgium or Australia – a wealthy nation that no longer wants to invade third-world countries and murder and rape innocent civilians there.

That is all.
CT

“He sees the democrats as the good guys. The republicans are bad guys.” The democrats are just as bad. They are all bad.
John

“Now, according to Prof. Laurence Kotlikoff, the full measure of that unfunded, largely off-the-books, debt is over $200 trillion – making the US government, effectively, insolvent. And that didn’t get there just because of democrats.

Nor will electing a republican make it go away.”

Thank you, I have been saying for a long time that there is no real difference between the parties, at least when it comes to growing big government and spending someone elses money.

Our government will continue to grow exponentially until it consumes the host. When the final collapse begins, big government will spend the last of the money it doesn’t have to appoint panels to study why it doesn’t have any money.
Facundo

“Lagirl said
This is Bonner’s second reference this week to a possible revolution.”

I already bought my V for vendetta mask! I’m waiting… maybe the same will happen here very soon… in Argentina.
Weather Forcast

Industrial revolution is over. French, Chinese revolutions are now past perfect tense. What’s coming next would most probably be printer revolution or golden revolution.
jack

I READ with interest what you say about Britain “JUST GOT ON WITH IT”. Yes we did and what have we today a dumping ground for any would be peice of wandering shit that wishes to have a free hand out from the powers that be. It’s dying and is in its last death throws. Many good people with brains have gone, they can see tomorrow and they do not like what they see coming , me included. I live in Cambobia. This part of the world is tomorrow;mine and yours are yesterday.
Brian B.

Mr. Bonner, the sad part is, most informed people already know the USA is insolvent, and even with this awareness are willing to just shrug their shoulders and say “Oh Well, that’s the way it is.”
As for me – I am making plans as best I know how to avoid the worst for my children and grandchildren. That is why I read you stuff. Most of what you toute comes to fruition over time.

Keep up the good work.

Recent Articles