The Buie Knife

In Mass Culture, Why Does Junk Crowd Out Quality?

Down a barren highway toward the Cappadocia region of Turkey, one comes across a lone billboard. See slide show of billboards by American corporations in Turkey.

"Mass culture is responsible for debasing our moral values," some 70 percent of Americans have consistently told pollsters. Not only that, but mass culture is the chief American export, so one could argue that American culture is debasing the world's cultures. 

People the world over tend to agree. But they still buy fast food which makes them fat, spend too much time computer gaming which make them fatter, and sit like couch potatoes for hours watching trash television entertainment rather than quality programming, which makes them even fatter and dumber.  

What is to blame for this sorry state of world affairs aside from consumers choosing the path of least resistance and the lowest common denominator? 

Wealth Gap Between Blacks, Whites Grew Larger 2001-2008

Tony Racina's assertion that African Americans should thank their lucky stars that their ancestors were born into slavery and segregation because they now have the opportunity to fully achieve the American dream ignores the reality that blacks still face a rather staggering wealth divide in relation to whites. It's not surprising that the net worth of the average American is less than it was in 2001. But it is sad and shocking that "the gap between the wealth of white Americans and African Americans has grown. According to the Fed, for every dollar of wealth held by the typical white family, the African American family has only one dime. In 2004, it had 12 cents." -- Meizhu Lui, in a Washington Post column. She is director of the Closing the Racial Wealth Gap Initiative and author of The Color of Wealth: The Story Behind the U.S. Racial Wealth Divide.

Debt Will Continue to Rise Until At Least 2011. Political Implications.

The Economist, a usually fiscally conservative news magazine, points out global economic trends. Hint: The rising debt has little to do with Obama's spending policies, but with broader economic trends and demographic changes.

Political analyst Charlie Cook tracks increasing support for the Republican Party because of concern about the debt. Andrew Sullivan: "This strikes me as an amazing thing. It makes Charlie Brown, the football and Lucy look like the model of intelligent interaction. If you believe in fiscal conservatism, the last place on earth you should look for salvation is the GOP. They have single-handedly destroyed America's finances since the 1980s, with the sole exception of George H W Bush, who was rejected by his own party precisely because of his fiscal sobriety. The current debt is overwhelmingly inherited by Obama, and it would have been nuts to enter office in the downdraft of the sharp recession and set about cutting spending."

That said, the growing debt is a political vulnerability for Obama and the Democrats. Yet the Republicans' refusal, once a recovery is fully in place, to consider any tax increases is irresponsible. On taxes, once health care legislation passes hopefully this year, Obama needs to point out that in 2009, he and the Democratic Congress enacted one of the largest tax cuts in history, with almost no Republican support, in order to stimulate spending our way out of a deep recession.

The answer to controlling the deficit, Sullivan explained previously, ""is there, but politically hard. It would look something like this: raise the retirement age, reform taxes on the 1986 model, cut defense (how many troops do we have in Germany?), enact a Value-Added Tax (VAT), and sell public land."

Previous:

• How Did U.S. Get in So Much Debt? How Might We Get Out?

Is the Recession Over? Some Economic Analysts Say Yes

So August's unemployment numbers are not good: 9.7%, though still below the 10 percent predicted earlier this year. Employment is always a lagging indicator, the very last to expand when a recession is receding.

"8 Reasons Why The Recession Is Over," from Edward Jones investing. Click. Admittedly, they're trying to sell investing, but it does seem there have been some good bargains in stocks in 2009, and there are some positive indications we are beginning to dig ourselves out of a hole. There was also a cover story on Business Week: "The Budding Recovery Has Staying Power",

Previous:

• Economic Optimism for the Long Haul
• Templeton on Investing
• Good Opportunities from Bad Economic News?
• How Did U.S. Get in So Much Debt? How Might We Get Out?
• This Recession Not Yet Nearly As Bad As 1979-83
• New Era of Financial Regulation, Large Deficits, Probably Some Inflation, Higher Unemployment, Smaller Gaps Between Rich and Poor
• Libertarian Free Market Philosophy is Now Completely Bankrupt: Devastating Critiques of Greenspan's Reign at FED from the Left and Right »

Will Obama Bring European-style Socialism To America?

In "On Becoming Europe," Victor David Hanson looks at European-style economic "socialist democracy" and finds it wanting, as I suspect I will in my upcoming travels. But he makes the mistake of assuming that Obama wants to bring "socialist democracy" to the United States, which this article by Jacob Weisburg suggests is impossible, out of touch with American history and tradition, and Obama clearly understands that.

Templeton on Investing

Heard a good quote at lunch today from Sir John Templeton on investing:

Bull markets are born on pessimism,
grow on skepticism,
mature on optimism,
and die on euphoria.

How Did U.S. Get in So Much Debt? How Might We Get Out?

David Leonhardt of The New York Times explains the four factors that have put the U.S. in far deeper "debt than it has been since the years just after World War II." When Bill Clinton left office in 2001, the U.S. was looking at a surplus. Now we're looking at a $1.2 trillion annual deficit.

You can think of that roughly $2 trillion swing as coming from four broad categories: the business cycle, President George W. Bush’s policies, policies from the Bush years that are scheduled to expire but that Mr. Obama has chosen to extend, and new policies proposed by Mr. Obama.

The business cycle accounts for 37 percent of the $2 trillion swing; about 33 percent of the swing stems from new legislation signed by Mr. Bush, including tax cuts and the Medicare prescription drug benefit. Some 20 percent of the swing comes from Obama's extension of Bush policies -- like the Iraq war, tax cuts for households making less than $250,000, and the Wall Street bailout.

About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas. If the analysis is extended further into the future, well beyond 2012, the Obama agenda accounts for only a slightly higher share of the projected deficits.

To reduce the deficit, the government has to get control of Medicare payments. "The only way to do so is to take money from doctors, drug makers and insurers," Leonhardt writes. Republicans want to extend all the Bush tax cuts, "which will extend the deficits further." In actuality, some combination of tax increases and spending cuts are essential, he says. How to deal with trillion-dollar deficits "will become one of the great political issues of the coming decade," Leonhardt concludes.

Andrew Sullivan observes that "the answer is there, but politically hard. It would look something like this: raise the retirement age, reform taxes on the 1986 model, cut defense (how many troops do we have in Germany?), enact a Value-Added Tax (VAT), and sell public land."

Megan McCardle, an economics blogger for The Atlantic Monthly, has a clever response to Leonhardt called "The Deficit Blame Game," accusing him essentially of writing a "how-much-can-we-blame-Bush" column. "The deficit now is not what matters.  Any Republicans who are using it as a political tool to bash Obama should be ashamed of themselves; whatever you think of the stimulus package, one year of massive borrowing is not going to kill us, and the impact on future generations will be small."

She goes on to conclude that Obama must do something to curtail the deficit. "The problem with the budget deficit is that, unlike the deficits George Bush ran, the deficits projected under Obama (and beyond) are actually large enough to potentially precipitate a fiscal crisis." Read the whole thing.

It's good to see President Obama seeking $313 billion in savings from health care reform. That's more than a start. Details. Washington Post coverage.

Is Inflation In Our Future?

No period in American economic history is perfect. We now deplore the popping of bubbles in housing and financial services, the spending sprees built on credit cards and sub-prime loans, the large gap between the rich and poor, and Americans' lack of savings. But we've had worse economic times, and even worse economic times could return if we as a society do not show self-discipline, and in the long run reduce government spending and/or raise taxes or BOTH, according to Robert Samuelson, author of The Great Inflation and Its Aftermath: The Past and Future of American Affluence (2008). Samuelson is a somewhat conservative, but non-partisan economics journalist -- he refuses to vote for fear it will taint the impartiality of his journalism.

While it doesn't make sense to cut spending during the deep recession we have now -- indeed it's important to increase spending in order to stimulate the economy -- in the long run we have to face a reckoning. Raising the average age of retirement is inevitable, as is finding more efficient ways to deliver health care.

Related:

• This Recession Not Yet Nearly As Bad As 1979-83
• New Era of Financial Regulation, Large Deficits, Probably Some Inflation, Higher Unemployment, Smaller Gaps Between Rich and Poor
• Alan Greenspan's Book, 'Age of Turbulence' Is Flawed, But Edifying
• Libertarian Free Market Philosophy is Now Completely Bankrupt: Devastating Critiques of Greenspan's Reign at FED from the Left and Right »

Most Americans Don't Pay High Taxes. But Let's Simplify the Tax Code

Not sure why there is such anger over the U.S. tax burden -- it's at historic lows. Most Americans pay less than nine percent of their income in federal taxes, the Washington Post reports, and middle class families making $61K or less paid three percent of their earnings to the feds in 2006.

I do think there is legitimate anger at the complexity of filing one's income taxes. We ought to be able to file taxes online in less than half an hour, without the aid of accountants. As Andrew Sullivan points out after posting a libertarian Cato Institute video, we should make the tax code much simpler, more transparent, end the loopholes, shelters and deductions.

Auto Industry, Bush Trashed Al Gore's Push to Bring Extremely Fuel Efficient Vehicles to Market By 2003

As the American auto industry faces bankruptcy, it's well to remember their stubborn short-term thinking, and how they colluded with the Bush administration in 2001 to scrap Al Gore's voluntary Partnership for a New Generation of Vehicles, which was on target to market extremely fuel-efficient vehicles by 2003. With cheap oil and gas-guzzling SUVs dominating the market then, Bush and the auto industry thought there was little market for extremely fuel efficient vehicles. Instead of invading and occupying Iraq to secure long-term U.S. access to cheap oil, suppose the U.S. President in the early 2000s had instead declared that Americans, and the auto industry, had to wean themselves from dependence on foreign oil? Sure there would have been some grousing, but how much better off we'd be today.

Related:

• Al Gore: Prescient in 2002 About Iraq and Afghanistan