U.S. to become world's largest oil producer by 2020, report says
11-13-2012, 08:29 AM
More like everyone else except Americans are heavily taxed. That’s not being spoiled, that’s just paying what the damn thing costs vs. paying for what it costs plus financing a whole lot else.
I’m not that optimistic (surprise!).
The reason is because a large resource endowment will generate national wealth, yes – but what good is that if the fundamental behavior of the economy is sub-par?
Over the next 10-30 years, the share of Americans who do poorly in school, drop out, commit crime and other detrimental behavior towards overall economic growth will increase significantly. Wage inequality will therefore also increase, as wage growth will be confined to the higher-end while immigration and population growth at the lower end of the scale will continue to depress wages. This is discounting the danger of serious inflation, and is the reason why median household incomes have not increased since 1972, for two main reasons: the number of households has increased at the lower end, and this is due to 1) divorces – divorce is the best way to impoverish yourself and 2) high-volume low-skill immigration.
At the same time, families will continue to be under attack from feminists, popular culture and perhaps even government. In order to mitigate the negative consequences of divorce, single women and divorcees will demand more hand-outs and compensation for losing access to their partner’s/husband’s income, which will only be possible through increased redistribution and higher taxes.
Today, these groups (that is, single women and disenfranchised – the working poor, who are increasingly made up of poor immigrants who in turn show a stubborn tendency even after several generations to under-perform in school and are over-represented in crime) will form an “entitlement alliance” the purpose of which is to extort increasing amounts of revenue from the one demographic in society that produces enough to support itself as well as others, ie. educated, hard-working adult men. All other population groups are dependent either as net-receivers of benefits vs. taxes, or in the family relationships themselves. Except what we’re going to see is that fathers and husbands are going to be asked not to pay for their wives and children – the classical dependency relationship throughout the history of mankind and the reason why the nuclear family was such an efficient working unit – but instead these men will be required to finance increasing benefits to swathes of society to which they have no affinity and owe no allegiance other than that ictated to them by government - government controlled by liberals, civil rights' activists, progressives and their minions - as the fight is extended to encompass not just moral rights but socio-economic rights as well with equality as the ultimate right.
The entitlement alliance will increase in size the next 10-30 years. Their increasing power was best documented in this latest election and also in California under proposition 30.
And as redistribution and taxes increase to support this growing synthetic demographic, tax hikes will accelerate as each new tax-increase generates even less revenue than the last, bringing growth to a screeching halt, as citizens will increase their efforts to hide their savings away from the IRS, and circumvent the spirit of the law – with more resources dedicated to tax-planning rather than to doing what they do best – earning a living. Law-enforcement will devote increasing resources to punishing tax-evaders while the struggle to maintain law and order in inner cities and certain regions of the nation becomes increasingly insurmountable due to strains on public finances and the constant failure of new government initiatives to stem the tide of anarchy.
Meanwhile, what’s going to happen to monetary policy? Right now the federal government is financing record deficits by printing money – and thanks to Chinese currency controls and the Euro crisis, alternative reserve currencies aren’t readily available. Yet the Chinese have been reducing their dollar-held assets (as the China Development Bank launches the first real wave of Chinese corporate colonialism) while the Fed is buying assets at prices no one else is willing to pay – this means the Fed’s balance sheet has exploded and the quality of assets held is likewise pretty crappy – I dare not speculate as to what security the Fed has for the junk that is American debt that they continue to buy. Add to this that most Federal debt is short-term financed and this means it will be very sensitive to interest rate fluctuations. A doubling of the interest rate from 2 to 4% is not unimaginable, and this will increase the federal budget deficit by another 3-400 billion dollars. More if the debt continues to grow. This means total annual interest payments (forget amortization) will probably exceed 700 billion within a few years. And because of these crappy returns on fixed income, everyone’s buying equity, so we’ve already created a new asset bubble on which many retirement portfolios depend.
The US is already in debt up to the hilt (total household, government and corporate debt @ 500% of GDP). This basically means we own a whole lot less than we think we do. Yet with these record-low interest-rates, there’s little incentive to pay back the debt or increasing savings rates, which is what got us into this mess in the first place – decades of living beyond our means, essentially covering the cost of unsustainable behavior in a mountain of borrowed dollars.
Over the next 10-30 years, there is little I can see that indicates we are going to stop living beyond our means, and start making do. The entitlement alliance is going to vote to requisition more of total output to pay for their own consumption, increasing the advantage and return to those who are interested in immigrating to the US for its social benefits and the relatively lax demands required in return (not even English!). At the same time the opportunity cost to divorce will decrease, so family break-ups will become more common. And these groups will vote for more of the same.
Take California’s proposition 30, for instance. A solid majority voted for tax-increases – for the highest earners (who already pay the vast majority of taxes). No one seemed to discuss that the reason these increases were necessary was because of massive increases in consumption of public services by the poorest. Instead of addressing increasing costs that have ballooned and are the reason for the deficit, the solution Californians voted for was to bite the hand that feeds it. And this vote was only possible because of the large income-gap, which in turn is due to 50 years of uninhibited immigration from poor countries. It is simple economic logic that you will not change your ways just so that someone else can reap the benefit of your cost savings.
Not to ignore our foreign policy challenges. We’ve wasted time a money trying to colonize Afghanistan, gutting the moral of our armed forces trying in a game of hide-and-seek with goat herders who have no incentive to play by the rules. We must accept an alliance with treacherous Pakistan if we are to even have a hope of achieving the neo-conservative and progressive wet-dream of civilizing the barbarians in the Hindu Kush. And as we waste time and money on a pointless colonization effort and more yet in a never ending orgy of drug-addict-like binging on the least productive in our society, the Chinese have been saving for tomorrow. What happens when the Chinese decide to build the blue water navy that will render our global influence increasingly marginal? We can’t even afford peacetime, how do we afford assisting our allies in their time of need? There is no money for defence now, let alone when we will need defence budgets at much higher ratios-to-GDP to match the Chinese – and don’t put your faith in the magnanimity of a rising China – unlike the West, the tradition of introspection and self-criticism is unlike to brace the Chinese when they punish local governments for trying to assert their sovereignty within their own borders over Chinese corporations who have little respect for local needs or CSR. As things look right now, anything but a weak cry of protest is the best America will manage down the road since our leaders will be devoid of options, because any such options were forfeited long ago when it was decided we’d rather bankrupt ourselves paying for welfare for the entitlement alliance.
A year from now you'll wish you started today
