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How Americans Have Coped With Decline

By Rick Ackerman Posted on March 31, 2010, 12:37 am EDT Last Updated April 8, 2010, 8:00 pm EDT

(Editor’s note: Is economic recovery slowly emerging? And is there perhaps a benign side to the alarming expansion of the nanny state under President Obama? Readers aggressively rejected both of these ideas in responding to yesterday’s essay by “Donniemac.” Following are the comments of Chris T., whose thoughts mirror our own, especially where they pertain to the steepening decline in America’s standard of living.)

I could not be as sanguine as [Donniemac]. We always read about all this being caused by the general profligacy of an entire generation. To some extent of course that is true. However, what is the backdrop to all of that? A few generations of Americans grew up in a generally sound economic environment, where the norm was that the next generation would do as well or better than their forebears. It is this situation that finally went under about 40 years ago, as demonstrated by the real median-wage “growth” ever since.

In order to cope with this development, meaning finding a way to keep that “normal” alive, Americans adopted coping mechanisms. First was the double-earner family, but when that failed to suffice, it was credit, credit, credit. Those that benefit(ted) from this were happy to oblige. Both changes had their costs, and they were not only financial. The loss of a stay-at-home parent (usually the Mom) had many non-economic costs as well. (To those women who chose to work instead of mother, this was not a loss; but many had no choice but to work).

Coping Mechanism

Now, of course, even the credit coping mechanism has failed, so that at some point the bitter realization of having to do with less than our parents had will have to sink in. This should have happened long ago, of course, but paradigm shifts of this nature are slow in coming.

As college education has become a major part of many families’ consumption, student loans were another way of coping with the roughly 20x cost increase over 40+ years. That is now failing too, with crushing debt killing the futures of grads — and just today, the about-to-be-signed full socialization of the student loan program.

Bottom line: Those who merely tried to sustain the standard of living they knew from childhood are to blame, sure; but the real blame goes to the devaluing monetary system, which has forced this general backsliding.

A Fundamental Flaw

As to the nanny-state commentary, “I used to be opposed to laws that protect people from themselves … But I have slowly come to the realization that those laws also protect me from the irresponsible. So, as I pay for some idiot…” Unfortunately, this attitude is fundamentally flawed, for you have accepted the government taking from you for the benefit of others as correct and normal; and also, that government can impose even more on your freedom in order to right the wrongs it created in the first place.

You would not have to suffer a stricture on your freedom if others weren’t being bailed out for their stupidity. Old English/Scots law has a general principle, namely that you are not your brother’s keeper. This differs quite drastically from other Roman-influenced systems, where not being a keeper can be a criminal act of omission (as opposed to our criminal acts of commission).

Paying for Your Beliefs

There may moral/religious/blood-tie reasons why you will feel compelled to be another’s keeper for their stupidity, but those are your personal ties/beliefs that I do not share. I have others, which you do not share. By accepting the nanny state, you ultimately support  the idea that we are collectively responsible for doing for others what any one of us might choose to do. Thus, you want me to pay for your personal moral suasion.

Anyone empowered in this “democracy” of ours should bear the costs for their actions by themselves, or at worst, rely on aid freely given by others only, if that exists. In a society with values and morals, such free aid will and does exist. It is only compulsory aid which should not exist, and which should be resisted by all who value freedom.

And that is why the founders had it right in creating a republic rather than a democracy. They knew that some are more capable than others. Unfortunately today, we only want the benefits (i.e., full enfranchisement) but not the consequences.

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  • Chris T. April 1, 2010, 4:21 pm

    no one reads these posts after a day, but here goes anyway:

    I agree about the optimist/pessimist reference, the former is the more attractive, and from a health perspective, prob. the better approach.

    But there is a third state of mind: realism, which sits between the two, but only obliquely, because its approach is inverse in concept.

    The optimist pessimist has a a way of thinking, which is used to filter that which is being observed. and evaluated according to that proclivity. One then ends up focussing on those aspects which fit better. The optimist is of course the happier, if at times a Pollyana.

    The realist looks at the situation, and then sees where that takes him. One tries for objectivity, but we all now that it can never be perfect.

    Here’s a bit of the sunny side:
    A Barry O presidency at least means that W and Dick are no longer calling the shots (though with respect to foreign policy, one can’t be so sure at times) 🙂

    • donniemac April 1, 2010, 5:54 pm

      I worked in a company where anything other than optimism was negative. So no matter how many times those of us who saw ourselves as realists were proven correct, we still were negative if we did not “go with the flow (i.e., with prevailing upper-management beliefs).” Fortunately I had the plant manager’s ear and that kept me from being as frustrated as my other fellow realists were.

      As I pointed out, I have been following RA’s commentary for close on 15 years or so. That is not because I am always looking through rose colored glasses. I just see signs of recovery, and I hope that it is not totally fueled by the massive influx of funds from the Fed. What I see is people like me who are continuing to spend, and those dollars are working to keep the juices flowing, so to speak. I live in Athens, GA. An economics professor here (another UVA grad, I asked him if he knew RA, but he is my age so I think a fair amount older than RA) has been seeing the same signs I am from different sources.

      I am not so foolish to think we are out of the woods and what I think is we are headed for a sideways motion for a while. I also think we are going to see inflation rear its ugly head.

      Another sunny side: The economy typically grows more when we have a Democratic president. Probably because the Republican lays the ground work for an expansion and the Democrat turns the dogs loose. Unfortunately, this time could be different. We shall see.

  • donniemac March 31, 2010, 10:49 pm

    If the total collapse that many here think is coming, is indeed coming, the rule of law will remain or we will have total chaos. And I would not bet on the rule of law, the “thin blue line” will only prevail if we have a pullback, not a total collapse. Frankly, I do not see a total collapse happening. What I do know is this. The house of cards that is a fiat money system can exist for infinitum as long as the masses are kept fed, housed, clothed, somewhat safe, and occupied. And that is in all of ours’ best interest, whether you believe it or not.
    I really do not know how to prepare for a total collapse short of becoming a survivalist or something similar. As y’all have figured out, I am a liberal although I believe in fiscal conservatism (that Virginia upbringing). So I look at things in a different light, and this I know. Since man changed from a hunter/gatherer to living in larger social circumstances, the vast majority of time has been spent in relatively benign and safe eras, although civilized people needed to protect themselves from the uncivilized. Civilization has grown and progressed. And the darkness has been pushed away. So one can see doom and gloom or one can see a silver lining. I choose the silver lining while at the same time protecting myself without becoming a fanatic. And this I know, it is much healthier and infinitely more fun to be an optimist.
    And if anyone wonders, I have read RA’s musings for years, since the 90s and continue to learn from him.

  • Rich March 31, 2010, 4:07 pm

    The deluge…

  • Rich March 31, 2010, 3:38 pm

    We may see the results of the handouts stopping sooner, rather than later. Kept seeing April 5th mentioned all over the place. Yesterday is became apparent. The day Unemployment stops because Congress went on vacation two weeks and did not extend it.
    Down we go…

    Meanwhile, the $17.5 B HIRE Act sneaked in 30% tax or closed accounts on capital leaving the country. The tax trap sprung by Spring. Those seeking to avoid it in copper, gold or silver may find prices halved faster than they went up, as government market ops punish people for saving by keeping or pushing them into insolvent defaulting Treasuries or dollars…

  • Bill S March 31, 2010, 1:37 pm

    Point of observation: My company implements complex system software in large enterprises throughout the nation. We have encountered every industry. The two private industries that stand out – as having inefficiently run IT departments – are hospitals and colleges. With complete pricing flexibility to pass on their costs to others, they have little incentive to improve their operations and become more cost efficient. Uncle sucker will only make things worse.

  • Nukedel March 31, 2010, 6:15 am

    A republic rather than a democracy yes I hate to make generalizations, but I do believe the majority of the people today don’t know the differance. Maybe someone in the House or Senate should put forth a name change for our country… Maybe the United Democratic States of America. Or better yet go all the way and change it to the United Socialist States of America.

    I was raised by a father and mother who were born and raised during the Depression. They stood in food lines in Newark, NJ and were poor beyond imagination. My father put me through a paramilitary work program when I was growing up. I use to rail against it. Now I thank him for it. He taught me the value of Hard work and saving, which has served me well.

    I’m in the process of reading “The Creature from Jekyll Island” This on top of reading Misses and Rothbard. First the Federal Reserve in 1913, then Nixon severing the link to Gold in 71. Where will it end???

    I’m afraid that it will only end with total chaos. Everyone I know without EXCEPTION has little or no knowledge of economics, GOLD, sound money, or for that matter the Constitution.

    The sheeple have been totally corrupted. Laziness and putting your hand out for any freebie that might come your way is the norm. Hard work self-reliance — forget about it. Not until the government teet runs dry will we see a change. It’s unfortunate that it will have to come to this, but it looks like we are headed down that path.

    The founding fathers were brilliant men. Jefferson, Adams. Franklin. They were brilliant then, and would be today if they were alive. Every as&^%le today would pat them on the head and say “Nice Founding Father How Quaint” They knew their history remember ROME ah yes Glorious Rome. We seem to be making every mistake past EMPIRES have made. How UNFORTUNATE!!! Keep your friends close and your family closer. Use your knowledge to persevere. When everything goes down the tubes, they will be the ones to pick up the pieces.

  • John B March 31, 2010, 5:41 am

    The commentary all links back to a root-cause problem – the systematic destruction of most people’s wealth by the erosion of our currency. This is the Hidden Tax that both parties use to finance much of what they do, aided by the Fed, and the dirty little secret that they will not speak of. Why did one wage-earner to support a family become two of necessity? Our savings buy less, and yet we are blamed for not saving more. Catch-22. When the money is inflated, who gets hit the hardest? Yes, it’s the bottom of the economic pyramid who garner the blame for being lazy and shiftless – though there certainly are those who are. But then there are certainly some of those living off daddy’s inherited wealth that are no boon to society either and didn’t do anything other than win what Buffett calls “The ovarian lottery”. The argument is against the nanny-state – and yet the same people will not protest the nannied bankers who started the socialist bailout to begin with. That socialism for the rich was deemed “necessary”. So you see what the problem is – the moral high ground has been lost. To regain it and argue effectively againt the encroaching nanny-state, you have to first go back and reverse the nanny-for-the-rich state. If you don’t begin your protestations there, all that follows is at best hollow, and at worst hypocrisy. The Republicans had the Congress and Whitehouse and did nothing to address Healthcare. So now what they say is irrelevant. Squeaking-up on a topic they admit needed to be addressed after-the-fact stinks of cowardice, not leadership.

  • Other Paul March 31, 2010, 3:26 am

    Amen, Brother Chris.

    The depreciation of the currency is the root of so many of the past 100 years’ problems. Bankers and the Govmint wanted and got more chips to pay with for their own profit, at the citizens’ expense.

    The Fed’s creation in 1913 was mistake #1. The Govmint giving them a new pile of chips over the past 18 months has been mistake #2. I can’t see a mistake #3 happening.


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