econintersect .com

FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

posted on 10 June 2015

Diagnosis for America (Version 3)

Written by

On May 23, 2011, I published Diagnosis for America: Cancer! (Version 1). On November 16, 2012, I published version 2 (Diagnosis II for America: Cancer!). This is version 3.

America is deeply in trouble, with high unemployment (e.g. the current labor force participation rate is at the 1978 level - Labor Market Participation Rate Continues to Slump) and impossibly huge unsustainable national debt (i.e. $18 trillion and counting) often cited as the top two problems. But what is the root cause for these dire problems?

To me, there are two root causes:

  1. Foreign competition: The rise of BRICS (Brazil, Russia, India, China, and South Africa), led by China, as viable economic competitors to America.
  2. Self-destruction: America has been badly self-destructing for the past few decades, thanks to both Democratic Socialism and Democratic Imperialism!

Specifically, here is what happened to America after WWII:

  1. America thrived from 1946 to 2000 for one key reason: America's chief competitors were either destroyed by the war (e.g. Germany and Japan) or self-destructed badly by adopting/continuing a fundamentally flawed system called "communism" (e.g. China 1949-1976 and the USSR) after the war. As a result, America was left as the only chief producer on earth, making and inventing virtually everything and thus dictating prices. This not only finally lifted America out of the Great Depression, but also created unprecedented prosperity in America throughout the second half of the 20th century.
  2. While America's superb capitalism has been driving the economy, democracy, as we practice it today, has been progressively driving America deeper and deeper into Democratic Socialism as well as Democratic Imperialism - We became victims of our own success! However, no big problems showed up before 2000, because America, as the economic monopoly, could afford anything and everything, even democracy!
  3. The bottom fell out at the turn of the 21st century, when BRICS began to show their strength. The rise of BRICS not only signaled the end of America's economic monopoly, it also revealed the naked truth about American democracy: It does not work! As a matter of fact, democracy is failing in America today for the same reason it failed in ancient Greece more than 2,000 years ago as well as in modern Greece today: debts. Debts may also bring down the American Empire, as it did to the Roman Empire some 2,000 years ago!

The rise of BRICS was inevitable, but America's self-destruction was not. It's The Political System, Stupid!

Unfortunately for America, our politicians have been trying to fix everything but the political system. In other words, we have a cancer, but we have been treating it like anything but a cancer!

1. What is the cancer?

Today, most American politicians are career politicians, working for one paramount purpose only: getting re-elected ad nauseam, even if it means destroying America by emptying her public treasury! In other words, they serve themselves first, their party a distant second, their constituents a remote third, and their country dead last! It is an insidious cancer, killing America from within, slowly but surely, one vote at a time ...

Let me give you the most extreme example of getting re-elected ad nauseam: JFK!

By signing off Executive Order 10988 on January 17, 1962, President Kennedy allowed public-sector workers to unionize against their employers, the people of the United States of America! This communistic act did help millions of public-sector workers join the ranks of the middle class, at the cost of America’s future though: It ensured a spectacular failure of America down the road, city by city, state by state, as we have been experiencing over the past decade, with no end in sight! For more, read: Detroit, Public-Sector Unions, and JFK.

Now, why did JFK, against the explicit warning by his idol FDR (Letter from FDR Regarding Public-Sector Unions), allow public-sector unions? To maximize his chance of re-election in 1964!

JFK was not re-elected, as he was assassinated on November 22, 1963. But he committed the worst act against America on January 17, 1962! It’s time for America to recognize it - and then undo Executive Order 10988!

2. How was the cancer developed?

Let's look at Congress ...

According to Salaries of members of the United States Congress, the salary of members of Congress was below $9 until 1855. Created by design: to be a member of Congress, first you had to make it (i.e. becoming financially independent), then you served with honor for a few years, and finally you went home. Serving was never meant to be a way of life - not even to make a living, let alone a career!

According to Congressional offices and staff,

  1. "Prior to 1893 Members of the House of Representatives were forbidden from using public funds to pay personal staff. Those Members who had the ability to hire personal staff could do so with their own funds".
  2. "Prior to the Legislative Reorganization Act of 1946 staff rarely topped one or two advisors".
  3. "Members of Congress rely heavily on staff to handle a lot of legislative and constituent correspondence issues. Congress did not allow for the large staffs that exist now until the 1970s."

All hell broke loose after the 1970s, as the era of "career politicians" began! Since then, most, if not all, Members of Congress have been serving for one purpose only: getting re-elected ad nauseam. In other words, it stopped being about us, or about the U.S. - It became all about them!

3. How has the cancer been killing America from within?

For most, if not all, politicians, the re-election campaign starts immediately upon election. How do they keep getting themselves re-elected? By any and all means! Two examples:

  1. Recklessly crippling business by supporting special interest groups (e.g. unions)! Still wondering about high unemployment? Wonder not! Our cost structure is too high!
  2. Blindly robbing the public treasury by introducing socialistic programs at home (e.g. affordable housing) and waging wars abroad (e.g. Iraq), to such an extreme now that work is optional for many and foreign war is perpetual! Still wondering about our huge national debt? Wonder not! The money has been used to buy votes!

Neither was a huge problem though, thanks to our superb free enterprise system, until 2000, when BRICS, led by China, showed up as viable economic competitors ...

4. A few words on China

I was born in China in 1959 and grew up in the horrible days of the Cultural Revolution. So I know what communism is: It destroys any incentive of work in people, resulting in a country being dirt poor! For example, in China before 1980 -

  1. Economy: It was totally ruined because the working class took over the economy from the rich in 1949, without knowing what to do with it!
  2. Housing: Yes, it was basically free, but most urban families ended up living in dorms.
  3. Health-care: Yes, it too was basically free, but it was low-tech, low quality and required long waits.

Then what happened? Chairman Mao died in 1976. China changed, fundamentally and in a big way, thanks to a wise man named Deng Xiaoping!

China started embracing capitalism in 1978, and is now more capitalistic than America in many ways. Overall, the Chinese system (i.e. capitalism + autocracy), albeit with many endemic problems of its own, appears to be slightly better than the American system (i.e. capitalism + democracy), especially in terms of running a country like a business. In fact, today's Chinese government is more pro-business than today's American government, even per Steve Wynn!

5. Our responses to the competition from China?

Feeble and irrational! Worse yet, some American politicians have simply resorted to China bashing (e.g. currency manipulation), just as they did to Japan in the 1980s. There is a big problem, though: It will not work this time! Four main reasons:

  1. Unlike Japan and Germany, China has both the size and strength to fully compete with America.
  2. Unlike Japan and Germany, China is not a post-WWII American "colony".
  3. Like Japan, Germany, and even America, China has been building its initial wealth through exports.
  4. Like America in its early days, China has the potential for huge domestic consumption. China has been striving, and succeeding, in creating a domestic market fueled by its newfound wealth. For example, in 2011, more cars were sold in China than in America!

6. America's self-destruction

America has been self-destructing in two major ways:

  1. By the extreme right: The politicians on this side keep driving America deeper and deeper into Democratic Imperialism, with the Iraq War being the worst example. War and debts!
  2. By the extreme left: The politicians on this side keep driving America deeper and deeper into Democratic Socialism, with public-sector unions being the worst example. Spending and debts!

Once again, America, It's The Political System, Stupid!

7. Is our political system really so bad?

Yes, it is! Because getting re-elected ad nauseam is every American career politician's highest priority, the ugliness of our presidential re-election seems to have deeply affected the two wars in Iraq and Afghanistan.

  1. President George W. Bush recklessly turned off the beacon to launch the Iraq War in 2003, at least partially, for the sake of his re-election in 2004. For more, read: Blagojevich and Pearl Harbor: They Are Related!
  2. President Obama chose to escalate the war in Afghanistan in 2009, but with a troop withdrawal plan so ridiculously rigid and hasty that there could have been only one possible explanation: it was perfectly timed for his re-election bid in 2012! For more, read: For Obama the Road to Reelection Runs through Kabul.
  3. President Obama kept his campaign promise to end the Iraq War by pulling all American troops out of Iraq by December 2011, regardless of the situation over there. As a result, he was re-elected in 2012. But he had to renew the war in Iraq in September 2014, after losing all the gains previously made. For more, read: President Obama and War.

So here are two serious questions:

  1. Is our President, throughout his first-term, concerned with nothing but his own re-election, with everything else being secondary?
  2. If the answer is yes, which seems patently obvious, we cannot ever expect the President to always do the right thing for the country (vs. for himself) throughout his first-term, can we?

Fortunately for America, the American Presidency is limited to two terms. For Congress, it's infinitely worse, because of the lack of term limits! In other words, we cannot ever expect our Members of Congress to always do the right thing for the country (vs. for themselves), as long as they are running for re-election!

Need more concrete examples to show how profoundly misguided American democracy has truly become? Let's see: voting vs. drinking ...

  1. Ages 18-20: Too young to drink, but old enough to vote!
  2. Age 21: Show your ID to drink, but no ID is needed to vote!

For those who get it, no explanation is necessary. For those who don't, no explanation is possible!

8. What will happen if we stay the course?

We will become an also-ran, second to China! To win (i.e. to remain #1), what you think or do is irrelevant - you must actually be better than your competitor(s)!

Specifically, here are two projections if we stay the course:

  1. By 2025, China will overtake us as the largest economy in the world in GDP (China's economy is already bigger than ours in PPP), thus ending America's leadership, not only economically, but also politically.
  2. By 2030, China's RMB will replace the U.S. Dollar as the world's major reserve currency, thus ending an important American way of life: printing money to cover the trade deficits in general and to buy oil in specific (i.e. the Petrodollar).

Frightened? Then change!

9. Is democracy doomed?

Yes, most likely! Read this classic piece: The Truth about Tytler. Here is an excerpt:

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years."

"Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage."

Still unconvinced? Here are two more quotes from Europe:

Frightened? Then change!

10. What did the Founding Fathers think, really?

Five examples:

Frightened? Then change!

11. What do Americans think, really?

Here are the recent approval ratings for the three branches of our government:

  1. "A new Rasmussen Reports national telephone survey finds that just 10% of Likely U.S. Voters rate Congress's performance overall as good or excellent. That's down from 12% in March and from an over three-year high of 16% in December" (Congressional performance).
  2. Barack Obama Presidential Job Approval Rating Consistently below 50%.
  3. Americans' Approval of Supreme Court Near All-Time Low.

Frightened? Then change!

12. Closing

The diagnosis is cancer: self-serving career politicians! What’s the solution? Stop career politicians with term limits! For a complete solution, wait for my next post!

Page Code: 31Count: 1779

Click here for Historical News Post Listing

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.

Econintersect Contributors

Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government

 navigate econintersect .com


Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2018 Econintersect LLC - all rights reserved