by Victor Davis Hanson<\/p>\n
Tribune Media Services<\/p>\n
The 2008 financial crash originated with a housing bubble. Not long ago, the cheap-money policies of the Federal Reserve, the infusion of trillions of dollars in new foreign investment, and the misguided policies of Freddie Mac and Fannie Mae all conspired to extend to millions of Americans lots of easy credit for houses whose inflated prices they could hardly afford. Owning a house was seen as a \u201cright\u201d rather than the just rewards of household sacrifice, delayed gratification, and budgetary discipline.<\/p>\n
Builders, lenders, realtors, and bureaucrats all got in on the easy-money Ponzi scheme \u2014 until a few noticed that the emperor had no clothes and that rather pedestrian homes were hardly worth what unqualified purchasers had paid for them. Financial hysteria followed when shaky borrowers began to miss exorbitant mortgage payments and walk away, and lenders panicked. The subsequent meltdown is history.<\/p>\n
A similar situation \u2014 more a vacuum than a bubble \u2014 is unfolding with pensions. There is perhaps as much as $6 trillion owed in retirement pledges to Americans, $500 billion in California alone. That tab under present conditions simply cannot be met. For the last 30 years, politicians outbid each other to offer more lavish retirement packages to union members and public employees \u2014 more eager for their votes than for ensuring the payment of what they had promised. Receiving a generous retirement package was considered a right rather than an investment predicated on past savings coupled with modest interest and dividends.<\/p>\n
There may already be a $1 trillion shortfall in meeting what is owed current retirees. Pensioners on the receiving end are becoming more numerous, older, and more affluent, while the younger workers on the paying end are becoming less numerous and poorer. At some point, a city, a state, or perhaps the Social Security system itself is going to announce there is no more money. Then, if there is not another financial crisis and Wall Street meltdown, the fantasy will end with workers paying higher contributions, retiring later, and receiving less.<\/p>\n
Then there is the higher-education bubble, as collective student debt nears $1 trillion with no guarantee that it will be paid back. Lots of poor college students and their strapped parents are floating huge government-subsidized student loans to pay for ever-more-costly bachelor\u2019s degrees that no longer ensure that the recipients are well educated, will find a job upon graduation, or, if they do become employed, will be better paid than the vocationally trained. Going to college has somehow become seen as a national right rather than a privilege predicated on superior academic achievement, financial sacrifice, and continued academic discipline.<\/p>\n
There are disturbing commonalities between these situations \u2014 and others like the recently enacted health-care entitlement on the way. The rich and connected seem exempt from the impending reckoning, and the poor assume government will offer them debt relief. Those in between are on their own and will have to pay more for receiving less.<\/p>\n
America is not creating enough wealth to justify the notion that everyone should go to college, get a higher-paying job than their parents, buy a nice, affordable house, and retire earlier and with more money than did prior generations.<\/p>\n
We have forgotten what wealth is \u2014 and how tenuous our grip on the good life is. Riches are created by educated and skilled workers who directly translate natural resources into commodities that make life easier. The nonproductive sectors of government, law, and banking must facilitate that process with efficient and transparent financial and political systems.<\/p>\n
Instead, we are failing to provide our college graduates with unique skills that make them rare assets in the global competitive arena. Meanwhile, our more talented and better-trained workers are suing, subsidizing, and regulating more than ever \u2014 instead of searching for more oil and gas, supplying more water to productive farmland, fast-tracking nuclear power plants, manufacturing machines and consumer goods, or devising new and more efficient ways to help others to produce such food, fuel, and products. In other words, we are living the good life in the abstract that we have not quite earned in the concrete.<\/p>\n
America is a naturally rich country. Unlike Russia, China, Egypt, or Greece, it is stable, transparent, tolerant, and free of civil strife. The result is that we are not doomed to see these bubbles expand and burst with the attendant social unrest. We need only return to our old American creed that wealth is created only with hard work and delayed gratification. In other words, America must get back to producing real, rather than imaginary, riches and ignore pleasing rhetoric that masks unpleasant reality \u2014 the faster the better.<\/p>\n
\u00a92011 Tribune Media Services<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"
by Victor Davis Hanson Tribune Media Services The 2008 financial crash originated with a housing bubble. Not long ago, the cheap-money policies of the Federal Reserve, the infusion of trillions of dollars in new foreign investment, and the misguided policies of Freddie Mac and Fannie Mae all conspired to extend to millions of Americans lots […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0,"footnotes":"","jetpack_publicize_message":"","jetpack_is_tweetstorm":false,"jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[49,47],"tags":[1081,1014,1023,471,463,83,67],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p466Sb-102","jetpack_likes_enabled":true,"jetpack-related-posts":[{"id":7968,"url":"https:\/\/victorhanson.com\/wordpress\/janet-yellen-shills-for-the-democrats\/","url_meta":{"origin":3846,"position":0},"title":"Janet Yellen Shills for the Democrats","author":"victorhanson","date":"October 31, 2014","format":false,"excerpt":"by Bruce Thornton \/\/ FrontPage Magazine At a conference last week, Federal Reserve Chairman Janet Yellen recycled a shopworn Democrat talking point about the supposed crisis of income inequality and stalled economic mobility. \u201cThe extent and continuing increase in inequality in the United States greatly concerns me,\u201d Yellen said, going\u2026","rel":"","context":"In "Our Contributors"","block_context":{"text":"Our Contributors","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/our-contributors\/"},"img":{"alt_text":"Photo via FrontPage Magazine","src":"https:\/\/i0.wp.com\/victorhanson.com\/wordpress\/wp-content\/uploads\/2014\/10\/janet-yellen-450x337.jpg?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":18,"url":"https:\/\/victorhanson.com\/wordpress\/angry-reader-6-responds-to-bush-reconsidered\/","url_meta":{"origin":3846,"position":1},"title":"Angry Reader #6 Responds to “Bush Reconsidered”","author":"victorhanson","date":"January 4, 2013","format":false,"excerpt":"Angry Reader #6 wrote: \u201cVDH Trash\u201d VDH do you actually believe\u00a0this? I have to doubt your sanity. So many examples but I think the breezy dismissal of Iraq, not mentioning torture, the health of the economy circa 2009 and the Bush tax cuts relationship to the deficits are the real\u2026","rel":"","context":"In "Angry Reader"","block_context":{"text":"Angry Reader","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/angry-reader\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":6292,"url":"https:\/\/victorhanson.com\/wordpress\/the-death-of-populism\/","url_meta":{"origin":3846,"position":2},"title":"The Death of Populism","author":"victorhanson","date":"August 1, 2013","format":false,"excerpt":"Plenty of pleaders for rich and poor, but no politician speaks for the common man. by Victor Davis Hanson \/\/\u00a0National Review Online Occupy Wall Streeters claimed that they were populists. Their ideological opposites, the Tea Partiers, said they were, too. Both became polarizing. And so far populism, whether on the\u2026","rel":"","context":"In "Political Culture"","block_context":{"text":"Political Culture","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/american-culture\/political-culture\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/victorhanson.com\/wordpress\/wp-content\/uploads\/2013\/08\/4995090651_deb33b4738.jpg?fit=433%2C500&ssl=1&resize=350%2C200","width":350,"height":200},"classes":[]},{"id":3992,"url":"https:\/\/victorhanson.com\/wordpress\/mexicos-sick-economy\/","url_meta":{"origin":3846,"position":3},"title":"Mexico’s Sick Economy","author":"victorhanson","date":"May 15, 2006","format":false,"excerpt":"Relying on oil and illegal workers' wages leads to long-term disaster. by Victor Davis Hanson Tribune Media Services Economists have long pointed out that relying on oil as a natural resource can be a long-term disaster for a developing nation. The income from exporting petroleum provides cash infusions that can\u2026","rel":"","context":"In "May 2006"","block_context":{"text":"May 2006","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/archives\/2006\/may-2006\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":3123,"url":"https:\/\/victorhanson.com\/wordpress\/thoughts-on-a-surreal-depression\/","url_meta":{"origin":3846,"position":4},"title":"Thoughts on a Surreal Depression","author":"victorhanson","date":"May 10, 2011","format":false,"excerpt":"by Victor Davis Hanson PJ Media Here in Fresno County, in the heart of California\u2019s San Joaquin Valley, the official unemployment rate in February to March ranged between 18.1 and 18.8 percent. I suspect it is higher in the poorer southwestern portions, especially near my hometown of Selma, about two\u2026","rel":"","context":"In "California"","block_context":{"text":"California","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/california\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":4184,"url":"https:\/\/victorhanson.com\/wordpress\/the-political-arcade\/","url_meta":{"origin":3846,"position":5},"title":"The Political Arcade","author":"victorhanson","date":"December 12, 2005","format":false,"excerpt":"Presidents frustrate the sale of political rhetoric. by Victor Davis Hanson Tribune Media Services Bill Clinton frustrated Republican critics. He passed welfare reform, waged a preemptive war against Slobodan Milosevic without either the approval of the Congress or the United Nations, and reined in federal spending. And so anguished conservatives\u2026","rel":"","context":"In "December 2005"","block_context":{"text":"December 2005","link":"https:\/\/victorhanson.com\/wordpress\/ahref=\/index.php\/categories\/angry-reader\/categorylink\/a\/archives\/2005\/december-2005\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/posts\/3846"}],"collection":[{"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/comments?post=3846"}],"version-history":[{"count":1,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/posts\/3846\/revisions"}],"predecessor-version":[{"id":3847,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/posts\/3846\/revisions\/3847"}],"wp:attachment":[{"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/media?parent=3846"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/categories?post=3846"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/victorhanson.com\/wordpress\/wp-json\/wp\/v2\/tags?post=3846"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}