Back in 2009, when the flames of the collapse were still climbing to the heavens and no one really knew where the bottom was going to turn out to be, the newly-elected American president — Dear Leader, we’ll call him — had his folks in Congress ramrod through a $780+ billion “stimulus” package to keep unemployment under 8% and get us back down to 5% unemployment by what is now several years ago. In fact, that’s how the “stimulus” was billed and sold, as a mechanism to keep ordinary Joes and Janes at work. At the time the “stimulus” was pushed through Congress, on a largely party-line vote, there were dissenting voices who had the ill graces to point out that the “stimulus” bill was really the last 40 years of Democrat Party Christmas wish list. It was overwhelmingly targeted towards keeping state and local government employment rolls topped up, and even expanded. And so it turned out to be: The private sector shed millions of jobs, most of which haven’t come back yet, either in an absolute sense or in the sense of keeping up with population growth among the working age. Labor force participation rates are in the 65% range, lower than they’ve been in nearly 40 years. The U6 unemployment data, which captures not only those actively looking for work, but also those who’ve dropped out of the game from disappointment or despair, has been hovering in the 14-16% range for months and months and months. Even nominal unemployment has only in the past month or so dropped below 8% . . . and most of that drop is attributable to ever more people giving up on ever finding work again, and so dropping out of the labor force entirely. During this time government employment rolls barely shrank at all.
We’re now well over 1,400 days since the last federal budget. We’re $6 trillion deeper in debt than when Dear Leader began his first term. Other than soak-the-rich, we’ve heard nothing in the way of suggestions to get the country back to work. On the contrary, we have an EPA which, by executive fiat, has intentionally set out to decimate the country’s electrical generation capacity. We’re sitting on top of the largest discoveries of petroleum and natural gas in history (literally: in the Green River Formation they’re estimating as much petroleum as has been used in all human history, since they first started pumping the stuff in 1859 on Oil Creek in Pennsylvania), and Dear Leader sits placidly by while his agencies and allies erect roadblock after roadblock to their exploitation . . . while a gallon of regular gas costs $3.70 or more in most of the country. We’ve enacted a “healthcare reform” program the mathematical consequences of which will inevitably be the bankrupting of the private insurance industry, leaving a formal government take-over as the only remaining option. “Never let a good crisis go to waste,” as one of Dear Leader’s least savory advisors famously quipped, and if you can’t find something that’s wrecked, why, you just go out and wreck it yourself. There’s your crisis. Dear Leader has got business so spooked by his incessant demonization and vindictiveness that they’re too damned scared to hire or invest. They don’t know how much of what they make they’ll be allowed to keep. We’ve enacted a monstrosity of a financial sector “reform” one of the side effects of which will be to destroy the community banking industry (where do Dear Leader and his cronies suppose small business America banks?) by imposing on it compliance costs it will never be able to recover from its customer base.
And so America drifts, out of work, decaying, directionless, the plaything of a tribe bent on fundamentally changing the structure of American society and the relationship between Americans and their governments.
At the same time Dear Leader was borrowing and spending his way into the hole, the Germans went the other way. They began looking for ways to spend less. Dear Leader even lectured Chancellor Angela Merkel about the un-wisdom of “austerity” measures when what was really needed was going on a toot like a crowd of drunken sailors on their first shore liberty in ten years. Merkel, who unlike Dear Leader actually has some demonstrated intellectual horsepower (before she went into politics she was a practicing physicist, as opposed to a “community organizer”), politely told Dear Leader to mind his own business.
Germany’s new budget proposals for 2014 (“budget”? what’s that? what does a “budget” look like?) project the lowest levels of new borrowings in 40 years. In 2015 the budget will be balanced, and in 2016 they’re looking at €5 billion surplus. Being Germans, what are they proposing to do with that surplus? Right: Pay down their accumulated debt (which is €1.3 trillion). Does anyone seriously suppose that any American government with a budget surplus wouldn’t tear out and spend it?
What Germany’s accomplished is even more remarkable when you consider not only its overall history but more particularly what’s been going on the past few years. For starts, most of the post-war reconstruction in Germany was not financed by things like the Marshall Plan (both France and Britain, with much lower levels of destruction, got much more money out of Uncle Sugar). The entire eastern quarter, in fact, was ruthlessly plundered by the Soviet Union. Western Germany largely re-built itself. After reunification, it then turned around and re-built the former East Germany as well, the physical plant of which had been studiously neglected for 45 years in order to keep up a massive military and secret police apparatus. West Germany itself had also contributed to its own defense as well, after 1955. Granted, it did not have the overseas commitments of the U.S. or Britain, and its total military spending as a percentage of GDP was never as much as half of America’s expenditures. On the other hand German society also had to pay for stuff that America hasn’t. Like food; Germany hasn’t been self-sufficient in foodstuffs since before World War I. And energy: Barring coal, the economically recoverable deposits of which have been played out for 20 years or more, Germany produced roughly zero of its own energy requirements. And ores: Germany produces little of its own metal ores (and in an economy the flagships of which are heavy industry and chemicals, that’s a hard nut to crack). And then in the last two or three years, Germany has been propping up entire countries across Europe’s southern fringe. Most of the money that’s keeping the lights on in Greece and Italy is coming out of Germany.
Yes, Germany has much higher income taxes than America does. But in point of fact they’ve been reduced, somewhat, in recent years. Germany also turned away from its single-payer healthcare system. And German taxes on capital gains and businesses are significantly less than their American equivalents. But mostly what Germany brings to the table is a cultural memory of the Weimar years, and what came afterward. This instills in them a discipline that America, the Land of Perpetual Plenty, of Wish-it-True, simply lacks. America has had downturns here and there. So has everyone. But only on three occasions has the fabric of the American economy had gaping holes blown in it, the kind that take years if not decades to mend: in 1837, 1873, and 1929. No one is left to remember anyone’s first-hand tales of the first two. While the Great Depression was awful in the U.S., it was cataclysmic in Germany. Most of what Germans thought to be their late 1920s prosperity, such as it was (remember this was after the terrible inflation of 1923-24), was financed by cheap credit from the U.S. When America no longer had money to lend, and when the rocket scientists in Congress came up with the Smoot-Hawley Tariff, thereby blowing up large chunks of the international trade economy, suddenly Germany had no credit sources and their economy, which since the 1870s had been highly dependent on exports, just disintegrated. Today’s German leaders aren’t old enough to have personal memories of the 1920s, but at least some of their parents were, and certainly their grandparents were. And they’ll have heard stories about family fortunes blasted to bits, about lifetimes of effort brought to naught, about hopes destroyed and opportunities forever denied. And then of course came the Nazis, and the war, and the Soviets.
So we and Germany have chosen divergent paths, it seems. Curiosity suggests it will be interesting to see where they end up. A solicitude for my children’s future terrifies me at the thought.