Wednesday, October 17, 2012

Voters and Free Stuff

I thought that President Obama won on points in the townhall debate last night, especially given the help of the replacement ref.  Imagine my surprise to learn that the "undecided voter" focus groups at FoxNews and MSNBC both leaned to Romney!

I guess that undecided voters are looking at a completely different debate.

But what troubles me is the questions, because they show the difficulty of moving forward.

There was the "women only earn 72 percent" question, and neither the president or the governor told the questioner that, look, it's time to end the women-are-victims game.  Women do better in school, earn 60 percent of the college degrees, meanwhile men, particularly low-income men, are dropping out of the workforce.  But how do you change a cultural meme that has served its term?  How do you talk to two generations of women taught to believe that they have been oppressed by the patriarchy since the dawn of time?

Or the question about the prospects for college graduates.  Both candidates swung into their standard pitches about the wonders of Pell grants and student loans.  Yeah.  Well, the ruinous cost of college today is mostly due to the money sluicing into colleges through government subsidies like Pell grants and government guaranteed student loans.  What have the colleges done?  They have built luxurious workout facilities and raised the fees and the salaries.  But when will the day dawn that a politician dares to suggest that the free stuff has got to go?

Mitt Romney is proposing to lower tax rates and simplify the tax code by cutting deductions.  So of course there was a woman asking about the mortgage interest deduction.  Now, I'd say that after the mess created by Fannie and Freddie with their $5 trillion in mortgage-backed securities and debt, and the mandates of the Community Reinvestment Act to force banks to loan to people that couldn't afford the payments, you'd have to say that the subsidy for mortgage interest in the income tax code sits right up there as something that has got to go.  But try telling the voters that.

That's why I doubt if the current debt problems can be solved with "austerity" and "cuts."  Just like in Europe, the program beneficiaries won't allow it.  The only way out of the jam is by default, by inflation and by financial repression, so that the government cunningly reduces the value of entitlements etc. by stealth and deception.

They say that Russia increased its public spending in the last decade from 15 percent of GDP  to 25 percent of GDP.  Now that revenue from oil and gas is declining the Putin government is facing a looming crisis.  But what in the world did the Russian government increase spending like that?  Well, obviously to buy support.  Even an authoritarian government needs support.  Especially an authoritarian government.

So governments are all the same.   They all get in power and maintain themselves by taxing the people and rewarding their supporters with free stuff.  Until they can't.

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