An analysis of the grim economic challenges that may confront the United States in the near future.
The last election season was certainly marked by fervent ideological divides, but that doesn’t mean that it was substantively serious. Paepke (The Evolution of Progress, 1993) calls it the “Seinfeld Election” because, like that TV sitcom, it was essentially about nothing. This is especially worrisome, he says, as the nation faces a maelstrom of daunting problems on the horizon. First, he asserts that the deficit will continue to balloon as spending consistently outstrips economic growth—the result of recklessness by both political parties. The interest rates on the nation’s debt alone will have crippling effects, he says, and future presidents will have a limited toolbox of fiscal strategies available when new crises arise. Also, he paints the country’s demographic reality as both frightening and inexorable; an aging population, he says, will be less economically productive but more solicitous of government funds—a problem compounded by senior voters’ increasing political clout. Entitlement spending poses grave risks, Paepke notes, as it’s considerably easier to take on new fiscal commitments than it is to shed them. Finally, he says that lasting economic progress depends upon technological innovation, which our nation no longer adequately supports: “Any prospect of restoring past levels of growth would require…making essential investments in infrastructure, improving incentives, eliminating crony capitalism, and government belt-tightening. Even then, any return to technology-charged rates of growth may not be sustainable for long.” Overall, Paepke’s analysis is chilling but sober, as he avoids any partisan score-settling or melodramatic announcements of imminent collapse. He addresses a number of issues, as well as suggested reforms, that faithful readers of decent newspapers will already be familiar with, but he’s right to point out that they were indeed neglected during the election season. His work is relatively brief—really more of a long essay than a full-fledged book—but it serves as a helpful introduction to economic hurdles that the United States government may find hard to clear in the years ahead.
A brief but astute primer on the nation’s economic vulnerabilities.