【纽约时报】Decline and Fall: A View From 2089

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Decline and Fall: A View From 2089
http://www.nytimes.com/2009/05/24/business/24every.html

By BEN STEIN Published: May 23, 2009

THE future is now. To see how history might look back on our economic crisis, we bring you this excerpt from “The Decline and Fall of the United States of America,” Beijing University Department of Western Hemisphere History (Beijing Press, 2089):

The demise of an economy as mighty as that of the United States as of 2000 cannot be accounted for by anything less than deeply mistaken and foolish decision-making within that nation’s ruling circles.

No amount of foreign competition or resource shortage has historically caused such a catastrophe. However, policy actions undertaken without proof or even evidence of their efficacy have historically done so. (See “The Decline and Fall of the Roman Empire,” Gibbon, 1776.)

Starting from an extremely strong economic and fiscal position in the year 2000, with surpluses running far into the future in the federal budget and a highly positive outlook for its ability to handle its future pension and health obligations, the United States, under the administration of George W. Bush, a Republican, undertook one of the most mystifyingly self-destructive policy actions yet seen in a democracy.

Taxes were lowered sharply for well-off and other taxpayers, while government expenditures rose in almost every area, civil and defense. This, in short order, led to a multiplication of the size of the federal budget deficit.

The theory behind this puzzling behavior was known as “supply-side economics.” Magically, it was supposed to increase productivity, the number of hours worked, and tax receipts to the point that the losses in federal revenue were more than offset. There never was any historical evidence that this would happen, at least not as a consequence of the tax cuts, and the deficit, in fact, grew. So did class antagonisms over the ever-larger share of the national income taken by the wealthy.

There was also a steep increase in liquidity after the notorious terror attacks of Sept. 11, 2001. This, combined with federal regulations that virtually eliminated regulation of lending and banking in general, led to the great Credit Collapse stagflation in the period after 2006.

At this time, the nation’s finance sector had to become a virtual ward of the state, with public shaming of the leaders of the banking sector in front of Congressional committees — a sort of Great Cultural Revolution in America.

There was a spectacular constriction of credit, despite the flooding of the economy with dollars.

Whether this had to do with the fear generated by the Credit Collapse or fear of further public shaming is still in debate.

The Credit Collapse and the government’s conflicting response to it — shoring up the banks and expanding reserves on the one hand, while putting lending officials at risk for aggressive lending on the other — led to a prolonged slowdown in the economy.

At the same time, the confidence that American lenders had in the rule of law, probably one of the main pillars of the economy, was demolished by government actions that invalidated some lenders’ long-held legal rights in favor of ad hoc attempts to please various political constituencies.

Confidence was further eroded as the government embarked upon unprecedented “stimulus” moves costing trillions of dollars in the aggregate. These were rushed into law as a crisis measure immediately after the inauguration of Barack Obama, a Democrat, as president in January 2009. Most of the startling sums involved, however, were not spent until years later, by which time public confidence was so low that even these measures were not meaningful in stimulating the economy.

In retrospect, it is not clear upon what evidence the stimulus packages were based, because no one had ever been able to prove that taking money from taxpayers, and having the government spend it instead, would meaningfully enlarge the scale of economic activity. (See “John Maynard Keynes and the Suicide of the West,” 2039, Hong Kong Press.)

By 2012, after a substantial victory by President Obama over Jeb Bush of Florida, brother of George W. Bush, the United States had been mired in recession for six years. (The Obama victory was greatly aided by the unopposed secession of Texas and Alaska from the nation.)

The flood of liquidity into the economy had translated into unnerving inflation as sellers constantly anticipated higher prices, while labor demand remained soft as buyers resisted buying, especially durable goods. The heavy industry and refining segment of the American economy, once by far the largest in the world, atrophied further as environmental and other regulation made it impossible for executives to compete with the industry of countries that ignored such issues as the environment.

By 2014, the federal government’s debt had reached $25 trillion, while the economy had shrunk to roughly $10 trillion in annual output (at 2006 prices). At that point, the Treasury began to announce that it would suspend payment of interest to foreigners on United States federal debt except by the issuance of so-called P.I.K., or payment-in-kind, notes of the Treasury. These were simply payments by promises instead of by money.

At that point, only the Federal Reserve remained as a buyer of United States Treasury debt. Foreign holders sold as quickly as they could. The dollar collapsed, and the yuan replaced it as a global reserve currency. The resulting hyperinflation in the United States and the accompanying collapse of the republic are by now known to every schoolchild. ...

Ben Stein is a lawyer, writer, actor and economist. E-mail: ebiz@nytimes.com.

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