WASHINGTON, Dec. 13, 2015 – Hordes of student narcissists blowing off classes to demand speech codes, renamed buildings and mascots, altered curricula and hiring, and free college, are despicable. For progressive faculty and administrators to teach that racism, free speech, the classics, white people, capitalism and the lack of “safe spaces,” rather than radical Islam, a terrible economy and moral decline are their core problems, is pathetic.
Yet these spoiled brats have a legitimate grievance, even if they are as blissfully ignorant of it as they are about almost everything, and even if many would vote (again) for the primary architect of their misery—Obama—if they could. Each new college graduate owes a per capita share of $20 trillion in federal debt accrued mostly in the last seven years. Factor in debt owed by state, city, and municipal governments—another $5 trillion—and that’s $75,000 per person. As graduates marry and have children, each family of four seated around a dinner table in the year 2025, given accrued interest and additional government deficits, will be on the hook for three-quarters of a million dollars even if unemployed in a grim job market.
In short, today’s collegians are the first American generation that cannot expect better lives than their parents. They are all but guaranteed that their country is headed for economic catastrophe, political instability, and wars with no safe spaces. They and all Americans should be outraged at our bitter inheritance.
How did this happen, and what can be done about it?
In 1776, Americans fought a revolution to restrict government’s authority to tax and spend. Providing a common defense and protecting ordered liberty defined its reach. If people wanted something to make them happy, they pursued it for themselves. Where they fell short, families, churches, and civic organizations picked up the slack, or they did without. Public borrowing, save for wars, was unnecessary.
Then progressivism—a creation of academic leftists and slang for “Marxism” lite—entered the political arena in the 1930s, teaching that government, no longer a potential tyrant, was our friend and “here to help us.” Social Security kicked off an 80-year slew of welfare programs of which ObamaCare is but the most recent. All are predicated on a corrupt bargain.
In exchange for forfeiting their independence, progressive voters receive subsidized retirement, housing, education, food and healthcare from womb to tomb. The governments they elect tax the “rich” (defined as those who have jobs) and pay for entitlement programs with the proceeds. The entitled are too fat and happy to launch social revolutions against the system, progressive politicians enjoy life tenure, and conservatives silently pay their “fair share.”
The problem, apart from issues of constitutionality, is that entitlement programs are staggeringly expensive. Social Security and Medicare alone eat up 80 percent of annual federal spending. Worse, the government already collects too little tax revenue and must run annual deficits of over $500 billion to sustain Social Security and Medicare even before it pays for national defense. And many more big-ticket entitlement programs crowd the budget.
When progressives eventually run out of other people’s money, there are only five ways to maintain their Ponzi scheme.
The first is to raise taxes. While appealing to progressives, it won’t work. Maximum revenue is generated when marginal tax rates are lower than at present. Even if progressives took all the earnings of the top 50 percent, the government would run a deficit. What government taxes it destroys and discourages. At confiscatory rates of taxation, high-income earners emigrate or cease working, creating brain-drain and depriving the U.S. of future revenue.
The second is to borrow money. But our national credit card is maxed out, and we are in hock to hostile foreign governments. As we borrow more and more simply to repay interest, lenders fearing default charge higher interest rates. To appease them, the Federal Reserve will raise interest rates. This too will fail when houses, cars and consumer credit become more expensive, employers’ access to credit dries up, imports become too costly, hiring stops and job loss spikes. As the U.S. economy contracts, lenders will quit lending or, as China has done, buy up our country on the cheap, taking positions in U.S. minerals, transportation hubs and other assets to collateralize their loans.
The third is to print more paper money. But increasing money supply, or “quantitative easing,” has only jacked up the price of everything over the last seven years while eroding savings and inducing lenders, repaid with devalued dollars, to demand higher interest rates. As prices of food, housing, and other goods hyperinflate, no minimum wage—even $15/hour or higher—will keep pace.
The most spectacular currency devaluation failure occurred in post-World War I Weimar Germany, when mothers had to choose between carting a wheelbarrow of paper currency to the grocer to buy bread or burning that currency to generate more heat than the coal it could purchase. Meanwhile, fathers labored eight hours for the impossible sum of 100 trillion marks, which at 8 A.M. covered the monthly rent but by 6 P.M. wouldn’t buy dinner. Massive currency devaluation, ordered by the Weimar government to create new paper to pay war reparations to France and Britain, and the hyperinflation that resulted, left an impoverished German people vulnerable to Nazi promises to repudiate the debt, unleashing horror on the world.
The fourth method of maintaining a government living beyond its means is debt repudiation, a measure akin to bankruptcy. The trouble is a good fraction of the U.S. federal debt is owed to U.S. and allied investors, who would be badly harmed along with U.S. good faith and credit. Funding future U.S. entitlement programs could no longer depend on borrowing.
The fifth method is to launch wars of conquest to grab other people’s resources. Think Putin’s Russia. But the U.S. has been out of the business of colonialism for at least a century. Each and every time we’ve had the chance to profit from a foreign war we have declined and instead footed the bill to liberate other countries—Europe (twice), Korea, Grenada, Panama, Kuwait, Bosnia and Iraq. Unless we abandon our just war values and idealism, this method too is useless.
In short, economic and political disaster has been self-inflicted by a government that shredded the Constitution to make a bad bargain it cannot keep. Nothing can preserve the progressive welfare state. As it disintegrates, the economy grinds to a halt, and the U.S. defaults, riots, crime, poverty, and unchosen wars will follow.
Worse, it isn’t only $20 trillion in debt that imperils the nation. Unfunded future obligations from Social Security, Medicare, public employee pensions, and ObamaCare measure between $70 trillion and $200 trillion. We face hypergeometric growth in our national debt. The U.S. economy may even now be in a death spiral from which recovery is mathematically impossible.
Both parties are silent about this. Social Security and Medicare are shibboleths. None wants to be accused of booting the elderly into the street, denying anyone healthcare, “stealing from children” or other proofs of bad political character. For incumbents, far better to cut defense than social welfare. Soldiers don’t publicly complain, and there are fewer of them than entitlement-addicted voters.
Yet if we cannot discuss the impending politico-economic catastrophe for fear that discussants will be booted from public life, and if we cannot broach the subject of recommitment to a government that is more limited and spends, taxes, and borrows far less, we are left with ostrich politics—burying our heads in sand and awaiting our doom.
Perversely, the university system—for 50 years the warmest national incubator of progressive radicalism—may offer a sixth option, and the only viable one, out of this mess. If we grow our human capital, encourage innovation, develop heretofore unheard-of value-adding technologies and industries, and capture that value in our trade relations, we might grow our economy fast enough to generate sufficient revenue at efficient rates of taxation to retire our national debt, stop borrowing, preserve our currency and save entitlement programs. And we’d be in a better position to defend against foreign threats and might even become a creditor nation again as China is now.
But to execute this sixth option, universities can no longer be progressive playpens. Like the military, they must be disciplined and reconceived as engines for national salvation. They must compel students into critical thinking, research, and the competitive marketplace of ideas so they acquire and invest human capital into national economic growth. Learning, rather than protesting, must be prioritized. Thinking, rather than indoctrination, must begin. Americans must be given preference over foreign students. Academic excellence must be the sole criteria for admission, retention and graduation. Football and all other trivial pursuits must be subordinated to research and teaching. University leaders must be adults, intolerant of the lunacy that has descended on college campuses.
Although college students may become even angrier on learning what we must demand of them, it is for their own good and that of the country. And it is just and fitting that universities help fix what they have broken.