As the close of this difficult decade draws near, some are tempted to assume the cycle of economic decline we have experienced will once again be followed by prosperity. But the past decade of American policy, and the past year particularly, recall the Roman poet Juvenal’s critique of his contemporaries as eschewing their civic and military responsibilities for “bread and circuses.”
Over the past decade, federal government spending reached the $400 billion level; in this past year, it has more than quadrupled. In the past decade, the dollar has continually lost value; in the past year, there has been serious and persistent discussion of abandoning it as the world’s reserve currency.
In the past decade, financially sophisticated people have understood that our current rate of entitlement spending would result in an eventual crisis necessitating massive, painful spending cuts or massive, permanent tax increases; in the past year, the Administration and Congress are attempting to institute a massive, new trillion-dollar entitlement.
Imagine a family — a dysfunctional one — that has used up all their savings, credit cards, home equity line of credit and retirement fund — but want to go on one last grand vacation using up the kids’ college funds.
The bread and circuses lack of seriousness is even more acute in military affairs. After Pearl Harbor, Americans fought the Japanese and their fascist allies in Europe to defeat. After 9/11, Americans were told we needed to fight a war on…”terror.”
If you can’t name your enemy, you can’t defeat it. The strategic errors and weak public support for America’s wars in the past decade are the result of the strange unwillingness to educate the public on the Islamofascist threat to American power, freedom and democracy. In the past year, this policy confusion has turned to outright appeasement and defeatism.
Some market commentators have noted that America has been through a period of massive debt and emerged robustly. True, but that debt was accumulated in World War II, after defeating our enemies. Our recent debt binge has been accumulated in peacetime, rendering us vulnerable to threats still emerging.
As Americans line up for bread (entitlements) and circuses (distraction from foreign threats), we are drawing ever nearer to the day when that last college fund is dried up and we will be presented with a financial or military emergency for which we are unprepared. According to The Wall Street Journal, some 40 percent of current tax dollars go to interest payments on the national debt, which is set to double in 10 years.
Some market optimists are expecting a regression to the mean — a sustained upswing that would compensate for the worst decade in market history that we have just experienced. But market cycles occur in normal times; our current bread and circuses mentality is indicative of a civilization in senility.
The Roman emperor Nero is said to have fiddled while Rome burned. If, despite record deficits, debt and a hurtling dollar, we expect the good times to return, investors in America will be the ones who burn.
Gil Weinreich, editor