In a democracy, politicians cannot help promising more than is deliverable. Even if the system is rigged to perpetuate its founding ideological paradigm; even if on every election voters are asked to choose between nearly identical options—as a minimum any given politician seeking to keep his job or improve his personal and professional prospects needs to ensure that he is regarded by voters as the least bad of available options. The similarity within, and between, the parties and the individual politicians creates a highly competitive environment that provides every motivation for politicians to overcommit, stretching the truth, if not outright lying, before an election, and worrying about how to obfuscate broken promises once (back) in office.
Any attempts to reduce budget deficits will be driven by the sudden fear of economic consequences likely to lead to social unrest; after all, social unrest could develop into a revolution where they end up in exile, in prison, or worse. Because in a capitalist system the economy becomes all important, growth being an ends in itself; because disciplined restraint and aim-directed privation are anathema to a consumer culture; because elections run in four or five year cycles—avoiding pain and creating the illusion of a recovery within the electoral horizon takes priority over creating an economy that is stable in the long term; thus for 2011 the premium will remain on reflating bubbles, on quick fixes, using every imaginable subterfuge to levitate economic indicators for as long as the ruling party remains in power. The obvious and most election friendly method to achieve this is running deficits—or, expressed more honestly, money-printing, which enables incumbent politicians to spend immediately without raising taxes or cutting social programmes, while also deferring the consequences (taxes, inflation) until after the next election.
Although there has been some alarm at the high deficit levels, and although there is anger at the bank bailouts, the economic pain currently being experienced by the voter is still being attributed to the recession, a recurring economic phenomenon with varying and nebulous causes. Therefore, I suspect ruling politicians will suffer further loss of prestige (mainly through their failure to get the economy going fast enough), but they will be able to manage the decline for another year.
More and Higher Taxes
Citizens have become accustomed to huge levels of public debt in recent years. That there has not been a revolutionary uprising yet may owe partly to the successful maintenance of economic illusions, partly to Western economies still being able to live off past glories, partly to the unimaginable scale of public debt, and partly to the inability of the public to understand the personal consequence of these colossal numbers (to them, they are just numbers). Still, even if public debt itself has ceased to be contentious, its speed of growth, if seen as excessive, can still temporarily occasion problems for politicians. For the moment, this puts a limit (which is ever shifting) to the amount of money that can be printed—which means any shortfalls need to be made up with through taxes. Deficit reduction will continue to be used as an excuse to impose more and higher taxes. Because taxes are unpopular, however, the emphasis will be on concealing the actual increase of this burden by using indirect methods. In 1997 Tony Blair was elected in Britain after assuring the middle class that his party would not see their income burglarized by a fiscally hostile and irresponsible government; yet the tax burden grew heavier all the same via a plethora of indirect, invisible ‘stealth taxes’, which were regularly increased even while the income tax was kept steady or even moderately reduced.
If you think the tax burden is heavy now, in time it may be regarded as benign compared to what may eventually come. In 1932 the top rate of income tax in the United States was raised to 63% and steadily increased until reading 94% of all incomes above $200,000 in 1945. Worse, the top rate stayed around 90% until 1964. In the United Kingdom, personal income tax reached 98% of earnings above £20,000 (equivalent to £155,247, or $225,000 in 2010): 83% for normal income, and an additional 15% for income from dividends and investments. We are still a long way from that, but given a severe enough series of crises and panics, maybe a war, politicians could well find themselves willing, if not compelled by circumstances and / or the hard Left, to revisit this kind of fiscal obliteration.
Even if attenuated by increases in taxation, deficit spending (money printing), will remain an instrument of choice: on the one hand, taxes can only be raised up to a point before leading to revolt; on the other hand, deficit spending in the public sector is farther removed from people’s daily lives, because the consequences are only felt years later, can be further deferred with additional money printing, and are not generally attributed to money printing. All the same, when the supply of money grows faster than the supply of goods and services, the value of money decreases, and prices adjust upwards. Vast quantities of money have been printed since the onset of the present financial crisis in 2007; and the U.S. Federal Reserve, acting on its own, has printed much more than previously known or imagined—$3,300,000,000,000, equivalent to Germany’s GDP—in its efforts to bail out foreign banks in the United States. Much of that money remains parked in the bowels of the banking system. If and when it is finally released, we can expect sharp upward adjustments in the price of consumer goods and services. We may not necessarily revisit Weimar Germany or Zimbabwe, and if we approximate anything alike it might still take years to get there, but we will see ‘the cost of living’, relative to incomes, rise in 2011.
Any efforts to curb immigration in the West have proven merely cosmetic efforts to quell unrest among citizens nervous about the transformation of their country, something they never wanted, never needed, and never asked for. In the United Kingdom, Tony Blair’s Labour government orchestrated a top-level conspiracy to make the country more multicultural, secretly ramping up immigration. The present coalition government has promised to curb immigration, but their temporary cap on non-EU immigration was overturned after being challenged by a pro-immigration group and their concessions to businesses partially neutralise the promised curbs, if not effectively provide a loophole for more immigration.
Since the liberalism remains the dominant ideological paradigm in the West, since liberalism is predicated on a belief in progress, and since a traditional mindset is an obstacle to progress, we can expect liberal intellectuals and campaigners to continue pushing the envelop in 2011. Once the battle to allow gays serve in the military is won, campaigners will move on to the battle: allowing the disabled join the gays. On and on it will go, not only in the military, but on all fronts, until all lines have been erased, except those that defend anything White, European, and traditional.
Holding the chanko stew of the multicultural society together requires more laws to maintain minimum standards and ensure its continued functioning, because what was once obvious to everyone, and what would previously occur to no one, is no longer obvious, does not occur to many, and is in fact part of one or more competing group’s culture and religious beliefs. A parallel process driving the need for more laws, also driven by immigration, are the increasingly crowded conditions in the cities and the close proximity of incompatible, hostile, and mutually exclusive tribes competing ever more fiercely for dwindling resources. This often takes the form of illicit economic activity or ethnic gangs that specialize in new forms of crime that exploit the welfare and insurance systems of Western societies. Examples are the insalubrious Ecuadoran immigrant gastronomic flea markets in Madrid’s public parks and the Asian staged crash insurance fraudsters that have proliferated in England over the past few years. Needless to say that the increased chaos and criminality are not limited to immigrants; but their presence acts as a catalyst for the progressive social dissolution that results in the need for increased legal regulation. More laws will be introduced in 2011 to cope with the increased chaos of the multicultural society, to suppress dissenting voices, and optimise tax revenues and collection.
As more chaos demands more laws, more laws demand more surveillance, for the same reasons given above. So the newest technology will be used in the West more efficiently to monitor its citizens and ensure they remain compliant, fiscally and psychologically.
More laws and more surveillance entail, necessarily, more bureaucracies for their successful implementation and administration. And with already so many bureaucracies, all expanding and running into one another with their competing and often contradictory remits and interests, even more bureaucracies may be needed to regulate the bureaucracies. But perhaps we have reached that level, and we will need bureaucracies to regulate the bureaucracies regulating the bureaucracies, plus bureaucracies to obscure what is going on and keep the citizens ignorant and disinformed. With the infinity of possibilities opened by deficit spending, there is virtually no limit to the layers of bureaucracy that can be built and nestled into one another to track all aspects of life, which takes us to…
Even More Deficits, and Even More and Higher Taxes
Yes, to pay for the continued growth of bureaucracies.
Even More Inflation
Need I explain?
Even More Immigration
This will be necessary to expand the tax base and staff all the ever-growing bureaucracies.
More of the same for 2011. We have our work cut out for us.