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Published on: February 12, 2010
Feeding the Blue Beast

The driving force in American politics today is a struggle to restructure and modernize some of our most basic institutions.  It’s only going to get more intense. Back before the global warming mess blew up, I wrote a post about the breakup of the ‘blue social model‘.  Not to regurgitate the whole post, but the […]

The driving force in American politics today is a struggle to restructure and modernize some of our most basic institutions.  It’s only going to get more intense.

Back before the global warming mess blew up, I wrote a post about the breakup of the ‘blue social model‘.  Not to regurgitate the whole post, but the mid-twentieth century saw the US (like most advanced countries at the time) develop an economic and political system based on large and stable entities in the public, private and mixed sectors of the economy.Franklin_Delano_Roosevelt_Campaign

The private sector was dominated by large, regulated and mostly unionized oligopolies and monopolies like the Big Three automakers and the AT&T telephone monopoly.  Government had a large and growing civil service protected cadre of professionals and bureaucrats and provided ever-increasing public services.  The public schools and the universities were also built on the blue model: they provided lifetime employment to those who worked for them and were expected to provide more and better services each year. College education was expected to become more and more affordable for more and more people, with government subsidies making up the difference. Politics was a process of negotiation between large, organized interest groups: the Big Three automakers and the UAW hammered out the division of the industry’s revenues at the bargaining table, but also negotiated through the political process to enhance the position of the industry as a whole and to shape government policy to the marginal benefit of either the unions or the companies.

The blue social model was a triumph of progressive social imagination and political organizing; for two generations it effectively reconciled capitalism with the demand for a better living standard and more security for the population at large.

The breakdown of the blue model is the core problem of American society today and the key to the troubles of the Democratic party.  Blue states really are blue; the ‘progressive imagination’ remains staunchly blue, and blue model interest groups like public school teachers, government employees, the remnants of the private union movement and the much healthier labor movement among public employees shape and mostly fund what Howard Dean famously called ‘the Democratic wing of the Democratic Party.’

Most Americans would like the blue model to stick around and are nostalgic for the security it once provided, but they understand that the great task of our times isn’t to save the blue model but to move on. The Democratic wing of the Democratic Party believes exactly the opposite: that the blue social model is the only way to go. If our city and state governments are groaning under the dead weight of inflated labor and pension costs, the only solution is to pump federal money into them somehow. If public schools aren’t working, they need more money — but seriously restructuring the system is out of bounds. If college and university tuition is exploding as the costs of education rapidly and continuously outpaces the general level of inflation, the only solution is to pump more money into the system while leaving it to operate much as it does.

Democratic policy is increasingly limited to one goal: feeding the blue beast. The great public-service providing institutions of our society — schools, universities, the health system, and above all government at municipal, state and federal levels — are built blue and think blue. The Democratic wing of the Democratic Party thinks its job is to make them bigger and keep them blue. Bringing the long green to Big Blue: that’s what it’s all about.

Three problems: we can’t afford it, people know that, and we desperately need the things that Big Blue can’t give us.

Blue institutions aren’t productive enough and efficient enough to provide the services we need. There’s a hard and bitter truth here: workers in these sectors are going to have to accept lower wages and less security going forward — and they will have to produce more than they do now. Much more. This sounds draconian and harsh, but with a relative handful of exceptions everybody else in the United States has been facing this reality for the last generation.

This has turned into a massive political problem for Democrats because more and more people are waking up to the fact that this just doesn’t work. We don’t have the money to keep throwing more and more of it into dysfunctional public schools, overpriced state colleges and government at all levels. In the competitive world we all live in now, our society has no choice but to learn how to do these things much more cheaply. Otherwise the blue sector will drag the whole country down with it. This is part of what drives the Tea Parties: there’s a sense out there that the time for careful, limited reform is past. We need a crowbar, not a scalpel, to fix the blue beast.

Yet Democrats are right about one very important thing. We actually do need (most of) the services that the blue beast seeks to provide. We really do need good government at all three levels. We really do need more and better education. We need better health care and better access to it. The Tea Party movement is more about tearing down the blue beast than about building something that can take its place and until and unless Republicans figure this out the country will shift unhappily between two political parties that it dislikes and mistrusts.

What we really need in this country is a new generation of post-blue wonks who can think intelligently and creatively about how to dismantle the old structures and replace them with something that works. The political party that can figure this out and build a constituency for the massive and, inevitably, sometimes painful and disruptive restructuring this requires owns the future.

Can the Democrats unshackle themselves from their degrading and destructive servitude to the blue beast before the Republicans build a new cohort of smart policy wonks with a practical vision for the future? Can either party develop the capacity for innovative leadership before the social and economic dysfunction of the current system drives us into a massive social and financial crisis?

We will find out the answer to that last question fairly soon, I fear.

show comments
  • adam

    Out of curiousity, do you get paid to regurgitate stereotypes of what “liberals” want? Or do you just do it for fun?

    Because this is hardly the image of the progressive democrats I know. I’m sure there’s some parts of the democratic party that are like it – but it’s a far cry from all of it. Oh and:

    “What we really need in this country is a new generation of post-blue wonks who can think intelligently and creatively about how to dismantle the old structures and replace them with something that works.”

    These people exist. Get out of whatever bubble you’re in and look for them, they’re hardly hiding in caves.

  • Rich

    I think the author makes an interesting argument. However, neither political party will be able to move forward and creatively address our serious policy issues until we first tackle the issue of our dysfunctional political system. Our political parties are financially dependent on interest groups for their members reelection and those interest groups are primarily interested in maintaining the status quo. Our current system provides no incentives for any politician to challenge the current economic and political system. The Tea party movement and the general population understands that we need serious restructuring, but there is no political will in Washington to carry it out as taking on the status quo in our current system would be political suicide. The Tea Party movement is just one wing of a growing independent or non aligned political base that understands that neither party in this system can or will make the necessary policy changes to address our ills.

  • Norm

    Yes, but what broke the “Blue Beast”? The 1970s was the inflection. I don’t think Vietnam was the fulcrum. The oil crisis happened then, but cheap world class goods from Japan was what really broke the labor cartel. Japan got rich and then was undercut by goods from the Asian tigers. They got rich and then China undercut them. China is getting rich and Vietnam and India are the new up and coming economic contenders. We have another couple waves of dirt poor nations (central Asia and Africa) that can repeat the process, but then we’ll be on a converging course where labor costs will increasingly equalize. I don’t think the US Blue institutions will outlast those next waves of economic take-off.

    Bush ’43 proposed an “ownership society” that didn’t take off. Obama is almost a “Julian the Apostate” reversion to blue orthodoxy who would turn the USA into a more spacious Denmark. I find myself in agreement with the core conclusion that both parties have opportunity to adapt to these circumstances and fashion a new reliable majority.

  • Don Rodrigo

    “What we really need in this country is a new generation of post-blue wonks who can think intelligently and creatively about how to dismantle the old structures and replace them with something that works.”

    These people exist. Get out of whatever bubble you’re in and look for them, they’re hardly hiding in caves.

    If they exist, where are they? The author has described the Great Blue Beast exactly as it is and has been, and I know this from first-hand experience and observation.

    To be fair to you, there really isn’t a liberal/conservative dichotomy to imaginative solutions and the people who come up with them. The problem is, the “progressive”-type imagineers you allude to are 1) mostly not in government, and 2) when they are in government they are thwarted at every turn, with few exceptions.

  • Mike M.

    This is one of the most thoughtful, evenhanded, and intelligent articles about our government and long-term economic situation I have read in some time. One could argue that the substance of it could apply just as well to many other advanced countries, especially in western Europe.

    The biggest and most likely danger is that political intransigence on both sides will lead to continued paralysis, and prevent our society from making the necessary structural changes in a manual gradual and sensible enough to cause the least amount of social disruption possible. And the longer we put the transition off, the more painful and disruptive it is likely to be.

  • Don Rodrigo

    The most potent forces for the shift away from “Big Blue” solutions lie outside of politics.

    Two things are happening to the American workforce landscape:

    1) The number of independent contractors/self-employed have been on the rise in the last two decades, after dropping precipitously for almost a century prior to 1990.

    2) Contrary to popular opinion, the American manufacturing base is still quite large, but it differs from those of countries like China, India, and Japan in that it is much more fractured and diffuse. Americans are discovering ways to leverage small manufacturers into industrial powerhouses, often by coupling with imaginitive industries in China and Japan, and even among other American companies.

    These two phenomena are largely ignored by policy makers and bureaucracies as if they existed in an alternate universe. It’s one of the reasons for the disconnect between government and so many of the American people. These trends will continue, and cannot be ignored in the public policy mix forever. These two trends could be America’s salvation because of the mindsets that drive them.

  • http://www.thebewilderedeye.com Eric Treanor

    Our institutions are not the problem. The problem resides in our unwillingness to tax our wealthiest citizens—those, in other words, who benefit most from a functioning society—at a rate that permits us to maintain the institutions that have made their wealth possible. If we are unwilling to do that, our wealth will continue to consolidate into the hands of fewer and fewer people, and our society will continue to crumble around us.

    Eisenhower’s top tax rate during the prosperous 1950s was 91%! The historic average hovers near 70%. Even Reagan taxed the rich at 50%. But since Bush 1 we have fluctuated between 28% and 39%, and we spent most the past decade at 35%. Such tax rates are untenably low. Until we are willing to tax the rich, we will continue to watch the dissolution of our society.

    The solution is not complicated, and it’s spelled out in The Wealth of Nations: reinstate a just progressive tax system that redistributes wealth, rebuilds the middle class, and saves our institutions from collapse.

  • http://BornAgainDemocrats.com Luke Lea

    One thing you might emphasize more is the self-reinforcing effect of 3 major factors: technological unemployment (especially in the home, ie, modern appliances), mass immigration, and liberalized trade with low-wage behemoths.

    All three increase the supply of labor relative to labor, and hence reduce its price.

    The only good, or at least best, way I can think of to mitigate these factors is to artificially restrict the supply of labor the way we did in the early decades of the 20th century. In other words restrict immigration and greatly reduce the standard workweek.

    Of course it is hard to imagine what this would look like. Here is the picture I imagined 40 years ago, which I recently wrote up for my daughter lest she not know what a hopeless goner her Daddy used to be:

    http://sites.google.com/site/lukelea2/introduction

    feedback welcome: luke.lea@gmail.com

  • Mrs. Davis

    The crisis which wipes out the Blue Beast will be as devastating as the Revolution, the Civil War or the Great Depression/WWII. And no wonks can now know, plan, or envision what the world will look like after this crisis than one could in 1773, 1859 or 1928. And it’s no coincidence that those dates are all about 80 years apart. It is like a blind man enetering a dark room.

  • http://BornAgainDemocrats.com Luke Lea

    Of course, that should be “increase the supply of labor relative to capital.” I am getting old.

  • megan

    Public goods and services started getting harder to pay for the minute large monied interests ie rich, businesses and corporations got government officials to cut their share of the burden(taxcuts, credits) that they profit from. So the average worker gets paid less and less COL wages to turn around to then pay more of the public burden for a free and safe society that the rich and powerful can profit and get even richer on their backs by sucking down bailouts and corporate welfare.

  • Paul J O’Brien

    This article is right on. There are too many of us who are not part of the blue beast to continue to subsidize its inefficiencies and waste.

  • carl

    Unfortunately, the only way to force change is a crisis. The dollar will finally collapse and the price of all imports, especially oil, will sky rocket. From the chaos, if we’re lucky, a new order will emerge.

  • jidcat

    The economy is being strangled by economic rents. A reduction in these rents is the functional equivalent of a tax cut. The current, horribly complex legal and tax framework generate rents to lawyers and tax accountants. Myriad farm subsidies, closed-shop contracts, the minimum wage, certifications of all kinds, and myriad other snouts in the trough strangle innovation and entrepreneurship and reduce productivity. If America is to prosper in the future, these strangleholds maintained by the Grandees of the Establishment must be broken by a sustained assault on economic rents.

    Economic Rents
    Payments made to a factor that are in excess of what is required to elicit the supply of that factor.

  • grabski

    “What we really need in this country is a new generation of post-blue wonks who can think intelligently and creatively about how to dismantle the old structures and replace them with something that works.”

    These people exist.

    Where? Not in NJ which is going bankrupt, nor in its biggest cities like Newark or Camden. Blue to the core. Ditto California or New York, or Chicago or Illinois

    Seems that this author hit the nail right on the head.

  • grabski

    Eric Treanor There were 3 recessions in the 1950s, and JFK ran on the policy to ‘get the economy moving again’ through – that’s right, Tax Cuts.

  • Black Saint

    Excellent article but getting from here to there is going to be very painful. One way may be forcing balanced budgets coupled with low taxes where government must change or die!

  • http://blogs.the-american-interest.com/wrm/2010/02/12/feeding-the-blue-beast/#postcomment Jim

    Come out of the cave, they are out there? You can name many “Iconic” leaders from the private sector (ex. Steve Jobs, Bill Gates, etc), but look for those leaders in the public sector. They aren’t there. You couldn’t set the bar any lower in terms of hiring and promoting. Shielding them from performance pressure, competition, and any new management and leadership practices. It’s an ameoba that is simply unresponsive, even after getting poked by a sharp stick.’

  • Dolly

    What a great article. I read the one on Global Warming the other day too and it was equally well balanced and truthful.

  • http://www.visualcv.brkdm93 Brendan Duffy

    Dismantling existing systems should be our highest priority….just as pensions serving past employees did in 2 of the big 3 automakers, similar retirement benefits will consume state and local governments and many other businesses. Privatize social security. reduce income taxes, cut the federal payroll by 50% and keep the government out of everyone’s pocket….and let people decide via school vouchers whether they want their kids educated by public school teachers or via private institutions. Most important of all, use the US Constitution as the foundation of our roadmap forward. It’s not too late to save this great republic while being an American still has great value!!!

  • Mike in Vermont

    There’s one place to start, and while it will be fought vigorously, it’s only fair: make public sector unions illegal. In 1962, JFK signed legislation giving Federal workers the right to unionize, before which time it was illegal.

    In the recent NJ gubernatorial election, during a campaign rally in front of a union crowd, Jon Corzine shouted out, “we will fight for a fair contract.” Huh? Isn’t he supposed to be on the other side of the table? This is the problem with public sector unions-there’s no dynamic of opposing sides.Taxpayers, unlike the owners of a business, have no representation in public union negotiations. Scrap them, and make it like the private sector, 401(k)’s for all.

    There are currently 835,000 state workers in California. There are 15,000 retired CA state workers who are receiving pensions in excess of $100,000. Firemen in Vallejo, California make $130,000 per year and can retire at 20 years(age 38) at 90% of pay, plus COLA and full health care for life. Police in the town have similar deals. This has to be stopped. Only one way to do it. Make public sector unions illegal.

    Mike

  • John

    The entire rich vs poor battle still plagues us even though a well thought out analysis might cause many people to rethink their opinions.

    Eric mentioned that he would like to see the rich taxed at a much higher rate. A lot of people seem to share that opinion. If you take resources away from the rich person, where do they go? The government is not particularly efficient at redistribution this wealth.

    The real question should be “Who should be entitled to direct the resources of our nation?” Successful business people or the government? There needs to be a mechanism put into place to funnel the resources for effective uses. Confiscatory taxation doesn’t work so well, but it is the favored tool of the government. In my opinion, control is the main issue.

    There are plenty of rich people doing very good things – check out Bill Gates and his foundation. You might also look at what Rotary International does throughout the world.

  • Jerry

    I mostly agree with the writer, with one important dissent:

    What would an unfettered capitalist free market system have produced had not the Blue Beast been created in the first place? It is my belief that the Blue Beast rather than being a necessary development was in fact a anti-progressive development in the evolution of human enterprise.

    If the Blue Beast has outlived its usefulness it could be argued that to a large degree it was not all that useful to begin with, other than an object lesson in negative consequences. Since the liberal progressive movement has controlled the historical outlook of what occurred through control of the media and education we don’t exactly have an objective view of what occurred.

    My intuition and the actual results show that limits put on governments and letting all markets work based on competition and result oriented outcomes, brings about a faster and better outcome than the Blue Beast could have ever hoped to.

    The Wonks the author seeks will only come from peoples who understand that freedom, both individual and in the market place is the key to true progress. The Blue Beast chained and continues to chain such truly progressive individuals in the dungeon of the statist castle.

  • http://outpostus.com Lance Nelson

    The blue model is fiction. What has always made America is is freedom. Alternatives to freedom aren’t modern, they are medieval. Here’s how freedom works. Every year in the U.S. an average of 750,000 people start mostly 1 person companies in their basement, den, kitchen, or garage. If the market likes what they are doing, they accumulate enough money to become a 2 person company, then 3, then 4, and so forth. Companies under 5 employees create about 55% of the new jobs and economic growth. Companies over 500 contribute under 2%. source: U.S. Small business Administration statistics 2002-2006. As people see what Obama has in mind for them, they are not sure the rewards of starting companies and growing companies willl be there. That’s why they are not hiring and growing.

  • Rich

    What the author did not articulate, and what many Tea Types I know believe, is that control, taxation and spending need to be cascaded back down to the state and local levels. This is unlikely to originate at the federal level, regardless of the party that produces “post-blue wonks.” The concept of heterogeneous states testing different solutions to our common problems has been abandoned in favor of inefficient cross-subsidization and cookie-cutter policies imposed from above, by the central-planning, big-spending addicted Congress.

  • Aliquis17

    This is a balanced, intelligent article on an issue that too often gets polarized between the wrong poles. Historically, the populist and progressive eras from roughly 1890 to 1915 were driven by the feeling that the small, independent voter was being disenfranchised by large-scale organizations–particular big business, the labor unions, and big (local) political machines. The progressives looked to the federal government, which was relatively weak at the time, to address the problems. And few people today would doubt the success of this action in establishing food and drug standards, limiting workplace abuses, maintaining open elections, etc, etc. Thus the federal government acted as the referee between the individual citizen-voter and large scale institutions that had the power to out-spend, out-muscle, and out-organize the average citizen. Fair enough.

    But that was then, and this is now. And now federal government IS the large-scale institution out-muscling and out-organizing the individual voter. Which is why the same populist impulse that gave rise to government intervention in the first place (from the liberal direction) is now agitating again (though from the conservative direction). Since the liberal impulse (this is not a dis, just an observation) is to view government as the solution to social problems, they can only appeal to more government, which, of course, only makes the matter worse.

    See Richard Hofstadter’s “The Age of Reform” for an excellent summation of these issues.

  • No One Important

    Good article, however, the “services” can be provided with out the parasitical “union” costs injected into the equation.

    We have another “entitlement” class besides the politicians that isn’t being addressed. Greece is dealing with it right now.

    The “entitlement” mentality of public workers.

    No one working for “public money” should be entitled to pensions on the tax payer’s back, goodies and bennies.

    Taking from those who do not even have that for themselves is obscene.

    Pelosi spending 10K a month of OUR money to stuff her face? When 1 in 7 americans is struggling to BUY FOOD?

    What’s wrong with THAT picture? It’s obscene.

    And tax payer provided PENSIONS must go the way of the dinasaur. You cannot insist that those with tax payer provided HC be taxed hard, while protecting another section of the “entitled” crowd. That’s obscene.

    It’s time everyone lived on the same playing field. We ALL should shop for our own services, and save for our own retirements.

    We should tell all the politicians and “union political employees” get out now, and take your pensions. Next year, it all goes away.

    So you can leave now with all of it in tact, or hang around to next year, you’ll still be 70 years old, and not a nickel in retirement money or benefits.

    Consider it an “early retirement” incentive to get rid of the ever growing parasites on our backs.

    We can take prudent measures to get the “blue” off our backs, or it will come at the point of a social meltdown. In either case, it’s going to happen.

    It’s just a matter of whether we do it orderly, or a slash and burn social upheaval. I vote for orderly unwinding of these “entitlement” practices.

    The democrats would rather continue to take from people.

    Republicans would rather unwind the “entitlement” mentality of several classes of people. The tea parties are for limited government and will push for this to happen in the upcoming years.

    Washington can choose to look like they get the message now, or get the message in November. Right now it’s their choice. In November, it won’t be.

    You cannot continue to take more from society to continue to feed a protected few who have ever growing demands while those you take from continue to struggle.

    It won’t be the public workers protesting in the streets like Greece. It will be the entire working class of the nation protesting the entitlements of the public workers.

    They’re being looked at more and more like parasites. They need to figure this out. It isn’t just the politicians and their cushy jobs, it’s EVERYONE who works in the public sector on our backs.

    You guys better wake up. Because the nation isn’t going to tolerate you very much longer.

  • EJM

    Mr. Mead:

    It’s a broad, sweeping picture you paint (blue), but
    in its broad terms it is substantially correct.

    The problems with our institutions–government, corporations, unions–were already starting to appear in the fractious 60’s. In the 70’s we suffered an oil shock, a constitutional crisis of the Nixon presidency and the dollar was loosened from the gold standard. The heavy manufacturing base built up during and after WWII started to decline, and with it union membership. US influence abroad fell, we had stagflation and Carter’s malaise.

    Reagan’s presidency and Volcker’s Fed turned a lot of this around. Inflation was throttled in the 80’s, the economy grew, but so did deficits. Cheap oil helped fuel this boom, but also encouraged postponing the switch to more efficient energy. The US was more assertive overseas, and the cold war was won by the west as communism collapsed.

    In the 90’s more countries embraced democracy and free markets. This achieved a major goal of half a century of US policy, but also meant that we would face much stiffer economic competition from new non-western powers, such as China. The economy grew healthily again, predominantly in technology and services but structural problems with heavy manufacturing, failures in public education, and energy consumption remained. Although the federal budget was briefly balanced, and modest welfare reform was passed, but deep “blue” entitlements such as Social Security and Medicare continued to grow unchecked and unreformed.

    After 9/11/2001 preoccupation with terrorism, Iraq and Afgahanistan diverted attention and resources from our domestic problems. Greenspan kept interests rates low but this and government incentives from Fannie Mae fueled a housing bubble. Bush tried to address Soc. Sec. reform but could not generate a consensus for change. Debt and deficits grew, as we imported more and more from China. Cheap money also fueled Wall Street speculation, and finally led to a financial crisis in 2008. TARP and low interest rates now are just postponing what many fear may be an even worse day of reckoning in the future. Obama came in promising hope and change, but turned health care “reform” over to the grizzled partisans of Congress who only want to increase government further in the “blue” model, as if it were 1966, the year after Medicare. Even if this is not passed, as now seems likely, Obama’s economists are forecasting enormous deficits and growing debt as far as the eye can see.

    More and more Americans can see that this is unsustainable and they are alarmed. They know that growing the federal government as Obama, Peosi and Reid would is not the answer, and we have to confront this profligate chronic overspending. The problems in public education, overdependency on foreign oil, and loss of jobs and economic competiveness have festered and grown worse since the 70’s. Neither political party is trusted. Obama’s health “reform” is blocked, and as soon as someone like Rep. Ryan comes forward to address entitlements, he is demonized as usual by the democrats.

    A nation of grown-ups would have this conversation and rise to the challenge, as Americans of past generations did when confronted with depressions, world wars and totalitarian regimes. We are still a great and productive nation. Decline is not foreordained. But if we don’t get serious about addressing our structural problems, and impose some fiscal discipline on our government, we are no more immune from the laws of gravity that pulled down great nations in the past as Rome or once Great Britain.

  • Thomas Paine

    Any discussion of raising tax rates on the “rich” should take into account net effective rates–discussions of circa 60s/70s top rates fail to take into account the TRA removal of multiple deductions–many of which, such as passive losses-were sound policy. Then look at the rise of state and local rates, including sales taxes. Then look at property tax rates and misc transactional taxes. Then FICA rates–including the level of capping vis a vis inflation.

    What you will find is that the net tax burden has risen much faster than inflation.

    The author is correct, you can’t just throw money at the problem–or “rich” peoples money either–you have to look at these institutions and figure out how to make them actually do the things they are supposed to, cost effectively, or get out.

    II’ve worked with public sector unions extensively–basic workplace changes that would be common sense in the private sector can take multiple years to implement–this does not make the employees themselves evil–as is often alleged–but it does mean the system is dysfunctional. Where I live, we will literally face the choice of having public services or simply paying retirement and retiree health benefits, but not both in a decade or so. Not an appetizing choice. And when property owners in these locales–people who actually own their homes–realize that their largest asset will go down the tubes–they are going to get more than a little “squirrely”….

  • Bruce Daniel

    Agree with diagnosis of the problem, but disagree that we need to replace the old mess with something new. Permanently dismantling the federal beast is the answer, then let the states pick up the services that their constituents want and are willing to pay for.

  • MaxMBJ

    Doom and gloom, that’s all any of you know.

    The solution to the problems we have today are already fomenting in the creative mind of the great, collosal animal that is American freedom. No politician will dream it up any more than any politician dreamed up the most powerful political force in the U.S. today, the tea parties.

    The sickness of our economy today and our polarized society is the perfect, fertile soil for this great, collasal, creative mind to begin inventing tomorrow.

    The politicians should learn to follow this great mind, not try to be it.

  • http://hanson807.wordpress.com Shane

    It did not reconcile capitalism with a better standard of living. That is just a flat out myth. Socialism is a parasite that sucks the life blood out of other systems. It feed off the life blood that capitalism provided. If it was not for these programs, our standard of living would be even higher than it is now. There was no reconciliation by the socialist programs, they inhibited progress. You are confused about what you saw.

  • VINCENT CURCIO

    For aliquis 17. Yours is the best analysis that I’ve seen. At the time, labor unions were necessary as was communism in China. Unfortunately, over time the abused become the abusers

  • thommie

    The problem is not the “beast” per se. I would rather posit that it is the system of “laisse faire capitalism” and the social philosophy of “carpe diem” as practiced by the bourgoisie (the corporate/political class) that has led US to this moment of crisis/opportunity for transformation.

    [Capitalism] the system that pits the owners of the means of production against the laborers is not new, and has always relied on incidious legal policy (the 3 branches) to maintain and enforce institutionalized social stratification for the purpose of maintaining the status quo. The collusion between these two groups–who’s interest are the same–the accumulation of wealth, power and dominion over the [slave] class is [classic Aristole, Hobbs and Marx]–enforced by the government, against the best interest and the will of the “people”, thereby (abusing) the power vested to them by the people…and our money (taxes). That is immoral and it should be against the law.

    Further, I find it really disturbing that many people consider the government providing for its citizens in this crisis “the problem” , especially when you consider the damage that Nafta, GWB’s tax cuts, offshore tax havens, two illegal wars, no-bid contracts, massive financial fraud and a host of other crimes and misdeameanors, have done to undermine the security and stability of this Nation. I’m guessing far more than any social program for the “people” who have been victims of the “malice” of the well heeled–and yet the, congress, President nor the Justice Department has started in investigation.

  • D Gross

    We can’t “design” anything.

    Our wealthier, more globalised, innovative world was formed by competive pressure and creative destruction.

    We can regulate this process or choose to cushion pain (for awhile) for the losers but we certainly cannot “design” it nor control it.

    A corporation seeks profit. If there was no competition most would provide the highest margin/lowest quality product possible. Government tried to regulate monopolies to produce what bureaucrats and politicians acceptable prices and acceptable quality. The competitve, gloabalized world that supplanted what Mead calls the “blue model” has given us in most cases better and cheaper products.

    A union seeks maximum income and job security for it’s members. It is no surprise that pols living off of union contributions have proven to be inneffective regulators of union monopolies in govt and education.
    If we can’t trust our politicians to regulate monopolies then the only answer (and the best answer in any case) is more competition.

    Our new economy will not be “designed” by policy wonks and eggheads. It will emerge through competition and innovation…..if we let it.

  • http://www.daylightresearch.com Steve

    There is a very dark side to all of this that the article did not cover: the public service sector can tyrranize society to feed itself. In most third-world societies, the public sector has driven civil society into poverty and fear because it has found a way to enforce its demands. In these societies, getting a public sector job is the number one goal for anyone who wants security above all else. My feeling is that, unless things change as Mead hopes, we will loose our feedom to the demands of the public sector.

  • http://www.beforeitsnews.com Concerned Citizen

    We are witnessing the death of socialism around the world. It has literally run out of money and is now bankrupt. The only options now are to 1) print money and steal what remains of its citizens savings and finish the ruin or 2) dismantle the whole corrupt thing.

  • Chief1942

    I thought the article was sound on it’s view and premise. However, if one simply reads many of the comments, it becomes obvious that each side that will have to make concessions to their ideological plan in order to m ove forward, are hardly willing to be a participant in the effort unless it is “their way”.

    I find it humorous the mention of “post-blue wonks”. “They are out there” one said. Perhaps, but those that are out there are encumbered by a mindset that is derived from the “entitlement” mentality. They pretty much had their comfortable lifestyle handed to them by their predesessors and have little understanding or appreciation of how one “constructs a nation”. Once the current set have endured the travails, that say the Great Depression Generation or the “Greatest Generation” did, then with that kind of experience perhaps then, they might have some point of reference from which to proceed.

  • Michael

    Increasing taxes is exactly wrong.

    It’s a call for more young to be sacrificed to the ever-hungrier beast. The CBO pegged 2009 federal expenditure at almost 10% of GDP, the highest since WW2 ended and projects that this year and the years forward will maintain at nearly the same ridiculous rate.

    No, thanks. Time to starve the beast, not to look for more hearts to throw into into that gaping maw.

  • Michael

    Blame is a socio-political grift. We are all to blame for things we did and did not do – as part of institutions and as individual persons.
    Pointing at this person or that group is a scam – playing causality and responsibility to simpletons.

    Blaming unions is an example. Unions make demands for wages and benefits and working conditions, but mayors, state legislators, governors, secretaries, presidents, and other politicians agree to those demands. You and I vote for the wrong politicians, we withdraw from politics and so fail to persuade fellow citizens to vote against public sector union candidates, or we abandon serious thought in favor of simple, dirt-stupid answers like Marxism.

    I think this is a thought-provoking article. I think a lot of the comments are just silly. I think change will come, if it comes, not from sweeping systemic changes initiated by grand policies but from the individual actions we each take, step-by-step and one-by-one.

  • mhr

    I was born before Social Security and Medicare were. Both those programs are eating us alive finanially. The unfunded liability of public employee pension plans of teachers, police, firemen etc is staggering. Americans have come to believe that their “rights” to benefits have nothing to do with the ability of others to pay for them. Yet we have Obama and his liberal cohorts ready and willing to add the right to “health care” to the mess. Whether they are “able” is yet to be determined.

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  • Humphster

    I thought this was an interesting and thought provoking article. It made a lot of sense.

  • edlarson

    So what went wrong with the Blue Beast? A first year economics student can tell you. The Law of Supply and Demand. When these grand social programs were put into place, there were millions of working taxpayers pumping money into them and few people receiving benefits.

    Social Security for instance took in money for almost 20 years before it had to pay out any significant amounts of money. So the supply of money for the program was high and the demand for payout was low. There were about a thousand workers paying in for every person receiving benefits. The problem is of course as the workers became eligible for benefits the ratio of workers to receivers slowly changed, and the demand for services rose.

    The Law of Supply and Demand says that as the demand rises for a fixed asset then the cost increases. This is exactly what has happened to Social Security. Unfortunately for us the public and the politicians thought that the supply of money was infinite and the demand was finite, this is the classic error that all ponzi schemes make.

    They have overlooked the fact that there is a real limit to what you can tax individuals before your revenues start to decline. This comes from the Law of Diminishing Return. This law simply says that as you increase demands on the system, the benefit that you receive decreases. For example if you tax a person at 20% and you receive 10 thousand dollars, taxing them at 40% does not yield 20 thousand dollars. In fact oftentimes you will receive substantially less. The reason is that the person has fixed expenses that they cannot do anything about, rent or a mortgage, food, transportation, clothing, etc.

    As the tax burden increases the person looks for more tax breaks, they start to itemize instead of taking the standard deduction, they invest more in pretax savings like IRA or 401k, they deduct mileage, etc., they may even avoid taking a higher paying job if that moves them into a higher bracket. So higher taxes are often counter productive. It is always amazing to me how few politicians understand this fact.

    At the same time the politicians are extending ever more benefits they also raise the number of tax exemptions. It should be obvious that you cannot continually increase the benefit pool while decreasing the source of the revenue. As it stands now anyone who makes less than 30 thousand a year is exempt and pays little or no taxes, other than FICA and SSI. Add the fact that the demographics of the Baby Boom produced a lot of taxpayers but now those taxpayers are retiring and there are no additional taxpayers to replace them.

    So a vast segment of the population is moving from contributor to receiver. Where is that revenue going to come from? Especially since many of the best paying technology jobs are filled by foreign nationals who will eventually return to their home countries and take their money with them. In addition many of our manufacturing and support jobs have been exported overseas.

    The laws of economics are laws, not suggestions, and they do not bend for anyone. There is no magic bullet solution that allows the government to fund failed programs by increasing taxes. The debt owed to Social Security exceed the GDP of the US and will soon exceed the GDP of the world. That means that there is not enough money in the world to fix the problem.

    I have known since I began working that the Social Security program will be broke before I draw out a single dime of benefit. Anyone under 40 is SOL and they know it. The problem is that our entitlement society has created a myth in the minds of its citizens that they are owed a comfortable retirement. That was not the intent of the Social Security system when it began, in fact the intent was that most people would not live to draw benefits. Unfortunately the program has become something that it was not intended to be, and that is a forced savings system for a government pension plan. If we truly want to save our society then we need to be honest with ourselves and acknowledge that Social Security is a failed system. The only way to fix it is to let it die.

    A new system should be put in place for a real government pension plan based on 401ks and anyone under 40 should be enrolled in it. There should be an account number for each worker (SSN#?) and there should be an online monitor that would allow a worker to view the balance in his account, just like a private 401k. There would be a selection of investment options available and the worker could move their money around based on what they want to invest in. At retirement time the government sends you an account passbook and you can do with the money whatever you want, if you waste it then you are SOL, if you are frugal with it then it will provide a comfortable retirement.

    Of course the only problem with this idea is that the politicians would not have access to this money to spend on themselves and their friends and so they would never vote for it.

  • Troy

    1 the primary system, Iowa, New Hampshire, South Carolina produce purple pols that feed the blue beast. Until that changes, nothing changes.

    2 the answers are in the constitution. Before the USA goes insolvent, you would hope a constitutional reawakening will occur.

    3 as hard as this is to say, the founding principle “beware of foreign entanglements” should be revisited in a rational way.

    4 modify fiscal conservative morphing to a fiscal
    surplus philosophy

    5 have seen first hand and second hand that the herd mentality In education can never work. Integrating technology, education, employment into one integrated, lifetime action is possible (hence no more top down centralized education warehouses)

    just some opinions from this business owner of 25+ years.

  • http://blog.sustainablemiddleclass.com John Freeland

    My favorite quote from Walter Russell Meade, Senior Fellow at the Council on Foreign Relations, spoken on the News Hour, March 17, 2003, just prior to the Iraq invasion:

    ““I actually think that in a way just as the stock markets have been going up as it looks like the crisis is going to be resolved quickly that probably we took much more damage in the run-up to war than we’ll take in the war itself.”

    http://www.pbs.org/newshour/bb/white_house/jan-june03/historians_3-17.html

    Way to go Walt!

  • Michael

    Ok, I was way off above. I wrote that 2009 federal expenditures were 10% of GDP. Not even close. The US federal DEFICIT was 10% of GDP, a historical high since WW2 ended.

    Federal expenditures were about 40% of GDP in 2009 and are projected to be about 45% in 2010 – also historical highs – the highest since WW2 ended.

    Federal expenditure was only about 7% in 1902 and has steadily risen since except for spikes in WW1 and WW2. The largest increases have been to the Social Security System of 1935 and Medicare and Medicaid from the mid 1960s. These 3 entitlement programs alone have, are, and will gobble down the US economy.

    Higher taxes would only throw more of our future into the fat Beast. Michelle Obama needs to change focus from overweight kids to morbidly obese government.

  • Steve Diamond

    @Eric Treanor

    My father was a successful business owner in the ’50’s. He told me once that he was turning down work near the end of the year since it was silly to work to keep only 9% of what he earned. That’s why onerous taxes don’t work. The people who would pay such taxes are self-employed and will avoid incurring the taxes. As they do so, they slow the economy for everyone else.
    Capitalism is considered imperfect because the rich do get richer. What is false is the idea that this is a zero sum game where the lower classes are hurt by some getting richer. Free market economies make everyone willing to participate richer over time, and some get a lot richer than others. Bill Gates is worth 45 billion, and that doesn’t bother me a bit. He has earned it. He has helped hundreds of thousands become millionaires, and has improved the lives of tens of millions in this country.
    Also, the math won’t support the idea of onerous taxation. There aren’t enough rich earners to pay for all the goodies demanded by those who see government as a surrogate parent.

  • JohnR22

    As the article explains, the size/scope of the govt has grown by leaps and bounds and even as it grows it delivers less and less. And the most critical piece of the Blue Beast is the entitlements which are already bankrupt and will explode the national debt as the Boomers retire (and living increasingly longer lives due to improved medical technology). As the Europeans have found out, getting voters to give up ground on entitlements is virtually impossible. Voters are addicted to them like a junkie. IMO what’s going on in california is a precursor to what we’ll face as a nation. Escalating debt, a paralyzed ideological political class, and eventual fiscal collapse.

  • http://blog.sustainablemiddleclass.com John Freeland

    Is “blue beast” a euphamism for middle class?

  • JimBeam

    The blue model never should have worked. The only reason it ever did is because the United States was the only industrialized nation that had not been destroyed during WWII.

    By the 1960’s it started to crack and in the 1970’s the problems really started to show with the stagflation and malaise. In the 1980s Volcker was able to stop the inflation and Reagan was able to get things going again, but the blue beast wouldn’t give up. So we lived on borrowed money instead.

    The Reagan era continued under Bush Sr. and Clinton. The US continued to lead the world. However, as more countries have become more economically free and prosperous, the US is facing more competition.

    9/11 and the tech crash hit the US far harder than people realized at the time. The Bush Jr. era involved the United States spending money we didn’t have in a failed attempt to restore international military and economic strength that we enjoyed in the 1990s. However, the spending was more to preserve an illusion than to actually strengthen the United States: We were like an affluent professional who had lost his job and were using credit cards to maintain our lifestyle. Not surprisingly, this ended badly.

    The election of Obama was a hope for change. Any change. It was a combination of disgust at Bush Jr.’s lost decade and panic caused by a financial crisis that occurred a month before the election. Obama’s vague “return to blueness” was comforting to many after such a shocking decade.

    Now we are remembering just why the blue model didn’t work. It will be an even bigger disaster now than it was in the 1970s as the world has gotten smaller and the competition has gotten fiercer. The Democratic Party is full of old dinosaurs who wanted to hold on to that old blue model forever. (Look at the average age of the Democratic congressional leadership.) Obama is a man who has gotten where he was by pleasing the blue leaders–as are many of his young college age supporters. He has been isolated from how the world really works and is incapable of understanding why what he is doing isn’t working. That is why he thinks that wild conspiracies to dupe the ignorant masses must be the problem–he is incapable of thinking that all he has been taught (and learned so well) is wrong. I think he really does want to fix America, but he has no clue about how to do it. Unfortunately, he thinks he is brilliant.

  • Tom Morris

    Our republic was founded on many of the principles found in Adam Smith’s, Wealth of Nations. The work highlighted how free men could organize themselves far better than any centrally controlled state.

    Unregulated capitalism is an ugly thing. The challenge is thus to put in place rules that serve the public without destroying the wealth producing power of the free market. Unions and government have served us well at times. Unions in the private sector have loss power as their use has diminished. Soon public sector unions will encounter resistance from the public as the bill for there very effective representation come due.

    The fix we need is simple. Complete the mission and bring the troops home, all of them. This includes our left overs all over the world. Simplify and hold tax rates were we can have the highest revenue yield while not taking the incentive out of the system. Cut our benefits back to something we can afford and take personal responsibility for each other.

    I would like to see Obama be the leader that can do what is needed. So far I have been disappointed with his lack of understanding of economics and leadership capability. If can’t develop an understanding of how incentive and marker forces work, his time will end not to soon.

  • Skyranch

    Thought provoking article. I’d like to read more on this topic.

    As a baby boomer, I’m about to retire from the federal government’s branch of big blue with all the perks and benefits that I know are not sustainable. A recent study showed the difference in pay between federal workers and the private sector at approximately $30,000 per year. Our local county governments see the future day when all they will be able to afford is to pay the pensions of their retirees. How did we get here?

    I work hard, but hard at the needless shuffle of paper. I joined the feds 30+ years ago not because it was the feds, but because I wanted to work in a public land and resource management agency. I worked in the out-of-doors for years, but to advance I had to become desk-bound. Currently, my agency is barely able to do anything with all the rules, regulations, conflicting laws, and access to the courts by anyone that doesn’t like what we do. When we lose a court case, the government then pays the plaintiff’s fees, which just breeds more frivolous lawsuits. We’re almost gridlocked – yet we’re still spending tax dollars.

    On to retirement!

  • David Doney

    A well-done article! The crisis represented the end of unsustainable private sector borrowing to feed an unsustainable standard of living. The government has attempted to step in an maintain this standard, but it cannot do this much longer. We are already printing money to “feed the Blue Beast.” This will also end badly if we don’t stop it soon.

    What does the future look like?

    1) A continuing shift from nation-state power to corporate power, as the recent Supreme Court case illustrated. Corporations only paid 7% of the total federal taxes in 2009, continuing a 30-year trend.

    2) Massive cuts in defense spending, they are nearly all deficit-financed. Recall that the entitlement programs thus far are fully funded by dedicated tax revenues; they are the long-term problem, not the short-term problem.

    3) Big tax increases to cover 77 million retiring Boomers, phasing out Social Security and Medicare for younger folks.

    4) Reducing the annual cost of living increases in Social Security and reducing benefits to the wealthy through higher taxes.

    5) Huge stimulus projects and incentives to build 150 nuclear plants and electric cars, to get us off foreign oil.

    6) A trade war with the developing nations and we re-industrialize our country at a much lower living standard.

    7) States will be required to reduce pensions and significantly increase consumption and property taxes.

  • David Doney

    I should add #8 to the above:

    8) Aggressive, government-driven medical reform, as we have no choice but to drastically reduce costs. The long-term budget issue is all about healthcare; nothing else comes close. The cost drivers are: obesity, fraud, defensive medicine, a critical shortage of doctors and nurses, incentives that reward more care instead of better care, a parasitic insurance layer that adds enormous cost yet is non-value added to the care-giving process, and attempting all heroic steps to keep a person alive at the end of life rather than keeping them comfortable.

    These are resistant to free market solutions or they would have happened already. We will pass a series of healthcare bills focused on getting the costs down, attacking the problems listed above. Make them separate bills. Obesity will require taxes on soft drinks, removing non-nutritious foods from schools, higher insurance costs for companies with more obese workers, and prohibiting a young person from getting their first driver’s license until they get in shape. Medicare fraud will require more auditors, better systems, and stiffer penalties. Addressing defensive medicine requires tort reform. Modify doctor incentives to more salary, with bonuses for positive outcomes and hospital penalties for bad outcomes (e.g., post-operative infection rates). Provide educational incentives to get as many doctors and nurses into the field as we can. Ration care for those in the last year of life, where 25%-33% of costs are incurred.

  • Cincinnati Rick

    Among the self-anointed intelligentsia a true blue world is as taken for granted as the air you breathe. It’s the same atmosphere in which Obama, a product of affirmative action and the romance of radical chic, is stuck. It is how he can think he would nevertheless account himself a “good President” should the voters deny him a second term. Such chutzpah can only be explained by a fundamentally undemocratic and unrepublican world view…the omniscience of paternalism and progressivism. Where is the Cincinnatus of our day?

    You need not look to the GOP. Republicans are a natural opposition. Their ideology is focused on preventing the government from doing things to the individual rather than what the government can/should do for you. The best and brightest with this philosophy will not naturally gravitate towards politics or positions in government. The career Republican politicians are a barren and self-serving wasteland, all tactics and small ball, no vision.

    Enter the tea party. I can understand that many of the intelligentsia are frustrated that these tea bag people have been using inappropriate (dare we say, ignorant) characterizations to describe what they are opposing and incoherent yelling to get their point across. Much as Karl Marx in his day, the intelligentsia are demonstrating their petulance with the hoi polloi for failing to respond to the utopian vision offered by their betters and demanding that it be rammed through by whatever means necessary.

    But they are sadly mistaken if they do not understand that these unseemly outbursts and dubious arguments are simply metaphors for the frustration with a government that is not listening to them and, where many key figures even seem contemptuous of them.

    To some extent the Tea Party is the inevitable outcome of the fact that, contrary to the promise of transparency, bills have been crafted in back room deals and voted in the middle of the night by a Congress that doesn’t even know what is in them. As a result, all the passion is with the opposition. Only “true believers” can rationalize that this is all the product of evil “vested interests” peddling “lies.” You can strike a match but you will have no fire without ample tinder. And there is a fire in the American heartland.

    With all due respect to a sensible progressive, Camille Paglia, who has called (in vain, I think) for Pelosi’s head, the senior people from safe districts who run Congress can thumb their noses at the opposition and attempt to divert attention to the manner it is expressed. That will work just fine for their constituents. But the so-called “blue dogs” will be decimated if things continue as they are now about health and cap-n-trade specifically and big government in general. The Pelosi/Obama agenda is the perfect recipe and perhaps the only way you can unite and fire up both the social conservatives and the libertarian wings of the GOP. And the “Tea Party” is the libertarians, whether inside or outside the GOP.

    The current debacle is a product of wilfulness and hubris on the part of an immature President who has yet to grasp the limitations of his ostensible greatness. A basic change such as this requires consensus. The AMA and the drug companies may have been co-opted onto the reform bandwagon (for a price)…but this will all be undone in the near future if a SUBSTANTIAL majority of the people are not on board. Ditto cap-n-trade.

    If Republicans can profit from this blunder by Obama, well sobeit. We all learn from our mistakes. Perhaps it will make him a better President. While it is far too soon to be writing him off, he has shown thus far a remarkably tin ear.

    But as for tea partiers becoming an actual third party, it would require the likes of a Ross Perot to provide the continued structure and financing that he did to actually launch much less maintain a viable political party. Failing that, the issue will be to what extent the libertarians feel at home with the GOP or sit on their hands. Their anger could fuel a GOP renaissance in 2010, much akin to 1994. Or not…which makes politics a great spectator sport.

    Fortunately our founding fathers designed a system that checks rather than enables power and we will eventually be rescued from our current folly…albeit with a vicious hangover and backbreaking debt to repay…ever the price of binging. But my, it was fun while it lasted, wasn’t it?

  • BIll in Chicago

    Adam who wrote the first comment, please give us some names of the post-blue wonks you say WRM overlooks, and would you point to what blue structures they’d dismantle (particularly puublic sector unions ?
    Just asking ….

  • sue robinson

    A brilliant piece. In my state – Washington – 70 percent of our lawmakers are current public employees, retired public employees, or spouses of public employees. Our governor has never worked in the private sector. All dance to the tune played by public unions, especially teachers unions. I would like to believe we can fix our ‘blue’ problem, but I am not optimistic. As I write this, our lawmakers are in a Saturday session aimed at raising taxes on small business. There has not been a single proposal to rein in spending on public employee salaries, benefits and pensions and I don’t expect one. At the national level, when the crunch comes via a debased currency or even a ‘sudden stop’ in currency value, I fear that our lawmakers will drastically cut entitlements like Social Security and Medicare while resisting similar cuts in the federal worker workforce and its incredible entitlement system and raising taxes to keep its ‘blue forces’ intact. This will be a terrible risk but I believe they will take it because the alternative would be to face down the very forces that put them in power in the first place. A move like that will be dangerous to the social fabric of our country, but it’s been done before and the governments that did it survived. Just look at Argentina. An impoverished and fearful general population and a governing elite that last year seized the final vestige of private sector security by nationalizing their equivalent of our IRAs and 401Ks. Even now, our Treasury Department is publishing rules that would ‘allow’ us to ‘invest’ our 401Ks in government-managed annuities and Obama has discussed creating mandatory five percent of salary annuity retirement accounts for private sector workers. Both of these proposals are being done for one reason: to find forced buyers for U.S. Treasuries because the normal buyers of our treasuries – China, for example – are very rapidly running away from these worthless pieces of paper.
    As I wrote, I would like to be optimistic. But facts are hard to avoid and the laws of economics, as one of the previous commenters noted, are not suggestions.
    ment isityae o

  • Gene Hotz

    Excellent article. Some of the most cogent and thoughtful comments I have read in a long time. I don’t know the “solution” to the mess we as a nation are in but believe we face some very hard times. It’s difficult for me to see either of the 2 existing major parties putting forth anything to move us in the right direction. I believe the time for a true third party exists.

  • http://ckarabin@aol.com Chuck in Wisconsin

    It’s not our inability to tax the country that is causing our runaway deficit and shortage of resources, it is the runaway spending. Tax revenues are fairly constant around 20% of GDP, but federal spending is rising rapidly toward the upper 20’s now. And that boom in spending does not appear to be having much impact in creating wealth and welfare.

    Similarly, look at the states that have budget problems. Nearly all are high tax states. Conversely, states that have low taxes are generally doing much better economically. Have we finally taken the “tax and spend” model as far as we can without killing our economy?

    Time to adopt SMART spending and thus keeping our tax rate at the level that it has been at for the past few decades.

  • Ja Mais

    I remember the 90% plus 1950’s tax rates; my father was a CPA then. Nobody wealthy paid as much in taxes as they do now. There were literally thousand of tax deductions then that no longer exist. Do you think “Black Jack” Kennedy was paying 91%? BTW the top 1% of earners today pay over 40% of the total Federal Income Tax; isn’t that enough?

  • SA

    Negating the power of the unions would go a long way towards getting to a more competitive edge in the world.

    How can we possibly compete with all the demands union puts on the system? Our union system is unsustainable.

    The answers aren’t that hard to imagine. But they are impossible to implement. Collectivism is not the answer… Unions have to be dismantled first so that individual innovation can lead us out of this mess.

    But good luck with that especially with the current government that can’t see the forest for the unions.

  • MojaveMax

    This is a fine piece. Clearly describes the problem AND the solution. My fear is that the entrenched interests will not act, as some of the furtniture has to get broken in the process of changing from the current paradigm to whatever new paradigm we decide to seek. And no one wants to be around and responsible for the broken furtniture that is going to cause an awful lot of pain to an awful lot of people. Ergo, we will continue to muddle though until a big crash hits where our options for choosing are narrowed a great deal, and we will have to simple figure out a way to get along and survive. A lot of pain, but a necessary pain. And what comes out of that will have to be something much closer to the strict constitutional model of the US as envisioned by our founding fathers. The lawyers won’t have a big role to play in that new world. The societal safety net will be replaced with us taking care of each other, and the rest. It will be a spriritual awakening that will carry us back…

  • http://conservativenews J Calvin in Oregon

    Excellent overview and an accurate paradigm.
    Perhaps a simple solution to the problem is for the private sector to supply public services. The States can reduce their staffs and provide monitoring and regulatory functions. Oregon and Washington State both have a huge public sector (relative to population) serving nearly every conceivable service, from roads and bridges to drug counseling. I suspect this arrange arose initially because the combined assets of the taxpayers in rural, new, and relatively poor states was the only way to :get things done”. Of course someone needs to convince state governments to make such a change possible. Good luck with that! In the end, States will go broke and that will force the issue.

  • Karl Maier

    Competition has proven to be greatest human organizing force, for the improvement of price, service, and quality. Next to the competition of the free enterprise system, the monopolies of the Blue Beast (labor, government, schools, etc…) are at best stagnate. So, competition must be injected into the monopolies. This means the customers of these necessary institutions must be put in direct control of the payments to them. Which calls for alternative suppliers (for choice) and fee based funding. Some like unions (labor gangs) can be subjected to antitrust laws. Schools could be moved to the internet and be broken up into professor based classes competing for student class fees. A national class transcript data base could be placed alongside the national medical data base. Health insurance also needs more competition; insurance should be limited to catastrophic health insurance and Health Saving Accounts, so patients will feel the pain of paying and demand improved prices, service, and quality, as well as costs for unhealthy lifestyles. Look at the advertising for Lasik, and cosmetic health care, you know there is competition when you have advertising. Chile privatized their Social Security, and created a huge pool of investment capital for their economy, and we should follow a similar model.
    That takes care of the entitlement institutions, but leaves the Government functions identified in the Constitution as the remaining monopolies, with the only competition that of other governments, and the democratic competition for leadership. Perhaps we could increase the level of direct Democratic participation but it would require a constitutional amendment at the very least.
    What do you think?

  • Gene Man

    A wonderful article, Walter Russell Mead’s “Feeding the blue beast” about the huge public sector unions that the Democrat party depends on. Some thoughts:

    When I worked for NASA decades ago, a RIF (Reduction in Force) was announced. My co-workers, physicists all, were most unlikely to be fired, but despite this, almost to a man, they became neurotic as hell. The thought of being knocked off the gravy train just sent them almost over the edge.

    I was reminded of this with last weeks shooting at the U. of Alabama, Huntsville, where a female neuro-biologist killed three co-workers, apparently over being rejected for tenure.

    If we are truly to get a hold of our problems, and start downsizing the monster government parasite that has grown by sucking our blood, be ready for trouble. The civil servants will become most uncivil. Some will go nuts.

  • jd

    If the Republicans could get their heads out of Washington for long enough to see what the country is looking for, this process would have happened long ago.

    In 1994, after winning a stunning victory, the Cavelry who came riding over the hill to the rescue proceeded to sit down with the Indians and had lunch.

    Just as Bush began trying to improve his image with the MSM and Washington types by his “New Tone.” If there was ever a MAJOR mistake by W. it was the “New Tone.” And having it shoved right back in his face wasn’t enough to convince him to get off of the Discount Democrat track and go another way altogether.

    In 2006, Talk Radio was inundated with Callers saying a single Mantra, “The Republicans DESERVE to Loose!” And they did. That mantra was the REAL beginnings of the Tea Party movement.

    And now, Chuck Grassley has shown that He Hasn’t learned a thing. You don’t defeat bad ideas by negotiating 10 percent discounts on them! (Can you say Bob Dole?)

    If the Republicans don’t figure it out soon, they run the risk of seeing another move for third parties. When someone who wants to move Center Right has a choice between Half Left and Hard Left, they are going to be discouraged and Sit Out (2006, 2008) or go for third parties (1992, 1996).

    just my thoughts.

  • Karl Maier

    Walter Russell Mead is a National Treasure.
    Jacksonian
    Hamiltonian
    Wilsonian
    Jeffersonian
    What a Sage!
    The Blue Beast
    He sees so DEEP
    When I see his name I know I will be receiving paradigm shifting insight.

  • plaasjaapie

    Brilliant analysis. I think that Rich nails the problem that we face, however, which is a political system that simply is incapable of doing anything save pandering to the players in the economy that keeps it in power.

  • plaasjaapie

    Good point, Gene. Nobody likes their rice bowl to be broken.

  • Karl Maier

    The Monopolies of the Blue Beast will be slain by the Sword of Competition.

  • Linda Dwyer

    None of the above comments address the true concern of tea party attendees. The common core of all of their complaints is the loss of individual freedom through the Big Blue institutions, the imposition of ridiculous regulations aimed at helping us, but ending in paralyzing any creative or constructive endeavors, and the political correctness that inhibits all actions these days.

    It is immoral to take from one and give to another. Thieves are put into jail for this, but the government seems to feel it can do so in the interest of “fairness”. Equal opportunity never means equal outcome. NEVER. Yet our country seems bent upon doing exactly that in every aspect of our lives.

    The result is free education (which is so unappreciated that drop out rates increase daily), free work training ( when said dropouts find they can’t make it without education) and free handouts when they drop out of all the available programs.

    We have entire generations living on government grants to study every possible aspect of human and non-human life, with no end to said studies.

    The systems set up by Big Blue all require separate agencies, buildings and workforces to administer poorly that which we should be able to administer ourselves – not to mention cadres of lawyers to step in when all is not deemed to produce the necessary outcome.

    Turn the country loose to exercise its abilities and kindnesses freely and you will unlease a power not previously seen before.

  • Dave Minnich

    One thing to dump: bricks-n-mortar public education. We’ve poured more and more money per student into this for decades and all we have gotten is more failure, lame excuses, and balloning pension costs.
    Think about it – parents buy Leapfrog and other electronic learning tools to teach their kids the things they won’t learn in school. Distance learning education has made bricks-n-mortar public schools obsolete. As for the “socialization” of bricks-n-mortar public education – don’t make me laugh.

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  • Mark

    The actual root cause of our problem is not that the rich or corporations are taxed too little but the fact that so many others are taxed too little. Currently 43% of income earners pay no federal income tax whatsoever and this percentage is growing due to socialist politicians attempts to gain a permanent majority. As they pay no federal income tax they have no interest in reducing spending hence growing fiscal insanity. Once this percentage of non-contributors reaches 50% the Republic as we know it will end.

  • fred gill

    I do find Meed’s analysis fascinating and even compelling. I am a recently retired California state bureaucrat who spent 30 years in the blue beast. Most of the people I worked with and supervised were conscientious and dedicated. But when we did get a bad apple it was extremely difficult to be rid of them. Every agency in government suffers from people like this and often they must be carried for years.

    I also noticed long ago that San Francisco bus drivers were almost uniformly surly. Yet when I’m back in the South I get service with a smile from non-unionized people who make less than half of what SF bus drivers do. Surely something is wrong with that picture.

    I know the “blue” model must be abandoned. What I fear is that America’s relative competitive advantage has been irretrievably lost and that by moving away from FDR’s social compact we are condemning our working class to a long-term decline in standard of living. I fear the inverse as well: the rise of an entrenched oligarchy which has little or no concern for working Americans It is a process already well under way.

    So how to change models and stay the land of optimism and opportunity?

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  • http://www.geoffrobinson.net Geoff

    People aren’t having enough babies to pay for the current structure and that’s all there is to it. If you want a big welfare state, you have to have a lot of young people.

  • SC Mike

    Contra Eric Treanor and others, the handwriting is on the wall but it shouldn’t take much more time for most to realize that federal spending has to be slashed to keep the American Experiment afloat.

    Rather than taking even more from the successful, by that I mean taxing the incomes of the wealthy, why not offer taxpayers the opportunity to take up the funding of current discretionary budget items like the Corporation for Public Broadcasting, AmeriCorps, and the like?

    General budget outflows to Social Security predicted for 2017 are hitting us now, thanks in part to the depths of the current recession. Failures in corporate and other pension will soon be realized and there are simply not enough wealthy folks for the feds and states to tax to make good on all of these contingencies.

    Why not cut back on discretionary expenditures at the federal and state levels while urging private foundations to direct their resources to fund those same activities? Why can’t the Ford Foundation and others take up the cause of public radio? Not only could they do it more efficiently, but their budget would not hit federal or state budgets to the extent that they managed the activities.

    For a sanity check, how much would it cost the feds to reach 20 million listeners per week three hours per day via broadcast radio?

    I don’t know how to compute the number, but I’m sure that it’s quite a bit more than Rush Limbaugh earns per year.

  • Jose Pardinas

    We are in trouble as a country but not on account of the “blue beast.”

    In fact, the author himself acknowledges that: “We actually do need (most of) the services that the blue beast seeks to provide. We really do need good government at all three levels. We really do need more and better education. We need better health care and better access to it.”

    If we cannot make ends meet in this country it is because of misplaced priorities and misallocation of resources. Importantly, the US has taken it upon itself to militarily dominate the entire planet – a supremely expensive and ultimately futile proposition.

  • Jacquelope

    American workers in the blue sectors will have to accept lower wages? Like the private sector?

    People in the private sector are doing more, being paid less, and being laid off for being so productive, because higher productivity means higher worker redundancy. And they aren’t getting new, better paying jobs: just like the article said, they’re having to get by with less.

    Do you even realize what this means? THIS is why our economy is so far in the dumps. The subprime crash would NOT have led to such a huge market panic if we had kept all those high wages. People who earn less spend less – especially now that credit is so hard to get and use.

    Can anyone around here tell me what happens to a nation’s economy when millions of Americans have to learn to live with earning less? Here’s a clue. It’s happening around you right now. You’re soaking in it!

    Now, Walter Mead, you want to take all the Government workers and bring them down to that level, too? Now you’re calling for throwing millions more workers into the cycle of buying less discretionary goods and services so they can make ends meet.

    You think that will benefit America? Well check this out. 9500 businesses in the Sacramento area have closed in the last year. Ninety thousand five hundred. That’s one out of SIX businesses in this area. This is happening all over America. Why do you think they’re going out of business? I’ll tell you why. It’s because workers are having to make do with lower wages, and they stopped spending as a result. That is what caused the lion’s share of our recession, and that is what is killing America’s businesses from sea to shining sea.

    Oh. And how about a nationwide poll? “Would you, as an American, prefer the blue model of lifetime job security and higher wages, or the uber capitalist model of lower wages, harder work and job insecurity?” I will bet any fool hard money that almost no one will vote for the latter.

    America wants higher wages and job security – but they have been bullied into believing that it is impossible. Except the CEOs who get million dollar bonuses as they design gas guzzling SUVs no one wants to drive, and then blame UNION WORKERS as if the unions somehow designed these junk heaps.

  • Jacquelope

    You know, I read someone else ask about this, and I wanted to repeat it:

    Why, as the economy becomes more productive, are most Americans expected to get along with less, as the rich keep getting richer?

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