Thursday, June 14, 2018

America in 2018: Debtor Democracy

America's debt-fueled economic model is incompatible with merit and possibly tolerance once we account for physical and educational segregation. A debtor democracy cannot succeed without new immigrants and/or new residents willing to contribute to ensure existing and new debt rolls over. As with America's entitlement programs, its political structure is geared not towards resolution of problems but using debt to pass responsibility to future generations. 

Outsiders fail to appreciate how much American inequality and de facto segregation are premised on assumptions of meritocracy. When almost 50% of your population is without significant assets in a debtor democracy, the foundation cracks, causing the younger generation to question capitalism and other values. In short, at the same time the status quo needs to be preserved in order to repay debt, the younger generation has every incentive to break its shackles. We have arrived at this troublesome scenario in large part because of the ways debt and the tax code, especially the mortgage interest tax deduction, have promoted segregation. 

Rather than attempting to fix segregation in ways that identify deserving residents, America's government has outsourced the task of social cohesion to private schools and private banking institutions--with one notable exception. A teenager poorly educated has little choice but to rely on parental connections--increasingly tenuous as segregation increases--or join America's military, the sole entity the government has decided is worthy of its direct involvement in identifying talent. 

Consider a society where the government borrows virtually unlimited money to promote a program heavily biased in favor of men while using the men in increasing meaningless ways as wartime readiness favors technology, economic agreements, and diplomacy over brawn and manpower. Such a society will inevitably create tensions between its banking sector--and, by default, the private sector--and its government by issuing bonds and inviting foreign investment in ways that favor the status quo over residents' well-being. In a dictatorship, such an approach may be viable; in a democratic republic, it is suicide. Welcome to America in 2018. 

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