Sticking With the Golden Formula As Empires Crumble

Reckoning from Paris, France...

The European democratic social welfare model – which took root in North America, Australia and other colonies throughout the globe – is putting in a giant, multi-decade top. Birthrates are low. GDP growth is low. Job creation is low. Debt is high. Its money corrupted by the paper-based dollar, the whole system has degenerated...ossified...and decayed. Now, it is dominated by frauds, incompetents and parasites.

Kurt Richebächer used to call it 'late, degenerate capitalism.' We call it Zombiedom!

Hold onto your gold.

We left you yesterday just as we were describing how the US slipped into corruption and degradation. It was nothing personal, we were about to say. It was nobody's fault in particular. That's just what happens.

We were also musing – on Bastille Day – on why monarchy was not such a bad system of government, after all. At least, Louis 16th was less sensitive to mob pressure; he didn't have to keep his eye on the opinion polls. He could do things that were necessary, even when they were unpopular.

As a government matures, more and more people find ways to game the system. This is true of all forms of government, not just democracy. People always want to get ahead in the easiest, surest way possible. Often, it's easier to steal money than to earn it. In a monarchy, people court favors and privileges from the ruling class, just as they do in any other system. They win battles, procure women, keep secrets or tell them, they don't rebel...or they do, they are useful...or troublesome. They connive. They plot. They flatter. They use their elbows and their brains. They do what they have to do to gain an advantage.

In democracy, they grease the legislature to get special laws limiting competition...special tax breaks...bailouts...jobs...and titles. Why do you think Wall Street is the single largest contributor to Congressional campaign coffers? Because it has a lot at stake. And who would have thought – 100 years ago – that the president of the United States needed a well-paid assistant in charge of African-American Media? Does he also have an assistant in charge of Irish-American Media? And who covers the Yiddish press for him?

There's a little niche...a sinecure...a bit of spare change for almost everyone.

As time goes on, the number of leeches, parasites, and blood-suckers multiplies. You see it at the local level as at the national one. If you want to build a house in Anne Arundel Co., Maryland, for example, you have to be prepared to pay thousands of dollars in bribes. Engineers, clerks, administrators, environmental protectors – a whole gauntlet of zombies stands between you and finally breaking ground.

Last week, at the dump, we noticed a large group of men in clean white shirts and hard hats wandering around. They seemed to have notebooks in their hands and stopped from time to time to write something down.

Who were they? Surely they were on the government payroll somewhere, somehow; they were probably making sure that the county dump was run according the latest standards of Zombiedom.

But it is not just government that is corroded. The private sector – especially those parts of it that are most closely connected to government – gets twisted too. Education in America is a government industry – even though there are plenty of private schools and universities. At the university level, it is almost impossible to exist without doing Washington's bidding. Students are supported by grants and loans – coming from the government. And universities depend on government research and other projects for a major part of their funding.

Plus, the universities are no different from any other advanced, degenerate system. As they age, they too are full of their own tweedy leeches. Americans came to believe that their children would do better in life if they had a university education. This proposition was so little challenged that it led to almost a complete lack of price resistance. The more people paid, the better they liked it; presumably, because they were sending their children to the 'best' universities. Families mortgaged their houses in an effort to pay for their children's college education.

Now, of course, the nation is saturated with university graduates who are largely illiterate and incompetent. People are beginning to realize that a college diploma is as bad an investment as a house. The Financial Times:


The cost of education...in the US has soared in recent decades while median incomes have stagnated... In the past decade, tuition rates at public universities have risen 5.6% a year above inflation...

"Over the past 60 years," says Jim O'Neill, head of the Thiel Foundation, "owning a house became part of the American Dream. People were told: 'buy a house, don't worry about the price; you'll earn it all back later.' Now it's the same thing with college."
In the curious way that Zombiedom takes over, the idea that a university degree would pay off was not entirely an illusion. As society became zombified, the value of phony professionalism grew. Degrees and qualifications are important in organizations that don't actually produce anything. An active, profit-oriented entrepreneur will not particularly care if a person has a degree or not; he wants a producer. But universities, the health care industry, many large corporations, and the government itself are not output oriented. Usually, no one knows if they do anything useful or not. So, how can they select or advance employees – except by reference to degrees and qualifications?

The cost of a university education, as a percentage of disposable household income, has risen from about 18% in 1985 to nearly 35% today. But did a college degree really pay off? Guess how much more a university graduate earns today...in real terms...than, say, a college graduate in 1985.

Zero.

More to come...

Regards,

Bill Bonner
for The Daily Reckoning