In order for us to understand where we are going, we must understand where we’ve been. Ideas have consequences. Actions based upon those ideas have even greater consequences.
This article is an effort to show how our present economic crises have their foundations not just in the government, but also in the structure of the American family.
All of the plans, stimulus packages and machinations of the state and Federal governments cannot change the decisions that families have made and continue to make about their family structures and the homes they live in. And those decisions have occurred over the last 50 years. It is the “blowback”…the unintended consequences of the individual choices that accumulated into domestic policy and became the dominant culture.
Occam’s Razor is a principle that says that the explanation of any phenomenon is best found in the simplest explanation. So, forget all of the deeply technical explanations you’ve read about monetary policy, Federal Reserve actions, Treasury edicts and TARP legislation. It’s really about the family, stupid!
There is a circle of life. Young folks start families and businesses, and need to borrow money for those efforts. Old people need to earn money on their savings, and need the young to take care of them when they are elderly. So the circle of life is the investment we make in every new generation so they will take care of the old.
The two-parent family with children has always been the societal building block. According to the Census Bureau, American population grew from 200 million in the ‘70s to 300 million today. In the 70s, America had about 25 million two-parent families with children. Today, we have about the same number of two-parent families with children as America had in the ‘70s.
What does that tell you? Over the last 30 years, America has decided that the two-parent family with children is only one of many acceptable options for a nuclear family. America has had an explosion of one-parent families. In some segments of the population, two-thirds of babies are born out of wedlock. Single parent families with children have lower incomes, and many are below the poverty line.
Two-parent families usually have the highest income of all family units. That makes them the group with the most buying power. And because single-parent families with children tend to have lower incomes, they have the least buying power. So, much of the population growth in the last 30 years can’t afford to buy a house, no matter what subprime mortgages are offered, and no matter how much of a housing glut may exist.
Yet, government policy didn’t take this into account.
America also made another decision about families…abortion. The Alan Guttmacher Institute, the research arm of Planned Parenthood, states that the number of abortions performed since the 1973 Roe v. Wade decision is about 49.5 million abortions. Those people aborted in 1973 would be 36 years old now. That would place them in the prime ages of life wherein children are reared. It also would place them in the ages of life wherein they would be buying housing.
But they do not exist. They were never born.
Forty nine million people. That is equal to the population of Myanmar, or South Africa, or South Korea, and a few million more than Spain. Think about the economic impact of any of those nations, and what it would mean to America if that number of people lived here.
Would we be in this recession today if that cultural decision had not been made? Remember that neither Congress, nor the Supreme Court, nor any President made these family planning decisions. The American people decided themselves.
Human life consists of one generation procreating and rearing the next generation. But in America, the last generation could not be bothered to raise the very generation that would care for them in their dotage.
Europe and Asia have it even worse. They have been below population replacement for two generations. So, it’s not like we as a nation could invest in the young families overseas. They’ve got worse problems than we do.
Can America fix its economic problems? Not likely, and certainly not likely with the quality of solutions and leadership coming from Washington.
One of the few ways to fix the housing crisis would be to “import” millions of people. But not just warm bodies. America needs skilled and entrepreneurial immigrants, not maids and landscapers. America needs millions of additional young people to begin earning, starting families, borrowing for housing and creating wealth. At this point, that would require a massive change in immigration policy in Washington. Some lame tax break would not be enough. Congress would have to enact law that would be so irresistible to highly skilled young people in other countries that they would relocate to the USA.
One irresistible idea to right the capsized American economy and recruit immigrants would be the repudiation of the Federal tax collecting system. Repealing the Income Tax and the IRS tax code, which rewards certain behavior and penalizes other, would be a good place to start. Replace the tax code with nothing, not a new tax.
Thanks for the credit and housing bubbles go to government policies, jointly shared by Republicans and Democrats, that increased the money supply, kept interest rates artificially low, and fostered a regulatory atmosphere in which sub-prime mortgages could be turned into securities and sold around the world.
So, as comic strip character Pogo said, “We have met the enemy, and he is us.”