Watching the political machinations in washington as the deemocrats
sneak the healthcare bill through, it looks to me like the economy is going to
have to get much worse before it can get better. They are finally going to
kill the goose that lays the golden eggs of american exceptionalism.
Every country has smart, well educated people with new ideas, but what I think
made america different was that small percentage of innovators that combine
that education, intelligence and new ideas with ridiculously hard work that
in most countries doesn't pay off so it doesn't happen.
Here in italy people are smart, elegant and well educated, but once you reach a certain
level of income one has to pay 45% income tax plus 9% health care tax. If one has
a choice between working hard or going up to the mountains and skiing with other
beautiful people, most people here go for the skiing, the beach, the museum or
the 4 hour lunches.
Another component of america's exceptionalism is fear. If you know that you are
working without much of a net, or the idea of going on hands and knees for a handout
sickens you then working extra hard to make sure that you stay employed and get
ahead is normal. As the government becomes the source of all things, healthcare, mortgage payments, and discount cars it will become much easier to not work extra hard to get ahead but to take up the 'they pretend to pay us so I'll pretend to work mentality'.
These effects will happen much more rapidly than expected, as soon as people start
to get paychecks with less than half of gross income productivity will decline, tax revenues
will then decline leading to higher tax rates with everything spiraling downward pretty fast to
default on a debt that is pretty unpayable at this point anyway. So maybe things will
work out for the best.