A Nation in Denial (October 2004)
I continue to be dismayed by the disconnect between the enormity of the problems facing our nation and the apparently willful ignorance of the populace and governing class. This is a nation in a pathological state of denial about the real world and its impending impact on the United States. Here is a partial list of long-term difficulties which will not go away unless serious, sustained, painful changes are implemented soon. Appallingly, the nation seems largely unaware that these problems will soon negatively influence daily life in fundamental ways:
1. The runaway Federal deficit. No nation running endless deficits of 3-4% of GDP can finance the Medicare and Social Security costs of the 76 million Baby Boomers who start retiring in 2008.
2. The vast current account imbalance. This nation has a trade imbalance of 5% with the rest of the world. In simple terms, we buy $500 billion more than we sell. Historically. no nation has sustained a 5% current account deficit very long. The only way the market has to fix this is a radical devaluation of the dollar, which will wreak its own pernicious forms of mayhem on our economy.
3. The permanent shortage of oil. The peak of world oil production is one or two years away. From then on, production will decline, no matter what technologies are employed or how many new wells drilled. Please read Hubbert's Peak: The Impending World Oil Shortage by geophysicist Kenneth S. Deffeyes. It will change your view of energy and our future.
4. The precarious state of world finances. The world is awash in cheap money and highly leveraged derivatives, setting the stage for one or more unpleasant scenarios: the return of stagflation (rising costs in a flaccid economy), an unexpected global financial crisis (think Asia 1997 or Long-Term Capital Mgt. 1998) which cannot be contained, or a simple devaluation of the dollar by 30%, disrupting currency, tourism and world oil markets, which are priced in dollars.
5. The worldwide bubble in real estate valuations. The era of cheap and abundant money has fueled a bubble in real estate around the globe, and all bubbles end in the same way: a collapse. The problem is that a drop of 20% - 30% in property values has a deeper and longer lasting effect on household finances than a similar drop in the stock market.
6. The dangers of terrorism and the poor state of Homeland Defense. Contrary to the party line coming from the White House, we are not safe from terrorist attack. Non-partisan studies have found numerous inadequacies in infrastructure as ubiquitous as shipping and agriculture. Many Homeland Security programs are underfunded. Our nation continues to provide numerous tempting targets to terrorists, and while some "hardening" has occured, the illusion of safety is far more dangerous than a realistic appraisal of our existing vulnerabilities.
This is only a partial list of the most glaring problems facing the nation--the list could easily be extended. For instance, on a trip through Las Vegas last week I observed how rare it is to see a normal-sized human being in the city. Although official statistics claim 40% of Americans are overweight or obese, I would put the number at 75%. It seems we've forgotten what a normal-sized human looks like--and I'm not referring to a skinny model or buffed-out athlete, I'm just talking about a normal human body phenotype, be it thin or stocky or in between. It is beyond debate that we as a nation are literally eating ourselves to death, yet what policies are in place to stem the tide of weight-related diseases?
We walked into a well-known fast-food restaurant one morning for a quick breakfast and after scanning the menu of trans-fat loaded "meals" (choice of high-fat croissant or high-fat biscuit covered with high-fat sausage and cheese, with a high-cholesterol egg in there somewhere), we had to walk away. There was literally nothing even remotely healthy on the entire menu. I am not a health nut by any means, but eating a diet of high-salt, high-fat (50% or more of total calories) fiber-less, vitamin-deficient "food" is simply a slow form of suicide. It's not what we're designed to eat. While it is possible to find an occasional alternative (a garden burger or some chicken sandwich which isn't deep-fried), you have to get lucky to find an outlet which serves such an alternative. It's frightening how poor the food is in this "fast food nation," and how unhealthy its citizens have become.
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