Spending

During the cold war years, the world was kept safe by MAD, mutually assured destruction. The two super powers, the USSR and the USA were kept at bay because both had enough nuclear bombs to blow up the earth or at least a good part of it. When the cold war ended in the early 90’s, as represented by the fall of the Berlin Wall, MAD was no longer necessary. It was in the early years after that when the new world strategy emerged and it was called MAED or mutually assured economic destruction. The idea was to tie all of the countries of the world together economically so that one would not attack the other for fear of hurting everyone including the attacker. This seemed reasonable to many but now an unforeseen problem has developed. Some of the countries using the EURO have been acting irresponsibly and have run up debt that they cannot repay. Greece is the first of these countries to face this problem. They have provided their citizens with more benefits than they can pay for and now must go through the painful process of reducing benefits. The people, of course, are not happy with this and are rioting in the streets.

The wider concern is that if Greece falls other countries like Portugal, Spain, Italy and Ireland will also fall and eventually it will spread to the rest of the European Union and ultimately to the USA. In other words MAED will work.

Many countries in the European Union have handle their finances in a more responsible manner and are now being asked to send money to Greece to cover their debt. The people in these countries like Germany are being told that the Greek government provided so many benefits to their people that the Germans must now help to pay for these benefits. It is like forced foreign aid.

I can’t help comparing the economic woes of these countries with some of our states and companies. Some states like California have provided more benefits for the state employees than they can afford to pay and are now heading for bankruptcy. Many companies increased their legacy benefits, (benefits promised to retirees like pension and health insurance) and they now find that the do not have the money to pay these benefits.

There is an old adage that might be worth remembering and that is there is no free lunch. It is easy to hand out benefits but not so easy to take them back.

We shall soon see what happens in the US when we start to reduce social security and ration Medicare, Medicaid and health insurance. Imagine an ad saying vote for me and I will reduce social security. Get ready for a Gizzer riot.



Jack/John