THE BLOG
09/14/2010 11:51 am ET Updated May 25, 2011

America's Fantasy Politics

If you write a check on an empty account because the money was there a year ago, the check would bounce and you'd come up on charges. But America routinely acts like we can solve today's problems with yesterday's solutions, and nobody blinks.

Mostly, this is because people think the future will be like the past. This is a perfectly prudent approach; the past is what we know. But when the facts change, you'd better change your mind; otherwise, you're trying to turn a rusty nut with a pair of pliers.

And that's how we're trying to solve our problems now--as though nothing had changed, with the wrong tools. But thanks to facts like over-population, technology, and modern medicine--and the simple march of history--almost everything has changed. And America has to address the problems we face accordingly.

Here are some problems we can't solve with old ideas.

The Unemployment Problem Will Solve Itself When The Economy Gets Back To Normal

Wouldn't that be great?

The problem is, the economy hasn't been "normal" in years, and we're never getting back to it. In fact not only doesn't "normal" exist anymore; a lot of jobs just aren't coming back.

You can learn this in any number of outlets, including this one. And the reason is pretty simple: The economy has been in fantasy mode for years; it created fantasy jobs to meet fantasy demand, paid for by debt lent on fantasy values and a fantasy future. Now reality has set in, and those jobs have vanished.

Business isn't hiring because business people are evil; they aren't hiring because the past few years have been a disaster, people are either afraid of losing their jobs or don't have one, and they're acting prudently--not buying more stuff, and not expecting to always do better.

So, consumer demand is low and manufacturers see little demand. So, they don't hire people to make stuff to meet it. So, no jobs. So, little demand. Get it?

In other words, the unemployment problem won't solve itself when everything gets back to normal. Things aren't getting back to "normal", even if much of Washington is pretending it will and that, in any event, that there are plenty of jobs if people would just swallow their pride and take one.

This, even though highly-respected economists say we can expect high unemployment until 2017.

This, even though the Labor Department admits it reports the unemployment rate at only 9.6 percent --the so-called U-3 number that only counts people collecting unemployment--while it knows the real number is more like 16.7 percent--the so-called U-6 number that counts everybody.

This, even though there are as many jobs today as here were in 1999, but 28 million more Americans.

This, even though early claims for Social Security benefits were up 25 percent last year; that projections of getting back to 5 percent unemployment are based on normal growth even though the economy is slowing; and that soothing press reports that we'll avoid a "double-dip" recession are based on the underlying reality that things are terrible and probably can't get much worse.

Which brings us to another problem we can't solve by imagining the future will be like the past:

Social Security's Problem Can Be Solved by Raising the Retirement Age or Cutting Benefits

Americans all know that "fixing" Social Security by raising the retirement age to 75 is nonsense in a country that starts pushing people out of the workforce at 55. What are people supposed to live on if they're pushed out at 60 and can't collect Social Security until they're 75? Their 401(k)? Anybody out there with a 401(k) worth more today as it was in 2006, raise your hand.

See any hands? Nope. That's because the Dow peaked at 14,164 on October 9, 2007 and fell to 7,449 on November 21, 2008. And while the Dow's come back some 50 percent since then, you can't say the same for many folks' portfolios; the well-respected Russell Funds Indices has fallen as little as 6.19 percent and as much as 12.03 percent in the past 3 years, and there's been an investor stampede out of stock-based mutual funds--and into the bond-based alternative--since 2008.

Why? People stopped trying to get rich and began thinking about holding on to what they had.

But it wouldn't matter if they did cash in their investments; all living off their 401(k) would mean is starvation when the funds ran out--if, in fact, they lasted until Social Security kicked in. And please don't say there's plenty of work for people over 60. This is a reality-based discussion here.

In fact, the entire premise Washington builds its Social Security fantasies on is that the vast majority of people have large savings, large portfolios, or rich kids, and that Social Security is for unscrupulous, improvident fools who threw away their fortunes scheming that the rest of us--the honest, prudent, wise majority--would pick up the tab. In other words--without stretching it much--people who need Social Security are virtually criminals who deserve what they would get if we weren't so wonderful.

This isn't just ridiculous; the idea that any American willing to work can find a job, and that an American career is like an escalator ride, is gone with the wind. Today careers start late, end early, and reset every decade or so--meaning that going forward, most people will never be able to build the sort of equity Washington wants them to have, just so it won't have to deal with the problem.

The truth is that while America's economy has dodged the bullet for decades, it's now
in the same pickle as most advanced economies--with more people than jobs; with technology eating more jobs every day; saddled with a growing population of citizens permanently unemployed through no fault of their own; and with lots of elderly people who don't work, while we spend plenty on their health care.

Even if some genius produced a solution to this tomorrow that you could sell to every political niche, that solution wouldn't kick in tomorrow. And fat chance of finding one like that, anyway; the obvious direction would immediately be branded as socialism--or, worse, European.

Anyway, the real issue isn't morality or national character. Not solving the problem will mean millions of Americans out of work and dispossessed. With nothing to lose. You up for that?

I don't care if you call the solution a banana; Washington has to come to grips with the real facts and come up with a real solution, or God help us.