Endless Growth
Hey Boomers! Here’s the situation you find yourselves in. You’ve been plowing your money into 401k accounts for almost your entire working lives. You’re counting on these funds to sustain your standard of living during your “Golden Years”. Let’s take a look at these funds, how they relate to other social issues and how these elements may affect your future.
1) What are 401k plans? They were authorized via section, you guessed it, 401k of the Internal Revenue Service code in November 1978. They allow employees to save money for retirement, tax deferred, until they begin withdrawing funds. There are penalties for withdrawing funds prior to age 59-1/2. Employers can match employee contributions up to government specified limits. These plans are popular because they reduce employee tax burdens now and the funds will theoretically be taxed at a lower rate when the employee retires.
2) The government promotes these plans because they see them as a hedge against the insolvency of the Social Security System. However, many of the lowest income employees do not have sufficient funds to even participate in a 401k plan. And there is more…
3) Most 401k plans are invested in mutual funds, index funds or exchange traded funds (ETFs). These funds are based on the performance (profitability and growth in market capitalization) of companies traded on the New York Stock Exchange (NYSE), National Association of Securities Dealers Automated Quotations (NASDAQ) and similar exchanges. In short, the vast majority of 401k plans, and your retirement, are dependent on the growth of large corporations.
Now, the fun starts!
1) Corporate domination of government - Large corporations now dominate your federal government. Via Political Action Committees (PACs), (and, in some cases, good, old-fashioned bribery) their dollars largely decide which candidates you will be allowed to choose from. Let’s disabuse ourselves of the notion that this is a democracy. Those who swear fealty to the corporate structure have, by far, the best chance of getting elected. This is not a single-party phenomenon. Check the donor rolls for candidates from both major parties. This practice is pervasive.
2) Federal debt - in 1980 the US National Debt was less than $1 Trillion. That same year, the total market cap of US corporations was $1.36 Trillion. In the ensuing 44 years, the US national debt has skyrocketed to over $34 Trillion, while the total market cap of US corporations has soared to over $54.00 Trillion. (Has your income / wealth increased at this rate?)
Somehow, during the 40+ years of the “technology revolution”, the inept US government has watched entire new streams of wealth get created and failed to tax it sufficiently to avoid this massive debt? Or, is it that the previously mentioned corporate domination of government has helped create spending bills where most of the cash ends up in corporate hands while those same corporations “urge” legislators not to increase taxes.
3) Endless growth - The US government needs to maintain a certain debt-to-GDP (Gross Domestic Product) ratio so they can continue to “spin the yarn” that the massive debt is not an issue. Note, the only time that this nation was at such a dangerous level was during World War II. (Stay tuned for the war portion of this essay) Maintaining the debt-to-GDP ratio requires the government to either:
A. Spend less money than it takes in, (who sees this happening any time soon) while productivity and GDP continue to grow
B. Have endless growth of the economy to sustain the massive spending, and borrowing.
Endless growth requires continuously increasing revenues, which are derived from sales, which are derived from people and organizations consuming goods and services. In short, people must continue to consume more and more, and/or prices must rise to increase margins. So, selling to people, obviously, requires people. Uh, about that…
4) Demographics - The US population, as with most industrialized western societies, is aging. The replacement birth rate is too low to natively sustain the population. As of 2030, 20% of the US population will be over 65 years of age. As of 2034, senior citizens will outnumber children (18 and under) for the first time in US history. In 2030, based on current trends, immigration will exceed native births.
5) Immigration - significant immigration will be required in order to keep the US population large enough to “make the numbers work”. What are your thoughts on border walls, guest worker programs and more efficient immigration processes? We need to sort this out or start having a lot more babies.
As for the endless growth or the economy, how do we accomplish this? Here are a few of the pieces.
1) Social Programs - Constantly funnel more-and-more money into social programs to, ostensibly, help American citizens. Notice, even though these programs have produced abysmal results for decades, we continue to increase funding. Why? It “creates jobs” (which makes presidents look good) and it puts dollars into circulation so corporations can sell stuff to people and continue to grow, so the charade can continue. Note, social programs are also an excellent means of pandering too, and buying votes from, certain constituencies. It also ensures their dependence upon federal taxpayer dollars.
2) Healthcare Programs - The US spends $12,555 per capita on healthcare. The average per capita healthcare spending on the next 11 countries is $6,651, only 53% of the US rate. The country with the second highest per capita healthcare spending is Switzerland, at $8,049, Almost 36% less than the US. In 2022, hospital spending represented close to a third (30.4%) of overall health spending, and physicians/clinics represented 19.8% of total spending. Other personal health care expenditures include: Physician and clinical services (24.1%), Prescription drugs (11.5%), Nursing care facilities and continuing care retirement communities (5.4%), Dental services (4.5%), and Home health care (3.5%). It must be noted that the Affordable Care Act, an industry consolidation plan cloaked in a social change agenda, has succeeded in driving most small healthcare practitioners into the corporate healthcare fold, or out of business. Big Healthcare, including Big Pharma and Healthcare Corporations, frequently allied with Public University-based health networks, dominates healthcare in the USA, with Medicare/Medicaid funding $1.75 Trillion in 2022. You need only examine the explosive growth of healthcare costs in the US since 1965, when the Medicare and Medicaid programs were created, to understand what has been happening.
3) Infrastructure Programs - Major “public works” projects inevitably funnel most of the allocated funds to large regional and national companies. “Water seeks its own level”, and large projects require companies with large resources. These programs also create jobs, which big construction firms and construction unions love. The interactions between unions and political parties are well documented.
4) Military Programs - In order to justify the endless need for military manufacturing and new weapons systems there must always be a perceived threat. There must also be frequent instances where we deploy these weapons so we wan turn to the taxpayers to say “see, we gotta keep doing this, the world is a dangerous place”. This requires, Endless War. There must always be a “dangerous enemy”, insert China, Russion, Iran, etc., from which the military is protecting us. There must always be a “hotspot”, currently Ukraine and Israel where we are deploying our weapons. The United States spends more on national defense than China, Russia, India, Saudi Arabia, United Kingdom, Germany, France, South Korea, Japan, and Ukraine — combined. Defense spending accounts for 12 percent of all federal spending and nearly half of discretionary spending.
So, what does all this mean?
It means that the companies in which your retirement savings are invested are working in tandem with the federal government, which they effectively control, to do a lot of wasteful and dangerous things in order to keep the appearance of an endlessly expanding economy.
In much the same way that local organized crime cartels gain the loyalty of citizens, or groups like ISIS and HAMAS gain traction in their communities, the US government “shows they care” by funding social programs, provides “protection” via massive military spending and “keeps us healthy” by incredibly high healthcare funding. The positive results of these expenditures are very difficult to find. We must question the effectiveness of these expenditures and where the money ends up. Will you do this, at the risk of a less glamorous retirement? At the risk of not having that second, or third vacation home? Do you truly understand the impact of your complacency on the futures of your children, grandchildren and the entire society?
Endless growth is not sustainable. In fact, it is not being sustained. It is a mirage built upon an ever growing mountain of debt, which you will not be alive to deal with.
Do you care about the future? Your move…