WWFS. What does it mean? World Wide Fire Sale.
It’s not just the U. S. economy that’s having problems, it’s most of Europe as well. The burden of debt is rapidly becoming insurmountable, and there is no way that the services promised by modern governments can be delivered. The world economy is, to be technical, broke.
In order to get enough money to pay off debt more money must come in, or expenses must be cut in order to use existing income to pay off debt. At this stage of the game perhaps the best way to do this is to start by selling off assets.
On the national level this would mean getting rid of non-productive or under-performing assets. This is primarily real estate. The Post Office has not performed well for decades. Every year brings a rise in the cost of postage and a decline in service. It is time to turn the Post Office over to UPS or Fedex, or some non-political, non-government group. Retain the small portion necessary for issuing stamps, which are a valuable source of revenue from casual collectors and enthusiastic philatelists.
Next look at the alphabet soup of government agencies. There is no constitutional mandate for a Department of Education. It may even be that by providing an increase of money for educational purposes that government funding, by exerting inflationary pressure in the education sector, has caused a rise in costs that exceeds that in comparable sectors. This has had the deleterious effect of raising the cost of education a greater percentage than inflation in te remainder of the economy. This in turn has led to increased borrowing. It is quite possible that there is a bubble in higher education, just as there was in housing, and that when that bubble bursts that it will be as bad or worse than the housing bubble.
As a case in point consider that in 1964, the year I entered college at George Washington University, tuition was $600 for a semester, or $40 per credit hour. In 1970-2 tuition at GW was $70 per credit hour. In 1990 at Catholic University of America graduate school tuition was in excess of $5,000 for 9 credit hours. Current undergraduate tuition at George Washington University is $41,160. At Catholic University graduate tuition is $15,870, for 1 semester. It has tripled since 1988-1992 when I attended.
￼ ￼Update: August 3, 2010—Camille Paglia had a column in Salon back in November and mentioned coming across a bill for her freshman year in college at SUNY, Binghamton. The itemized bill that she gives is shown in the table at left. The current cost, from the SUNY website. is shown in the 2010 column. I’ve assumed that the tuition and fees given by SUNY includes the PE, Activity, and General College fees of 1964, or their equivalents, and that room and board charge also includes linen. As you can see the inflation factor for both is about 29, which is in line with the 32x factor for George Washington University.
In the years since 1964 the CPI, which is a measure of inflation, has gone from 31.1 to 215 or so. This is an increase of a factor of almost 7. In the same period tuition has increased by a factor of 32. In other words there has been a greater degree of inflation in the education sector than in the overall economy. This can be attributed to the increase in the number of dollars available for education via federal and state funding.
Paradoxically this means that rather than helping the students of poor families obtain a better education it has forced them to go with cheaper alternatives, such as community colleges, thereby ensuring that they get a worse education than if the government had done nothing.
So get rid of the Department of Education. You have just saved $95 billion or more.
The Department of Housing and Urban Development is another agency that is ripe for abolition. Many housing programs are geared to keeping Congressional incumbents in office by procuring funds for each district. Fannie and Freddie, while nominally independent, are tied in with HUD. Privatize any useful functions that they have. Get rid of programs that are useless.
The Department of Agriculture was created in 1862, but it is also the vehicle for agricultural subsidies and for food stamps. The agricultural subsidies exist to keep the price of food high, and the food stamps exist to help families afford the food that is priced artificially high. Get rid of the Department of Agriculture. Most farmers have access to state colleges that teach agricultural science and management, and there is no need for the department any longer.
Reform Social Security. The basic idea behind Social Security is that the older generation will die off shortly after retiring. As older people persist in living longer, the top of the SS pyramid grows larger, and the bottom, all the younger people who are still working, grows smaller in relation to the top. So begin to move from a pyramid scheme to an investment scheme where the money taken out is actually invested in individually owned stocks or bonds, or other financial instruments.
Go to a flat tax. At present the tax system provides employment for attorneys and accountants, many of whom would be happier in more useful occupations. Go to a straight flat tax. Don’t indulge in demagoguery about fair share, or ability to pay. A baker charges the poor man and the rich man the same for a loaf of bread. A plumber charges the same to unclog the toilet of a rich man and a poor man. In fact, it could be said that because the rich man demands fewer services from the government, that he should pay less than the poor man. Don’t tinker with tax credits, deductions, and all the other folderol of the modern tax code. Make the rate 10% or 15% or whatever, and then economic calculation will be better and more coherent.
Consider the sale of other real estate, i.e., the parks. Maybe require that they be maintained as recreational facilities as a condition of sale, but get rid of these assets.
Charge entrance fees to the museums. This hurts me because I love the National Gallery of Art and the Smithsonian, and when I was in DC I went to the museums constantly. However, these are popular tourist attractions, and a potential source of revenue.
The civilian, non-defense sector of the government needs to shrink. Programs that do nothing, Coast Guard stations in West Virginia, which won’t have a coast to guard until Virginia goes away, need to be defunded. Pork needs to end.
The states and local governments also need to sell assets. Start by privatizing the schools. Consider making parks and museums fee based or raising the fees. Cut back on services that are not directly related to the protection of the citizenry.
The era of living beyond our means has to end. It is time for austerity, and consolidation.