As the generation born after World War II emerged to take power, an
American fantasy took power with them. A generation that grew up without
depression or global war continues to expect never-ending prosperity and
world peace. The hard facts of reality will not be faced. Therefore, reality
has increasingly given way to various fictions – about Russia, China, the
economy, education and public morality.

In his 1998 book, “The Great Betrayal,” Patrick Buchanan tells us of
an America in which working men and woman are sinking into poverty. The
United States is being drained, de-industrialized and silently looted.
“After fifteen months of traveling from Alaska to Florida,” wrote Buchanan,
“I came home convinced that we are losing the country we grew up in.”

No doubt you have heard the unemployment statistics. Times are good,
right? But Buchanan paints a different picture. Forget what you have heard
about America’s booming economy. “In the first six years of the 1990s,”
Buchanan explained, “real earnings of full-time U.S. workers fell .9 percent
but rose 10 percent in Germany.”

Here’s another mind-blowing statistic. “The wages of manufacturing
workers,” claims Buchanan, “once three and four times those in Europe and
Japan, are now below Japan’s and are only 60% of Germany’s.”

From 1900 to 1970 we ran a trade surplus every year. But for the last
27 years we have had a trade deficit every year. Consider, as well, what
happened to our manufacturing base. In 1962 manufacturing accounted for 29
percent of our GNP. Today it accounts for less than 17 percent. Buchanan
points out, “Americans no longer make their own cameras, shoes, radios, TVs,
toys. A fifth of our steel, a third of our autos, half our machine tools, and
two-thirds of our textiles and clothes are made abroad.”

Buchanan calls this “the decline and fall of middle America.”

Supposedly the U.S. economy has been steadily expanding for many
years. With the exception of a mild recession in 1992, we have supposedly
benefitted from 18 years of economic expansion. But consider recent
statistics regarding the U.S. manufacturing sector. Last Tuesday an AP
headline stated, “Manufacturing Activity Plunges for Ninth Month in a Row.”
The story described America’s industrial sector as “battered.” Production in
America’s factories, mines and utilities is down.

Fed Chairman Alan Greenspan has unsuccessfully responded to this
slowdown by lowering interest rates six times in seven months. Last
Wednesday, testifying before the House Financial Services Committee,
Greenspan commented, “The sub-par economic performance … is not yet over,
and we are not free of the risk that economic weakness will be greater than
currently anticipated. …”

It is believed that Greenspan will cut interest rates once more in
order to avoid the pain of recession. By expanding credit, Greenspan is
allowing consumers to borrow more money to buy goods and pump up the
manufacturing sector. Americans are being tempted to get deeper and deeper
into debt.

The deferment of pain is basic to the new American ethic. We refuse
to face up to the realities of the world. Going deeper into debt to stave
off recession is like eating chocolate bars to lose weight. Yet this is our
choice. Nobody is complaining. Everyone wants the party to continue. Few are
thinking ahead to the consequences.

This is the same pattern of behavior shown in our relations with
Russia and China. It is a pattern of behavior that takes the following
approach: Better to turn a blind eye to emerging war preparations and
preserve the peace of the moment; or rather, the illusion of peace, the
fantasy of peace which soothes our increasingly weak national character. Add
to that the fantasy of never-ending prosperity and you complete the picture.
The United States has entered a kind of extended childhood in which fantasies
and wishes are preserved and extended in the face of hard fact.

Is the economy headed for trouble?

Consider what President Bush’s very own economic adviser, Larry
Lindsey, once said about our country’s account deficit. “We have had 20
years of expansion – 18 actually, going on 19,” said Lindsey, “and it has
been an extraordinary period. But that does not mean that everything is

Lindsey noted three imbalances in the economy that really amount to
one imbalance: “Last year the private sector spent $700 billion more than it
earned after taxes. Now that is 7 percent of GDP. We have never been there

We are overextended, folks. According to Lindsey, “The private sector
is running a record deficit. We are in uncharted territory. We don’t know how
this is going to work out.”

If Joe and Jane America spend more than they make, the outcome is
obvious. We will sink into debt. If the behavior continues and is not
reformed, the debt will grow. It will become heavy. Finally, the
consumption of Joe and Jane America will be curtailed. It will decline. And
that will impact business employment, investment and manufacturing. And that
is precisely what we are seeing.

Cutting interest rates, on Greenspan’s part, does not correct the
error of deficit spending. It extends the error. It extends the fantasy
existence of a generation that never saw the Great Depression or the Second
World War.

Brace yourselves for a collision with reality.

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