The Twilight Of American Culture

Chapter One

COLLAPSE, OR
TRANSFORMATION?

Sallust's description of Rome in 80 B.C.—a government controlled by wealth, a ruling-class numb to the repetitions of political scandal, a public diverted by chariot races and gladiatorial shows—stands as a fair summary of some of our own circumstances....

—Lewis Lapham,
Waiting for the Barbarians

Before we can talk about the long road to cultural healing, then, we must begin by understanding the illness. But here we are confronted with a complicating factor, briefly alluded to in the Introduction: Decline comes inevitably to all civilizations. With the exception of hunter-gatherer societies that have not been interfered with by more complex ones (and there are no pristine hunter-gatherers left anymore, I fear), the pattern of birth, maturity, and decay would seem to be inescapable. Est ubi gloria nunc Babyloniae? Where is the glory of Babylonia now? Or that of ancient Egypt, China, India, Greece, Rome? Gone, all gone—that is the historical record. Why, then, should America escape this fate? If decay is built into the civilizational process itself, then talk of healing might be a bit out of place. Indeed, from an analytical standpoint, the problem is not that states collapse—for that is the rule—but that some manage to last as long as they do. To what purpose, then, my attempt to give the reader a cultural roadmap, or to suggest a way out, a creative response? If the historical record is clear onthis point, there is no way out. We might just as well fiddle while New York and Los Angeles burn.

    This is, of course, a formidable objection, one not easily dismissed. Nor do I believe that America is somehow so privileged as to constitute a historical exception (which belief would be a typically American kind of hubris). But three things do jump out of the historical record that are worth mentioning. First, the process of decay may be inevitable, but it is rarely linear. In its three thousand years, for example, Egypt suffered periods of complete political disintegration and foreign domination that sometimes lasted more than a century, and it then bounced back. While its ultimate decline was inevitable, and it was eventually absorbed into the Greco-Roman Empire, three millennia is not exactly an unimpressive showing; and most of those years were "up" (in terms of political coherence), while some of them were "down." So it might conceivably be argued that the United States is going through a bad patch, from which it might recover, at least for a time.

    Second, if the classical model of collapse of empire is that of ancient Rome, we have to remember that its fall was, in terms of the larger world system, as much a transformation as it was a decline. Indeed, it was from the ruins of the Roman Empire that medieval European civilization emerged. While the parallels between the Roman case and the American one are not exact, the analogy does suggest some transformative possibilities. If, for example, we are indeed slated for another dark age, it may not have to last six hundred years this time around. This is precisely a case in which something like the monastic option, and the deliberate work of cultural preservation, might come into play.

    Third, there is the issue already mentioned in the Introduction, and which I shall discuss later on in this chapter, as well: This is a very lively kind of decline. In this sense, possible hubris notwithstanding, something unprecedented might be happening. Europe's Dark Ages were truly dark—"singularly monochromatic," as the historian Peter Brown put it. Our own transformation is confusing, because of the "invisibility" factor discussed above. For those seduced by noise, toys, and technology, the current transformation to a global economy is nothing less than cultural efflorescence. For those who place their values elsewhere, there is the paradox that the very success of McWorld, the very transformation that it represents, is a darkness that is ultimately every bit as dark as the early Middle Ages, no matter what the surface appearances might indicate. Whether this will make recovery easier or more difficult remains to be seen.

    My point, in other words, is that even if decline is historically inevitable, it is still a process that contains unexpected twists and turns. The sine curve may be descending, but there are loopholes in it nonetheless. Furthermore, the precedent of the monastic option suggests that there might be ways of ensuring that what is of value in this civilization can be preserved and handed down in the hope of generating cultural renewal at some later point. As for the individual reader poring over these pages, he or she doesn't have to be a statistic; there are choices to be made that move in directions opposite to the general tide of events. Before we discuss all that, however, we need to have a closer look at the larger process of civilizational decline, and the factors that come into play when a culture enters its twilight phase and begins to implode.

    The concept of decline often involves organic metaphors, notions of birth, maturity, and senescence. This way of viewing civilization goes back to the eighteenth century (Giambattista Vico), and perhaps even to the ancient Greeks; but it came into common currency in the nineteenth century through the writings of the German Idealist school of philosophy. Hegel, for example, saw history as a kind of spiritual journey, in which Geist ("spirit") moved around the globe, generating the Renaissance in fifteenth-century Florence, and sowing the seeds of decay when it subsequently departed. Oswald Spengler, as already noted, thought in similar terms, arguing that a civilization was organized around a central ideal, or some sort of Platonic Idea, and that the process of civilization involved a stage of aging, during which the Idea hardened into pure form. Writing in the early twentieth century, Spengler believed that this process of formalism, or "classicism," as he called it, was happening to the West during his lifetime, and that it would be on the Western agenda for the next few centuries.

    There is, perhaps, something intellectually satisfying about the organic approach. After all, humans die, so why not civilizations? It is, however, not really necessary to rely on organic metaphors (or mystical forces) as sources of explanation. As Joseph Tainter points out in The Collapse of Complex Societies, civilizations are anomalies. The whole statist configuration of hierarchy, specialization, and bureaucracy emerged fairly recently—about six thousand years ago—and has to be constantly reinforced and legitimized. It also requires an expanding material base and a constant mobilization of resources, and the trend is always toward higher levels of complexity. There is the processing of greater quantities of information and energy, the formation of larger settlements, increasing class differentiation and stratification, and the development of more complex technology. Collapse, which involves a progressive weakening of the political and administrative center, is the reversal of all this, and a recurrent feature of human societies. As the center weakens, there is no longer an "umbrella" to guarantee safety. The strong savage the weak, and there is no higher goal than survival. Literacy may be lost entirely, or decline so dramatically that a dark age is inevitable.

    Thus collapse is built into the process of civilization itself, but this can be understood in purely rational or economic terms. When stress—for example, resource shortage—emerges in hunter-gatherer societies, the members of the tribe have an easy option, one that worked for hundreds of millennia: They move. The solution, in short, is horizontal (dispersion). But if you are sedentary, committed to staying in one place and depending on that place for your livelihood, you must "go vertical," that is, generate another level of hierarchical control to solve your problems—a process that never ends. The whole thing is cumulative. Taxes rarely go down; information processing gets denser. Standing armies get larger, not smaller, and bureaucracies grow rather than shrink. Elites want—and get—more and more of the pie, and so forth. What is unleashed is an unending spiral of increasing complexity and correspondingly higher costs. Finally, says Tainter, "investment in sociopolitical complexity as a problem-solving response often reaches a point of declining marginal returns." The "center of gravity" is too high; the benefits per unit of investment start to drop off. At this point—that of diminishing returns—collapse is not only inevitable; it actually becomes economical. Although the effects are not exactly pleasant, collapse finally becomes an economizing process, the best adaptation under the circumstances.

    Tainter's argument, however, is not necessarily at odds with that the of German Idealists. For one thing, both he and Spengler agree that collapse is inherent to the process of civilization itself, and thus inevitable. But there is even deeper agreement than this, although it is implicit: Economic decline has an obvious "spiritual" component, which shows up as apathy and meaninglessness—what the French sociologist Emile Durkheim called "anomie," and which is the reality lurking beneath the facade of Spengler's classicism. In the classicist phase, the culture no longer believes in itself, so it typically undertakes phony or misguided wars (Vietnam, or the Gulf War of 1991, for example), or promotes its symbols and slogans all the more. As the organizational costs rise, yielding increasingly smaller benefits, so does the formalism, the pomp and circumstance. Just as the jaded crowds of ancient Rome zoned out on bread and circuses, Hollywood makes Rocky-type films, rerunning tired old formulas, but nevertheless, these are box-office hits. And gladiatorial extravaganzas, as well as the "Rambification" of culture, are sure signs of spiritual death.

    If we can pull together the threads of this discussion so far, it would seem that four factors are present when a civilization collapses:

(a) Accelerating social and economic inequality

(b) Declining marginal returns with regard to investment in organizational solutions to socioeconomic problems

(c) Rapidly dropping levels of literacy, critical understanding, and general intellectual awareness

(d) Spiritual death—that is, Spengler's classicism: the emptying out of cultural content and the freezing (or repackaging) of it in formulas—kitsch, in short.

    It is at this point that this scenario may strike the reader as hauntingly familiar, because these four conditions would seem to apply to the United States at the beginning of the twenty-first century. What reader of these pages is not aware that the gap between rich and poor has increasingly widened since the 1970s? That entitlements such as Social Security are under threat, or that we incarcerate more people per capita (565 per 100,000) than any other country in the world? That millions of our high school graduates can barely read or write, and that common words are now often misspelled on public signs? That community life has been reduced to shopping malls, and that most Americans grow old in isolation, zoning out in front of TV screens, and/or on antidepressant drugs? This is the nitty-gritty, daily reality that belies the glitz and glamour of the so-called New World Order.

    In order to understand the reality of our situation, it will be necessary to flesh these four factors out in some detail. But—to skip ahead for a moment—it is, once again, not a simple case of civilizational collapse, but a more complex one of cultural transformation. Viewed from a certain perspective—that of Wall Street, Beverly Hills, the region contained within the Capital Beltway, and Redmond, Washington (home of Microsoft)—the transformation to the global society of the twenty-first century is a great success. In terms of late-empire developments, with the Soviet Union now a vestige of the past, it may even be adaptive, at least for another fifty or one hundred years. After all, if there is nobody around to offer a different definition of success, then perhaps there really isn't a problem. The meaning of collapse is in the eye of the beholder, n'est-ce pas?

    Let us take a closer look at what the American transformation consists of. I shall begin with the data on social inequality, Item (a).

There was a time, not so long ago, when data on rich versus poor could only be found in left-wing journals. I remember how, as graduate students in the sixties, we would excitedly photocopy these articles and distribute them to our friends. Today, this is all just basic information, often obtainable from mainstream newspapers or the pages of journals such as Business Week and Fortune. In a 1995 article in The New Yorker, John Cassidy notes that between 1947 and 1973, while there was certainly a great disparity between rich and poor, actual incomes rose at the same rate for everyone. In that sense, the increase of income mapped across the five quintiles of society, and arranged on a graph, looked like a picket fence. But from 1973 to 1993, he says, it was only the highest quintile, the rich, that enjoyed a significant increase in wealth. The top 1 percent of the nation saw its income level grow 78 percent between 1977 and 1989, and Federal Reserve Board figures from 1989 reveal that this elite group owned 40 percent of the nation's wealth. By 1995, according to Robert Reich, the figure (excluding the value of homes) had risen to 47 percent—more than $4 trillion in assets—while the upper quintile owned 93 percent. The result is that America is no longer a middle-class society. "The picket fence," Cassidy remarks, "has been replaced by a small staircase, and some of the staircase is underground." The two lowest quintiles (bottom 40 percent) experienced a decline in income during the period from 1973 to 1993, whereas the top quintile saw a transfer of $275 billion per year from the middle class to the rich. In 1973, the typical CEO of a large company earned about forty times what a typical worker did; today, he earns from 190 to 419 times as much. Reich notes that Bill Gates' net worth in 1998—$46 billion—was larger than the combined net worth of the bottom 40 percent of American households. What the country has experienced, concludes Cassidy, is "an unprecedented redistribution of income toward the rich." In terms of wealth disparity, the United States leads all other major industrial nations.

    MIT economist Paul Krugman refers to this trend as a "spiral of inequality," with economic lopsidedness increasing every year. As it gets increasingly difficult for most Americans to make a living, it also becomes increasingly easier for a select handful to make a killing. According to the Census Bureau, the bottom 20 percent of U.S. families in 1970 received 5.4 percent of the national income, while the top 5 percent received 15.6 percent. By 1994, the corresponding figures were 4.2 percent and 20.1 percent. All of this, says Krugman, signals a "seismic shift in the character of our society." It also indicates a shift in our values. In 1962, President Kennedy confronted the U.S. Steel Corporation over price increases and forced it to back down. Today, upper-echelon CEOs would be more likely to be invited to dinner at the White House.

    As far as the White House goes, messages from it about the increasing prosperity of Americans have to be taken with several pounds of salt. "While the national economy has been growing," writes William Finnegan (Cold New World), "the economic prospects of most Americans have been dimming."

    Yes, by 1999 the unemployment rate was the lowest it had been in twenty-five years, but during that same time period real hourly wages fell significantly, the median household income went down, and the national poverty rate rose. The number of low-wage jobs proliferated dramatically. The past twenty-five years, notes Finnegan, have produced "the first generation-long decline in the average worker's wages in American history. ... The middle class, defined by almost any measure, has been shrinking conspicuously for some time." Thus the White House boast that 70 percent of the workers who lost their jobs between 1993 and 1995 found new ones by early 1996 is hollow, for the great majority of that 70 percent found only part-time jobs or ones paying less than their previous wages. Since 1979, 43 million jobs have been erased in the United States.

    We are, in short, drifting toward a situation such as exists in India, or Mexico, or Brazil, and nothing is being done to halt this. During the period from 1991 to 1994, for example, the number of Mexican billionaires went from two to twenty-eight. Ernesto Canales Santos, a corporate attorney who has represented many of these men, calls it "the Aztec pyramid model," much of which was made possible by U.S. investment, and which, in turn, had repercussions for our own lopsideness. Thus David Calleo (The Bankrupting of America) writes: "The advanced part of the [American] economy seems a more and more prosperous enclave, barricaded within a deteriorating nation. Rather than providing a model for the third world, the United States appears to be imitating it." "If anything," adds David Rieff of the World Policy Institute, "America, with its widening income gap, its vast, deepening divergences in everything from education to life expectancy between rich and poor, is less democratic today ... than it was in 1950."

    The effect of these trends, and of growing corporate hegemony, has been particularly devastating on children—not only in the United States, but in other parts of the world as well. Between 1979 and 1990, the number of American children living below the poverty line rose an astonishing 22 percent. A 1996 article entitled "India's Child Slaves," in the International Herald Tribune, notes that 15 million children in India work eleven to twelve hours daily in dangerous conditions, and are beaten if they try to escape. In the silk industry—financed by the World Bank—children as young as six and seven years of age are forced to plunge their hands into scalding water. To avoid starvation, many Indian families send their handicapped offspring to wealthy Arab nations to beg. Girls under ten are sold into prostitution, and India is hardly alone in this (Asian countries employ an estimated 1 million child prostitutes). Worldwide, according to the UN's International Labor Organization, 250 million children between the ages of five and fourteen are now employed across Asia, Africa, and Latin America, and this involves slavery, prostitution, and work in hazardous industries.

    Events such as these do not happen in a vacuum. Involvement of the World Bank, and/or U.S. corporations, is part of the whole fabric of oppression. Global corporate hegemony, multinational and transnational in nature, means by definition that these events are linked by a web of interdependent markets, investments, and trade agreements. The wealth of America's top quintile is implicated not only in the poverty of South Central Los Angeles but also in the slums of Buenos Aires. In 1991, the Nike Corporation made $3 billion in profits, paying its factory workers in Indonesia—mostly poor, malnourished women—$1.03 a day, not enough for food and shelter. (Just do it!) By 1996, the 447 richest people on the planet had assets equal to that of the poorest 2.5 billion—52 percent of the world population. What do we think it means when we buy a new sweater and the label reads Made in the Philippines, or a transistor radio stamped Made in Korea? What do we imagine the social and economic reality is behind these seemingly neutral words? Or behind the cup of Colombian (Brazilian, Angolan, etc.) supremo that we drink every morning, or the cleverly crafted decaf latte with 2 percent milk that we enjoy on a sunny autumn afternoon in a chic café with our friends? We hardly need Ann Landers to tell us to "wake up and smell the coffee." The truth is that it is a bitter brew; that the affluence of the few is purchased at the misery of the many.

    The argument that world inequality is structural is a major theme of what is known as world-systems analysis, which views the drama in terms of a distinction between core and periphery. Core countries are those in the privileged regions of the Northern Hemisphere such as the United States and Western Europe. It is in these regions that financial, technical, and productive (usually industrial) power is concentrated, power that is controlled by an elite. The periphery, on the other hand, contains the exploited regions that sell their resources and labor to the core without ever having access to the latter's wealth. The enrichment of the core is structurally dependent on the impoverishment of the periphery. Thus today, the Pacific periphery consists of Burma, Thailand, Malaysia, Indonesia, and the Philippines, whereas Europe's periphery is largely Africa, what the French economist Jacques Attali (in Millennium), calls "an economic black hole." In a future world of, say, 8 billion people by A.D. 2050 (a very conservative estimate, incidentally), Attali believes that 5 billion of these will, because of this structural inequality, be living right at the survival line, just managing to hang on. The twenty-first century, he writes, will be a Blade Runner world, "a world that has embraced a common ideology of consumerism but is bitterly divided between rich and poor." The latter, inhabiting the destitute peripheries, will be "boat people living on a planetary scale." But, he adds, this situation is highly volatile, because those in the periphery are increasingly aware that the prosperity of the core is purchased at their expense. They will, as a result, eventually rise up against the core in "a war unlike any seen in modern times."

    Sociologist Christopher Chase-Dunn has pursued this theme in great detail in his book Global Formation. He shows that the core/periphery hierarchy is a structural feature of the world system, that is, it is an institution of socially structured inequality. Historically, going back to the Commercial Revolution of the sixteenth century and the plunder of the Americas, the exploitation of the periphery was crucially important to the emergence of industrial capitalism in the core, and the direct use of coercive force eventually evolved into institutionalized economic power based on "law" and private property. So a network of interdependent markets is the main glue of our global system, he says, bolstered, when necessary, by the military power of the core states. Thus, we read in American newspapers (Seattle Post-Intelligencer, 27 January 1997; originally reported in the Baltimore Sun in 1995) of a CIA training manual that decribes torture methods used in Honduras during the 1980s. This was part of President Reagan's effort to control leftist movements in Nicaragua and El Salvador; movements that were, like the subsequent uprisings in Mexico (Chiapas), fighting for local self-determination and against those market forces trying to grind them down into permanent peripheral status. Or consider the situation in Colombia, where according to the Human Rights Watch, CIA officials helped the government set up "killer networks" of paramilitary soldiers for the purpose of murdering suspected leftists, as well as supplying arms and money for this purpose.

    No surprise here, of course; this is an old story in our relationship with Latin America. Nevertheless, writes Chase-Dunn, political coercion coming directly from the core has become less central to the structure of exploitation and domination, since the core can rely on local coercion—that is, authoritarian client states in the periphery to do its dirty work in exchange for economic aid to the elite in the periphery; and economic exploitation, organized through the production and sale of commodities, is a more efficient, "less dirty," means of control. (Add to this, in recent years, the role of the World Bank, the International Monetary Fund, NAFTA, GATT, the proposed Multilateral Agreement on Investment, and so on.)

    In any case, the system is a nested one, with wheels within wheels. There are important inequalities between major areas of the globe, but also within specific regions. Thus the peripheral countries of Brazil and Nigeria play the role of core countries vis-à-vis nations peripheral to them. All of this, in turn, ricochets back onto the core sectors within the core countries. Exploitation of the periphery, and the threat of the flight of capital to the latter, has served to keep labor unions and socialist parties docile, preventing them from successfully challenging elite powers within the core.

    All of this is part and parcel of the global economy. Thus, Federal Reserve Board Chairman Alan Greenspan, in congressional testimony given on 21 January 1997, said that "heightened job insecurity explains a significant part of the restraint on compensation [that is, wages] and the consequent muted price inflation." Typically, when employment increases, the Dow-Jones average falls. For the economic elite in the core, it pays to have an insecure labor force.

    Both the penetration of a peripheral nation by foreign investment and the creation of debt dependence by means of foreign credit actually serve to damage that nation's economic development, and to increase inequality within that country. The net effect is the replacement of direct colonial control by neocolonial economic mechanisms. The structure of dependency, says Chase-Dunn, "provides support for elites in the periphery and keeps wages low relative to the income of elites." These elites, in fact, are linked "to the interest of the transnational corporations and the international economy," not to their own nations or people.

    For the purposes of our own discussion, however, it is important to remember that this description also applies to peripheral areas within the United States, not just, say, to Guatemala. Month by month, more and more wealth is being transferred to fewer and fewer hands. In mid-1997, Republicans in Congress proposed a tax cut that was designed to give the upper quintile 87 percent of the tax savings over the next decade. Two years later the attempt was repeated when the House and Senate passed a compromise tax bill, which would give the richest quintile 79 percent of the tax savings, as well as pass billions of dollars in tax breaks on to multinational corporations. The process is inexorable; and although I would not predict a massive popular uprising within the United States—that is more likely to happen in peripheral regions outside the core countries—it is nevertheless true that this kind of inequality could eventually destroy the entire social fabric, as it nearly has already in the case of public schools and inner cities. It is also spiritually corrosive, demoralizing, and will do untold damage to this nation. In this regard, if one wants to make a comparison with ancient Rome, it is interesting to note that during the reign of Nero (A.D. 54-68) roughly two thousand men owned nearly all of the land between the Rhine and the Euphrates. The population was pretty much divided between the rich and all the rest, and the rich were very, very rich. Similarly, writes Kevin Phillips (in Arrogant Capital), what we are witnessing in the United States today is a broad transition "toward social and economic stratification, toward walled-in communities and hardening class structures, [and] toward political, business and financial elites that bail each other out...."

    Why is this slide toward greater inequality occurring? Partly, it is because the concentration of wealth in fewer and fewer hands is itself part of the process of declining marginal returns. Every time a greater investment in complexity takes place, it is accompanied by a greater share of the pie for the elite. Hierarchy generates power; the greater the verticality, the greater the opportunity for the few to exploit the many, especially in times of debt and crisis. "As massive debt becomes a major national problem," writes Kevin Phillips, "it also becomes a major financial opportunity and vested interest." For a select few, in other words, national collapse is a good business opportunity! But ultimately, no one knows exactly why America has experienced such a shift in wealth, as John Cassidy admits. It seems to be due to a combination of factors: the rising volume of international trade, the spread of computer technology, the decline of labor unions, and the immigration of unskilled workers into the country. Yet all of these factors are controversial, and a truly unambiguous explanation escapes us. The best that any economist can say is that this is just how capitalism has developed (or in the case of Rome, perhaps it was just a function of the closing phase of empire). The only thing that can reverse this trend, besides a dramatic revitalization of labor unions, would be a very steep tax on the rich. In the mid-1990s, Robert Reich, who was then Secretary of Labor, floated this out as a possibility, and his suggestion was met with a deafening silence. There simply is no sympathy for such a solution, even among middle-class citizens for whom such a move would be an obvious benefit (largely because, I suspect, they individually believe that they alone will somehow beat the system and become rich themselves—sort of like winning the lottery). As a result, the progressive "Aztecization" of the country is a foregone conclusion.

Let us, then, turn to Item (b), the Tainter thesis as it applies to the American economy. If we focus on what is probably the major issue here, that of entitlements—principally Social Security and Medicare—we discover that this is, unfortunately, a very murky area. As far as entitlements go, the data and prognoses seem to change almost every month. Hence, by the time this book appears in print, my data will probably be obsolete. In addition, in this particular area, the data can vary significantly depending on the political agenda of the researcher. Position papers published by right-wing think tanks—the Cato Institute, the Heritage Foundation, the National Center for Policy Analysis—argue that the entitlement system is in a crisis situation and that a program such as Social Security needs to be phased out and/or totally overhauled. Hence, we have to be wary of the data here, because they are often a front for privatization—for example, replacing Social Security with private pensions along the lines of IRAs or 401(k) plans. At the other end of the spectrum, such as it exists in the United States, we have the Brookings Institution, which argues that the system needs only moderate adjustments to stay on track. So it is hard to decide which arguments are valid, given these competing claims, and the reader should be aware that I am not an economist, or any sort of expert in these matters. Let me take a shot at it, nonetheless.

    In some ways, the best place to start is with the reports of the Social Security Administration (SSA) itself. According to the trustees' report of 30 March 1999, Social Security will become insolvent in 2034, and the Hospital Insurance part of Medicare will do so by 2015. The combined expenditures here are higher than the taxes and premiums collected to support them, and this situation will continue. Thus the cost of these, which is 7 percent of the Gross Domestic Product (GDP) today, will rise to 11.7 percent by 2030. By 2025, claims on the Social Security trust fund will be $86 billion, and by 2075, costs for Medicare will be 45 percent higher than the income available for it. These figures, moreover, are not based on a particularly pessimistic scenario. In fact, as early as 2014, other federal receipts will be needed to help pay benefits. Hence, comments a Congressional Research Service (CRS) report on the situation, "the long-range outlook ... leaves little to be sanguine about," and popular opinion reflects this. Less than 50 percent of the American people believe that Social Security will meet its long-term commitments, and in the group of those below age fifty-five, nearly two-thirds have little confidence that it will work for them.

    Why is this the case? The answer is obvious: We are becoming an older nation. By 2025, the number of people sixty-five years and older will grow by 75 percent, whereas the number of workers supporting the system will grow by only 13 percent. The current ratio of workers to Social Security recipients is 3.4:1; by 2035, it will drop to 2:1. The "big three" entitlements—Social Security, Medicare, and Medicaid—will grow rapidly burdensome because the costs are directly linked to an aging population.

    Turning to the reports of conservative organizations, such as those previously mentioned, the most pessimistic scenario of the SSA, they point out, is that by 2045 almost 53 percent of the total taxable payroll in the United States will be needed to fund Social Security and Medicare. Whereas in 1950, we had seventeen workers supporting each retiree, the number could drop to one in the next century. The revenue shortfall, they say, will be $232 billion by 2020. Life expectancy is increasing faster than previously predicted, while the fertility rate is falling faster than was previously thought. By 2050, the number of retirees will reach 80 million people. The entitlement system is not sustainable, and very little, short of privatization, can avert a major collapse.

    Finally, the evaluation of Henry Aaron and Robert Reischauer of the Brookings Institution (Countdown to Reform) corroborates much of these data but maintains that the "Chicken Little" position is just plain wrong. Having until 2034, they say, does not amount to a crisis, and Social Security can be saved in its present form by enacting modest cuts in benefits, levying modest tax increases, and increasing the age of elibility for Social Security as well as taxing SS benefits like any other pension. The problem, as the authors admit, is that public opinion polls reveal very little support for these policies, so the only solution is to phase them in slowly, thus triggering less opposition.

    How much trouble are we really in, then? Are we, as Joseph Tainter maintains, rapidly reaching the point of diminishing returns, or is this unwarranted alarmism, as Aaron and Reischauer suggest? As I said, I am not an economist, but here is what I conclude from my research in this area:

1. The long-range outlook is not good, as the trustees' report of the SSA freely admits.

2. We are becoming an older population, the fertility rate is dropping, and we may well reach a situation toward the end of this century in which the ratio of worker to recipient is 1:1. This will indeed require drastic measures, but as the Brookings' authors note, Americans don't want higher taxes or lower benefits, even in the case of moderate measures, let alone draconian ones.

3. One thing everybody seems to agree on is that if we want to put a positive spin on these dates (2015 and 2034), and say that we've got time to spare, we must realize that a prime factor behind this "healthy" situation is the strong economic growth that has taken place in this country since 1995. It is this in particular that is giving the entitlement situation a boost, because such growth increases revenues (payroll taxes) flowing into both Social Security and Medicare. The only trouble is, capitalism operates in terms of ups and downs, and as the trustees' report candidly says, "we cannot prudently rely on economic growth." Nor can we reasonably project it indefinitely into the future. In short, a structural crunch does seem likely sometime in the twenty-first century.

    This last point strikes me as the crucial issue. In Gray Dawn, Peter Peterson claims that the benefit outlays for Social Security, Medicare, Medicaid, and federal civilian and military pensions will exceed total federal revenues by 2030. Between 1980 and 1990, the national debt went from being 34 percent of the Gross National Product (GNP) to 59 percent of it. By 1996, the debt amounted to $5 trillion, and interest payments on this were eating up one-sixth of the national budget. I suspect that only continued economic growth can outflank this kind of debt and interest burden, and I just don't think we can count on this happening. The accuracy, then, of Tainter's thesis as it applies to America's economic future remains unclear. My own sense is that we shall be in serious trouble by mid-century.

(Continues...)