Former White House Director of Economic Policy Todd Buchholz appeared on Monday morning’s edition of Breitbart News Daily with SiriusXM host Stephen K. Bannon to discuss his new book, The Price of Prosperity: Why Rich Nations Fail and How to Renew Them.
Bannon congratulated Buchholz for so presciently describing the populist economic issues at play in the 2016 election, given that he began work on the book two years ago.
Buchholz said he chose a childhood anecdote about a neighbor telling his father, “If Nixon wins, I’m moving to Canada!” and similar angry declarations about Carter and Reagan years later to illustrate how “people are just bluffing” when they say such things … or at least, they used to be bluffing. He wondered if the number of people who seriously consider abandoning the United States is growing.
“I started taking that crisis in the American spirit much more seriously than I ever had in my life,” he said.
Buchholz postulates that achieving true prosperity is a moment of great danger for a nation because prosperity nourishes the very social trends that can lead back to ruin, from declining birth rates to the loss of national sovereignty through globalization.
“Countries are just as likely to unravel after they’ve become prosperous than when they were poor,” he explained. “Lots of people have written books about poor nations who fall apart – Sudan and Syria, and obviously, we see that throughout the Middle East. Very few people, it turned out, had written books about rich countries that fall apart.”
“We just celebrated a birthday for my wife’s grandmother’s 100th birthday. Well, when my wife’s grandmother was born a hundred years ago, there was an Ottoman Empire. There was a Hapsburg Empire,” he recalled. “Have you ever met an Ottoman? I haven’t. I’ve never met a Hapsburg. Those were prosperous, dominant empires through the 1800s – in the case of the Ottomans, for five hundred years. And yet, they’re gone. They didn’t fall apart because they were poor.”
Buchholz said the first force contributing to the decline of prosperous nations is falling birth rates – which, ominously, we recently learned America is now unquestionably experiencing.
“When people become wealthier, they have fewer kids,” he said, adding:
They don’t need as many folks working on the farms, or working in the mines, or the factories. Kids become just a sort of luxury. In fact, in America today, I would argue that pets are more popular than kids. I could tell you, in my neighborhood – I live in Southern California – I find, when I take a walk around my neighborhood, plenty of places to get my dog washed and groomed. It’s tougher to find a place to get your kid’s hair cut.
“Just stand at an airport boarding gate and count how many people are lined up to pre-board because they’re old and in walkers and wheelchairs. Just compare that to the number of parents pushing strollers,” he continued. “That is not a recent U.S. phenomenon. That took place in Sparta. That took place in Victorian England.”
Buchholz noted that “traditional societies used to size up a man by counting his kids,” but “now we size up – what? Rolex watches? Frequent flier miles? Instagram followers? Nielsen ratings?”
He made the intriguing observation that children are no longer seen as a requirement for aging patriarchs and matriarchs to live comfortably in their sunset years. On the contrary, the expense of raising a large family is seen as making it “more complicated to become a rich old man.”
In his book, Buchholz also explores the paradox of trade, which is indisputably necessary to build national wealth, but he warned that “it’s very hard to be a global trading country without losing some of your customs and character.”
In the States, we’ve moved from “Made in the USA” – which used to be a label of pride – to “Made in Wherever’s Cheaper.” Compare a Boeing 787, a wonderful new jet, to the Boeing 747, manufactured, what, forty, fifty years ago. Look at the content. The 747 was essentially Made in USA. The 787, in order for Boeing to get contracts from airlines throughout the world, they had to subcontract the fuselage, the engines, the wings, and so on. And so you lose some of that character.
The third dangerous paradox of prosperity identified by Buchholz is unsustainable debt.
“Poor families tend to rack up more debt,” he noted. “If you look at the statistics, you can see that, as a percentage of their income, poor people end up getting in more debt than middle-class or wealthier people. But, paradoxically, when you look at countries, rich countries rack up more debt than poor countries.”
“Japan owes about 200 percent of its GDP in debt to very wealthy countries,” he said by way of example. “The U.S. is up to about a hundred percent. Poor countries, like Mexico and Russia, have less debt. We can borrow the money more easily.”
“The problem there – and this is what really creates the crunch, when Americans are concerned about at this moment – when today’s politicians rack up debt, today’s politicians will someday die, but the debts live on,” Buchholz observed. “They pass on the debts to our kids and our grandchildren. They never had a vote in any of it.”
A fourth factor in prosperity’s decline is the degraded work ethic. “When countries become rich, no one starves, but people sleep late,” he said. “Everyone’s got a bed, but no one has a reason to get out of it.”
He pointed to the spike in disability claims over the past 20 years, which has produced some embarrassing scandals, such as the billion-dollar “gravy train” scheme in which nearly all employees of the Long Island Rail Road (LIRR) filed disability claims, vastly enriching their union bosses in the process. (Three years later, the LIRR was still approving virtually every request for disability benefits filed by its workers, without requiring verified medical evidence.)
“Of course, they found these guys on the golf course and on the tennis courts, with their ‘disabilities,’” Buchholz recalled. “Now, what’s remarkable to me here is that jobs are safer than they’ve ever been before. People are no longer crawling on their bellies into a mine, or working with whirring blades in a meat-packing plant. And yet, disability claims have gone up.”
“Lastly, in a multi-cultural country, it’s very difficult to maintain a spirit of patriotism,” he postulated. Indeed, the spirit of patriotism he describes is under active assault, caricatured as xenophobia and nationalist chauvinism, thus depriving citizens of an important motivation in their drive for excellence.
Buchholz coined the term “patriotist” to describe “someone who believes, as a matter of philosophy, that it is a good thing to love your country.”
“I’m afraid that not only is patriotism under attack, but the very idea that it is a good thing to like your country seems to be under attack, especially at universities,” he said. “I think we’ve got to restore that sense of patriotism, and that it’s our right to think that our country may be better than others.”
Pulling out of the demographic, social, and economic fall from prosperity is difficult; some analysts argue that beyond a certain point, it becomes impossible. Buchholz, however, retains his optimism. “I believe in American exceptionalism, so I believe that we can be the exception,” he said.
Other countries offer historical precedents, leaders in various eras who have been able to reverse downward trends for their nations, as chronicled in The Price of Prosperity.
One example is Mustafa Kemal Ataturk of Turkey, whom Buchholz described as a “fascinating example.”
“The Ottoman Empire did not believe in nationalism. They believed in Islam,” said Buchholz. “They were the last ‘Caliphate.’ According to the Koran, it was a kind of sin to believe that there should be an individual nation. Their job was to maintain Islam. Ataturk didn’t believe in any of that. When the Ottoman Empire fell, he created modern Turkey, the Turkish Republic.”
Of course, we know Turkey right now has many problems and so on, but what he did in creating a Republic was absolutely remarkable. In fact, the very word “Turk” was a pejorative term under the Ottoman Empire. It meant like a nomad, a hick, a know-nothing. And he brought pride to this country that had just been a subset of an empire.
Japan in the 1800s avoided decline by opening its closed society to the West through the Meiji revolution, inspired by the sight of what American technology could achieve when U.S. ships steamed into Japanese ports. This could be seen as the mirror image of what Ataturk achieved for Turkey, illustrating that each fall from prosperity is different, and there is no universal solution.
There are, however, important tools that prove useful to every society seeking to reverse decline. One of the most important is “grit,” the first ingredient in a formula Buchholz calls “GMC” for Grit, Mobility, and Confidence. He sees GMC as the essence of the true American character, the source of American exceptionalism.
“We’re not the best at everything,” he explained. “We may not be the friendliest. Maybe there are other countries that are friendlier. Maybe there are other countries that are naturally more interested in soccer than we are. But what made America great was those three characters: Grit, Mobility, and Confidence.”
He defined “grit” as “stick-to-it-iveness, the willingness to fight,” immortalized in such cultural treasures as George M. Cohen’s World War I song, “Over There,” whose lyrics include:
Johnny, get your gun
Show the Hun you’re a son of a gun
Hoist the flag, let ‘er fly
Yankee Doodle, do or die
Pack your little kit, show your grit
Buchholz wondered if that sense of grit was lost as America grew more prosperous. It gave him no pleasure to label America’s youth “Generation Go Nowhere” in a piece written several years ago with his daughter, referring quite literally to their unwillingness to relocate in pursuit of better employment opportunities.
“People didn’t move in order to find a job,” he said, looking back to the Great Recession. “Even when the unemployment rate was ten percent in certain states, people stayed put and said, ‘Well, you know, what’s the government gonna do about this and make it better for me?’”
“We are in danger. I think time is running out to make some pretty fundamental decisions, to create new obligations for citizens and non-citizens,” Buchholz warned.
He offered a simple example of such obligations from the latter chapters of his book: “I think that any immigrant should be required to get his or her passport stamped at at least five historical patriotic sites – the Gettysburg memorial, the Museum of Tolerance, the Statue of Liberty.”
“I would also impose that same obligation on American students applying for a student loan,” he added. “How dare you expect, as a young person, that your fellow taxpayers should lend you money, or give you money, without your at least demonstrating you have an interest in this country sustaining itself?”
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