- Being routinely scorned by George Bush and his cronies got many of us going.
12/7/10, "Longevity gives life to Tea Party," Spengler
"How could the Tea Party elect five senators and 40 members of the United States Congress last November, none with political experience and many with evident eccentricities? The answer is that a single issue united a slapdash agglomeration of amateurs, with sufficient power to override all the sources of weakness.
The Tea Party represents creditors of the government who do not want to be cheated out of their savings; that is, people close to retirement age who fear slow confiscation by inflation. Governments that run huge deficits normally reduce them by debasing the currency, in order to repay their debts in inflated money.
In fact, the Tea Party is a triumph of economic rationality over lack of talent: its reason for being is so compelling and so clear that it has succeeded despite the silliness of some of its candidates. One top Republican pollster thinks that the "I am not a witch" message aired by losing Tea Party candidate Christine O'Donnell in Delware was the
- single worst piece of advertising in political history.
- The most important thing to know about such people is that there are more of them than ever before in American history.
Elderly dependents have remained fairly static as a percentage of total population during the past 40 years. But the proportion will jump from 19% today to 32% in 2030. This seismic change in American demographics explains a great deal.
In 1975, when Jimmy Carter ran for president, 39 out 100 Americans were dependent children, but only 16 out of 100 Americans were dependent elderly. The baby boomers were in their twenties and starting families. Once elected president, Carter allowed the inflation rate to reach double-digits by 1981. A family that bought a house for $60,000 in January 1975 could have sold it for $110,000 in January 1981. In fact, home prices offered positive returns after inflation (stocks, bonds, and cash all showed negative real returns during the 1980s).
Elderly people on fixed pensions took part-time jobs or ate pet food as the value of money shrank; young people caught a free ride on the inflation wave. No one liked inflation, to be sure, but it was an ill wind that blew good to a great many people. The Carter administration, though, made an elementary blunder: as inflation drove up nominal income, it also pushed middle class into higher tax brackets intended to soak the rich. With a top tax rate of 70%, the tax squeeze due to inflation became a crushing burden on the middle class, and the high rate of taxation on nominal capital gains was often confiscatory. If the Carter administration had indexed tax rates to inflation, it might have lasted a second term.
Now the tables are turned. By 2030, elderly dependents will comprise 32% of the American population, twice the level in 1975.
- For the first time in history, the number of elderly dependents will equal the number of child dependents. Americans now aged 45 will retire in 2030, and it is their concerns that give buoyancy to the Tea Party.
This is not the first time that monetary issues have motivated the formation of an important third party. During the last quarter of the nineteenth century, a prolonged deflation under the gold standard drew Western farmers to the inflationist Free Silver movement. Permitting silver coinage would have increased the money supply, raised the price level and helped debtors. The movement was powerful enough to take over the Democratic Party in 1896, when its candidate William Jennings Bryan (an unknown 36-year-old congressman) excoriated Eastern creditor interests and their ''cross of gold'' imposed by Eastern creditor interests.
- The proportion of prospective pensioners in the rest of the industrial world exceeds that in the United States...
- for example, on the extent to which France and Germany will bail out Ireland, Portugal, Greece, or Spain.
- demographics and rational interest will make it an
- (As for the left, they believe the country is theirs because we will be dead soon. Many Tea Partiers are in their 40's or younger, so they'll have a long wait. They hope to hurry us off by giving us a UK style medical system where seniors are routinely left to starve. They figure in a few years we'll be gone, and a snakepit of crime, poverty and despair will be theirs. A land mass with no borders. But our numbers are just beginning.