As the 21st century began, Americans appeared to have every reason to consider themselves the most fortunate citizens in the world.  Though there are problems in virtually every sector of our society, resolutions are still within our reach and capabilities.

Although the abundant nonrenewable natural resources our forebears found for the taking have largely been depleted, we still have copious renewable resources of fertile land and its produce and have demonstrated the innovative capability to synthesize replacements for the nonrenewable resources that are being exhausted.  Our tradition of hard work, plus saving for investment, unfettered by government and protected by law, has accumulated the necessary capital, progressive technology, and diversification of commerce to enable the highest and most broadly distributed income and standard of living for the average American.  This productivity has also enabled nutrition, public utilities, and healthcare that have more than doubled life spans since the founding, as well as military defense capabilities unrivaled by any potential foe.

Since the founding, America’s stock of human capital has multiplied manifold as well.  One of the highest birthrates in the world and the immigration of people seeking the privileges and responsibilities of American citizenship combined as a driving force for more than two centuries of economic growth, without diminishing the quality of life and functionality of society.  The universal education of Americans sprouted in local communities and churches at the primary level, and in church-based colleges for higher education.  State land-grant universities and public-school systems increased the quantity, if not the quality, of education offered to all Americans.  The workforce skills and knowledge necessary for the industrial and governmental functions of the modern state were provided, along with sufficient instruction in classical religion, history, and philosophy to enable an understanding of the present in the context of our cultural heritage.

Limited government allowed families, communities, and churches to serve as the guarantors of childrearing, care for the aged, and the general welfare.  Americans organized themselves into a myriad of voluntary organizations that managed the complex functions of society without the need for government oversight.  Government served limited functions, providing for sanitary water and sewage management, public health and safety, arteries of transportation, and a sound currency—and defending our borders.  Americans were given the responsibility and accountability for directing their own lives and, thus, the right to be left alone by government.

All of that has changed.  Today, most of the virtues cited above have been forsaken in whole or in part.  The value of our human capital has been severely depreciated by the corruption of our educational and intellectual community, which peddles socialism, multiculturalism, and internationalism as substitutes for traditional American values—creating, in effect, a cultural amnesia that rejects the sources of America’s historic success.  Socialist welfarism is creating a growing underclass, led by unwed mothers, that is underwritten by hard-working taxpayers.  Illegitimacy is on the rise once again, with more than one third of our children born out of wedlock.  (However, without the population increase provided by these illegitimate births and illegal immigration, the United States would join Europe in depopulating.)  Government’s already excessive redistribution of wealth from working families to retirees through the Social Security and Medicare Ponzi schemes will take yet another bite for prescription drugs.  Washington promotes unlimited healthcare for “the poor,” which drives medical inflation, adding more to the burden on working families.  Marriage rates continue to decline as middle-class real incomes stagnate because of immigration and the excessive costs of government.

The United States is losing her manufacturing sector at an alarming rate as the federal government, in effect, tax-subsidizes the foreign importation of goods and the outsourcing of services abroad while penalizing U.S. exports, by denying U.S. manufacturers border-adjusted taxes comparable to those that foreign competitors abate on their exports and add as tax on U.S. imports to their markets.  As their workers become industrialized, China and India, which aren’t saddled with the burden of inefficient and inequitable taxation, will continue to be serious long-term competition for U.S. manufacturers.

Equally ominous is the continued concentration of the control of commerce on Wall Street, in concert with the centralization of government in Washington, D.C.  The myopic focus of investment bankers on maximizing near-term earnings, dividends, and stock value comes at the expense of the future growth and security of U.S. corporations’ employees, communities, and shareholders.  In the face of a coming economic crisis, the government can be counted on to rush in with massive handouts it cannot afford, as well as whatever regulation and intervention it can conceive in order to save us from ourselves.

Until now, Americans have lived in the future as much as in the present.  Rambling and spacious New England homes were expanded to house two or even three generations, and the meticulous finishing was a mark of enduring family pride.  The great Middle Western farms were so densely forested when the settlers arrived that a squirrel could travel from the Ohio River to the Great Lakes without leaving the trees.  It took a man and a horse one full year of hard labor to clear an acre of cropland to create a perpetual family inheritance.  Entrepreneurs who created commercial empires valued far in excess of what their descendants could responsibly enjoy proudly invested this excess in libraries, museums, colleges, and churches for the future benefit of their fellow citizens and their descendants.  Whether the motivation was the perpetuation of their kin or their country or preparation to meet their Maker, they built for posterity and invested in the future of America.

Today, under the permissive and seductive culture of individualism and socialism, most Americans have not even provided for their own future.  Since the late 1990’s, households have been disgorging financial assets and home equity and accumulating debt at an alarming rate that has reduced personal savings to a level not seen since the Great Depression, while accumulating record household debt compared to disposable income.  The federal government far exceeds households in its fiscal irresponsibility.  The federal debt as stated is less than its additional unreported loan guarantees, which are dwarfed by the unreported actuarial obligations of Social Security and Medicare, whose “trust funds” hold only obligations on future generations to pay for current excesses.  The massive trade deficit (now approaching one trillion dollars per year), along with the federal deficit, increasingly transfers the net worth of the country to foreign investors—another debt left for future generations.

Our self-serving politicians and brainless intellectual elite congratulate one another on the latest increase in the GNG (Gross National Gluttony), and the Federal Reserve underwrites the financing of this consumption orgy.  Foreign investors will continue to accept our prime assets—and obligations on the same—for as long as we consume their trinkets and still have desirable assets for sale or to offer as collateral.  The bumper stickers on our parents’ motor homes headed for the Sunbelt—“We are spending our kids’ inheritance”—are right on target.

The military valor of our previous wars and the hegemony of our current arsenal embolden our leaders to pursue the creation of an American Empire that covers the globe and engages us in wars of dubious necessity that are inadequately funded and manned.  America, so greatly admired by the rest of the world not long ago, is now the most detested country.  As the United States continues to provoke and fight an endless “War on Terror,” Americans will systematically be deprived of their civil rights.  The prospects for 4.5 percent of the world’s people consuming 21 percent of the world’s produce on a “buy now, pay never” plan, while provoking back-to-back overseas wars and consuming one third of the world’s energy (held primarily by our enemies as known resources dwindle), must be considered short-term, at best.

Can we reclaim our heritage as Americans by enacting a plausible reform of our society, like the chain-smoking drunkard or the degenerate dope addict who faces reality and “kicks the habit” to reclaim a lost life?  If we do not, what can we expect to happen?

If we follow the “What, me worry?” scenario, we will continue full-speed ahead on our present course, with internationalism, multiculturalism, and socialism as our compass, sextant, and rudder.  The privileged caste of “knowledge workers” in professions, finance, academia, and government will prescribe continued growth of imports and immigration to provide themselves with cheap personal services and goods for consumption.  The manufacturing sector will continue to shrink as foreign border-adjusted value-added taxes undercut U.S. goods.  Corporations will continue to move headquarters abroad for outsourcing and territorial corporate taxation.  Declining middle-class and working-poor wages and salaries will further depress marriage and child-rearing within marriage.  This, in turn, will be joined by relentless growth of government welfare, enlarging an underclass characterized by ignorance, substance abuse, welfare dependency, criminality, and unwed motherhood.

The “knowledge workers” will find that living like nobility precludes saving; the federal government will continue to run deficits; and the middle class will not be able to save.  Investment will decline, and the demise of the manufacturing sector will make permanent the trade deficit in goods.  America will become a “has-been” military power, to be protected (we can only hope) as a cheap place for future wealthy Asians to take vacations and own second homes.  Social Security and Medicare will fail to deliver on the promise that the improvident aged can bilk ill-gotten livelihoods from hard-pressed workers.  Cycles of inflation and recession will result in the confiscation of the incomes and property of the few remaining provident citizens.  A consequent social breakdown will replace the American Dream with an endless nightmare.  Government will increase regulation and revoke individual rights, “in order to protect us.”

We must return to the virtues and values from which the unique character of America was originally constructed.  The centralization of power and welfarism have been the principal forces that have reshaped the Republic, and we must destroy the roots from which these overpowering forces have stemmed.  Wars and economic crises enabled the confiscatory taxation that, in turn, financed the irresistible growth of government.  Crony capitalism has cartelized big business on an international basis, supported by Wall Street investment bankers who know neither borders or nationality.  Where the damage to the social fabric becomes evident, the welfare state takes over, and the expanding underclass of dependents becomes a permanent electoral bulwark of the centralized state.

Once, families, churches, charities, and fraternal organizations formed a welfare safety net, which various forms of commercial casualty insurance increasingly fortified but did not perfect.  However, the French Revolution and the emergence of European socialist states promised the utopia of the welfare state, which the pseudointelligentsia of America bought and sold to the gullible American public.  Americans have since been convinced that government can and should serve as the insurer of last resort; any serious attempt to decentralize the federal government must untie this Gordian knot.

The pattern for reform of the welfare state is obvious if we would only open our eyes and look around us.  Driving a car risks casualty to its passengers or those of other cars, and attendant liabilities.  So government requires that everyone who puts a vehicle on the street must carry insurance to provide for these risks.  But government does not pay for vehicle maintenance, fuel, parking, tolls, etc., as health insurance does.  The insurance company builds reserves for your policy and buys reinsurance to fortify those reserves.  The same is true for your home insurance.

The problem with Social Security as income insurance, and Medicare as health insurance, starts with participants who do not pay premiums for their own policies; instead, they pay taxes that are passed to the current retirees, who are dependents on the state.  Benefits are provided through third-party disbursement.  We must convert this system to one of personal-responsibility accounts that are required of, and belong to, each citizen; premiums would amortize the expected minimum income and healthcare costs for a lifetime.  The healthcare accounts would have private major-medical insurance, but the reserves and returns on the same would belong to the insured.  Non-major healthcare would be competitively purchased directly by users from their accounts.  If necessary, the federal government could be the reinsurer, but at actuarially appropriate cost to policies.  The federal government would contribute the shortfall from poorer workers, but only money paid in by the citizens would count toward residual equity.  Healthful lifestyles that reduce the expected costs of healthcare would thereby be encouraged, to each citizen’s benefit.

When Singapore became an independent state, she was one of the poorest countries in the world.  She adopted this form of social insurance, which entirely replaced state welfare.  Her responsibility accounts are tax exempt, inheritable, can be used to borrow for education or home equity (with required repayment), and are cashed out at retirement.  Singapore is now one of the most prosperous nations in Asia, with the world’s highest percentage of home ownership and one of the highest rates of saving for investment.  The United States could progressively transform her retirement and welfare by funding personal accounts, starting with accounts for those nearing retirement, enabled by floating federal debt at a pace the market can absorb, which will only formally recognize, rather than add to, currently existing actuarial liabilities.  Welfare, healthcare, and retirement would no longer primarily rely on government, and 40 percent of federal revenues would be returned to the control of private individuals for disbursement and investment.  Personal saving would more than meet America’s additional saving-for-investment requirements.  Welfare for any individual would be paid out of these responsibility accounts, at the expense of the holder’s equity.

The tax code must be reformed to include border-adjusted taxation, so that American goods, services, and agriculture can be competitive once again.  It must be changed to levy taxes on consumption rather than on income, in order to secure competitive tax rates on capital that can help to restore saving for investment.  This will help close the trade gap by fostering a resurgent growth of new capacity and technology that reclaims lost markets at home and abroad.  The borders must be secured, and immigration reserved for those who can be productive contributors who augment, rather than depress, the American standard of living and domestic security.

Alexis de Tocqueville told us that America is great because America is good and that, when she ceases to be good, she will cease to be great.  Alexander Hamilton argued that, for America to succeed, she must stay solvent.  The most important contribution that a restored America can offer the world is to provide a model of liberty, individual responsibility, and free enterprise.  The public-policy reforms proposed here are based on individual responsibility.  They will help to rebuild the American character and launch the restoration of strong families, communities, and domestic commerce—the foundations of American prosperity, culture and security.