"We borrowed too much because we were self-involved yuppies who just could not deny ourselves the latest flat-screen doodad for our McMansions." "Their incomes were not keeping pace with the cost of crucial items of the middle-class lifestyle: housing, medical care, college tuition."
I dont think there's as much difference between these two "causes" of borrowing, as Frum likes to pretend.
He's simply moved the viewpoint half way to "self-involved yuppy" and then describes what are luxuries as "crucial items". If a BIG new house is seen as "crucial" to the middle-class lifestyle, necessarily they'll be paying more for housing. If college tuition has become more of a "crucial item" through the 90s and 00s and capacity has not increased, then prices for tuition will of course rise. Medical care is the one factor which has increased most in cost. Is it for the same reason: increasing demand but lagging supply? I think there are other factors: the synergy between medicine and the law, which makes it risky to use anything but state-of-the-art equipment, or to prescribe an older and cheaper drug which has a higher level of risky side-effects. Introduction of, or increasing use of new treatments (huge increase in medicating children, explosion in the use of CAT and then MRI scans, HIV treatment, surgery and medication for the increasingly long-lived elders, oh etc etc over twenty years).
Frum may not agree, but healthcare reform actually addresses the underlying cause of these problems probably more than finance reform does.
Addressing it is good. We shouldnt pretend that increase in cost is going to level out though. People in developed nations may just have to lower their expectations of whether they can afford whatever-it-takes from medicine to save their lives. Even if its an insurance company paying, or a government fund paying, there comes a point where the years of life saved is not worth the money. We're just going to have to tolerate it, that a small section of the population can afford to be perfectly healthy, and for everyone else staying alive is the most they can ask. Thats the situation for the time being.
As far as the issues with China goes, I'm not going to address that. Many people have, and maybe some of y'all should, as China is not going away anytime soon and has been very proactive in leveraging their economic abilities and will probably continue to be a chief influence on our economic situation into the foreseeable future.
A lot of debt is concentrated in that one place, to the point where its a strategic liability. But the cause of it, the trade deficit the US has with China, is just a fraction of the trade deficit situation.
The US-China deficit began to rise steeply in 2004, rising to $268 billion in 2008. Source (http://www.census.gov/foreign-trade/balance/c5700.html#2010) The US-World deficit in 2008 was $696 billion. Source (http://www.census.gov/foreign-trade/statistics/historical/exhibit_history.pdf) (.pdf)
(Those sources both include figures for 2009, showing a sharp drop due to the GFC. But since Frum is talking about the origins of that crisis ...)
Exactly the same mechanism of exporting-debt applies to the sum figure as applies to Chinese held debt. By Frum's argument, the Chinese should hold no more than 40% of foreign held US debt...
(1)
"We borrowed too much because we were self-involved yuppies who just could not deny ourselves the latest flat-screen doodad for our McMansions."
"Their incomes were not keeping pace with the cost of crucial items of the middle-class lifestyle: housing, medical care, college tuition."
I dont think there's as much difference between these two "causes" of borrowing, as Frum likes to pretend.
He's simply moved the viewpoint half way to "self-involved yuppy" and then describes what are luxuries as "crucial items". If a BIG new house is seen as "crucial" to the middle-class lifestyle, necessarily they'll be paying more for housing. If college tuition has become more of a "crucial item" through the 90s and 00s and capacity has not increased, then prices for tuition will of course rise.
Medical care is the one factor which has increased most in cost. Is it for the same reason: increasing demand but lagging supply? I think there are other factors: the synergy between medicine and the law, which makes it risky to use anything but state-of-the-art equipment, or to prescribe an older and cheaper drug which has a higher level of risky side-effects. Introduction of, or increasing use of new treatments (huge increase in medicating children, explosion in the use of CAT and then MRI scans, HIV treatment, surgery and medication for the increasingly long-lived elders, oh etc etc over twenty years).
Addressing it is good. We shouldnt pretend that increase in cost is going to level out though. People in developed nations may just have to lower their expectations of whether they can afford whatever-it-takes from medicine to save their lives. Even if its an insurance company paying, or a government fund paying, there comes a point where the years of life saved is not worth the money. We're just going to have to tolerate it, that a small section of the population can afford to be perfectly healthy, and for everyone else staying alive is the most they can ask. Thats the situation for the time being.
A lot of debt is concentrated in that one place, to the point where its a strategic liability. But the cause of it, the trade deficit the US has with China, is just a fraction of the trade deficit situation.
The US-China deficit began to rise steeply in 2004, rising to $268 billion in 2008. Source (http://www.census.gov/foreign-trade/balance/c5700.html#2010)
The US-World deficit in 2008 was $696 billion. Source (http://www.census.gov/foreign-trade/statistics/historical/exhibit_history.pdf) (.pdf)
(Those sources both include figures for 2009, showing a sharp drop due to the GFC. But since Frum is talking about the origins of that crisis ...)
Exactly the same mechanism of exporting-debt applies to the sum figure as applies to Chinese held debt. By Frum's argument, the Chinese should hold no more than 40% of foreign held US debt...