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July 28, 2010

The End of "Progress"

The "Economist" this week writes about the "end of progress", in other words the end of the limitless expansion of social benefits.

I agree. As developed countries are now inversely treadding the process of industrial hollowing-out, they will lose the sector which has been generating wealth for them. And we, still living in all civic niceties created as a result of the industrialization, but with less revenue, will have to substantially change our way of life.

I believe that two things require urgent consideration in this change.
One is about the "paper money": will we be able to rein in the power of the printed money, the value of which was seperated from the gold's value in 1971? This "liberation" caused the oil price hikes in 1974 and 1979, the ensuing stagnation and the Reaganomics as a response to it. It is since 1971 the scale of the printed dollar circulating in the world has reached gigantic size, causing bubbles and their breaking-ups too often.

The other is the need to drastically ax the social welfare system. Under the electoral system political parties tend to add one after another new benefit to please the voters. Now that the larger part of our industry is gone abroad, we can not afford this luxury any more. The most part of the social welfare system should be axed so that the well-off people take care of themselves and the government take care of only the needy and handicapped people.

Saddly enough we may have to recognize that developed public social welfare is not a sine qua non for an advanced society. Paradigm has changed.


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