Economic Outlook

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Or, to state the case somewhat differently: As we all know, there are—on a few remote islands in the South Pacific—some isolated tribes that were completely overwhelmed by the sheer wealth our armed forces dumped on their shores during World War II.

They had no idea where that wealth came from or how it was collected, processed, and transported. They only knew that—suddenly, one day—tons of C-rations and jeeps and Quonset huts and gasoline and chocolate bars came in across the ocean and down out of the skies and landed on their islands.

Well, those folks liked that wealth and they never quite figured out why—once the war was over—it stopped being delivered to their doorsteps. And now, every once in a while, members of those tribes build elaborate replicas of the landing craft and the cargo planes that once brought all those riches to them. And they hold ceremonies, and they promise their gods that they'll be good little boys and girls if only that Magic Spigot in the Sky is turned on once again.

And that's exactly the way most of the so-called leaders of the "civilized" nations are operating today. We were all poor once but—suddenly, one day—we got rich. And we stayed rich for 450 years. And then we all started to get poor again. And none of our politicians or economists seems quite able to figure out why the Magic Spigot is running dry.

And so, just like those "simple" natives out there in the South Pacific, our politicians and economists are now resorting to ceremonies, incantations, and other forms of magic. Maybe—they hope—if they put just the right name on a new financial theory and fiddle with the discount rate or insure bank deposits or create investment tax credits just so . . . well maybe, just maybe, the Good Times will roll once again.

Lots of luck. Until and unless another unmapped and untapped planet swings so closely into orbit with the earth that we can build a bridge across and start plundering virgin territory once more, those Good Times are gone for good. And all our quaint social, economic, and political theories with them.

Which leaves us with ... more of the long, slow slide that all of our institutions have been struggling with since at least 1966 (the year in which, in real terms, the U.S. stock market peaked).

From now on—for as long as you, your children, and your children's children live—we can expect the overall quality of life, as we've come to know it, to do nothing but decline. There will, of course, be ups and downs along the way . . . but in general each and every year from now on will be a little worse than the one before.

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