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Izzy Speaks: Part 2 - A Question of Debt
14 years ago
Those in America, and possibly a number of other places, might of turned on the news of late to hear about some sort of negotiation between the President and the Republican's in the House of Representatives on a debt ceiling. Namely, the fact that at the start of August, the federal government will hit a limit for the amount of debt it can have that is written into the law.
For some, it might be confusing why the government even has such a limit. To others, they'll be thinking something along the lines of 'if they knew this was coming they should of not spent so much!' I'm afraid both perspectives are formed from incomplete knowledge about the situation.
For a number of years now, the federal government has had these debt limits. And in every previous year when the debt limit was due to be hit, the congress passed a new law to raise that limit. Both parties have participated in this lift. And yes, during the Bush years when Republicans controlled congress they voted en mass to lift the debt limit. When power in congress has been divided previously both parties got the votes to do it. But they never got the votes together to totally do away with it, partially because it looks better if you can go home to your district and tell all ten people who care more about the deficit then good schools and receiving their social security cheques that every thing is okay since there's a maximum limit. By setting a limit, even if you raise it almost yearly, you can claim to be more fiscally responsible then you have been.
So really the debt limit has been in the past a game of smoke and mirrors to try to limit the damage of the view that congress keeps pushing uncontrollable spending. A fig leaf at best. It never demotivated anyone from pushing for more spending on their issues or industries of interest. Or keep them from cutting taxes when the budget is balanced. The debt limit has been a lie built into law.
But recently things have changed. Potentially, congress today could continue the game by raising the limit. The Republicans in the House could even agree to split responsibility on the matter as despite the theme of Tea in their numbers, there are a number of them who would rather the economy not collapse and they get blamed for it. But they're not going that route.
So what would happen if the debt limit is not raised before the August deadline? There are three possibilities from what I can tell.
1. The government effectively goes into default on its debt in order to meet current payment obligations. This will be a huge blow to the economic markets as suddenly the firmest investment on the planet, US treasury bonds, are now potentially worthless as they might not be paid back. All the time there is a near constant flux of money into and out of the government in terms of securities. People, companies, and nations buy them while other bonds and such are being paid back (things like 30 year bonds where they get paid back after 30 plus interest for instance). Suddenly those that are due to be paid back aren't. What more, the interest payments going out might not be paid either if they're not part of the repaying bonds. So for those wishing to buy US debt based securities, they will demand higher interest payments on their 30 year bonds because there is now less of a chance that they'd get the money back since the government has demonstrated that it won't pay at this point. So the $14+ trillion debt suddenly has higher interest payments when we are paying them and this makes balancing the budget much more difficult, be there a debt limit or not.
What more, investors hate having their money vanish. More often then not it dissuades them from investing at all as when a sure thing goes rotten, they can't logically assume that other sure thing investments are going to be worth it either. So they stop investing. Which means fewer people are giving loans. Fewer people giving loans means business that depend on short term loans to meet payroll before the profits from recent sales can come in have to fire most of their people. And... things are just like in 2008 after Lehman Brothers fell apart. The economy tanks, there are massive layoffs, and everyone is generally not having a good time. This of course cycles back with the government having less revenue to try to get back to a balanced budget. Again, making it harder to fix things.
2. The government keeps paying as much of its debt based bills as possible to avoid default. But in order to do that, the money coming in that it uses for everything else is drastically reduced. So they have to prioritize. Do they pay the salaries of active duty military men and women who are putting their lives on the line this very moment? Okay if they manage, that and have any left over, do they pay grandma her social security cheque that she needs to pay rent and buy food because she's to old or infirm to work? Well that'd more then eat up the rest, so some grandma's will go hungry. And what about education? States need federal money to run their schools anywhere near the minimum for an education (aka, keep the lights on and pay a couple teachers) and if that goes away suddenly the states have a much larger debt bill, or they have to close schools. Think 30 students per class is crowded? Oh, and you're a fan of scientific advancement? Well its good the shuttle's winding down as NASA has to turn the lights off for a bit. Have a job in construction building roads and bridges? Sorry no money for your salary so you're out of the job for the time being. Oh, what about medicare? If grandpa is sick we can't keep him alive because the monies gone. And... well you're getting the picture.
Lots of people will be out of work. Lots of people who are only able to survive thanks to the safety net will scramble to make ends meet. Very likely some of them will die as a result. The states will be pushed into a panic as even the states that do manage to keep their budgets balanced in the current economic climate will be in trouble.
The frightening thing is that both 1 and 2 can happen at the same time. Of the almost $30 billion going out for social security cheques alone in August, there's less then half that in revenues expected. And things are further complicated that around $4 trillion of the US debt is money borrowed from the money set aside for Social Security. Talk about robbing Peter to pay Paul eh? Or would it be Ron Paul... hmm...
And...
3. The President or various parts of government ignore the debt limit, citing the 14th amendment. This is very risky and very likely to get the House of Representatives to try to impeach him. The important part of the 14th amendment is:
"Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."
It then goes on to talk about how debt held by rebellious folks isn't legit and will be ignored. Now this section isn't all that great in getting us out of this pickle. Some might claim the debt below a debt limit is authorized but that above it is not. Others will claim that laws authorizing spending are the primary authorization and thus this out is ok. So in other words its unclear what the interpretation should be. This is further complicated by those most likely to be the arbiter of this being a very divided and partisan supreme court. The most legit interpretation from my view is that this section means that the public debt made by the federal government will never be in default. And even that can have different interpretations. And if the President goes this move and is rebuked by the supremes he'll be painted as the bad guy.
....
And that's the real reason there's the current debate.
The conventional wisdom is that if the economy gets worse at this point, the President won't win reelection. For the economy to not automatically tank worse then it did in 2008 the debt limit needs to be dealt with in some fashion (either raise it or use the 3 option as an out). And the people the President needs to sign off on a debt limit increase have made it their #1 mission to make sure he's a one term president. I should note at this point that their #2 goal is to never let taxes go up (for various definitions of taxes) on anyone.
So the President hopes to make a deal. And not just a deal, but a big deal. Lots of spending cuts. Trillions over the next ten years. More then even the Republicans were demanding previously. Cuts so drastic that, comparing them to what polls have shown the American people would prefer as a solution to this mess, cuts so drastic that they are to the political right of the typical Republican voter.
And yet the Republicans refuse to budge. You have Eric Cantor, the House Majority Leader, walking out on meetings in a huff and bringing up things that have already be demonstrated as non-starters for the Democrats (who also have to sign off on this insanity by the way) over and over again. You have Speaker Boehner, boxed in by his own party into constantly harping a hard line against accepting a deal.
Some may at this point out that the offer the President has been making includes closing tax loop holes, especially those that allow companies that make billions in profits to pay little to no taxes. (For example in 2010 General Electric made $10.3 billion and paid no taxes. If you work full time on minimum wage you pay more then they did.) This would seem like a no brainer for helping balancing the budget and to make the tax system more fair (something the Republican love to claim they'll do before elections) but yet they're calling it a tax hike and that it will destroy the economy. This very simple, no brainer bit of contention, that even if you buy into the magic that low taxes automatically make rainbows appear and results in everyone in the universe including your dog making more money, wouldn't hurt the economy any where remotely as much as hitting the debt limit would, brings the Republicans to shout no.
Deficit reduction that at most has 15% of its package as removal of tax loop holes? Gasp, can't have that! So lets run the country into the ground by holding our breath eh? So what if granny croaks, the kids don't get educated, and Army Man Dan stops getting paid despite those bullets whizzing by his head? So what if some super conservative folks who used to work for Dubya think this is the best deal the Republicans would ever get ever and thus should take it?
So either the Republicans are:
A. Willing to drive us into the ditch because taxes are just that bad to them.
B. Willing to do anything to make the President look bad even if it means total economic collapse.
C. Completely unable to grasp the amount of shit we're in and thus are okay with the country going into default unless they get their way.
From what I can tell, its a little bit of all of these. Senator Lee thinks taxes are bad and that we shouldn't have Social Security, so he's probably a mix of A and C. There's Mitch McConnell who said "The single most important thing we want to achieve is for President Obama to be a one-term president." He's probably in class B as he's floated a new compromise that lifts the debt limit automatically until the end of 2012 unless congress actively votes and passes a law to prevent it. He probably realizes the trouble we're in so wants an out that still makes Obama look bad. There's signs that even Speaker Boehner realizes the trouble we're in but also realizes there's enough in the House who fit with C that if he doesn't go along with them that they'll give his job to Eric Cantor.
So what does this mean?
It means that unless something is done soon that we're all pretty much fucked. What are we going to do about? I encourage people to call up their representatives and ask them what they're doing to make sure the economy doesn't collapse. If you luck out and get to talk to a real person, and they bring up anything beyond raising the debt limit, be it with a deal or without, feel free to laugh at them and ask them when they're going to be serious. When are they going to stop playing stupid games and get back to doing their job. And if they do talk about the debt limit, feel free to tell them out right that if they vote against an increase and it fails, and the economy tanks, that they've not only lost your vote forever, but that you will not vote for anyone who shares their ideology because they'll have demonstrated that they don't care about the people of this country and so can't be trusted in positions of power. Hopefully if enough folks make this clear to them that they'll start rethinking their kamikaze trajectory for us.
----
So this is of course a little dark sounding by this point. I tend to be an optimist, but even an optimist knows that if we do nothing, bad stuff happens. For those who have made it this far through this now rather lengthy post, I ask you to at the very least pay attention. Because for some in this game, there is pure ideology. For others its games of positioning. But overall, the power of the 'Tea Party' faction within the Republican Party has poisoned them to the point where they are unable to be sane actors in government. You're either an absolutist, the most anti-Obama person ever, or you get primary-ed or otherwise booted from your seat. This is not healthy for democracy as they have ceased to be reasonable actors. I can deal with people disagreeing with me and even those folks running the country provided they are using reason in doing so and are not threatening the democracy with their actions.
The majority in the house has ceased being rational.
But its been those running the states that are threatening democracy... But I'll save that for another post.
For some, it might be confusing why the government even has such a limit. To others, they'll be thinking something along the lines of 'if they knew this was coming they should of not spent so much!' I'm afraid both perspectives are formed from incomplete knowledge about the situation.
For a number of years now, the federal government has had these debt limits. And in every previous year when the debt limit was due to be hit, the congress passed a new law to raise that limit. Both parties have participated in this lift. And yes, during the Bush years when Republicans controlled congress they voted en mass to lift the debt limit. When power in congress has been divided previously both parties got the votes to do it. But they never got the votes together to totally do away with it, partially because it looks better if you can go home to your district and tell all ten people who care more about the deficit then good schools and receiving their social security cheques that every thing is okay since there's a maximum limit. By setting a limit, even if you raise it almost yearly, you can claim to be more fiscally responsible then you have been.
So really the debt limit has been in the past a game of smoke and mirrors to try to limit the damage of the view that congress keeps pushing uncontrollable spending. A fig leaf at best. It never demotivated anyone from pushing for more spending on their issues or industries of interest. Or keep them from cutting taxes when the budget is balanced. The debt limit has been a lie built into law.
But recently things have changed. Potentially, congress today could continue the game by raising the limit. The Republicans in the House could even agree to split responsibility on the matter as despite the theme of Tea in their numbers, there are a number of them who would rather the economy not collapse and they get blamed for it. But they're not going that route.
So what would happen if the debt limit is not raised before the August deadline? There are three possibilities from what I can tell.
1. The government effectively goes into default on its debt in order to meet current payment obligations. This will be a huge blow to the economic markets as suddenly the firmest investment on the planet, US treasury bonds, are now potentially worthless as they might not be paid back. All the time there is a near constant flux of money into and out of the government in terms of securities. People, companies, and nations buy them while other bonds and such are being paid back (things like 30 year bonds where they get paid back after 30 plus interest for instance). Suddenly those that are due to be paid back aren't. What more, the interest payments going out might not be paid either if they're not part of the repaying bonds. So for those wishing to buy US debt based securities, they will demand higher interest payments on their 30 year bonds because there is now less of a chance that they'd get the money back since the government has demonstrated that it won't pay at this point. So the $14+ trillion debt suddenly has higher interest payments when we are paying them and this makes balancing the budget much more difficult, be there a debt limit or not.
What more, investors hate having their money vanish. More often then not it dissuades them from investing at all as when a sure thing goes rotten, they can't logically assume that other sure thing investments are going to be worth it either. So they stop investing. Which means fewer people are giving loans. Fewer people giving loans means business that depend on short term loans to meet payroll before the profits from recent sales can come in have to fire most of their people. And... things are just like in 2008 after Lehman Brothers fell apart. The economy tanks, there are massive layoffs, and everyone is generally not having a good time. This of course cycles back with the government having less revenue to try to get back to a balanced budget. Again, making it harder to fix things.
2. The government keeps paying as much of its debt based bills as possible to avoid default. But in order to do that, the money coming in that it uses for everything else is drastically reduced. So they have to prioritize. Do they pay the salaries of active duty military men and women who are putting their lives on the line this very moment? Okay if they manage, that and have any left over, do they pay grandma her social security cheque that she needs to pay rent and buy food because she's to old or infirm to work? Well that'd more then eat up the rest, so some grandma's will go hungry. And what about education? States need federal money to run their schools anywhere near the minimum for an education (aka, keep the lights on and pay a couple teachers) and if that goes away suddenly the states have a much larger debt bill, or they have to close schools. Think 30 students per class is crowded? Oh, and you're a fan of scientific advancement? Well its good the shuttle's winding down as NASA has to turn the lights off for a bit. Have a job in construction building roads and bridges? Sorry no money for your salary so you're out of the job for the time being. Oh, what about medicare? If grandpa is sick we can't keep him alive because the monies gone. And... well you're getting the picture.
Lots of people will be out of work. Lots of people who are only able to survive thanks to the safety net will scramble to make ends meet. Very likely some of them will die as a result. The states will be pushed into a panic as even the states that do manage to keep their budgets balanced in the current economic climate will be in trouble.
The frightening thing is that both 1 and 2 can happen at the same time. Of the almost $30 billion going out for social security cheques alone in August, there's less then half that in revenues expected. And things are further complicated that around $4 trillion of the US debt is money borrowed from the money set aside for Social Security. Talk about robbing Peter to pay Paul eh? Or would it be Ron Paul... hmm...
And...
3. The President or various parts of government ignore the debt limit, citing the 14th amendment. This is very risky and very likely to get the House of Representatives to try to impeach him. The important part of the 14th amendment is:
"Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."
It then goes on to talk about how debt held by rebellious folks isn't legit and will be ignored. Now this section isn't all that great in getting us out of this pickle. Some might claim the debt below a debt limit is authorized but that above it is not. Others will claim that laws authorizing spending are the primary authorization and thus this out is ok. So in other words its unclear what the interpretation should be. This is further complicated by those most likely to be the arbiter of this being a very divided and partisan supreme court. The most legit interpretation from my view is that this section means that the public debt made by the federal government will never be in default. And even that can have different interpretations. And if the President goes this move and is rebuked by the supremes he'll be painted as the bad guy.
....
And that's the real reason there's the current debate.
The conventional wisdom is that if the economy gets worse at this point, the President won't win reelection. For the economy to not automatically tank worse then it did in 2008 the debt limit needs to be dealt with in some fashion (either raise it or use the 3 option as an out). And the people the President needs to sign off on a debt limit increase have made it their #1 mission to make sure he's a one term president. I should note at this point that their #2 goal is to never let taxes go up (for various definitions of taxes) on anyone.
So the President hopes to make a deal. And not just a deal, but a big deal. Lots of spending cuts. Trillions over the next ten years. More then even the Republicans were demanding previously. Cuts so drastic that, comparing them to what polls have shown the American people would prefer as a solution to this mess, cuts so drastic that they are to the political right of the typical Republican voter.
And yet the Republicans refuse to budge. You have Eric Cantor, the House Majority Leader, walking out on meetings in a huff and bringing up things that have already be demonstrated as non-starters for the Democrats (who also have to sign off on this insanity by the way) over and over again. You have Speaker Boehner, boxed in by his own party into constantly harping a hard line against accepting a deal.
Some may at this point out that the offer the President has been making includes closing tax loop holes, especially those that allow companies that make billions in profits to pay little to no taxes. (For example in 2010 General Electric made $10.3 billion and paid no taxes. If you work full time on minimum wage you pay more then they did.) This would seem like a no brainer for helping balancing the budget and to make the tax system more fair (something the Republican love to claim they'll do before elections) but yet they're calling it a tax hike and that it will destroy the economy. This very simple, no brainer bit of contention, that even if you buy into the magic that low taxes automatically make rainbows appear and results in everyone in the universe including your dog making more money, wouldn't hurt the economy any where remotely as much as hitting the debt limit would, brings the Republicans to shout no.
Deficit reduction that at most has 15% of its package as removal of tax loop holes? Gasp, can't have that! So lets run the country into the ground by holding our breath eh? So what if granny croaks, the kids don't get educated, and Army Man Dan stops getting paid despite those bullets whizzing by his head? So what if some super conservative folks who used to work for Dubya think this is the best deal the Republicans would ever get ever and thus should take it?
So either the Republicans are:
A. Willing to drive us into the ditch because taxes are just that bad to them.
B. Willing to do anything to make the President look bad even if it means total economic collapse.
C. Completely unable to grasp the amount of shit we're in and thus are okay with the country going into default unless they get their way.
From what I can tell, its a little bit of all of these. Senator Lee thinks taxes are bad and that we shouldn't have Social Security, so he's probably a mix of A and C. There's Mitch McConnell who said "The single most important thing we want to achieve is for President Obama to be a one-term president." He's probably in class B as he's floated a new compromise that lifts the debt limit automatically until the end of 2012 unless congress actively votes and passes a law to prevent it. He probably realizes the trouble we're in so wants an out that still makes Obama look bad. There's signs that even Speaker Boehner realizes the trouble we're in but also realizes there's enough in the House who fit with C that if he doesn't go along with them that they'll give his job to Eric Cantor.
So what does this mean?
It means that unless something is done soon that we're all pretty much fucked. What are we going to do about? I encourage people to call up their representatives and ask them what they're doing to make sure the economy doesn't collapse. If you luck out and get to talk to a real person, and they bring up anything beyond raising the debt limit, be it with a deal or without, feel free to laugh at them and ask them when they're going to be serious. When are they going to stop playing stupid games and get back to doing their job. And if they do talk about the debt limit, feel free to tell them out right that if they vote against an increase and it fails, and the economy tanks, that they've not only lost your vote forever, but that you will not vote for anyone who shares their ideology because they'll have demonstrated that they don't care about the people of this country and so can't be trusted in positions of power. Hopefully if enough folks make this clear to them that they'll start rethinking their kamikaze trajectory for us.
----
So this is of course a little dark sounding by this point. I tend to be an optimist, but even an optimist knows that if we do nothing, bad stuff happens. For those who have made it this far through this now rather lengthy post, I ask you to at the very least pay attention. Because for some in this game, there is pure ideology. For others its games of positioning. But overall, the power of the 'Tea Party' faction within the Republican Party has poisoned them to the point where they are unable to be sane actors in government. You're either an absolutist, the most anti-Obama person ever, or you get primary-ed or otherwise booted from your seat. This is not healthy for democracy as they have ceased to be reasonable actors. I can deal with people disagreeing with me and even those folks running the country provided they are using reason in doing so and are not threatening the democracy with their actions.
The majority in the house has ceased being rational.
But its been those running the states that are threatening democracy... But I'll save that for another post.
Sigh. What would be nice to have is a government made up of people who have known lives OTHER than politics... i.e. they know a bit about the real world. And I DON'T mean John Boner - er, Beanie - er, Boehner ^_^
Question; If the government tanks, what really would happen to business and every day stuff. I don't think most companies would just shut down and die. Their production is driven by consumers not the govt, so would you still be able to get a burger and shake at McDonalds? Would you still be able to buy gasoline at the 7-11? I'm sure China would see to it that we can still buy crappy merchandise, even if we have to set up malls at shipping docks, and have nice 'walk-in' shipping containers
Another question; is a possible solution to this forming a super economy like that of the Euro? So we'd have the Amero, comprised of the economies and shared debt/credit of Canada, USA, and Mexico?
Businesses that either rely heavily on government contracts (from local construction contractors to large companies like Boeing) would be effected directly if the government stops making payments as their main source of income vanishes. This also effects the health care industry as a number of insurance and hospitals won't be getting as much if any medicare/medicaid payments for the care they provide seniors/the poor. What this means for you specifically in the short term is a little murky unless your insurance company is forced to close because of over due medicare payments. Unless the company you work for does lots of government contracting (which I don't recall being the case).
In the situation where the financial markets collapses is similar to what was feared back in 2008 where small and medium businesses that rely heavily on short term loans won't be able to. And so they either close or lay off most of their workers. Not only are small businesses the primary engines of economic growth when it comes to escaping recessions in this country, but its another situation where lots of workers will loose their jobs. It also means a number of these businesses will be closed. So the Wal-mart stays open but the locally owned grocery store might have to cut hours or shut down. Not all businesses will have these troubles either as some of them will be able to get loans still (either having a long established relationship with a large and unfazed bank or being in the black financially). But it will almost prevent any new small businesses from being formed (kind of necessary to escape the economic turmoil that).
In both cases tons of folks will be loosing their jobs. The near scare of 2008 lead to a couple million people loosing their jobs and in that instance the financial markets were only dealing with bad assets from known shady companies. So either situation on the economy end would be at least that bad if not much worse. Millions more out of work means millions more without income to spend on either essentials or luxuries (or housing or their cars...) and so the large companies start getting hit as well as suddenly their profit margins vanish. This will force them to start firing workers as well as they don't need as many people to sell or make things as there's not as many buyers. Despite potential demand remaining level, actual demand falls apart as no one has any money. And so more workers go unemployed, with huge more amounts of people unemployed other businesses have to let people go to keep making money, and so there's more unemployed and so on. This goes on long enough the McDonalds could be forced to fire people or if it gets bad enough, shut down lots of locations.
And it gets worse. With less people spending you also run into the problem with prices. One of the things that keeps prices stable and fairly low in this country is mass production and mass distribution. You pay a set base cost to keep the machines running (or your sweat shops sweating) and then you produce lots of cheep crap. If people are buying much less, suddenly that initial base cost is a larger and larger portion of the cost to make your stuff as you can't produce as much because you are literally running out of room (and not making money). So you cut production and now each item costs you more per unit to make. So you raise the prices. So even if Walmart stays open and keeps all its employees, prices go up. The same thing would probably happen with gas (a little more complicated due to the facts of foreign imports, speculation, and price fixing). So if you luck out and keep your job and luck out and all the business you go to stay open and functioning with things are much worse elsewhere, the prices you pay for things will very likely go up.
So you'd probably still be able to buy gas at the 7-11 but the cost will likely cut a larger part out of your paycheck.
As for China, I think they're more immediately concerned about our ability to pay back the 10% of the debt they own.
Question 2: In the short term probably not. The North American Free Trade Agreement (NAFTA) already allows for low cost movement of goods between the US, Canada, and Mexico so on the private sector side we're pretty unified there. On the debt/credit side of things, even that doesn't quite fly in most of Europe, hence the outrage with the bailing out of nations that mismanaged their economies. But even if you were able to establish a composite multi-national debt/credit system in the USA, Canada, and Mexico (very unlikely with the number of nationalists we have in government) it would also mean that all three countries have shared weight in managing and creating that debt. You might have problems where Mexico might think it a good idea to spend more and rely on the US and a Canada to pay for it. Unless this super organization is able to even out the tax bill and spending bill between the three (effectively uniting the countries entirely) one of the parties would be able to abuse the other two, or worse, everyone abuses the system and assumes everyone else will pay for it. And if there's imposed a debt limit on this unified debt, then we're back to square one except with more chiefs trying to call the shots.
The best solution is to get our affairs in order in the US. Remove the debt limit, spend what we need to in the next couple years to get out of the real recession (we're technically not in one but still lots of people without jobs means we're effectively in one), then let the Bush tax cuts expire when they're due to, get out of Afghanistan, finish leaving Iraq, close the various tax loop holes that allow billion dollar companies to pay no taxes, and then wait. If we do nothing else beyond this the budget will be balanced in less then 10 years. If we do additional things like increase the top marginal tax rate (aka, make them more progressive so that those who don't need the extra million to buy food or housing pay more) it happens sooner. If we cut the military budget or even just freeze it, the budget balances sooner. Things are bad, but the federal deficit can be eliminated by doing rather common sense things. Having a politically motivated hard limit isn't going to help us, it just makes it much harder.
When our affairs are in order, setting up a multi-national economic community might be more doable and desirable. But right now I'm pretty sure both Canada and Mexico would basically say no thanks to being attached to the economic schizophrenic USA.
Nobility isn't quite the word I'm thinking of, patrimonialism works a lot better. The difference here being that patrimonialism in this form has become an impersonal thing, where being admitted to the 'family/corporation' is merited on skill/a college degree. This is the same step states have taken, forming modern bueacracies based on merit (however loosly it sometimes appears), and now patrimonialism follows in step.
I think in all, there's going to be a new step in forms of government at some point, or the need for it will arise at the least, to deal again with entrenched patrimonial actors. Nothings changed at all in the US yet, and maybe the strings of corporations could be cut with some heavier corruption law, but the problem still presents itself as being there, and I'm wondering how much that might affect everything.
Or maybe i'm using some acquired political science to create scenarios where there aren't, I can't tell quite yet.