Beyond Our Means
The fact that Americans have been living beyond their means should be no news to anyone who reads the newspapers. This book summarizes the major problems of the capitalist world and shows how any one of them could bring down the house of cards. The federal debt has nearly tripled in the last decade so that the United States has become a debtor nation. The Third World nations are defaulting on their enormous debts to United States banks. Many huge corporations have been hollowed out by borrowing and cannot afford to modernize their facilities to keep up with foreign competition. Small farmers are on the brink of disaster. Cities, streets, highways, bridges, and railroads are badly deteriorated through deferred maintenance. Consumer debt is a shaky tower that keeps growing. Nearly everyone’s job is dependent on someone else spending money he does not have. Yet everyone wants still more. American workers are paid far more than their counterparts in the most advanced foreign nations. Even if they were to accept enormous wage cuts to make American business more competitive, this would have drastic repercussions on their spending and their ability to repay borrowed money.
Alfred L. Malabre, Jr., economics editor and columnist for THE WALL STREET JOURNAL, predicts that the day of reckoning is nearly at hand. He thinks that disaster will strike before the end of Ronald Reagan’s presidency and that the American people will be looking for another Franklin D. Roosevelt to save them with a program of massive government controls. How can investors protect themselves? Malabre offers little hope. He does not think that even Treasury securities are safe anymore, because the government may repay them “in a manner tantamount to default--or confiscation.” He believes that the Reagan experiment with deregulation has been a failure and that there is no escape from rigorous government control of the entire economy.
BEYOND OUR MEANS is not a cheerful book, but it contains a sobering message that a great many people need to hear.