This is the underlying theme of Rick Santelli's rant on CNBC and the various Tea Party protests that are springing up all over the country. Allow me to illustrate from a post over at the marvellous Baseline Scenario blog. In the post, Simon Johnson is making the case for a plan to bail out the European banks, which are in worse shape* than the American ones.
Create a European Stability Fund with at least €2tn of credit lines guaranteed by all Eurozone member nations and potentially other European countries with large financial systems such as Switzerland, Sweden and the UK. This fund should provide alternative financing to member countries in case market rates on their government debt become too high. This will prevent a self-fulfilling cycle of rising interest rates.It's another monster bailout of the banks which, in the end, will have to be paid back. It assumes, like Obama's plans all assume and like the California legislature has assumed for years, that productive people will chain themselves to their jobs and keep working as hard as they can for as long as they can. Without that, there won't be any goodies for the best and brightest in Washington DC, Sacramento and Brussels to hand out.
It doesn't work that way, as California has found out (though I'm not sure the Democrats in California understand this yet). Businesses are fleeing the state in favor of other, more profitable places to work. Going back to the European example, think about the situation they're in. The population is rapidly aging, the cost of their social programs is enormous, their banks have just killed themselves in a frenzy of lending to developing countries and on and on. If you were, say, an electrical engineer in France or Germany who spoke passable English (or Chinese), why would you stick around to be the one who had to pay the $2T bill?
What happens when they start to leave?
In all the discussions of unemployment, bailouts and stimuloids, I haven't heard anyone worry about keeping the productive people around. They're all taken for granted as these monstrous bills pile up. Here in the US, other states have been successfully poaching California businesses for a long time. How soon before that happens on a global scale?
It might be nice to give a thought or two to the productive, responsible people out there before it's too late.
* - I blame President Bush for this. I don't know how he did it, but he ruined everything for everyone everywhere. The MSM told me.