Sometimes, the outcome is obvious, but people wish it were otherwise.
Whether you look at the fiscal situation in Europe, Japan and the United States, or countless examples in world history, you’ll find lots of examples where the proverbial writing is on the wall, but most ignore it.
It’s not that they don’t grasp it. They do. It’s that they don’t want to. Like a three-year-old having a good temper tantrum, they drop to the floor, close their eyes, and kick and scream that reality is what it is.
And yet, reality doesn’t change. It doesn’t care how loud you scream, how much you kick, or how tightly you squeeze your eyes. At least a three-year-old can make an honest argument that they don’t really understand.
I was really struck by this recently in watching The Teaching Company’s course, “From Yao to Mao: 5000 Years of Chinese History” taught by professor Kenneth Hammond. In it, I learned that China’s confrontation with the western world in the 19th century was as clear as could be.
First there were the Opium Wars with Britain, then the defeat in the Sino-French War, and then the crushing blow in the first Sino-Japanese War. In every confrontation of east meets west (for Japan had adopted western ways), east lost–Big Time.
How did China face each of these defeats? Did they realize they were behind the times and needed to change? Nope. Each time, political infighting within China snuffed out any good kind of reform and led to the next defeat.
The writing was clearly on the wall, and yet the political leaders in China just kept clicking their heels like Dorthy in the Wizard of Oz. It didn’t work.
Can Greece continue paying public employees huge salaries when not enough taxes are collected? No. And yet they riot.
Can German banks afford the losses on the Greek debt they hold? No. And yet they dither.
Can Japan’s economy grow when most of its companies show contempt for shareholder interests? No, sir. Can an aging population that doesn’t allow much immigration support that aging population by borrowing? Not really. But they’d really prefer not to change.
Can Wisconsin, Illinois, New Jersey, New York, San Francisco or California afford its pension promises? No, and yet they vacillate.
Can the United States pay its current obligations to Social Security and Medicare. Not at all. But reform hasn’t occurred.
Like China confronting the west, the outcome is clear. And yet, they all vacillate.
Wouldn’t it be easier to face facts, do some math, and make necessary changes? Without the slightest doubt. But, on the other hand, most people don’t want to. I wonder if reality will change for them this time…?
Nothing in this blog should be considered investment, financial, tax, or legal advice. The opinions, estimates and projections contained herein are subject to change without notice. Information throughout this blog has been obtained from sources believed to be accurate and reliable, but such accuracy cannot be guaranteed.