This article was originally published in Teach magazine.

For most of the 18 years I’ve written this column, I’ve focused on how education will change. This time, I’m going to focus on why it must change, and it relates to the purposes of education.

There are two major schools of thought about the purpose of education, and for some strange reason, most people believe they are mutually exclusive. One school believes that education should primarily be devoted to the enlightenment of the individual, to equip them with the mental tools to enable them to appreciate the fine and important things of life, and to enable them to contribute to their society and the world. The other school believes that education should provide the individual with the skills they need to  get a good job and a vocation, so that they can support themselves, contribute to the economy, and enjoy the material things of life. Both are right, and they are actually mutually supportive, not mutually exclusive – but that’s a topic for another day.

For both purposes, education must change. Let’s look first at the enlightenment of the individual. The world around us is being driven largely by commercial interests. This has become such a normal part of our lives that we hardly even notice the daily bombardment of advertising, and the pervasive, subtle pressures to own something, or behave in a particular way. And there is nothing especially wrong with society because these pressures exist – this pressure has largely been responsible for the richness and luxury of our daily lives. Yet, there is more to life than just commercial offerings, and most commercial offerings are shallow, and lack deeper purpose. Moreover, commerce and society generally tends to emphasize novelty, and while, again, there’s nothing wrong with new things per se, there is much more to life than just the novel.

On their own, few people would delve deeper than today’s satisfactions – which is where education enters the picture. Education provides context, history, art, depth of understanding, and perspective that most people would not otherwise be exposed to. This is part of the traditional role of education as it fulfills part of the purpose of culture, which is the transmission of our society’s values.

But the world is changing, and at ever accelerating rates. And the shiny baubles that novelty and commerce provide are increasingly being designed to be “sticky” or addictive. If education is to capture the attention of children, and persuade them of the value of what we know, what we have, where we’ve come from, and who we are, then it must compete with the increasingly effective seductions of commercial offerings. Assuming that just because we can hold students captive for six hours a day, 180 days a year, for 12 years is enough to allow us to brainwash them into appreciating the riches or our society is, in my view, a short-sighted and foolish view. Instead, I believe that education must compete for attention, not just for enforced time, and the only way we can do that is to seduce students into a state of fascination with what the wider world has to offer. As I say when I’m invited to speak to groups of students, we adults have perpetrated a cruel hoax on you: we’ve convinced you that learning is an intolerably boring process that you have no choice but to endure, when the reality is that learning is the most fun you can have with your clothes on.

We need to change that. Today’s students are, in my view, smarter, hipper, more skeptical, and less likely to believe propaganda than any other generation in history. They know that no matter what the school system tells them, the odds of them needing, wanting, or using most of the crap we teach them is vanishingly small once they leave their formal education. And yet, there are things that they will need to know that we’re not teaching them, and there are things they would love to know if we could present them in a way that doesn’t bore than pants off them. And as far as I can see, the only way we can seduce students into loving education is if we approach that education by appealing to those things that the individual students themselves are passionate about. We have to stop teaching the curriculum, and start teaching the individual – each individual, every single individual, and teach them as individuals, with unique interests and abilities. We have to stop teaching Mr. Smith’s grade 11 English class, Ms. Phansalkar’s grade 9 geometry class, or most of the groupings that assume that 25 kids are all the same simply because that makes education simple for us (and excruciatingly boring for them). And I don’t see any way that our current education system can achieve the level of interest or seduction necessary to compete with the enthralling, but shallow, offerings of commerce and society.

Now let me turn to the vocational aspects of education. And if anything, the need for change is even more compelling here.

We are all aware that countries like China and India, plus fast gaining countries like Brazil, Mexico, Indonesia, and Malaysia, are providing enormous competition for low-level and low-skilled jobs. What is not as well known is that these same countries are aiming for the best jobs that require the highest levels of education. They will not be satisfied with low-skilled jobs that don’t pay well and offer little opportunity. This means that our students will be competing with the best in the world in almost any field. Worse, they are starting at a big disadvantage: our school days are shorter, our school years are shorter, and our society no longer has the devotion to higher education that parents in developing countries have.

Some commentators and politicians contend that the way to deal with this issue is to lengthen school years and school days, pile on the homework, and really get “back to basics.” I think this is precisely the wrong answer, because it means making our education system even more boring than it already is. Moreover, we are headed into a world where creativity and innovative thinking will be more valuable than rote learning of any depth. Indeed, what’s the point of memorizing facts if you can command them with a wave of your search engine? Understanding and context, on the other hand, are critically important. Accordingly, if our kids are to compete with smart kids from around the world, our children will be better equipped if we focus on helping them identify their peculiar talents and abilities, and then develop them.

But there’s another threat that is, perhaps, even more worrying than rising competition from smart kids abroad, and that is automation. Most people are familiar with Moore’s Law, coined (and repeatedly reframed) by Gordon Moore, one of the founders of Intel. In economic terms, Moore’s Law states that computers will double in speed, and halve in price, every 18 months. Yet, it turns out that Moore’s Law is wrong because it’s too conservative. Moore’s Law posits an exponential growth rate – which means a constant rate of change (i.e., doubling every 18 months). But computers are evolving faster than that, and not only is the rate of change accelerating, but the rate of acceleration is increasing. As a result, a rough estimate indicates that computers will become about 1,000 times faster and more cost-effective over the next 10 years. And, as we develop new, more effective tools and techniques to harness this power, it means that automation will become dramatically more powerful in the next decade.

Automation has been increasing in power for millennia, since the invention of fire and the wheel. It really started to accelerate with the advent of the Industrial Revolution in the 18th century. Now it is moving at a rate that may be beyond our comprehension.

In the past, automation has led to a steadily rising standard of living, as well as new, better paying jobs that offer more opportunity. And so it still does. However, the major difference now is that automation is changing things so fast that the skills we develop at the beginning of our careers may not be enough to allow us to make a living for more than a few years – and eventually a few months – before they become obsolete. We are being thrown out of work at ever-faster rates, and if we are to hope to continue to work, we will need to constantly upgrade our abilities.

To some extent, the effects of both of these developments – foreign competition and domestic automation – are already evident. Whereas when I and my peers left our formal educations, we had a choice of jobs available to us, today students finish a university education, and spend years looking for anything more than menial labour. Worse, the next 10 years are going to make this seem like a happy outcome. Within the next 10 years, we will face an employment crisis that will shake the foundations of our society, our political system, and our economy. And the only answer is education, and education for adults as well as young people.

But it can’t be the same old education. It has to be education that emphasizes our human talents and abilities, our creativity and our ability to improvise and innovate. Skills training in most fields, with a few exceptions, will become obsolete at faster and faster rates. We will, instead, need to fall back on those things that are uniquely human, like art, teamwork, leadership, empathy, understanding, creativity, ingenuity, and all of the deeper aspects of human life and society. Computers, robots, and cheaper competition from abroad will take everything else.

And for those who say that the way to combat these things is by protecting domestic jobs, and halting the use of automation, let me say that like King Canute, you might as well try to stop the tide from coming in. Such efforts are not only doomed to fail, they will also make it even harder for us to succeed by diverting our attention and efforts away from the real task for tomorrow’s education: helping us to blossom into self-actualization, to become the best people we can be.

Do we have the wit to see the problems that are racing towards us? And do we have the will do to something about them? Those are the questions that will determine why we need to change education.

© Copyright, IF Research, September 2010.

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The next 10 years will dramatically change your life and almost everything in it. And while there are lots of things likely to change, I’d like to focus on 10 that will be of particular importance to you personally, to our society, and to the meeting planners generally.

Someone always benefits from change – and those who will benefit most will be those who prepare most successfully for what’s to come. Since I’m necessarily going to have to be brief, I would encourage you to contact me if you’d like to discuss any or all of these 10 points.

1. Everyday robots

The first thing you need to know is that we are about to experience the emergence of what might be called “everyday robots” and computer intelligences. We’ve been raised on the idea of robots, and they’ve always been just beyond the horizon, like flying cars, vacations on the moon, and the three-day workweek. We grew up with pulp fiction fantasies about what robots would be like, such as Rosie the Robot from The Jetsons, the Terminator from the governor’s mansion in California, or the classic Isaac Asimov I, Robot series of stories. But over the next 10 years, we are going to experience an increase in computing power of roughly 1000 times, and that means that that the hesitant, clumsy robots that are now appearing in laboratories will get dramatically better over the next decade, improving about as quickly as an 18 month-old toddler improves at walking. Robots will first be used with applications in the military, police, health care, and be created by hobbyists for fun. Much of the non-military development is in Japan, because they have, by many measures, the oldest population in the world, and need arms and legs to do things.

Aside from the sex trade, which seems to soak up new technologies and harness them for sexploitation, the development of robots for civilian use will start primarily in the workplace, especially in fields like health care. (I’ll deal with sex robots at a later date, because they are a real prospect.) It will take time for robots to come to households, because they will cost about as much as a car. But the business potential of another household possession in a field that may become as important as the automotive industry is going to drive development. And along with everyday robots, we will also get computer intelligences that rival human intelligence in certain, tightly defined areas. This leads to my second point.

2. Dramatic increases in productivity

Related to the rise of robots will be automation and dramatic increases in productivity, which has several implications. The first is that increased productivity will lead to cheaper goods and services, which will produce a substantial increase in your standard of living and a much higher level of wealth – if you have a job or occupation. But greater productivity also implies that companies won’t need to employ as many people, which will mean that many jobs will disappear, replaced by automation.

Traditionally, automation has led to new jobs with better wages and prospects appearing, and that will happen – but these new jobs will also require more education, more intellect, and more creativity. This means that people who don’t have appropriate skill sets will become chronically unemployed or underemployed. This could make it even harder for young people, just finishing their formal educations, to get their feet on the bottom rungs of the employment ladder.

In the meeting industry, it also means smart tools for planning your conferences and running your business. Think of having an automated assistant that can do a lot of the routine work in organizing a conference, including the routine interactions with hotels, travel agencies, printers, communicating with conferees, and so on, leaving you to do the tougher creative work, and to focus on the human, interpersonal aspects of your job

3. The ascent of women

Next is the ascent of women and different ways of doing business. The first part of this is the decline of men, as men seem to be harmed more by environmental degradation than women. Based on research that is only just starting to emerge, two to four times more boys than girls are afflicted by attention-deficit disorders and hyperactivity disorders in America. Sperm counts are dropping in many parts of the world, and testosterone levels are lower. Testicular cancer is higher in many places. And the birth rate of boys in many countries, including America and Japan, is far lower than statistical variance should allow. We don’t really know why this is happening, but researchers are theorizing that males are more vulnerable to new chemicals, such as synthetic hormones, that are making their way into the biosphere.

Meanwhile, girls have better roles models now than ever before in our society, up to, but not quite including president of the United States. More businesses are being started by women than men, and the businesses started by women are more likely to survive, so that over time, more and more businesses will be headed by women. But the clincher is that almost 60% of college and university students are women, and the ratio is even higher in most graduate fields. As a result, a steadily rising share of tomorrow’s leaders will be women, which will lead to a cultural shift. Without being too glib, I think it’s safe to say that women have a different way of thinking and acting in the world than men, and this power shift to women is going to change the way our society – and this industry – behaves.

4. The health care revolution

Point four is the health care revolution, starting with customized drugs and treatments. Herceptin is a drug used to treat breast cancer – but it is only used with patients that have two particular genetic markers. If you don’t have these two specific genetic characteristics, there’s no point in giving you Herceptin, because it won’t help you. And it’s the precursor of customized drugs. They will be dramatically more effective – and, at least initially, dramatically more expensive as well because the research costs will have to be spread over a much smaller population.

Meanwhile, decoding your personal DNA is rapidly becoming affordable. You can already get genetic tests that show whether you are susceptible to certain kinds of diseases, such as Alzheimers, ALS ( Lou Gherig’s disease), or Huntington’s. But whereas it took decades, and billions of dollars to decode the first human genome, within 10 years, having your personal genome fully decoded will cost about $1000 or less, and take a few hours, bringing it into the realm of the possible. And this cascade of data about you will, gradually, allow us not only to ascertain what diseases you need to guard against, but also which lifestyle choices, including foods, will work best for you.

And a third leg of the future of health care is the wearable computer companion to monitor your health and guard against threats. There are already smartphone applications to monitor heart rate, blood sugar, calories burned, and so on. These are going to become increasingly sophisticated, and will, over time, become dedicated to monitoring your health, heartbeat-by-heartbeat, and intervening as necessary to reduce the risks of health crises, such as heart attacks or strokes, as well as to advise you on optimal health management.

These three things, combined with electronic health records, will, over time, produce the greatest tool for health treatment and research humanity has ever had: a global system to identify health risks, and find cures or treatments for them in something approaching real time. And I fully expect that they will eventually lead to life expectancies of 120 years and more, although this development will take much more than just 10 years. Which leads me to my next point.

5. Transhumanism

Like my previous point, this is going to start over the next 10 years, but will carry on into the indefinite future as we learn more, and figure out what to do with what we know. Transhumanism is the school of thought that science and technology are going to allow us to first cope with disabilities, and then to augment and exceed our natural abilities. Some of this, such as stem cell therapies, will mean using biological mechanisms to repair our own bodies. Beyond that, transhumanism also projects that we will use artificial means to augment our abilities. It has already started with devices that help us survive. Some, like heart pacemakers, have been around for decades. Others, like brain pacemakers to prevent seizures, are relatively new. Next are prosthetics. Of course, the oldest prosthetics, like peg legs and hook hands, have been around since Disney invented pirates, but I’m talking about arms and legs controlled by thoughts and nerves. Prosthetic arms & legs will act and seem natural.

As we move towards computers that can read your intentions and interpret your thoughts, we get into interesting man-machine combinations. Eventually we will be able to choose, by an act of will, to control distant machines and mechanisms by thought. We’ll be able to use the power of computers to augment the speed with which we think, and the depth of things we can “remember.” Imagine, for instance, being able to Google something on the Internet just by thinking a query, and getting the answer either whispered into your ear, or displayed on contact lenses on your eyes that act as a computer monitor. There are already prototypes of precursors of these things, from thought-controlled wheelchairs for paraplegics, to memory glasses that can remind the forgetful who the person in front of them is. As I said, this is a brand new field, so I doubt if you’ll need to worry about the Borg just yet.

6. Critical economic uncertainties

The headlines this spring have centered on whether we’re likely to have a double-dip recession, and the financial and fiscal crises of the PIIGS of Europe (Portugal, Ireland, Italy, Greece, and Spain). These uncertainties are caused by too much debt borrowed by consumers and governments alike.

Having too much debt is like having a rowboat that’s heavily loaded – it doesn’t take much to swamp it completely, and it doesn’t have much resilience. Moreover, it takes a long time to bail out of debt, so these problems are not going to go away overnight. Accordingly, in your plans and planning, I would strongly recommend that you be prepared for repeated, periodic shocks and crises that lead to financial upheaval, and economic slowdowns or outright recessions over the next decade. Believe me, I don’t like this prospect, but I think it’s better to be prepared for shocks than to be caught by surprise by them. You need to have plans in place for dealing with such upheavals and slowdowns, or else you’ll be flattened by them.

7. Growing political and social turmoil

In addition to the potential for new crises and turmoil in the global economy and global markets, there is also the potential for increased financial and political turmoil in the developed countries. Not only is the U.S. federal government, among other nations, running up unprecedented amounts of debt, increasing its financial vulnerability, but many of America’s individual states are in a squeeze. This is happening not just because of the Great Recession, but also because they’ve been too generous with pensions and benefits to their retirees over the years. For example, by 2018, the state of Illinois will have to pay $14 billion a year for benefits for retired state employees, which is more than a third of the state’s total revenues, and could bankrupt it, much as happened to General Motors.

And in a larger sense, there are going to be growing conflicts between public sector retirees, who mostly have decent pensions, and private sector retirees, who mostly don’t yet will be paying taxes to support their civil servant neighbors. As well, there will be conflict between aging boomers, who will vote for generous Social Security payments and unlimited health care, and their children who will be paying taxes for benefits they don’t believe they will ever receive. Accordingly, the political situation in most developed countries will likely get worse – hard as that is to believe!

8. Climate change accelerates

Within 10 years, the debate on climate change will be effectively over except for those who are willfully choosing to ignore evidence. It’s already clear from changes happening in the polar regions that climate change is happening, and climatologists are astonished by how fast they are occurring. Change may come not only more rapidly than we expect, but faster than we can adapt. I suspect we’re in for a wild ride, and that will almost certainly force changes on us that we will find difficult. We will also find some changes that are helpful, such as longer growing seasons in parts of North America – particularly the northern tier of Midwestern American states and the Prairies of Canada – IF we get the right rainfall patterns, which may also change. But it’s also clear that many of the changes will be harmful to us and the way we live.

I also suspect it is going to force us to make significant changes to our lifestyles, imposing Green Economy ideals on even disbelievers. This doesn’t have to be a bad thing, because another name for “pollution” is “waste,” and by decreasing waste, we can actually increase profits. Specifically for the meeting industry, I would suggest that we need to develop a “green index” to indicate the environmental cost per participant of conferences as a means of first measuring, then pushing for improved efficiencies.

9. The energy revolution

We’ve already seen with natural gas that new technologies can revolutionize even well-established industries – but that’s not going to be enough. If you look at the long-term cost of oil over the past 150 years, you can see that, with the added demand from rapidly developing countries like China and India, coupled with the sheer volume of energy we need to add each year just to maintain our lifestyles, we will push up the price of oil at a remarkable rate – at least for the next several years, until we come up with good energy substittues.

Now, let me reassure you – we are not running out of oil, because almost ¾ of the Earth’s surface is covered in water. We haven’t discovered or exploited the vast majority of the oil under that water. But we are running out of cheap oil. The BP oil spill in the Gulf of Mexico is an example of the problems ahead. More expensive petroleum will provoke us to develop new ways of using energy more efficiently – so called “negawatts” – as well as developing new sources of energy. It’s astonishing what demand for a critical resource can do, but it’s going to take time to displace oil from the center of our energy equation.

For this industry, though, it’s also going to mean that travel is going to become more expensive. We will see more moves towards virtual meetings, more local meetings, and regional satellite meetings that combine through telecommunications into national conventions. Start thinking about, and looking for ways of stretching travel dollars, because it’s going to be a fact of life.

10. The purpose of life

When people ask the question, “What is the purpose of life?”, they are starting off in the wrong direction with an improperly formed question. This is not a question at all, but a statement: Life is purpose. Without purpose, there is no life.

But this raises a different question: What’s my purpose? And this is a question that can’t be answered by looking out there, but in here, inside yourself. I got this from a wise man, Viktor Frankl, in a book called Man’s Search for Meaning. And here’s the question he posed that you should ask yourself: “It’s not a matter of what you can expect of life, but what can life expect of you?” It may be that you think your purpose is to bring home a paycheck, and that’s certainly important. But I would urge you to stop and think about what life can expect of you, what you feel is your calling, and then be guided by this sense of purpose.

The decade ahead is going to be radically, remarkably, dangerously different than any period you’ve lived through or have experience with. And it’s going to offer opportunities that you cannot now anticipate. If you don’t have a clear sense of where you are going and why, and are not prepared for the challenges we face and the opportunities ahead, you will be devastated by what’s to come.

Someone always benefits from change. Let it be you.

Good luck, and God speed. Thank you.

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Mathematics is a thing apart, like nothing else in our world. It’s a human invention (I think), but not like other inventions. It exists in our minds and nowhere else – although its effects are felt everywhere since science, engineering, and technology have adopted it as their language. Yet, despite the fact that most people lump math and science together, they are very different.

Science is the observation of natural phenomena combined with the attempt to understand, explain, and predict what will happen next. It is rooted in the real world (and I’m going to avoid the whole metaphysical question about what is “really real.”) But although science uses mathematics, mathematics doesn’t use science. Indeed, it has been argued, and I’ve argued myself, that math is more akin to art or philosophy than it is to science, because at its center is an act of creation, often from nothing except the mind itself. Indeed, mathematics could not exist unless it were created by the human mind. I know from my own experience, and the descriptions of others, that arriving at a mathematical insight brings a sense of harmony, beauty, and wonder, which mathematicians call “elegance,” that is like the sense of creative rightness that artists experience. Indeed, one description of this creative sense, based on the observations of the 19th Century French mathematician, Henri Poincaré runs as follows:

Mathematical solutions are selected … on the basis of “mathematical beauty,” of the harmony of numbers and forms, of geometric elegance. “This is a true esthetic feeling which all mathematicians know,” Poincaré said, “but of which the profane are so ignorant as often to be tempted to smile.” But it is this harmony, this beauty, that is at the center of [mathematics].[1]

Why mathematics is different

And again, mathematics is unlike art or philosophy, because the creations of mathematics can be proven (within the assumptions that bound them) to be correct or incorrect. This is what it means to prove a theorem: you demonstrate its correctness. And there is no doubt involved; once proven, no one can later disprove such a theorem without altering the assumptions of the underlying mathematical system. No piece of art can be so demonstrated to be correct, and those works of philosophy that can be proven are, themselves, effectively sub-sets of mathematics based on logic.

I was struck by this conclusion in part because I recently read an article written in 1960 by physicist Eugene Wigner, called “The Unreasonable Effectiveness of Mathematics in the Natural Sciences.”[2] This classic essay describes the uncanny way in which natural phenomena can be described by mathematics, to the point where many natural phenomena, before they were understood, were correctly predicted by their mathematical descriptions. Wigner asks a central question: Why should this be? Why is it that an invention of the human mind can be capable of being so good at describing nature, particularly in cases when the mathematics involved was invented long before it was ever applied to science, as has happened in many instances in the history of science.

Wigner’s comments have been discussed and debated by many people since then. One commentator, physicist Max Tegner, suggested in 2007 that the reason that mathematics is so good at describing reality is that the physical world is completely mathematical. Others have commented that it is our own myopia that causes us to be able to explain the world in mathematical terms: we are only capable of observing those aspects of reality that are capable of being described by mathematics. Both statements are unprovable, and are regarded as a philosophical in nature, rather than mathematical, yet Tegner’s comment raises an interesting point that stimulated two additional thoughts.

Perhaps mathematics is reality

One is the slightly whimsical comment by nuclear physicists that subatomic particles are really just mathematical constructs. I suspect this is just a means of saying that subatomic particles are physicists’ way of balancing the books of quantum mechanics. But as someone trained as a mathematician, the thought struck me that perhaps this observation is literally true, that reality is nothing more than mathematics, and that explains why mathematics can describe reality, for they are the same thing.

The capstone of my conjecture comes from the cult-classic book that has been repeatedly ridiculed because it was a cult-classic, Zen and the Art of Motorcycle Maintenance. In this book, the author, Robert Pirsig, pursues the concept of Quality. To understand why this is important, you will have to read the book, which I recommend in any case. Pirsig is attempting to prove that the philosophic proposition that Quality is at the center of our perception of the universe, that, indeed, it creates the universe we perceive. In this, he is running counter to the large body of Western philosophic thought. Indeed, he had been challenged to prove that Quality existed, in part because he felt that it was vital to human existence, and that it was beyond our ability to define.

To prove the existence of Quality, he used a logical technique from the philosophical school of realism. His argument ran like this:

A thing exists if the world can’t function normally without it. If we can show that the world without Quality functions abnormally, then we have shown that it exists whether or not we can define it.

He then considered what our world would be like if we subtracted Quality from it. Art would cease to exist, because if you can’t distinguish good art from bad, then there is no point in art: a bare wall is as valuable as a painting (and let’s please agree to ignore so-called artists who produce bare walls and call it art). Likewise, poetry and literature would disappear, as would sports and acting and all kinds of performance. In the marketplace, only one kind of clothing would exist, and only plain foods. Indeed, virtually everything in our world would change, and dramatically for the worse, with one exception. In this way, he argued, it is demonstrated that Quality exists.[3] Now let me return to my own thoughts by drawing on his observation.

The one exception in Pirsig’s world-without-Quality was that mathematics, science, logic, and philosophy would be unchanged. He didn’t venture to guess why this should be so. I don’t know, either, but I would like to speculate.

Or perhaps mathematics contains reality

Perhaps mathematics is a thing apart from all the other things we create because it truly is the underlying reality of existence, the frame that contains existence. Perhaps it is mathematics that creates us, rather than the other way around, and it is our discovery of this underlying reality that leads to the mathematician’s sense of elegance and rightness.

I once speculated, in a presentation to a group of computer scientists, that once we learned enough about reality, we would find that reality was a computer (or rather, an information processor), that the elements of reality, from subatomic particles all the way up to ourselves and our minds, are packets of information, and that existence is the processing of these packets.

Or, to put it more poetically, perhaps we are merely mathematics in the mind of God.

It’s a thought.

[2] See, for instance, the following link for a copy of the original paper: http://www.physik.uni-wuerzburg.de/fileadmin/tp3/QM/wigner.pdf

[3] Pirsig, pp.193-4.

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‘America will never be destroyed from the outside. If we falter and lose our freedoms, it will be because we destroyed ourselves.’
– Abraham Lincoln

Unless America and Americans force a drastic change in the country’s direction, the American dream is dead, and America’s place as the leader of the world is over. I find this intensely distressing and worrisome, and have hopes that the situation may yet be retrieved, but the time available is short. Americans have repeatedly overcome fearsome odds throughout their history to survive and thrive, but if there were ever a time when they needed true grit, self-sacrifice, and a willingness to cooperate with other Americans of different backgrounds, politics, and beliefs, it is now.

To put it bluntly, America is hurtling towards bankruptcy. This is not due only to the Obama administration, or the administration of George W. Bush, but to American presidents dating all the way back to FDR, and the Congresses that accompanied them. There are two major reasons for this coming disaster, one short-term, and the other longer-term.

A massive deficit at the worst possible time in history

The short-term cause is the massive federal deficit. George W. Bush inherited the biggest budget surplus in history and turned it into the biggest deficit in history, and at exactly the worst possible time because of the aging of the oversized population of baby boomers. The boomers selfishly expect their governments to give them more than they have contributed, and get downright nasty when told they can’t have what they want. Bush also inherited a trend towards greater deregulation from Bill Clinton, and accelerated that trend, believing, wrongly, that the financial industry, among others, could be trusted to regulate itself. This is like expecting a greedy kid to regulate himself in a candy store. The events of 2007 & 2008 proved this policy to be both stupid and irresponsible. The resulting financial catastrophe could have led to a complete collapse of the global financial system, and only the massive intervention by virtually all central banks, coupled with unprecedented fiscal stimulus, prevented a complete collapse that would have resulted in a new, world-wide, Great Depression.

The Obama administration inherited this unholy mess, and is not responsible for it, but has not dealt with it well either, leaving too much of a leadership role to a Democratic Congress that too often substituted ideology and partisan politics for sound economics. Obama hasn’t been helped by the Republicans in Congress either, who seem to think that the president is their enemy, and anything they can do to harm him is good, regardless of the consequences for the country.

Yet, my point here is not just the deficits themselves; they are unfortunate but necessary in the short term to stave off a much worse economic crisis. My concern is that the stimulus spending has been directed more towards lobbyist-inspired pork than creating a solid underpinning for recovery. This is a self-indulgent luxury America can no longer afford. It is, alas, far too early to restrain spending, no matter what Tea Party enthusiasts may say. There will come a time for this, but it is not yet.

The scale of borrowing threatens both American and global stability

However they occurred, these deficits will require massive borrowing by the federal government: the Obama administration estimates the U.S. government will need to borrow $10 trillion over the next 10 years. Most commentators say that assumes higher levels of economic growth than are likely, and higher tax increases and deeper spending cuts than Congress will accept, and so are unrealistically low. I’ve seen estimates that place the borrowing requirements (which are remarkably difficult to pin down) as high as $9 trillion over the next 5 years. For the moment, let’s assume that the administration’s figure is correct, and place it in perspective.

China is America’s biggest external lender, and holds almost $2 trillion in foreign reserves. Let’s assume, for the sake of simplicity, that all of China’s holdings are in U.S. dollars, and all of those are in U.S. treasury bonds and bills. This isn’t true, but let’s make that assumption anyway. China has already expressed concern over the amount that America has borrowed, and is borrowing, and is diversifying away from U.S. securities; so how willing will they be to buy that much and more in U.S. debt over the next decade? And who else in the world will have enough in investable funds to buy U.S. debt? Financing of this magnitude has never been done before, and there may simply not be enough investment money to do it. And even if there is, there’s very little certainty that lenders will continue to funnel money to an increasingly debt-heavy American government. The federal government already has proportionately more debt than at any time in its history outside of times of war, and Moody’s rating agency has publicly expressed its belief that America in danger of losing it’s AAA credit rating. (This, on its own, may have severe consequences, which I’ll come back to in a later blog.)

If America cannot borrow the money it needs, then it becomes insolvent. The checks it writes will bounce, which could lead to a financial panic even greater than that of 2008, and one that no central bank or group of central banks will be able to stem, leading to an economic nuclear winter. (I’ve dealt with this prospect in an earlier blog, “WILD CARD WARNING”, published June 3rd, 2009.)

The rapidly approaching Social Security disaster

But the longer-term reason is even more dangerous. Both the U.S. Federal Reserve, America’s central banker, and the Government Accounting Office (GAO), America’s financial watchdog, have publicly stated that the unfunded liabilities of the U.S. government for Social Security and all forms of medical insurance, including Medicare, Medicaid, and Veteran’s Administration coverage, amount to approximately $100 trillion and are unsupportable. To see this, America’s total economic output (GDP) is about $14 trillion per year, so this $100 trillion figure amounts to roughly 7 times the nation’s entire annual income – a horrendous and unmanageable amount. Yet, when George W. Bush attempted a modest (if somewhat misguided) reform of Social Security, all he got was nasty complaints from selfish boomers, violent rhetoric from Congress, and reams of bad press. And these ticking time bombs have much shorter fuses than most people realize.

If you look at the Social Security Online Actuarial Publications website, you will see an extraordinary statement in the second paragraph:

“The financial condition of the Social Security and Medicare programs remains challenging. Projected long run program costs are not sustainable under current program parameters. Social Security’s annual surpluses of tax income over expenditures are expected to fall sharply this year and to stay about constant in 2010 because of the economic recession, and to rise only briefly before declining and turning to cash flow deficits beginning in 2016 that grow as the baby boom generation retires. The deficits will be made up by redeeming trust fund assets until reserves are exhausted in 2037, at which point tax income would be sufficient to pay about three fourths of scheduled benefits through 2083.”

As bad as this sounds, it’s actually much worse. The ‘trust fund assets’ that the Social Security Administration is talking about redeeming are bonds and T-bills issued by the federal government. When 2016 rolls around, and Social Security starts ‘redeeming’ these ‘trust funds,’ it will be making demands on the government of the United States. In turn, the federal government can only redeem these securities in one of three ways:

• Raising taxes,


• Cutting spending, or


• Borrowing even more in the public markets.

Given the federal government’s current perilous financial position, any of these three choices will be painful at best, and potentially disastrous at worst.

As an aside, we could, and should, ask the obvious question: What happened to all the surpluses in the Social Security system in the decades that led to the build up of the so-called ‘trust assets’? Answer: Congress spent them and handed the Social Security Administration IOUs in return.

And Medicare is even worse

In the same paragraph, the Social Security Administration goes on to comment on the status of Medicare:

“Medicare’s financial status is much worse. As was true in 2008, Medicare’s Hospital Insurance (HI) Trust Fund is expected to pay out more in hospital benefits and other expenditures this year than it receives in taxes and other dedicated revenues. The difference will be made up by redeeming trust fund assets. Growing annual deficits are projected to exhaust HI reserves in 2017, after which the percentage of scheduled benefits payable from tax income would decline from 81 percent in 2017 to about 50 percent in 2035 and 30 percent in 2080. In addition, the Medicare Supplementary Medical Insurance (SMI) Trust Fund that pays for physician services and the prescription drug benefit will continue to require general revenue financing and charges on beneficiaries that grow substantially faster than the economy and beneficiary incomes over time.”

Translating this into English, Medicare is bankrupt, but keeps operating by soaking up current tax revenues to fund it, increasing the effective size of the deficit that needs to be financed. It also means that the benefits people are expecting will have to be cut drastically – undoubtedly accompanied by much squawking, finger-pointing, and political posturing as president and Congress-critters all try to deflect the huge amount of blame.

Ironically, the new health care bill just signed into law may actually ease the situation slightly, because now government-funded insurance will fund the young and healthy as well as the old, poor, and sickly. That’s how insurance is intended to operate: by spreading the risks. But this change will be well short of what is necessary to avert disaster, and was so botched in the compromises necessary to get it passed that the benefits will be far less than they should be.

Now let’s be clear: the problems with Social Security and Medicare are not the failure of the Obama administration, nor of the Bush administration before it, but of all administrations and Congresses since the 1960s, and even before that. It was always politically easier to ignore the growing problems, and leave them to the next generation of politicians. Now the problems are arriving, and there will be hell to pay. To my mind, the last politician that had the courage to attempt to deal with these issues was New York’s Senator Daniel Patrick Moynihan, who raised the age when boomers could collect Social Security. He is, unfortunately, now dead, and no one else has had the guts to step forward and tackle these problems.

Are these problems too big to solve?

So are these problems solvable? Maybe, but only with immediate, Herculean efforts, unprecedented cooperation between Republicans and Democrats, and a willingness to sacrifice and accept less by the American people. I would think this makes solutions unlikely.

Indeed, I would say that America’s financial problems can only be solved if it solves two other, unrelated problems, one political, and the other societal.

Republicans and Democrats conspire together against democracy

The first problem is the polarization of the American political system because of gerrymandering. (See related blog post.) Gerrymandering is a term we all learned in high school social studies, but which most of us have forgotten. But Congress has not forgotten it. Gerrymandering is the re-drawing of the boundaries of electoral districts to create as many safe seats as possible – that is, where the same party will almost invariably be elected. Republicans and Democrats have connived together to do just this, and the Supreme Court has given them a limited seal of approval. The result is that in normal times, the vast majority of incumbent members of the House of Representatives cannot be defeated in a general election. The Economist newsmagazine once commented that America’s record of re-electing incumbents to the House would do credit to the dictatorship of North Korea.

This means that a Republican in a safe seat cannot be defeated by a Democrat, so his political spectrum goes from the center to the extreme right wing. And a Democrat in a safe seat cannot be defeated by a Republican, so her political spectrum goes from the center to the extreme left wing. This has two unsavory results: First, it means that the majority of voters in the center are not represented at all. And second, it pushes the two parties further and further apart, so that they cannot agree on anything, and gridlock results. That’s where we are today.

What is necessary is for the drawing of electoral district boundaries to be taken away from politicians eager to protect their own seats, and given to non-partisan committees that draw boundaries based on geography and similar needs rather than voting patterns. This has been done successfully in a number of jurisdictions, such as Washington state, and defeated by political machines elsewhere, as in California. But without this kind of non-partisan protection of the American people, the country as a whole is being stage-managed for the benefit and security of the politicians and the political party machines, and not in the best interests of the country. If the Tea Party movement wants a real and important target, this should be it.

The dumbing of America

The second fundamental issue is America’s education system, which has many problems. These include those teachers’ unions that block progress to protect their prerogatives and power (but not necessarily the interests of their members); helicopter parents that verbally and even physically assault and intimidate teachers; students who are more dedicated to fun than learning; violence and drugs, which turn schools into armed camps, forcing students to worry more about their own safety than what they learn; and a culture that now glorifies winning at any cost, including cheating, and elevates sports and entertainment success over academics. Most school systems are such a mess that it’s hard to know where to start to improve them, but the result is that America is producing generations of citizens who neither know nor care about their own history; who believe that America will always be right, and will always be #1 without thought, effort, or sacrifice; and who are uninterested in the common welfare of anyone other than themselves, and have no concept of civic duty. Unfortunately, the odds of a widespread improvement in American education are, if anything, even less likely than a balanced budget, and even if such a miracle were to occur, it would take years to change America’s direction. Yet, even so, if America wants to continue to prosper, it must both improve its education systems, and its citizens must rediscover their dedication to education excellence. Without this, in the long run, nothing else will matter.

Does America still have what it takes?

The financial problems America faces are severe, potentially the worst in its history. To solve them will require higher taxes and cuts to the military to be sponsored by Republicans, and spending cuts and reductions in entitlements to be sponsored by Democrats. It will take the postponement of eligibility for Social Security and Medicare benefits for boomers as well as a reduction in benefits provided, plus the end of ‘gimme-gimme’ pork-barrel politics. It calls, in short, for sacrifice. The alternative is disaster, and the end of America.

America’s problems threaten the stability of the world’s financial system, and the global economy. They also threaten America’s leadership of the world, which has, in the main, been remarkable for its enlightenment and goodness. There are other countries waiting in the wings, notably America’s chief banker, China, who are eager to replace America as the dominant force in the world. If Americans do not immediately begin to grapple with its problems, then both the idea that is America, and the country that is the fact of America will crash with such force and violence that it may lead to the end of America as a coherent society, as well as precipitating a second global depression. The stakes are high. The time is short. And the critical question is: Does America still have the will to be the best?

© Copyright, Richard Worzel, March 2010.