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23 Sep 10 The 3 Mental Shifts Undermining Western Prosperity
For most, it is plain to see that a massive shift of power is happening in the world economy: the old Western empires are crumbling under the weight of regulation, excessive taxation and crippling debt. But I think the Western decline is not only related to policy mistakes and financial bubbles, it is a more deep-seated issue than that, it goes all the way to shifts that have happened in the mentality and psyche of people living in western Europe and the US - I believe there are three fundamental mental shifts that have occurred over the last 30-40 years.
From Building Wealth by Saving & Investing to Feeling Wealthy by Spending
This shift is something that is plain to see not only in the racking up of massive consumer debt with no productive purpose or rampant consumerism, but in the very commentary of contemporary economists.
Even the academics and financial forecasters of the west have been fooled into believing wealth is created by mindless consumption by invoking fairy tales such as “aggregate demand”, rather than understanding that the consumption can only occur because something has first been produced!
As long as this mindset prevails, the west is not only doomed to stagnate, but to actually be in perpetual decline.
From Self-Reliance to Entitlement
The Welfare State can only function so long as its citizens have the morality to only use its safety net in their hour of need, rather than as a means of financing their idleness and hedonism. In most of Europe, we probably passed the point of no return a good 20 years ago.
Generations of children grow up in families where the parents have never worked, nor even shown any interest in working. Without a massive effort of will to break free, the children are doomed to follow in their parents footsteps. With no interest in work or education, entire generations become the permanent clients of the Welfare State, not only accepting perpetual dependence, but also expecting it, seeing as an entitlement they have a right to.
Those who are slightly more interested in their own welfare try to get jobs, but even in these cases, if you take away the jobs permanently, most would fall into the same dependence rather than take the step to build their own future by starting businesses and making sure they become self-reliant. Food, clean water and shelter are our most basic needs, yet 90% of the western population would probably starve to death if they didn’t have it handed to them, and most major European and American cities would probably descend into looting and civil war if water and electricity went out for 3 days.
From Improving Your Own Lot In Life to Coveting Thy Neighbours Lot
Jealousy is probably a universal feeling that has been around for as long as man has been able to strap on a loin-cloth, but with the combination of consumerism and an entitlement mentality it has gone into overdrive, at least in Europe. People seem to have lost track of the fact that wealth is not a zero sum game: unless you are a robber or criminal, someones gain is not another persons loss, but also the other persons gain. Capitalism and wealth creation drives living standards upwards by mutually beneficial exchanges.
What your neighbour has doesn’t matter to your standard of living, so why are we so focused on what others have? If you burnt all your money, how exactly would that benefit someone else?
If the west is to break free from its decline, and try to avoid entering a free fall, it must rediscover som fundamental truths that it lost somewhere along the line. Maybe it was the Welfare State, maybe people got too comfortable, maybe it was a combination of the above. Either way, as long as these mindsets remain in society, the decline will continue.
