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The Social Contract

One of the funniest meme creators on the Francophone version of X dot com goes by the pseudonym of Bouli. Bouli’s most famous meme is philosophical (appropriate for a Frenchman) and titled Le Contrat social, The Social Contract.

Here it is:

It is pretty self-explanatory, but perhaps some detail is helpful. This shows Nicolas, 30, and his money being drained, one one side, by pensioners, Bernard & Chantal, and on the other, by Karim, an immigrant. Karim takes Nicolas’ money through various social programs and then sends it back home to Africa (along with AFD, France’s foreign aid agency).

Bernard & Chantal take Nicolas’ money through taxes, which pay for pensions and health care, and through “SeLoger”, which is the biggest rentals listings website in France. They use the money to go on luxury cruises.

Obviously, the meme is oversimplistic–it is a meme–but what simplifies sometimes also clarifies and in clarifying helps understanding. Memes can sometimes be an excellent teaching device.

This “social contract” is a deeply perverse one. Baby Boomers maintain a stranglehold on the electoral system through sheer numbers and higher turnout, and on real estate prices through NIMBY policies. Because they did not have enough children, the Boomers import immigrants to keep creating “GDP” (even if that GDP represents debt-financed social spending rather than productive work) to fund the system.

The “social contract” works at the expense of the future of the country: Nicolas cannot afford to buy a home, to have children, or to invest or start a business.

France is an extreme case: it is the only OECD country in which pensioners enjoy a higher average standard of living than workers, and its mass immigration from predominantly Muslim African countries is much more obviously a net negative to society than immigration to the US.

Nevertheless, the “social contract” meme was the first thing we thought of when we saw this:

In a recent briefing, we discussed the national debt, and the unescapable fact that much of the growth in government spending, deficit, and debt, are old-age entitlements that are as economically unsustainable as they are politically untouchable.

We also discussed that American dominance in AI is going to require significant investments in energy and semiconductors.

Both parties need the boomers to be electorally competitive. And, obviously, there is nothing wrong with being a boomer and they are as entitled to voice and representation as every other citizen. But a country where the political and fiscal system is dominated by the interests of the oldest generation is a country whose future isn’t bright.

We hope America doesn’t get the same “social contract” as France.

Policy Links

#SCOTUS – The Biden-Harris team has clearly decided that going on a jihad against the Supreme Court in an election year is a good idea. Matt Stoller put it best: “The importance point here isn’t the actual reforms, which won’t be enacted. It’s that the Democrats are saying they don’t like courts as hidden policymakers. That’s a HUGE reversal. Since the 1970s, the judiciary is where prestigious liberals aspire to.”

#SCOTUS – Speaking of, the great Ed Whelan of EPPC writes on what a second Trump Administration could mean for the conservative legal movement.

#EconomicPolicy – Wall Street and Silicon Valley VCs are wild about the pick of Kamala Harris as the presumptive Democratic nominee. The main reason is she looks set to fire Lina Khan.

#SiliconValley – Speaking of prominent financiers: in spite of headline-grabbing defections to Trump by Silicon Valley heavyweights such as Elon Musk and Marc Andreessen, the overwhelming majority of the Valley remains firmly pro-Democrat.

#Labor – The FTC’s ban on non-competes is set to go into effect in September. Steven Clark has a good outline on what “the non-compete revolution” means.

#Immigration – Almost everyone agrees high-skill immigration is good for the U.S. Except that the main way this supposedly happens in the US is the H-1B program, and this program is a scam. Bloomberg’s Eric Fan confirms something which has been an open secret for decades: “Every year, a lottery determines who gets an H-1B visa to work in the US. The game, it turns out, is rigged. Outsourcing and staffing firms are exploiting loopholes, crowding out US employers and immigrants who play it fair. We have exclusive data to show it for the 1st time.” The H-1B visa doesn’t serve to bring smart talented people to the US, it serves outsourcing firms to hire cheap replacements for American skilled workers.

#AI – The Senate Commerce Committee passed a slew of AI bills: the Future of AI Innovation Act, the Validation and Evaluation for Trustworthy AI Act, the AI Research, Innovation, and Accountability Act, the NSF AI Education Act, and the CREATE AI Act. That August recess really is coming fast. The most notable is the Future of AI Innovation Act, which would create a U.S. Artificial Intelligence Safety Institute (AISI) at the National Institute of Standards and Technology (NIST). Notably, several amendments authored by Ted Cruz were adopted, preventing that new body from trying to put “equity” or “disparate impact” in its standards.

#LGBT – A high-ranking FDA official admitted that “puberty blockers” carry an “increased risk of depression and suicidality” but called for approving them anyway. More.

#Crypto – Sen. Lummis (R-Wyoming) has introduced the BITCOIN Act which would create a strategic Bitcoin reserve.

#LaboratoriesOfDemocracy – Cato’s Chris Edwards: “IRS has released new data on interstate migration. For households with income over $200,000, the best in-migration/out-migration ratio is Florida, and the worst ratio is Illinois.” Oof.

Chart of the Day

ECI data for the second quarter shows compensation and wages continue to slow down. Private sector wages grew at a 3.4% annualized rate in Q2, the slowest pace since Fall 2020. Via economist Nick Bunker.

Meme of the Day

Obviously: