During my college days in the early Nineties, I read a study that projected tax rates into the future, assuming government spending remained fixed at early Clinton levels. Due to the explosion of entitlement spending brought about by the insolvency of Social Security and Medicare, even the lower income brackets would face something like a sixty percent federal tax burden by the 2020s. Reading this study was one of the most significant events of my intellectual life. I remember thinking, with terrible clarity: That’s just not going to work.
I believe collectivist ideology is an offense against liberty, and also a tragically inefficient means of addressing the social problems it professes to care about. A study of history shows that every form of collectivist ideology has grown increasingly vicious, and eventually murderous, as its ruling elite struggle to retain power. There is one other reason I’m opposed to collectivism: it’s doomed to fail. Even if I were willing to concede Big Government the intelligence and moral stature to control our culture and economy, I would be haunted by the knowledge of its inevitable failure… a destiny written into the DNA of American socialism since the birth of Social Security.
Socialism fails because it’s a static solution imposed on a dynamic society. People respond to incentives, chasing carrots and avoiding sticks. The initial proposition of the New Deal was to provide for the needs of the desperate, by collecting taxes from the wealthy. Unsurprisingly, the system devolved into the vote-buying and corruption we live with today, becoming a heavy wagon hitched to a struggling middle class, which provides far more of the funding than those “fat cats” socialists love to use as whipping boys. Politicians respond to incentives too, and the machinery of the centralized state excels at sucking in tax dollars and spitting out votes. The ugly gears of that machinery are well-hidden behind an illusion of moral authority and seductive promises, alluring enough to compel the faithful support of nearly half the population, even as its unsustainable failures become painfully obvious.
The system was doomed to crash because its vast array of taxes, spending, and regulation destroy the very wealth that sustains it. It ran out of fat long ago, and began feeding on muscle… and now it has worked its way down to the bone. Wealth is a product of choice, and every action taken by a collectivist government destroys wealth by reducing the options available to its citizens. Liberal politicians assume the population will go on blindly producing the same extraordinary prosperity, no matter how much the government skims off the top. That’s why every outbreak of bad economic news is “unexpected” to them, as well as the media who share their assumptions. Has a nation ever grown poorer after reducing the cost and power of its central government? Why would anyone assume a nation could grow richer by reducing the size and power of its private sector?
The towering heights reached by the American economy gives us a long way to fall. Of the dozen wealthiest nations in the world, only America has a nine-digit population. The next largest wealthy nation after us is Switzerland. The system imposed on a population our size is bound to fail with a mighty crash. We take the trappings of our prosperity for granted, and don’t appreciate how complex, fast-moving, and fragile the upper reaches of our economy are. Politicians seeking to micro-manage the corporate world are tinkering with a high-performance engine while it’s still running.
I don’t know exactly what form the Great Crash will take. Social Security has been a ticking bomb for generations, and recently we learned its detonation is much closer than previously suspected. Instead of producing a surplus that helps fund the rest of the government, it has gone into the red… something that wasn’t supposed to happen for over a decade. Social Security was never an “investment” safeguarded by the government. It’s a pyramid scheme, with current payroll taxes funding the benefits of retirees. The original ratio ofworkers to recipients was over 40 to 1, but now it’s down to three to one… in an economy with over 20% real unemployment, suffering under a government unwilling to do any of the things that would reduce its power, and promote long-term job growth.
Reckless deficit spending has weakened our currency, and hastened the day when Social Security and Medicare entitlements will grow to devour the entire federal budget. Massive tax increases are just over the horizon, awaiting the day when this President feels safe in assuring the voters that fiscal responsibility compels him to unleash them. The point of statist “health care reform” is to make the voters feel the only alternative to those tax hikes is death. The outer limit of New Deal socialism will be reached when overtaxed workers step back from the last few private-sector jobs, and refuse to support dependents who will fight to the death for their benefits.
I suspect the Great Crash would begin long before that ultimate moment of bankruptcy arrived. It could be triggered by an unforeseen catastrophe. Bysome estimates, the total cost of the 9/11 attacks exceeded two trilliondollars. Barack Obama’s economy would not survive such a blow, especially since his immediate reaction to a systemic collapse would accelerate it, by nationalizing more of the private sector.
Even without a catastrophic trigger, the tragic end of our old system would begin when the job-creating upper class exercised its option to withdraw from the economy, taking money and capital with it. One of the most important attributes of wealth is the range of options it brings. The people targeted most aggressively by desperate socialists can simply leave the system. They can stop investing, hoard their wealth, or move overseas. They can do this very quickly, and they are, by definition, highly skilled at sensing the right moment for dramatic action.
The rich will play along for a good long while, and as you can see from the number of well-connected Democrats raking in fortunes during this recession, they can even profit handsomely by purchasing influence over a stagnant command economy… but when they feel the endgame approaching, they’ll be gone before their old pals in Congress know what hit them. When you hear a leftist declare that all of our problems can be solved by soaking the rich, understand that will never happen, because the rich will jump out of the pool before they get soaked past the knee.
The time of the Great Crash has not arrived just yet. As bad as things may seem now, they can get an order of magnitude worse… and that means we still have time to change course. Your daily life depends on billions of transactions performed at the speed of light, millions of tons of goods shipped across vast distances, and oceans of gasoline flowing from convenient pumps. These complex systems cannot sustain much damage before your life changes in ways you might never have imagined. The people responsible will tell you it was inevitable, or it was all your fault for living so well in the first place. They’ll try to divert your anger to their enemies, and expect you to trade your ambitions for the sustenance they will provide.
We don’t have to let it come to that, if we remember that prosperity is inseparable from freedom, while command offers only obedience and survival. We don’t have to lose much more freedom before we lose a great deal of our prosperity. Every dollar spent by the government is a dollar that won’t be able to generate wealth through choice. We still have the imagination and energy to put the bankrupt ideology of liberalism behind us, before it bankrupts us. We can thank the deluded intensity of Barack Obama and the last true believers of the Left for making it clear how the story of the almighty State will end, in the absurdity of a $14 trillion debt that still isn’t big enough for them. Our grandfathers broke the Axis and rebuilt the world. Our fathers made academics eat every word they wrote about the inevitable triumph of communism. We have one last pitiful offspring of the collectivist dream to bury. We can do it, but it will require vision and leadership.
Simply returning to the bloated budget of George Bush’s final year would require a historically unprecedented cut of over 15% in total government spending. The budget President Obama just submitted would swell the federal workforce to over two million. Trimming it back to where Bush left it would put half a million people out of work. Correcting this ruinous course will be an achievement unlike any the world has ever seen. The world has also never seen anything like the crash that awaits us if we fail.
Cross-posted at Hot Air.
…and I, with many others, ask the inevitable question: so how do we stop it? Call? They don’t answer the phones. Vote? That feels so hopelessly like nothing. How do you survive? Does it come to fighting? Who do you fight? I hear a lot of rumbling about “a civil war” and so on, but I’ve thought about that, and I can’t imagine who you fight against. Your neighbors? The clerk at City Hall? What good can that do? I have a little idea of how people survived the Great Depression, from readings of history and from talking to my grandparents, but more people were farmers then. My yard won’t grow much but moss, blueberries, and tomatoes…in season.
I’m sorry. I know you’re right, because every word you say resonates with me. But that doesn’t tell me what to do to stop it. I am not one of the “rich” who can up and leave, who can flee and take my riches with me. I’m afraid for my children. And I have no idea what I need to do to protect them, to prevent what appears to be the inevitable, pre-ordained, destined outcome. Voting seems like so very nothing.
@ Angela in Seattle:
We should never despair, our Situation before has been unpromising and has changed for the better, so I trust, it will again. If new difficulties arise, we must only put forth New Exertions and proportion our Efforts to the exigency of the times.
GEORGE WASHINGTON, letter to Major General Philip Schuyler, Jul. 15, 1777
What a gorgeous essay! Americans have freedom in their blood. I am not afraid like I was before. What we are dealing with in the Obama government is the opposite of hope. It is the practical, political expression of the death of God. Government, to them, must be God, the giver of all things and meaning. The need for material things and for meaning are innate and cannot be eradicated by adopting practical atheism. The need is merely transferred to government. A people without hope in God, themselves and in the gift of freedom inevitably look to government for answers. We, too, have been too swift to lose our suspicion, even of our finely-designed American government. It is ironic that the slogan of the Obama campaign was “hope” when the kind of government he is running is the political equivalent of the loss of personal hope and it’s transfer to government.
We should be thankful that the left got so much power all at once and then showed themselves to be who they really are: treasonous, godless haters of freedom. People now recognize the evil that is upon them and are fighting with votes, with KNOWLEDGE, and with character. And when the crash happens, I have more *hope* in the goodness of my neighbor than I do in government, and this is what will help us get through.
The new and shorter version of ATLAS SHRUGGED.
I was thinking the best way to correct this whole problem was to just let them continue spending til they broke the system and were then forced to make a correction.
Until that happens, I think we are stuck with can-kickers.
Neither side will do what it takes to tame this beast. As much as we like Reagan, he still signed off on social programs, and pushed back the the bankruptcy date of Social Security, without correcting the problem.
You’re so right on this, Doc. Wish you weren’t.
[...] anyone assume a nation could grow richer by reducing the size and power of its private sector? http://www.doczero.org/2010/02/the-g…sh/#more-14017 Eventually, everyone has the same problem. The only unknowns are when, and how fast. [...]
Okay, socialism = bad. I get it. I’m not sure that we needed another piece telling us why, no matter how eloquently written.
What’s a road map to get us back to a healthy economy? What are specific steps I as a voting citizen can take to encourage fiscal responsibility? Although I have no doubt that many of your readers would consider me liberal, I’m closer to independent and have never voted a straight ticket.
The Contract with America offered specific solutions. Heck, as much as it was ridiculed, Ross’s Primetime Graph & Chart Review offered specifics. These plainly presented plans allowed me to examine the facts and see how those proposals would benefit me. We need more of that today, instead of obstructionism for its own sake and the Party of No.
Wow. Just, Wow.
George of Cappodocia wrote:
I agree mostly with what you say. What is our roadmap out of here and who can we trust. I don’t see anyone in either party that can be trusted. The GOP was given the chance, and we all saw what happened.
I don’t see your point w/ “The Party of NO”
I kinda look at the health care and stimulus bill as a no brainer, no vote.
It is like you are sitting at home w/ some friends and another group of friends pull up and want you and your buddies to jump into the car. Why? Well they want to run down and rob a bank and then lead the cops on a high speed chase through the city…..
Well you and your buddies get an uneasy feeling and say…”Ok, then after that what will we do? How do we get out of the mess we will be in?”
The answer? “Oh we don’t know yet…..we will expect things to turn out good just cause we did it.”
So seems like the smart thing to do in that instance is to just say “NO!!!”
“People respond to incentives, chasing after carrots and avoiding sticks.”
Right on!!
I had a teacher once, Bob Gladstone, who said that some people say we shouldn’t offer rewards-based teaching—-i.e., do this in order to get that. He said, “People who say that need to go tell Jesus how to teach!”
Because, as it turns out Jesus, the greatest teacher of all time, advocated a system of rewards. “Your Father, who sees what is done in secret, will reward you.” Matthew 5.
In that case, he is talking about prayer and fasting. Numerous other examples exist. But my point is that those who think that humans ought to do things just out of the pure love in their heart, just because they’re good people, expecting no reward, have it wrong. People aren’t designed like that.
[...] future holds the final, systemic crash of the New Deal and Great Society. How far away is it? It’s hard to recalibrate the doomsday [...]
[...] future holds the final, systemic crash of the New Deal and Great Society. How far away is it? It’s hard to recalibrate the doomsday [...]
“The people targeted most aggressively by desperate socialists can simply leave the system. They can stop investing, hoard their wealth, or move overseas. They can do this very quickly, and they are, by definition, highly skilled at sensing the right moment for dramatic action.”
You were referring to “the rich” but we’re not rich and I’m pleased that my daughter is going to go to college in Australia. We have friends there, tuition is cheaper and if the socialistic trend in this country isn’t fixed, I can rest knowing that she is safe in another country. I wish I could join her there but we have a lot of work to do here, don’t we? I guess I don’t want to give up on the US just yet…
[...] More: The Great Crash – sooner than you’d think [...]
[...] future holds the final, systemic crash of the New Deal and Great Society. How far away is it? It’s hard to recalibrate the doomsday [...]
[...] an election about the very philosophy of our government. It is our last chance to avoid the Great Crash which Obama has brought to our doorsteps… but which would have lurked twenty or thirty years [...]
[...] an election about the very philosophy of our government. It is our last chance to avoid the Great Crash which Obama has brought to our doorsteps… but which would have lurked twenty or thirty years [...]
Reading this essay for the first time, and it is haunting my mind already. Somebody needs to make a YouTube video or something, using these words as a narrative.
I don’t know who said it first, but G’Kar (late of Babylon 5) once said “One can not hope to change history, but only to survive it.” That sounds rather dark, and frankly, while I am currently seeking acreage and a pond somewhere away from a major population center so that I don’t have to see stupidity in mass numbers (not unlike the craziness we saw during Hurricane Katrina), I hope that our voting electorate will find wisdom and vote accordingly as to ensure the Great Crash never happens in the first place.
Like all things, time will tell…