How America Can Come Back from Chaos

The chaos and ruin in America today is exceptional: our open border, the intellectual and moral corruption of the mainstream media, wokeness over readiness in the military, an educational system that indoctrinates but does not educate, decriminalization, resurgent antisemitism, the mutilation of children in service to the promotion of transgenderism, the weaponization of the legal system to destroy political opponents, strangulation of the economy by an onslaught of regulation, control of information by a tiny band of information tech oligarchs.  I could go on, but would get too depressed to keep writing. This essay is about none of these, serious as they are. It is about a chaos that I believe is coming and sure to affect every American household. I am talking about a financial and economic crisis that to me looks unavoidable. The fiscal and monetary authorities can delay the day of reckoning for a very long time, but only at the cost of making the ultimate denouement much worse.

The chaos generator is debt, especially the debt of the federal government along with its unfunded Social Security and Medicare liabilities. These obligations have grown so large and are growing so fast in absolute terms and relative to the economy’s growth potential that – absent some science-fiction-like productivity miracle – they eventually will trigger either crushingly high interest rates, or more likely, inflation that surprises everybody. One leads to recession or depression, call it what you will. The other, more likely in my opinion, is the irretrievable loss in how much you can buy for  your money. As usual, the most vulnerable in society will suffer the most.

Unbearable debt burdens always get resolved one way or another. They sow the seeds of their own destruction.

In the private sector, over-leveraged consumers and businesses eventually default on their debts. This creates a self-reinforcing chain reaction throughout the economy of declining revenues and rising unemployment.

The public sector by contrast  can always pay its debts via creating money with a mouse click, backed by nothing. But, inflation always ensues eventually as the increase in fiat (paper) money to pay for goods and services outstrips  changes in production at an accelerating rate.

Crisis almost always is the way a debt dragon is slayed. Politicians and bureaucrats, knowing that proper corrective action would cause intense short term economic pain,  have little incentive even to address the problem until it’s too late. The politicians don’t want to get thrown out of office and the bureaucrats don’t want to be revealed as incompetents. Instead of admitting they have made a mess, they will cover it up by creating more and more money by mouse click.  Paul Volcker was one of a kind. So, as the economy teeters between recession and inflation, count on a crisis, a really big one, but don’t ask when or how it hits because nobody knows.

After the deluge, what? This too is unknowable, but what can be said is what should be done. The starting point is to ask, “What is American society – or any society for that matter –for? The answer given by our founding fathers and enshrined in the Declaration of Independence is “life, liberty, and pursuit of happiness”. In more prosaic language, this means the point of a society and a government is to promote and enable individual human flourishing. This requires freedom and equality of opportunity.

With their profound understanding of human nature, the founders recognized that the power of those desiring power and adept at gaining it must be severely and permanently limited. Otherwise, ordinary citizens would lose their freedom and all the blessings that come with it. The American experience over the last century with the consequences of the centralizing pressures from big government progressives has shown that the founding fathers had it just right: without strong bonds of restraint, the powerful will always seek more power and will always rationalize what they want, regardless of their impact on other people. The elites who currently control government, academia, the mainstream media, the arts, big tech, and many large corporations  have embraced the anti-American, alien idea that self-anointed elites, endowed — according to themselves — with intellectual and moral superiority, therefore have the right to tell the rest of us how we must live, what we can say, and how we should think. They have made great progress of the wrong kind.

The limits imposed by the Constitution have not proved strong enough to withstand the onslaught of the progressive left, whose main tool is the federal government. The woke left, which now dominates the Democratic party,  does not seem to care about seeking the consent of the governed.

If ordinary Americans are to keep their freedom to live the way they wish, there has to be a radical, radical downsizing in the size and scope of the federal government. It has become accountable to leftist politicians and bureaucrats, not the people. What has happened is that various government departments and agencies to varying degrees  have become tools for activists’ social engineering schemes and the source of gobs of money for politically connected rent seekers, groups that want money and privilege with no associated obligation to create benefits or wealth for anyone else. The teachers’ unions come to mind.

If Americans who support the principles on which the country was founded were to win an election, that would help but not provide a long term solution. Progressives always and everywhere will push for more centralization of power into their hands. The only way to limit their limitless quest for power is to take away their tools.

The principle espoused by Lincoln should provide the guideline: “The legitimate object of government, is to do for a community of people, whatever they need to have done, but cannot do at all, or cannot do so well for themselves—in their separate, and individual capacities.” Otherwise let voluntary exchanges among free individuals with protected rights, aka free markets, guide who gets what under what circumstances.

The Lincoln test should be applied to every line item of every federal department. Those that fail the Lincoln test should be eliminated. Those that pass should be restructured so that they not only perform better, but are effectively and permanently constrained from abusing their power.

The common element among almost all federal activities is that they are organized according to a centralized, top-down, command and control model with no built-in processes for self-limitation and self-correction. They are largely controlled and managed by untouchable, unaccountable “experts” (bureaucrats). No wonder the ministrations of the “Great Society” have been an utter failure. Poverty is still with us; black families have been destroyed; incompetent, arrogant public “servants” suffer no consequences for their ruinous decisions; in fact, they retire with lush pensions.  The public has the worst of all worlds, more power to those skilled at gaining power but do not serve the public with integrity, respect, and good judgment. In fact, federal bureaucrats often seem contemptuous of the rest of us. The behavior of the well-groomed functionaries at the Center for Disease Control (CDC)  and Anthony Fauci during the Covid-19 episode, for example, are Exhibit A.

Only the Departments of Defense, State, Treasury, and Justice pass the Lincoln test of performing functions that can be done only by government and even they have numerous unnecessary or pernicious barnacles that should be scraped off.

Some departments –  Education, Housing and urban Development, Agriculture, and Labor – are nothing more than vehicles for transferring money and power away from taxpayers and markets toward politically powerful and ideologically favored special interests. Why should these groups be privileged over the rest of us who have to make our way in competitive markets? Adding insult to injury, their activities uniformly result in poor quality and high costs.

Some agencies provide services, such as air traffic control. Can they be provided more efficiently and with greater responsiveness to users by alternative private or quasi-private arrangements?

Some agencies churn out rules and regulations, none of which are ever subject to audit as to how their costs compare to their benefits. When is the last time swaths of ridiculous regulations were rescinded?

Some agencies such as the Social Security Administration and the Centers for Medicare and Medicaid Services (CMS)  dole out money to individuals. Both are headed for insolvency. Medicare in particular is a steaming dog’s breakfast. It has taken power away from individual Americans to decide how much and what kind of health care they want to pay for; it has driven health care costs up and quality down. Sooner or later it must be reformed.

In sum, the federal government across the board lacks the negative feedback measures necessary to:

(a) stop the spread of federal power,

(b) create positive incentives for producing the performance the public wants and strong disincentives for poor performance,

(c) minimize regulatory capture by single-minded zealots and rent seekers,

(d) assure that power is retained by individual citizens, never concentrated among elites.

If wholesale downsizing is a bridge too far, at the very least there should be some modest measures to rein in runaway federal power. Examples:

  • Term limits for congressmen and senators,
  • Term limits for departmental and agency heads,
  • streamlined termination procedures for government employees,
  • Dispersal of the geographic location of federal departments closer to where their dictates have the greatest impact.

Until proper limitations on federal power are put in place, there will be no improvement.

At the moment there is no incentive for widespread reform, no matter how obvious its necessity. So, why bother to discuss it? When the next financial / economic crisis hits, there will be huge public disillusionment with a federal government that, with a few shining exceptions, is corrupt and incompetent

. When people get frightened, there is heightened risk that they will turn to authoritarian solutions that are as destructive as they are wrong. The root cause of Americas’ problems is excessive concentration of power. It would be catastrophic and tragic if the American public gave more power to the very crowd that created the problems to begin with. But that would be a strong possibility unless an exceptional, freedom-oriented leader emerges or public opinion becomes convinced that more big government is a truly bad idea. Events may cause the leftist elites to lose credibility and legitimacy. Let us hope the public will see through their demagoguery and false promises. It is going to be a close run thing.

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Ground rules for comments 

I strongly welcome comments, but  ask you to abide by the principle, “Always respect the person, never respect the idea.”  A thoughtful analysis of why the views  I present are wrong helps all of us get closer to discerning what is true, but civility must rule.



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