, "The nine most terrifying words in the English language are: I'm from the Government, and I'm here to help."
We must look back at history. It is replete with disaster after disaster at the hands of "the Government". At some point we must ask ourselves if whether what we have been taught to believe about "the Government" is true. We must start with our sources: where did we get that knowledge? what evidence is there that challenges that knowledge?
It is the art of asking questions. Keep asking why, and you will get closer to the truth.
People make mistakes. The private world of win-win deals routinely corrects them. Death, divorce, default, destitution – many are the ways it sets things right.
But the public world… the world backed by tanks and armed police… the world of wars and sanctions… regulations and money-printing… uses its considerable might to resist correction.
No matter how stupid… no matter how wasteful or harmful to the public weal – government programs are rarely and reluctantly discarded.
The Definition of Eternity
Dear readers who doubt this is true are invited to recall the real nature of government. It is an organization that has only one real goal – to protect and promote the people who control it.
And as we’ve seen, illuminated by the great Italian economist Vilfredo Pareto, it is always controlled by a small segment of the society – the elite.
We’ve seen also that the “investments” made on behalf of the public most often benefit only the elite. And, protected by their beneficiaries, errors persist and accumulate.
Even the most temporary and woebegone government agency becomes eternal. Crises – forgotten by the public for decades – still trouble the sleep of well-paid agents of the federal government.
Programs that should have been a source of shame and embarrassment continue indefinitely, while the people who put them in place – who should have been bankrupted… run out of town on a rail… or at least had the good grace to resign from office, or like German general Erwin Rommel, to accept the cyanide pill – stay proudly at their posts year after year.
Elections are supposed to “throw the bums out.” But apart from a few headliner acts, the show remains little changed… with the same clowns, misallocating the same resources, over and over.
How It Ends
And yet, as American economist Herbert Stein remarked, things that can’t go on forever must come to an end.
But how? When? Those are our questions for today.
And we won’t beat around the bush. The answer is this: Deprived of regular hygiene, public life gets dirtier and dirtier… until finally, we all “take a bath” on the feds’ bad investments.
We pause to back-fill…
Errors – even in public life – are usually limited by money. The feds may want to spend $2 trillion on infrastructure… or on climate control… but they lack the means.
This forces them to make trade-offs… hard choices – cutting here to spend there… raising taxes… or borrowing.
Raising taxes tends to upset those who pay them, imposing a barrier that politicians are reluctant to cross.
And even when Congress passes a tax increase, it doesn’t mean that the feds will actually collect more tax revenue. People duck and dodge. Even without cheating, they change the way they do business and how they spend their money.
In the end, tax revenue, as a percentage of GDP, tends to stay fairly constant, as tax rates rise or fall.
And borrowing brings its own problems. First, a dollar must be earned before it can be saved. Then, it must be saved before it can be borrowed.
This century, federal deficits have far outstripped GDP growth and savings rates, which is why the feds have had to resort to the printing press.
Besides, even when there is money available from private lenders, borrowing by the feds will “crowd out” private borrowers, driving up interest rates, depressing the economy, and putting voters in a sour mood.
It is only because our fake-money system permits the feds to spend so much, without depleting savings or raising taxes, that they can make so many bad “investments.”
(An important note: As prices begin to rise, the Federal Reserve will come under pressure to “taper” off its money-printing ways. Most likely, next month, as higher inflation rates are reported, we will see some fireworks at the Fed… and in the markets… Stay tuned.)
Extraordinary Scrubbing
In addition to the bad investments on existing wars – against terrorists, poverty, recessions, bear markets, and drugs – the Biden Administration has proposed an additional $4 trillion to do battle against temperature changes and viruses… as well as allegedly improving the nation’s families and its infrastructure.
Some of these proposals will be adopted. Money will be misspent. Debt will increase. And the grime will grow thicker and greasier than ever.
With no routine way of cleaning it off… an extraordinary scrubbing will be needed.
Wars, revolutions, economic collapse – the ways in which elites are finally punished… and their bamboozles eventually corrected… fill the history books. They’ve been explored by historians and catastrophists such as Edward Gibbon, Arnold Toynbee, Oswald Spengler, Joseph Tainter, Peter Turchin… and many others.
Each has his own theory… his own “spin”… on the issue. Some emphasize foreign competition. Others focus on the degeneration of the elite themselves. Some lay the blame on economic mismanagement or resource depletion. Others insist the real problem is a moral failure.
Joseph Tainter put forward the idea that governed societies are fundamentally problem-solving organizations. Each problem requires a solution. Each solution adds costs… and increases the complexity of the organization.
Eventually, the complexities and additional costs become unbearable; the society collapses.
Parasitic Living
Another way to look at it is that the elite is fundamentally parasitic, living off the labor of others.
As time goes by, more and more people naturally wish to join the elite. They learn to speak the language of business schools and The New York Times. They send their children to college.
And then… the college graduates feel entitled to an elite lifestyle, and take their places on Wall Street, in the government, a university, or a non-profit organization.
Thus are more and more people turned into quasi-rentiers, contributing little to the real wealth of the society, while relatively fewer remain to make the plumbing work.
Here at the Diary, we pretend no precision. Our analysis is broad-brush… like a barn door painted by a blind man.
During our own lifetimes, America’s elite has degenerated greatly. Funded with almost unlimited fake money, it has become arrogant, corrupt, and incompetent.
And now… caught in an “inflate or die” trap… its “investments” become more desperate and less productive than ever…
And since the elite controls both soap and water… the dirt builds up.
And then, we all get hosed.
Regards,
Bill
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