03/23/11 Buenos Aires, Argentina – To every cause, an effect. To every action, a reaction. To every well-meaning, do-gooder, interventionalist policy, a broken heart and an empty pocket. Such are the rules of life, Fellow Reckoner. It’s no use arguing with them. They are what they are, and for good reason. Bad behavior is discouraged by undesirable consequences. Dishonesty, for example, results in mistrust. And one can’t very well get along in life without trust. But imagine for a moment. Just imagine…
…imagine for a second that you were impervious to this inconvenient collection of celestial algorithms. Imagine that the rules did not apply to you, in other words…that you were somehow immune to, or removed from, the objective laws of reality, such as they are. Imagine that you could go out every night, party as long as you wanted, drink as much as you cared to and sleep with whomever took your fancy. (Remember, we’re just imagining here.) And now, suppose for an instant that there were no negative consequences. None. Zero. There was no hangover. No jilted wife (or husband) and no guilty conscience. No discouraging affects whatsoever; nothing to tell you that you were a bad boy (or girl).
Welcome to the fanciful “reality” as experienced by the world’s governments, where idiotic actions result in reelections and signals are so far removed from actuality that up is commonly mistaken for down and black for white. This is a world where deficit spending – that is, forking out more cash than is actually in your possession at any one time – is thought of as a prudent path to prosperity and where statistics are so routinely tortured as to barely resemble any recognizable definition. This is a “reality” where marching off to indefinable, unwinnable wars in far off lands, at the cost of tens of thousands of young lives, inspires not disgust, shame and embarrassment, but pride, patriotism and chest-beating camaraderie. It is a “reality” where naturally free men and women voluntarily elect “leaders”…as if there existed some gap in their lives where self respect and determination ought to be. It is a “reality” in which the weak are promoted at the expense of the strong and where anything that can go wrong almost certainly will.
This “reality,” as experienced by any and all governments, is, unfortunately, less surprising an occurrence than we might freely have hoped for. In fact, it is as inevitable as it is undesirable. Permit us to explain. Better still, permit us to cite the work of Morris and Linda Tannehill. This, from their indispensable book The Market for Liberty:
“…government is an extra market institution – it’s purpose is not to make profits but to gain power and exercise it. Government officials have no profit and loss data. Even if they wanted to satisfy their forced ‘customers,’ they have no reliable ‘error signal’ to guide their decisions. Aside from sporadic mail from the small minority of his constituents who are politically conscious, the only ‘error signal’ a politician gets is the outcome of his re-election bids. One small bit of data every two to six years! And, even this tidbit is hardly a clear signal, since individual voters may have voted the way they did because they liked the candidate’s sexy appearance or fatherly image. Appointed bureaucrats and judges, of course, don’t even get this one small and usually confusing data signal; they have to operate completely in the dark.”
Given that governments are both motivated by a perverse goal – power, not profit – and driven by individuals who, necessarily, are inspired by force rather than voluntary exchange, it is little wonder that nations periodically undergo sea changes in the form of revolutions, civil wars and social and political upheaval. Left unchecked, all governments inevitably descend into pure sin. Even the most lethargic, apathetic citizenry is likely to stand up and declare that “enough is enough” eventually. The only surprising thing is that it doesn’t happen with more frequency and to more welcome cheers.
So what is the solution? Does one even exist? Happily for us, truths tend, by their very nature, to be more apparent than we generally give them credit for. Truths don’t require construction, in other words; only that we destruct myth to see them more clearly. Perhaps the most common, insidious rumor that the government has managed to perpetuate is the lie that it is, itself, necessary at all. We are all familiar with the phrase “necessary evil,” for example. Voters are said to select between the “best of a bad bunch” or the “lesser of two evils.” And, we humans are commonly heard to say that the only two certainties in life are “death and taxes,” or, in other words, our own expiration date and the theft and coercion we must be subjected to until it comes due.
Such a defeatist way of thinking is, obviously or not, utterly absurd. Why be party to evil at all? Why choose the least rotten apple on the tree when there is a whole orchard waiting to be picked? Why, since we so vehemently abhor coercion in our personal lives, in our day-to-day, voluntary dealings with one and other, should we permit, enable and validate it in our “political” lives? Surely there is a better way, no?
Continue the Tannehills, with a none-too-subtle clue:
“…the big advantage of any action of the free market is that errors and injustices are self-correcting. Because competition creates a need for excellence on the part of each business, a free-market institution must correct its errors in order to survive. Government, on the other hand, survives not by excellence but by coersion; so an error or flaw in a governmental institution can (and usually will) perpetuate itself almost indefinitely, with its errors being “corrected” by further errors. Private enterprise must, therefore, always be superior to government in any field.”
Joel Bowman
for The Daily Reckoning
Joel Bowman
Joel Bowman is managing editor of The Daily Reckoning. After completing his degree in media communications and journalism in his home country of Australia, Joel moved to Baltimore to join the Agora Financial team. His keen interest in travel and macroeconomics first took him to New York where he regularly reported from Wall Street, and he now writes from and lives all over the world.
The Daily Reckoning is your premier source for making sense of the news Washington and Wall Street generate. Each business day, The Daily Reckoning calls on its stable of world-class writers and thinkers to show you how to get ahead.
Start your 100% FREE subscription to The Daily Reckoning today and you’ll get a free research report, “How to Survive the Fall of Social Security.” Simply enter your email address below to get your free report and join over 495,000 worldwide Daily Reckoning subscribers!
We Respect Your Privacy and We will
Never Share or Sell Your Email Address
The problem is really that the wisdom of the People is reduced. The People are of lesser quality than during the Founding. A wiser and more understanding people would have long since stopped this, but the situation we have now is one in which the Takers are more numerous than the Producers. (Not just economic producers, but anyone who contributes to Life and humanity.) In a democracy, what can the outnumbered producers do? The problem, if you think it through, is actually spiritual.
This quote, supposedly from the Czech President, sort of makes this point:
“The danger to America is not Barack Obama but a citizenry capable of entrusting a man like him with the Presidency. It will be far easier to limit and undo the follies of an Obama presidency than to restore the necessary common sense and good judgment to a depraved electorate willing to have such a man for their president. The problem is much deeper and far more serious than Mr. Obama, who is a mere symptom of what ails America. Blaming the prince of the fools should not blind anyone to the vast confederacy of fools that made him their prince. The Republic can survive a Barack Obama, who is, after all, merely a fool. It is less likely to survive a multitude of fools such as those who made him their president.”
For the U.S. there is another destructive force at work called the Federal Reserve. Our dollar is the reserve currency of the world. This allows far cheaper credit than normal market conditions, even of a country our size. Like a drug, this situation has profoundly affected our culture over the last 50 years. As a country we have been able to make profound mistakes, socially, culturally and politically because we have not felt the brutal results of those miscalculations. Human beings only truly learn through pain and consequence. It’s what makes us grow as people. Is it any wonder that the average American has a stunted, weak, childlike personality?
What America has experienced as owners of the world’s reserve currency is incredible economic progress and incredible social regression at the same time. This social regression will eventually cause us to lose our status as a reserve currency, unleashing the consequences of decades of bad behavior.
Over the next 10 years there will be an incredible political upheaval, much like a brush fire, consuming feet of dry kindling. Reserve currency status does have a deep, profound dark side.
I suspect the article’s analysis grossly underestimates the degree to which corporations control the levers of government. In no small way they are one and the same, corpoartions=government.
One need look no further than the Wall Street bailouts, the influence of special interests and the like, to know that free markets and “private enterprise” are hardly the panacea to all of our financial problems.
It is this very concentration of wealth and power in the private sector that has so totally corrupted our government. I don’t think you can operate under the assumption that all government is bad, any more than you can adopt the “death and taxes” mantra as being defeatist. Government can only function effectively when it is divorced from the undue influences of other powerful interests in the market place, namely the super rich and their minions.
In the abscence of a rational distribution of wealth, wherein the super-rich control 90% of a nations wealth, there can only be corrupt government, and a populace perched on the brink of revolution. To suggest that they are poised to revolt against the government alone, is to dismiss the notion that the government acts indepently of the super-rich, which the events the last 2 years on Wall Street demonstrate is utter nonsense.
All fiat currencies will eventually go to zero value and all governments will eventually descend into some form of tyranny. This is, I’m afraid, the legacy we are going to leave to our children.
Government = freevil (free evil)