Compounding Error: Your Tax Dollars At Work

As we hunker down in the Whiskey Bar and await the hyperinflationary doom that is bound to come, we have to marvel at the reasons for and manner of our nation’s destruction. As a group currently numbering somewhere around 300 million souls, we’ve sold out our security, freedom and future for what? Unpayable debt on tract housing pods, car dependence and cheap doodads from the Far East? It’s almost funny.

And what has been the means by which hundreds of millions of people have turned themselves into a race of clowns bound for extinction? Why, faith in the voting booth… Misplaced trust in the state…The usual stuff.

Government is simply the means of compounding mistakes, of bundling them up and paying them forward. Instead of the agility of the market, you get the lead foot and heavy hand of centralized planning. Mistakes that individuals would make and learn from—in the form of individual bankruptcies and failures—are necessary to keep a society on a healthy and sustainable path. That multitude of tiny failures throughout society is a required corrective feedback…but people—given the chance—come by and by to prefer the state’s interference to this natural process of failure and correction. The state impedes processes that are unpleasant in the short term, but healthy and essential for the long term.

Acceleratory hyper-growth is only possible with the streamlined efficiency of the state, but that efficiency and that growth come at the cost of inevitable overshoot. The actual slow and steady growth of a market-driven world is replaced by the state’s breakneck “efficiency,” but the mistakes that characterize the creative destruction of the market don’t magically disappear…they get stored up and unleashed all at once later.

Our tendency toward bad decisions manifests as massive governance itself. Government is simply humanity’s way of ignoring reality’s warnings…at least for a while… People cherish the roads, the trade, the complexity and comfort that come to fill their lives: Highways, globalism, social security, the peace of empire, systems too big and wonderful to go without and too big to fail …until they do.

The mobs always favor lending the state more power and the state is only too happy to keep the goodies coming by the usual scams: currency debasement, easy credit, foreign resource grabs. The market would probably never have brought us many of the supposed “goodies” to which we’ve become so accustomed and certainly not at the scales only possible with larger government. And we most likely would have been better off.

The state is essentially pretence to a wealth that doesn’t really exist. The state’s essence is welfare and warfare. It’s public works, make-work, misappropriation and misallocation.

Want more of something, but can’t afford it? Want roads, highways, more trade, or war when trade doesn’t work to your liking? No problem!

Guaranteed income in old age? Nationalized compulsory education (and indoctrination), nationalized health care, government guarantee against all failure? Just ask.

Why merely allow an economy to grow at that a glacial but natural rate? Just stimulate! Lower interest rates below what the stodgy market would have. When in need, print money and goose the system with pretend wealth.

And if all the above results in an infrastructure and lifestyle that require deals with the devil to prop up…? Well, a state can always resort to war.

Were an individual to commit pre-emptive murder (“my neighbors kept looking at me funny…”), take things that didn’t belong to him or pass bad checks, he’d be locked up before too long. If a smallish group of unelected individuals were to do this, we’d call them gangsters. But grand larceny, gangsterism and mass murder become things to celebrate in the hands of the state. In fact these things are the true raison d’etre of governments. Things that the sane and law-abiding individual would never dream of doing on his own become entirely reasonable when he is in the midst of a mob. That’s the appeal of government. The formation of the state is the manifestation of the uniquely human tendency to overreach. The state is the culmination of the wish to ignore limits: of ecology, of civility and of good sense. It specializes in fostering the unsustainable—spending, habits, infrastructure and population—through activities normally regarded as sin when done by any individual.

Right now the market seems to be telling us one thing, but the feds would like us to believe another. They want us to believe that we can and should keep zooming back and forth over massive distances, getting goods cheaply from around the world, showing up dutifully every day to our cubicles…but according to the market it’s time to reform our ways and redirect our energies…time to create a built environment worth inhabiting and more in line with what will work amid reduced energy availability and to occupy ourselves with things worth doing, like producing the things we need to live closer to where we live.

The market—oft-ignored augur of reality—seems to be telling us to expect to stay closer to home, to start a garden,maybe even to get to work on an actual farm. It’s time to come in from the exurban expanse. It’s time for the auto industry to die—the commercial airlines, too. Heck, if it hadn’t been for the federal government’s vigorous intervention neither of those industries might ever have assumed the size and importance they did in the first place. The market would have gotten in the way of a lot of the things we take for granted today…but then we wouldn’t miss them. Now we get to bawl as our presumed entitlements of conquering distance, of ease and plenty get ripped away from us.

The market is trying its best to start correcting those state-driven errors. Maybe it’s trying to pry coddled unionized workers from the cooling corpse grip of the auto industry so that labor can be (naturally) reallocated to local food production (farms). But the state will fight that by stealing a little bit from everyone in the form of inflation in order to prop up that which should fail. The same goes for every other “bailout.” The market says firmly “Time to stop this…and it was a dumb idea anyway,” but the state will resist…But that’s what states do. They try to defy the market by means of theft and force…and as a result bundle the mistakes and their consequences to be suffered all at once.

Please don’t misunderstand; I’m not calling for any edicts or proposed solutions from the state. That’s rather like asking the arsonist to help put out the fire. I don’t care much if climate change is man-made. I don’t care whether or not you believe Peak Oil is a hoax. I just know that somethin’s gotta’ give. We’ve gotten away with efficiently making collective stupid decisions for a long time. Now it’s time to get what we got coming…good and hard. What I expect to happen is for the mess to sort itself out with all the attendant consequences. Sometimes there’s no easy way out despite the wishing and the begging. Sometimes you can’t avoid the gnashing of teeth and the wailing that goes with it.

Regards and a Happy New Year,
Gary Gibson,
Managing Editor, Whiskey & Gunpowder

January 6, 2009

The Daily Reckoning