It took the Roman empire about 300 years to debase the greek drachma enough such that society imploded into the Dark Ages.
You can follow all of the ups and downs of the history of the Roman empire and you can identify hundreds of proximate causes for the unraveling of society including political intrigue and infighting in policy making elites, constant war, economic malaise, famine, loss of classic virtues in society … etc. sound familiar? But, the underlying cause for the implosion of society, is the same underlying cause we are seeing play out today. central bank money printing.
All of the other hypotheses about what leads to the collapse of civilization are proximate – superficial – coincident – correlated causes that hide the fundamentally underlying cause. which is that politicians inevitably attempt to gain power through debasing the currency. politicians always debase a currency because the easiest way to tax citizens is via the inflation tax. Since 1913 the dollar has devalued 96% thanks to inflation. We are like frogs in the boiling pot. Before we can jump out, the water is boiling (i.e. inflation has sown its fatal distortions) and we’re dead.
governments always grow ever larger due to intervention policies – war or welfare -- which seem to be necessary in times of external and internal shocks/ crisis, but remain in place (due to the ratchet effect) well after the crisis is past). for example tax measures implemented during a war are often kept in perpeturity. other interventionist policies developed during times of crisis, such as economic central planning measure, are seldom unwound or onlyl unwound grudgingly … and thus, the cycle of crisis and intervention paves the way to the road to Serfdom.
John, you have created a world view such that bad news can always be blamed on some exogenous problem. You are already saying you assume the US is in decline so that when Obama’s policies prove counter productive, you can claim that Obama did the best he could given all of the factors outside his control, including a hostile GOP.
Take a closer look at your model and you will see that it is self contradictory. In order for Obama to get the freedom he needs to implement his policies, we’d need to get rid of the GOP or move to a single party political system. if we do this however, this leads --by definition-- to a government that has absolute power. This is what we are seeing in China. China has what appears to be an enlightened one party system which seems to be working great over the past 30 years, but will implode dramatically unless the political system is turned into a multiparty system based on rule of law.
Power tends to corrupt and absolute power corrupts absolutely
This is an ironclad law of human politics and social organization. It is one of the two key laws that you can’t just assume away. the other natural law of politics and social policy is the law of unintended consequences (L.o.U.C.), which prevents well intended policy from delivering social goals promised by policy makers. The very act of aiming for social outcomes triggers a cascade of unintended consequences that not only prevent the goal from being reached, but also makes the system more fragile and vulnerable to systemic collapse. Policy makers can change the rules of the game, but they can’t deliver certain outcomes, such as equality, social justice, level playing field, stable growth, etc without undermining the very achievement of those very goals. Attempting to reduce volatility from markets for example will necessarily sow the seeds for systemic risk. Markets can only be durable when they are allowed to be volatile!
In order to implement your perfect world with your laundry list of enlightened reforms (e.g. implementation of tort reform, entitlement reform, health care reform, etc) , you need a system unemcumbered by two party grid lock. but in so doing you get a problem where power becomes unchecked power and thus is vulnerable to the law of absolute power corrupting absolutely.
A system organized around free markets and limited government facilitates a system in which people can agree to disagree. The system channels human failings and different view points into behavior that promotes overall social welfare. your system requires a docile public or at least 51% of the public to be "brainwashed" to agree to a certain set of "objective" outcomes you wish the government to seek. You need philosopher kings who are perfectly reasonable and rational and not influenced by ideology or opinions or imagination. These philosopher kings are by definition "unreal" because they possess qualities not entailed in humans. Such a world ruled by such philosopher kings is therefore utterly fanciful, impractical, impossible.
In my system with a limited government and free trade, humans can be what they are: human. The rationality of the market is “ecological rationality” … which means it is rationality that emerges out of regular human exchange and thus is beyond what Vernon Smith calls "constructionist rationality" or the design rationality of mere individuals or experts. ecological rationality goes beyond the rationality -- and capability-- of human brains or computers… it is a "rationality" that is emergent and that evolves out of the interactions of only partially rational individuals who are flawed as all humans are. the results of ecological rationality are better than humans or policy makers can do via constructionist rationality implemented through a central government policy making authority.
If we notice what seem to be "irrationalities" in social outcomes (sometimes called market failures), it is impossible to fix these outcomes with policy designed via constructivist rationality.
The best we can do is to try to fix the institutions or the rules of the economic/market/social system that apply to everyone.
We should not have different rules for different sets of individuals, because such systems open the way for arbitrary human intervention and rent seeking opportunities for govt. a second reason for what appears to be an irrational outcome for society is that a previous well intended intervention aimed at delivering some desired macro outcome instead caused distortions thanks to the law of unintended consequences.
The third reason we may see what we think is an irrational outcome is that we misinterpret the outcome as irrational when in fact it is perfectly rational. Consider an asset boom and bust event in an eocnmoy that causes a large bankruptcy leading to large lay offs and social disruption. The boom is caused by irrational exhuberence and thus we may think of it as irrational and thus as a case of market failure requiring a solution. But the boom-bust cycle may be a natural cycle just like happens in nature, which helps promote sustainability of an eco system over a long time. Without the boom-bust cycles, the system may accumulate systemic failure risk.
We do not live in a world that is the best of all possible worlds. We don’t have to be resigned to our current system as it is constituted. But we also can’t fix the outcomes to the outcomes WE prefer because we cannot circumbent the law of unintended consequences or the law of absolute power corrupting absolutely. Social systems can’t be engineered like machines because they are not “man-made” in the sense we think of a physical technology. Social systems are emergent natural systems that emerge according to discovered rules (not man made invented rules or regulations) that MUST accord with natural laws. Society is natural after all. it is invisible but real. It is not artificial. If you think of the economy as man-made, you’ll always end up with the wrong assumption about why things happen and what the solution might be.
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