The Economy of the Future
In Niall Ferguson’s book, The Great Degeneration: How Institutions Decay and Economies Die, he quotes one of my favorite passages from Edmund Burke’s Reflections on the Revolution in France where Burke explains that “one of the first and leading principles on which the commonwealth and the laws are consecrated is — that [people] should not think it among their rights to cut off the entail or commit waste on the inheritance [of posterity] by destroying at their pleasure the whole original fabric of their society, hazarding to leave those who come after them a ruin instead of an habitation….” Burke added that society is a partnership between the living, the dead, and the unborn. About this partnership Ferguson wrote, “In the enormous inter-generational transfers implied by current fiscal policies we see a shocking and perhaps unparalleled breach of precisely that partnership.”
Our economic future is now threatened by the government’s inability to control public spending. The developed world is going deeper and deeper into debt, sacrificing the future to the present. Already in the 1890s the Irish historian and political theorist William Edward Hartpole Lecky saw that increasing government taxation and expenditure was a trend which might eventually lead to bankruptcy on a massive scale. He believed government indebtedness was a serious and long-term threat to liberty and prosperity; for when a government borrows it is stealing from the future. Even worse, when such a theft is accomplished in the name of equality, warned Lecky, it only proves that “democratic tendencies are distinctly adverse to liberty.” Such a realization is unsettling, and we do not know how to fix what now seems broken.
If we return to Burke’s quotation, above, we today find that the partnership between the living, the dead, and the unborn has given way to the selfishness of the moment. The unborn have no vote and the U.S. Constitution never really protected posterity from the vagaries of the democratic present. Supposedly we are to feel a natural concern for the future, and this was to restrain our behavior. But our feelings for the future are clearly attenuated. Perhaps we don’t even believe that the future will come. But when it comes let us admit that the banks will be empty. Uncle Sam will be broke. Every taxpayer will be stripped bare. And why must this be? The answer is given at every election by our leading politicians. Social justice requires solutions now, regardless of the future cost; for everyone must have healthcare and every country in the Middle East must have democracy; and it’s all very expensive, of course, so we settle the bill on posterity.
Posterity cannot vote against us, but we can vote against them. If we were decent folk this would not happen. But we aren’t decent. Not any longer. Let us therefore eat up our inheritance and leave nothing for our children. Such is the logic of our system of government. Such is the logic of our governors – those great visionaries. The politics of our time is about arranging the economy in such a way that our children will pay. Who, after all, can stop us from doing this? We are determined. It is already largely accomplished. The system of the Founding Fathers, which was designed to limit the power of the government, has been subverted by a generation that wants everything for itself now.
Recent testimony before a Congressional Committee offers fascinating insight into the breakdown of limited government in America. Congressman Bob Goodlatte (R-VA) recently put a question to legal analyst and scholar Jonathan Turley: “How does the president’s unilateral modification of acts of Congress affect both the balance of power between the political branches and the liberty interests of the American people?”
Professor Turley replied by saying that the danger to liberty was “quite severe.” President Obama has not merely endangered the Constitution, Turley explained. “He’s becoming the very danger the Constitution was designed to avoid. That is the concentration of power in every single branch.” According to Turley, the power of the presidency has been greatly expanded under George W. Bush and Barack Obama. What we now have is an “imperial presidency” which Turley describes as “a model of largely unchecked authority,” Turley further added. “We have agencies that are quite large that issue regulations. The Supreme Court said recently that agencies could actually define their … own jurisdiction.”
Besides leaving our posterity with an impossible burden of debt, it seems we are also leaving them with a gigantic government machine which must inevitably tyrannize over them. And we should not be fooled where the current regime is leading us. Here government is eating away the market, one slice at a time. Today it is healthcare; tomorrow it will be our “carbon footprint.” We can see how everything is already being arranged; for nearly everything derives from the market economy, and when you take that economy away you must ration what remains. And here is another legacy we leave to the future.
For those who believe freedom is a moral imperative and tyranny an unmitigated evil, the freedom represented by the free market is not the corollary of untrammeled greed. The market economy is moral because it is the only path leading to freedom. Without a free economy, all other freedoms become meaningless. What dignity, then, remains for man? All that would remain is the violence of a dictator; for when the hour strikes and the debt finally comes due, the dictator will claim that the market has failed and socialist dictatorship will remain the only option. Therefore our children will lose their freedom, which is the dearest part of their inheritance.
“It is not surprising that a majority of current voters should support policies of inter-generational inequity,” wrote Ferguson. “But what if the net result of passing the buck … is not just unfair to the young but economically deleterious for everyone? What if uncertainty about the future is already starting to weigh on the present?” And this is close to the truth, indeed! Here Ferguson warns that the future is not so far away. We are going to have to face up to the fraud that has been committed much sooner than we realize; for the present system, says Ferguson, “to put it bluntly, is fraudulent.”
In his Psychology of Socialism Gustave Le Bon wrote of the “decay of will, coinciding with lack of initiative and the development of indifference.” This is where we stand today. Our financial future has been determined by a kind of paralysis – an inability to act. While it is true that we have leaders, and we have men who understand the problems of the hour, we also have a sense of our own helplessness; for everything is so large and the individual has been made so puny. But we must not forget that the individual is the effective agent of all action. As individuals we are responsible for ourselves. And we are responsible for the future.
About JR Nyquist
JR Nyquist Archive
|12/30/2013||A Financial Poem for the New Year||story|
|12/23/2013||The Free Market's Path to Peace||story|
|12/16/2013||Learning the Wrong Lessons From the Financial Crisis||story|
|12/02/2013||China Troubles and the Incapable Nitwits of 2014||story|
|11/25/2013||The Lost Context of the Economic Crisis||story|
|11/18/2013||Economic Science and the Underworld||story|
|11/12/2013||The Market Knows Best||story|
|11/04/2013||America, Saudi Arabia, and the Dollar||story|
|10/28/2013||The Economics of Disagreement||story|
|10/21/2013||High Debt, Low Integrity||story|