Are We Ready to Handle the Truth?

As of Friday, June 15, 2012

Here’s a proposition for all you historians and economists to consider: No country has ever failed because it was too rich and prosperous.

There is a corollary: All countries whose expenditures have become insupportable through some combination of taxation and borrowing have eventually failed. By fail, I mean undergone a radical transformation of government and an extended period of social and economic upheaval, likely including depression.

Recent elections in Europe proved, if there was any doubt remaining, that neither European voters nor their politicians are prepared to give up on the promise of a socialist utopia. Unfortunately, the countries that have elected leaders making the most promises are the same ones that can least afford those promises. Their economies are faltering, taxes collected are declining, and the bond markets are squeezing their borrowing capacities further.

Since both economies and populations began booming with the Industrial Revolution, social and infrastructure demands have been piled on military ones, as well as the apparently limitless ability of bureaucracy to expand itself, abetted by special interests overburdened with money. These demands are what have stretched governments around the world to the breaking point and beyond.

Greece is the current, but certainly not the last, poster child for the next phase of — what? What happens when the money runs out?

A discontented citizenry seems to be an early symptom. The Greeks, for example, have been rioting in the streets and burning things down, possibly in the belief that rebuilding them will spur a construction boom.

Then comes inflation. In ancient times, rulers clipped chunks out of gold or silver coins. These days, central banks churn out more paper. Greece and other struggling European countries are restrained by their common currency. Can the euro survive?

Next comes a reduced standard of living, as wages lose purchasing power and imports fall off because a depreciated currency won’t buy much.

Pretty soon rioting becomes a recreational activity, because there are no other ones available and people have a lot of time on their hands.

This is about where that radical transformation of government occurs.

It is possible to have a less contentious transformation, if only by degree. Consider Wisconsin, a state that could provide a template for changing governance. All it required was a politician who actually meant what he said, 18 months of civil disturbance, and the most expensive election in the state’s history. The result left a lot of government workers unhappy and a balanced budget. Get used to it.

Something like Wisconsin’s tough medicine is the only viable alternative to the unpredictable unwinding of governments around the world, including ours. Wisconsin’s governor, Scott Walker, has become a piñata for the left and a hero of the right. He is most likely neither. He is an apparently prickly individual who was elected on a platform of controlling the state budget, and actually set out to do so. Wisconsin’s citizenry was sufficiently fed up with the status quo to elect him and then confirm him.

Translating a single state’s action to the international stage will be extremely difficult, and some European nations may be just too far gone; but ask yourself:

What would happen if Mitt Romney, or, for that matter, Barack Obama, put forth concrete proposals to reform entitlements, the military and the tax code and to bring the federal behemoth to heel – not next term, not during the lame duck session of Congress, but right now? What if these proposals were made the heart of the presidential campaign, as they should be?

Do you think that, just maybe, all of America is ready to handle the truth, or is Wisconsin an aberration?

sbFred Wolferman lives in Southern Pines. Contact him by email at fwolferman@

cglobal.net.

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The_AnonymusProfit 11 months, 1 week ago

Great Great Great article fred/

DoubleHeroides 11 months, 1 week ago

Mr. Wolferman, I’ll preface my comments by stating that I am not a historian nor am I an economist. That being said I find that it may be useful for you to clarify or define what you mean when you imply that a country can be too wealthy or prosperous to fail, the definition of wealth becomes a sticking point for discussion, is the government itself wealthy, is wealth a figure of the total population? Or is the overall wealth of all individual citizens the measure you are using? In addition, the concept of failure is not clearly specified. Is the collapse of a form of government considered failure or does the country have to cease to exist entirely to constitute a failure? Before moving on too far I will admit that because you were also not at all clear on the timeframe for your historical analysis (whether we are discussing the last 100 years or the last 1000) I may be off my mark and you are certainly invited to correct my timeframe to fit the one you had intended.

With those questions unanswered I unfortunately will have to disagree with your proposition and therefore your ultimate conclusion by countering that historically larger, wealthier countries took the form of empires, the goal of colonization and imperial rule being a large driving force for expansion and, consequently a rise in overall wealth of a nation. Within these empires however the distribution of wealth was fairly polarized with a very clear working class (sometimes serfdom as in the case of Catherine II and Alexander’s Russian Empire), a middle class of tradesmen and merchants and then a ruling, upper class that held a majority of the overall wealth and power. As a consequence to this disparity the working poor of these countries, marginalized and taken advantage of without any benefits, assistance or adequate representation, would rise up in riots and revolutions in an attempt to garner themselves some protections. In Russia this scenario is what led to the Revolution of 1905 and the subsequent Russian Revolution in 1917 that led to the rise of the Soviet Union.

Almost conversely the French Revolution was caused in part by a financial crisis across the country caused by the France’s financial involvement in overseas wars and a regressive tax code that subjected the lower classes to a heavy burden while exemptions existed for the upper class. A failure by the government to address this issue eventually led to dismissals of financial advisors, proposals of increased taxes for the upper class and finally a revolution by the lower class. In effect a collapse of the previously (prior to the wars) wealthy French country and the beginning of a new country organized along ‘democratic’ principles. I mention this because there were no government “socialized” benefits for the poor, a symptom or precursor to a country’s failure you stated in your article.

DoubleHeroides 11 months, 1 week ago

These two examples demonstrate quite the opposite of your supposition earlier and point out that a nation that disregards its working class can oftentimes find itself overthrown. I now get around to my point which is less about the geopolitical or socio-economic factors that may lead a country to success or failure and more about the nature of humanity itself. Supposing that you are correct, that social programs administered by the government are the cause for the downfall of a country (which I have just shown to not necessarily be the case for wealthy countries) why then does the public, the voting population, allow a country to in effect destroy itself? The pendulum swing of public support and opinion at the national level is fickle enough that it will continue to transition from left to right and there is no correct answer to the question of social programs. If you underfund or defund them for too long the people will “rise up” so to speak and vote in those sympathetic to their plight. Too far down that road and it becomes the turn for people such as you to “rise up” to unseat a political leader. I’m afraid that there is no helping the nature of humanity’s sense of self service.

The_AnonymusProfit 11 months, 1 week ago

Dh i can answer your questions when i get home. Stay tuned

JD 11 months, 1 week ago

On the upper levels I feel no politician really wants to fix anything. Just get there and move on. Have you ever noticed how most congress people come out richer than when they went in? Insider info and massaging laws to get hold of public money.