Uncivil society and the collapse of the nomenklatura

A few moments ago, I read a review of a new book, Uncivil Society: 1989 and the Implosion of the Communist Establishment, and the following sentences jumped out at me:

This is less a story of dissidents, so-called civil society, than of the bankruptcy of a ruling class–communism’s establishment, or “uncivil society.” The Communists borrowed from the West like drunken sailors to buy mass consumer goods, then were unable to pay back the hard-currency debts and so borrowed even more. In Eastern Europe, communism came to resemble a Ponzi scheme, one whose implosion carries enduring lessons.

I found myself wondering “And this differs from our political class…how?”

The U.S.’s very own nomenklatura, our permanent political class and its parasitic allies, has been on a borrowing binge since the Great Society programs of the 1960s. Just like the pre-1989 Communist elites, they’ve been piling up debt in order to buy the consent of the governed with ever-more-generous entitlement programs. It took another twenty years, but the insolvency of California is bringing those chickens home to roost here as well. With the CBO now projecting that Social Security will go cash-flow-negative next year, an equally cataclysmic collapse of the federal government’s finances won’t be long in coming — in fact, I now give it over 50% odds of happening before Obama’s first term ends in 2012.

I think the answer to Mancur Olson’s great question may be heaving itself into view. In The Logic Of Collective Action and later works, Olson developed the thesis that democratic politics must more or less inevitably degenerate into a mad scramble among interest groups seeking to corner ever-higher rents from their ability to swing votes; see my previous post Some Iron Laws of Political Economics for discussion. So, where does it end? Increasingly, it looks like the answer is “when the creditors of the resulting Ponzi scheme decide they’ve had enough”.

Under today’s conditions, given who’s holding the biggest wad of T-bonds, that decision will probably be made in Peking.

53 thoughts on “Uncivil society and the collapse of the nomenklatura

  1. Or, to look at it another way, do the Chinese truly have such a passionate desire to see America destroyed that they would be willing to cut their own throat doing it?

  2. weird…it’s eating every other comment

    Thanks for convincing me to never use WordPress ;)

  3. I’ve haven’t read the book but there is something that looks strange to me. Borrow-spend-buy consent describes my childhood experiences in Hungary very well, we called it later a “premature welfare state”, maybe it fits East Germany too, but clearly not Poland and Romania which Amazon says they have examined.

    I’ve visited with my parents Poland around 1985 or so, some small town, and it was astonishing compared to our “premature welfare state”, because what we saw bordered on literal starvation. The meat shops and suchlike were all empty, we ended up eating some sort of dry cakes for lunch as we couldn’t find anything else. It was quite surprising.

    Romania was doing so bad in the eighties that eggs and meat were rationed, and were so scarce that it resembled the novels I’ve read about World War 2. They hadn’t even had enough glass bottles – vodka was sold in plastic bags. When late-eighties refugees from the Hungarian minority in Romania arrived Hungary, they were totally shocked that you can just walk into a shop and buy sausages or eggs because it was so different from the near-starvation they experienced at home.

    In short: I don’t know how much the Commies in Poland or Romania borrowed but surely it wasn’t spent on welfare in the modern sense of the word because these countries looked like towns under siege, with a scarcity of even the most basic things. I suppose it must have been spent on other things f.e. forced urbanization (bulldozing villages and forcing the inhabitants into Soviet-style block houses was big in Romania). (Part of the reason Ceausescu gradually distanced his regime from the Soviet Union was that they weren’t Stalinist enough for him, which says a lot about spending priorities, as in: guns vs. butter.)

  4. BTW the parallel needs to be drawn out further as history didn’t stop at the collapse of the Communist systems.

    Generally and by large, the entitlement mentality lived on and even now, 20 years later the picture isn’t really clear. I can’t really summarize the different politics tried in 8-10 countries during 20 years, in short, the three typical policies were

    1) continue pretty much the same welfare politics with the combination of 2) when the IMF says to,

    2) something that’s called the “lawnmover principle” here, simply cutting every budget chapter by a certain percentage and leaving institutes and people to cope with it however they can, instead of looking at what is essential, what is not, what can be replaced by what, how the relationship between things work etc. which is really stupid way to do it. Generally, when you have a significant percentage of the services centrally planned you just cannot cut it without planning the cut itself, as that results in chaos, you have to carefully unwind the planning, make a reduced plan, a smaller plan every year, until it disappears. This is why it was stupid. You can’t just simply take 30% of the budget away from a hospital and expect them to cope with when the people are not yet trained in self-responsibility and entrepreneurship, the cut has to planned and self-responsibility and entrepreneurship gradually introduced.

    3) some intelligent reforms aiming a gradual un-planning in order to introduce a working market, with careful consideration of what to cut this time, what leave to next time, and how these things work together, and exactly what incentives to introduce to slowly educate people towards a better working ethic which will later make it possible to cut further.

    Of the 3) which seems to be the most reasonable option of the three Estonia and Slovakia seemed to have done it well and were rewarded with really imposing GDP-growth figures but the strange thing is that they were exceptionally hard by the global crisis, it wiped out much of that progress so I think they must have done something wrong. In case of Estonia, it was inflation, in case of Slovakia, too much reliance on the automotive industry.

    So as of September 2009 there are no real success stories here anymore, the most hopeful countries suffered a big crash and it’s still an open question what would solve this problem. (I.e. what reforms cannot be derailed by corruption and accepted by the population and not have their results wiped out oin the next recession.)

  5. >The U.S.’s very own nomenklatura, our permanent political class and its parasitic allies, has been on a borrowing binge since the Great Society programs of the 1960s.

    Really? Cause the numbers I’ve seen (Wikipedia) don’t suggest that at all (Reagan, Bush, Bush II excepted).

  6. Any reform or other program can be “derailed by corruption”. The success of the Anglosphere countries is in large part based on their extremely low, by global standards, levels of corruption.

  7. William,

    partly yes, although other factors must be considered too. But I agree that it’s a very important factor. I think it would be high time to try to make a plausible theory how moral capital is accumulated, preserved and eroded, as it’s really all about that.

  8. pete: Depends on your definition of “binge”. I think you are trying to observe that there isn’t a spike in that data per se. It isn’t entirely untrue that what we’ve seen this last year or so isn’t that exceptional, but libertarians do have the luxury of claiming that they really weren’t all that happy with even the 1970 level of borrowing. In fact it’s the lack of spike and the fact that we have been overconsuming for decades that is the objection. This last year was the brick that broke the camel’s back, but we’ve been loading that camel up for a long, long time, with happy economists smiling and telling the government that exactly what it wants to do is the right thing, in fact, could it please spend some more?

  9. >In fact it’s the lack of spike and the fact that we have been overconsuming for decades that is the objection.

    But that’s just not what the numbers show. There are massive spikes everytime there’s an expensive war, but the interbellum trend is for reductions in debt. Overconsumption shows up in private debt, not federal.

    (Curiously, the Vietnam war seems to have been run on a fiscally responsible basis (relatively speaking).)

  10. >Really? Cause the numbers I’ve seen (Wikipedia) don’t suggest that at all (Reagan, Bush, Bush II excepted).

    One of the oldest dodges in the Federal accounting book is to hide debt by taking it off the books of the general fund. Wikipedia and you, I’m afraid, have both been had.

  11. >One of the oldest dodges in the Federal accounting book is to hide debt by taking it off the books of the general fund.

    Are you talking about unfunded liabilities, or something more obscure?

  12. >Are you talking about unfunded liabilities, or something more obscure?

    That, and various sorts of other accounting flimflam with the SS and Medicare budgets after 1965. One of the reasons the Wikipedia debt graph starts to climb seriously after 1980 is that Reagan’s budget director pruned back some of that nonsense. This had the effect of making it look like the debt exploded on Reagan’s watch, when in fact the general-budget figures were mainly revealing the full extent of pre-existing liabilities. What’s even funnier is that Stockman and Reagan did this on purpose – Stockman thought that by pushing the revealed debt number to historic highs he would create political pushback against further expansion of entitlement programs. He was, in this respect at least, a naive fool – he grossly underestimated the willingness of Congress to mortgage the country’s future.

  13. Is there any possible outcome to all this other than national bankruptcy?

    Given this guy we have in the White House, with trillion dollar deficits as far as the eye can see, it is hard to see any other outcome. The Chinese, for christ’s sake, have been telling us to calm down with all the borrowing.

    Our expectations have become so inflamed, it is hard to imagine any kind of spending restraint in the near future.

    And all this stuff Obama wants to do, from health care to cap and trade, is only going to make everything much worse. Is inflation around the corner? Is it maybe time to buy gold? ESR you are old enough to remember the late 70s and the inflation we had then. I remember seeing guys parked by the side of the road buying and selling gold out of his vw bus. God I hope we don’t see this again. All out entitlement programs are broke, from medicare to social security, and Obama wants to do more and more.

  14. “Is there any possible outcome to all this other than national bankruptcy?”

    I think America is the textbook case of “too big to fail”, the global economy depends so much on America that there will always be someone willing to extend more credit in order the avoid The Mother Of All Depressions.

    If I were you, I’d rather think about how that debt will be used. Hint: a population density as low as 80 people per square mile with excellent infrastructure? And the main creditors overpopulated? And a political system where buying corporations buys lots of lobby power to influence politics? Hmmm…

  15. If I weren’t merely treading water financially, I’d put my money into gold and real estate — things that have real value. I do think we’re on the beginning of massive inflation; there’s no other way out of this hole, if speaking from a political reality.

  16. “Is there any possible outcome to all this other than national bankruptcy?”

    Yes. The US still has an enormous income. The problem with the US is not a lack of income. The US is still the richest country the world has ever seen, and most of the reasons for that still apply. The problem is too much spending. Cut back the spending significantly and the problems we face are managable.

    Now, for the most part I’m cynical enough to agree the odds of this are pretty minimal, however, those Tea Parties do mean something and do somewhat play against the cynical interpretation. After all, for the US to be saved, it doesn’t have to become a libertarian paradise, it just has to spend less. Granted, a lot less, but this is not actually inconceivable. If the people push hard enough, it could be done.

    To be honest, I have admit I’m still betting against it, but no longer would I put it at a 100:1 longshot. If the US falls financially, it will not be because we dug ourselves into a hole we couldn’t get out of, it will be because we weren’t willing to do what it takes to get out.

  17. >If I weren’t merely treading water financially, I’d put my money into gold and real estate — things that have real value. I do think we’re on the beginning of massive inflation; there’s no other way out of this hole, if speaking from a political reality.

    Actually, even inflating the currency isn’t an easy way out any more. Because if they do that. the price of imported oil skyrockets. Instant voter backlash.

  18. esr says:
    >Actually, even inflating the currency isn’t an easy way out any more.
    > Because if they do that. the price of imported oil skyrockets. Instant
    > voter backlash.

    I don’t believe you are right, because the currency doesn’t need to be massively inflated, and (for reasons I stated in previous comments) I think exponential inflation is very unlikely. Consumers are used to oil prices higher than now, so a 10% increase, for example, is unlikely to have much political impact.

    However, on a separate topic, their kiss ass attitude toward Iran is very likely to lead to Israel bombing Iranian facilities, and that is likely to lead to all sorts of horrible consequences, including massive increases in the price of oil. No doubt we can expect the present administration to try price controls, and more and more Obama is looking less FDR and more Jimmy Carter.

    Oil Futures might be a good buy right now.

  19. “…gold and real estate — things that have real value…”

    Ouch. You might want to revisit your understanding of ‘value’ before you make some unwise choices :)

    A belief in ‘innate value’ has been behind many a loss.

    The real benefit of such tangibles is the inability of government to inflate them away – no matter what Peebo and his witless congress munchkins do, an acre is still an acre.

    I wish I’d had the wisdom to buy lead, zinc and copper before the election – have you seen the ammo industry lately? ;)

  20. Dan Says:
    > The real benefit of such tangibles is the inability of government to inflate them away

    You forget that the US Government is the largest owner of both gold and real estate in the United States. The have a great deal of control over their value both by controlling the supply, and controlling their utility. For example, you say an acre is still an acre, however if you are a timber company, and you can’t cut down your trees because of some darned spotted owl, then an acre isn’t an acre anymore.

    Value is always subjective and circumstantial. Governments can affect both these measures of value. However, at least they can’t just print more gold or real estate.

  21. “However, at least they can’t just print more gold or real estate.”

    Quite so…which was really my point. Gubmint meddling in supplies and environmental restrictions is a whole ‘nuther problem.

    There are no spotted owls on my acreage….would you like a bowl of ‘chicken’ stew? ;)

  22. >Wikipedia and you, I’m afraid, have both been had.

    Don’t give us that bullshit. Wikipedia doesn’t have a special trend for herself. It’s maintained by voluntary contribution, anyone can edit the articles. You talk as if the general policies of the entries of that free encyclopedia is predefined by some authority. That’s pure nonsense.

  23. more and more Obama is looking less FDR and more Jimmy Carter.

    If only he were. If only he had anything like Carter’s guts and resolve. Carter only lost because he, to paraphrase Dijkstra, told truths that might hurt. If we had listened to him then, we’d have a stable financial and energy base and fewer political entanglements in the M.E.

  24. Jeff Read are you eff-ing serious?

    Carter was perhaps the most incompetent person we ever had in the oval office. He talked of limits and decline, and then pursued policies to make sure it happened. Remember the malaise speech he made while wearing the stupid Ned Flanders sweater? He seemed unable to tell friend from foe; and appeased our enemies while annoying our friends. The Iranians sure as hell didn’t respect him. People today have a hard time remembering how shitty things were in the 70s with the hostage crisis, the oil crisis, and a pervasive sense of American decline.

    Carter was and is a sanctimonious, antisemitic asshole. And Obama is looking more and more like him.

  25. Jeremy Bowers Says:
    > Yes. The US still has an enormous income. The problem with the US is not a lack of income.

    I absolutely agree with that; whatever dollar to value ratio we choose, the US still produces a lot of value. However, it is worth saying that the value that is being produced is definitely decreasing as well, and all the various things that are being done have a very significant impact on this. For example, a massive new bureacracy to manage healthcare costs value that could be spent elsewhere. Cap and Trade largely forces the value to be generated in other countries rather than here in the US, and adds substantial cost when it must be produced here. So the income side is absolutely impacted too. Nonetheless, I thank you for your voice of good sense. There is still real value being produced, so I think the hill of Megiddo is a ways off yet.

    > The problem is too much spending. Cut back the spending significantly and the problems we face are managable.

    Here is where I am going to differ from you. Of course it all depends on what you mean by spending, but a huge part of the federal budget is transfer payments, not spending per se. An even larger part of it is non discretionary, meaning that the government is obliged by law to pay it, and much of that is in pre-negotiated prices in the fast shrinking dollar (Medicare for example.) Most of those payments have heavy lobbyists to ensure their rent, so it is very hard politically to decrease them. The only place where I can see possible shrinkage is in the military budget, which is huge, and it looks like Obama is rather stuck there too.

    What about the tea parties? I think there is a genuine groundswell against big government. I am happy to see that, I thought the American people had lost that. However, what I see also, especially so in the healthcare conflagration is not “Less government please”, but “don’t institute this new government program, because it might defund my government program.” That is not so good.

    In these matters you have to look at political reality, and the political reality is that there is no strong constituency for actually reducing the size of government. There is a very powerful constituency for increasing the size of government, so I think it is clear where it will go. Perhaps the uprising will slow the growth a little, but it certainly won’t reverse it. I agree with Eric, something is going to break. I am just not sure when, and I am not sure who will get the blame. However, don’t worry middle class, read Obama’s lips, no new taxes.

  26. Wait a second. Isn’t this sort of at odds with a previous post in which you said the US was at such an advantage against China that even if China *did* start making demands, it wouldn’t matter because we have the physical, tangible artifacts we bought back from them? Or something along those lines? Does this represent a shift in thinking, am I missing something obvious (quite possible), or is this a form of doublethink?

  27. >Wait a second. Isn’t this sort of at odds with a previous post in which you said the US was at such an advantage against China that even if China *did* start making demands, it wouldn’t matter because we have the physical, tangible artifacts we bought back from them?

    You’re confusing two separate issues. One is the consequences of a voluntary U.S. default on T-bonds; the consequences of that, I still think, would be manageable. Trouble is, defaulting wouldn’t solve the larger [problem, which is that the Feds have political commitments to spend more money on entitlements than the economy is capable of generating to pay for them (which is how we got in hock to the Chinese to begin with). My argument in the previous post was that the Chinese have no real power to bend the U.S. to their will; what they do have is the ability to smash the financies of the welfare/warfare state beyond repair, but that’s a trigger they can only pull once and there is no guarantee the results won’t be worse for them than for us.

  28. JessicaBoxer: That stuff is sort of my point. Transfer payments can be stopped, cap and trade can be rolled back (or never passed), etc. Yes, I’m cynical enough to know the odds, but it should be pointed out, over and over if necessary. The problems we face are mostly in human heads, not actual physical problems, and, frankly, one way or another the spending will stop. The only question is how.

  29. I have a debate going on in my head between Mancur Olson (_The Logic of Collective Action_) and Bryan Caplan (_The Myth of the Rational Voter_). Is the problem with our government that the political class are corrupt and have become unresponsive to the median voter, or that the political class are responsive to the median voter and the median voter is insane? Voters say they want the government to be fiscally responsible, but then they crucify any politician who wants to reform Social Security.

    Both of these explanations have some validity, but there’s something else going on, too. Caplan describes modern political thought as quasi-religion, and he hopes that “educated” political elites will exploit their “wiggle room” to do the right thing rather than what the “uneducated” voters want. But it seems to me that the political elites are more into political quasi-religion (ie. your “Gramscian damage”) than the median voter is. The median voter is more into traditional religion.

    I’m afraid that the situation we have is worse than either Olson or Caplan are saying.

    Maybe we need to look at this as a three-way conflict, with special interests (elites), the mass public (most voters), and the “attentive” public that are somewhere in between. The attentive public may be the group that is most motivated by political quasi-religion (and thus most sensitive to “Gramscian damage”).

  30. Peter A. Taylor says:
    >Maybe we need to look at this as a three-way conflict, with special
    > interests (elites), the mass public (most voters), and the “attentive”
    > public that are somewhere in between. The attentive public may be
    > the group that is most motivated by political quasi-religion

    You know your comment reminds me of something that really annoys me about polling organizations. Most polls make the mistake that most people care, which they don’t. For example, if you conduct a poll asking people if we should pull out of Afghanistan, the possible answer is yes or no. The truth is most people really don’t care one way or another. Of course some people care a lot, and a large group care not about the specific issue, but treat the issue as a marker for some bigger issue. However, nobody is honest enough to say “I don’t really care”, everyone is supposed to have an opinion about ever issue, and everyone’s opinion is apparently of equal weight.

    The truth is that on 99% of political issues, most people really don’t care. Oftentimes they are making a good choice to not care because the cost of forming a good opinion is quite high, and the benefit minuscule, unless you have an intrinsic interest. To compensate for this, what we have is a short cut solution — political parties. “I am a democrat”, “I am a republican”. means that you have professional democrats or republicans to determine what the appropriate positions are, reducing greatly your cost in determining your position.

    What this means is that politics is largely run by small focused groups that care about specific, particular issues. Abortion, or pro life. Gun nuts or gun control, save Medicare, provide single payer health care, save us from terrorist loons, save us from abusive CIA agents, give us net neutrality, butt out if the management of our networks. And so on. Each of these issues are things that significant groups care a lot about, and are willing to set up rallies in Washington, or show up at town hall meetings, or convince their friends, or put up TV commercials. This happens at ever level from federal down to dog catcher. Most of the time most people don’t care about school boards, or dog catcher, or parks commissioner. However, sometimes specific issues come up, a group forms around it, and moves the needle.

    Politics in the United States works basically this way. There is a professional political class who for the most part are primarily interested is keeping the political position. Additionally there are a few politicians that have a specific agenda and try to move their political sphere in that direction. (Bush was orginally the former and became the latter after 9/11, Obama has always been the latter. Clinton was the latter, and became the former. Eisenhower, Johnson, Nixon and Bush Senior was the former.)

    However, these two professional politicians have to move in the landscape that is set up by the thousands of small special interest groups. By special interest I don’t necessarily mean paid political lobbyists, but rather groups of people who form around very specific issues, and are willing to do something about it. Politics then is essentially an equilibrium of the different forces pulling in different directions.

    Most people don’t care, and most people are right to not care because there have no power to make a difference.

    I am reminded of the contrast between two political strategists on the right, Dick Morris and Karl Rove. For our non American readers let me explain. These two men are political consultants, who run firms that help politicians get elected. Rove was also quite heavily involved in the Bush administration, and Morris in the Clinton administration (though he is definitely a light right winger.)

    Morris’ is famous for his strategy of “triangulation” which essentially means adjust your policy positions to encourage more “middle ground voters” to vote for his candidate. Rove on the other hand takes a different approach. What he is famous for is his “ground game” that is to say, to get more of the people to agree with his candidate to get off their butts and actually go to the polls. The point here is that since elections rarely hit even 50% turn out, and most elections are close to down the middle then getting more of your guys to the poll, moves the needle to your side.

    This is the basis of winning political contests.

  31. “However, sometimes specific issues come up, a group forms around it, and moves the needle.”

    I like your overall assessment of the general political situation. This is why it is so important for the “10th Amendment movement” to succeed – to deny these groups as much political landscape as possible. Force them to take their issues to the states/localities, where they have to look their neighbors in the eye.

  32. Dan says:
    >This is why it is so important for the “10th Amendment movement” to succeed

    Dan, the Tenth amendment is basically dead. If you doubt that you need to look at the case law associated with it. For example, one of the most important opinions states that the tenth amendment “adds nothing to the constitution.” From a judicial point of view it is useless, and arguments based on it in court always fail.

    That is dumb. It is a betrayal. But it is reality. I would argue that the constitutional limits on government are pretty close to dead also. There are a couple of notable exceptions in recent case law, however, anyone who is relying on the constitution to save us from spiraling out of control is not wise. Most of what the federal government does has little basis in the constitution of limited powers, and so adding a few things at the edge is unlikely to cause much of a stir.

    Also, if you are relying on the Supreme Court to save you, I would recommend you consider how Obama’s hero, FDR, dealt with that sticky situation, and ask you if it could happen again today.

  33. BTW, regarding the vanishing constitutional limits, I was reminded on this with some of the recent arguments regarding health insurance. There is talk of forcing people to buy health insurance or face a huge fine. Some have argued that this is entirely unconstitutional, but the counter point is that people are already forced to buy car insurance, so the government has the right to force them to buy health insurance too.

    Regardless of the many other reasons why this argument is very weak, one point is relevant here. It is states that have laws requiring car insurance, and they probably have the right to do so. However, the federal government would not have the right to force people to buy car insurance, such power is not enumerated in their limited powers (states having no constitutional limits on their powers.) This illustrates the popular misconception that the federal government can do whatever they want, and it never seems to even occur in the public debate that there are things that the state governments can do that the federal government cannot.

    (BTW, the other argument that is quite relevant here is that the states own the roads, and have the right, therefore to set the rules of the road, much as you have the right to restrict religious practice and freedom of speech in your living room. Whether the government should own the road is a different matter, but the fact is that they do.)

  34. I concur with your bleak outlook, but I do not let it cast me into despair.

    Firstly, court opinions are not law, nor are they constitutionally gilded. The fact that we revere them so much as ‘rulings’ is shocking. Changing this attitude, if it can be done, will take time – not just for an ‘intellectual’ revolution, but also to physically unseat the black robed bastards. A nice first step would be to have a courageous chief executive that publicly denounces and discards bad judicial opinion. Stop laughing.

    “…anyone who is relying on the constitution to save us from spiraling out of control is not wise”
    “Not wise” is an extremely charitable description ;) The constitution is not a magical amulet; it is just a bunch of scrawl. It is nullified with all the ease of merely turning ones head. It is, however, officially the supreme law of the land, and it is up to people (who give a damn) to enforce upon the government it establishes. Time will tell whether Americans have lost the founding spirit and ultimately betrayed the nation.

    “It is states that have laws requiring car insurance, and they probably have the right to do so.”
    Per the 10th ;)

    “(states having no constitutional limits on their powers.)”
    Outside the limits prescribed by the concept of ‘incorporation’, that is…

  35. In the Communist block, politicians had taken over the entire economy and the money was borrowed not to bribe citizens into re-electing the government but to keep the economy working at a sustainable level of terror. In the US there is still a significant amount of efficient business and there are still enough businesses not vitally dependent on the budget. In fact, they are to a very large extent what keeps the world economy going. So a difference is that “perestroika” and “transition” policies would be meaningless, as there is nowhere the U.S. can import solutions from. The good results of the Chinese economy are dependent on a large free market economy to the same extent a socialist planner is dependent on market prices for a “scientific” management of government-controlled economy.

    In other words, if the people of the U.S.A want out of the current mess, they can only rely on their abilities. That is why it is important how the “cataclysmic collapse” would occur and who would be in power in the government that will have to prepare it. It was a lucky occurence the leader of the reform envisaged and promoted by the KGB – more in tune with the reality than the rest of the nomenklatura – was eventually Gorbachev who was sufficiently naive to believe communism could be reformed and could work without a generalized system of terror. A more realistic person such as Andropov or a more narrow-minded one like Putin would have caused a lot more problems or even started a major war.

    Thus, while the collapse of the communism had very little to do with an alternative, organized civil society, the degree of success of the reforms after the fall has highly dependent on the existence of such a structure to assume a political role and not least to block the return to power of the old politicians. Similarly, in the U.S. there should also be an organized and recognized alternative capable of taking over and not least, an old leadership sufficiently desperate and unagressive to start a round table. Otherwise, there is a clear risk of the collapse taking in capitalism and republican democracy, with long-term dramatic consequences for civilization and life quality at a global level.

  36. “(states having no constitutional limits on their powers.)”
    Outside the limits prescribed by the concept of ‘incorporation’, that is…

    And other limits the constitution puts on all levels of government, not just the national (horribly mis-named “Federal”*) level.

    Article I, section 10, and Article IV constrain the behavior of the states. That these provisions exist at all puts the lie to the idea that the Constitution is only about the national level of government. Some Amendments say things like “Congress shall make no law…”, which should be understood to be a limitation on national power (for the Executive branch at that level would have no constitutional power to intervene where Congress has been forbidden to legislate, and the Judicial branch would have little basis to judge what Congress cannot legislate). But others simply state a limit on government power, without specifying the level at which the limit applies:

    A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

    Nothing there allowing an exception for a state government or one of its local subdivisions to infringe that right. Therefore, the 2nd Amendment doesn’t need to be “incorporated” to prohibit State legislative action by some strange synergy between it and the 14th; that prohibition was in its plain wording from the beginning.

    *Federal refers to the system of placing certain limited powers in the hands of the national government, while reserving other powers to states and the people to handle at more local levels. Calling the national government “Federal”, as it arrogates unto itself power far beyond the intent of the Framers, deprives “federal” of its meaning.

  37. It’s these “off-budget” liabilities (Social Security, M*care/caid) that are about to peak that will rapidly put us into an unsustainable situation with our debtors. Presently those debtors are still primarily other Americans but the gross trade imbalance with China increases their influence at just as dramatic a rate of growth.

    Problem with China is that their mixed up economic & political situation is only sustainable so long as its people continue to see economic progress – which is unsustainable at the current rate. Compound that with the gross imbalance of male/females guaranteeing tens of millions of males will not have the opportunity to settle down and marry and you basically have a giant bomb whose trigger is held by the current Chinese leadership who are perfectly willing to destroy their citizenry & world economies in order to retain power and increasingly have the means to do so with a lessoning ability for us to influence its outcome. An incident with N. Korea or Iran could cause an accidental flash of this keg with little warning.

    Unless more people of economic & political responsibility (such as Ron Paul – and I give that example to demonstrate just how radical a change it must be) suddenly gain leadership in the USA then I see no way to avoid an economic and military conflict with our debtors. Unfortunately for the rest of the West – they’re kinda screwed as either direction is bad for them since economically responsible US politicians tend to be a lot more isolationist so European socialism which has been artificially propped up for decades is gonna fall hard.

    Only hope is for US to change policies, restore Constitutionality of its govt, and for our debtors to be willing to hang on for the ride. Where’s that Y2K bunker plan again??

  38. I’m in total agreement with you, Monster.

    The only reason I mentioned ‘incorporation’, even though it is not formally prescribed in the constitution, is that I do consider it to be a useful interpretive rationale.

    I happen to consider the “privileges & immunities” clause (A4:S2:C1) to be far more significant than most people would credit. I think that it it is at the heart of the concept of ‘incorporation’.

    The 2nd Amendment establishes an ‘immunity’ from infringement upon our right to keep and bear arms. Per the P&I clause, this immunity should be considered ‘incorporated’ into the limitations of state and local government.

  39. 1) It is incomplete to look only at the budget, or even at off-budget expenditures. A large, but uncalculated, portion of the economy is allocated via regulation. For example, whether one thinks the current water situation in CA is a good thing or a bad, it is undeniably a major reallocation of national resources and income away from farmers and workers. Another, one reason the rich have become Democrats is that many of them, such as lawyers and bankers, are rich because of the special interest state. Many of our wealthiest citizens are where they are because of government, not the market or productivity.

    2) Like esr, I do not think current trends can continue for much longer. See The Coming of the Fourth American Republic.
    http://american.com/archive/2009/april-2009/the-coming-of-the-fourth-american-republic/?searchterm=republic
    Look at Olsen’s other book, The Rise and Decline of Nations.

  40. @Jeff Read
    You said: “If only he were. If only he had anything like Carter’s guts and resolve. Carter only lost because he, to paraphrase Dijkstra, told truths that might hurt. If we had listened to him then, we’d have a stable financial and energy base and fewer political entanglements in the M.E.”

    I was a young adult during the Carter Depression. The Carter fiscal policy was to keep the money supply artificially constrained in order to keep unemployment high and inflation lower. I say lower instead of low because even with this scheme inflation was not low during the Carter Depression. We had double digit inflation rates, interest rates, and unemployment rates. The money supply was so constrained that banks had no money to lend.

    A stable financial…. base? Well, I guess you can say that an economy with very constrained money supply, high interest rates and high inflation and unemployment rates with no end in sight is “stable”.

  41. @Ben Scherrey

    I was discussing with an intelligence analyst for one of the intelligence agencies my idea that the United States should adopt a one China policy to reduce friction with the Chinese communists and perhaps we could trade that for a one Korea policy. In other words we push Taiwan for reunification with the mainland and China agrees to abandon North Korea which would then collapse and reunification with South Korea would be a probability.

    My friend laughed and said that the intelligence community already had adopted a one China policy because they knew that the Chinese communist regime was going to collapse and the people in mainland China would look to Taiwan to save them from starvation and fuel shortages of all types. So, basically the mainland was going to be reunified with Taiwan, not the other way around.

    I asked my friend why he thought this and he gave me some stats that were truly breathtaking. China runs out of both food and fuel in the not so distant future with no way to replenish them. They already had 30 million newly unemployed because of the global economic downturn.

    I think the Chinese communists’ days are numbered. They have been building this economic miracle on the backs of complete environmental degradation and slave labor. As you said the communists’ ability to pacify their people with economic prosperity is not sustainable.

  42. >I was a young adult during the Carter Depression.

    I was a few weeks shy of 20 when Carter was elected in ’77, and ‘curious’ tells it like it was. Carter’s ineptitude at domestic policy would, as it later turned out, be exceeded by his disastrous incompetence in foreign policy.

    As for the notion that Carter had either “guts” or “resolve”…it is to laugh. It is to laugh exceedingly.

  43. Shenpen: Romania was the one East Bloc state that had little foreign debt. Romania had just enough domestic oil production not to be drained by OPEC, and (as you observed) Ceaucescu imposed draconian restrictions on consumer goods.

    Curious: That’s a remarkable prediction. An RoC comeback would be a historical miracle, comparable to the Christian Reconquista of Spain from the Moslems. However, Taiwan has only 2% the of the mainland’s population, and less than 10% of its GDP. The Reconquista took over 700 years.

  44. Am I getting it right that Curious and ESR claim Carter’s main domestic policy failure was not to inflate the monetary base enough? That sounds like a curiously un-Libertarian position to take if I compare it with all the attacks on inflation as the root of all economic evils I’ve read on mises.org. Also, http://www.city-journal.org/2009/19_3_otbie-inflation.html

  45. >Am I getting it right that Curious and ESR claim Carter’s main domestic policy failure was not to inflate the monetary base enough?

    Not in my case. You don’t cure inflation by pumping more paper into the economy.

  46. > One is the consequences of a voluntary U.S. default on T-bonds; the consequences of that, I still think, would be manageable. Trouble is, defaulting wouldn’t solve the larger [problem, which is that the Feds have political commitments to spend more money on entitlements than the economy is capable of generating to pay for them (which is how we got in hock to the Chinese to begin with).

    Defaulting can force a solution to the larger problem. All it takes is for potential lenders to say “I’m not loaning to the US govt because it defaults on its debts.”

    Unfortunately, potential lenders could say “this time it will be different”, as they did after Argentina defaulted. (IIRC, Argentina defaulted a couple of times within the last 50 years.)

    Then again, that’s not a bad solution either. If lenders are willing to keep throwing away money, why not take it?

  47. About blog post and a commentary:

    A part of borrowing of communist states was done for building factories, industrial facilities and the like (many good things have been built over this period of time; I doubt that the “burghezo-moÅŸierii” – in english about “burgeoisie and great landowner people”- would have done it, to say as the propaganda said it :-) ). But many of these factories were not rentable and the problem compounded over the years and contributed to what ESR stated in the post.
    Otherwise, I was told that in the sixties in Romania you could find plenty of food at shops. In a history manual I studied in high school (about 1995-1996) was said that the penury Shenpen speaks about didn’t come until CeauÅŸescu decided to pay back the foreign debt before it was due; being denominated in other currencies, receipts from exports were supposed to supply the cash needed; but because of industry’s inefficiency (it did not realised enough products marketable on needed currencies), exports were forced, including necessary foodstuff; in this respect, this manual sounds more credible than that’s book estimation.

  48. esr,

    The borrowing binge began in the 1980s under Reagan and started again under GW Bush. It most certainly was not the result of social programmes, but a combination of military spending and tax cuts. So your post is based on a misconception.

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