The Economic Crisis is a Sideshow to the Real Issue

The world is changing and few people understand the implications. Old rules and guidelines which worked for generations no longer apply. Profound changes, termed “discontinuities” by the late Peter Drucker, have obsoleted them. For those accustomed to linear change, there is a  new normal. Mr. Drucker described a discontinuity as a change so profound that normal extrapolation of the past would produce misleading forecasts.

The most profound change the world faces is the future role of government in relationship to its citizens. Here are a few of the unsettled issues:

  • Are citizens going to allow government to continue to grow at the expense of the productive sectors around the world?
  • Can economies prosper as government becomes a larger section of the economy?
  • Does government work for the people or has this relationship been inverted?
  • Once government has reached a certain level of power over citizens, is it possible for people to ever reduce its control and power?
  • Will what appears to be inevitable sovereign bankruptcies destroy economies, welfare states and societies themselves?

Short of the disruptions associated with a World War, there has never been as much uncertainty regarding the future. For the US, isolated by geography from most wars, the current situation has no comparable other than the Civil War. What is happening is not understood by the masses. For them, this crisis is another economic problem, just another recession albeit one that is harsher and longer than previous ones. For them, it will eventually pass like all others.

The reality is that this crisis is less an economic crisis than a political crisis. In raw terms, we are at a crossroads between freedom and slavery. Are the elites going to enslave the producers? That is the critical question, and this issue is also the causal factor behind what is perceived as just another economic crisis.

Sadly, many citizens do not recognize what is at risk. If it were merely the standard of living for the next generation, this crisis would be serious but not fatal. That is trivial compared to the risks to freedom and the future of civilization and peaceful coexistence itself.  Social cooperation, innovation, liberty and progress are in play. If government suppresses its citizens, the world will enter another dark ages in terms of economy, peace and humanity.

Government, the so-called custodian of civilization, precipitated the economic crisis as a result of their desire to control everything economic and personal. Nowhere is this more apparent than their favoritism to financial institutions who reciprocate favors back to the political class.

As economic conditions worsen, government ratchets up its efforts to control and dominate individuals, information and outcomes. We are in uncharted territory, at least for the modern, developed world.

The force that created the crisis is unwilling to admit error or relinquish control. Despite deteriorating economic and social conditions, government appears determined to exploit these conditions to obtain more if not total control over its citizens. In poker parlance, government has gone “all in.”

The alternatives are clear. That State can be dismantled or it will assume total control. We can descend into the totalitarianism that plagued most of mankind for much of  history or we can once again become masters of the government. There is no other outcome! It is one or the other.

Monty Pelerin – Economic Noise