Much ink has been spilled over the years bemoaning the fact that American’s don’t save, more even than the ink poured over the inverse propensity of the Japanese. The recent “haircut” being imposed on depositors in Cyprus, however — and all the reassurances of how exceptional this move is and how unprecedented — only makes sharper the long-standing policy, now in full overdrive, of the US central bank of keeping interest rates too low for savers to get ahead of the inflation that erodes the value of their money.
In effect, the Federal Reserve has been funding growth since at least the 1980s by doing in darkness what Cyprus has so rashly decided to make explicit: that is taxing savings by reducing their real value. Cyprus had no choice — it does not control its own currency, and so induced inflation, concealed or otherwise, is plainly not an option. The Fed does have a choice, but poisoned as it is with long-falsified Keynesian ideas it persists in taking our money for the sake of growth that manifests itself increasingly in a succession of asset bubbles.
The persistent mantra of the call for limiting the size and power of government that has so captured the imagination of a certain segment of the American body politic sounds very well to those of us who would do what we will in our own personal and economic spheres, but no amount of suasion is very likely to have significant effect, aside from the occasional lip service when the country’s mood requires it, to the actual trajectory of growth of governmental power.
The sad fact is that the law of government is that it must grow, not less than it is the nature of rabbits and of entropy to increase. The simple reason for the growth is the natural reluctance of those in authority to relinquish it but rather always to increase the power they hold. What bureaucrat, after all, has ever volunteered to reduce his budget or his reach?
If we are to examine the trajectories of governmental institutions throughout history, we likewise find that once a governmental system has emerged from the infighting, it promptly will commence to establish and shore up its power position. We see this pattern, for example, in the emergence of strong monarchy in Europe in the Middle Ages, just as we do in the rise of empires of the East and of the ancients.
Only when a governmental power is overthrown, by war, disaster or even revolution does it give up the growth of its reach, only to be replaced by the next emerging government which next begins its own power-agglomeration cycle.
Despite our well-attested distaste for pseudo-scientific historic theories, for once I must come to the defense of the usually very fatuous Mr. Diamond, at least when it comes to his claim that civilization reduces violence. Conflicting claims of clashing anthropologists notwithstanding, there is little doubt that men pursue violence against one another at the slightest provocation and that in the absence of the apparatus of civilization in the form of law and its enforcement, such violence tends to only escalate.
The fact is that there are no paleolithic tribal societies still in existence that remain untouched by contact with our civilization, and — even if there were, in an ironic parallel to quantum theory — we could not study them without changing what we see. It is thus an exercise of most utter of futilities to claim, based on very spotty, often over-interpreted and — to begin with — circumstantial evidence that the original human social structures were free of war-making. Perhaps we could ask their contemporaries, the Neanderthals, for some corroboration?
Every so often a politician or philanthropist is heard expounding on the acute need to eradicate poverty, most often citing income figures for some tribesman or a villager forced to subsist on mere pennies. However, even leaving aside the blatantly nonsensical comparison of wealth measures for subsistence farmers in terms of a means of exchange of a fully developed society, and not to mention the fact that wealth and poverty are concepts only meaningful relative to one another — imagine for example, say, an emperor of Rome or Byzantium unable, for all his wealth, to find a decent dentist — it ignores a fundamental fact about the nature of wealth and poverty per se.
In fact, to understand the matter better, it behooves us to recall that poverty, as we most commonly perceive it, has been the natural condition of the bulk of humanity for as long as it has existed: what sort of wealth can we ascribe, for instance, to a paleolithic hunter-gatherer hard at work to find enough to eat each day? It is, in fact, possessing wealth that is the great exception to the rule — always arising as a result of a unique conjunction of access to resources, ability, effort, and — to no small extent — of luck.
It is for this reason that aid programs to poor countries have always failed in much the same way: wealth is captured by well-placed elites, while the great bulk of the poor is at best no better off, and more frequently than not is made poorer still. The perpetual surprise at the continual failure of all efforts to institutionalize wealth transfers as a means of poverty relief is rather puzzling to those of us who seek to profit by experience.
The big question of why the West broke out of the trap of poverty, even if this condition were to last, for a large proportion of its people is one that our politically correct age prefers to leave unanswered. Instead, we try to squeeze out all we can from those members of society who have achieved a measure of affluence, whether or not it was by luck or their own efforts, not stopping even at taxing their income twice or more, forgetting always that when the cow is slaughtered the milk stops flowing.
Whenever we are subjected to a new bout of technocratic regulationism in the name of greater efficiency or moral correctness — whether it stems from bureaucratic self-servingness or ideologues’ delusions of omniscience — it behooves us to remember the sad fate all such initiatives to date, whether they were as large and sweeping as the Russian Revolution, that last great paroxysm of romantic ideology, or merely the dressed up doctrines concocted by powerful interest groups as universal truths, they all aim to fit facts to the Procrustean bed of favored theory and sweep the inconvenient details under the rug. Still, the devil is not merely in the details of such undertakings, but in the very nature of our human ability to closely manage, or even fully understand, phenomena of such complexity as our economy, the planetary climate or even the direction of the arrow of history, all as impossible to predict as next week’s weather.
The sad spectacle of Lance Armstrong’s auto-da-fé serves up a pertinent reminder of the smug hypocrisy with which our media (and our government, as if it had no more pressing issues to be solving) treat the rather natural extension of the top athlete’s drive to win. Never mind that the notion of what is sporting has evolved from turning up one’s nose on the very thought of training — we lionize those who broke that particular taboo — to use of every form of medicine in the service of the quest, from nutrition to psychiatry — but only when they turn to pharmacology that they are paraded through the pillory.
Doping in sports has been an issue for as long as drug use was in general society, and the reason that it despite all efforts to stamp it out it continues and evolves is the same: when a natural market has been established, that means that real needs exist, and when they do, there always is supply.
It is time to recognize that what grownups do to their bodies is no more our business than what they do in their bedrooms and that by driving markets underground we do nothing more than create criminals of those who desire to excel or exit and bring into being vast conspiracies to off them supply.
As the White House toys with thoughts of yet another Middle-Eastern intervention amidst an ever-louder chorus of demand to “do something“, nevermind the outcomes of the last two, still fresh even in memories of journalists, perhaps it is worthwhile to review the still-being-paid wages of another well-meaning bout of humanitarianism.
It is not that we are even discussing the law of unintended consequences of high-minded policy, but rather the well-documented and fully-well expected outcomes of boneheaded policies that are still claiming lives of brave Americans. A wise man once defined insanity as doing the same thing over and over and each time expecting different results. How long can we continue tolerating moronic policy of spilling blood and treasure on the thankless sands when we can ill afford to fritter away either, especially as we are about to become drawn into yet another French-led pseudo-colonial adventure?