See this post.
See this post.
See this post.
A revised and updated version is here.
It seems likely that General Motors will become a vassal of the United Auto Workers union and the federal government. Which means that GM will survive only because U.S. taxpayers pick up the tab in order to preserve the pensions of UAW members and keep them employed at above-market compensation. Similar arrangements may come to pass in other (effectively) nationalized industries — banking and health care, most notably (but not exclusively).
Nationalization of the auto, banking, and health-care industries (among others) will prove to be the straw that — when piled on Social Security and Medicare/Medicaid — breaks the back of the American economy. How so? The effective tax rate — the true cost of supporting Social Security, Medicare/Medicaid, nationalized industries, and the ever-growing panoply of government “services” — will further (and fatally) deter work, saving, capital investment, innovation, and entrepreneurship. (See, for example, this piece by Lawrence Kudlow.)
The economy, if we are lucky, will muddle along at a rate of growth that is barely positive. And that growth will be phony because it will be attributable to the expansion of the public sector (i.e., government and its wholly controlled subsidiaries). We will then have achieved the Left’s Nirvana: Europeanism.
God help us. It’s unlikely that anyone else will.
UPDATE: Arnold Kling makes a related and equally gloomy prediction:
I no longer believe that freedom and democracy are compatible…
As one fast-forwards to 2009, the prospects for a libertarian politics appear grim indeed. Exhibit A is a financial crisis caused by too much debt and leverage, facilitated by a government that insured against all sorts of moral hazards — and we know that the response to this crisis involves way more debt and leverage, and way more government. Those who have argued for free markets have been screaming into a hurricane. The events of recent months shatter any remaining hopes of politically minded libertarians. For those of us who are libertarian in 2009, our education culminates with the knowledge that the broader education of the body politic has become a fool’s errand.
I think that perhaps the best positive approach for libertarians right now is to support institutions that compete with government. That means charities, churches, charter schools, clubs, consumer information services, and other sources of public goods. I would count the traditional family as an institution that competes with government.
You are likely to see Democrats under President Obama launch assaults against all of the institutions of civil society. Already, the Washington DC school voucher program is under attack, as is the tax deduction for charitable contributions. As libertarians, our electoral voice is worth little. Our threat to exit is probably too costly to carry out. Promoting institutions that compete with government is the best strategy I can come up with.
I tend to agree that for libertarians the “voice” option is looking bleak. I prefer exit options. But by the same token, I do not want to move to New Hampshire (see Jason Sorens) or to a seastead (see Patri Friedman).
UPDATE 2: The Supreme Court will be of no help to us, if Ed Whelan and I are right about its likely direction. I focus on the long run; Whelan, on the near future. Sadly, I must agree with his assessment:
Don’t be fooled by the false claims that we have a conservative Supreme Court. The Court has a working majority of five living-constitutionalists. Four of them—Stevens, Souter, Ginsburg, and Breyer—consistently engage in liberal judicial activism, and a fifth, Kennedy, frequently does. As a result, the Court is markedly to the left of the American public on a broad range of issues. Indeed, in coming years, Souter’s replacement may well provide the fifth vote for
- the imposition of a federal constitutional right to same-sex marriage;
- stripping “under God” out of the Pledge of Allegiance and completely secularizing the public square;
- the continued abolition of the death penalty on the installment plan;
- selectively importing into the Court’s interpretation of the American Constitution the favored policies of Europe’s leftist elites;
- further judicial micromanagement of the government’s war powers; and
- the invention of a constitutional right to human cloning.
American citizens have various policy positions on all these issues, but everyone ought to agree that they are to be addressed and decided through the processes of representative government, not by judicial usurpation.
Charles Murray speaks eloquently in opposition to our Europe-ward drift; for example:
….If we want to know where America as a whole is headed–its destination–we should look to Europe.
Drive through rural Sweden, as I did a few years ago. In every town was a beautiful Lutheran church, freshly painted, on meticulously tended grounds, all subsidized by the Swedish government. And the churches are empty. Including on Sundays. Scandinavia and Western Europe pride themselves on their “child-friendly” policies, providing generous child allowances, free day-care centers, and long maternity leaves. Those same countries have fertility rates far below replacement and plunging marriage rates. Those same countries are ones in which jobs are most carefully protected by government regulation and mandated benefits are most lavish….
I stand in awe of Europe’s past. Which makes Europe’s present all the more dispiriting. And should make its present something that concentrates our minds wonderfully, for every element of the Europe Syndrome is infiltrating American life as well.
We are seeing that infiltration appear most obviously among those who are most openly attached to the European model–namely, America’s social democrats, heavily represented in university faculties and the most fashionable neighborhoods of our great cities. There are a whole lot of them within a couple of metro stops from this hotel. We know from databases such as the General Social Survey that among those who self-identify as liberal or extremely liberal, secularism is close to European levels. Birth rates are close to European levels. Charitable giving is close to European levels. (That’s material that Arthur Brooks has put together.) There is every reason to believe that when Americans embrace the European model, they begin to behave like Europeans.
Europeanism rests on the fallacy of the “free lunch.” The state, which produces nothing, somehow underwrites the benefits listed by Murray — as well as “benefits” like socialized medicine and month-long vacations. All of these supposed benefits must be paid for, of course; the only question is how they will be paid for.
The illusion of free benefits is a disincentive to work: Why work harder when the state will ‘give” you child care, health care, etc.? The cost of those “free” benefits is a disincentive to hiring, business formation, and capital investment, thus penalizing those Europeans who are willing to work and take the business risks that lead to job creation.
Because of these disincentives, most European nations have long experienced low growth and high unemployment. There is even more of that in Europe’s future (and in ours).
Why? Because the “free” benefits enjoyed by Europeans are not free; they come at a high price. And that price will become even less affordable because of the low birth rate among Europeans. The low birth rate means that future European generations (like our own future generations) will find it harder to bear the burden of supporting their elders (whose numbers will rise disproportionately) while paying for their own “free” benefits.
Europeans are able to enjoy “free” benefits, in part, because they are taxed lightly (relative to Americans) for defense; Europe is a free rider on America’s military strength. As our military budget is tapped to pay for our own adventures in Europeanism, the free ride will end for Europeans. They will then have to pay the price of defending themselves from, say, an aggressive Russia or they will have to succumb to Russia’s territorial and economic demands.
Europeanism, in sum, is a prescription for economic stagnation, unrest, demagogic despotism (as the likely response to unrest), and surrender.