FUTURECASTS online magazine
Vol. 3, No. 1, 1/1/01.
(from Vol. 1, No. 1, 8/1/98)
|21st Century futurecast
Government policies that create an economic environment that facilitates commerce are essential ingredients in modern prosperous economies - yet Government remains the biggest threat to the vast prosperity forecast by FUTURECASTS online magazine.
To understand developments expected in government and politics during the 21st century, both what government does right and what government does wrong must be kept in mind.
We do democracy no favors by ignoring its many weaknesses. Indeed, to enjoy the many benefits of political freedom, we must clearly recognize those weaknesses and make democracy work in spite of them.
In the 21st century, only political freedom will work. Only multiparty forms of democracy can provide the flexibility and encourage the grass roots initiatives required by an environment of rapid change.
People are NOT well informed, politically responsible, or actively attentive to matters of governance. Thus, democracy must ALWAYS involve political inequality and minority rule with majority acquiescence, apathy and distraction, and an array of interest groups contesting for influence.
Limitations on the powers of government are essential if individual interests are to be provided a practical level of protection from majoritarian excesses and the excesses of power.
However, "perfect" forms of democracy clearly don't work. The challenge is to develop practical - workable forms of political freedom. Government must have the powers needed to perform its essential functions, but limitations on the powers of government are essential if individual interests are to be provided a practical level of protection from majoritarian excesses and the excesses of power.
A large part of the brilliance of the Founding Fathers of the United States Constitution is that - having experienced failure under the Articles of Confederation - they clearly understood the weaknesses of democracy and thus carefully established political systems to deal with those weaknesses. It is well to remind ourselves of all the things that government in the United States does right - especially since this provides a road map for East European and third world nations currently struggling to establish an environment conducive to economic growth and prosperity - and a political system that assures political freedom and individual liberty.
The list of economic virtues has grown impressively
long - starting with fundamental political virtues and Constitutional
provisions, and continuing through trial and error - frequently
egregious error - to the current mix of economic policies that
the nation enjoys today.
There are the four fundamental virtues of
the American political system that are essential for its economic
prosperity - political freedom, economic freedom, individual
liberty, and rule of law.
There are such vital constitutional provisions as due process, property rights, the uniform and non preferential regulation of interstate commerce, an independent judiciary, patent and copyright protection, the postal system, bankruptcy provisions, and standardized weights and measures. Such basic rights as petition and press freedom also have commercial implications.
The Judiciary at state and federal levels continues to be guided by the requirements of commerce in its interpretation and development of such legal fields as contract, property, negotiable instruments, trust, and commercial and corporate law - although in the twentieth century it increasingly recognized competing interests in such legal fields as labor, tort, civil rights, product liability and environmental law.
State governments, under our federal system, still have a great deal of autonomy, and there has been increasing recognition of the advantages of local administration of government programs. This facilitates flexible approaches to match the differing conditions that exist in the various states and localities.
Also, it places a great deal of governmental activity in political hands that do not suffer from the temptations of control of the monetary printing presses. It permits statewide and even local experimentation with new government initiatives as an alternative to nationwide experimentation. Current experiments with school choice are a good example.
Only the federal government can temporarily escape its budgetary constraints by resort to monetary expansion - and only the federal government makes its mistakes from sea to shining sea.
Economic policies - such as the establishment of the limited liability corporation and other economic legal entities - and the effective regulation of the banking system, the securities industry, and various "public utility" monopolies - and antitrust law enforcement - have improved substantially during the 20th century. These policies reflect continuing government efforts to improve market efficiency and facilitate commerce.
Police and military protection for persons and their property, assistance for transportation, education, and frontier settlement, and infrastructure projects have all played major roles in the development of the United States as an economic powerhouse.
Debates about "laissez faire" policy are obvious exercises in obfuscation. While individual economic policies have been either advocated, undertaken or rejected - and many egregious mistakes have been made along the way - the nation has always clearly opted for an active economic policy aimed at facilitating commerce.
The post WW-II foreign policy emphasis on the liberalization and expansion of international trade has been a major factor in the ability of the economy to prosper despite Cold War burdens and a nearly disastrous twenty year experiment with Keynesian policies.
Of course, there have been economic policies of more dubious impact - such as the tariffs, import quotas, and subsidies for favored economic interests that played such a large role in the Great Depression. To a much lesser but still real extent - these kinds of policies continue to burden the economy to this day.
Multiparty politics assisted by a free press provide an effective means for punishing the political party in power when its policies undermine economic prosperity.
Monetary integrity and balanced federal budgets - the cornerstones of government economic policy during the first 150 years of the nation's existence - have once again - after a six decade hiatus - been reestablished as the cornerstones of government economic policy. Much of the hiatus was caused by WW-II and the Cold War and was largely unavoidable, but the rest arose from the decade of futile efforts to borrow and inflate our way out of the Great Depression, and the two decade experiment during the 1960s and 1970s with Keynesian deficits and monetary expansion that resulted in the oppressive economic troubles of the 1970s.
By overcoming the attacks of its political and ideological adversaries and bringing these incredibly stupid Keynesian policies to an end during the harsh 1980 - 1982 recession, the Reagan administration - along with the Thatcher government in England and similar efforts elsewhere - achieved one of the greatest economic policy victories of the 20th century - and made the current prosperity possible in the United States and around the world.
However, there remain many Keynesians who are unrepentant. They await - like expectant vultures - for the inevitable next recession, when they will undoubtedly again peddle their invalid nostrums - and they remain a primary threat to the nation's future economic prosperity.
Government management is INHERENTLY inefficient
- as FUTURECASTS has pointed out since its inception - and must
continue to point out because recognition of this powerful factor
is essential to any understanding of future developments. A certain
amount of favoritism, waste and even fraud is inherent in government
With each inevitable scandal, the situation gets worse. Additional safeguards designed to reduce fraud and waste usually entail extra planning, authorization, appropriation, reporting and inspection procedures that cost far more than the waste and fraud that they are meant to prevent. Regulations proliferate constantly as each new regulatory fix induces a variety of responses requiring further regulatory efforts.
It is not the waste and fraud
that is so devastatingly expensive - it is the regulatory responses
and multileveled bureaucratic cycles of planning, appropriation,
authorization, reporting and inspection procedures themselves
that drain funds and vitality from government programs and reduce
efficiency to ludicrous levels. Multiple levels of government
continuously generate additional wasteful regulations and procedures
at a rate far faster than any administration could possibly come
to understand them and appreciably cut into them.
"Image is everything."
Lacking these essential management tools, government
cannot grant broad discretionary powers to its front-line managers.
Government cannot decentralize decision making. Government is
stuck with its smothering layers of organization in depth - up
and down which must flow the interminable paperwork of myriad
planning cycles, authorizations, appropriations, reports, and inspections - all smothered in
It is beyond dispute that government outputs don't equal government inputs. Billion dollar programs for health care, housing, education, military arms, etc., invariably produce substantially less than billion dollar outputs of health care, housing, education, military arms, etc.
Dependency on the tender mercies of government bureaucracies is an awful fate.
Then, there is the government's NEGATIVE
learning curve. If a government program involves much more
than merely taking money in and issuing it to designated recipients
on the basis of objective criteria, it must become increasingly
inefficient over time.
During Europe's experiment with socialism,
nationalized economic entities that worked tolerably well in
the 1950s and 1960s were hopeless economic basket cases by the
1980s. Germans are properly renowned for their managerial efficiency,
but not even they could keep the socialist economy of East Germany
from utter collapse.
Political, bureaucratic and administrative imperatives remain as always a major part of the overall problem with government management. They are so obvious and intractable that people tend to simply overlook them. There is:
Generally, governments have no economically rational basis for such common managerial decisions as:
Such decisions are unavoidably based on deplorably
crude decision making methods. All too frequently, it is political
or bureaucratic considerations rather than economic considerations
that drive economic decisions.
Of course, socialistic efforts to provide goods and services - such as are widely advocated for the health care system - face innumerable additional problems. Government managers have no rational economic basis for
Insulated from ordinary sales chart and
profit-and-loss statement disciplines - and with the ability
to allocate credit and bestow a host of government benefits at
public expense and without personal risk - government policymaking
and administration can continue for lengthy periods of time substantially
divorced from the harsher aspects of economic reality. If a successful
program of any complexity lasts long enough, it must eventually
become just another money sewer. Government has a NEGATIVE learning
Thus, there is the difficulty experienced by the government in closing unneeded military bases - a task still not completed more than a decade after the end of the Cold War. There was the dilatory response to the savings and loan crisis that turned a $20 billion problem into a $120 billion fiasco and then pushed it off budget and out of mind with a financing program that will ultimately cost about $300 billion. The dilatory response to the long recognized need for reform of social security and Medicare entitlements is entering its second decade.
Then, there are those worthless pennies in your pocket that the government persists in coining.
Examples are numerous. A major network news program has no trouble finding items for its "Fleecing of America" series. The General Accounting Office never runs out of inefficient government activities to study and report on. For autocratic governments the situation is even worse, as levels or rigidity and corruption rise unchecked over time.
These are the reasons why socialism and government "industrial policy" failed. These are the reasons why the Evil Empire now resides on the trash heap of history. This is why every increase in government involvement in health care undermines the efficiency and threatens the effectiveness of the health care industry.
These are the threats posed by government to the continuation of prosperous economic growth.
Evolution of Government
However, political governance
is not standing still. Even now, it is evolving rapidly in response to the
demands of rapidly changing conditions. These changes will continue, as
political leaders struggle to provide effective governance in the face of
rapidly changing technological and economic conditions - and to respond to a
bewildering array of political pressures. These changes
naturally raise questions about the future of the nation state itself.
Devolution, globalization, and privatization:
|Decentralized decision making processes are being recognized by governments all over the world as essential if their nations are to have the flexibility to take advantage of the opportunities and deal with the problems of rapidly changing times.
By the end of the 21st century, national governments will still retain the essential characteristics of sovereignty.
The difference between poverty and plenty will continue to depend on the effectiveness with which national governments facilitate commerce within their own borders.
All of these tendencies will continue and intensify
throughout the 21st century.
| During the 21st century:
(from Vol. 1, No. 1, 8/1/98)
Even when government is a necessary part of the answer, it is always a part of the problem.
1) An ever-increasing government role will inevitably be required as population densities and levels of technological complexity increase: There is, unfortunately, no simplistic answer to the question of whether and when government is the problem and whether and when it is the answer. Even when it is a necessary part of the answer, it is always a part of the problem.
Rumors of the demise of "big government" are
century liberalism - even if by some other name - will continue to drive
American political policies for the foreseeable future. Now that "liberal" is a dirty word
- and politicians of both major political parties are carefully occupying
centrist territory - it is time to acknowledge the tremendous victory of 20th
century liberal ideals during the past 100 years. Assertions that "the era of big
is over are certainly premature, and constitute nothing more than just another Clinton
(from Vol. 1, No. 1, 8/1/98)
3) Big business and big labor will be
increasingly important, and increasingly dangerous: Business
must have the freedom and flexibility needed for success - and
must be permitted to fail. However, it must not be permitted
to restrain competition. Unions must be powerful enough to protect
worker rights - but must not be powerful enough to restrain commerce,
either domestic or foreign.
4) Demagoguery will remain the strongest force in democratic politics: The public will tend to vote for those who promise them benefits from the public treasury. The "Politics of Envy" works, constantly feeding redistributionist fervor. There will never be more than a handful of "small government" conservatives in Washington.
5) Growing prosperity will spin off vast resources for government programs: The Economic futurecast for the 21st century is for a cornucopia of material prosperity. The financial burdens imposed by the vast debts incurred during the wars of the 20th century will rapidly diminish as the economy grows. Parkinson's Law will continue to govern government growth.
Government corruption must inevitably grow with the growth of government.
6) The more that government tries to do for
the public, the more its esteem with the public will decline:
The 21st Century futurecast for
accelerating rates of change means that the shortcomings of government
policymaking will be increasingly exposed. Evidence of government
ineptness and sheer stupidity will become increasingly apparent
in everyday life.
It's the economy, stupid.
7) Recessions will continue to pose the only real
threat to the vast majority of incumbent politicians: Only when the extent of
government mismanagement threatens economic growth will the public
turn at least temporarily to politicians who profess a desire
for reductions in government -- only recessions provide the political
cover for some reform of government programs. Elimination of
government programs will remain a rarity.
8) Judicial activism will reach epidemic proportions: Top law schools routinely instruct their students that the Constitution is a malleable thing that lawyers and judges should feel free to alter as they see fit. Congress, too, is at fault. It enacts vague statutes, leaving it to the courts and administrative agencies to provide the precise meanings and boundaries of important provisions. The courts will become increasingly recognized as just another political organ of government, control over which various interests must struggle. No interest group will feel any obligation to respect the precedents of courts controlled by other interest groups.
This means that "rule of law" will increasingly be replaced by "rule of men" for politically controversial rulings. Public respect for the Judiciary - for the unelected "Philosopher Kings" on the bench - will decline sharply.
When the Supreme Court becomes widely perceived
as just another political arm of government, there may be serious
efforts at Constitutional amendment to impose some checks and
balances. Limiting Justices to a term of office, after which
they would have to seek election, is a technique used by some
Resort to the "science" propaganda ploy will
The tendency to believe one's own propaganda is one of the classic mistakes of the propagandist.
The deceptions of the "science" propaganda ploy - used to enhance professional prestige and influence - have proven to be far from harmless.
9) Efforts to turn nonscientific practical arts into
"sciences" for propaganda purposes of enhanced
professional prestige and political influence began in the 19th century and, unfortunately,
will continue unabated into the 21st century.
Immigration and assimilation will continue to provide
the United States with many substantial benefits.
Those who seek to permanently divide the American people on the basis of ethnicity or race - for narrow ideological or political advantage, are beneath contempt, and will fail.
10) The American melting pot will again triumph:
Assimilation is the ultimate victory and crowning glory of the
American Way of Life. It is an essential advantage that nations
in the Western Hemisphere enjoy over nations on other continents.
Efforts to maintain diverse cultural heritages will remain clearly valuable, but will be increasingly difficult. Those who seek to go further - to permanently divide the American people on the basis of ethnicity or race for narrow ideological or political advantage - are beneath contempt, and will fail.
The keys to prosperity are to be found in the fundamental economic and political virtues of the American Way of Life.
11) The fundamental economic and political
virtues of the American system will continue to spread to other
nations: The International
futurecast is that economic freedom (capitalism), political
freedom (multiparty democracy), limited government (checks and
balances on government powers, especially property rights and
an independent judiciary), and individual liberty (legally enforceable
individual rights), will be forced on reluctant politicians around
the world as the only practical arrangements in a world of accelerating
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Copyright © 2001 Daniel Blatt