I’m not an economist. I took the basics in college - Macro and Micro. More recently I’ve been reading up on complexity economics, where economic theory looks a lot more like evolutionary theory rather than the laws of supply and demand. In the last chapter of his book, “The Origin of Wealth”, Eric Beinhocker discusses the end the Democratic and Republican parties as the market forces that allow a two party system to remain viable in the complex economic landscape begin to evaporate. To me there is nothing natural about a two party system, it is entirely unnatural and it’s existence and persistence on the American landscape bodes a hidden corruption I would prefer not to contemplate. Why we, as American’s, have been so blinded to it’s pitfalls staggers the sensibilities of many an external observer.
It’s easy to understand how in a complex environment there can never be two sides to an argument...there are countless positions and depending on where you sit will determine your position in any given argument. The landscape continually changes. The unnatural alliances made within our two party system is a dead give-away that something stinks. The manifestations of these unnatural forces within our two party system are now coming home to roost. Our two-party system of government is forever grid-locked and our representatives will forever point fingers at one another rather than figure out how to evolve our government in order to grow and prosper. That’s harder to do. First, however decisions must be made.
Sadly, when compromise cannot be reached decisions are still made, but this is not government. It’s randomness, exactly why we chose to have a government in the first place, so we are not subject to the random forces of nature. Choosing not to decide is still a course of action, time doesn't stand still when a decision is not reached. March 1st has come and gone, time did not stand still. President Obama signed the order to cut $85 Billion out of the Federal budget, what we know to be Sequestration. The choice not to decide and instead lapse into Sequestration was stone cold f-nuts stupid. It also represents an exciting new way for the government to tax a subset of it’s citizens. Regardless how one may view a government furlough, the end result is an effective 10% increase in the tax imposed on the individual employee it affects over the year, but more like 20% over the next six months. For those of us who happen to be of the lucky 800,000 civilians employed by the Department of Defense, ladies and gentleman welcome to the 50% tax bracket! Of course for the next 6 months, welcome to the 60% tax bracket. Don’t these percentages seem huge? And yet we quibble about a small increase in the tax on the wealthy, or the closing of a tax loophole for those who make their living on capital gains vs working income. For 800,000 Americans there isn't even a choice. We've leapfrogged past any small incremental tax increase and joined, ironically, the Europeans. But I’m not writing this blog to argue about my misfortune of being one of these DoD civilian, it’s to describe the wrong headed nature of a government that refuses to make decisions.
I’ll be the first to argue that the DoD is prime for some cuts. So cut it. Gut it if you want to. Tell me I’m out of a job, then I’ll go get a new job. I’ve got responsibilities, bills to pay, a family to care for, and an economy to invest in. I want to go to Starbucks on the weekends. I want to go to BestBuy for a new iPhone. And I want to put money away for college. Tell me I’m in the new 60% tax bracket and my life changes dramatically. First, I pull completely out of the economy. Second, I stop saving. And third, I start looking for Republicans to vote out of office.
We need a government that can make decisions, any decisions because we don't want to live in the wild. This is how it works in the wild. Say we all live on an island... Survivor Island if you must. The water on the island is rising by some unseen force. There are three options. Two require a decision. The first option is to move to the snowy mountain on the left, it might be cold but at least you and your family will not drown. The second option is to move to the fiery volcanic mountain on the right. It may be hot, but again, the risk of death by drowning will be eliminated. A movement to either mountain requires a decision. The third choice is to remain standing still as the water wells up around your ankles. Soon you will be forced to swim. Some will make it to shore and perhaps to either one of the mountains. If you survive you might find yourself lower down the mountain than those who made an independent decisions to move to higher ground before the water came. Now in nature, evolution works the same way. Some will move to either one of the mountains and survive. Some will stay in place and die. The ones who move to mountains early and adapt to the hot or cold environments might survive a little longer. But in nature it’s entirely a random process, some of each will go in all three directions--like seeds scattered on the wind. Exactly like seeds scattered on the wind. We have a government for making decisions. We know if we stay where the water rises we will die so we count on a government that will lead us to higher ground (or build a working levy to hold back the water). We don’t need a government that can’t make a decision. Otherwise we are seeds scattered on the wind and might just be better off fending for ourselves. Why have a Government at all? Republicans would rather have less Government, that doesn't mean no government, but that is exactly what they have brought to us, the absolutely worst form of Government. For 800,000 DoD employees we have little or no decisions we can make, we must live with the water pouring in around our ankles. Some of us, certainly can quit and go elsewhere, most of us can’t quit. So we will endure and sacrifice while others will scramble for higher ground simply because compromise is not an option.
I’m not an economist, but in the new economy you don’t need to be. I’ll be heading for the higher ground soon.