Why the Police State Is Not a Threat
Let's start with the good news.
Almost half of the budget of the United States government goes to support Social Security and Medicare.
The percentages of each category in the overall federal budget will increase permanently over the next generation, until the systems finally bankrupt the federal government.
The relentless expansion of Medicare and Social Security will strangle all other categories of the federal budget. This means that the welfare state for geezers is going to crowd out all the rest of the welfare state, and eventually even the defense budget. There is no way politically to organize against the geezers. The geezers are going to get their money if anybody gets his money. This is a great thing for those of us who want more liberty.
Now for the bad news. It's not that bad.
THE MYTH OF THE POLICE STATE
I have known John Whitehead for about 35 years. He is a first-rate constitutional lawyer. He has been at the forefront of opposing the expansion of the federal government in its relentless suppression of individual liberties.
He has a problem. It is a problem which faces almost anybody who has spent his entire career in the trenches against the federal government. The federal government always appears to be winning. It does not get rolled back. This is his constant theme.
If you have a hammer, everything looks like a nail.
The problem is this: the free market also does not get rolled back. On the contrary, the free market keeps expanding its influence.
The rise of the microcomputer in 1979 was a major breakthrough. It moved the entire economy toward decentralization. Now, the World Wide Web has vastly accelerated this process.
As I have said repeatedly, the amount of tax revenues collected by the federal government as a percentage of GDP has not changed in 70 years. It never gets above 20%. In my view, this is a major indicator of the inability of the federal government to extend its influence.
The relentless expansion of the Federal Register seems to be counter evidence. The regulatory arm of the state has increased. But the amount of free market activity the regulatory arm of the federal government has to keep up with has also increased.
It is easy for somebody who is in the trenches, and who sees himself surrounded, to imagine that he is by himself. But there are far more trenches that are filled with lonely resisters than there were 35 years ago.
The ability of the federal government to direct the American economy is limited. If it were not for the Federal Reserve System, it would be dramatically limited.
It is not easy to see the extent to which the free market is expanding its domain. We don't notice the effect of 2% economic growth per annum. But it has been going on for over 200 years. The cumulative effects of this have been to completely reconstruct society, creating a society which would have been inconceivable to President John Tyler when he was 20 years old, and yet which his two grandsons presently enjoy.
The CIA and the NSA do not have their budgets cut. But do they really have much power over the day-to-day affairs of the American people? No. They are a bunch of time-serving bureaucrats, and they are being overwhelmed by the amount of information that they are now facing. They're supposed to be able to connect the dots, and they cannot even find the dots. Their computer programs cannot find all the dots. They are going to collect their salaries, but they are increasingly going to do their best to avoid controversy. They're going to pull in their horns, but they will collect their paychecks. Symbolically, they will continue to dominate. In fact, they will not.
THE KEYNESIAN MYTH
We must learn to distinguish between substance and form. The form of the federal government indicates that it is in control. The theology of the federal government is Keynesian, and Keynesianism teaches that governments have the ability to control markets, direct people's affairs, and direct the overall economy. This has always been a myth, and the myth is becoming ever more ludicrous. The Keynesians have no such ability. No government agency has such ability. Mises made this clear in 1920 in his article on economic calculation under socialism. It is not just that Keynesians and socialists don't believe this; the problem is that conservatives don't believe it. They really do not believe that, as the federal government expands its control over the economy and over the affairs of men, it becomes increasingly blind, increasingly paralytic, and increasingly bureaucratic.
Why should we believe that a bunch of bureaucrats, whose main job in life is to get promotions, are in a position to direct our affairs? They are timeservers. The longer the bureaucracies go on, the larger the percentage of the timeservers and the organizations. They don't get more efficient; they don't get more powerful; they get more bureaucratic.
All of this system of official control is going to come down in a series of collapsing card houses. Recessions will cut back on the ability of the government to interfere with the economy. We already know that federal spending seems to have stabilized. The disruptions caused by the Federal Reserve continue, and this remains a major problem. But the central bank will ultimately blow up the economy. Around the world, central banks will finally be exposed as bureaucratic agencies run by PhD's who don't understand the economy. The misallocation of resources that is being fostered by central bank policies will eventually be shown to be counterproductive.
If you get challenged by some police agency, this can be a disaster for you. Individually, we are vulnerable to these bureaucrats. But bureaucrats don't want to make waves. They just want to collect their salaries. If they can throw their weight around against somebody who is defenseless, they may do this, but they never could get Bernie Madoff. How effective are they?
ON THE DEFENSIVE
With the exception of central banking and state education, the American establishment does not have a single area in which it is not under assault. Their control of the universities' curriculum materials remains powerful, but it is clear to the public that university education costs too much, and digital alternatives over the next 25 years are going to take down a thousand or more of these schools. The curriculum materials get dumbed down. The quality of the graduates gets ever-more pathetic. The public still puts up with it, but when online education cost 10% of classroom education, and the general public figures it out, then there will be changes.
In every other area of life except central banking and education, the Establishment is on the defensive. In any case, the main area where they do retain control, namely, the public school system, is still favored by conservatives. Because conservatives favor the system, the schools are not going to change.
The implicit decentralization of the microchip sends a message to the bureaucrats: you are not in control. There are people who worry that robots and computer programs are going to take over the world, but if this happens, they at least will be decentralized, privately owned robots and computer programs. The robots and computer programs of the federal government will be a generation late and a dollar short. We've already seen this. Moore's law operates primarily at the microcomputer level. Whether chip density doubles every 18 months or every 12 months is debated, but there is no debate about the general trend. Microcomputers swallow mainframe computers. Google is run by microcomputers, not some mainframe computer. The trend is toward private ownership, decentralization, and liberty. It is not moving toward government ownership, centralization, and tyranny.