My old friend John Whitehead wrote a column on America's nervous breakdown. He offered a suggestion:
As always, the solution to most problems must start locally, in our homes, in our neighborhoods, and in our communities. We’ve got to refrain from the toxic us vs. them rhetoric that is consuming the nation. We’ve got to work harder to build bridges, instead of burning them to the ground. We’ve got to learn to stop bottling up dissent and disagreeable ideas and learn how to agree to disagree. We’ve got to de-militarize our police and lower the levels of violence here and abroad, whether it’s violence we export to other countries, violence we glorify in entertainment, or violence we revel in when it’s leveled at our so-called enemies, politically or otherwise.Unless we can learn to live together as brothers and sisters and fellow citizens, we will perish as tools and prisoners of the American police state.
This is good advice. But it is incomplete advice.
The problem is the word "citizens." This word refers to politics: the legal right to vote and to serve on juries. It has to do with the exercise of state power.
In every imposition of state power, there are winners and losers. One party wins; another loses. The plaintiff wins or the defendant wins. Inherently, there is no compromise possible. It's winner take all.
In contrast is the free market social order. This includes a narrowly defined market: voluntary exchange. The rule here is this: high bid wins. It also includes institutions in which there is no exchange: family and church. You cannot sell your spouse. (In England from around 1680 until around 1900, men did sell their wives, with their consent, at public auction. High bids won. It was not legal, but it was tolerated.) You cannot sell your church membership.
BARGAINING
The crucial feature of market transactions is the legal right to bargain without interference by the state. This is the legal right to make a bid. The state is not supposed to interfere with the legal right of someone to make a bid, as long as the bid does not violate a fundamental moral law. (You don't have the right to bargain with Murder, Incorporated on a price to kill your brother-in-law.) As soon as bargaining is possible, people begin to cooperate. At some price, people can usually come to some agreement.
In market transactions, as in courtship and shopping for a church, we do not find much gridlock. If two people cannot work out an arrangement, each of them can seek to locate someone who may work out an arrangement. There are lots of alternatives available. One way or another, at some price, somebody can usually find somebody else who will cooperate with him.
There is lots of cooperation in politics. There is lots of give-and-take. The problem is, it is give-and-take by politicians regarding property and liberty that belong to citizens. The politicians are quite ready to trade away that which does not belong to them. They want to work out deals for their constituents, so as to get re-elected. Their constituents want them to work out deals. But individual citizens who are not major political action committee donors do not have any significant input about the terms of the agreement. This is not the case in free-market exchange.
Constituents have varying degrees of political interest and political skill. Highly self-interested small voting blocs that are after other people's money by way of the state know how to get their representatives to enact legislation. The only way to stop this is for another highly self-interested small voting bloc to do an even better job of political persuasion. Sometimes, these voting blocs offset each other. At that point, there is political gridlock. This means the triumph of the status quo.
A huge part of what Whitehead calls America's nervous breakdown is the advent of political gridlock. But this is also positive. Political gridlock stops the government from doing more things. Virtually everything that the government does today to extend its power is wrong morally or else it is self-defeating operationally. The government says it is going to achieve one thing by means of a piece of legislation. If it is signed into law, the result is usually the opposite of what the government promised would be the result. The solution to this is gridlock.
Basic to gridlock is a commitment to stop your political opponents cold. It is to keep them from achieving their stated goals.
This means that the more that citizens trust in the state as a means of reconciling differences, solving problems, achieving better results, lowering the costs of action, and similar benefits, the less that they will be able to achieve any of these goals.
It is the reliance on political action as a way to solve problems that is at the heart of what Whitehead calls America's nervous breakdown. But in the realm of voluntary transactions, there are few signs of such a nervous breakdown. There is economic growth. This means that there are more opportunities at the same price.
THE SMART PHONE
Consider the smart phone. Apple introduced it in 2007. This technology has spread more rapidly around the world than any new technology in the history of man. It has revolutionized the lives of two billion people. (It has not revolutionized my life. I still use a flip phone. But I am part of a tiny minority in America.)
Accurate communications are the most important single technological aspect of economic growth. There has never been a communications device that has been more efficient, more wide-ranging, and more beneficial to more people than the smart phone. This is not the sign of a nervous breakdown; it is the sign of economic progress on a scale never before seen in a 10-year period.
The federal government did not invent the smartphone, but it did invent the Internet. The Defense Department built the cable-based infrastructure of the Internet. This was done for military reasons: to decentralize communications, so that a nuclear attack on Washington would not destroy communications of the military. The greatest centralized force of military technology created the most decentralized technological force in the history of man. I don't see this as a nervous breakdown. I see it as the most beneficial unintended consequence in the history of civil government.
THE POLITICS OF PLUNDER
If there really is a nervous breakdown in America today, it is the result of excessive trust by citizens in the beneficial outcome of political coercion. People want to get their hands into each other's wallets. As Frederic Bastiat wrote in The Law in 1850, this is the politics of plunder. He said it was leading to terrible consequences for society, and he was correct.
The problem is this: citizens around the world have been lured into trusting in political coercion. They are committed to the politics of plunder. Bastiat described the options. The question of legal plunder must be settled. There are only three ways to settle it:
1. The few plunder the many.
2. Everybody plunders everybody.
3. Nobody plunders anybody.
We must make our choice among limited plunder, universal plunder, and no plunder. The law can follow only one of these three.
The first option is inevitable, given the monopolistic power of the state. Minority will always plunder the majority. A free society will place strict limitations on the state's ability to do this.
The second option was the dominating theme of the world in the 20th century. The socialist movement and the interventionist movement began organizing in the 1880's in the West, including the United States. This went into second gear around 1900. It went into high gear with the outbreak of World War I in 1914. It was reversed in Communist China in 1979 when Deng Xiaoping freed up the agricultural sector of the Chinese economy. It was rolled back significantly in 1991 when the Soviet Union collapsed. But in the United States and Western Europe, there was only rhetorical resistance, mainly by Ronald Reagan and Margaret Thatcher. The size of the governments in both countries grew, but at least there was rhetorical resistance. The West is still moving erratically to develop the second stage.
Leonard E. Read, the founder of the Foundation for Economic Education in 1946, made a crucial point no later than 1950. He said that it would be a tragedy if socialism produced beneficial consequences. If that were the case, people would demand more socialism. He said that it is one of the great benefits of life that socialism and economic interventionism by the government produce overwhelmingly negative consequences. This keeps people from trusting in political coercion as a way to achieve their goals in life.
DELIVERANCE
The good news is that political gridlock is placing limits on the ability of the state to expand its jurisdiction. We see divided national governments around the West. They are paralyzed.
We also see dentralized communications on a scale never before seen. These are positive developments that are now offsetting what had been a seemingly irresistible extension of state power into our lives.
Political gridlock is positive. Decentralized communications are positive.
When the old-age welfare programs of the West collapse in bankruptcy, as they will inevitably do, actuarially speaking (unfunded liabilities), the ability of the state to expand its jurisdiction will reverse. I call this the Great Default. Meanwhile, the world economy will continue to grow, as will the American economy. All ships will rise in the aftermath, save one: the state.
This is the solution to America's supposed nervous breakdown. It can't happen soon enough.
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