In a down economy, dominated by repeatedly looming government shutdowns and budget cuts, the question is generally whether governments should cut spending or rather invest more. You would think that, the economy being a concept of human design, someone would have the definitive correct answer. But it seems that we have truly created a monster, and we have no idea how to tame it.
During the credit crisis of 2008 the emphasis in the debate was on the role played by the financial sector, or as a more generalized term: capitalism. But just like all of us are suffering the consequences of the economic crisis, governments worldwide are in a similar predicament. Both governments and civilians have gotten used to living large when all seemed well, but now that times have gotten tough the deficits we are facing seem insurmountable. The government in my homeland The Netherlands have announced big cuts in spending under the guise of introducing a “participation society”, however without changing the astronomically high taxation levels that date from the nanny state’s hay days. In other words: the government is in remission, but taxes are still on the rise.
It is the inevitable inheritance of the socialist ideal, just like the credit crunch was the logical outcome of unbridled capitalism. A participation society with income taxes up to 52% is just as much an abomination as a free market where failing companies get bailed out with public funds. In short, the government’s greed is equal to that of the financial sector. Ultimately both end up without money, in debt, and used to a way of living that is unsustainable.
In that light, CNN.com’s description of the impending debt limit crisis in the US is fitting:
Remember that time when you maxed out your credit card? That’s what the debt limit is all about. The U.S. is on the verge of maxing out its $16.699 trillion credit card. (…) The government can’t just stop paying on its previous debt or spending money, even though its credit limit is maxed out, because it has too many obligations to meet. It has to have access to money to pay for the interest on that debt, as well as pay soldiers’ paychecks, doctors’ Medicare reimbursements, expenses like bridge repairs, and so on. So the president must ask Congress to raise the limit of the country’s credit card, or debt limit.
Even a child would see that this is a recipe for disaster. Whether it is the temptations of capitalism luring people ever further into debt, taking out credit to pay off previous credit, or socialism doing the same to government, it is this type of infantile bookkeeping that has left us teetering on the edge of a collective bankruptcy and is about to push us over.
Indeed, the views of the economic left and right might not be so different from each other after all. The left generally opposes capitalism for its emphasis on consumption and its goal of profit prevailing over the (financial) wellbeing of the consumer. The right objects to socialism for wanting government to take charge of everything and spending way beyond its means at the cost of future generations. If we allow these “isms” and the infantile bookkeeping strategies described above to control our lives, as we have gotten used to in the west, our destiny is clear. The elite and its institutions of government and economy have failed. They have made a mess that by now appears impossible to ever clean up. The lesson we should learn here is that “they” do not know better than we do, and they certainly do not have our best interests in mind. We need to reclaim our independence from both public and private institutions and learn to take care of ourselves and each other again. The elite needs us, and needs us to think we need them. But we don’t.