Diary

Secession, Revolution... are they the end game of a deck stacked against freedom?

I’ve argued for many years that the United States is the greatest nation in the history of the world. From driving prosperity to winning two world wars to putting a man on the moon to ensuring individual liberty the United States is unlike any other country in history. And it has nothing to do with DNA. Indeed, some of America’s greatest men came from elsewhere… Alexander Hamilton was born on St. Kitts. Andrew Carnegie was born in Scotland. Albert Einstein was born in Germany. Leo Baekeland – the man who brought us plastic – was from Hungary. Nikola Tesla – the man responsible for the current running in your house – was born in Croatia.

It’s not the blood that makes the United States great, it is the Constitution. The US Constitution was the first document in history to form a government based on the principals of individual freedom, private property, limited / representative government and the rule of law. None of the things in the Constitution were completely unique. The Greeks had representative government and the Magna Carta put limitations on the Crown after all. What made the Constitution unique was the combination of those factors and the fact that the power resided in the hands of common citizens.

That could, frankly, have only occurred in the United States… because it was a new and free nation. Because of that youth, the colonies did not have vested interests sufficiently powerful to mold the formation of the government to benefit themselves. And as a result, the power resided in the hands of common men, the citizens. Not in the hands of an aristocracy. Not in the hands of the church. Not in the hands of some bourgeoisie merchants. No, in the United States the power to govern was put in the hands of regular citizens. There were power centers of course, but none – such as the northern states who still had debts to be paid from the Revolutionary War and the southern states who wanted low or no import tariffs – had the power to dictate the language of the Constitution. (To the degree that there was one vested interest powerful enough to make such a demand it was the slave states and the result was the most anti-freedom part of a document built on freedom.)

But why Philadelphia and not London or Paris? Both the British and the French had access to the same writings our Founding Fathers did – from Plato to the Old Testament to the Magna Carta to John Locke and Adam Smith and William Blackstone and Edmond Burke – but they did not create anything like US Constitution. Indeed, France, whose revolution followed the American revolution by a mere decade, spiraled into bloody chaos and brought about a dictatorship. The reason is because both France and England had strong vested interests loathe to give up their power and privileges, and as a result, neither laid the foundations for lasting prosperity that the US Constitution did.

And that prosperity was enormous and far reaching. By 1950 the United States economy was more dominant on the world stage than any economy in history. The US commanded fully 40% of the world’s GDP with less than 5% of its population. While both China and India had achieved that same 40% mark centuries before, they accomplished it with 35% & 30% of the world’s population respectively.

And that economic prosperity ushers in many benefits that are not measured in dollars like life expectancy increases, leisure time growth and dramatically safer employment conditions. Another measure of the impact of that prosperity is the Nobel Prize. Since the American economic heyday of the 1950’s, Americans have won over 50% of the Nobel Prizes in Physics, Chemistry, Medicine and Economics. Interestingly, 1/3 of those winners were immigrants who chose to come to the United States in pursuit of success, often because they didn’t feel they could do so at home. America is increasingly the epicenter of research of all sorts. Unfortunately however, it is not research that drives prosperity, it is economics and increasingly the United States is falling behind.

The freedom that drove the United States to become the most influential economic juggernaut in history no longer exists.  Today American GDP is 23% of the world’s.  While we are still experiencing advances in technology and medicine, increasingly the United States is becoming an economic morass. Although we see companies like Apple, Facebook and Google creating millionaires and billionaires by giving citizens great products, the chasm between the ultra rich and the middle class and poor is growing. An example is that can be seen in the data since the recession of 2007 & 2008. According to the Wall Street Journal:

“All told, average inflation-adjusted income per family climbed 6% between 2009 and 2012, the first years of the economic recovery. During that period, the top 1% saw their incomes climb 31.4% — or, 95% of the total gain — while the bottom 99% saw growth of 0.4%.”

But it’s broader than that. American incomes have been declining for over a decade, from a high of $56,080 in 1999 (inflation adjusted) to $51,017 in 2012, a drop of almost 10%, a decline unprecedented since the Great Depression – another government induced disaster. But it didn’t need to be this way. Had our economy had been as productive over the last twenty years as it was in the 1950’s and 60’s the average American family would today have an income in excess of $120,000 per year. At the same time, and not coincidentally, the rate of employment in the United States has plummeted, with the labor force participation rate at its lowest level since 1978 and disability claims skyrocketing.

All of this, and much more, are the consequence of the United States abandoning the very things that caused it to be great in the first place: limited government and individual liberty. Just as the British and the French were straight jacketed by their vested interests the United States is straight jacketed today. And that vested interest is government.

Entrepreneurship has been the life’s blood of American prosperity and today it’s on the ropes. While Silicon Valley venture capitalists throw money at high tech startups the rest of the country has seen regulation strangle entrepreneurs in their cribs. Government regulations, particularly federal regulations, have strangled small businesses in America. For the last 40 years the gap between the rate of companies starting to rate of those failing has been getting smaller. The bigger the gap (Companies started – companies failed) the better for the economy because it means more companies are surviving and creating jobs and value. In 2009 the lines crossed and today there are more companies failing than are started annually. The result less prosperity as small businesses are the golden goose of the American economy, generating 65% of all new jobs.

What we have today as a result are fewer, bigger companies that are increasingly turning to the government to hinder competition. From Wal-Mart supporting Obamacare to steel companies seeking import tariffs to General Electric pursuing Export / Import Bank subsidies to Wall Street banks lobbying for low interest rates to the Chamber of Commerce advocating for open borders, big companies are increasingly looking for government to protect them from the vagaries and verities of the competitive markets that helped create American prosperity in the first place. They are willing to trade higher taxes and endure more regulation for a playing field that is tilted in their favor… that is of course until when the taxes become too high and the regulation becomes too onerous, then they simply relocate outside the country.

In America in 2014 we have the opposite of the recipe for prosperity. We have a ruling class that has no desire to give up its power and privileges and a business class willing bend to that power and fund those privileges in the name of fattening their bottom lines. In this case the ruling class is the federal government. The power is demonstrated by the fact that the federal government has its claws in virtually every aspect of American life… from what you can do with your land to what your kids can bake for a bake sale at school to the healthcare you have to the kinds of light bulbs you can buy. At the same time they are writing thousand page laws – which generate tens of thousands of pages of regulations – the government is taking ever greater amounts of money from taxpayers for its redistribution schemes. From a sixth of the population on food stamps to taxing the lunch your boss provides, the ruling class of government seeks to control virtually every aspect of American life.

And being in power has its privileges. Federal workers have achieved for themselves that $120,000 average income (including benefits) while the average private sector employee gets by with less than half that. Seven out of the country’s ten richest counties – out of over 3,000 – surround Washington, D.C. And of course government employees enjoy almost guaranteed lifetime employment. And those at the upper echelons enjoy even better privileges, taking advantage of the revolving door of power. When their party is out of power the revolving door turns and the regulators simply join the regulated class or their lobbyists, at even higher salaries, until their party returns to power and the cycle starts over again.

Perhaps the perfect example of how America used to be a place where things could get done, where private enterprise could achieve great things was the Empire State Building. Started in 1929, it took 14 months to complete what would be the tallest building in the world for the next 40 years – four months ahead of schedule. Today, 13 years after the destruction of the towers that took that tallest designation from it, the World Trade Center complex is still not complete. Only within the last year did the first of the towers open that would replace the destroyed complex and pieces of it are not expected to be completed before 2020… 19 years after the complex was destroyed. And it may well be the most expensive building project in American history. Was it technical capabilities that kept the complex from being replaced? Had Americans suddenly become too stupid to understand how to build buildings? No. It was bureaucracy. It was regulations. It was lawsuits and political interference. In other words it was government and government empowered chaos.

Which brings us back to the beginning. The United States was at one time the single greatest economic power in human history. As a result of that prosperity it has had more of a positive impact on the condition of man than any force in history. But that was an America where citizens had big ideas and big dreams, and the freedom to build on the first to achieve the second. Today that America doesn’t exist and a tyranny of the vested interests has replaced it. From government bureaucracy to crony capitalists to politicians who use the government purse as a vote buying scheme, America is no longer the bastion of freedom and prosperity that it once was. It is no longer the shining city on a hill. It is no longer the place where anyone can pull themselves up by their bootstraps by sheer will and hard work. And as guilty as the Democrats are in this, there are many big government Republicans who are just as much to blame.

Is it any wonder that 25% of Americans would consider secession? No. I count myself among them.  What about a revolution? Yes, I’d consider that too, but not the violent kind in either case. When faced with the same kind of vested interests that kept the British or the French from doing what our Founding Fathers did, what can be done? The real question isn’t whether the gift that James Madison, George Mason, John Hancock and Sam Adams gave us can be saved? The answer to that is yes. The real question is, how…