‘I haven’t read the Constitution, but, from what I’ve been told, most of it is a waste of paper, quite frankly.’
Donald Trump
The noose tightens.
Higher interest rates. Lower real earnings. Businesses and consumers pull back. Most reach into their savings. Others look in their pockets for loose change. Some find nothing. From NBC News:
‘A growing number of consumers are falling behind on their car payments, a trend financial analysts fear will continue, in a sign of the strain soaring car prices and prolonged inflation are having on household budgets.
‘Repossessions tumbled at the start of the pandemic when Americans got a boost from stimulus checks and lenders were more willing to accommodate those behind on their payments. But in recent months, the number of people behind on their car payments has been approaching prepandemic levels, and for the lowest-income consumers, the rate of loan defaults is now exceeding where it was in 2019, according to data from ratings agency Fitch.’
Collectivist illogic
Most likely, the coming recession will make things worse. Prices, sales, and profits will fall…along with the stock market. But we’ll come to that in due course. Today, we let you in on an insight. Free speech and free markets don’t really matter to the great majority of Americans. And now that they are being lost, most people don’t care. But why were they included in the Constitution in the first place?
The answer occurred to your editor this past weekend. And maybe it isn’t such an important insight as he thinks it is. But we’ll let you be the judge of that.
The key to understanding the future of the US, and why we are doomed, is to realise that ‘The People’ and ‘the deciders’ are not the same. Mancur Olson described the important difference in his book, The Logic of Collective Action.
It tells us why the US Government has gotten so big, so bossy, and so out-of-step with ‘The People’. In short, the support for more government — laws, regulation, subsidies, bailouts, stimmies, and the like — is always very limited and focused. Some people, those who get the money, have a keen interest in making sure new programs, whatever they are, go ahead. The public, on the other hand, is usually unaware of what is going on. And if you explained it, most likely, it would be against it…or simply uninterested.
A public policy might deliver US$1 billion in money to a small group of arms suppliers, for example, to ‘aid Ukraine’. Explain that to the average man. If the program goes forward, it will cost him…about US$3.03. He’s not going to get too animated about that. He doesn’t really know where Ukraine is; he has no idea of its history or of what led to the war. And helping Ukraine to ‘protect its freedom’ sounds vaguely like a good thing.
But while the common man is ignorant or indifferent, the insiders who will get the money are well informed and keenly interested. The program could change their lives. Naturally, they’ll hire lobbyists…make campaign contributions to key members of Congress…and make sure everyone realises that this is a matter of vital national importance.
Origin stories
That explains how the US Government got so big, and so powerful. But it doesn’t explain why it is now trying to stifle free speech and control the economy. Nor does it tell us how constitutional limitations — designed to protect free speech and a free economy — got there in the first place. For that, we need to go back to our origins.
Elites are never completely homogenous…and rarely all on the same page. When the American Revolution was announced, it had the support of only about a third of the population. Another third was against it. And the other third had better things to think about.
At the crucial battle of Yorktown, Virginia, there were about as many Americans fighting for England as for the colonies…and the battle was decided by foreigners, not by Americans themselves. The French navy, under the Comte de Grasse, blockaded the Chesapeake, cutting off supplies to English forces.
The American elites of 1776, who wanted to break away from Britain, were outsiders. That is, they were rebels…defying the authority of the entrenched elite. Naturally, they wanted to be able to say what they thought, without going to jail. So they favoured ‘free speech’. But so were ideas of liberty, free trade, and social evolution very much in the ‘air du temps’. Both Adam Smith’s The Wealth of Nations and Charles Darwin’s On the Origin of the Species were published in 1776. These ‘liberal’ ideas caused them to have faith in the common sense of the masses…with their folk wisdom and traditional values. Besides, they needed ‘The People’ to win the revolution!
Today, the situation is completely different. The elite are not outsiders; they’re insiders, eager to protect their power, status, and wealth. They do not favour free speech; if free speech were allowed, ‘The People’ — or at least dissident intellectuals — would use it to criticise them!
The elite deciders believe they are no longer at the mercy of ‘old wives’ tales’ or constitutions. Like Joe Biden or Donald Trump, they think they can make up their own rules — as they go.
They’re in the position of George III, eager to protect what they’ve got against the outsiders. They don’t like free speech because it challenges their ideas. And they don’t like free markets either. Free markets are in constant churn. One man invents a state-of-the-art camera. Then, another invents a cellphone that takes pictures too. One upstart discovers oil and before you know it, his grandson is governor of New York.
Free markets, like free speech, make everyone better off. In the competition between ideas and opinions, much like the competition between businesses, entrepreneurs and technologies, The People come out ahead. But the insiders don’t necessarily come out ahead. They own the camera company, not tomorrow’s smartphone company; they’re the ruling class now, but not necessarily tomorrow’s governors and bureaucrats.
Naturally, they try to stop the future before it happens.
Regards,
 |
Bill Bonner,
For The Daily Reckoning Australia
