In yet another cliffhanger – these cliffhangers are getting to be about as exciting as John Boehner’s tan – Congress and the President entered into the expected “weaselly compromise.” (I’m quoting myself in an NPR interview, you can get it here.) It did little to raise much-needed revenue and it did nothing at all to reduce out-of-control spending. It merely kicked the can down the road, à la Europe.
“We’ll come to grips with revenue and spending later in 2013,” Congress and the President announced. Uh, huh. And in 2013 Br’er Rabbit will finally admit he’s really the Easter Bunny.
People who heard me interviewed on NPR (Marketplace with Kai Ryssdal, see the link above) are always asking me, “Did you really want us to go over the fiscal cliff?” What I actually said (well, ok, what I meant to say) was that, in the long run, it might be worth the short-term pain if it forced politicians to deal with the long-term problems.
Normally, I’m as happy as anyone else to muddle through. But, unfortunately, America’s problems aren’t muddle-throughable. Every year we delay coming to grips with our soaring entitlements and the need to pay down our debt, the harder those things become. If we can’t deal with them now, when they’re merely difficult, we surely won’t be able to deal with them later, when they are intractable.
Why can’t America deal with problems that are so obvious they are slapping us in the face every day? For the same reason, I suspect, that Europe and Japan can’t deal with their very similar problems: we have no intellectual basis on which to conduct the discussion. To illustrate the problem, ask yourself these questions: What is the responsibility of a wealthy liberal democracy to its citizens? What are the responsibilities of citizens of these republics to their governments and their societies?
How do we begin to think about these crucial issues? Does anyone read Montesquieu or Spencer or Mill or Marx any more? What about Hobbes and Adam Smith and Hegel? Nobody in Congress, surely, and very few who vote.
But maybe these guys just aren’t relevant anymore. Mostly they wrote and thought early in the Industrial Revolution when democracies were rare and fragile. Now that liberal democracies are wealthy and dominate the world, things have changed dramatically.
If we examine more modern theories of social responsibility we find ourselves immobilized between the concepts of liberty and equality – emphasize the one and we eviscerate the other. But we have to examine these issues. Otherwise, we simply fall back on our own self-interest – the hell with the other guy and the hell with what’s good for the country.
Consider the recent Presidential election. A large group of voters didn’t trust the government to spend their tax dollars wisely, and so they decided they didn’t want taxes raised – figuring, correctly, that they knew whose taxes it would be that would get raised. Another large group of voters didn’t trust the government to cut entitlement spending fairly, so they decided they didn’t want entitlements cut – figuring, correctly, that they knew whose entitlements it would be that got cut.
Caught in-between was a third group of voters who sympathized with both camps but had no idea how to reconcile the conflicting positions. These voters broke for Obama because they liked and trusted the President better than they liked and trusted Romney.
This is an ok way to run a railroad when we’re dealing with the usual, day-to-day business of legislating. But it’s no way to run a railroad when the very life of the State is at risk.
But how do we begin to think about our responsibilities to the nation and its responsibilities to us? Is anyone offering an answer? Is anyone even bothering to ask the question?
Next up (for those with a taste for such things): Liberty or Equality? Alas, Poor Yorick, That Is the Question.
Please note that this post is intended to provide interested persons with an insight on the capital markets and is not intended to promote any manager or firm, nor does it intend to advertise their performance. All opinions expressed are those of Gregory Curtis and do not necessarily represent the views of Greycourt & Co., Inc., the wealth management firm with which he is associated. The information in this report is not intended to address the needs of any particular investor.