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Watercolor Memories

by Brian Wilson

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Tuesday, October 7, 2014

Chaos


There is a law of inverse political thermodynamics. Above a certain threshold necessary to free a social system from chaos, over time the more energy expended to maintain order by a governing body, the less order there will be. Government efforts to promote order often cause disorder, and in extreme cases, chaos. If the spending of governments around the world is a proxy for the energy spent maintaining “order,” then never has so much been expended in pursuit of that elusive goal, to such little effect.

One would be hard-pressed to find a spot on the globe where order is not beating a full retreat. The Middle East and parts of Africa are engulfed in religious war, the ultimate chaos. Twice in the last thirteen years the US has tried militarily to impose its version of order and twice it has failed. Now it is trying a third time. Our goals are ill defined and contradictory and should we, by whatever definition we adopt, “win,” the political ordering we leave behind will no more lift our conquered territory from chaos than what was left behind in Afghanistan and Iraq. The energy, as measured in money and military force, required for the garrison states necessary to maintain a semblance of order in those two states was monumental, and a substantial portion of the American electorate was unwilling to expend it. Why should anyone expect things to be different this third time?


Japan, the US, and most of Europe’s welfare-state governments have been or will be unable to keep pension and medical promises. Their sputtering economies cannot generate the necessary revenues. Demographically, the older age group of beneficiaries swells while low birth rates have insufficiently replenished the younger taxpayer cohort expected to support them. Broken promises, austerity, and lower-than-envisioned standards of living—for both groups—will further retard economic growth, leading to outright contraction. Such has already been the case in both Japan and southern Europe.

Borrowing and central bank money creation have done little to kickstart economies and have generated mountains of debt. Boxed-in governments will eventually be overwhelmed, especially when financial markets start charging higher interest rates (which central banks will be unable to suppress), to reflect their increasing credit risk. Stay tuned for political conflict between the young and old, rich and poor, and governments and their citizens, undoubtedly featuring confrontation, violence in the streets, and more demands by aggrieved regions to secede from their central governments. 

China has been the last, best hope of command-and-control statists, but the wheels are falling off there, too. The fantasy and the fear was that Chinese bureaucrats, much wiser than the ones populating other governments, would direct their economy to growth rates far higher than Western economies, eventually leaving them in the dust. This recycled the fantasy affixed to Japan in the late 1980s, just before that economy went into its endless recession. It turns out that below market interest rates and state-directed credit produce the same results in China that they do everywhere else—malinvestment in unneeded factories, office towers, transportation projects, and housing developments, debt-fueled speculation (mostly in real estate), and rampant corruption.

The Chinese have an additional problem: their people have no say in who misrules the country and screws up the economy. The government has done a good job of repressing malcontents, but recent Hong Kong demonstrations pose a ticklish problem. Behind the Chinese fantasy was the oft-disproved notion that political and economic freedom were separable. The Chinese people were to be drones: starting businesses, working hard, making themselves and the country rich, but not expressing themselves politically. That’s been the Holy Grail of statists since the first caveman “leader,” but history is repeating itself; the drones never keep to their assigned place. Hong Kong, a premier financial enclave with a British common law tradition, was always the odds on favorite as the focal point of the clash between economic freedom and political repression. If the contradiction is resolved in favor of freedom, the Communist party risks similar uprisings throughout the country and losing its grip on power. If repression reigns, talented people and their capital will flee, foreign investment will dwindle, and Hong Kong will become a shadow of its former self. Either way, score another victory for chaos.

Ironically, disorder is staging an upside breakout just when we may, arguably, need a good dose of command and control. Congress has appropriated billions to fight the Islamic State, supposedly an existential threat. Ebola will probably kill more Americans than the Islamic State, but funding has been cut for the Center for Disease Control and World Health Organization, medical screenings for those streaming into the country are nonexistent, and controls at foreign airports and US ports of entry are a bad joke. The confirmed case in Dallas was sent home from an emergency room after he told personnel he was from Liberia and suffered symptoms typical of Ebola. That emergency room’s preparation is apparently on par with that of the rest of our medical system.

The government’s reaction has been the usual mix of prevarication and incompetence. For thirteen years it has tried to frighten us into bloody and costly wars and surrendering our civil liberties to fight an overblown threat of terrorism. Now officials are telling us not to worry or panic about Ebola—reason enough to worry and take precautions. Medical screenings, travel restrictions, quarantines, and other abridgments of liberty may be necessary to fight Ebola, far more necessary than the police state apparatus constructed to fight terrorism. Yet, politicians and bureaucrats are displaying the same insouciant ignorance about the exponential growth function of microorganisms as they have of the exponential growth function of compounding interest on our debt. If it becomes life-or-death crucial for the government to maintain public order and safety, it will—again—almost certainly be an agent of chaos.

Robert Gore

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