The Importance Of Not Doing Business

Here’s where the debt ceiling crisis stands at the moment:

House Republicans just passed the only proposal on the table that would actually eliminate the federal deficit: the “Cut, Cap, and Balance” plan.  Long experience has demonstrated that government spending in excess of 17% to 19% of GDP is unsustainable over the long run.  The “Cut” and “Cap” parts of the Republican plan bring Washington down to that size, and keep it that way.  The “Balance” part means it can’t spend money it doesn’t have.

Naturally this plan, consistent with simple logic and common sense, has absolutely no chance of survival.  If the Senate doesn’t kill it, the White House will.

Meanwhile, the news is buzzing with the “Gang of Six” bipartisan proposal, which still doesn’t have much in the way of real numbers yet, but purports to cut about 30% from the deficit over ten years.  The only thing it would do immediately, besides wipe out some tax exemptions, is offer $500 billion in “down payment” spending cuts.  That would still leave us with a trillion-dollar deficit. 

This proposal can’t even be ready for a vote in time for the August 2 debt-ceiling deadline, but the halls of Congress are filled with the piled bodies of senators who fell all over themselves rushing to endorse it.

Thus, a government that’s already $14 trillion in debt congratulates itself for its courage in seriously thinking about keeping it down to a little over $20 trillion by 2020.  Meanwhile, the concept of actually balancing the budget is unthinkable, perhaps even laughable.

No business could be run this way.  Its management would end up in jail… but, perhaps more importantly, it would have gone out of business long before they slipped on their orange jumpsuits.

An essential feature of economic freedom is the right not to do business with companies you dislike.  Big Government is corrupt because its failures are immortal.  Those who feel its long-term promises are a sham cannot take their “business” elsewhere.  You cannot refuse to “invest” in its doomed plans.  It will eventually go out of business, but this will happen far beyond the point where any private concern would collapse, and the consequences will be vastly more horrible for the captive “customer base.”

What business could rack up as much debt as Washington has, without even the pretense of matching its expenses to revenue?  What corporation could survive after charging so much money from its “clients,” and delivering so little?

To be sure, some of Big Government’s “clients” have made out very well indeed.  The problem is that unhappy customers have no immediate recourse.  You’re likely to be insulted as “greedy” or “racist” if you even try using the suggestion box. 

Politicians do not accommodate angry citizens – they attack them.  What business would dream of subduing displeased customers by attacking their motives for complaint, or turning other members of the customer base against them?

Some businessmen would love to have options like that.  They’d love to have the power to raise prices, without having to worry about competitors eating their lunch.  They’d love to borrow limitless amounts of money, without having to worry about ever repaying the loans.  They would love to be the sole auditors of their own performance.  It would be great to brush aside suggestions of downsizing by complaining about the unfairness of expecting so many superfluous employees to find new jobs.

We have long understood that monopolies are bad.  Why are we surprised that the biggest monopoly in history, the United States government, suffers from all of the expected dysfunctions, inflated to absurd proportions?  Why should we wonder that a couple of votes, spaced out over the course of years, influences a gigantic operation far less than the ever-present threat of taking your business elsewhere, whenever you choose?

One of the great fears about a monopoly is that it can change the terms of its deals with customers at any time.  Ladies and gentlemen, I give you Social Security.  Has the retirement age been raised during your lifetime?  Then you’ve been cheated.  You would never allow a private investment plan to simply decide that it wants to hold off on paying your benefits for a few more years.  You’d never let them justify this by saying people live longer these days.  Why would that matter, if you were collecting the return on an investment accumulated over your working life? 

If you didn’t sue such an investment firm for fraud, you would certainly refuse to do business with them any longer.  But you can’t withdraw from the rapidly disintegrating Social Security scheme.  In fact, it’s just one division of a tottering “company” whose chief executive feels free to threaten the payment of your benefits, because he can’t bring the rest of his operations in under budget.  The terms of this “retirement plan” have been altered, without your consent, since you entered it, and they will be altered again, before you ever collect a nickel.  If you’re young enough, it can be demonstrated, using standard accounting methods, that you will probably never collect a nickel.

In the debt ceiling drama, we witness the entirely predictable behavior of “managers” who know damn well that their “customers” aren’t going anywhere.  No private corporation could survive long enough to reach the degeneracy of the Gang of Six, who dare to offer their “investors” a plan to slightly reduce the madcap spending that has produced our crushing debt burden… but still leave the most spendthrift President in history throwing around far more imaginary money than any of his predecessors. 

Only an insulated political elite could believe the voters who shook the world with their 2010 ballots really just wanted to reach $20 trillion in debt a bit more slowly.  Only a government operation could claim that its endless failure is an irresistible argument for making it larger.

The most insolvent organization the world has ever seen is telling us, once again, that fiscal responsibility is impossible.  They know you can’t take your business elsewhere, and they seriously doubt that you’ll fire them all, or even most of them.  They calculate that votes from those who accept their fantasies will outweigh votes from those who don’t believe them.  Unlike a private business, they’ll never have to worry about losing some of their “customers” or “investors.”  From that perspective, everything else they do, and fail to do, is quite predictable.