Congress appeared taken by surprise in October of 2008 as the financial crisis on Wall Street unfolded. Congress was in a state of shock and awe, amazed to see their policymaking implicated in the speculative bubble and its collapse. But why were they surprised? How did these legislative engineers fail to see the hazards of their fiscal deficits? Had they been pawns? Were they errantly advised? Or were they led astray by false theories and their own greed?
Congress does not have to be an economically naive institution even though it is constituted as a citizen legislature rather than a body of subject matter experts. Thousands of specialists serve Congress as committee staffers in various support operations. Unfortunately, there is nothing to rally and organize these experts on behalf of the public good broadly conceived. While the tasks of many political specialists overlap, these experts have discreet functions and objectives. When it comes to economic matters most defer to party leadership, appropriation committees, and the Congressional Budget Office. What is missing in this arrangement is a mission organizing and consensus building document at least as important as the Federalist Papers. We need something of enduring relevance that rises above partisanship and demographics in showing the way to sustainable healthy economics and fiscal policy.
There is little that Americans agree upon anymore except for the importance of the right to disagree — a right operationalized in freedom of religion, speech and the right to bear arms. The impact of liberal thinking, especially as it regards diversity and pluralism, is evident everywhere. We are no longer “a people” in the traditional sense of the word. We’re not even an amalgam, for there is low cohesiveness. In place of an ethical ethos or moral consensus we elevate an unqualified goal of economic growth.
The accelerating decline of real religious faith has contributed to the elevation of goals such as GDP growth, national security at any cost, and “free choice” regardless of the consequences. These goals help explain why the country has borrowed far beyond its capacity to repay, why we’re responsible for almost half (45%) of the world’s total expenditures on militarism and defense, and why we continue to tolerate destructive pursuits in the name of freedom.
Imprudence is happily tolerated if it contributes to economic growth. Many economic “experts” advocate whatever contributes to short-term nominal growth. Steadily increasing national budget deficits contribute to growth (until deficits get out of hand). The same goes for money supply inflation, consumer and producer price inflation, the monetization of government debt, “easy money” Fed policies, and high levels of bank leverage. Other strategies that contribute to growth include lax immigration policies, an increase in the percentage of two income families, and a covetous consumer psychology that speeds up borrowing and money velocity.
We’ve lost faith in society to recognize and reward responsible behavior, good stewardship, and money morality. Thus, it has become easy to jump on the bandwagon of getting as much as possible while the getting is good. Interestingly, this is the disastrous societal psychology implicated in the 1964 Hollywood production, “The Fall of the Roman Empire.”
Many of us can remember our mixed emotions during Ronald Reagan’s time in office. It was easy to appreciate his call for smaller national government but difficult to swallow the federal government’s growing expenditures and deficits. Growth was billed as a magical phenomenon capable of producing ‘money for nothin’ and your prosperity for free. Dissembling elites placed experts at politicians’ elbows, the handlers promising that growth would pay for whatever borrowing was necessary to achieve it. The end, purportedly, justified the means. However, it was a fairy tale and a hazardous one.
America got growth but without increases in the middle class standard of living (once adjustments are made for more hours worked). We also received conditions leading to our developing debt storms. It took no genius in the 1980s to see that America was becoming debt dependent and increasingly less free. When we arrived at our debt crisis in 2008, it did not dawn upon Congress that we should resize our economy to a level not requiring new debt additions. Instead, we chose to increase debt levels further by transferring private debts to our national government. Other nations chose the same dangerous path.
How short-sighted is it for a major nation to be without a great and honorable mission? Rome’s ancient decline is instructive. In modern times the mission of enduring commercial enterprise has come to resonate with people, in part because the pursuit of wealth is associated with elites having an incentive to protect robust markets, consumer demand, and productive efficiencies. Hence, many people rationalize the idea that “greed is good.”
The difficulty is not that a commercial nation is without guidance but that the guidance of money comes to reflect little other than the power-maximizing goals of elites. Granted, monied interests must compete against other visions of the public good such as the quest for quiet familial life or sustainable ecological systems. However, these ideals are relatively ineffective in organizing society since they must compete against the ‘money acquisition’ mission — a mission which by its very nature is dramatically more likely to amass and hold power. Thus, unless a society is held on course by quality religion, insightful education or a mission oriented constitution (or equivalent), it is vulnerable to capture by those who make money their fortress and god. Indeed, if our nation was guided by a proper ethos, we would not have fallen prey to the Wall Street deception that debt-driven growth is good.
During the first 100 years of our country’s history our informal mission of doing “the right and the good” reflected the happy confluence of pious religion, a self-responsibility ethos, and a belief in small government. Many Americans saw no need for a national ethos, per se, because the aggregated individual ethos seemed to guide us providentially. However, much of this changed with the rise of big industry and national banking in the early 20th century. People began to be dependent upon industry and government. Furthermore, immigration from Southern and Eastern Europe ended the prospect for a default majoritarian consensus about the country’s appropriate direction. This environment opened the door for American presidents to offer their political agendas as a substitute means of organizing the public mind.
Franklin D. Roosevelt brought the so-called “New Deal” and a vision of redistributive politics. Truman sought to use atomic energy for peaceful purposes — subsequent to the two atomic bombs dropped on Japan. JFK endorsed a “New Frontier” in space. LBJ advocated a “Great Society,” with infrastructure development in the South. Ronald Reagan promoted a new federalism. Clinton and both Bushes dreamed of global, interdependent democratic capitalism. (Now they’ve got to live with the mess.) Finally, Barack Obama promotes “change,” especially change that empowers Democratic constituencies. While presidential agendas are more complex than one phrase descriptions, the point remains that the U.S. has lurched from one partisan mission to another. We lack an ethos to keep us on a positive course for the common good.
The void created in the absence of a meaningful national ethos invites “economic growth” to perform as a substitute mission. In advocating growth, a president can imagine himself furthering the one thing citizens can agree upon: Get more money! The lurking danger is that increased debt seems to be the preferred way of trying to get more money.
For financial elites, the prospect of growth increases the allure of fiat money, investment leverage, and steady inflation, for these conditions empower elites to more effectively capitalize upon growth. The goal for devious elites — especially Wall Street types — is the acquisition of disproportionate monetary power for use in private and public conquests. Just as thinking Americans want the country defended against military conquest, we must be careful to defend America from debt-instrumented conquest.
When America’s debt storm finally passes, along with the angst and trouble it brings, the country must rediscover an inspiring and sustainable ethos that can compete against the power of money as society’s compass. An adequate ethos cannot be created out of nothing. It must arise from cultural developments and a rebirth of spiritual health. Nevertheless, by organizing against the idea of debt-driven economic growth — clearly different than desirable growth that reflects technological progress, productivity gains and business efficiencies — we take a first step in the right direction. Step-by-step, progress adds up. Enough progress in the right direction and a new world dawns. Gentlemen and ladies: Find your compasses. And help your neighbor find his.