Peak Government
05-15-2012, 04:22 PM
#1
With The Resistance
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Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
Peak Government
Interesting concept, How much is too much, how much do we need, what are the real benefits?
================================================== ======
Submitted by ChrisMartenson contributor Charles Hugh Smith
Acknowledging the Arrival of Peak Government
Most informed people are familiar with the concept of Peak Oil, but fewer are aware that we’re also entering the era of Peak Government. The central misconception of Peak Oil -- that it’s not about “running out of oil,” it’s about running out of cheap, easy-to-access oil -- can also be applied to Peak Government: It’s not about government disappearing, it’s about government shrinking.
Central government -- the Central State -- has been in the expansion mode for so long that the process of contracting government is completely alien to the nation, to those who work for the State, and to those who are dependent on the State. Thus we have little recent historical experience of Peak Government and few if any conceptual guideposts to help us understand this contraction.
Peak Government is not a reflection of government services or the millions of individuals who work in government; it is a reflection of four key systemic forces that drove State expansion are now either declining or reversing.
The Four Key Drivers of State Expansion
The twin peaks of oil and government are causally linked: central government's great era of expansion has been fueled by abundant, cheap liquid fuels. As economies powered by abundant cheap energy expanded, so did tax revenues.
Demographics also aided Central States’ expansion: as the population of working-age citizens grew, so did the work force and the taxes paid by workers and enterprises.
The third support of Central State expansion was debt, and more broadly, financialization, which includes debt, leverage, and institutionalized incentives for speculation and misallocation of capital. Not only have Central States benefited from the higher tax revenues generated by speculative bubbles, they now depend on debt to finance their annual spending. In the U.S., roughly one-third of Federal expenditures are borrowed every year. In Japan -- which is further along on this timeline, relative to America -- tax revenues barely cover social security payments and interest on central government debt; all other spending is funded with borrowed money.
The fourth dynamic of Central State expansion is the State’s ontological imperative to expand. The State has only one mode of being, expansion. It has no concept of, or mechanisms for, contraction.
In my book Resistance, Revolution, Liberation: A Model for Positive Change, I explain this ontological imperative in terms of risk and gain. From the Central State’s point of view, everything outside its control poses a risk. The best way to lower risk is to control everything that can be controlled. Once the potential sources of risk are controlled, then risk can be shifted to others.
Put another way, once the State controls the entire economy and society, it can transfer systemic risk to others: to other nations, to taxpayers, etc.
In effect, the State’s prime directive is to cut the causal connection between risk and gain so that the State can retain the gain and transfer the risk to others. The separation of risk from gain is called moral hazard, and the key characteristic of moral hazard can be stated very simply: People who are exposed to risk and consequence act very differently than those who are not exposed to risk and consequence.
Every time the Central State guarantees something, it disconnects risk from consequence and institutionalizes moral hazard.
To take but one example of many, when the Central State guarantees mortgages so lenders and originators cannot lose and the borrower can’t lose more than his modest 3% down payment, then everyone in the chain is encouraged to pursue risky speculations because the State has disconnected risk from the consequence of a potentially large loss. The risk hasn’t vanished; it has simply been transferred to the taxpayers, who absorb the inevitable losses that result when speculation is encouraged.
Separating risk from gain inevitably generates systemic instability. The entire credit-housing bubble can be seen as proof of this dynamic.
All four of the causal factors itemized above are turning against continued expansion:
•The key energy source of global transportation, liquid fuel, is no longer cheap and easy to access.
•The demographics have reversed as the population of State dependents is soaring.
•Debt has expanded to the point that servicing that debt now threatens the financial stability of the State and its currency.
•The State’s separation of risk and consequence is generating systemic instability.
There are plenty of models of State expansion -- democracy, socialism, communism, theocracy, and so on -- and none for State contraction. This suggests that the down slope of Peak Government will be disorderly and rife with unintended consequences.
The Failure of Separation of Powers
The predominant Western model of governance assumes, incorrectly, that a “separation of powers” within the State will limit the State’s appetite for control. But rather than limit the State’s expansion, the State’s subsystems -- the institutions of executive power, legislative power and judicial power -- are competing to gain as much control as possible over both the State itself and the nation’s social and financial systems.
This competition doesn’t weaken or limit the State; rather, it lends the State a fearsome competitive advantage, as each institution gains power as the State expands. So even though the competition between the three may appear to limit the power of each, in aggregate this competition only increases the State’s expansion as each seeks to outdo the others in reach, influence, and power.
Regardless of which institution wins or loses a particular squabble, the State inexorably expands its control and power. And just as inexorably, elites within the State -- systemically protected from the risk created by their policies -- will experience a rising sense of omnipotence as their private power rises in tandem with the State’s expansion.
These powers also offer State elites a way to radically lower their own risk and dramatically increase their private gain by leveraging the State’s vast powers to their own private benefit.
In other words, not only does each agency and branch of the State seek to expand its reach and power, so, too, does every individual within the State who can leverage the power of the State to protect his/her own individual gain.
The State as Protector of Private Gain
The Central State is granted unique powers of coercion by its membership (the citizenry) to protect them from the predation of foreign powers, individuals, and subgroups seeking monopoly. The citizens grant the State this extraordinary power to protect their freedom of faith, movement, expression, enterprise and association and to insure that no subgroup can dominate the nation for their private gain.
Granting this power to the State creates a risk that the State itself may become predatory. To counter this potential, the State has the self-limiting mechanisms of a separation of powers such that no one institution or agency can dominate the State and thus the nation.
But as we have seen, the separation of powers has failed to limit the expansion of the State; rather, it has become a competitive advantage, feeding the State’s expansion. There are no State-based limits on the State’s concentration of wealth and power.
There is a great irony in this concentration of power in the State: the power is concentrated to protect the citizenry from predation and exploitation, but that concentration becomes an irresistible attractor for all those seeking to increase their private gain via monopoly, cartels, collusion, fraud, and other forms of predation.
The wealth that can be concentrated in private hands is not limited or self-regulated, and so private concentrations of wealth inevitably exceed the ethical threshold of individuals within the State (i.e., their resistance to bribes and self-interest). This structural imbalance leaves the State intrinsically vulnerable to the influence of private wealth. Once this wealth has a foothold of influence within the State, it can then bypass the State’s internal controls and become the financial equivalent of cancer: a blindly self-interested organism bent solely on growth at the expense of the system as a whole.
Rather than protect the citizens from exploitation, the State’s primary role becomes protecting the private gains of elites who have taken effective control of the State’s vast powers.
The Death Spiral of an Expansive State
We can now see that the Central State faces an impossible contradiction: to pursue its primary purpose of protecting the citizenry from predation, it is granted powers that enable it to evade its own self-limiting mechanisms. Private concentrations of wealth gain control over the State’s machinery of governance, and the resulting partnership of private and State elites suppress the mechanisms that were intended to limit private influence over State power.
To enhance their own power, these elites increase the State’s reach until it dominates the entire political, social, and economic system. This sets up an inherently self-destructive feedback loop in which the State’s actions to protect its self-serving elites weaken both the State and the nation. The State’s inefficiencies pressure the nation’s output, even as the State increases its share of the national income to maintain its self-serving elites and quiet its potentially restive dependents. The more the State expropriates, the less surplus is left for productive investment, and so the nation’s output continues to decline.
This dynamic creates a positive feedback loop (i.e., a death spiral) of higher taxes and lower investment in productive assets.
Post Peak-Government Living
In Part II: The End of the Free Lunch, we consider what citizens can do to limit their own risk as the Central State contracts.
We explain how the State has unfairly used taxpayer-funded subsidies to erode participation commerce and investment at the local level that in ages past provided transparency into the true value of labor.
Now that the artificial influence of these subsidies is waning as the State can longer longer afford them, reactivating the infrastructure and processes for enterprise at the community level will be critical to transitioning to a sustainable and more resilient economic model.
================================================== ======
Submitted by ChrisMartenson contributor Charles Hugh Smith
Acknowledging the Arrival of Peak Government
Most informed people are familiar with the concept of Peak Oil, but fewer are aware that we’re also entering the era of Peak Government. The central misconception of Peak Oil -- that it’s not about “running out of oil,” it’s about running out of cheap, easy-to-access oil -- can also be applied to Peak Government: It’s not about government disappearing, it’s about government shrinking.
Central government -- the Central State -- has been in the expansion mode for so long that the process of contracting government is completely alien to the nation, to those who work for the State, and to those who are dependent on the State. Thus we have little recent historical experience of Peak Government and few if any conceptual guideposts to help us understand this contraction.
Peak Government is not a reflection of government services or the millions of individuals who work in government; it is a reflection of four key systemic forces that drove State expansion are now either declining or reversing.
The Four Key Drivers of State Expansion
The twin peaks of oil and government are causally linked: central government's great era of expansion has been fueled by abundant, cheap liquid fuels. As economies powered by abundant cheap energy expanded, so did tax revenues.
Demographics also aided Central States’ expansion: as the population of working-age citizens grew, so did the work force and the taxes paid by workers and enterprises.
The third support of Central State expansion was debt, and more broadly, financialization, which includes debt, leverage, and institutionalized incentives for speculation and misallocation of capital. Not only have Central States benefited from the higher tax revenues generated by speculative bubbles, they now depend on debt to finance their annual spending. In the U.S., roughly one-third of Federal expenditures are borrowed every year. In Japan -- which is further along on this timeline, relative to America -- tax revenues barely cover social security payments and interest on central government debt; all other spending is funded with borrowed money.
The fourth dynamic of Central State expansion is the State’s ontological imperative to expand. The State has only one mode of being, expansion. It has no concept of, or mechanisms for, contraction.
In my book Resistance, Revolution, Liberation: A Model for Positive Change, I explain this ontological imperative in terms of risk and gain. From the Central State’s point of view, everything outside its control poses a risk. The best way to lower risk is to control everything that can be controlled. Once the potential sources of risk are controlled, then risk can be shifted to others.
Put another way, once the State controls the entire economy and society, it can transfer systemic risk to others: to other nations, to taxpayers, etc.
In effect, the State’s prime directive is to cut the causal connection between risk and gain so that the State can retain the gain and transfer the risk to others. The separation of risk from gain is called moral hazard, and the key characteristic of moral hazard can be stated very simply: People who are exposed to risk and consequence act very differently than those who are not exposed to risk and consequence.
Every time the Central State guarantees something, it disconnects risk from consequence and institutionalizes moral hazard.
To take but one example of many, when the Central State guarantees mortgages so lenders and originators cannot lose and the borrower can’t lose more than his modest 3% down payment, then everyone in the chain is encouraged to pursue risky speculations because the State has disconnected risk from the consequence of a potentially large loss. The risk hasn’t vanished; it has simply been transferred to the taxpayers, who absorb the inevitable losses that result when speculation is encouraged.
Separating risk from gain inevitably generates systemic instability. The entire credit-housing bubble can be seen as proof of this dynamic.
All four of the causal factors itemized above are turning against continued expansion:
•The key energy source of global transportation, liquid fuel, is no longer cheap and easy to access.
•The demographics have reversed as the population of State dependents is soaring.
•Debt has expanded to the point that servicing that debt now threatens the financial stability of the State and its currency.
•The State’s separation of risk and consequence is generating systemic instability.
There are plenty of models of State expansion -- democracy, socialism, communism, theocracy, and so on -- and none for State contraction. This suggests that the down slope of Peak Government will be disorderly and rife with unintended consequences.
The Failure of Separation of Powers
The predominant Western model of governance assumes, incorrectly, that a “separation of powers” within the State will limit the State’s appetite for control. But rather than limit the State’s expansion, the State’s subsystems -- the institutions of executive power, legislative power and judicial power -- are competing to gain as much control as possible over both the State itself and the nation’s social and financial systems.
This competition doesn’t weaken or limit the State; rather, it lends the State a fearsome competitive advantage, as each institution gains power as the State expands. So even though the competition between the three may appear to limit the power of each, in aggregate this competition only increases the State’s expansion as each seeks to outdo the others in reach, influence, and power.
Regardless of which institution wins or loses a particular squabble, the State inexorably expands its control and power. And just as inexorably, elites within the State -- systemically protected from the risk created by their policies -- will experience a rising sense of omnipotence as their private power rises in tandem with the State’s expansion.
These powers also offer State elites a way to radically lower their own risk and dramatically increase their private gain by leveraging the State’s vast powers to their own private benefit.
In other words, not only does each agency and branch of the State seek to expand its reach and power, so, too, does every individual within the State who can leverage the power of the State to protect his/her own individual gain.
The State as Protector of Private Gain
The Central State is granted unique powers of coercion by its membership (the citizenry) to protect them from the predation of foreign powers, individuals, and subgroups seeking monopoly. The citizens grant the State this extraordinary power to protect their freedom of faith, movement, expression, enterprise and association and to insure that no subgroup can dominate the nation for their private gain.
Granting this power to the State creates a risk that the State itself may become predatory. To counter this potential, the State has the self-limiting mechanisms of a separation of powers such that no one institution or agency can dominate the State and thus the nation.
But as we have seen, the separation of powers has failed to limit the expansion of the State; rather, it has become a competitive advantage, feeding the State’s expansion. There are no State-based limits on the State’s concentration of wealth and power.
There is a great irony in this concentration of power in the State: the power is concentrated to protect the citizenry from predation and exploitation, but that concentration becomes an irresistible attractor for all those seeking to increase their private gain via monopoly, cartels, collusion, fraud, and other forms of predation.
The wealth that can be concentrated in private hands is not limited or self-regulated, and so private concentrations of wealth inevitably exceed the ethical threshold of individuals within the State (i.e., their resistance to bribes and self-interest). This structural imbalance leaves the State intrinsically vulnerable to the influence of private wealth. Once this wealth has a foothold of influence within the State, it can then bypass the State’s internal controls and become the financial equivalent of cancer: a blindly self-interested organism bent solely on growth at the expense of the system as a whole.
Rather than protect the citizens from exploitation, the State’s primary role becomes protecting the private gains of elites who have taken effective control of the State’s vast powers.
The Death Spiral of an Expansive State
We can now see that the Central State faces an impossible contradiction: to pursue its primary purpose of protecting the citizenry from predation, it is granted powers that enable it to evade its own self-limiting mechanisms. Private concentrations of wealth gain control over the State’s machinery of governance, and the resulting partnership of private and State elites suppress the mechanisms that were intended to limit private influence over State power.
To enhance their own power, these elites increase the State’s reach until it dominates the entire political, social, and economic system. This sets up an inherently self-destructive feedback loop in which the State’s actions to protect its self-serving elites weaken both the State and the nation. The State’s inefficiencies pressure the nation’s output, even as the State increases its share of the national income to maintain its self-serving elites and quiet its potentially restive dependents. The more the State expropriates, the less surplus is left for productive investment, and so the nation’s output continues to decline.
This dynamic creates a positive feedback loop (i.e., a death spiral) of higher taxes and lower investment in productive assets.
Post Peak-Government Living
In Part II: The End of the Free Lunch, we consider what citizens can do to limit their own risk as the Central State contracts.
We explain how the State has unfairly used taxpayer-funded subsidies to erode participation commerce and investment at the local level that in ages past provided transparency into the true value of labor.
Now that the artificial influence of these subsidies is waning as the State can longer longer afford them, reactivating the infrastructure and processes for enterprise at the community level will be critical to transitioning to a sustainable and more resilient economic model.
05-15-2012, 06:56 PM
#2
Gets Weekends Off
Joined APC: Nov 2010
Position: Journo by night, irrigator by day
Posts: 220
look forward to part II, and now a song;
The rich get richer, the poor get the picture
The bombs never hit you when you're down so low
Some got pollution, some revolution
There must be some solution but I just don't know
The bosses want decisions, the workers need ambitions
There won't be no collisions when they move so slow
Nothing ever happens, nothing really matters
No one ever tells me so what am I to know
You wouldn't read about it, read about it
Just another incredible scene, there's no doubt about it
Hammer and the sickle, the news is at a trickle
The commissars are fickle but the stockpile grows
Bombers keep acoming, engines softly humming
The stars and stripes are running for their own big show
Another little flare up, storm brewed in a tea cup
Imagine any mix up and the lot would go
Nothing ever happens...
You wouldn't read about it, read about it
One unjust ridiculous steal, ain't no doubt about it
You wouldn't read about it, read about it
Just another particular deal, there's no doubt about it
(Hirst/Moginie/Garrett)
The rich get richer, the poor get the picture
The bombs never hit you when you're down so low
Some got pollution, some revolution
There must be some solution but I just don't know
The bosses want decisions, the workers need ambitions
There won't be no collisions when they move so slow
Nothing ever happens, nothing really matters
No one ever tells me so what am I to know
You wouldn't read about it, read about it
Just another incredible scene, there's no doubt about it
Hammer and the sickle, the news is at a trickle
The commissars are fickle but the stockpile grows
Bombers keep acoming, engines softly humming
The stars and stripes are running for their own big show
Another little flare up, storm brewed in a tea cup
Imagine any mix up and the lot would go
Nothing ever happens...
You wouldn't read about it, read about it
One unjust ridiculous steal, ain't no doubt about it
You wouldn't read about it, read about it
Just another particular deal, there's no doubt about it
(Hirst/Moginie/Garrett)
05-15-2012, 08:41 PM
#4
Gets Weekends Off
Joined APC: Nov 2010
Position: Journo by night, irrigator by day
Posts: 220
Originally Posted by jungle
What I want to know is why the Journo isn't writing about this, most likely it is because it would get them banned from major media outlets.
Honestly though, the only reason I even put this in my 'bio' is a matter of transparency. I think is is better to be open, as opposed to one of you accidently discovering I am a Aussie Journalists Association member.
To be 'eligible' to write for News Corp on a 'freelance' basis you are forbidden to use the same 'by line' on other publications like IndyMedia or Reporters Without Borders... So yes there certainly is the fear factor to consider. Additionally Murdoch refuses to pay MEAA <Union> rates for work submitted.
05-15-2012, 08:48 PM
#5
With The Resistance
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Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
Originally Posted by FlightGear
There is a reason I only do piddly little product reviews.....
Honestly though, the only reason I even put this in my 'bio' is a matter of transparency. I think is is better to be open, as opposed to one of you accidently discovering I am a Aussie Journalists Association member.
To be 'eligible' to write for News Corp on a 'freelance' basis you are forbidden to use the same 'by line' on other publications like IndyMedia or Reporters Without Borders... So yes there certainly is the fear factor to consider. Additionally Murdoch refuses to pay MEAA <Union> rates for work submitted.
Honestly though, the only reason I even put this in my 'bio' is a matter of transparency. I think is is better to be open, as opposed to one of you accidently discovering I am a Aussie Journalists Association member.
To be 'eligible' to write for News Corp on a 'freelance' basis you are forbidden to use the same 'by line' on other publications like IndyMedia or Reporters Without Borders... So yes there certainly is the fear factor to consider. Additionally Murdoch refuses to pay MEAA <Union> rates for work submitted.
We call this media failure here, they can delve into the fifty year history of an individual within 24 hours and at the same time keep the truth hidden for years on a very public official. Shame on you.
The real reporting is mostly done without names today and we all know why.
Last edited by jungle; 05-16-2012 at 07:17 PM.
05-16-2012, 12:40 AM
#6
Gets Weekends Off
Joined APC: Nov 2010
Position: Journo by night, irrigator by day
Posts: 220
Originally Posted by jungle
And you know any major outlet would nail you to the barn door for this, no reason to single out Murdoch.
Originally Posted by jungle
We call this media failure here, they can delve into the fifty year history of an individual within 24 hours and at the same time time keep the truth hidden for years on a very public official. Shame on you.
We have a show here called Media Watch, produced by our ABC. I get the dinstinct feeling you will enjoy it.
Media Watch (ABC TV)
This is Media Watch on Datelines expose on the multiple shooters involved in the Robert Bales shooting.
Media Watch: Anatomy of an investigation (30/04/2012)
05-16-2012, 01:10 AM
#7
With The Resistance
Thread Starter
Joined APC: Jan 2006
Position: Burning the Agitprop of the Apparat
Posts: 6,191
There is certainly a lot of chatter about symptoms, but not much about causation, we make a mistake when we believe one outlet differs from another. A little search on the history of ABC drives that home in a most convincing manner.
In fact and history all of the major outlets have about the same credibility as the cheapest supermarket checkout tabloids, anyone who argues otherwise just isn't watching. Forgery and prostitution seem to be the hallmarks of the industry, and I mean that in the kindest way.
This is nothing new, but perhaps somewhat less subtle than in the past, perhaps it has much to do with the lost art of the lie, or the greater amount of information available to the public from numerous reliable sources.
“If you don't read the newspaper, you're uninformed. If you read the newspaper, you're mis-informed.”
― Mark Twain
In fact and history all of the major outlets have about the same credibility as the cheapest supermarket checkout tabloids, anyone who argues otherwise just isn't watching. Forgery and prostitution seem to be the hallmarks of the industry, and I mean that in the kindest way.
This is nothing new, but perhaps somewhat less subtle than in the past, perhaps it has much to do with the lost art of the lie, or the greater amount of information available to the public from numerous reliable sources.
“If you don't read the newspaper, you're uninformed. If you read the newspaper, you're mis-informed.”
― Mark Twain
Last edited by jungle; 05-16-2012 at 01:42 AM.
05-16-2012, 04:56 AM
#8
Libertarian Resistance
Joined APC: Feb 2007
Position: 757 FO
Posts: 1,057
While I agree with the general premise of this article, as well of most of its specific points, I am not sure that the era of cheap liquid fuel has ended.
Innovations in extraction technology have made many sources of oil, previously unrecoverable, tecnologically and economically recoverable. We all know the story of North Dakota's recent success, take a look at these (currently unused!) resources.
CARPE DIEM: 200 Year Supply of Oil in Green River Formation
CARPE DIEM: Map of the Day: 87% of U.S. Federal Offshore Acreage is Off Limits to Oil and Gas Development
Additionally, the surplus of natural gas we know have will find its way into transportation energy. Leaving aside the possibility of large scale conversions to nat gas vehicles, it is interesting to note that natural gas can be converted to methanol. This is already being done and methanol can be burned in the same flex fuel vehicles that are being marketed to use ethanol.
Liquid fuel can be as cheap as our government allows it to be.
WW
Innovations in extraction technology have made many sources of oil, previously unrecoverable, tecnologically and economically recoverable. We all know the story of North Dakota's recent success, take a look at these (currently unused!) resources.
CARPE DIEM: 200 Year Supply of Oil in Green River Formation
CARPE DIEM: Map of the Day: 87% of U.S. Federal Offshore Acreage is Off Limits to Oil and Gas Development
Additionally, the surplus of natural gas we know have will find its way into transportation energy. Leaving aside the possibility of large scale conversions to nat gas vehicles, it is interesting to note that natural gas can be converted to methanol. This is already being done and methanol can be burned in the same flex fuel vehicles that are being marketed to use ethanol.
Liquid fuel can be as cheap as our government allows it to be.
WW
05-16-2012, 06:33 PM
#9
Gets Weekends Off
Joined APC: Nov 2010
Position: Journo by night, irrigator by day
Posts: 220
Originally Posted by jungle
There is certainly a lot of chatter about symptoms, but not much about causation
Originally Posted by jungle
In fact and history all of the major outlets have about the same credibility as the cheapest supermarket checkout tabloids, anyone who argues otherwise just isn't watching. Forgery and prostitution seem to be the hallmarks of the industry, and I mean that in the kindest way.
2- You don't have to qualify that statement with a 'in the kindest way' on my account. If I were to neglect my honor and 'spill my guts' about what I have learned and seen you all would vomit. To that end Google Rebekah Brooks...
@ Winged Wheeler. Although 'we' are discovering new ways to mine oil all the time. The fact that we are figuratively looking under rocks to find it does suggest the end is nearing.
05-16-2012, 06:49 PM
#10
With The Resistance
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Joined APC: Jan 2006
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Posts: 6,191
There is some history for this thesis, having seen first hand the results of the collapse of the Soviet Union and some of its satellites, the contraction phase is indeed rife with problems that many cannot anticipate.
Not so much a problem with cheap liquid fuels but a problem with liquidity in financial markets brought on by staggering debt. It paints you into a corner in which there are no options except contraction.
Not so much a problem with cheap liquid fuels but a problem with liquidity in financial markets brought on by staggering debt. It paints you into a corner in which there are no options except contraction.
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