Politics as usual is over
14th March 2011
Eric Raymond speaks the simple truth.
Political persuasion matters most when when policy options are relatively open and unconstrained by objective conditions that politics cannot alter. It matters less when policy options are more constrained, and not at all when there are no choices left.
Politics as we know it has had a structural problem for a long time; the self-destructive interest-group scramble that Mancur Olson identified in The Logic of Collective Action continually makes parasitic demands beyond the capacity of the underlying economy to supply, and the difference has to be papered over by massive government borrowing.
This is all very well until, as Margaret Thatcher put it about socialism, “you run out of other peoples’ money.” The system is reaching that point now. Bond investors are figuring out that the debt load has become impossible and are increasingly refusing to either purchase new debt or roll over existing paper. The muni and state-bond market in the U.S. is near-moribund, and the threat of sovereign debt default is tearing the Euro zone apart. U.S Treasuries increasingly look like Wile E. Coyote running in midair; they’ll keep selling only as long as nobody actually looks down.
A year ago the U.S. government was only taking in a third of what it needed to cover annual outlays; today it’s so much worse that individual monthly deficits are larger than the entire Bush administration’s. The money’s all gone. Our options are closing down to default or hyperinflation.