Systems Thoughts on the Government Shutdown

In reading about the fall 2013 federal government shutdown, a few points need to be made. First, the personalization and demonization of the Tea Party is an emotional and media-driven response to a much larger, more powerful, and systemic set of issues. These were addressed well by Brit Hume, who said that the Tea Party was a response by conservatives who felt that the Republican party had betrayed its purportedly small government and Constitutional roots. To back up this critique with some data, I pulled this chart of Federal Government Debt as a percentage of GDP:

Federal Government Debt as a Percentage of GDP

There are a couple of things to note. While debt appears to hit zero around 1980, the scale starts at 30%. Debt grows quite rapidly during the Reagan/Bush I years in a less-than-conservative fashion. Then it basically declines during the Clinton years, only to grow again slightly during the Bush II years. What's I found astonishing however was the debt explosion during the Obama years. Charles Krauthammer was criticized this week for saying that Obama was uninterested in debt reduction, but this graph provides strong evidence for this that no amount of campaign verbiage and spin is going to be able to counteract. The graph shows not a continuation or slight increase of the Bush debt but an astronomical, order of magnitude increase that I found quite surprising.

Politically and economically, the Reagan debt increases were able to be overcome through economic growth. However, through a combination of factors, those days of high-economic growth are gone. Cheney and Bush II tried to maintain them through globalization, but it seems that those gains have played out. It remains to be seen how Obama intends to pay off this astronomical debt increase, but as the Obamacare exchanges clearly point out, Obama's strength appears to be rhetoric and winning elections not planning and technical execution.

What ultimately drives this spending and debt is the political-economy relationship between elections and standard of living, what during the Clinton years was captured by the phrase, "It's the economy stupid." The majority of people will vote for politicians who deliver the most wealth to their constituents. When that wealth comes derives the public coffers, then the government has set itself upon an unsustainable course. This dynamics is captured by the following pseudo-quote from Alexander Fraser Tytler:

"A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.
The average age of the world's greatest civilizations from the beginning of history has been about 200 years. During those 200 years, these nations always progressed through the following sequence:

• From bondage to spiritual faith;

• From spiritual faith to great courage;

• From courage to liberty;

• From liberty to abundance;

• From abundance to selfishness;

• From selfishness to complacency;

• From complacency to apathy;

• From apathy to dependence;

• From dependence back into bondage" 

While the Tytler quote conveys a germane and valid insight, it is in fact a misquotation from and condensation his Universal History (1839). Nevertheless, to my eye the government debt graph provides empirical evidence for the political dynamic described by Tytler because the majority of voters support politicians who deliver the most wealth. If we follow the money, then it should be easy to determine how those benefits from the public treasury are distributed, unless of course those we entrust to take care of the public treasury have an interest in hiding and obfuscating those payments, a favorite DC game. Were this the case, then we would expect entitlement spending to be growing rapidly, which is what Nate Silver's analysis shows. This dynamic is at the center of the Tea Party critique and the current elite defense. 

Rapid Growth of Entitlements Drives Government Debt (Silver 2013)

What's really happening is this. So many of the political and media elites depend on these government payments for their livelihoods and status that they will do anything to maintain the status quo. The ability of DC elites to view these payments in a critical and disinterested fashion has disappeared long ago. The Tea Party thus incurs the wrath of these elites by pointing out the illogic and long-term unsustainability of this system from which so many benefit. 

To conclude, this more systemic context and perspective casts Obama's challenge to "win an election" in a more cynical, self-serving, and tragic light. Elections are fine so long as they are a fair competition of ideas, but when the competition it so significantly tilted - as the government debt chart shows - then something other than fairly contested elections are happening.