The end of America as we know it is near. This can be a good thing or a bad thing. We are at the place where we will return to the remarkable and wise foundations on which the nation was built, or we will cease to be a Republic at all. Which it will be will likely be determined in 2012.
This is not to say that this will happen next year, but the choices we make over the next year will determine how we end up, and then we will get there very fast. Remember the saying, “If you do not change your direction, you will end up where you are headed”? We are now headed toward an ultimate collapse and meltdown of America as we know it. If this happens, we will not just morph into some European style socialism. As we can see, that is failing too. The alternative is the worst kind of totalitarian tyranny.
The 2012 elections will no doubt be the most important of our lifetime and maybe our history. Even so, all of the choices that will determine our future are not just about the elections. Our government is in crisis, and if radical change does not come next year, we will not survive as a Republic much longer.
I received a huge response for my recent evaluations of the Republican Presidential candidates, virtually all of which were very positive. I will do more evaluations as there is such an obvious desire for this. However, first we need to discuss what I think is the biggest issue facing our nation at this time—one that the candidates are addressing only superficially and the Administration is not addressing at all.
Let me also preface this by saying that I am not implying this is the most important issue facing our nation at this time, but the biggest, and it is the one that has the potential to sink the ship before the others do. Therefore, it must take precedence until it is resolved, or we won’t have a Republic much longer.
I also don’t want to make the judgment that none of the candidates understand this issue. The debates are mostly driven by questions asked by the media moderators, who seem to be almost completely blind to this primary issue.
I think the Republican field is impressive in many ways. Even so, I admit that at times it was like watching doctors standing over a terminal cancer patient with just a few days left to live and they’re arguing over what to do about a hangnail. Granted, this could be due to the questions they’re having to field, but we are in a crisis that will destroy our nation very soon, and it must become at least a main part of the discussion, if not the main focus. Consider the following factors listed below:
Factor #1: Government workers do not produce anything marketable. For this reason, government has to be supported by the productivity of private sector workers whose production provides the tax base.
Factor #2: A healthy private sector to government worker ratio would be about 10 to 1. The further we get from this ratio, the more excessive the burden of government becomes. When it becomes 3 to 1, it is unsustainable for long, even by the most efficient private sector workforce.
Factor #3: The ratio of people in America who now receive their support from government (on all levels), which includes workers and entitlement recipients, the military, etc., is now approaching 1 to 1.
Factor #4: If Obamacare is implemented, this ratio will be about .8 to 1. This is the core reason for our deficits that are now almost half the size of the entire budget. Entitlements may need to be reengineered, but they are not the main culprit in our deficit problem. A much bigger problem is a bloated, inefficient government.
Factor #5: Local government workers now make, on average, about 25% more than private sector workers when considering the value of their benefits. State government workers, on average, make almost 50% more. Federal government workers make, on average, almost twice as much as private sector counterparts, again, if you include the value of their benefits.
Factor #6: Not only does Factor #5 swell the cost of government, which is now at unsustainable levels, but it creates a brain drain that takes all of the best talent away from the private sector which are the producers.
The Head’s Too Big!
Again, entitlements may be part of the problem, but the biggest problem that we have is not entitlements, as far as the benefits being paid to entitlements—it’s the inefficiency of government. For every dollar that is now being paid for entitlements through a government agency, at least nine are being consumed by the bureaucracy and are not making it to the purpose for which the agency exists.
We need government, and we need regulation, but we need the right amount run efficiently. The most serious crisis we are facing is a management efficiency problem. We must stop flailing at the branches and put the ax to the root of the tree of government inefficiency or the whole system will soon collapse.
Picture a human body that is 90% head. That is what our Federal government looks like to a good manager. It has tiny little legs and arms that look like sticks, and can no longer carry the weight of its head, much less do anything.
No Unemployment
When I’ve shared this with elected officials, and they begin to see it, the same question always comes up, and it is a good question: “If we shrink government back to the size it should be, and make it more efficient, where will all of the unnecessary government workers be employed?” They will go to the private sector.
If you think that the private sector is not hiring now, how will it absorb all of these other people? They would be expanding and hiring at a rate that we would have trouble keeping up with, even if they did not have the financial and unnecessary regulatory burdens that are now shackling them and security about stable, workable rules for the future.
There is an answer.
America still has the most powerful and resilient economic engine on the planet. Released from the excessive tax burden and excessive and counterproductive regulations, our private sector still would be outgrowing every other economy by a wide margin. We have many other basic advantages no other nation has, but we can’t take advantage of them now because we are being crushed under the weight of the government.
If this one issue is addressed soon, as it needs to be, the cutting down of government and the growing of the private sector could be done in tandem so that there would be a minimum of pain. Eventually everyone, including government workers, would be in far better shape than ever. If this problem is dealt with soon, and with the depth it has to be done, our biggest problem will be finding enough qualified workers for the opportunities in America.
How long would it take? If this process was initiated now, it could probably be fully accomplished in less than ten years. The benefits of starting down this road would be seen very quickly. This would happen especially now as the rest of the world's economies are collapsing under this same weight, and the world’s capital would pour back into America.
If we return to the solid and sane economic principles our nation was built on, we would not only have a balanced budget, but we would be well on our way to paying off our national debt. If we do not do this, our Republic will not likely exist in ten years. That is not based on conjecture, but on what Marc Nuttle calls “economic physics.” We are at that kind of crossroads now. We are hanging over a cliff and the fragile ground that is now holding us up could give way at any minute. We must, at the very least, get away from the cliff.
Great Government
What is called “American exceptionalism” may sound arrogant, but it has nothing to do with pride. To be exceptional means to be different, an exception. The foundation of what the American government was created to be was an exception to anything that had ever been seen before. It was a government that would exist for the people, not the other way around.
The Federal government was basically formed for providing the defense of the nation and regulating commerce. For much of our history, we have had the best government on earth, and we can have this again. We can and should also have civil servants who are true servants of the American people, who work for us with a standard of excellence the American people deserve.
Let’s use a metaphor of how government should work using a uniquely American sport, football.
You can have an economy without a government, but you cannot have a government without an economy. The economy of a nation is the game. The best economy will be one that is regulated so that there is fairness, or justice, for everyone. The rules should be consistent, not overly complicated so as to inhibit the game. Government provides the referees and officials to ensure that the game is played by the rules.
The best games are those that have good officials who make good calls and are basically not seen very much. They let the players play, which is what everyone wants if you expect many to come out to the game.
Now think what would happen to the game of football if its rule book grew to 10,000 pages, with dozens of rules per page. Then think about an official being on the field for every player, with some penalties, and often multiple ones after every play. How many people would want to play this game? How many would want to watch such a game?
If a game could ever be more frustrating and hard to play, think about how much worse it would be if the referees then started changing the rules at their whim. If that weren’t bad enough, then they started changing them retroactively, taking points off the board or adding them. The confusion and hesitancy to do anything would be so crippling that the game would likely grind to a halt. That is what our government has done over the last three years, effectively changing contract law, and profoundly changing some of the basic rules of business through crippling legislation like Dodd/Frank.
Contract law is one of the pillars of our economic strength, and a main reason why the world wanted to do business with us. Now even our own best entrepreneurs are leaving the country because of the hostile environment toward success now present in the U.S. Our present Administration, without a single high-ranking member in it who has ever been in business, cannot figure out why no one is hiring or has confidence enough to move forward with any kind of major expansion.
Then, if anything could get worse than the over-regulated game where officials were constantly changing the rules they did have, it would be if the referees decided they were going to play the game too and just started tackling players, intercepting the ball and scoring themselves. That is what happened when the government took over General Motors and Chrysler. Then they started taking control of the banking industry, even forcing major banks to take stimulus money from the government so they would have to submit to the regulations that came with it. That Gestapo tactic happened right here in the U.S. Then the Administration wonders why the banks are too paranoid to do business?
That is what has happened to the greatest economy in the world—our government is killing it in this same way such out of control officials would kill the game of football, or any sport, and then wonder why no one wants to play here anymore. It is a credit to the strength of our economy and the amazing resilience of many business leaders that the whole economy has not collapsed yet. Already a major unraveling has begun, and the whole economy is in jeopardy.
No doubt much of the blame for the 2008 crash was a lack of regulation in the banking and mortgage sector, especially Freddie Mac and Fannie Mae, which were under government control and the direct oversight of Dodd & Frank’s committees. They caused the problems, and their regulations will absolutely kill any long- term recovery. The government did not do its job regulating the new investment vehicles because they were so tied in knots majoring on minors trying to micromanage the economy. No doubt we need good regulators, but we need those who know what they’re doing.
Governor Perry may have had a brain freeze when trying to make the point of how some government departments need to be eliminated, but the point itself may have been the most important one that was addressed in that debate, or any of the debates. It is true that we have many duplicate agencies, and we have whole departments in the Federal government that need to be eliminated or merged to cut out the duplication.
However, it will take much more than that to get our fiscal house in order. Every agency, including the military, can be run far more efficiently than they are now. It will take leadership on a level we have not had since Washington, and one who understands management, efficiency, and the difference between good laws and bad ones, and good cops and bad ones for the economy.
With government run as efficiently as it should be, the wealth of America will not continue to be consumed by out of control bureaucracy, and the greatest game on earth will once again be business in America.