Wednesday, November 6, 2013

Tipping Point

There is, in a very real sense, a natural order to the world, and the societies man forms to live in it.  I think if you look at how our civilizations have formed, grown, sustained and collapsed you will see that at some time they reach a point where the premise for their rise is no longer valid, and they collapse under the weight of their own infrastructure.
Some societies, like the Chinese or the Egyptians, grew and sustained themselves for thousands of years.  While others, like the Greek city-states flourished for a brief 150 years or so during the Classic period.  The Roman Empire lasted 500 years until overrun by the Germanic hoards.  The Eastern portion of the empire survived for another 1,000 years in Constantinople, but it never had the energy or vibrancy of Rome. 
Each of these civilizations reached some cataclysmic event that lead to its ultimate demise.  There was some event or series of events where once a threshold was crossed it doomed the people and the society to collapse.  Once that point was reached it was no longer a question of if, it was only when.
Lets consider now the United States.  Have we reached the tipping point?  Is there some seminal event that will lead to our collapse or will it be an accumulation of things that occur over time?  Will we recognize it when it occurs?
A viable middle class
To simplify the discussion I will use some home made art.  What you see is a representation I think our founding fathers envisioned for this country, and one that has seemed to work historically.  The government, represented by the fulcrum (or triangle), is a central pivot point.  On the left we have the poor, on the right the rich and of course in the middle we have the middle class.  The success of our nation depends on a large and vibrant middle class to help keep the balance. I guess you could also argue it represents the political positions in this country, on the left the socialists/progressives, on the right the conservatives/libertarians, and in the middle the centrists.   
Now what happens when circumstances change and this scale shifts?  For example what happens when the middle class shrinks and wealth is centralized in a small group and the number of the poor increase?  I think the potential for larger shifts in the economy increase based on what the shrinking middle class and the position of the government.  If the government shifts even a little the opportunity for disaster is magnified.  I believe we are seeing the loss of our middle class and leading to this new dynamic.

One of the founding principles of this country is religious tolerance.  The Constitution’s first amendment says, “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof;” We were a collection of states, with a small spectrum of Christian beliefs held by the framers of the Bill of Rights.  Men like Thomas Jefferson were concerned the establishment of a state religion, like the Church of England, could lead to divisions the nation could never withstand.  What I have observed over the past 20 years is the growing trend of intolerance of religion.  If someone holds a view counter to you they are wrong, you are offended, and they must be stopped from the free exercise of that religion.  This continues to expand as the celebrations of faith are increasingly banned from public areas, or simple things like Merry Christmas must be struck from our conversation.
Respect for life is an issue we hear about a great deal, from the left lately it is associated with some condemnation of violence involving a shooting.  The conservative talks about the rights of the unborn and the need to protect them.  Both sides obviously have their critics and counterpoints; whether it is a woman’s right or a gun owners right does it really matter?  The fact is we cheapen the value of human life in our daily choices and I wonder, will that at some point be the tipping point?
 So what happens when the government shifts left to encourage a growing class of poor that the government will always be there for them, and the government will fund their needs no matter what.  The middle class shrinks, individual wealth shrinks, the wealthy flee or find ways to shelter that wealth. Can the society maintain its balance or will it tip?  There will be stability at first because of the size and support of that group, but it will inescapably cause the balance to fail.  The same would hold true if the government shifts right to encourage and protect the rich.  The scales will tip, and social stability tumbles.
Lets talk about healthcare and the perceptions of an increasing group of Americans, but unlike most of the current sound bites, lets put this in some historical context.  There is a growing sense on the part of many that the only way a health care system can work is for the government to interject itself.  We must ultimately move to a single payer system where the government will fund everything.  I think this system is doomed to fail in its purest form because the Government is incapable of being efficient and effective in such an intimate service.  We all seem to forget that up until the 1960’s our medical system was largely a private affair. 
People had a family doctor and they paid directly for his or her service.  Health Insurance, for those who had it, was principally for catastrophic need.  It was still incumbent on the individual to determine how much to pay for a service or to forego it if it was an option.  In the 1960s with the advent of Lyndon Johnson’s Great Society, Medicare became a reality.  Now, for the first time in the United States, individuals had a government assurance that funds would be available if they were unable to pay.  The second order affect of this government program was to begin an escalation of medical costs that far exceeded the inflation index.  People and organizations soon learned how to game the system to increase profits, or personal wealth.  It was the first step in removing personal decision making from the healthcare process.  No longer was the Doctor-patient a private exchange, the government increasingly had began to interject itself into how that doctor was to deal with the patient.  Add to this the private insurance companies, as they strove to expand their customer base, and in turn their profits.  Following the lead of Medicare/Medicaid examples they have added, or covered, more and more services until we are where we are today where no one bats an eye at a thousand dollar a day hospital room unless you don’t have insurance.   Then it becomes a financial disaster or a tragedy where health service is denied.
As the debate between the left and the right continues; the question will always be how will we pay for this?  Apparently that is not a concern for most since they are now long used to not worrying about how much medical care would cost since they had insurance, or those who’ve not had insurance will now be able to sign up, but when the costs are understood, I wonder how many healthy young people will actually make the choice or will they opt to pay the tax penalty and still have to deal with the potential of an uninsured medical emergency, and if so will the government stop hospitals from treating the uninsured, and they actually end up worse off?
Finally, lets think about the national debt.  The federal government is, today, quietly buying down the federal debt by printing more money.  Why are they doing this and what is the probable outcome?  Regardless of what the President and his financial advisors may say publically there will come a time, if it has not come already, where the interest payments on our debt will exceed the revenue we take in, and we will no longer be able to pay even the interest.  One of the strengths of the United States is we form the basis for the worlds currency and if that ever were to change we would find ourselves exactly like the third world countries where we have inflation, followed by devaluation and loss of the middle class.  Those third parties who have a vested interest in seeing the US fail will help this along.

I had lunch the other day with a friend.  Our conversation dealt with these questions.  We agreed the nature of a civil society seems to reflect a period of exuberant growth, then a leveling plateau followed by a sharp decline.  Our questions, unresolved, were how close were we to that sharp decline?  

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