We’re strong and adaptable, but have a problem that might sink America.

Summary:  Today’s post gives a different perspective on the challenge of reforming America. Before we can fix our political machinery we must understand what’s wrong. This post gives a possible explanation.

This blasted itself out of my keyboard late last night. After it went up I divided it into 2 smaller and more focused posts. Tomorrow’s part 2 examines the implications of this diagnosis, and discusses two solutions.

“Stability is in unity.”
— Mencius (372 – 292 BC), Chinese philosopher, a follower of Confucius.

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  1. America’s strengths, & a weakness.
  2. Symptoms of political rigidity.
  3. The cause of our problems.
  4. For More Information.

(1) America’s strengths, and a weakness

Nations thrive over long periods not by luck (or not just luck), but by being adaptive, innovative, and intelligent in their public policy. What nations best deserve that description today? Singapore and the Nordic nations, certainly. Germany, Korea, and China, probably.

Does this describe the USA?  Our business sector has all of these qualities, as does our society with its incredible vitality. This was also true of our political regime — in the past. But somehow, sometime since WWII, our political institutions have become rigid, even stupid.

That’s bad news, since America has a different foundation than most nations. America is its political regime. We’re not defined by ethnicity, religion, economic ideology, or even geography (although many Americans confuse these things with the nation and feel alienated when they change).  We’re like Athens, but more so.

… the soul of the city was the regime, the arrangements of and participation in offices, deliberation about the just and the common good, choices about war and peace, the making of laws. … {Pericles’ famous funeral oration} says nothing about the gods, or the poetry, history, sculpture or philosophy of Athens. He praises its regime and finds beauty in its political achievement …  {From Allan Bloom’s Closing of the American Mind}

It has been the basis for America’s resiliency and power. But it’s a single point of failure: When our political regime weakens, the entire nation weakens.

Political order & decay

(2)  Symptoms of political rigidity

Our handling of major threats since 2001, such as jihadists and climate change, shows this rigidity.  These are complex threats, whose dynamics cross multiple intellectual disciplines. Their understanding requires knowledge and experience beyond that of any small group — certainly beyond that of most bureaucrats at the senior levels of government. America has people with the necessary experience and knowledge. But instead of consulting them, our leaders quickly choose a policy response.

What do we have to show for those decisions 13 years later? We have no effective climate change policy, not even firm direction for our expensive climate science research programs. Everything remains locked in America’s political polarization. Our long war runs even worse. Our interventions in Afghanistan, Iraq, Libya, and Yemen have been bloody failures — leaving the region aflame. Our dreams of bases in strategic Afghanistan and Iraq, from which we could project power across the region, have burned way and left nothing but the casualties.

And so it goes with most of our major public policy issues. Our infrastructure rots. Our education system is among the world’s best funded and delivers slightly below-average results. Ditto for our health care system. Our defense department has a stunning inability to consistently deliver working weapons despite spending unimaginable sums (the F-35 being the logical next step in their increasingly large fiascoes).

All of these problems have been widely known for decades, even generations. Most continue despite adequate or even lavish funding. No, it’s not an inability of “government” to function. Most of our peers run these systems much better, cheaper, and with less fuss.

Social Cohesion
Social cohesion makes people into a nation.

(3)  The cause of our problems

The problem is not our governmental structure; it’s the same as has run in the sloppy but effective manner as during the Republic’s first 200 years (1789-1989).  The problem is not the two-party structure; which has run in the same messy fashion since John Adams was President. It is not polarization; western governments, including ours, often have functioned with high levels of polarization.

It’s obvious to anyone paying attention that the middle class (more accurately, the upper middle class — the professional and managerial classes I call the “outer party”) are locked in a struggle with the 1% and its allies (especially the wealthy and leadership classes I call the “inner party”) for control of America. Since roughly 1980 the 1% has been winning, rewarded by an increasing share of the national income and greater control of its public and private institutions. But the cost has been to make dysfunctional our governmental machinery.

Such internal conflicts have often disrupted societies, as their political machinery fails when social cohesion is lost. For extreme examples look at Latin American nations. In the 1920s people in Europe described rich people as being “Rich as an Argentinian.” After generations of social conflict Argentina’s GDP per capita now ranks 55th, between Gabon and Croatia.

The story of Argentine economic growth in the 20th century is one of decline unparalleled in the annals of economic history. Once one of the richest and fastest growing countries in the world, Argentina is now firmly entrenched in the ranks of less-developed countries; and the Belle Epoque, the turn-of-the-century golden age, a time of rapid growth, high culture and dreams of continued prosperity, is but a dim and distant memory for most Argentines.

— From “Three Phases of Argentine Economic Growth“, Alan M. Taylor, National Bureau of Economic Research, October 1994. Open copy here.

Tomorrow’s post looks to the future. Will we be better off when ruled by the 1%?

(5)  For More Information

If you liked this post, like us on Facebook and follow us on Twitter. See all posts about the decay of the Second Republic (built on the Constitution), and those about ways to reform America — paths to a new politics. Especially these about the consequences of a nation losing its social cohesion:

  1. Learning not to trust each other in America, and not to trust America.
  2. The bitter fruits of our alienation from America.
  3. Worry not about America becoming like Zimbabwe. Worry about becoming like Argentina.

24 thoughts on “We’re strong and adaptable, but have a problem that might sink America.”

  1. FM,

    Perhaps the better questions is, “Can we self-govern?” Sub-question, “What is the best way to organize?”

    If we look at it from that perspective, then more options are out there. For example, we’re seeing that our government is failing under a two party system. Is two parties sub-optimal? Should we disrupt with multiple parties?

    Another question, “Have checks and balances in our process become debilitating?”

    Or, have we simply gotten too big to govern?

    I don’t know the answer, but asking the right questions is the best way to frame the problem.


    1. Mike,

      I woke up realizing this post was missing two paragraphs, which you unerringly spotted. I’ve added:

      The problem is not our governmental structure, which has not suddenly changed so that it operates differently now than it did in the first 200 years (1789-1989). It’s not the party structure (we’ve had several since 1789), or polarization (western governments, including ours, have functioned with high levels of polarization).

      … Such internal conflicts have often disrupted societies. This is somewhat similar to what wrecked many Latin American nations. In the 1920s people in the great European nations described rich people as being “Rich as an Argentinian.” Generations of social conflict destroyed their social cohesion. Argentina’s GDP per capita now ranks 55th, between Gabon and Croatia.

      As a people we have governed ourselves since 1789, in the sloppy way of democracies — with many ups and downs. We have had broadly the same governmental structure, which — being an adaptable people — we have tweaked over these many generations to the needs of the time. So I see no reason why the current structure doesn’t work (although it might need more tweaks, again). Specifically, why would our 2 party system and our checks/balances suddenly fail us?

      On the other hand, social conflict (like our class conflicts) have produced similar situations in other nations.

      “have we gotten too big to govern”

      That’s a possibility. It is not easy to test, and history offers little or no guidance. Operationally I suggest we try other cures before breaking up the United States.

  2. I agree with Mike that asking the right questions is the key to solving the problem.

    My question, a continuation from yesterday, sorry FM, is “Do the 1% really want to rule the US?” Certainly there are individuals in the 1% (which is composed of the top 1.1 million households in the US) that want to rule but if you look at the wealthiest Americans, Buffet, Gates, Larry Ellison from Oracle, Sam Walton’s children, you see no desire to rule.

    Diving deeper into the 1% you find people who want to heavily influence the US government: Ted Turner (faster internet and the environment), the Koch brothers (more science, less environmental regulation), Steve Forbes (more wealth to the wealthy) and Sheldon Adelson (more support for Israel) but they do not provide complete political agendas, they tend to be oriented around a single topic and are sometimes in serious disagreement with each other. Where they are generally united is in the theory that the government needs to cater to their personal whims and corporate needs.

    This is in keeping with the Gilded Age where the wealthy literally bought and sold government leaders (although it was a tremendously smaller market because the US government was so much smaller and less powerful at the time) but virtually never sought government positions. In order to rule, would-be leaders need to offer a complete set of policy initiatives (even if the initiative is to do nothing) and to own both the victories and the failures of those policy initiatives. I see nothing from the 1% that indicates that they, as a whole, are thinking about this at all.

    The key to getting into the 1% and staying there is to acknowledge that you personally have a strong desire to have more of everything and to be willing to do whatever it takes to get more. But becoming a government leader is not generally popular among the 1%, probably because they have more efficient uses of their time. You, FM, have stated many times that Libertarianism and Indvidualism are very poor philosophies for governing a large country and you are right. But these are the philosophies of the 1% and they serve the 1% very well.

    If I were to sum up their ruling beliefs, it would be “give me the money and don’t bother me.” Individuals would vary greatly from this but would be constrained by the values of the majority of the 1%.

    Based in large part on the Gilded Age, if I look 50 years into a future where the 1% are allowed continued unfettered rule, I believe I would see the following:
    – Reshaping of Social Security and Medicare to benefit the wealthy (poor people are happy being poor and dying young, otherwise they wouldn’t choose to be poor)
    – The conclusion of reshaping the Defense Department to benefit the wealthy
    – Foreign policy would be based exclusively on which companies gained the most short-term benefit (brush wars would continue to be very common)
    – Repealing taxes of any sort for anybody earning more than $150,000 per year. Corporate taxes would be completely repealed
    – The judicial system would primarily consider the wealth of individuals in their rulings, not the issues in the case or previous rulings
    – Congress would be exclusively involved passing or repealing laws that favor certain companies
    – Only individuals with wealth over $1 million will be allowed to vote
    – Atlas Shrugged will be the sole textbook used in teaching economics
    – Everybody besides the 1% would be much poorer
    – Nothing else would change
    You will notice that most of these items are a continuation of current trends. The 1% already controls a large part of US policy and I see no reason why they will change their future choices.

    Based in part on the Gilded Age, I do not believe the 1% would be in charge in 50 years because they will destroy everything around them in pursuit of personal wealth and conflicts with each other.

    1. Pluto,

      I think you’re looking at this far too narrowly. That’s not how the rich think.

      (1) “The key to getting into the 1% and staying there is to acknowledge that you personally have a strong desire to have more of everything and to be willing to do whatever it takes to get more.”

      Not at all. There are many paths to wealth. Inheriting it works just fine; they often have no desire for more wealth. Ditto for very wealthy people. Some remain acquisitive, some turn from pursuit of wealth to other pursuits. In both cases we see Maslow’s Hierarchy of Needs at work. Once their desires for material things are satisfied, they want other things. Such as the power to shape the world according to their superior vision and insights.

      (2) “But becoming a government leader is not generally popular among the 1%, probably because they have more efficient uses of their time.”

      What you see as a “leader” they see as an employee, like the executives that run their great corporations. See this from Act III of “Major Barbara” by George Bernard Shaw (1906). The speaker is Andrew Undershaft, co-owner of the vast munitions company Undershaft and Lazarus.

      The government of your country! I am the government of your country; I, and Lazarus. Do you suppose that you and half a dozen amateurs like you, sitting in a row in that foolish gabble shop, can govern Undershaft and Lazarus? No, my friend; you will do what pays us. You will make war when it suits us, and keep peace when it does not. You will find out that trade requires certain measures when we have decided on those measures.

      When I want anything to keep my dividends up, you will discover that my want is a national need. When other people want something to keep my dividends down, you will call out the police and military. And in return you shall have the support and applause of my newspapers, and the delight of imagining that you are a great statesman.

      Government of your country! Be off with you, my boy, and play with your caucuses and leading articles and historic parties and great leaders and burning questions and the rest of your toys. I am going back to my counting house to pay the piper and call the tune.

    2. You argue persuasively, FM (as usual). But I am going to stick with heart of my argument

      The 1% already controls a large part of US policy and we do not get good government. I see no reason why they will change their future behavior.

      1. Pluto,

        ‘The 1% already controls a large part of US policy and we do not get good government. ”

        You don’t seem to have the knack of seeing things through the eyes of others. Your statement is probably wrong on two levels. First, the 1% probably agree with me that the government’s dysfunctionality results from the conflict for control of it.

        Second, I suspect they believe that the current government is good — although not as good as it will be when they control more of it. Their wealth, income, and power have increased greatly during the past few decades — in both absolute and relative terms. Government regulation has been diminished. Private sector unions have been broken; public sector unions are under attack. They’ve greatly increased their influence over key institutions such as colleges and the news media. The Left has been marginalized.

        Their dissatisfaction is that typical of people: they enjoy their success but want more.

  3. The growth in wealth inequality has been exponential. A favorite teaching parable that captures the essence of this problem is the lily pond. At first there is one lily on the pond, and no one notices or cares. A few days later there are two. Later there are four, then eight, then sixteen. Still no one cares. Sixteen lilies covers less than one percent of the pond. But eventually the lilies cover half the pond. How long before all the pond is covered and all life below dies? A few days!
    Right now the one percent owns half the wealth. They are trying, like the lilies to finish the job and own 100% but this will kill the system that supports them along with everyone else. So we have a crisis; of economics, of government, of culture, of cohesion(breaking), and most important of all, of failure to see this is what’s happening. Civilizations fall because they are bad at math.

    1. Peter,

      What data shows that the increased inequality of wealth has been “exponential” in the sense you use it (I.e., very rapid)? Also, the data on wealth distribution is of low quality, so such quantitative descriptions should be regarded skeptically.

      We have tax data on income, which is far more accurate.

      “They are trying to own 100%”

      That sounds quite unlikely. It sounds over the top unlikely.

      1. It’s doubled in ten years:
        Which sounds about right. Thirty years ago would be three doubling times ago or one eighth where we are now which also sounds about right. It was a small problem compared to now for sure. Total private sector debt has grown perfectly exponentially for five decades. The R squared is like .98. This loosely jives with the exponential rise of our creditor class.

      2. Peter,

        (1) i guess this is a function of what you think of as “very rapid” growth. Seven percent per year is not what I think of as very rapid.

        Yes, it adds up. Even slow growth adds up thru the miracle of compounding.

        (2) That change since 2003 is largely the result of the housing bust. The middle class has almost all their wealth in their home. It was an extraordinary event, not likely to be repeated — and does not characterize the multi-decade increase of inequality, which results from factors such as tax policy, financialization of the economy, change in senior executives’ relative compensation, and collapse of unions.

  4. That’s like saying a cancer only grew exponentially when it was a small cluster fed by diffusion but then it grew exponentially by angiogenesis by building its own blood supply unti it grew exponentially after that by metastasis starting new small clusters so it’s not that cancer inherently grows exponentially. There may be various regimes of exponential growth with different narrow explanations but I’m sure a lily pad expert could explain this is true for ponds too. Exponential growth by complex systems seems to always find a way to stay exponential until some firm limit is reached; thermodynamic (second law), external force (war, disease, famine), or internal structural instability (revolution, economic collapse).

    1. Peter,

      I have no idea what you are attempting to say. If these complex analogies are attempts to show this is a serious problem, then I’ll recommend you look at these50+ posts about inequality for more direct and useful information (first ones in 2008, after this website was opened).

      If you think 7% growth is very rapid, fine. I have talked to people about finance for 30 years. I never heard people say that 7% (a common “A” grade bond yield) was “very rapid”.

      If you believe “exponential growth” is synonymous with “rapid”, see Wikipedia. It means growth at a fixed percent rate. The rate might be big or small. As I said, it eventually adds up.

      Exaggerating the situation does not help.

      1. A king agrees to reward a wise guy who proposed a single grain of wheat be placed on square one on day one. Two grains on square two on day two and so on. On grain is, let’s say one billionth of annual production. On day ten square ten holds one millionth of production, still negligible. On day twenty square twenty holds one thousandth, still negligible. But somewhere shortly before day forty, within just three days the kings problem grows from ten percent of output to twenty to forty and …
        The king kills the wise guy.
        For thirty some days the problem is negligible and then in three days becomes insurmountable unless the rules are changed.my point is:
        We are the king.

      2. Peter,

        Your comments illustrate the problem of carelessly using mathematical language without PAYING ATTENTION to the math. It is just a series of mistakes, and so not helpful.

        You originally said that 7% growth per year was rapid. I said it was not rapid in any usual sense of the word.

        As rebuttal you cite a story about 100% growth per day. Yes, that is rapid growth — and makes the starting point of little importance (which the point of that story).

        Are you kidding us or just writing without thinking?

  5. “Nations thrive over long periods not by luck (or not just luck), but by being adaptive, innovative, and intelligent in their public policy. What nations best deserve that description today? Singapore and the Nordic nations, certainly. Germany, Korea, and China, probably.”

    Singapore is a city state shaped by a more unique than rare enlightened despot (usually in the area you get a Kim-Il-Sung or if you are lucky a Suharto) while places like Denmark or Norway have fewer people than some US cities. China is catching up but it is quite obvious that the existing political system is highly problematic. Germany performances should not be overestimated. It is a very high bar.

    “First, the 1% probably agree with me that the government’s dysfunctionality results from the conflict for control of it.”

    It is not hard for a population to become incapable of making a democracy work and it may well be that some sort of authoritarian rule then becomes a least bad option than anarchy. But if you are expecting that Google will fix global warming you are off mark.

    1. Marcello,

      You point about Singapore being the result of an individual, Lee Kuan Yew, is widely believed. I disagree. He played a large role, but successful large social movements result from a group of competent people working together. Also, he retired as prime minister in 1990 (age 67), serving afterwards in an advisory capacity. It’s been a quarter century in which Singapore managed the massive emerging market crash of 1997-98, the rise of China, and the Great Recession. I believe we can say that Singapore is not a one-man wonder.

      As for the Nordics, they have a total population of 27 million. I don’t believe it’s analytically useful to dismiss them so cavalierly. As for China, every government is problematic. Look to Heaven for something better. Yes, China has great problems and their government has weaknesses. Of whom can that not be said?

      “Germany performances should not be overestimated.”
      What are you attempting to say? I seems like this is the “it’s all a blur” view of the world, refusing to see any distinctions.

      “But if you are expecting that Google will fix global warming you are off mark.”

      What does that mean? Are you implying “Google” is a proxy for the 1%? Absurd. Do you mean that the 1% will not “fix” global warming? If so, what does that mean? Global warming began in the early 19th century; the IPCC says that “more than half of the warming since 1950″ is anthropogenic. Why might a plutocratic government take action to mitigate the adverse effects of climate change? Holland has been a plutocracy since the start; they were nonetheless able to build and maintain dikes.

  6. The easiest, most effective way to permanently sink a country is to sink their family units. Your gender series is great! Here is a research brief on the clusterfuck of no-fault divorce: “DOES DIVORCE LAW AFFECT THE DIVORCE RATE? A REVIEW OF EMPIRICAL RESEARCH, 1995-2006” by Prof. Douglas W. Allen and Maggie Gallagher.

    Douglas Allen is a professor of economics at Simon Fraser University. Maggie Gallagher is President of the Institute for Marriage and Public Policy.

    Executive Summary:

    Did the introduction of no- divorce law affect the divorce rate? This study looks at all the empirical research since 1995 that examines the impact of no-fault divorce laws on divorce rates both in the United States and in other nations, 24 studies in all, and concludes:

    * No-fault divorce did increase the divorce rate. Seventeen of 24 recent empirical studies find that the introductionof no-fault divorce laws increased the divorce rate, by one estimate as much as 88%. More typically, studies estimate no- fault divorce increased divorce rates on the order of 10%.

    *Divorce law, however, is not the major cause of the increase in divorce over the last 50 years. Clearly many other factors besides divorce law influence the divorce rate.

    *The effect of no-fault divorce laws on the overall divorce rate appears to fade with time; couples respond to the increased divorce risk from no-fault divorce law by delaying or forgoing marriages at higher risk of divorce, and states adopt related legal reforms that mitigate some of no- fault’s consequences.

    *For couples of a given match quality, no-fault divorce may have resulted in a permanent increase in divorce risk. Studies which take into consideration age at marriage tend to show a permanent increase in divorce risk after no-fault divorce. The idea that family law has no independent effect on family behaviors is difficult to reconcile with either economic theory or existing empirical research. Family scholars, policymakers, legislators, and media need to consider and take seriously the complex ways in which family law affects the likelihood that couples and children will enjoy the benefits of stable marriage.

    1. Oathkeeper,

      Thanks for the feedback. I have been wondering if I should continue the series (the posts so far have been warm-ups). The volume has been low, which I often find means that I’m too far ahead of the curve (see my posts about inequality in 2008). If you find them of interest, please pass them on. As you probably know, this message travels on virally.

      As for the effects of this radical revolution to gender roles — I avoid guessing. It provides a weak basis to make decisions, especially on such an important public policy issue. I believe the answer is that we don’t know. The technology allowing these changes is too new, so we have no basis for forecasting. I agree with you that the result is not likely to be pretty.

      Also: I reformatted your comment, maaking it easier to read. It deserves attention.

  7. FM: “The volume has been low, which I often find means that I’m too far ahead of the curve”

    I hear you, but what you’re saying makes no sense to me, its like saying you dont keep shooting cause the target is not up in flames, the target gets to be in flames by you shooting at it.

  8. The point I want to illustrate is that many doubling periods (the magnitudes days, years don’t matter) many doubling periods go by with negligible consequence until the exponentially growing problem stops being asymptotically negligible. Let’s arbitrarily set this at ten percent of total wipe out by the putative problem. You now have three or four doubling periods to total wipe out.
    Let’s take income inequality as an example. Let’s assume in 1940 wealth inequality was 1%. The top 1% owned 1% of all assets. Take ten years as the doubling time for this problem. So 1950 the number is 2%. (Still not a huge problem) 1960 4%, 1970 8% 1980 16%, 1990 32%, 2000 64% and 2010 over 100% which is impossible. I suspect these numbers are roughly correct and if true then the critical final three doubling periods were the 80’s the 90’s and the lead up to the GFC. I suspect the underlying mechanism supporting this exponential progression cracked in 2008 and events subsequent are moving us toward a new normal. If one looks at the plot of total private sector debt to GDP ratio vs time clearly something happened in 2009 after 60 years of perfectly uninterrupted exponential growth. Either willful blindness to these data or something worse underlies the academic theory response so far.

    1. Peter,

      Since you are just making up the numbers, there’s not much point to whatever it is that you’re trying to say. Just as with your previous comments.

      If you attempting to grope towards the concept of an “S” curve, probably most reading this understand that simple concept. If you are attempting to say that inequality is a serious problem, probably most readers know that from people who have explained it using real numbers.

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