When I give speeches around the country, I often get asked whether it’s time to give up.
More specifically, has America reached a tipping point, with too many people riding in the wagon of government dependency and too few people creating wealth and pulling the wagon in the right direction?
These questions don’t surprise me, particularly since my speeches frequently include very grim BIS, OECD, and IMF data showing that the long-run fiscal problem in the United States is larger than it is in some nations that already are facing fiscal crisis.
But that doesn’t mean I have a good answer. I think there is a tipping point, to be sure, but I’m not sure whether there’s a single variable that tells us when we’ve reached the point of no return.
Is it when government spending consumes 50 percent of economic output? That would be a very bad development if the burden of government spending reached that level, but it’s not necessarily fatal. Back in the early 1990s, the public sector was that big in Canada, yet policy makers in that country were able to restrain budgetary growth and put the country on a positive path. Sweden is another nation that has turned the corner. Government spending peaked at 67 percent of GDP in the early 1990s, but is now down to 47 percent of GDP after years of free-market reforms.
Is it when a majority of households are getting government handouts? That’s also a worrisome development, especially if those folks see the state as a means of living off their fellow citizens. But taking a check from Uncle Sam doesn’t automatically mean a statist mindset. As one of my favorite people opined, “some government beneficiaries – such as Social Security recipients – spent their lives in the private sector and are taking benefits simply because they had no choice but to participate in the system.”
Is it when a majority of people no longer pay income taxes, leaving a shrinking minority to bear all the burden of financing government? It’s not healthy for society when most people think government is “free,” particularly if they perceive an incentive to impose even higher burdens on those who do pay. And there’s no question that the overwhelming majority of the tax burden is borne by the top 10 percent. There’s little evidence, though, that the rest of the population thinks there’s no cost to government – perhaps because many of them pay heavy payroll taxes.
I explore these issues in this interview with Charles Payne.
The main takeaway from the interview is that the tipping point is not a number, but a state of mind. It’s the health of the nation’s “social capital.”
So for what it’s worth, the country will be in deep trouble if and when the spirit of self-reliance becomes a minority viewpoint. And the bad news is that we’re heading in that direction.
The good news is that we’re not close to the point of no return. There is some polling data, for instance, showing that Americans still have a much stronger belief in liberty than their European counterparts.
And we’ve even made a small bit of progress against big government in the past few years.
I speculated in the interview that we probably have a couple of decades to save the country, but it will become increasingly difficult to make the necessary changes – such as entitlement reform and welfare decentralization – as we get closer to 2020 and 2030.
And if those changes don’t occur…?
That’s a very grim subject. I fully understand why some Americans are thinking about the steps they should take to protect their families if reforms don’t occur and a crisis occurs.
Indeed, this to me is one of the most compelling arguments against gun control. If America begins to suffer the chaos and disarray that we’ve seen in nations such as Greece, it’s better to be well-armed.
Though maybe there will be some nations that remain stable as the world’s welfare states collapse. And if emigration is your preferred option, I’d bet on Australia.
But wouldn’t it be better to fix what’s wrong and stay in America?
[…] this can lead to a tipping point, which is illustrated by my Theorem of Societal […]
[…] this can lead to a tipping point, which is illustrated by my Theorem of Societal […]
[…] this can lead to a tipping point, which is illustrated by my Theorem of Societal […]
[…] that those policies will make a bad situation even worse, I’m not overflowing with confidence about the […]
[…] that those policies will make a bad situation even worse, I’m not overflowing with confidence about the […]
[…] but we can survive with slower growth. What really worries me is that we may eventually reach a tipping point of too many people riding in the wagon (and out-voting the people who pull the […]
[…] but we can survive with slower growth. What really worries me is that we may eventually reach a tipping point of too many people riding in the wagon (and out-voting the people who pull the […]
[…] but we can survive with slower growth. What really worries me is that we may eventually reach a tipping point of too many people riding in the wagon (and out-voting the people who pull the […]
[…] but we can survive with slower growth. What really worries me is that we may eventually reach a tipping point of too many people riding in the wagon (and out-voting the people who pull the […]
[…] this can lead to a tipping point, which is illustrated by my Theorem of Societal […]
[…] but we can survive with slower growth. What really worries me is that we may eventually reach a tipping point of too many people riding in the wagon (and out-voting the people who pull the […]
[…] but we can survive with slower growth. What really worries me is that we may eventually reach a tipping point of too many people riding in the wagon (and out-voting the people who pull the […]
[…] but we can survive with slower growth. What really worries me is that we may eventually reach a tipping point of too many people riding in the wagon (and out-voting the people who pull the […]
[…] I periodically warn that the United States is on a path to become a European-style welfare state. […]
[…] periodically warn that the United States is on a path to become a European-style welfare […]
[…] this can lead to a tipping point, which is illustrated by my Theorem of Societal […]
[…] this can lead to a tipping point, which is illustrated by my Theorem of Societal […]
[…] this can lead to a tipping point, which is illustrated by my Theorem of Societal […]
[…] that those policies will make a bad situation even worse, I’m not overflowing with confidence about the […]
[…] when enough people adopt that attitude and a nation reaches a “tipping point,” then you wind up with a society where too many people are riding in the wagon and not […]
[…] This dependency mindset shows that societal capital has eroded, and it’s why I fear those nations have passed a tipping point. […]
[…] decline, I fear there may be 22nd-century videos discussing how the United States reached a “tipping point” and went […]
[…] instance, I think some European countries have already reached a “tipping point” because of a dependency […]
[…] capital – I fear that there is a tipping point and that nations are doomed once people decide that it’s morally acceptable to use government […]
[…] Heck, I worry the United States is on the same trajectory. […]
[…] But that doesn’t mean it won’t happen. In this interview, I express my concern that the United States has passed a tipping point. […]
[…] that those policies will make a bad situation even worse, I’m not overflowing with confidence about the […]
[…] also unpopular for some of his good policies, which leads me to fear that France may be past the tipping point, meaning that genuine and meaningful reform no longer is possible because too many voters are on […]
[…] previously speculated whether the United States eventually may reach that point, and I definitely think it’s a relevant issue for states like Illinois and nations such as […]
[…] answers to these questions matter a lot because a nation can’t prosper once you reach a tipping point of too many people riding in the wagon and too few people […]
[…] decidem depender da “propriedade comum” do governo para a sua subsistência, isso cria um ponto de inflexão porque as pessoas produtivas em algum momento estarão incapazes ou relutantes em continuar […]
[…] other words, if we stay on this path, we’ll eventually become Greece. Not a good idea, to put it […]
[…] periodically fret that individualism is dying in the United States and that Americans are morphing into […]
[…] a result, I’ve assumed that Greece has passed a tipping point because the moral foundation of Greek society has been corroded by dependency. And it’s very […]
[…] a result, I’ve assumed that Greece has passed a tipping point because the moral foundation of Greek society has been corroded by dependency. And it’s very […]
[…] What can really sabotage a nation is when a sufficiently large share of the overall population decides that it’s morally acceptable to loot and mooch. In that case, politicians are simply a reflection of societal […]
[…] bottom line is that Illinois may have passed the tipping point and entered a death spiral. Sort of akin to being the Greece of […]
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[…] on the “communal property” of government for their existence, this creates a “tipping point” because productive people at some point are either unable or unwilling to continue pulling […]
[…] But I have very little hope for Bernie Sanders. Like the Syriza government, he would double down on higher taxes even as more and more taxpayers decided to “go Galt.” And just like Greece, there will be no turning back when we reach that dependency tipping point. […]
[…] of America’s ever-growing entitlement state and potentially dour predictions about when we reach a tipping point of too much […]
[…] America’s ever-growing entitlement state and potentially dour predictions about when we reach a tipping point of too much […]
[…] P.S. I’m worried about the degree to which America has traveled down the path toward societal decay, but I don’t think we’ve yet reached a tipping point. […]
[…] at all this data, my conclusion is that we’re not in any immediate danger of hitting a “tipping point” of too much dependency. To be sure, the trends are not […]
[…] The answers to these questions matter a lot because a nation can’t prosper once you reach a tipping point of too many people riding in the wagon and too few people […]
[…] even have speculated about when America reaches a tipping point, with too many people riding in the wagon of government dependency (as illustrated by these famous […]
[…] government and combine that with an aging population and poorly designed entitlement programs, then we will see the end of the world. At least in the sense of fiscal crisis and economic […]
[…] Big Government and Tipping Points: Is America Is Doomed to Become a Failed European-Style Welfare S… […]
Dan, are you not aware of the growing grassroots movements to take our country back through Article V of the Constitution? The Convention of States Project, of which I am an AZ member, is pushing legislators in a dozen states to sign the application so we can debate and vote on term limits for congress and the supreme court, clarify both the welfare and commerce clauses, limit the XO of the pres, curb the power and jurisdiction of the alphabet agencies.This is gaining legs with national attention. Check us out at conventionofstates.com.
Frankly what I saw of Australia was fully in the grip of every liberal ill we encounter at home. The only encouraging sign I saw there was that their Christians still existed. But the liberal self-loathing and white guilt were on full display. Also, the usual liberal initiatives such as oppressive anti-gun laws (like blanket prohibition on “military calibers”), anti-free speach laws and The Great Firewall of Australia to compete with China all point in fairly unpleasant direction. They may have some free-market lobby, but spiritually Australians are not far away from the British, from what I saw. I’d be very happy to be wrong about it, but I’m not hopeful.
That is the fifteen trillion dollar question. A most important question that an increasing number of us who are competent enough to have some international mobility are trying to evaluate before things get too bad. The question that American ostrich voter-lemmings seem to grossly underestimate. When will it all implode?
But when it comes to getting a little bit more insight into how close is Mr. Creosote to eating his last mint, it helps to have lived in Europe and have seen the movie of European decline unfolding over the last three decades.
“But we sure can afford one little more effort-reward flattening redistribution program. Don’t we? Mr. Creosote can sure have one last little mint. It’s only wafer thin…”
…and if he does not explode, then he can have another one, and another one, … the tipping point may be much closer than anyone thinks, or already passed, in which case we are just living the few short years of momentum, the last few years of the great smorgasbord. The years Americans finally discovered the great forgotten treasure of “free stuff”.
In my view the gradient of the proverbial slippery slope now exceeds the friction coefficient, i.e. yes, we are past the tipping point to Francification.
As I have said many times, the pace of everything human is irreversibly accelerating in this early 21st century. Get used to a world of much more frequent developments. Get used to a world where great declines complete in just a few short decades instead of centuries.
In the myopic world of voter-lemmings, a redistribution dollar today is worth five perpetually compounding growth dollars in the future. Hence the path to Francification. It won’t be long until ever more desperate American voter lemmings start voting exactly like their French brethren – or their European brethren in general — a continent where “star” economies are those growing at two percent per year at best, half the world average. Isn’t that the path to decline? Almost by definition.
My main argument for having passed the tipping point is:
Americans are naïve, with little historical experience and perspective on big government. It will take Americans a long time to bounce back from this “new” HopNChange culture (new to Americans only, it has been at work in Europe for decades) of more prosperity through more redistribution and flatter effort-reward curves. But that is exactly the very nature of a tipping point. Once you realize it, it’s too late. Once the desperation of decline sets in, immediate decisions about how to survive the next year (usually through the hope of some new redistribution) consume all energy and dwarf any longer term considerations. The American pendulum is now strongly moving in the statist direction.
The almost unique in history great American innovation in less government and more prosperity is being abandoned and the same sirens that lured Europe into decline are now finding great traction in America. In a way, I’m asking myself why it took so long for the sirens to be heard.
One more point to keep in mind: Most countries that shrunk government in the last three decades did so because of the enormous pressure they were getting from the relative success of a big US economy built on smaller government. A declining US cannot count on that. We are the last man standing against statism, save a few speck-on-the-map countries in the world. I think that a darker period of big government is in store for the world, with the OECD and like organizations managing to coercively intimidate most of the world into statism. But it will not last long. Such great disparities between the stagnation of worldwide coercive collectivism vs. modern human potential cannot last long. At some point, a small group of countries will realize that the benefits of breaking away from the international cartel outweigh the threats and impacts of cartel retribution. And that realization will not take long. At that point a new era for humanity will dawn, but it will not be the US leading that. The US will still be struggling to regurgitate the HopNChange perpetual motion machine it so enthusiastically and foolishly embraced for quite a few years– thinking it was a new American idea when in reality it was the standard mode in which most European countries declined in the grips and demotivation of coercive collectivism.
As the time horizon expands, the details of future predictions become more and more unpredictable. But the chances that the US will be leading the world in fifty years are very-very small. With cultural convergence towards the worldwide average, American economic, military power, and prosperity will all inevitably converge to the world average.
One last point. People are not neatly divided between those who engage self-sufficiency and those who do not. It is a continuum. I’m starting to make significant gains though the federal redistributive actions of cheap money borrowing and solar energy subsidies. Make no mistake, I’ll pursue these avenues and come after your wallets. It was your dream that is creating another Jin Taggart, dear American people…
While our politicians do not seem to learn from experiences elsewhere on the globe, we have the advantage that serious economic disruption will occur somewhere else, most likely Japan, Eurozone, and even China.
We also have the advantage of retaining the world’s “safe harbor” designation.
While we are fully integrated into the global economy, our exposure outside of our borders is less.
When all hell breaks loose somewhere else, we will have two alternatives: We can retrench and adopt a migration plan back toward free-markets and the Michell Rule of growing government slower than growth in the economy, OR we can attempt to “solve” the world’s problems and go down with them.
In either case, we will be far better off than after a world war. Most of our production facilities will remain intact. Defaulting debt and other obligations will become the norm. It will take awhile to adjust, and we will “never again” get into a similar situation, or at least for another 20 years.
Gold and guns will be your best insurance.