From Great Default – The Great Default and Economic Growth by Gary North
John Mauldin ran an article summarizing the work of economist Robert Gordon. Robert Gordon is pretty much a pessimist regarding long-term economic growth in the United States. He thinks that we have reached a kind of peak growth era.
Gordon may be correct. Given the level of taxation in the United States, and given the effects of the Great Default, there will be a slowdown of economic growth. But the fundamental question is this: if Keynesians like Gordon were not in charge, and if the welfare state were simply allowed to shut down, would there be economic growth? There would be massive economic growth.
Over 30 years ago, Julian Simon wrote his classic book, The Ultimate Resource. The ultimate resource is human brainpower, he said. Since he wrote his book, the thesis has been confirmed on a scale never before seen. The Internet has completely transformed our civilization. The huge increase in the number of people since 1800 — a billion to 7+ billion — has been a major factor in producing the geniuses necessary to innovate. Now they are going to be brought in from the villages and put in front of computer screens. We are not going to see economic growth as slow as we have seen it in the past. It is going to accelerate. All we need to do is get the state off our backs, and then use that saved capital to begin to empower the geniuses among us.
It is brainpower, not machines, that will make the difference. It is the creativity of individuals, who have a vision of what needs to be done in specific areas, and who have the ability to apply their genius to these areas, that will make society better.
If morality collapses, that is a different story. If we become debauched, that is a different story. But the great thing about debauchery is that it tends to debauch those who are already addicted to debauchery. It takes them out of productivity. It takes them out of the gene pool at some point. Decency is more productive than debauchery.
I am pessimistic with respect to the enormous social costs of the shift from the welfare state back to a family-based social order. It will be expensive. There will be a lot of pain. There will be a lot of losses. Getting rid of the control of governments in our lives, especially in monetary policy, is going to create a lot of pain. The Great Default will not be pleasant. But that is the price of escaping from the Keynesian macroeconomic bureaucracy that has been imposed on us in the name of good economics. It is bad economics. It is bad social policy. It is bad political policy. And it will go belly-up.
Quite a number of American Christians are taking the lead in (re)building a family-based social order.
Good to see.
I hope that the rest of the Body of Christ will learn from them, and learn well, as the welfare state fails around us.
Pain is coming. The impact can be lessened – no reliance on govt money, multiple income streams, a side gig after work – but it cannot be avoided by most believers.
Let’s make sure that the coming pain leads to something productive, some permanent growth and reward, like the pain that Christ suffered for a time, before rising to His place at the right hand of the Father.
And not a bitter, never-ending agony of futility, failure, and anguish. Like the pain that Judas Iscariot is suffering now.
- The ultimate resource isn’t truly the human mind: it is Obedience to the Law of God.
- Second up is having an upper class time perspective: delay rewards now, to get bigger rewards later.
- See The Unheavenly City by Prof. Edward Banfield, and his pointed application of this in regard to the American ghetto. It isn’t money or race that makes you upper-class: it’s the ability to plan, work, and wait, patience and determination.
- Third is the better aspects of the human mind: creativity, determination, intelligence, and picking up patterns quickly.