Resources are, by their nature, scarce. In fact, value or price for a resource is derived from its relative scarcity: how much we have of something we need or want versus how much we need or want it.
We vote with our dollars. In America, we vote with our votes. This applies to fresh drinking water during a hurricane, watches and, apparently, presidential candidates. In a free (unfettered) market, the supplier of a resource produces as much of that resource as they expect to sell at a reasonable profit; the consumer of the resource will continue buying it until the price becomes prohibitive. This is equilibrium.
In reality, a “free (unfettered) market” is a fiction. Markets are affected by irrational exuberance and hysteria: by fake news and propaganda. Markets are affected by taxes and regulations: collective actions that distort the costs of suppliers’ inputs.
Governments and institutions reallocate resources. Wrapped in ideals like liberty, justice and opportunity, the main difference between Democrats and Republicans has traditionally been how and at what scale to reallocate those resources.
The reallocation of resources has costs, and we all agree that liberty, justice and opportunity are worthy of collective resource allocations. Thus, we pay taxes to provide common defense, to enforce contracts and to educate our future generations. We understand that there is a siphoning-off of resources to administer such collective activities. When they don’t swing wildly, we can include such costs in rational, sustainable plans. Greater uncertainty about costs cripples planning for the future.
When a government underpays by a trillion dollars for the resources it administers, the effects are myriad. Not only have citizens agreed to the collective goals of liberty, justice and opportunity, not only have citizens accepted the institutional siphoning-off of administrative costs, not only have citizens agreed to have less water during hurricanes, less Rolex watches and less healthcare, they are seeing the relative devaluation of liberty, justice and opportunity.
There exists a fundamental cognitive dissonance between growing the size of government – the institutions built to reallocate resources – and the preservation of liberty, justice and opportunity. This is, at its heart, irrational. We accept it, as we plan, for predictable futures.
Since we can’t put a cost or price on liberty, justice and opportunity, we can do no better than to use approximate valuations based upon our collective buy-in to government budgets. We used to cede that power to our trusted elected representatives; leaders who found equilibrium in the quest to preserve the priceless on our behalf.
We had Republicans who fundamentally distrusted the siphoning-off, who wanted supply and demand to play a bigger part in the allocation of scarce resources. We had Democrats who didn’t mind the siphoning-off if it meant that the pro-cyclic forces of the market could be distorted just enough to make liberty, justice and opportunity more graspable – less priceless but more graspable at least.
We had Democrats and Republicans in equilibrium, throttling the relative supplies and demands of priceless ideals; Democrats and Republicans picking and choosing winners and losers; Democrats and Republicans leading a discourse centered around maximizing liberty, justice and opportunity. In this paradigm, progress was slow but steady.
Right now, we have no way to tell what we are paying, what we are giving up and what’s being siphoned-off. We are in a dangerous and unsustainable, populist economic moment. We have Democrats and Republicans who are devaluing liberty, verging on authoritarian cults of personality; undermining justice, politicizing courts and reconstituting founding documents; and ripping up opportunity, pitting winners against future-former winners. Populism in the two parties has thrown off the equilibrium in our nation and we are suffering from a collective vertigo: hysteria, cynicism and irrationality.
In 2016, Populism seemed the rational reaction: throw out the leaders who oversaw the current mess. The recent commingled political domination of progressive and nationalist populists has proven that liberty, justice and opportunity are at constant risk. They are at risk now more than ever. Free markets and big government are not the ends, they are the means for the protection of liberty, justice and opportunity.
I, for one, will support rational, sustainable, optimistic equilibrium. Whether it’s a trillion dollar Republican deficit or a trillion dollar Democrat deficit, it’s a trillion dollar deficit: an affront to liberty, justice and opportunity: a waste of our scarce resources, an unsustainable devaluation of the priceless.
I’ll not equivocate: the deficits being promoted by populists on the Right and Left are not merely fiscal. We face moral, spiritual, civic and cultural deficits; we can’t simply raise taxes to cover these deficits. We can’t regain our equilibrium from these as quickly. We can’t simply run up deficits to reimpose pricelessness into our devalued institutions.
I, for one, will support a leader who understands the rational tradeoffs between government and free market, who was not in Washington overseeing the current mess, and who’s personal dedication to liberty, justice and opportunity are proven in their personal and public lives.
I will support a former mayor (whose name begins with “B”) of a great American city who has the earnest audacity – or plain chutzpah – to stand up to populist demagoguery: who will fight for the priceless at any cost.
Jason Leclerc (@JLeclercAuthor) is chief economist and partner at Crescent Consulting.
