The one great truth found at the convergence of economics and politics is that government costs money. The more government you have, the more money it costs. This has both its good and its bad sides. The bad side is obvious. We need only look at the national deficit to see that. The good side is that just as the number of sheep helps limit the number of wolves, so too the amount of available money helps limit the size of government.
Of course given power, governments will vastly overspend beyond the money available to them, but that cannot go on forever. If the population of wolves increases drastically beyond that of the sheep, no matter what the wolves do, there eventually will be a dieback and a lot of dead wolves. Because as wolves sustain themselves on sheep, governments sustain themselves on money gathered from their own subjects. A government that expands beyond the ability of its subjects to sustain it will collapse sooner or later. It can go deep into debt. It can turn the entire country into a slave labor camp, as the USSR did. It can invade other countries and rob them, as Nazi Germany did. But in the end, there will be a dieback, and it will fall.
Alternatively, the need of a government for money can actually lead to reforms and more freedom. It is doubtful that America would exist today, if King George III hadn’t needed more money. Much the same can be said of Protestantism in Europe. But it doesn’t always have to come about as a violent reaction against a central authority. The colonization of the New World is a more positive example. As was the rise of a European Middle Class and the survival of the Jews in a Europe and the Ottoman Empire. All are examples of governments being forced to grant rights or decentralize their power in order to fund the exercise of that power.
The visible paradox here is that governments actually lose money by increasing their power, and in order to increase their revenues, they have to give up some level of control over the people they rule. That is why authoritarian ideologies on both the left and the right constantly warn about the dangers of money as a disruption of their moral and social order. They are well aware that freedom is financially rewarding, and that open markets undermine central authority.
The left’s obsession with capitalism emerges from the fear of an ownership society, dominated by the wishes of a socially conservative middle class. It is not the poor and oppressed that they care about, but themselves. The far right meanwhile is still stewing in the brew of inherited lamentations over the fall of kings and the diminution of inherited nobility at the hands of a capitalist meritocracy. Authoritarian ideologies on the far left and the far right, are both marked by symptomatic obsessions with Rockefellers and Rothschilds, banking institutions and billionaires. They claim to do so because they are concerned about the centralization of power. More often they simply want to be the ones to centralize power, and recognize capitalism as a dangerous tool that puts social mobility outside the control of any individual ideology or political faction.
The intersections of power politics and economics can often produce a cycle, in which governments allow freedom in order to draw in more revenues, only to have those same freedoms lead to more government control. Immigration is one obvious example. As is urbanization. Complexity and diversity can lead to more profits, but they also invite a new degree of complexity in government. Which means the rise of a larger and more controlling government.
A growing middle class and urbanization was in the long run structurally incompatible with feudal monarchies, but both led to a demand for even more centralized government to serve as a provider of services and control over dense population centers. Monarchy gave way to socialism. And socialism proved to be even better at bad budgets and spending money than Louis the Sixteenth. The lesson is that the trap of tyranny is always waiting by the side of the road. Outsmarting it requires not only moving fast enough to escape what is behind you, but studying to see what waits ahead of you in the direction in which you are headed.
A citizenry with more money only makes for a more tempting target. Robbing the middle class is much more fun than robbing peasants, because they tend to have bigger bank accounts. And they have already been trained to meet life’s needs by exchanging money for services. Which is exactly the socialist pitch. Along with the fine print that says the government is not obligated to actually provide those services, or have them available, that the cost of those services may change any time it sees fit, and that it may change the terms of the arrangement at any time, and in any way it sees fit.
Tyranny dropped its iron collar and reinvented itself as a gilded cage. A Utopian system in which a wise and kind government would see to everyone’s needs and curb individual greed and power. But when the golden paint washed off, the gilded cage turned out to be the old fashioned black iron after all. The paint only existed to sucker its new occupants long enough for them to be on the wrong side of the bars.
Governments, like con artists, configure themselves to fit the people. Even tyrannies are an expression of that. The greatest danger of tyranny is therefore not that it will be imposed against your will, but that you may actually welcome its imposition. That you may not even be able to recognize it as tyranny, until it is much too late. The fundamental shift that happens is that of the locus of control passing from the power. In democratic republics, the people control the government. In tyrannies, the government controls the people. The power shift comes down to whom both the people and the government believe is best fit to control. Who should hold the rope.
This is a question that comes down to what people actually need from their government and what they think they need from their government. The two tend to overlap, but they are never quite the same. For government, the matter is rather simple indeed. What governments need from the people is power. Money is simply another expression of power. Its popular potency lies in its symbolic decentralization of authority. By drawing the money back, governments monopolize power and diminish the available options for citizens of that country.
By purchasing services from the government through taxation, rather than from corporations, the citizenry create a much more insidious monopoly. And they are engaging in a transaction of unequals that shifts their power balance much more dramatically than any corporation could do. And so the transition from capitalism to socialism begins. Socialism however is already a dead end. Economic centralization leads to a poverty of economic options. The sheep begin to die off, and eventually the wolves have to follow. Unless the wolves reluctantly let the sheep live to breed, and create many more sheep to prey upon, and then the cycle begins again.
Governments liberalize to allow for wealth creation that they end up restricting and consuming anyway. And the social changes that encourage wealth creation also create new temptations for tyranny. The cycle repeats itself again when governments are formed into traps for a new generation, and when that new generation, having lost the wisdom of the old, flies into the gilded cage, and does not even notice when the door slams shut. Socialism’s gilded cage is a new incarnation of the recurring trap by which governments deprive the people of their power. And though a cage may be gilded, it is still a cage.
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