How Western Governments Will Fall

The French New Right author Guillaume Faye writes that the post-collapse democratic governments of the current era will fade away through a “convergence of catastrophes” which happen as all of their poor decision-making detonates simultaneously.

For many, this seems impossible because we perceive our societies as strong. The money flows, the media seems so informed and powerful, and we have these giant militaries which should be able to conquer anything short of Godzilla. And yet, doubts persist: how long can a society as indecisive and parasite-laden as ours continue to survive?

Most likely there will be a touchstone for this convergence of catastrophes which conveys to the ordinary inert and blithe person that things are really going wrong. If history is any guide, people will only really wake up and scream when their livelihoods are threatened. They can put up with the “death of a thousand cuts” of every product being worse, life being uglier, and work taking longer from year to year; after all, what else would they do with their time and money? They are mostly concerned with social factors, such as whether they appear likable to friends and neighbors, if they seem to be successful in comparison to their social group, and if they have something new to talk about. People live in small worlds, focused mostly on the biological imperatives of eating, reproducing, competing and dying.

This will go away when it finally sinks in that our governments are out of money because they spent it on entitlement programs, and that our future is to either default or go to some kind of managed economy like socialism, at which point the economic collapse will only accelerate. We got our first warning shots with the bankruptcy of Puerto Rico:

Puerto Rico announced a historic restructuring of its public debt on Wednesday, touching off what may be the biggest bankruptcy ever in the $3.8 trillion U.S. municipal bond market.

While it was not immediately clear just how much of Puerto Rico’s $70 billion of debt would be included in the bankruptcy filing, the case is sure to dwarf Detroit’s insolvency in 2013.

After years of dumping money on citizens to combat poverty and racism, Western governments are seeing death at the fringes. Those are happening in minority communities for now, but soon will spread to others as these governments recognize that they cannot raise enough revenues to pay for the obligations of yesterday with the taxpayers of today.

In particular, the first of the entitlements are starting to fail as the union-given, state-paid and taxpayer-financed pension system begins its fiery end with obligations that will crash the economy hard:

Federal Reserve data show that in 1952, the average public pension had 96 percent of its portfolio invested in bonds and cash equivalents. Assets matched future liabilities. But a loosening of state laws in the 1980s opened the door to riskier investments. In 1992, fixed income and cash had fallen to an average of 47 percent of holdings. By 2016, these safe investments had declined to 27 percent.

…By some estimates, unfunded liabilities would triple to upwards of $6 trillion if the prevailing yields on Treasuries were used. That would translate into much steeper funding requirements at a time when budgets are already severely constrained. Pockets of the country would face essential public service budgets being slashed to dangerous levels.

In other words, the pension system bet on the economy growing forever in the midst of the Baby Boomer years, and that growth has not been realized as economies across the West decline as their people decline, mostly from existential misery brought on by the utter tedium and ugliness of modern society.

There is no way out of obligations that large. Couple that with large national debts, political instability, and the end of various market booms that have seemed to sustain us, and we see that a huge crash is coming. It in fact may resemble a Soviet-style implosion:

But the deeper problem for the Soviet Union wasn’t the oil price collapse; it’s what came before. In his book Collapse of an Empire, Russia’s great post-Soviet reformer Yegor Gaidar pointed out that during the long preceding oil boom, Soviet policymakers thought that they could walk on water and that the usual laws of economic gravity did not apply to them. Soviet policymakers didn’t bother developing a theory to make sense of their spending. They didn’t even bother paying attention to their results. The math seemed to work out, so they just assumed there was a good reason.

This is as true of the current Venezuelan leaders as it was of the Soviet leaders. The Venezuelan government, though it doesn’t claim to be full-fledged in its devotion to Marxism-Leninism, has been pursuing as absurd an economic policy mix as its Soviet predecessor. It has insisted for years on maintaining drastic price controls on a wide range of basic goods, including food staples such as meat and bread, for which it pays enormous subsidies. Nonetheless the Venezuelan government, like the Soviet Union’s, has always felt it could afford these subsidies because of its oil revenues.

Substitute entitlements subsidies for food subsidies. Replace oil wealth with the productivity of American industry. Refocus the picture: while the situation is not yet as dire as in Venezuela or the Soviet Union, the United States and European Union are going down the same path, with the same predictable results.

This certainty of doom provides an opportunity to finally replace our failing political systems with something that works, hopefully a monarchy, since those have no need for constant growth or government-style social spending. The West died long ago; as the ruins of its substitute replacement come crashing down, there is an opportunity to finally bring the old West back to life.

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