Bob McKee the co-author of Democrisis says that democracies can’t keep debt under control. As such they are destined for crisis. Nonsense. Democracies (and non-democracies) with fiat currencies can’t keep debt under control. It happens over and over and over.
McKee assures us that the alternative to “democracy” isn’t necessarily an authoritarian regime however. There will just be a “narrowing” of democracy (in Europe). That’s encouraging. I wonder who gets to operate within this more narrow political spectrum? I think things are pretty narrow already.
The “democracy is bad” sentiment is a reflection of smart powerful people who are starting to realize that their positions of privilege may be under threat. The obvious answer to the current economic crisis, which would have been a lot easier to deal with a few years ago, is to open things up, not further burden society and the economy. But managers just can’t imagine a world without their wise guidance—the same guidance which crashed our society into an iceberg. No, it is we the people who must now give up what is left of our freedoms so a failed leadership class can keep the current system going for a little longer.
The market is clearly indicating that liberalization is the answer. Let the Eurozone break up. Let go of the greater Europe dream. For that matter, in the USA, move more responsibility to the states and localities. Create natural redundancies in the economic and political systems around the world. There is a point where efficiencies break down in a system when it gets too big. Things start to fail. This is where we are now. Democracy hasn’t failed. The system, driven in large part by unelected officials has created an unstable system. That is what has failed.
From what I see the only viable way forward is toward decentralization. Decentralized systems are much more stable. Diversify, diversify, diversify. But the management class is not very keen on this idea. They cannot imagine that society could work, indeed work much better, without them.
The anchor, midway through the interview, brings up an important point. Isn’t much of the economic chaos (in Europe especially) just the baby boomers refusing to accept reality? They want a retirement funded by the current working generation, but the working generation ( if they have work at all) is much smaller than the baby boomer generation. How is this going to work?
To the degree that seniors vote and continue to demand unreasonable benefits, one could argue that this is a “failure” of democracy. However, had we embraced the principals of sound money since the 1970s (when the Baby Boomers came economically online) many of the current problems in the economy would likely have been mitigated. Debt would not have exploded as it did that is for sure. It is true that those who were able to most manipulate the fiat dollar would be less “rich,” but a world with fewer Jamie Dimons is probably not a bad thing.
This sort of talk—and we are likely to hear more of it as the economy continues to deteriorate—is very dangerous for the average person. It is dangerous for the economy. It is dangerous for a free society.
Just to put a finer point on it, one of the other people on the panel with McKee, Paul Donovan, economist at UBS said this:
“Sounds like a benevolent dictatorship of economists. Which I’m all in favor of.”
Well I’m not. I don’t like dictatorships of any kind.