“What do you think is going to happen?” my friend asked, adding that most people he talked with believed the nation if not the world would suffer a major economic collapse in the next four years. Given the nation’s $16 trillion debt, plus another (according to one calculation) $84 trillion in unfunded liabilities, simple arithmetic suggests that a U.S. government default is inevitable, and that default would have world-wide repercussions.
For this very reason, many conservatives and Republicans argued that the recent election was the most important one in our lifetime, or at least in many years. Apparently, they believed (or wanted voters to believe) that they could somehow prevent this collapse–though if collapse is truly inevitable, by definition a single election couldn’t prevent it.
Now that Obama has won re-election, some people actually seem eager for the collapse in the hope that it will teach some kind of lesson to those foolish enough to vote for the wrong candidates in the recent election. Meanwhile, the web is filled with sites telling people what they need to hoard before the collapse comes (warning: annoying video starts as soon as page opens), or arguing that people should buy gold or providing some other useful (and often profitable, at least to the advisor) advice.
The Washington Times has even pinned down the date of the collapse: March 2014, so you have about 15 months to get ready. There are entire blogs, books, and youtube seminars dedicated to preparing for the collapse.
Despite this, I told my friend that I wasn’t worried. I see the world as an economic race between four kinds of systems: those dedicated to political and economic freedom (mainly English-speaking countries); those dedicated to political but not economic freedom (mainly continental European countries); those dedicated to economic but not political freedom (mainly Asian countries); and those that lack both economic and political freedom (mainly the Middle East but also many African and South American countries).
We can count the last group out–if the Mid-East didn’t have oil, it would be as economically irrelevant as most of Africa–and Europe seems to be losing as well. The main competition left is between the English and Asian systems, and I think the systems lacking political freedom will inevitably lose out to ones with political freedom.
Conservatives fear (and Asians perhaps hope) that our political freedom is leading us down the path of “socialism.” But the United States still has enormous economic freedom, especially if you live in states like Texas, Kansas, or North Carolina. Since we also have plenty of mobility, the loss of economic freedom in places like California won’t mean much in the long run.
What that means is that, despite the arithmetic logic that says the U.S. government is a poor credit risk, people will continue to lend to us because we are the only place in the world with potential for near-unlimited economic growth. It may take decades; we may have to short-change baby boomers on promised social security; and it will only be delayed by expensive programs like Obamacare and inane projects like high-speed rail; but eventually we will pay off those debts and return to full economic health.
That doesn’t mean we shouldn’t fight those programs, but it does mean we shouldn’t panic or give up. Economic freedom will prevail, and we should use every tool of our political freedom to maintain that economic freedom.