The government bubble and the short vision horizon

There was the .com bubble; there was the correction due to terrorism. There have been myriad fiascos and financial hooliganism on Wall Street. Some would say this is the eventual end of a super debt cycle started after World War 2. Perhaps the burgeoning chaos on Wall Street can be blamed on a few bad apples like Bernie Madoff, but I doubt it. The true threat from and to Wall Street has always been simple and utter greed.  Now exposed there is a rising bubble near popping and I am going to dub thee the government bubble. The likely cause of this bubble is a short vision horizon.

There has been 700 billion dollars in taxpayer money sent to Wall Street to feed the greed machine as if the stock market was the only element of the economy. Any place where trillions of dollars can evaporate over night due to an idea is a risky venture, but American taxpayers are on the hook. The free market economy eroded by the greed and pandering in a squalid political transition year is an utter rape of the taxpayer treasury. As the real estate market slides into the worst doldrums in history (nobody is really talking about that yet); as all the market corrections and elements of government control are used to keep the chaos of a major depression from occurring; as the list of bankrupt companies grows; the utter desperation of government begins to reveal itself.

The next rising bubble is the liquid and firm assets of the national, state, and municipal government infrastructure. Already GIVING away money in what should have kicked off a super inflationary spiral we are still grasping to depths of a recessionary deflationary spiral. People talk about rebooting the economy but that is usually the clueless luminaries pandering technological metaphors. The same people like CNBC commentators speaking as experts on technology today said “Makers of Guitar Hero and the highly prized ‘World of Witchcraft’ “(sic).  A reboot is a flushing of all memory, dumping of the operating system, and reinitializing the primary characteristics as if the original instantiation of the operating system never existed. That would be a political revolution in the real world. I’m not sure I’m up for that this decade.

With California a pending bankruptcy, many municipalities pending bankruptcy, several other states on the verge, and a national government “bailing out the street” another bubble is rising from the fetid swamp. Like a miasma of swamp gas this bubble sticks to everything and will result in a culling beyond anything people can expect. Shrinking services, rising taxes, decreased public infrastructure spending, and social programs shrinking to the absolute minimum. These are the hallmarks of depression spending. With the federal budget upside down, the roles of income tax shrinking due to unemployment no number voodoo will unmake the catastrophic mess.

The government bubble is rising. It is going to hurt. Unlike doomsayers and prophets of ill-considered purpose I’m not saying this is the end of America or that the world is coming to an end. What is happening is a forced correction in idealism showing the relative inherent idiocy of politics. The free market mavens of the conservative movement pro-business to a fault, well, are at fault. The tax and spend liberal social programs have absconded with the basic tools required to run a government creating a subservient class and eroding the normal social tools available in the past in a promise as ephemeral and pungent as the previous mentioned swamp gas.

How did we get to where we are going? One simple concept is the root cause of all the bubbles and likely many of the future bubbles.

Short vision horizon

When the vision of the business world shrank to a quarterly horizon in answer to share-holders demands the long view of future growth was nearly abandoned. A litany of business decisions litter the corporate world based on a short vision horizon and failure to think beyond the next corporate board meeting. Outsourcing knowledge jobs to over seas firms that created a competent competitive class to then turn on their employers is a symptom of this short vision horizon. The shrinking knowledge worker class and decimated consumer class due to increasing unemployment is a symptom of that outsourcing. This is just one simplified example of the short vision horizon resulting in a popped bubble of economic woe.

When the election cycle drives the decision cycle you have entered the realm of the short vision horizon for government. We see this from career bureaucrat all the way to the presidency and at all levels of city, state, and federal government.  If government is only thinking about a short-term vision and that horizon is so near then the catastrophic effects such as MTBE in the water supply or energy policy that drives foreign policy become possible. The decisions are based on the play at the next election cycle and rudimentary requirements for honest men doing their best to govern other honest men becomes antiquated in a short term. The wholesale selling of public trust in basic infrastructure from toll roads to bridges (didn’t that used to be a joke?), and inherent governmental services such as parking meters and traffic control have decimated future generations ability to govern.

A 100 year lease on a toll road is the equivalent of forever. Ask the Puyallup Indians what the federal courts had to say about recovering the thousands of acres at the end of their 100 year lease in the 1980s. Oh by the way most of the city of Tacoma sits on that land now. The federal government refused to allow the recovery of the leased property. There is substantial court litigation on this topic and the current tenant almost always wins.

The reason governments are engaging in such tactics regardless of the possible future impacts is a short vision horizon.  The rampant privatization of community assets held in trust is partially an underhanded method of bypassing community control. If a private corporation is running the toll road, or the parking meters then increases in costs do not have to pass through representatives or executives of the government. Privatization of public assets is a form of taxation without representation.  That used to be fighting words, but a befuddled public doesn’t even recognize the issue today. To make matters worse many of these assets are being bought by foreign governments (e.g. The Indian Toll Road).

A short vision horizon is often touted as flexible thinking, being decisive, thinking outside the box, or the most lamentable, being active in the decision process (sic). A short vision horizon allows corporations to plunder the future, governments to absolve themselves of responsibility, and people to forget their own actions to monitor governance.

The rising bubble of government about to pop is not just an American problem. India, Pakistan, Israel and most of the Middle East and Europe sat on a rising tide of outsourcing and petro dollars. Mexico is about to fold again and this time America does not have the funds to bail out the southern neighbor.  Russia’s expansionism became less hearty as the oil market collapsed.

What causes the short vision horizon? Perhaps simply greed, lust, or other more common human failures. One thing is for sure is that the law of unattended consequences erupts wholly formed from the short vision horizon like a monstrous leach sucking at the future until it is a rancid corpse.