Belmont Club

Lemon Tree

Even though the Republican party is on track to take both the Senate and increase its hold the House, not many believe government will subsequently improve. Expectations for both parties are low. “Faith in the president, and in government, is slip-sliding away,” writes the Chicago Tribune.  Gallup, reviewing responses over nearly 2 decades, concludes that it’s been declining for some time.

None of this is news.  Bureaucrats aren’t even bothering to pretend they’re faithful public servants. They’re more interested in shopping. NBC says that bureaucrats have been giving themselves taxpayer-funded credit cards to buy what they please. One investigation alone showed that $20 billion had been spent in this way.

Thousands of federal workers are issued taxpayer-funded credit cards, and as long as they buy items that cost less than $3,000 — or “micropurchases” — they can simply swipe and buy and it’s possible no one outside of some agency bookkeepers will ever know what they bought.

Lois Lerner is the face of the new mandarin. She has “so what” written all over her.   What really matters is the drapery allowance and the perks. The Washington Post relates that president Obama lied (or misspoke) on camera to CSPAN about plans to renovate the Oval Office.  He was all humble on camera even though plans were afoot for an expensive make-over. When caught out, Obama simply tried to suppress it.

As Attkisson tells the story, C-SPAN eminence Brian Lamb interviewed President Obama on Aug. 12, 2010, for a documentary on the White House. In the session, Lamb asks Obama about the Oval Office: “What have you changed in this room?”

The president responds, “We have not yet redecorated this room . . . Given that we are in the midst of some very difficult economic times, we decided to hold off last year in terms of making some changes.”

Two weeks later, reports Attkisson in the book, a White House official contacts C-SPAN to say, “the Washington Post will be breaking the story of the President’s reported multi-million dollar renovation of the Oval Office,” reads “Stonewalled.” According to the author, the White House official, then-TV liaison Dag Vega, wanted to “make sure” that C-SPAN didn’t run its Obama interview snippet after the story in The Post surfaced. …

On Aug. 31, 2010, The Post drops its story on the Oval Office makeover, much of which took place while the Obama family had been on vacation (between the time of the Lamb interview and the story in The Post).

C-SPAN blows off the White House fussiness and publishes its interview. That very night, Josh Earnest, then the White House deputy press secretary, sends a tough e-mail to C-SPAN accusing the outlet of “being egregiously unethical and of violating terms of the interview. Though there’s no evidence of the existence of any prior agreement, he continues to insist the White House would not and did not agree to an interview with the president without specifying the terms under which it would air,” writes Attkisson, adding that the White House official threatened to “withhold future access.”

You don’t have to know. You don’t wanna know.

Between rigged voting machines and implicitly exhorting illegal aliens to vote, to redacting the news in real time, it seems that government doesn’t care about appearances any more. It’s all Happy Days are Here Again. Some may fatalistically reply: so what? In their minds government misbehavior is like the weather: everybody talks about it but no one can change it.

But that has never been true. Historically people have circumvented failing government by establishing parallel systems. Take money. To the present generation, money is something only Obama can print. During the Great Depression local communities printed their own money because they didn’t trust or couldn’t get the regular kind. Even though it could be spent only within an affinity group, this quasi-money or scrip had the virtue of being more honest than the banknote. Nor was the practice limited to America, as illustrated by the contemporaneous Worgl experiment, where an Austrian town did the same thing.

Local currency is widespread even today, though it is usually used in a very limited setting.  But there is no necessary upper limit of use. In fact, any sufficiently acceptable scrip is indistinguishable from legal tender; and in cases where legal tender is debased scrip is money.

During the Great Depression, many local governments were forced to pay employees in scrip at the height of the crisis… After World War I and World War II, scrip was used in Germany and Austria … During the Vietnam War, as well as earlier during the Korean War, U.S. soldiers were sent on leave with a scrip marked with expiration dates which could be spent at establishments cooperating in the program.

People roll their own. Scrip is making a comeback today in the form of virtual money, most notably crypto-currencies like Bitcoin. One of its advantages is that unlike legal tender, Bitcoin shares the entire transaction log of all it’s activities with every user in the form of an encrypted hash tree through P2P networking. That allows anyone to compare his record with everyone else’s, which theoretically makes it more honest than a central bank printing money. Wikipedia writes:

Central bank representatives have stated that the adoption of cryptocurrencies such as Bitcoin pose a significant challenge to central banks’ ability to influence the price of credit for the whole economy, they’ve also stated that as trade using cryptocurrencies become more popular, there is bound to be a loss of consumer confidence in fiat currencies….

On March 25, 2014 the IRS ruled that Bitcoin will be treated as property for tax purposes as opposed to currency. This means Bitcoin will be subject to capital gains tax. One benefit of this ruling is that it clarifies the legality of Bitcoin. No longer do investors need to worry that investments in or profit made from Bitcoins are illegal or how to report them to the IRS.

Of course people prefer legal tender, but the point of this digression is to illustrate that where government fails a replacement is sure to arise. Consider national defense. The Obama administration has responded to the collapse of Westphalian states in the Islamic world by refusing to fight the enemy as nations. The result is privatized warfare. National defense now consists mostly of proxies hired by the administration to fight subnational foes like ISIS, Hezbollah, Hamas, the Haqqani network, etc. No longer is the 82nd Airborne sent to fight the army of another nation. Since there  is no national foe, the administration creates scrip armies, complete with change-over dates to keep things from becoming regular, hiring “moderate rebels” to fight wars for it.

Ditto with borders. Once there were frontiers. Since the administration seems uninterested in securing them, the response to the collapse of general public safety has been the rise of private safety. Gated communities, private security forces, surveillance cameras, etc provide the actual defense for those who can afford it. Many of the big Hollywood anti-gun types live behind bodyguards and security perimeters. The poor have to make do with the cops.

So it goes for public health.  Documents recently surfaced showing that plans were afoot to treat foreign nationals for Ebola in the United States to further the administration’s diplomatic agenda. Is it any wonder that the states, including New York and California, are responding with state-level quarantines? It’s substitution plain and simple.

One of most fascinating things about the failure of Obamacare is it has occasioned the rise of private exchanges, which are now on track to completely dwarf the public exchanges.  Obamacare is becoming Medicaid for all. That is where all their expansion is coming from, the metal plans it offers, not so much.

The abolition of employer-provided insurance has led companies to simply give workers money to purchase their own health care on a private exchange. Urgent care clinics are booming because they charge much less than Obamacare network prices when a policy holder has not yet reached his deductible. What is repealing Obamacare is that people are working around it, according to their preference. Vermont, for example, is creating a single payer health care system.  The Left approves, but it is a rejection of Obamacare just the same.

Thus, private money offsets legal tender. Private security replaces public safety. Private armies replace the United States Armed Forces. Private exchanges replace public exchanges. In the end, only the poor will be left with the public stuff. Those who can afford better will switch to untaxable private money, private security and private insurance. This is nothing new. Substitution always happens when the state starts becoming more interested in taxpayer funded charge cards than doing their job. Bureaucratic insolence is finally met by the building around them.

Of course there are limits to which failure can be patched. For example, Bitcoin assumes that the basic infrastructure of the world continues to work; otherwise P2P networking itself would fail. Bitcoin can survive, even thrive, in a degraded United States, but it could not exist in a world where order and fiber optic cables and routers have collapsed.

But trends suggest that voters may continue to lose confidence in government until the point where a basic failure is imminent. At that point, private workarounds can no longer offset the chaos. But until then, adaptation rules. For the foreseeable future the opportunities lie in meeting the demand caused by the collapse of Hope and Change. Government is a lemon tree. Just make the lemonade and sell it for a profit.

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