At some point, you need to stop worrying about what you wish would happen and start focusing on what is most likely to. In the real world, long shots run last, you don’t win the lottery, and rainbows never lead to pots of gold. In the real world, success comes from doing tedious and difficult things, not from good intentions and hope for the future. In the real world, there is no free lunch.
This is a tragic perspective, but very true. There is no doubt that the world would be a happier place if all we had to do to achieve our goals was to ‘believe’ in them hard enough. But that isn’t how the world works. And it’s time now for liberal America to realize this, and to finally face the unfortunate facts of life.
They still have a choice of course. They can continue to stand firmly behind their dreams of a world where they are the ones who decide who bears the burden and who gets the benefits. They can remain devoted to raising taxes and redistributing wealth. But that dream of a social welfare state is already in flames and Europe. And if they continue to hold fast to it, then it’s about to burst into flames here as well.
If liberal America can resign itself to the unfortunate facts of life, then we may still be able to avoid the worst of the possible consequences. The US will be downgraded of course, but only to double A. The consequences of this would be considerably better than the D rating that will come from an actual debt default. Interest rates will rise, and the economy will slow, but not nearly as much as it could. And the Fed will still be able to mitigate some of the difference with monetization, and by relaxing Cap Reqs. In short, life will go on.
We can then find a way to get our fiscal house in order while there is still time. We can rework the tax code to encourage economic growth, cut regulation, and focus on liberty instead of top down control. If we do that now, and continue to do that through the 2012 election, then there may still be time to save the republic.
But if they cling doggedly to their positions, then even if they win this argument, the inevitable result will be a credit default causing a much deeper economic slowdown. Capital formation in the US will come to a complete halt, the short term money markets will freeze, lack of access to capital will force corporate America to slash millions of jobs, and the wealth of America will flee for safer havens overseas. There will be nothing that anyone can do to mitigate enough of it to matter. At that point, we may very well see martial law before the crisis is ended.
If liberals continue to focus on the politics, they’ll probably feel like they’re losing. But it won’t actually be so. By accepting the tragic reality of a world where scarcity is the final arbiter of ‘cost’, they will really be the biggest winners. They’ll be taking the first step toward implementing policies that are far more likely to achieve their goals than what they have proposed thus far. They may not be in the fastest most luxurious yacht any longer, but they will at least be in the lifeboat. And right now, the lifeboat is the best any of us can hope for.
So there is the choice for liberals. Accept the unpleasant truth, and learn the lessons that this recession can teach them, we may all be fine. There will be some unavoidable pain, but it’s unlikely to be fatal. But if they cling to their dream of self importance where ‘enlightened’ guidance passed down from on high can make 2+2 equal to 5, then we will all have no choice but to watch it all burn.
It’s all on them now. They can either learn the facts or continue to deny them. But the market (and the real world) isn’t going to wait for them any longer. If you want to be the grownup in the room, facing reality is a vital part of that.
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