Even the freedom haven of the United States is not immune to the productivity killer called government. When we look at the increase in the US government spending since 2000 (a 3x), we see how this is swallowing a greater portion of the economy.
It is one major reason why economic productivity (growth) as compared to decades prior, has tailed off. Bureaucracy took over. Regulation is rampant. The producers are being squeezed in favor of the least valuable contributor: government.
Economists often point to a statistic called the money multiplier. For government, this tends to be a negative. In other words, for each dollar going to the government, the return is 60 cents. This is according to the multiplier estimated by the noted economist Lacy Hunt of Hoisington Investment Management Company.
Is this how things should work? Unfortunately, no. Economic productivity comes from the innovators. Markets, even if flawed, have ways of advancing society ahead over long periods of time.
When we look at longer term trends, it becomes evident how things change. In the near term, people do not notice.
Let us look at energy as an example. This is something that is a foundation of any economy. Without energy, the ability for society to exist is almost non-existent.
What happened to energy prices? People would say they went up. Actually, the long term trend is they are down.
As we can see, as a percentage of the overall, energy costs have declined. This is excluding the fact that households have more devices as compared to 60 years ago.
Consider how much the United States changed. In the late 1950s, there was a stove, refrigerator, perhaps oven, and a few lights. Some homes did have a washer/dryer. Thinks such as air conditioning were rare.
The US budget is now over $6 trillion. In 2000, it was roughly $1.8 trillion. The uniparty system means that politicians, no matter which party, use spending for votes. Campaigns are nothing more than a contest on who can hand out the most "party favors".
Many people enter government to get rich. Even the private sector gets involved using regulatory capture as a means to ensure a monopoly. This is something that is becoming more common.
It is one of the main reasons why so many developed countries are facing a sovereign debt crisis. While this will likely start in Europe, the US is not exempt. Contagion spreads rapidly. The party keeps going as long as someone buys the debt. If this stops, well, "Houston we have a problem".
Could blockchain be the answer.
The crypto world is a "price go up" crowd. That is the focus. Few look at the technology, believing that a few points on their favorite meme coin is what it is about.
While there is nothing wrong with making money, this is entirely misguided. Only a small handful are looking at the future potential and how these technologies could be adopted to change things.
Governance is something rarely talked about within the crypto world. Certainly there are those designing systems who focus upon this. However, for the masses, it is never mentioned.
Isn't that ironic that people will spend hours watching the cable news channel, being bombarded with reports about the President, Congress, and a host of other politicians yet they won't spend even a few minutes talking about blockchain governance?
This could be one of the most impactful contributions to society. A new governance system (which also means voting) could radically alter the entire makeup of government. Accountability could be instant, something that is lacking in most countries. Individuals could have a greater say in what is taking place, on topics such as spending and war.
Of course, those in power do not want this. It is for this reason that the industry needs to massive innovate in this area. We do not know what the solution is. Experimentation is required. Sadly, we basically started with proof-or-work, saw the lack of scaling with that, introduced proof-of-stake, and stopped. Yes there are a few other systems out there but nothing that is garnering massive attention.
The problem is that, even if someone created the best system ever, since few are paying attention, it gains no traction. Headlines across crypto media is about some forecast for ABC token to explode (or implode). A massive breakthrough in governance? Crickets.
One final point: the default that we might be heading towards is one where the platform operators have the power. This means the likes of Big Tech swallowing more of the pie.
Do you want the likes of Sam Altman in charge?
That is a question all of us have to answer.
