(New York Times) Among the people anxiously waiting to hear if Congress can reach a budget deal are front desk clerks at the Ahwahnee Hotel in Yosemite National Park, manufacturing executives whose companies supply goods to federal agencies, bank loan officers who make mortgages guaranteed by the Federal Housing Administration and Wall Street analysts who depend on a steady flow of government data.

Many would argue that the mere fact that a shutdown could cause disturbances throughout the economy is reason enough to try to avoid it.  And there is truth in this logic. Shutting down the government to whatever degree would cause serious problems in our economy, in both the public and private sectors.

But to focus on the effects of a shutdown is to overlook the effects of the initial government intervention in the first place. Yes, it is true that we now are reliant on the government for some degree of economic well-being, but should we be? Is it valid that so much of our actions and standard of living are contingent on the state? The more concessions we make in order to keep the government props under our economy, the less we will ever be able to escape the controls that come with those props and the less capable we will be able to exist on our own without the help of the government.

It is the problem of perpetuity as described in the third part of Juggernaut. From the text:

—-excerpt—–

The more government does to skew economic factors, such as the supply and demand for goods and services and for money in general, the more important it becomes. As more programs are added to the repository, and more of the economy is affected by government fiat, it grows increasingly important for the individuals affected by that growth to play some role in the process by investing in lobbying, litigating, and politicking to get a share of the expanding sums; and, similarly, it becomes more and more costly to stand by and do nothing.

The fact is that government has become too immense to disregard. Throughout the nineteenth century and even until the Great Depression, with the exception of wartime, state and federal spending was no more than 12% of national income, with around two-thirds directed to the state and local levels. During FDR’s New Deal, federal spending alone increased so that it took up around 10% of national income. Now, government spending is around 43% of national income, and two-thirds of that is dedicated to the federal level. Estimates predict that spending will continue to increase so that by 2019 some 60% of the national income will be absorbed by the government. The national debt, which currently stands at about 80% of the GDP, is estimated to exceed income in a few years.

Clearly, the government is an industry that no individual acting economically can afford to neglect. Washington correspondent Jeffery Birnbaum once quoted a lobbyist who spoke for the consensus: “The modern government is huge, pervasive, intrusive into everybody’s life. If you just let things take their course and don’t get in the game, you get trampled on. You ignore it at your peril.”

The recession of 2009 showed just how significant the government has become. News headlines claimed that the only growing industries were in the public sector. While real estate, finance, and technology were all retreating, government was advancing, just like the savvy monopolist of the late nineteenth century. As it was with Mr. Potter in It’s a Wonderful Life, the government wasn’t selling, it was buying. And every aspect of government action was gaining as a result.

One article dealing with the extravagant pensions that state employees have garnered in recent years envisaged a country with a new aristocracy made up entirely of opportunistic retired government workers living off the toil of private sector laborers . It is not too far of a stretch to think that we are all bound at some point to work for a branch of the government, whether by paying exorbitant taxes and submitting to cumbersome regulations, or by receiving subsidies, welfare, and government contracts directly.

As a result of such swelling power, more and more people flood into the system to take advantage of it. Individuals act economically no matter what circumstances they are in. If the citrus fruit industry is booming, then people will rush into the industry to get in on the action; if the solar panel business is booming, so too will people pour in to take advantage of the profits. We see it whenever a new technology or innovation sweeps through the economy and scores of businesses pop up to meet the emerging market’s demand. Similarly, when government produces artificial demand for an industry, individuals and businesses will flock toward it. The more demand it creates, the more interest it generates. In short, government intervention spurs higher interest in the government.

What this means, then, is a sort of self-perpetuating cycle. As special interests and rights groups increase their share of the outlay, so other interests must lobby and apply pressure in the opposite direction in order to keep pace. Government action causes special interest reaction, and the process begins again with larger sums of money and even more comprehensive intervention at stake.

One ironic aspect of the modern social condition is the fact that the welfare state operates in a closed economy, no different than that which arose at the turn of the century. The economy is a zero-sum condition now as much as it was before the Fed and the Welfare State were established to defy it. As such, the benefits one individual or group receives thanks to tax breaks, subsidies, or other political maneuvering are actually losses for others, who must now invest their time and effort to lobby for their own tax breaks, subsidies, and other benefits. It is a gigantic tug-of-war with hundreds of thousands, if not millions, of participants all grasping for more and more rope.

As the focus on the bureaucratic behemoth in Washington increases, its sway grows that much more dominant and thus forces even more interest in it. “The more actively and ambitiously government moves resources around,” says Jonathan Rauch, “the more can be gained by forming a group and lobbying for a bigger share, and so the stronger the incentive to do it.” To counter the actions, more groups form to lobby against them, and a self-perpetuating cycle forms. “A built-in side effect of new government programs is their tendency to summon into being new constituencies—which, in turn, often lobby for yet other new programs, keeping the whole cycle going.”

The cycle flows naturally. People go where the money is; government has the power to shift money around and distort markets, so people tend to go where the government is taking action; the more action is taken, the more others must join in to secure their share; the more people involved, the more action government takes; and so on, in perpetuum. The bulging bureaucracy feeds off itself as the people simply dive in to provide more fodder.

“And ye shall understand, that when there be great feasts and solemnities of that idol, as the dedication of the church and the throning of the idol, all the country about meet there together. And they set this idol upon a car with great reverence, well arrayed with cloths of gold, of rich cloths of Tartary, of Camaka, and other precious cloths. And they lead him about the city with great solemnity. And before the car go first in the procession all the maidens of the country, two and two together full ordinatly. And after those maidens go the pilgrims. And some of them fall down under the wheels of the car, and let the car go over them, so that they be dead anon. And some have their arms or their limbs all to-broken, and some the sides. And all this do they for love of their god, in great devotion. And them thinketh that the more pain, and the more tribulation that they suffer for love of their god, the more joy they shall have in another world.”

—Sir John Mandeville’s account of the Procession of the Juggernaut, Travels (1357-71)

——end excerpt—–

As can be deduced, then, solving the problem by adding to it can only make it worse. The only real solution is to escape the perpetuity and find other solutions.