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Wednesday, March 24, 2010

What is a Failed State?

I saw a bizarre idea circulating. Due to California's budget problems, some people are declaring California a "failed State".

If you live in California and refuse to pay taxes, then will people with guns come to kidnap you or take away your stuff? As long as the answer is "yes", California is not a failed State. The thugs don't have to be 100% effective. They just have to scare the vast majority into compliance.

In California, it's practically legal to possess marijuana. There are so many people ignoring the law. This makes it impractical for State thugs to crack down on everyone. However, some people in California do get busted for possession of marijuana. At some point, State thugs might ratchet up their enforcement efforts.

If there were widespread tax resistance, then that would lead to a failed State. The State thugs would walk off their job once their paycheck bounced.

However, California cannot fail unless the Federal government also fails. If necessary, the Federal government would send in thugs to keep collecting taxes. The whole point of the Federal government was that individual state insiders consolidated and expanded their taxation power. In 1787, some states were too weak to force the slaves to pay taxes. The Federal government was formed to consolidate and expand taxation power. State insiders were scared by Shay's rebellion, and formed the Federal government to violently resist future tax revolts.

It is more accurate to describe the USA as a "failing State" rather than a "failed State". As long as State thugs can violently collect taxes, then the State hasn't failed. As long as the vast majority of cattle pay their tribute without resisting, then the State hasn't failed.

In the USA, the Federal government and each individual State government will fail simultaneously. There are technically 50 separate state governments, but they're highly interlinked. For example, individual states can't legally issue their own money. After the US dollar collapses in hyperinflation, individual state governments won't have any money. I estimate there are 20 years left until the final collapse.


dionysusal said...

I have no expectations of a full on wiping out of the state for all time, what I see coming down the pike for most of the western world is a dramatic reduction is the size and scope of the states powers and place in society. Ironically, this will also come when the power and reach of the state seems to increase beyond all measure overtly.

At some point soon either people will go to withdraw their money from the bank at the end of the month and it won't be there, or they will succeed and it will be worthless due to inflation. This basically means that state workers (and everyone else) are not going to get paid.

The tertiary functions of the state - roads, police protection (i.e. the stuff they do to provide excuses for taxing everyone) hospitals, schools, welfare, benefits......this kind of stuff is going to have it's funding curtailed, stopped altogether or stolen by insiders.

And so those services will break down. But not as badly as one might think because it is the case that a lot of well meaning and indeed hardworking people are in those sectors. In extreme circumstances some nurses, teachers, policemen, doctors etc. will roll in to work for free.

But not for long and not without a lot of shouting. The good news is that people actually want those things, so there will always be a market for them and always be a way of acquiring at least some measure of them.

The governments of the west are enormous and powered as much by inflation as by taxation. With the inflation mechanism effectively broken the government will have to cut back on what it does.

First order - looting for those who run the upper tier of the state. That's what this game is all about. Once the people "at the top" can't extract lots of wealth without a lot of risk, they'll scurry off overseas or retire or whatnot.

Second order - protecting the top tier and forcing the population. This is the troops on the street, the policemen who do what the top statists tell them, the army, the muscle of the state.

These will be the priority for the statists to keep going. As the inflation mechanism falters, expect them to try and get in resources in other ways - more taxes, more fines, more licences, more control, direct seizures of property with no recourse - everything they usually get up to, but on steroids.

Traditionally this has meant.....a really large land grabbing war but nuclear weapons have made such a war a pointless activity, there is no point in stealing several thousand square miles of radioactive crap while having to live in a bunker yourself forevermore.

The problem that even the statists have is that using the state is a lot like riding a tiger, it might get you where you wanted to go but it's dangerous to get off once you arrive. Once a state is started, it's hard to stop the inevitable growth, levelling off and collapse.

Anonymous said...

You could take another angle with this. Any entity, whether a person, corporation, government, charity, etc, that has a lot of debt, is subject to the demands of its creditor(s). In this case, the California government is not just insolvent (is it insolvent?) but it's subject even more so to the whims of the banksters. At the same time...Greece is insolvent also, correct? Greece is bringing down the EU, the way California is bringing down the US? Parallels?

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