127th Edition
If you can keep it
I do try to make every weekly blog unique, but I’ve failed miserably on this one. The famous words uttered by Benjamin Franklin, after exiting the Constitutional Convention in 1787, which I highlighted in a previous blog, remain stuck in my mind. Franklin was asked, “Well, doctor, what have we got?” Franklin replied, “A republic, if you can keep it.” What exactly did he mean by that, and why was his warning so prophetic? Let’s dive into that in today’s blog.
Government of the people, by the people, and for the people, was a radically new concept. To say it changed the world would be an understatement. Franklin knew, as I suspect most of the founding fathers did as well, that this extraordinary experiment in self-government was not going to be easy. Man’s tendency toward greed, a thirst for power, and plain old human fallibility were destined to make our new republic fragile. Throughout our country’s relatively short history, we have struggled with a vast array of market, economic, and political tensions. We have suffered through monopolies, oligopolies, as well as too little and too much government regulation. We’ve seen the explosive energy and game changing innovation that only free market capitalism can produce. We’ve witnessed government and business partnerships that saved the free world during World War II. Unfortunately, Franklin Roosevelt’s vision of government management of the economy has expanded over time. History has shown that once government gets involved, it tends to stay involved. Bureaucracies never die; they just find other things to do once their original purpose goes away. The list of laws, rules, and regulations grows every decade. With it comes the gradual, sometimes imperceptible, but nonetheless relentless erosion in individual freedom. Slowly, but relentlessly, creative energy and innovation wane. That is the state we are in today.
The global economy is way too massive and complicated to be managed by any group of bureaucrats. Why do they persist in trying? Greed and power. Those two powerful forces are driving policy today. Grep Ip, in a recent article in the Wall Street Journal, refers to the current situation as State Capitalism. Think of it as socialism light. I have little doubt that the current administration will get some things right in its attempt to micromanage the economy. Unfortunately, it will get many things wrong, creating needless disruption, waste, and inefficiency within the economy and markets.
Will the next administration try to do even more, or will they realize the folly of the current approach? How that question is answered will larger determine how far the pendulum will swing in this dangerous dance with ever-increasing state meddling within the private sector.
Meanwhile, pressure is intensifying on prominent CEOs to get on board the state capitalism train. Several have been in the news lately, including Tim Cook from Apple, and Ip-Bu Tan from Intel. It makes very little sense, to me at least, to think that the current administration can develop better strategy to run any Fortune 500 company more effectively than the current CEO and management team. Even for companies that have been struggling, like Intel, market forces will sort things out over time. Government intervention to create winners and losers has never been effective and it is incredibly inefficient at best. Yet, the current administration seems hellbent on micro-managing the economy. This isn’t going to end well.
In the meantime, will we see some CEOs resist the pressure to bend to President Trump’s will? Which ones will sacrifice short-term profits in order to advance free-market principles and preserve economic freedom? This is a monumental battle for the future of our nation.
If you can keep it… Some people think we have already lost the battle. Some are fearful that socialism is around the corner. Are you ready for that? What are you willing to do, what are you willing to sacrifice to preserve freedom? Maybe a question worthy of contemplation and discussion.
One more executive order, one more law or rule, won’t end our republic, but our republic, if it in fact won’t survive, isn’t going to die in one fell swoop. It will die slowly. Many won’t even be aware of it until it is too late to save.
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Michael Kayes
*These views are my personal opinions and are not the viewpoints of any company or organization.