Postcards from the florida republic: An independent and profitable state of mind.
If the United States government were a business, would you invest?
Good lord, no, right?
Neither would I.
But let's think for a minute…
You'd have to ask yourself the first question: “What is the product they’re making?”
One could argue war, financial perma-crisis, cultural divides, popularity contests that exploit emotions, or constant empty promises.
After 42 years – and enough time in public policy and finance - I have to conclude the business of the government is to empower politicians and enrich bankers. There's a sideline in hoping that the middle-to-lower classes and pensioners don’t notice trickle-down centralized planning doesn’t work for them.
These "products" were probably what P.J. O'Rourke was thinking when he wrote, “If government was a product, selling it would be illegal.”
So how do they do that? How do they make all that… yeeuch?
What's the government's business model?
This isn't just a thought exercise. See, when you understand "how the sausage is made," your next - your only - course of action becomes clear…
D. C. Runs a Business Model That Can’t Change
We both know government bureaucrats and politicians have no plan to right our country’s ship. They’re now just raiding the treasury.
In a two-party system, no "activist investors" can take control of a large stake in the enterprise and force change to benefit all America’s shareholders.
That only happens on Wall Street; it’s one of the wonderful parts of the market. A hedge fund manager or group investors can buy a stake in a flailing technology company, say, and force change for all investors.
That doesn’t happen in America. At best, we get to vote for “more of the same” every two to four years.
The rest of the time, we’re on our own.
We can blame bureaucracy. Or we can blame ourselves. When it comes to current problems, most people don’t understand where they originate.
An essential part of the business model: the government tries perpetually to justify its existence as a driver of economic progress.
But few people recognize that nearly all U.S. problems that politicians campaign upon originally start in one of three places…
-Bad monetary policy;
-worse fiscal policy;
-or a complete lack of structural supply-side policy.
(That gets stifled by executive agencies.)
That’s all in Washington D.C., a city on a hill.
Its business model starts with the central bank…
The rich get richer, thanks largely to a central bank which has pumped trillions of dollars into the financial system since 1993 to fight off deflation (something that would have helped Americans) as waves of technology hit our economy starting in the 1990s.
Tack on massive increases in U.S. capital after the Dot-Com Bubble, the 2008 crisis, the 2014 central bank pivot globally, and the crises of 2018 and 2020.
Technology costs have fallen for decades, but food, housing, education, and energy prices soared. This is the source of our cost-of-living crisis, and it’s been happening for decades.
Terrible incentives are a critical part of this business model from Hell.
In 1993, Congress incentivized companies to pay top executives in stock options. This helped fuel massive dislocations in wealth. It did, and still does, drive the income inequality that so many progressive politicians debate. A law to reduce economic inequality only created more of it. Weird.
What’s worse, it also fueled a toxic cocktail that enriches the donor class and keeps dollars flowing through the D.C. lobbying apparatus.
But it’s not just the Fed and Congress that are driving the problems.
I said that nearly all problems start with monetary, fiscal, and structural policy ideas - those last problems originated elsewhere, fueled by a very special group of people 50 years ago.
I'll have more on them tomorrow morning.
But for now, be confident that this is precisely why we are constantly looking for ways to divest, various ways to opt out of… all that.
This is why this state of mind - the Florida Republic - appeals to many.
The sooner we realize our leaders don’t care at all about our interests, that no one is coming to save us, the better.
We'll adapt and succeed.
I'll talk to you tomorrow.
Stay positive,
Garrett Baldwin
Secretary of Finance
The Florida Republic
