de Tocqueville Comes True

Alexis de Tocqueville came to the US in the 1840s and as a result of the trip and the observations he gathered wrote a stunning book called Democracy in America.  In the book he commented that one of the risks of the new American system was the potential that the system could evolve negatively if a group discovered that they could get someone else to pay for their requests.

It seems to me that is exactly what the fight in Wisconsin is all about.  A fight by the way that is replicated many times over in other states, including California.  We've set up a system where employees bargain against no one.  Politicians have a natural propensity to kick the can down the road and thus offer huge concessions to their employees (who they are supposedly bargaining with) that do not have to be paid immediately.   Thus, provisions like support of pensions and health benefits can be added, with the politician knowing that the bill will not come due while the politician is serving.  Thus, in the fat times of the early part of the last decade, when market returns were up, wild assumptions about both long term returns on portfolios and long term costs of benefits were accepted as gospel.   What is worse, there is an extra incentive for politicians because they can reap huge contributions to help their own aspirations go forward.  And, even better, because of agency shop, those contributions are involuntarily extracted from the employees.   It has all the elements of a perfect storm.

The model was replicated from benefits programs like Social Security where for generations politicians have offered benefits far in excess of what the system could bear, simply on the notion that the bill would come due later.   Well, now the bills are coming due.

While Democracy in America was insightful on defining the problem we now face, it was not very good at thinking up solutions.  But Federalist #51 has a pretty good way to do that.  To wit  - "But the great security against a gradual concentration of the several powers in the same department, consists in giving to those who administer each department the necessary constitutional means and personal motives to resist encroachments of the others. The provision for defense must in this, as in all other cases, be made commensurate to the danger of attack. Ambition must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place. It may be a reflection on human nature, that such devices should be necessary to control the abuses of government. But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself. A dependence on the people is, no doubt, the primary control on the government; but experience has taught mankind the necessity of auxiliary precautions."