Sustainability.

“Sustainability” is something of a corporate fad.

Shell Oil has a sustainability policy. So does ExxonMobil.

Dow Chemical. Walmart. Mattel.

Even Ben and Jerry’s has a sustainability policy.

Even though “sustainability” may be interpreted differently in different companies, sustainability is something that corporate boards have come to expect of their managements.

Is it too much to expect our government and the people who run it to act as if they’re conscious of its sustainability?

Corporations usually put an environmental spin on sustainability. Broadly, their sustainability efforts would lead them to recycle, not make too big a mess, and not kill their employees, customers and neighbors.

Our government, though, threatens to kill our economy. The hungrier it gets, the more it grows, the more the engine that ultimately feeds it — the private sector, and specifically entrepreneurial capitalism — shuts down.

Common cuckoo being fed by its warbler host-parent. Wikipedia image.

I am reminded of two images. One is the “brood parasite” strategy of the common cuckoo, which lays its eggs in the nest of another species. The host dutifully raises the baby cuckoo as its own. The voracious cuckoo nestling demands more and more of the host until it crowds its nest mates out and works its host-parent to death.

The other image was a graph from a freshman-year Engineering 101 project on population growth. We were given the historical population figures for the City of Houston and for the United States up through 1970. Population data often plot as a straight line on semi-logarithmic paper; in this case Houston had a 12% annual growth rate, and the U.S. a 3% growth rate. When the curves were extrapolated, the conclusion was inescapable: by 2040, the curves intersect, so 100% of the U.S. population will reside in Houston.

The growth of government is unsustainable. In spite of high marginal tax rates on the wealthiest (and the poorest!) Americans, Government revenues are 15% of GDP, while Government spending is 26% of GDP.

Healthy corporations are forced by competition to trim deadwood. The alternative is a drag on earnings, reduced competitiveness, ultimately leading to bankruptcy or acquisition by a stronger competitor.

Government doesn’t know these market forces. Every single dollar of Government expenditures has a built-in constituency who will fight to the death before letting go the teat. Have you ever known a Government program to shrink? More commonly, the bureaucracy spends money lobbying to expand its sphere of influence.

To make matters worse, we’ve become conditioned to expect Government to provide the ultimate solution to all problems, from providing us jobs, to making the air cleaner than Yellowstone, to making our kids stop eating so much junk food and making our toilets not waste water. Excessive regulation is strangling the host.

The only possible fix for our economic woes is to unleash the mighty pent-up engine which is the American Capitalist Economy.

I’d do this by:

  • Reforming the tax code. President Obama favors high tax rates out of “fairness”, even if it can be shown that lower rates increase Government revenues. The increasingly progressive income tax may make us feel more “fair”, but it is why tax revenues lag. The “rich” will always be willing to money on lawyers, accountants or moving vans, if that’s what it takes to avoid what they perceive to be excessive taxes. The tax code needs to be flatter with fewer (or no) loopholes. The capital gains tax needs to be intelligently-structured to encourage innovation, capital formation and job growth, class envy be damned.
  • Reforming entitlements. That may mean means-testing or it may mean increasing the age of eligibility for benefits. But most importantly it means no new entitlements until we figure out how to pay for our current obligations. Period.
  • Reforming the Federal budgeting process. Start with -10% as a baseline, not +8%. Cut departments and regulation wherever possible. Reconsider the role of the  Departments of Energy and Education, for starters. Take away EPA’s trump card to stifle development wherever it strikes their fancy.

The warning signs are there for anyone who cares to pay attention. Government has grown beyond the economy’s ability to sustain it.

Cross-posted at RedState.com.

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4 Responses to Sustainability.

  1. Steve:
    This is super; mostly because it is exactly my analysis. But now the hard part, to get it implemented. As always we will have the sound of heads repeatedly bashing into that stonewall on the outside of the beltway known as reality. You know, that place where you and I live called reality.

  2. How absolutely fantastic that you have your own blog to EDUCATE us and even those who think they know, who will be educated none the less by reading what you write!

  3. Samuel Crowe says:

    Hi Steve,

    While I agree, I think we need to go about the cutting of the federal budget a bit differently. We need to prioritize, otherwise we end up cutting, for example, 10% from defense, and 10% from mass transit, when as a legitimate constitutional function of the federal government defense provides for all of us equally, where mass transit is prejudice in its application. All programs should be prioritized on whether they are a legitimate federal function, or should be passed down to those that benefit. (and that would force a local vote) In the end, Department of Education should be gone, along with much of Interior and Agriculture, etc., long before we cut Defense.

    I just wonder if we can bring about the reform before it’s too late, right now it seems like the “crisis” that it is going to take to bring reform is going to have to be so dire that the system might not recover.

    All the best,

    Samuel

    • Steve Maley says:

      Yes, of course I agree about Defense.

      As for Education, it’s unnecessary. And speaking as one with 33 years of oil and gas experience, I am mystified as to what it is that Energy does. They don’t regulate oil and gas. The EIA keeps an impressive database, and I guess they still regulate nukes, but other than that I don’t think we’d know if they just disappeared.

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