Lights Out for Government!

Posted by Bill Bonner - Diary of a Rogue Economist

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UnknownThe Dow fell 128 points yesterday. This followed news that the federal government – the nation’s largest employer and largest industry – was getting ready to turn off the lights.

CNN has the latest:

A government shutdown could cost the still-struggling US economy roughly $1 billion a week in pay lost by furloughed federal workers. And that’s only the tip of the iceberg.

First, there are the estimated 800,000 federal employees who will be off the job. That’s roughly the same number of workers employed by all the auto assembly lines and auto parts factories across the country. 

But economists say the impact will come not just from those lost wages, but also from related businesses cutting back or halting their operations. That will lead to a pullback in spending by employees of affected companies. 

Then, there’s the impact from increased business uncertainty that trims investments and disrupts financial markets. 

The total economic impact is likely to be at least 10 times greater than the simple calculation of wages lost by federal workers, said Brian Kessler, economist with Moody’s Analytics. His firm estimates that a three- to four-week shutdown will cost the economy about $55 billion. 

That would mean that the economic impact from a month-long shutdown would be roughly equal to the combined disruption caused by Hurricane Katrina and Superstorm Sandy, not counting the property damage that accompanied those storms.

What do you think, dear reader? Would sending the feds home be such a bad thing? 

Yes, they’re spending money. And yes, if they weren’t spending money there would be a slowdown in the money-spinning economy.

But why would that be so bad? 

What if the person on food stamps had to find work – or starve?

What if the defense contractors couldn’t pay their lobbyists?

What if the educators at the Department of Education stopped educating? What if the health-care zombies at the National Institute of Health went home? What if the paper shufflers stopped shuffling paper… the rubber stampers stopped rubber stamping… and the snoops stopped snooping? 

Would that be such a bad thing?

Not in our book.

Rape or Seduction?

We are developing a clean and simple way to understand political economy.

We begin by understanding that politics and economics do not go together. They are two separate things. Mix them up and you end up with a mess.

Look, you can get what you want – more or less – by force. Or by peaceful trade and persuasion. By rape or by seduction? 

Force is the easier and quicker option, usually. Which is why it is so popular. And why people like government so much: It is the only institution that gets to lie, cheat, steal… and even murder… lawfully. 


Because it makes the laws!

That is why a government shutdown would be a good thing. The government sponsored, taxpayer supported, voter approved, Fed-financed lying, cheating, stealing and murdering would stop (if only for a while). 

That’s why this fight over the shutdown is so interesting. Zombies – by definition – are kept alive by force. 

They get subsidies, handouts, contracts, salaries – all directly or indirectly thanks to the power of the state. They live on politics, not economics. 

And today, there’s hardly a family in America that doesn’t have at least one zombie in the spare bedroom. So much of the economy has been zombified that the press can now say that “nobody” wants a shutdown.

No Wonder Government Is So Popular

The fight over the shutdown is not about stopping the machinery of force. It’s about who gets to use it for what purpose: Whose property gets stolen? Who gets the stolen goods?

That’s what elections are about too… and why so much money is spent on them: There’s a lot of wealth at stake. 

And not just money, but power too. Bossing other people around is almost as gratifying as stealing their money. And when your group controls a great empire, such as the United States of America, you get to boss people around at home and abroad. This must be a great thrill, judging by the number of people who are so eager to do it.

“The government that governs best, governs least,” said Thomas Jefferson. He was right. The less “governing” you do, the less you are lying, cheating, stealing and murdering people. The less you are using force to get what you want. 

Take away the brute force, and all you have is dull economics – making things, trading, providing services, marketing, investing. 

No wonder government is so popular.

Bill Bonner is the founder of Agora Inc. and cofounder of The Daily Reckoning. He is also a three-time New York Times best selling author.