Happy New Year! What political change — what meaningful reform — would you like to see in 2013?
Watching the current debate in Washington, one might be pessimistic about the possibility of meaningful reform on spending, taxes … the big issues.
And yet, the need for reform grows every day. The U.S. Census Bureau’s latest projections are for the population age 65 years and older to more than double by 2060, from 43 million to 92 million people. Meanwhile, projections for births and immigration have fallen. With these demographics, how will Social Security and Medicare benefits be provided?
In the words of economist Herbert Stein, “If something can’t go on forever, it will stop.” The question, of course, is when will it stop. In short, when will reform happen?
The policymakers in Washington currently are demonstrating that they have incentives to make sure that spending stays relatively high and that taxes stay relatively low. The reality of many social security and medicare beneficiaries combined with relatively few contributors (i.e., taxpayers) has yet to become an urgent problem, at least to those who hold the levers of political power.
And yet, sometimes change happens. As we observe in the concluding chapter of Madmen,
Even in something as esoteric as political philosophy, the principles of economics still apply, and market realities must be respected… John Locke discovered this during his failed attempt to write a constitution for the Carolina colonies in 1669. His rules were rejected by most locals and didn’t last a year. Yet a little over a century later, those same ideas found favorable conditions as the American framers wrote the U.S. Constitution.
For those who hope for meaningful tax and spending reform from Washington, the story of John Locke should serve as a reminder that reform is possible. It also reminds us that even the best idea must overcome vested interests and gain a certain amount of acceptance, and that it will change the rules of the game only when its time has come.