How Different were the Unites States circa 1890!
On my twitter page profile I say that I like to do thought experiments and ask for example who would the United States circa 1890 deal with a given situation.
I like that kind of thought experiment because the United States was so different from what it is today in many interesting ways. Here is a short list of how things were different in 1890:
The Federal Government was ever so much smaller and it regulated so little in comparison today. Day by day our present government grows ever more powerful and pervasive with each new expansion being deemed essential.
In 1890, the total amount of government spending was 7% of GDP with 4% of that being spent by local governments. Today, government spending exceeds 40% of GDP with 24% being spent by the Federal Goverment. And yet to listen to Democrats and sadly many Republicans, to cut one red cent of Government expenditures is to risk economic collapse. I exaggerate. They never actually propose to cut anything. It's always a reduction in the growth of spending. Reduce the rate of growth of spending and you risk economic collapse. And anyone who proposes so much as a 1 cent real reduction in spending is at best tolerated as a nut.
And yet in 1890, total government spending was only 7% of GDP. How did we survive as a nation with so little government spending?
Well, in 1890, the United States was doing very well thank you very much. It had grown into an industrial colossus and world power. In the 1890s, one American company, Carnegie Steel produced more steel than Great Britain.
In 1890 we were on a Gold Standard as was much of the world. Much has been said on the gold standard. The United States grew to become a great nation under the gold standard. We could do a lot worse than return to it.
There was no Federal Reserve. The United States grew to become a great nation without a central bank. In 1890, we had system of National Banks which were each able to issue bank notes redeemable in gold coin.
We didn't have Federal Deposit Insurance. "Is that a good thing?" some would ask. I think Federal Deposit Insurance creates more problems than it solves. It is one of the big underlying causes of the financial crisis. In 1890, you had to be careful where you put your money. You didn't want to put your money in a shaky bank because if you did you might not get it back! This segways into next difference:
In 1890 bad banks did not get bailed out. They went out of business. Now people don't care what state the bank is in where they put their money. Who cares if the bank pisses it away? The FDIC will pay them back. Classic moral hazard. Banks get to play with other people's money. They keep the profits if they make money, the FDIC pays if they lose. The United States became a great nation without bailing out bad banks.
There was no 'War on Drugs.' We became a great nation in spite of the fact we had no war on drugs. In fact there were opium dens in many large cities. Note: I am not for drugs, at all. But the fact is the United States became a great nation long before the Federal Government began trying to solve every problem in society.
The Federal Government did not regulate guns in any way whatsoever. Today's gun banners often ask: well, should people be able to own tanks and artillery pieces? Isn't that taking things a little too far! The fact is in 1890 you could own an artillery piece. The only limit on what you could buy or make was the size of your pocket-book. The Federal Government did not begin to regulate such things until the National Firearms Act of 1934 and even then only under the guise of taxation. Yet somehow, in such circumstances, the United States became a great nation.
Today the Federal Government has grown into an all regulating all seeing all powerful surveillance state. It regulates every area of our life. I doubt anyone in our country could survive any serious investigation into our personal lives without being subject to charges. Our emails and our text messages are monitored. A couple of months ago I read of listening systems being installed on San Francisco city buses under a grant by the Department of Homeland Security. The systems work in conjunction with the already installed video surveillance systems. (Google news stories under Audio Surveillance Systems for the latest stores in this area).
Isn't it a wonderful world we live in where even conversations on buses can listened to? They didn't do that in the 1890s. How on earth did we survive as a nation without the Federal Government listening in?
Whenever we hear new proposals for further expansion of government power, we need to ask ourselves: Did they do that in 1890? If not, why do we need to do it now?
That is the perspective we need when we hear cries for a Federal law requiring background checks on the private sales of firearms. What is the real purpose of this further expansion of government power?
Will it really give us more safety?
Is that even the real goal?
