Gurus

The Failure of Kevin McCarthy is Another Step Away from Democracy and Toward Civil War - Ray Dalio

Tan KW
Publish date: Sat, 07 Oct 2023, 06:07 AM

         As you probably know, I believe that there are five major interrelated forces that are now driving most everything in ways that have never happened before in our lifetimes but have happened many times in history. They are:

1) very high levels of debt and debt creation in the US and other reserve currency countries;

2) intense levels of conflict within countries (most importantly the US) due to large wealth and values gaps and populist extremists of the right and the left fighting to win at all costs;

3) intense levels of conflict between countries (most importantly between the US and China and those aligning with them) in a classic great power conflict;

4) significant damaging acts of nature (droughts, floods, and pandemics) and;

5) mankind’s learning and deploying new technologies (most recently and notably, AI).

Just about everything that happens falls into one of these categories and this template.  Having seen this dynamic transpire many times before, I see every development within this context and wonder, are we progressing toward the classic perfect storm?  I view the recent developments related to Kevin McCarthy’s removal as related to the second of these, the internal conflict force. So, in today’s post, I am going to delve into it. 

Another Step Toward Civil War and the Loss of Democracy

In this, the latest episode of this drama, Kevin McCarthy tried to piece together a deal and a vote that required some Republicans and some Democrats to come together to support it. This was one of several bipartisan votes for this Congress that McCarthy helped to engineer in his tenuous position as the Republican speaker of the house (including Ukraine funding, raising the debt ceiling, etc.) that led to him being booted out and accused of being disloyal to his party. While I sympathize with those who worry about the increasing growth in debt, I am even more concerned about who has what powers and the choices that are being made to fight rather than to cooperate across party lines and view this development as another step away from democracy and toward civil war. 

I hope it is now clear that the two parties are squaring off into monolithic blocks that are controlled by uncompromising, win-at-all-costs extremists and that most everyone will be forced to pick a side and fight for it. While this tendency is most obvious in the Republican Party, it is also true for those in the Democratic Party. (Though the Democratic Party wisely chooses to make it less obvious, it very apparently demonstrates it in the ideological conflicts that are taking place throughout government, especially in congressional committees.) This is now a fight to win-at-all costs game in which just about anything goes, including fighting dirty (lying and cheating), and respect for the system doesn’t matter much.  

Bipartisan thoughtful disagreement that leads to compromises and voting on the basis of one's beliefs about what is best for the country are passé.   For understandable reasons e.g. —much greater wealth and differences in values and people being fed-up with the system not working for them – and the political system has (d)evolved from where it was when Ronald Reagan and Tip O'Neil and their constituents had more principles in common that bound them together than those that were opposed and divided them. Because those now controlling the two parties do not want party members to work across party lines and because there is certainly no room for people who put the interest of the country above loyalty to their parties, we are now in a period of much greater conflict both within and between the parties. 

The Loss of Power for Those in the Middle Who are More Moderate

Ironically, the parties are more extreme than most people, so there is no party for the vast majority of Americans to go to fight for what they want most.  Having studied history, I have seen that this dynamic always worked the same way for the same reasons because when differences become as irreconcilable as they are now and trust in the system becomes as low as it is now, there is a strong tendency for small groups of passionate leaders to gain followers to fight for their sides. This continues until everyone has to must pick a side and fight. It is for this reason that there is an uncomfortably high risk of some type of civil war.

Since I'm repeatedly asked and I can't help but think about what can be done to rectify things, I will share what I think.  I explained this five years ago more comprehensively than I can do here in my piece, "Why and How Capitalism Needs to be Reformed” but will briefly summarize my views here. There is only one path that will succeed in preventing civil war and promote working well together to make real improvements and that is to have a very strong middle. This strong middle would consist of bipartisans who are bound together to beat the extremists and then go on to reform the system and deal with our structural problems — i.e., to reform the system to work well for most people by creating broad-based capabilities, productivity, and prosperity.  While I have lots of ideas about how to do this, my ideas are not that important now (or, maybe ever) relative to the need for these bipartisan reforms to happen one way or another. 

Since all big winning movements start with a great leader and his/her constituents, if I were to have one wish, it would be for a very strong bipartisan leader with a strong constituency of people to emerge from the political middle. The members of this middle have more in common with each other even though they are of different parties than they have with the extremists of their own parties, so they will fight and win against those from the extremes bringing the country together and they win. They will go on to make major reforms to the system so it works well for most people.  My dream would include having a president who is so bipartisan that he/she would have a bipartisan cabinet and then convene a long constitutional convention type gathering of smart bipartisan moderates to produce a plan to reform the system so that it provides more equal opportunities and ways for most people to be productive.  While this may be a pipedream, a more realistic possibility, but probably still unrealistically ambitious, is to have those members of both parties who believe that working across party lines to solve problems to simply declare themselves to be "bipartisan" and to form a voting bloc that together would have enough swing votes to determine outcomes in the House and Senate.  Of course, that would require them to have some amount of courage to break with the monolithic party extremists.  Given the alternative, which is a civil war of some form, such courage is now warranted by those who truly believe in maintaining bipartisan democracy.

Wondering what a bipartisan platform would look like, I identified what the majority (60%) of Americans believe about the major contentious issues which I show below. Though people could argue for what they each think is best and let that argument split them, most moderates could agree to a platform along these lines and preferable to those positions and policies advocated by the extremists on the two sides.  Below is a list of those sentiments that over 60 percent of Americans have that could be the basis for a bipartisan agenda. 

I also imagine that states will inevitably and increasingly go in their own directions. People will increasingly go to states that suit their beliefs and circumstances and states will fight the central government about what they will do. This will be a reversal of what has happened over many decades during which the power of the central government has grown a lot relative to the power of state governments to become much greater than the way our founding fathers envisioned the relationship should be when they wrote the Constitution. I believe that path of moving to a strong bipartisan middle that coincides with what the majority of Americans want, working in bipartisan reforms to the system, and allowing more federalist state rights would be the best path forward. Most likely, this won’t happen so, most importantly, stay on top of what’s happening and navigate it well for yourself and the people you care about.  I hope these communications are of some use to you in your doing this. 

 

Select Policy Views Held by >60% of Americans

                

https://www.linkedin.com/pulse/failure-kevin-mccarthy-another-step-away-from-democracy-ray-dalio/

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