Thursday, February 9, 2017

Assessing the Requirements and Likelihood of Secession

I'm really not hostile to the idea of secession. Once one state successfully does it, there will be a mad rush for the door. The Union would be over. Unlike 1860, I guarantee Federal government will not take part in a war to stop a state from doing it. There might be one within the state and then the Federal government *would* step in. But if they had a referendum a clear mandate... they'd probably pull it off. Especially a big state like California, Texas, or New York.

But I don't think people recognize what an temporary economic catastrophe it would be. We have a lot of national debt, but most of it is held by Americans. That Federal debt counts as an asset for a lot people and organizations. If the Union dissolved those assets vanish from the economy. Destroyed. Social Security, Medicare, Disability... these are all personal assets. True, they are drawing those assets from their great grand children and beyond. It's a Ponzi scheme. But people can't see that at an individual level. All they see are subsidies that they see and treat as assets. When Ponzi schemes collapse, the "investors" do actually suffer. Ultimately, the sooner our reliance on debt and debt supported assets is taken from us, the better for us economically, but the pain is so great that no one would choose it. They would only do it if it collapsed suddenly unexpectedly and then the government would be expected to DO something to remediate it.

So the debt will have to get a lot worse before the states will be willing to bite that bullet. On the plus side, over the next 100 years, the benefits of a large, involved central government will greatly decrease. This will be especially true if that government is broke and largely devoted to transferring wealth. I predict that at some point, the disruption of a presidential election and the fight over the Supreme Court nominees will not be worth it for a losing side and the Union will crack up. Nothing lasts forever.

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