How long can looting last? As soon as a government gets into power, it attracts people who lust to tax and regulate their neighbors. These neighbor-haters cost the society an ever-increasing amount of money. Only if production efficiencies can increase faster than the costs imposed by control freaks, can the society can be maintained.
Solomon’s administration, for instance, was able to bring in as much or more money than his government spent. His son, Rehoboam, brought a whole new staff of taxers and regulators with him without any plans to increase efficiencies. So, he had to raise taxes. The Northern Tribes revolted, and the Kingdom centered in Jerusalem shrunk, never to fully recover the gains made in the previous generations of David and Solomon.
In democracies, each new administration must reward new taxers and regulators who helped elect them. At the same time, they must maintain the ever-vaster public sector costs that rewarded the supporters of previous administrations. For democracies to survive, productivity must increase or costs be lowered.
Currently, American manufacturers lower their costs by automation and by going overseas. Automation reduces the number of employees and increases the number of people clamoring for public-sector jobs. Going overseas reduces the country’s solvency by shifting profits to foreign countries, causing startling shortfalls in the balance of payments, thereby cheapening the currency.
That increases taxes as public employees demand higher wages. Increased taxes make it harder for native businesses to automate or otherwise increase efficiencies. That accelerates the shifting of manufacturing overseas to places with cheaper labor. Then, the balance of payments grows worse, money loses value, and the cycle repeats.
The only thing that can keep a democracy from choking itself with a bloated public sector are the tiny percentage of people who can reduce production costs. When they are under-educated or dispirited, the democracy must be replaced with an autocrat. Naturally, the neighbor-haters do whatever they can to accelerate that process.
