Consider that feedback loops are a useful way to model national spending and debt. There are reinforcing loops such as more government spending producing more demand for government spending with no slowing of that mutually reinforcing feedback loop. When you add a “balancing” loop that incorporates generation of revenue, you ultimately find your system hits an external constraint, the maximum amount of debt the system can sustain. At that point, the system is damped to a stop. This actually increases pressure on gov’t to spend because lack of additional spending forces pressure from the public who wants more spending. There are lots of other feedback loops that can be connected to this system but like many complex systems, the reinforcing loop found in gov’t spending and public demand is powerful and thus self-organizes to a critical level. This has happened in Greece.
One of the most dangerous characteristics of feedback loop systems is delay. The mere use of debt financing introduces delay into the system and by making unfunded promises, for example, retirement payments current workers, you further delay the system’s reaching of the sustainable debt limit and amplify the negative consequences over the delay period.
Unfortunately, this is a complex system and hard for most people to see. What most people see is that gov’t gives them goodies. They don’t have to pay much for those goodies.
The systems model suggests the end will be very bad. I hope I have overlooked something—does anyone have a model that suggests this system will actually end in sunshine and joy?
Business models that make perfect sense one day, are rendered obsolete when new taxes or regs are voted in and enforced.
This makes it incumbent on corporations to lobby government to minimize the negative impacts of legislative changes.
But then if corporations have to lobby just to stay in business, why not lobby for legislation that protects them from the vagaries of the market?
This leads to a ratcheting up of ever more bribed politicians doing ever more favors for connected businesses at the expense of those corporations that wish to compete on price/quality/service alone.