Forget Thucydides; Think "Rigidity Trap"
all governments rigidify; it's in the jeans
All the best people are nodding wisely about President Xi’s wise warning to President Trump about “The Thucydides Trap.” That’s the idea that established powers often get dumped by a rising power. E.g., the US is an established power and China is a rising power.
A word to President Xi: If only that were true, old chap. Experts agree that you can’t be a rising power with a fertility rate of 1.0 children per woman.
I wonder what would persuade Chinese women to have more children so that their boys could be sacrificed to the CCP gods in a war to squeeze the US in a Thucydides Trap.
But I am here to tell President Xi and his experts that the big problem is not Thucydides but the Rigidity Trap.
What do I mean by the Rigidity Trap?
Simply this.
The natural instinct of every political regime is to bleed the economy and spend the money on its supporters.
But the more you milk the economy with taxes and regulations, the more you reduce the ability of your people and the economy to adapt to change in markets and create new technologies and opportunities.
Every political regimes tends to make the economy rigid.
Obviously, the extreme case is the Soviet Union where the entire economy was rigidified into bureaucratically administered Five Year Plans. When you rigidify the economy like that and subject it to the expertise of the Planners, you kill opportunity and growth.
(I’d say that Mao’s Great Leap Forward was not rigidity but just economic madness.)
The next step down from the Five Year Plan economy is the “Curley Effect” economy of the large corrupt city that I discussed yesterday. The natural arc of a large city is to start as a rapidly expanding center of economic growth and then mature into a spoils system where the politicians fund their supporters and drive out their opponents.
Then we come to the modern administrative state economy. Decade after decade, the administrative state comes up with new programs to entice voters with free stuff. Typically, everything government does rigidifies the economy and prevents it from adapting and growing. Thus:
Pension programs typically substitute administrative rules for simple savings programs where you retire when you have saved up enough money. But the rigid rules for taxation and benefits means that the system can’t adapt.
Health care programs mandate free care for some people and regulated care for everyone else. The system cannot adapt because of government regulation.
Education programs impose the rulers’ notion of education on everyone. It follows elite fashion rather than educational improvement.
Regulation prevents change and adaption and ends up favoring special interests.
Urban zoning licenses NIMBYism.
Environmental protection ends up as a Save the Planet Green New Deal.
Each of these efforts are inflexible and rigid and prevent people from implementing new ideas and fixing problems and adapting to changing conditions: the Rigidity Trap.
In the context of a great power, it gets into the Rigidity Trap as it matures. It usually starts as an expanding empire that has wiped away all the corrupt rigidities of the old regime. But as time passes it mobilizes the people to fight real and imagined enemies and milks the economy to fund its supporters, whether existing or new. It rigidifies the economy, because that is what governments do.
And so, an established empire tends to fail not because it is challenged by a rising empire but because it has rigidified itself into economic bankruptcy. It has fallen into the Rigidity Trap.