The cycle of state failure

The failure of the state is a cyclical event connected with debt. The reason we are never prepared to handle it is because we, as a society, are cycle-blind. Even real societies still struggle to accept the idea of a failed state. Now that, after Greece, Hungary’s potential default is in the news, the question of how the state managed to fail is pretty relevant.

Reasons for failing
Why does a state fail? What does failure encompass? Is it just about payment defaults, cutting pensions, being unable to generate jobs or growth, failing the poor, failing the trust of its own people, or it something cyclical? It’s not the first time politicians have failed the people. In an article written by Martin Armstrong in 1991, ‘The Cycles of Political and Economic Change’ in Cycles magazine, the author quotes Cicero before the Senate of Rome in 63 BC. “The budget should be balanced, the treasury should be refilled, public debt should be tempered and controlled, and assistance to foreign lands be curtailed, lest (we) become bankrupt.”

Armstrong wrote in 1991 “These words serve as a fresh reminder of cycles; no matter how much we believe things have changed, indeed, much remains the same”.

Looking at the current state of affairs, the only thing which comes back is the cycle. The issue of debt has been with man from the beginning of time. Though popular belief holds that prostitution is the oldest profession, the banker (money lender) is truly the oldest profession. Man’s history of debt is a history of crisis. Virtually every known war has been fought for economic reasons, usually disguised by some noble saying or a religious slogan. But, without hardship or greed, there would be no incentive for war.

The Soviet Union’s break-up was a direct result of economics and the crisis was because of the debt that the communist government managed to create. The American Revolution was fought for economics. Saddled with escalating debt, England levied excessive taxes on its colonies. The king sought to bleed colonies to reduce his debt at home. That unfair policy, born from a crisis in debt, sparked the American Revolution.

The cycle repeats
Thomas Jefferson said, “Man cannot be trusted with the government of himself.” History has answered Jefferson a thousand times with a cycle of unqualified regularity. No matter how noble a form of government starts out to be, it always degenerates into the very thing it was created to replace. Looking at history, mankind acts like a dog chasing its own tail, running around in endless cycles.

The failure of the state is connected with mass psychology, which at one stage wants to be led and at one state wants to lead. The failure is linked with the problems of a large economy which fails to grow beyond a stage and starts to exhaust itself. But, more than anything else, the failed state is connected with the failure of the character of our leaders, who start on a good note but end up undoing the same good intentions. A failure of the state starts with debt and ends with debt. The best part is that it’s all cyclical, forecast-able and, hence, avoidable to the extent of reduced pain. The worst part is, the majority of us move up and down as the time cycle dictates, punishing us for being cycle-blind.

The author is CMT and CEO, Orpheus CAPITALS, a global alternative research firm