Debt, Not Capitalism, is the Problem

credit-card-debtOur national financial crisis is not the inevitable failure of capitalism, but instead the inevitable failure of debt.  Debt is toxic at the personal, national, and global level.  Like anabolic steroids, it promises to make people (and nations) more of what they want to be, faster than is naturally possible.  At first, debt provides immediate positive results, giving citizens and government leaders the perception that borrowing money is wise.

This is similar to the man who jumps off the roof of a fifteen story building and proclaims to a horrified crowd when he passes the fifth floor that everything is going great!  Unfortunately, debt eventually takes more than it gives.  Individuals, corporations, and nations only go bankrupt when they have borrowed money.  We all know people (with high and low incomes and extensive and limited educations) who were suckered into debt by their desire to grow rich faster than what is natural.  Like gambling, a sufficient number of borrowers succeed at creating quick wealth to lure a significantly larger number of people into the poverty debt usually provides.

I live in Montana, and the Democrats have recently nominated Amanda Curtis, a young, energetic socialist to run for the open Senate seat once filled by Max Baucus.  Mrs. Curtis, a one-term state representative from Butte, is unabashedly strong in her vilification of capitalism.  To Mrs. Curtis, there is something immoral about two parties meeting the needs of one another in the marketplace under terms to which both parties agree.  Like many young socialists, Mrs. Curtis fixates more on the inequality of capitalism rather than the improved quality of living it brings to all members of a capitalist society.

Debt, not capitalism, is the evil that needs to be addressed. While debt is a component of modern capitalism, it is not a necessary one.  Throughout history, individuals and nations have achieved financial security with little or no debt.  Traditional religions have admonished debt for centuries because of its enslaving qualities.  Unfortunately, our current federal government encourages debt.  It insures the loans (deposits) we make to banks, and it insures many of the loans the banks make back to us.

From the government, we get tax incentives to borrow money and tax disincentives to make money.  On Wall Street, the federal government partners with bankers to cook up exotic new forms of debt that will give citizens wealth and prosperity that naturally is not theirs to have without work, time, prudence, and thrift.  When the government borrows money from our enemies to provide us bread and circuses, it is just a matter of time before our enemies become our masters.

I believe capitalism, when personally practiced with prudence, brings more prosperity and freedom to more people and nations than any other system.  I am concerned that politicians like Amanda Curtis will end up throwing the baby out with the bath water.  Instead of teaching the evils of capitalism, political leaders should be teaching citizens to avoid debt at both the personal and national level.  Enron, MF Global, and college kids swimming in student loans are all tragic not because capitalism is a failed system, but because in every case the agents involved used debt to achieve riches faster and easier than is naturally possible.

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The Overton Window

I came across a term I had never heard before in reference to public policy called the “Overton Window.”  The Overton Window was developed by Joe Overton (now deceased) while he served as senior vice president at the Mackinac Center for Public Policy from  1992-2003.  Essentially, Overton believed that at a given point in time, the number of public policy options that politicians are allowed to consider is rather limited.  The “window” of politically acceptable options is not defined by what politicians prefer (or what is even beneficial to society), but rather by what politicians believe they can support and still get elected or re-elected.  The Overton Window shifts to include new options not when new  ideas are presented by politicians, but instead when the public (who elects them) accepts the new ideas and demands they  become policy.


To avoid a left wing-right wing political comparison, Overton created a spectrum that arranged policies from “more free” to “less free”.  At some point in time, some group of policies along the freedom spectrum will fall into a “window of political possibility.”

Policies inside the window are politically acceptable, meaning officeholders believe they can support the policies and survive the next election.  Policies outside the window, either higher or lower, are politically unacceptable at the moment.  If you shift the position or size of the window, you change what is politically possible.  As the spectrum moves or expands, an idea at a given location may become more or less politically acceptable.

New ideas move from outside the Overton window and into public policy as follows:

  • Unthinkable
  • Radical
  • Acceptable
  • Sensible
  • Popular
  • Policy

Overton often used Michigan’s education policy of the 1980s and ’90s to demonstrate his point.  The full spectrum for public education ranged from 100% parental choice at the high end, and a complete government monopoly void of  private schools, home schooling, charter schools, or other education options at the other. In the 1980’s, any politician who advocated for any option outside of 100% support for government schooling would have had a difficult time getting elected, and passing any legislation for education improvement outside of giving more money to government schools was unthinkable.  Although politicians could make  minor changes in support of home schooling, any support for charter schools was considered to be extreme; however, as the public became more aware of the success of private schools, home schooling, and charter schools in other states, it became safer for politicians to support legislation that would advance these new education initiatives.  By the 1990’s, home schooling and charter schools became part of the status quo, and opposition for these programs became a political liability.  The “window” had expanded to include options other than a government monopoly for education because the public had gained a deeper understanding and a greater appreciation for their benefits.

Politicians as a group are constrained to only advocate for ideas that fall within the window.  While they may personally believe in better ideas, most don’t have the fortitude to fight public opinion because it makes reelection more difficult.  As a result, their voting records tend to be reflections of voter demands rather than better ideas.

Overton believed it was the mission of think tanks to expand the window of opportunities for public policies by researching different ideas, educating the public, and advising politicians on how to implement them for societal improvement.  As in the case of Michigan’s education policy, the Mackinac Center helped get home schools and charter schools into the “Overton Window” by presenting these options to citizens and politicians alike.  As they became more familiar, they became more popular; today it would be unthinkable for a politician to come out against home schooling or charter schools as opposition now resides outside the Overton Window.

The concept of the Overton Window intrigues me, as I often struggle with our broken political system.  Occasionally I wonder if running for public office is really all that impactful.  It appears for those citizens who have a passion for improving our current political process, the best use of one’s energies is to educate the public on successful solutions that are currently outside the Overton Window.  Perhaps a citizen can make a bigger difference by educating his neighbors on the merits of free markets, sound money, and individual liberty than it is to convince our neighbors to vote for particular political candidates.

While I will continue to respect those willing to put up with the difficulties of running for and serving in public office,  I will, at least for the time being, continue to study policy issues and attempt to influence my peer group on why some policies work better than others.  I will let others serve in the halls of government; however, my chosen area of operations will be that piece of ground just outside the Overton Window.

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