"In 1988, Joseph Tainter wrote a chilling book called The Collapse of Complex Societies." Clay Shirky applies that to complex business models including the mass media industry and AT&T, and Derek Lowe applies it to the pharmaceutical industry at In The Pipeline. But the original is no less important, and — as these two examples illustrate — widely relevant.
Here's Shirky's synopsis of the meat of Tainter's argument:
The answer he arrived at was that they hadn’t collapsed despite their cultural sophistication, they’d collapsed because of it. Subject to violent compression, Tainter’s story goes like this: a group of people, through a combination of social organization and environmental luck, finds itself with a surplus of resources. Managing this surplus makes society more complex—agriculture rewards mathematical skill, granaries require new forms of construction, and so on.
Early on, the marginal value of this complexity is positive—each additional bit of complexity more than pays for itself in improved output—but over time, the law of diminishing returns reduces the marginal value, until it disappears completely. At this point, any additional complexity is pure cost.
Tainter’s thesis is that when society’s elite members add one layer of bureaucracy or demand one tribute too many, they end up extracting all the value from their environment it is possible to extract and then some.
The ‘and then some’ is what causes the trouble. Complex societies collapse because, when some stress comes, those societies have become too inflexible to respond. In retrospect, this can seem mystifying. Why didn’t these societies just re-tool in less complex ways? The answer Tainter gives is the simplest one: When societies fail to respond to reduced circumstances through orderly downsizing, it isn’t because they don’t want to, it’s because they can’t.
In such systems, there is no way to make things a little bit simpler – the whole edifice becomes a huge, interlocking system not readily amenable to change. Tainter doesn’t regard the sudden decoherence of these societies as either a tragedy or a mistake—”[U]nder a situation of declining marginal returns collapse may be the most appropriate response”, to use his pitiless phrase. Furthermore, even when moderate adjustments could be made, they tend to be resisted, because any simplification discomfits elites.
When the value of complexity turns negative, a society plagued by an inability to react remains as complex as ever, right up to the moment where it becomes suddenly and dramatically simpler, which is to say right up to the moment of collapse. Collapse is simply the last remaining method of simplification.
Somewhat further on, Shirky makes the following succinct observation:
Bureaucracies temporarily suspend the Second Law of Thermodynamics. In a bureaucracy, it’s easier to make a process more complex than to make it simpler, and easier to create a new burden than kill an old one.
And today, bureaucracies are inescapable and ubiquitous. Can we have a show of hands, please, from anyone who has NOT seen this effect taking place first-hand? ...Anyone? ...No, I didn't think so.
I don't own a copy of Tainter's book. But the soundness of his underlying logic is inescapable and universal. It is not too great a generalization to say that this mechanism, in essence, is analogous to how stars die. They use up their hydrogen to fuse into helium and start fusing helium, which requires higher temperatures and produces less energy, then they run out of helium ... and along about the time they start trying to fuse iron, the process goes energy negative, and the star's core collapses. Depending on the starting mass of the star, this may or may not involve an Earth-shattering — or, rather, star-shattering — KABOOM.
We have a significant advantage over a star: We are self-aware. We have the ability to foresee a coming crisis and, perhaps, given sufficient will and determination, change our course in order to avoid it. But if we don't want our complex society to collapse, we need to all get used to the idea that we cannot "grow" forever. Whatever the abstract ideal-world theories of conventional economics assume, we do not live in an unbounded ideal system in which an ideal economy can grow forever.
Of course, if our economy can't grow forever, neither can our government. But it doesn't know how to do anything else. (See the observation on bureaucracies above. Governments are the ultimate bureaucracies, and they react to EVERYTHING by adding complexity. Want a drinking game? Start at about, oh, 1960, and take a shot for every year in which the government has reacted to at least one problem by adding new complexity. You won't reach the present day. You'll be under the table.)
So, now, take Tainter's thesis and apply it to our society, and to our ever-expanding government in particular. Draw your own conclusions.