Logical Conclusions
One of the ways we train our young pilots to visualize the outcome of a mission event sequence is to think through a logical conclusion of the events they’re debriefing. If blue forces are overwhelming red forces with aircraft and missile numbers, a logical conclusion might be that Blue defeats Red and attacks the target.
In our financial lives, we can apply this same model. If we spend more than we earn, a logical conclusion is that we’ll reach insolvency and fail to fund a dignified post-work era (a.k.a. retirement) before finally calling it “one to a full stop.” No one aspires to be a senior citizen in poverty, so we try to save for retirement to avoid catastrophic consequences in the decades to come, which is the logical conclusion of too much YOLO.
While many of us have already voted, the imminent election day on Tuesday calls for some financial Logical Conclusions. I’ll scope these to military families.
One of the first conversations I have with families is that the reason we invest in stocks and bonds is that the U.S. has:
- Pretty good rule of law.
- Pretty good property rights.
- Pretty good incentives for people to take risks, build companies, and share profits with investors.
This is important because if you can’t draw a logical conclusion based on expected outcomes, it’s an awfully risky proposition to put your money on the line.
In the current environment, there is a lot of talk about disadvantaging certain groups and individuals, regardless of what the laws state. This, among other policy proposals, jeopardizes the assumption that we can invest knowing that the rule of law will help protect our investments.
As military personnel and veterans, we’ve benefited from the law defining our raises, the law protecting our pay during government shutdowns, the law protecting our retirement pensions, and the law protecting our VA disability compensation.
Yet, there’s an undercurrent… perhaps becoming an overcurrent… of disrespect and maybe even disregard, for the rule of law. Some are even championing a flaunting of the law in the name of expedient outcomes.
A logical conclusion of the degradation of rule of law is that the United States will become more like the sickened nations of the Soviet and now Russian sphere of control. Trust degrades as citizens see that money, proximity to power, and loyalty are the real influence in government.
As military members, we know that our units cannot tolerate disregard for law, policy, customs, courtesies, and other norms that undermine good order and discipline. Our nation is even more fragile than our military units, as the population’s commitment to a common cause is not as firm or enforceable as it is within military units. Why would we take any action that degrades the rule of law in our nation?
Getting back to logical conclusions… if we cannot trust that the rule of law will prevail, it’s logical to expect:
- Borrowing costs will be higher as creditors demand higher rates to take risks on a government that does not follow its own laws or changes the laws to suit autocratic whims. Doubt it? Higher borrowing costs are also inflationary. Don’t like inflation? Demand rule of law.
- The US Stock Market and our retirement investments will likely stagnate and or lose value. When investors cannot trust the enforcement of securities and other laws, there are no more protections on Wall Street than on Las Vegas Blvd.
- Military retirement pay may be at risk. If military members are subject to active-duty recall, court-martial, and retirement pay forfeiture for insufficient loyalty, should any retiree consider themselves safe from being judged insufficiently loyal? What if the standards change? The rule of law protects your retirement benefits far better than the rule of whim.
- Veteran’s Disability Compensation should be viewed as equally at risk. Policies have been floated by influential think-tanks that would curtail your benefits as a bill-payer for other government spending.
- Finally, the lack of rule of law breeds corruption at all levels of government. Ever been to a country where petty bribes were needed to get local officials to take even minor action? Think it can’t happen here?
As military members and veterans, we should hold certain values as non-negotiable. We swear oaths to support and defend the Constitution which is the source of our rule of law. If we are willing to forfeit that oath, we should find no surprise in the logical conclusions.
If we cannot count on the rule of law to buttress our benefits and the investment system that helps us build wealth to provide for our future, is it logical to assume positive financial outcomes?
Some might consider the devil’s bargain: “Rule of law for me, but not for thee…” Unfortunately, this leads to the logical conclusion that, if there isn’t rule of law, then “me” and “thee” can change places on a whim. I.e., our financial future is only as secure as we can try to make it through fealty, tribute, and a bent knee.
Cleared to Rejoin
Thankfully, none can see the future. It’s possible we don’t need to worry about the rule of law in the United States. The nice thing about laws is that we can change them through the hard work of governance and policy development. That doesn’t always fluff up our bottom line, and it requires that we endure the slow, grinding pace of real change. But if we can’t count on the rule of law, a logical conclusion is that our TSP and IRA balances will be the least of our problems.
Fight’s On!
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