The Thermodynamic Laws of Budgets:

One of the reasons that politics is always so contentious is that politicians lack a common set of natural laws that they can use to explain their positions. Thus unlike the scientific laws that have allowed the productive members of society to have advanced the human race and in our instance the America condition to the high level of achievement that we prize so much. Politicians are left adrift and forced to use their own intellect to explain why their positions and policies are the more deserving of support. Given their dependence upon their own cognitive resources, is it any wonder that they are so inept and incapable of accomplishing even the very little that they do? Even more depressing is the public’s acceptance of the drivel that these same self-appointed paragons of pomposity spew in endless torrents of opinion.

To better serve both the public and our government there appears to be an urgent need for someone to lay before the public and politicians some of the natural laws that apply to the political realm and the real world that our elected officials dabble in daily with disastrous results. To that end, the following offering is presented to help raise the level of understanding of the politicians and the public alike. In the case of politicians this may be more challenging; but given their abysmal awareness, knowledge and understanding of almost anything important any infinitesimal incremental increase in comprehension will be a tremendous even astronomical gain for them.

As the nation’s budget is much talked about as a highly charged political topic, it seems apropos to examine the budgetary equivalent to the scientific Four Laws of Thermodynamics. In this discussion I will at appropriate times cite C.P Snow’s interpretation of the primary 3 Laws of Thermodynamics.

First Law of Budgets: Conservation of Money

Money is Money. It doesn’t matter who has the money, it only matters how much they have. It doesn’t matter what form it comes in, in the end the money in the system always equals the same amount of value. This principle applies to the total system (globally) or to regional segments where the proper accounting is maintained. The general rule is that within a specified region (including the whole) money is equal to ‘all value’ (money) transferred into the system minus ‘all value’ transferred out, plus all value retained in the system. Think, there is no other source of funds that can be magically tapped when you need it. If you need more money, you have to have it or find someone who is willing to exchange something of theirs with value for something of yours with value that nets out to you having more than when you started.

What does this mean for Congress, the Administration, or even the Supreme Court? It means that they have to abide by the First Law. It’s not that it’s a good idea, it’s not that it’s the right thing to do, it’s the physics of monetary reality; try and resist or ignore it and you will face the consequences of the power of the universe marshaled against you. According to C.P. Cook this means, “You cannot win.”

Some things that politicians and the public need to become comfortable with because of the First Law are:

• The public pays for everything. No one except the public has any money.

• Whatever the public wants the government to do, they have to pay for from their money (wealth); they have to be taxed by the government.

• Everything required by the government, everything prohibited by the government, everything encouraged or discouraged by the government, and everything that the government does to achieve some goal requires the public to be taxed. It doesn’t matter if you support or oppose what the goal(s) is, the public pays.

• When you borrow, you create a condition where you eventually transfer more money out of your region into the one you borrowed from. You are transferring your wealth to them, and the public’s wealth will be diminished.

• Here’s a tricky one. The conservation rule sounds simple, but the recognition of how this applies to something as big as our modern economy is not simple. Comprehending the implications of every budgetary decision will not be obvious, self-evident, or even within the grasp of most politicians or the public. But understood or not, the First Law will rule and it will have its way. No force on earth or the universe can prevent it; and if you want to pray to God to intercede then you should know that he created the Three Laws of Budget.

No one reading this should assume or conclude that the obvious meaning of the First Law is that Congress should cut or raise taxes, or cut or reduce spending. Those are just actions, they don’t account for the consequences; but the actions will operate according to the Laws of Budgets.

Next up, the Second Law of Budgets; until then start looking for the operation of the First Law in the world about you. It runs through everything you do. That’s why it’s a natural law, it’s part of the fabric (the physics) of the universe.