Whenever Congress and a president of either party locks horns over something of vital national interest, it is easy to declare “a pox on both their houses” and reflect fondly on those nonexistent days when the U.S. government worked brilliantly and without friction.
In 2021, though, the public mood is a little different. The United States Capitol complex was attacked on January 6th–an action that polling suggests around 20% of Americans shockingly approve. Self-defined libertarians, pseudo-anarchists, right-wing groups like QAnon that are openly insurrectionist, and other formerly fringe groups have come into national prominence in part by openly questioning the federal government’s scope and role in America.
If America woke up to no federal government, there would be absolute chaos in the financial markets, healthcare system, and most other institutions that help form our way of life.
Once the chaos of the initial disappearance of the government abated, there would be a sorting out of day-to-day life.
A year or so in, more complicated and nuanced issues would crop up, like those of food and drug safety, interstate commerce, and taxation.
Many people survive in areas with weak (if not nonexistent) national governments, and they survive on a day-to-day basis, though American life as we know it would be unrecognizably different in this scenario.
As a thought exercise, then, consider what would happen if there was no federal government anymore. For purposes of this experiment, assume that one day government just disappears–the people still exist and the infrastructure is there, but the laws, rules, systems, and policies disappear. Admittedly it is an outlandish scenario, but what would life in the United States look like?
If America woke up to no federal government, there would be absolute chaos in the financial markets. U.S. federal debt is the largest single investment instrument in the market, and the disappearance of a federal government would have everyone scrambling to figure out who, if anybody, would honor that debt. Moreover, since each and every U.S. dollar is essentially a debt instrument backed by the “full faith and credit of the U.S. government,” what would that be worth (and also, of the billions of dollars of reserves held around the world in U.S. dollars) with no U.S. government?
Suffice it to say, the equity markets would also go haywire. So much of what is taken for granted in business–including taxes, regulations, and the smooth operation of interstate and international trade–is facilitated or overseen by the federal government, and nobody would have any immediate answers as to how that would continue. Likewise, what would happen to corporate profits if the federal government vanished as a customer? In such an environment, gold and silver would likely skyrocket, as speculators reassured themselves that precious metals would always be worth something in trade.
Perhaps contrary to expectation, there would not necessarily be full-scale bedlam and anarchy. Police are funded and administered at state and municipal levels, and while the National Guard is technically part of the U.S. Army and Air Force, it is still operates at the state level and governors could call upon them to maintain order.
Once the chaos of the initial disappearance of the government abated, there would be a sorting out of day-to-day life. Governments have fallen in many countries around the world in the last few decades (often in violence and bloodshed), and there is a remarkable consistency–once the bullets stop, people go back to work and try to resume their lives.
Absent a federal government, there would be no reason to deduct federal taxes from wages, so workers’ paychecks may be larger. Likewise, less overarching and overlapping tax and regulatory burdens could translate into lower prices on store shelves. On the other hand, Social Security and Medicare benefits would stop. Many retired people would likely struggle to find the cash for day-to-day necessities, and the disappearance of Medicare would jam up the healthcare system.
There would also be a serious need on the part of states and communities to resolve how certain functions would be handled. Would states step in and offer to pay USDA inspectors, FAA flight controllers, and other key personnel? Would they take over installations like federal prisons? Likewise, would states pass emergency legislation to increase income tax to pay these workers? With roughly 4.2 million people employed by the federal government, their fate would be no small matter to the U.S. economy.
This article is a hypothetical thought experiment, is one possible outcome, and is not a particularly likely scenario.
It would also be interesting to see how quickly the major banks tried to band together to replace some of the functions of the U.S. Treasury and other federal bodies. There is a history in the United States of banks issuing their own currency in the absence of a national authority, and it is not unthinkable that the likes of Citigroup, Bank of America, and so on could band together in an attempt to create a replacement system. Certainly, they have infrastructure and expertise that could be of use in a confederation of states lacking a federal government.
As time passes, more complicated and nuanced issues would crop up. Absent a federal food inspection system (assuming the states didn’t hire those workers and maintain the system), there would eventually be a major outbreak of contaminated food, and it would likely only be a matter of time before a company took shortcuts on maintenance and a major transportation disaster ensued. What these companies would likely find, though, is that their reputations would be irretrievably destroyed–absent a federal “seal of approval,” companies’ reputations would matter even more and one mistake could be the end of a company.
Interstate commerce would be a curious problem as well. Would companies really be hampered by the absence of a federal court system and a means of resolving litigation across state boundaries? Given the amount of cross-border traffic around the world (and shaky rule of law in many regions), it seems safe to say that business may slow but would not stop–companies would find that reputation and honor mean more, and in lieu of pursuing cases in federal courts, businesses would blackball unreliable counterparties.
Taxation would be another interesting set of issues. While many would initially celebrate the disappearance of federal income taxes, capital gains taxes, and excise taxes, the joy would likely be temporary. States would find that they need to raise revenue to pay for services the federal government previously handled, and would simply reinstitute many of those same taxes–though it is possible that the sum total tax burden would be lower.
What would the world look like a year after the federal government was gone? In many respects, it would probably resemble the America of the 18th century, and considerably more responsibility would be shifted back to the citizens. There would also almost certainly be enormous differences between the various states and regions, with far more power focused in states with larger populations. There also may be fewer reasons to hold together the union of the states.
But instead of EPA regulations, town councils might decide whether to allow business projects to go forward. Instead of Medicare or Social Security, there could be mutual aid societies and more individual savings. Instead of a Food & Drug Administration, perhaps people (or industry) would demand an independent organization like Underwriters Laboratories to develop standards, conduct tests, and certify which drugs were safe and effective. Likewise, people could possibly see more things like toll roads as the states offload the construction and maintenance of public goods to private companies.
Clearly, this is just one possible outline of how the disappearance of the federal government would look, and does not address topics like international security and the fate (or role) of a national military.
But many people survive in areas with weak (if not nonexistent) national governments, and they survive on a day-to-day basis, just as Americans of the 18th century and before survived.
While the most ardent critics of the federal government are mistaken when they say the U.S. government does all harm and no good, they may yet have a point, insofar as sometimes “less is more.”