A nyone who regularly navigates between the private marketplace and the world of government and politics is bound to notice the flexibility, choice, and efficiency offered by the first and the corruption, stagnation, and inefficiency on display in the second. The marketplace is an arena of endless choices among products and services tailored to individual preferences, while governments take advantage of their monopolistic power to offer second-rate services at prohibitive prices. In the private marketplace, companies that do not deliver the goods will soon be out of business, unless they can arrange a subsidy from the government, but in the public sphere citizens have few such choices. They are more or less stuck with their governments and have little capacity to change them in fundamental ways.

That is all about to change according to Kevin D. Williamson, author of this provocative new book, The End is Near and It’s Going to be Awesome: How Going Broke Will Leave America Richer, Happier, and More Secure. Mr. Williamson, author of the Exchequer column for National Review magazine and a widely cited expert on the costs and inefficiencies of public-sector programs (as well as the theater critic for this publication), argues that the era of large-scale government is about to give way to an era of political decentralization as Americans increasingly look for ways to circumvent political institutions by inventing private mechanisms to address areas of government failure. As state and local governments go broke and longstanding federal programs like Medicare, Medicaid, and Social Security approach insolvency, Americans will not lie down and die, but instead will draw upon their traditions of liberty and civic engagement to craft new systems of governance that are more flexible and consumer-friendly than the ones to which we have grown accustomed. In this process of change and adaptation, the yawning gap between the public and private spheres will gradually diminish as roles currently filled by the former are taken over by the latter.

Mr. Williamson does not write as a liberal or conservative, though perhaps as a libertarian or communitarian whose preferences do not align neatly with any established political paradigm. While he is certain that the liberal project has reached a dead end, he is not a cheerleader for the free market, since markets do not produce communities (though markets do make room for them); nor does he seem sympathetic to conservative preoccupations with national security and military power. The problem, he argues, is not one of liberal versus conservative politics but rather one that arises out of the highly centralized and bureaucratic character of modern politics itself. The essence of politics, he suggests, is rent-seeking: the organized effort by some to force others to pay above market prices for the goods and services they offer. Rent-seeking groups accumulate over time, and thus create governments that are costly, inefficient, and far more centralized than they need to be to fulfill their basic functions. We are rapidly discovering that these centralized and slow-moving systems can no longer satisfy the new demands for individually or locally tailored choices made available by the revolution in information technology.

The book contains several informative chapters that explain why costs of education and health care continue to go up year-by-year, even as prices for computers, software, and television sets go down (as quality improves), and why large-scale government programs, like Social Security and state and local pension systems, will inevitably go broke. All of these systems are based upon a shell game called “third-party payers”—usually uninformed or isolated taxpayers who are not parties to the immediate transactions and are thus in a weak position to withhold support.

What happens in such a system when we run out of “third-party payers?” Exactly what is beginning to happen today. Entrepreneurs and hard-working citizens are fleeing high tax jurisdictions like California and Illinois, leaving rent-seeking groups behind to cover the costs of their own salaries, pensions, and subsidies. At the same time, some 80 million “baby boomers” will reach age sixty-five over roughly the next decade and are expecting to cash in on the government’s promise to redeem the funds they have paid into the Social Security and Medicare systems. The problem is that, contrary to those promises, these are “pay as you go” systems: the funds to pay benefits come from taxes imposed on current workers, and there are no longer enough of these to cover the benefits that have been promised to the “baby boomers.” The revolt of the “third-party payer” represents the final crisis of the contemporary regime.

As the regime crumbles, millions of citizens across the country are creating new solutions for failing governmental systems. In the field of education, home schools and charter schools provide alternatives to bureaucratic government schools. Private courts are emerging in some places as alternatives to our hide-bound system of civil justice, and private security agencies as alternatives to established police forces. Entrepreneurs may at some point develop new forms of currency to facilitate private transactions. This, Williamson believes, represents just the beginning of a process that will explode in the coming years into new forms of civic invention. It is also “how going broke will leave America richer, happier, and more secure” than ever before.

T he author is undoubtedly correct to suggest that the American system as we know it is on the verge of an epic collapse. Yet he may be overly optimistic in thinking that something positive and constructive will emerge spontaneously from the ruins of a disintegrating system. He is, as he says, a “short-term pessimist but a long-term optimist.” The United States, as it has in the past, will find a way to replace its worn-out system. Let us hope that in the end he will be proved right.

But his own volume highlights one of the fundamental difficulties: Something close to half of our current population of 320 million is dependent on government benefits of one kind or another. Governments pay their salaries and pensions, and underwrite their health-care expenses; thousands of businesses and millions of employees across the country depend upon government contracts of various kinds. There is no doubt that we have been imprudent and irresponsible in making so many of people dependent upon the government without fully weighing the consequences of such an enterprise. Yet if that enterprise is coming to an end, what is going to happen to those millions of people now dependent upon government assistance? Is it likely that new institutional forms will immediately arise to provide them with employment and support? If not, then the transition to the new system that the author envisions is likely to be more painful than he anticipates.

Despite the misgivings of pessimists and crackpot realists, The End Is Near and It’s Going to be Awesome is a most refreshing volume, written with clarity and passion, presenting new information to the reader, and transcending throughout established lines of political combat. And it may even provide something far more valuable: a pathway into the future.