"Happy New Year" may seem an inappropriate cry as America balances on the edge of governments' financial cliffs.  We've been edging toward this danger for two generations.  The reason is simple; politicians have strong incentives to provide current benefits and promise payments in some distant future.  That future is ever closer.

The politics of this financial process are complex and uncertain but a few things are clear.  First, governments have diminished financial flexibility as past promises come due.  This means they lack sufficient funds to address new and current social and environmental problems.

This situation strongly implies that social entrepreneurs, individuals operating in the voluntary sector, will become increasingly important.   America's economic and social problems will surely grow while governments face ever-tighter constraints.  Bankrupt cities and states near default have little discretion to implement new programs and difficulty funding existing ones.

People of strong conscience and good will increasingly look toward innovative solutions.  We face tighter limits on governments, increased skepticism as to their efficacy, and greater knowledge of favoritism toward special interests.  I predict we will see greater interest in and respect for social entrepreneurs.   Here's an excellent local example of their success in dealing with a national cause, our obligations to America's wounded warriors.

Six years ago I wrote my annual New Year's resolution column for the Bozeman Chronicle,  "Let's Resolve to Reward Our Wounded Warriors".  It publicized the idea that became the Warriors and Quiet Waters (WQW) foundation (www.warriorsandquietwaters.org/).

Thanks to extraordinary dedication of its leaders, the Bozeman spirit of volunteering, and our ideal setting, this organization became America's gold standard for supporting and comforting our wounded warriors.  WQW has improved hundreds of lives and no doubt saved some. I urge a donation to this most worthwhile organization.  (WQW is a 501 c-3 so contributions are deductible on IRS forms.)

WQW is a stellar example of successful social entrepreneurship. If we are fortunate over the next few years, and probably decades thereafter, the contributions of such creative individuals will be increasingly important.  The primary reason is clear; governments will be ever more limited in their capacities to address problems.  Here's why.  

America's governments at every level are facing tighter financial constraints as bills, bonds, and promised benefits come due.  Concurrently, accretions of dysfunctional regulations limit adaptive responses. Further, we see erosion of civic and cultural capital, especially among the former working class.   Parasitic and opportunistic behavior follows.  

Among socially responsible citizens conscience compels actions.  However, the above problems strongly imply a shift toward the voluntary sector.  The reasons, governments have diminished capacity and people have less confidence in them.

 While some "progressives" might argue about the costs of regulations and losses of civic and cultural capital, our worsening financial prospects seem certain.  The clearest, most concise explanation I've  seen is by Christopher DeMuth, a distinguished fellow at the Hudson Institute.  Entitled "The Real Cliff", it appears in the December 24 issue of the Weekly Standard.  He wrote an elegant description of an ugly, protracted process. 

The situation Chris describes flows from the loss of Victorian fiscal virtues.  Nobel Prize economist James Buchanan described them thusly:  "Frugality, not profligacy, was accepted as the cardinal virtue, and this norm assumed practical shape in the widely shared principle that public budgets should be in balance, if not in surplus, and that deficits were to be tolerated only in extraordinary circumstances. Substantial and continuing deficits were interpreted as the mark of fiscal folly.... When capital expenditures were financed by debt, sinking funds for amortization were to be established and maintained."

This perspective, however sound, seems so terribly antiquated.  DeMuth argues that for the past 50 years America's de facto fiscal policy has been "continuous governmental borrowing to pay for current consumption".  It is as though the Keynesians and Supply Siders conspired to wreck the economic future of our children down through the nth generation.  

During the 1930s Keynes constructed the justification for government's borrowing from future wealth in response to current demands.  The now obvious dangers of this tempting possibility were magnified by the Supply Siders' fixation on the power of low tax rates to promote prosperity.  

Under President Reagan, when DeMuth was Administrator of the Office of Information and Regulatory Affairs, "...the public's tolerance for high debts and deficits was much larger than anyone supposed.  Today, one would have to say that tolerance is unlimited...."  Government has become "an engine for debt-financed consumption".  In this capacity it also operates as an engine to plunder future generations. 

In DeMuth's words: "Today's debts will be repaid...through higher taxes,...loan defaults, or through the partial default of inflation".  In sum, politicians shift some of today's costs to people not yet voters--or born.  Both the Republican and Democrat  parties are complicit.

Chris concludes with plans for the emerging debt crisis.  Here is my complementary addition.  As you  consider your New Year's resolutions please recognize the value of organizations created by social entrepreneurs.  Then become a financial supporter or volunteer. You have many opportunities among a large number of organizations.

For example, Gallatin County's Love Inc., has a "Change Your Life Program" for people who find it hard to cope with everyday life. Love Inc. designed a structured educational and mentoring system to help people become more self-sufficient.  It offers courses to improve finances, nutrition, health and many other life skills.

This Christian organization offers a large menu of volunteer activities.  Consider this from their Christmas request: "As a volunteer for Love INC you have previously filled out a Talent Tithe.  (Now please) fill out the Gift of Service form...."  Their form has one hundred different potential gifts of teaching, mentoring, and service.  They range from appliance, bike, and car maintenance, to prayer and quilt making.

The successful social entrepreneur creates roads down which people deliver their good intentions. One just underway is Gallant Chance Ranch.  (www.GallantChanchRanch.org)  Karen and Jon Goff created this new 501 c-3 corporation "...in response to the growing number of young men who either fall through the cracks at school or are already entangled in the juvenile court system."

Their goal is to teach these young men the self-discipline, life skills, and trades required of good citizens.  Turning potentially parasitic and predatory youth into productive neighbors is a huge challenge.  It's surely greater that that successfully confronted by the founders of WQW.

WQW stands as a stellar example of successful social entrepreneurship.  Below are my introductory paragraphs that introduced the idea six years ago.  While the column is specific to wounded warriors, the logic is applicable to a wide range of social and environmental concerns.  We have many opportunities to use it.  I suggest we resolve to do so in the coming year.

BY: JOHN A. BADEN, PH.D.

POSTED ON DECEMBER 27, 2006 FREE INSIGHTS

People make New Year’s resolutions to change their behavior. That’s why so many fail. Stopping unhealthy habits such as smoking or overeating are commitments that require the self-deprivation of pleasure. Vowing to exercise and substitute reading for TV is a positive step to self-improvement, but one hard to maintain. The lower the costs or the higher the benefits of change, the more likely is success. Alas, most strategies for self-improvement have short half-lives; few survive intact from New Year’s to Groundhog Day.

Here’s an easy resolution, one requiring only alertness to positive and constructive programs: “I resolve to recognize social entrepreneurs.” A second step, only slightly more demanding, is to reward constructive innovative behavior with positive comments. This isn’t hard -- and the exercise is likely to improve your attitude. To go a step further, you could resolve to contribute time, material, and money to these community-enhancing entrepreneurial ventures. Being alert, you’ll find many opportunities to honor this resolution.

This is certain: our environment, social and natural, will be altered in 2007, likely, at an accelerated rate. And I’m sure there will be much to lament. Fortunately, there is also much to cheer. There are many good people in our community attempting to do unambiguously good things. Let’s resolve to help them succeed.

Volney Steele, a retired physician, recently introduced me to a prospective opportunity. It builds on the success of Greta and Robert Mathis, founders of Eagle Mount, a truly remarkable example of social entrepreneurship. (See www.eaglemount.org/.)

Volney would like to replicate Eagle Mount’s services and design special outdoor activities for American troops wounded in Iraq. Here’s what he suggested while on a treadmill at the Ridge. (Vol is a great role model!) Some Iraq veterans were taken on a float trip by Bud Lilly, a nationally respected fishing guide. Last spring my colleague, Pete Geddes, saw such an outing on the Smith River. We know there are thousands of disabled veterans who would benefit from similar experiences.

“Disabled” can range from psychological injury to some terrible physical loss or deformity. A small group of fishermen, perhaps with a professional guide, could design trips tailored to the requirements of disabled veterans. VA physical rehabilitation centers could help us launch this worthwhile program by advising vets of its creation and linking them to us.