By Sell on News, a macro equities analyst. Cross posted from MacroBusiness
I have been reliably informed by Houses & Holes that we are “all going to die”, and rather sooner than we all imagined. Something to do with the economic meltdown in Europe and America, I believe. While I have no reason to doubt such potent insight — after all, death is the best one way bet available — I think it could do with a little refining. What is dying is the industrial era in the developed world, a trend that is obscured by the fact that the developing world is industrialising at an accelerating pace. Australia is caught in the middle. It provides the raw materials to rapidly industrialising nations, but is itself entering a post-industrial era. So the nation both is, and is not, in a mess, buffeted by contrary forces.
Over the last 15-20 years we have witnessed many symptoms of this death in developed nations. There was the death of Japanese mercantilism, which began on the dot of the 1990s and has worsened ever since. It is only because Japan is hermetically sealed, owes all its money to itself, that it has not spread further.
The dot.com boom, which was largely about monetising existing forms of commerce or creating transactions from what had previously been non-economic behaviour (social networking, for instance) rose and fell. Then we have had the mother of all death throes in the bizarre financialisation of Western economies, a debt driven exercise in making money out of air or algorithms. The latest iteration is high frequency trading, and, like derivatives such as CDOs and CDSs it, too, shall fail. To think it is alright to make finance into an infinite regress is so irresponsible it can only be because there are no other, normal ways of creating wealth. A death throe, in other words.
The same applies to Europe’s stagnation and hopelessly high unemployment. It is a society that has run out of ideas. Meanwhile, America seems to have only one idea: reward the fabulously wealthy at the expense of the middle class. In other words, fight over the deck chairs as the Titanic dies.
This is why “politics” is starting to assume centre stage in investment analysis. For some reason, governments, which have been demonised as useless for a quarter of a century, are now expected to fix things. They will not, because the problem is about a lack of creating the new, something governments have little or no influence over. About four fifths of so called “new products” are refinements of old products. Tyler Cowan is calling it the “great stagnation“. Yes, there is growth in areas like health care, but that hardly parallels the invention of the car, or fridges or any of the other big changes of the first half of the twentieth century. Most things that are new are just refinements – a mobile phone is just a phone made mobile, a microwave oven is just a quicker oven — or an enablement of something old: the digital revolution is mostly an enabler of existing, non digital forms of commerce or functions.
The most telling sign of death is the loss of a cost of capital in the developed world, which kills investment. American companies in particular are sitting on piles of cash, but they do not want to invest because they do not see the growth in developed markets (especially as the middle classes are being eviscerated). They can see hope in the emerging markets, but the middle classes are still emerging there.
It all adds up to gloom. Or does it? I do not believe so. Growth, it must be remembered, is transactions, not necessarily consumption of resources (something the Greens, with their Arcadian dreams do not understand). There is no doubt at all that what needs to be the defining characteristic of post-industrial society is a reduction of both the consumption of finite resources and a reduction of pollution. This can, and should, lead to initiatives as profound as the invention of the mass produced automobile or the aeroplane. Which in turn will lead to new growth.
There are many potential technologies; there is no lack of invention. But there is a lack of capital, because capital mostly prefers the industrial and the familiar. Capital is losing all those certainties. The catch is that the changes need to be system wide, and that is where governments will really matter. Given that governments have concentrated on getting elected by creating fear, shifting to showing vision will be an enormous challenge. But in the end, investing in the post-industrial world is the only way to go. As Michael Spence pointed out in the Financial Review this week, what is happening is the end of a cycle that is about a century old:
In the 100-year view of Nobel laureate economist Michael Spence, the current global economic woes are linked to the slow and painful adaptation of the developed world to the growing economic clout of China, India, Brazil and other developing economies.
Spence says it has not yet been fully recognised that the economic malaise is not just a cyclical downturn caused by excess debt, over-consumption, low interest rates and lax regulation, but part of a long-term structural change brought about by globalisation and technology, which are shifting the comparative advantage in a range of industries and services towards the developing world.
Europe, the US and other advanced economies must make long-term reforms to labour markets and boost productivity as well as encourage public and private sector investment in infrastructure, education, skills and training to remove growth constraints. Short-term fixes, such as Europe’s bailout packages and the US Federal Reserve’s promises of low interest rates for longer, can do little more than “kick the can down the road”, he says.
As chairman of the World Bank Commission on Growth and Development since 2006, Spence is uniquely informed on the subject of growth. In his new book The Next Convergence, he judges that it will take until mid-century for developing economies, which represent 60 per cent of the world’s population, to reach advanced status.
Further growth of developing economies could bring about more unemployment in developed economies unless they restructure, he says, citing Germany as a model between 2000 and 2005 when it loosened labour markets, committed to high-value manufacturing and accepted the trade-off between high income and employment. The weakness in global economic and political leadership in the developed world is “a real puzzle”.
In the US “people want things they aren’t prepared to pay for. There’s a fair amount of ideology – maybe people think those are real solutions when they are not”.
In contrast, Spence says, developing countries in general have “evolved a kind of pragmatic, persistent, problem-solving model. They’ve got some reasonable balance between government on the one hand and the private sector on the other”.
But, he says, we’ve entered a “high risk mode”. If the advanced countries can keep growing and avoid another recession, China and the developing world can keep expanding apace.
“But they can’t sustain enough demand to withstand a [US and European] downturn” he says. That would slow everyone, including China, Brazil, India and Australia.
Australia must remember “that natural resource wealth is volatile and impermanent”, Spence says. We should be investing “a fair amount” of the income from natural resources wealth abroad – thus mitigating the effects of the Dutch disease where a high exchange rate hollows out the rest of the economy.
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Well, this post sure is schizophrenic. It starts out recognizing how bizarre financialization is, and how it’s a symptom of the death of “capitalism”, since there’s no longer any way to extract legitimate profits from real economic activity, but only rents from corporatism and financial con jobs. So far so good.
To think it is alright to make finance into an infinite regress is so irresponsible it can only be because there are no other, normal ways of creating wealth. A death throe, in other words.
In a sense it’s similar to Peak Oil, how the way exploration and extraction have been driven to “unconventional oil” (ultradeepwater, the Arctic, heavy oil, the tar sands) is a sign of desperation, that almost all the cheaply, easily extracted oil is gone.
The piece correctly says that only kleptocratic politics is propping up this otherwise untenable zombie structure.
But then the second half directly contradicts the first, re-conjuring the now-mythical “growth”, and claiming that somehow out of the criminality and scorched earth of neoliberalism we’ll have a new Green Cornucopian utopia.
It all adds up to gloom. Or does it? I do not believe so. Growth, it must be remembered, is transactions, not necessarily consumption of resources (something the Greens, with their Arcadian dreams do not understand). There is no doubt at all that what needs to be the defining characteristic of post-industrial society is a reduction of both the consumption of finite resources and a reduction of pollution. This can, and should, lead to initiatives as profound as the invention of the mass produced automobile or the aeroplane. Which in turn will lead to new growth.
There are many potential technologies; there is no lack of invention. But there is a lack of capital, because capital mostly prefers the industrial and the familiar. Capital is losing all those certainties. The catch is that the changes need to be system wide, and that is where governments will really matter. Given that governments have concentrated on getting elected by creating fear, shifting to showing vision will be an enormous challenge. But in the end, investing in the post-industrial world is the only way to go.
What’s the evidence that this (assuming one can even get a clear idea what it means) is physically, economically, or politically possible? None is offered, because none can be. The fact is that green cornucopianism is a scam. We already see how every “post-industrial” technology is immediately corporatized and turned into a government-subsidized means of producing luxury goods, propping up other wasteful aspects of the bloated Western lifestyle (no CSP field or wind farm ever replaced or will replace a single lump of burned coal, but only added to the aggregate consumption), and extracting rents.
Similarly, all seriously considered cap-and-trade bills were designed to never mitigate GHGs, but only to serve as corporate welfare bonanzas and help Wall Street blow up a carbon bubble.
So we already know that when we see this kind of propaganda, it’s really someone talking his book, angling for another government-subsidized rent. But none of this can ever restore real economic growth or reinvigorate the true economy at all. (And of course it won’t help save the environment.)
None of that will ever happen so long as we continue empowering the same corporate and government criminals who caused the world crisis and drove the earth into this bottleneck in the first place.
Only relocalization and true economic and political democracy can feed the world post-oil and redeem prosperity.
I agree with this comment. We as society have allowed that the leadership under the influence of lobbyists with deep pockets has selected a way that enriched the few at the expense of the many. To turn this around will require a serious destruction of the present structure. When and how that will happen, well, I do not know. But it is required for real economic revival to take root.
Friends;
This might be a situation where the real world interjects to force the issue. I’m thinking specifically about a small rise in the sea level caused by a release of meltwater from under the Antartic and or Greenland ice sheets. A one metre rise would be enough to cause mass migration and chaos in some very densely populated regions of the world; Bangladesh, Coastal China, Americas Eastern Seaboard, etc. Thus, the political elites would be shown up for the short sighted fools they are, and the people worldwide would have to replace them, simply in order to survive.
It would also submerge half of the state of Texas, making Rick Perry look even more stupid than he actually is.
My Dear Sir;
Is such a thing possible? Mr Perry is already well on track to being the Psychotocrat In Chief. Perhaps Hypocrat In Chief is a more accurate moniker. By the way, whatever happened to “What Happens in Texas Stays in Texas?”
Am I right in thinking that you can suffer from Dutch Disease as surely from being a center of international finance as you can from being the owner of a gold mine? They’re both massive sources of income, from a source other than normal domestic production, that raises the value of the currency so much that normal domestic production is made impossible.
And yet so many countries are told by their elite classes that “financial services” or “financial innovation” is the key to prosperity for all. It looks to me like it’s only the key to prosperity for the elites who are pushing it.
you are correct sir.
this is a weird post, for sure. It sort of takes a hard right turn at the quote, unconstrained by gravity or momentum. Sort of like a UFO.
it all reminds me of that scene in Tennesee William’s Cat on a Hot Tin Roof, when Big Daddy’s arguing with Brick and roams around the basement filled with 40 years worth of high priced junk he and Big Mama bought in Europe, collecting dust. That’s our economy, stores full of ever more refined junk, useless baubles that try to stimulate a dying imagination like Viagra or squalid obscene parodies of formerly vital inventions. Kitchen appliance stores are the absolute worst — how many useless niche tools do you need to cook a gosh darn meal, how many knives? I have one knife and 3 pots and I keep my weight at 180 lbs. I don’t starve.
If everybody had 3 pots and one knife the economy would collapse. But that’s all you really need. There’s the rub. The architecture of social cooperation is built around erecting pyramids of junk.
You touch on our problem. We’re over saturated in the high income countries while there’s still huge unmet demand around the world.
If the poor in Asia, Africa and Latin America (and the U.S.) had enough income to fill their 3 pots with food, the economy would be chugging along.
Our politics is so biased to supply-side economics we seem to have forgotten that there has to be effective demand for the supply to be warranted.
my personal theory is that broad-based social cooperation structures do not exist in many parts of the world, due to the legacy of tribal consciousness. everything brings forth its opposite, and where money dissolved tribal consciousness it also released the unstructured ID energy. the energy has to ascend throug the chakras, and the root chakra is a hard snare wich is why people were t-shirts with stupid corporate logos on them. at the heart chakra the money dissolves into total cooperation and at the crown chakra you just sit there and laugh in a tree. ha hahahahaha. bird man.
This was killer analysis by Attempter, thank you; Linus, Ambrit and Craazyman. I can get along on 3 pots and 2 knives too. I think “money” is getting in the way of progress. How ironic.
You are spot on. I can’t believe how peoples lives revolve around stuff and novelty – things that are external to ourselves.
Epictetus is looking more right every day.
Lindsey Graham and the US Senate Judiciary Subcommittee on Intellectual Property changed our US Patent laws a while back at that point Patent filings dropped of. They took away most of the protection incentive for filing a patent in two different and major ways.
They changed the system from first to Invent to first to file.
Old way First to Invent: Most of your large and involved new products take time and research this kind of inventor keeps Daily logs on their progress which is witnessed daily to prove their Date of Invention. For proof of being first to Invent in a court of law.
New way First to file: The first Inventor to get a patent filing on record gets the Patent rights the details may not be completely work out but if they get to the patent office first they are considered to be the first inventor.
Big Problem with the new Patent system: The day you file your Patent it goes public anybody and everybody can see what you are doing and the patent strategy you are using for your patent protection.
The old Patent system way: Nobody could see your invention or read your patent until the day the patent was issued which takes about 2 years. During this time you could come out with your new product under patent pending status but would be competitor(try to get around your patent claims)can not see your patent claims until the patent issues at the end of the 2 years. It gives the inventor the advantage and protection for all his work and expense. All that is gone in the new system.
I think Lindsy Graham has a bunch of chines friends who don’t mind riping anybody off. Think about try to protect your patent rights against them. Patents are not worth there cost for most people anymore you don’t get much for your time and money. Lindsy Graham and his committee put a knife in the back of Innovation in the USA. Patent filing in the US are way down in the USA for good reason. IMHO I’m a small entity inventor with 3 utility patents not a lawyer.
Bingo!
Our patent system does not get talked about enough; dysfunctional on the one hand and underfunded on the other. Underfunded you say? How could that be? Isn’t the patent office a self-funding government agency? Well, yes it is, except, it functions just like a so called entitlement program. You have politicians dipping their hands in the patent office budget and moving those monies to other areas, effectively, underfunding the patent office.
Make no mistake about it, the largest corporations can maneuver their way around that 10 year deep log jam of a patent office, but small companies or inventors cannot. So, that new found, “value added” American invention (not some widget to be sold at 3am on cable) squanders into oblivion as the Chinese and others surf and steal these inventions before they are approved.
I was really surprised to hear Obama paying lip service to the patent office system this last week – now only if congress will act – fat chance, or was that Fat Cat chance.
Excellent historical/ongoing reporting on the patent office here http://www.jsonline.com/specialreports/patentspending/ by John Schmid, much more in depth than I have seen nationally.
The first to file system has not been signed into law yet. U.S is the only country that still has a first to invent system. This is about to change.
The US patent Office celebrated its 8,000,00 issued patent last week.
For factual information on patents please visit the patently.com blog or the USPTO website, yes the gov site.
Patent applications are published 18 months after filing unless the applicant request nonpublication. This change was made much earlier to harmonize the US with the rest of the world, and avoid the problem of “submarine” patents, i.e., patents issuing many years (sometimes decades) after the application was filled and remaining secret all that time.
I must admit I filed my patents back in 1998- 2001 I was keeping up with the laws back them more I did not realize that first to invent was still the law. First to file was the cry of the day back then and I think know it’s still on their agenda. Glad to hear it’s not yet.
But after reading the post of runthiscountry I can see that the PTO has gone down hill in efficiency.
I have some brushing up to do on the subject. Here is a good link for first time would be first time inventors.
http://www.Inved.org
To the Meat of the problem with the Patent Reform.
http://www.piausa.org/
attempter, I believe that’s the best, most succinct takedown you’ve ever written. Schizophrenic, indeed.
This article is a great example of the problem: an abundance of good ideas contributing nothing to the economy.
If we had to live off on our collective brainpower, we wouldn’t need three pots and a knife.
The internet has enabled us to produce so much of so little pragmatic value.
Excellent comments, attempter, also,
Michael Spence is a complete clown and a recipient of the Swedish Central Bank’s International Prize for Economics in Memory of Nobel, not the Nobel Prize.
The Swedish Bank’s prize, often incorrectly referred to as a Nobel, was created to lend authenticity to that looney tunes, Milton Friedman, and almost every econ recipient of it since (that first woman to be awarded it is a sociologist, please note) has been an unqualified looney tunes.
A microwave oven is not just a quicker oven. It uses far less energy than the conventional type.
Any new idea has to start off somewhere, and what is more, it has to have relevance to human existence as we know and understand it (as opposed to fear it). Few of us will care if someone has invented a new device to capture alien space rays.
I take the point about globilisation, but on the other hand, I recognize Spence’s claim “the West has run out of ideas” is pretty pedantic. Most of us can’t even predict what our spouse is going to do next, much less the entire planet.
The microwave is the epitome of overt consumerism. The expenditure of natural resources, the cost to dispose due to built in obsolescence, and lastly whether its functionality outweighs the costs to the environment. The truth is the microwave never lived up to its hype. Heating a cup of water, reheating coffee & leftovers, etc to shave off a few minutes has shown that the newest must-have gadgets are a negative impact on limited resources. The mindless shop til you drop for momentary happiness/relief of boredom was mimicked idolization of wealth. The point, acquisition of possessions has climaxed as entertainment of unfulfilled lives. We’ve over consumed seeking fulfillment within.
“To us, as to other spiritually-minded people in every age and race, the love of possessions is a snare, and the burdens of a complex society is a source of needless peril and temptation.” Ohiyesa
I completely disagree with you regarding the microwave. I finally replaced the Panasonic microwave I bought 20 years ago last year. When you do an energy comparison between cooking something in a microwave and on a regular burner (or worse, oven) it wins hands down. Vegetables steamed in a microwave are better for you too.
On second thought, I’m not sure what you mean by the loose term ‘consumerism’ – decadent? immediate gratification?. I see it as very frugal, practical and healthy.
ian
My GE is still going 24 years after I bought it. I agree, the microwave cooks vegetables better than anything else (and it also steams fish beautifully.) Chicken can be cooked most of the way, and then finished off on the grill.
Rps, check the wiring on a microwave – it only requires the standard 110 Volt (in North America) outlet. A regular range requires 240 volts – so in North America, it needs a special outlet. Point is, microwaves use less energy, not just less time.
Microwave can be carried by one ordinary man or woman, unassisted – this is not the case for a standard range, for sure! And it costs, much, much less than a standard range.
For those stuck in very small apartments, including those of limited means, a microwave is a godsend. I agree that electricity in any form isn’t very efficient at boiling water, but not all of us have access to gas.
Point is, it is NOT a mindless consumer object – it is just a question of learning how to use it, beyond the ‘hype’ you mention. Those on frugal budgets and in tiny dwellings, can get by with a bar size fridge, a microwave, an electric kettle, and some form of electric grill or frypan (I use an electric wok.)
This is an important dialog. There is a clear and huge need for innovation to help us through the challenges of climate change, peak oil, and so on.
It’s clear that this kind of innovation is not going to come from corporations, either in the developed or developing world. Their track record of misallocating resources into anti-social developments designed to enrich a few at the expense of many has been well documented here.
It’s equally clear that it’s not going to come by rejecting all science, technology, and medicine.
I agree with attempter’s ideas on relocalization. What we need too is a forum where people can share and develop these innovations. If we’re not to rely on corporations to innovate for us, we need to take that responsibility upon ourselves. I’m not sure we can wait for the system to collapse. I think we need to make the system irrelevant by building a better one alongside it.
Dear Sock Puppet;
Much as I agree with your point, we must recognize that no entrenched power elite ever willingly allowed competition to arise peacefully. Once a possible competitor for dominance starts to emerge, any competant power elite swings into action to either coopt or destroy it. Localization sounds interesting, if one assumes that overbearing regional and national elites have lost the ability to intervene. No amount of cooperation and goodwill can prevail if powerful and ruthless forces are able to come in from outside and force compliance. We do need a wholesale ‘creative destruction’ of political and financial elites to clear the decks for further action.
Modern biology is presently having an internal debate about the mechanisms that drive evolution. The older Darwinian incrementalist theory is being challenged by a newer Catastrophist theory. Here, the idea is that occasional mass extinctions open up the pathways for new evolutionary forms to thrive and develop. Given that many forward looking scientists are describing the present era as the Sixth Extinction Event, nature seems to be taking the control of events out of our hands, if we ever had control in the first place. Adapt or Die is an entirely apt title.
Yes, history is replete with examples of elites crushing popular movements, and more recently using the tools of mass communication to coopt them. But there are some examples of an erosion of elite power. The loss of power by the church during the renaissance and enlightenment might be an example, although of course new elites ultimately took over through the rise of the factory model, the corporation, the nation state, and colonialism.
While I am sympathetic to “creative destruction” of the current elites, without an alternative vision waiting in the wings might that not just present an opportunity for a new Hitler to get sucked into the vacuum?
Ambrit, this is a good thing to think about. And there is proven meta-evolution. It is not Darwin and it is not Lamarck. It is the nexus between the two. The research on the geneaolgy of Danish families who enjoyed an abundant wheat harvest in the late 1800 which bounty was then traced to diabetes two generations later! Crazy. But this reveals the mechanism of evolution. Or begins to. Maybe counter-logical is its genius. But of course if we idiotic humans just bicker until we go belly up and starve to death… that settles that.
Good Lady;
Yes indeed, I have done some reading about the ‘gene vs meme’ debate. Tha more we think we know, the less we can be sure of. I take heart at realizing that life has survived and flourished through and on after each of the preceeding “Extinction Events.” Excepting the ‘wierd’ theory that the ‘space aliens’ are really super evolved beings from the dinosaur age, we have the best chance of living through the unfolding ‘Event’ due to our ‘thinking’ abilities. Without hope there is only resignation and despair. We’re better than that.
Are you really bringing a new twisted form of social Darwinism into this argument? Evolution is just what happened, I hardly see how that can inform this debate. I’m sick of these nihilistic ramblings about the elites being overthrown through some kind of violent cataclysm. A) It isn’t going to happen, B) What would be left of society would suck worse than anything happening now, C) If somehow a new society were to arise it would have elites too. Things would have to be far more dire in the developed world for this to remotely make sense. Have any real ideas?
Ah, a ladder-puller. Now suddenly evolution “just happened”, now that your favored Social Darwinists have achieved their kleptocracy? Sort of like how the British empire was the result of “absent-mindedness”?
I can’t imagine anything more maladaptive than anyone on the victim side of this class war doing anything but fighting to take back what’s ours and purge ourselves of such a vicious, toxic, and destructive parasite.
Now that’s real evolution.
My Dear attempter;
Now that’s adaptive thinking! Besides, survival oriented parasites do not kill off their hosts! As for the British Empire, which has morphed into the American Empire, ‘muddling through’ is precisely correct as for the process involved. Even people like Rhodes, in their more meditative moments, admitted thet they took advantage of circumstances, not drove them.
Also consider that Marx and Engels were the products of the Western European Liberal Romantic tradition. So, both Modern East and Modern West can claim the same cultural forebearers. “Everything that rises must converge.”
What are you talking about my favored social Darwinists? Two wrongs still don’t make a right. My irritation is with the implication that progress isn’t possible without defining an other to defeat. Rich people are people too, ha ha. Why are you so oblique in your prescriptions, are you calling for your brothers and sisters to rise up in arms against the man or what?
Guy seems to’ think that the car was a more new than the Internet.
Firms aren’t creating new products therefore unemployment is up? What is this stuff. Come on.
The reason American firms are sitting on cash is because they are worried about future earnings. When you look at the fact that markets are not available for your existing products, let alone new ones you’re going to be cautious about investing.
Why are they nervous? Because they think their R&D departments have ‘run out of ideas’? Yeah, right. They’re nervous for the same reason Japanese companies were/are nervous: their freakin’ markets have dried up as people increase their savings and lose their jobs.
Back when I had no clue about economics I used to uphold the ‘competition from the developing world has showed the West who’s the Daddy’ argument. It was instinctively appealing on a number of levels. Now I realise just how silly it is.
We do need some seriously thought-out direction. All the rest be damned.
“The weakness in global economic and political leadership in the developed world is “a real puzzle”.”
Hardly. The whole thrust of neoliberalism has been to downgrade the role of government and neuter its ‘interference’ with market forces – the very ‘light touch’ approach that brought us the ‘Great Moderation'(sic), now leaves political leaders ill-equipped to cope with the backwash of the credit boom.
The synergy between public and private, the state and the market which, as Ho-Joon Chang has ably demonstrated, accompanied the most productive periods in the developed and developing worlds, has been abandoned in favour of a reductionist, winner-takes-all free-for-all, bringing ever greater concentrations of wealth and political power to tiny elites. Capitalism is eating itself, as Marx predicted before the ‘aberration’ of the welfare state ameliorated the more rapacious extremes of inequality and exploitation.
I think it’s good to ask the powers that be tough questions,
such as if and why disclosing more about dodgy assets
on the balance sheets of the Federal Reserve
System/Federal Reserve Banks, Deutsche Bank [bad loans]
or Societe Generale in France, would be bad for the common
good. It seems the financial world and the powers that
be resist having extensive disclosure of dodgy loans,
dodgy CDOs and other securitized assets related to
mortgages, primarily. I don’t think this is good for the
common good. So I would press the financial world
on why they seem to think that “mark to model”,
SIVs in the Cayman Islands, etc are better kept
in a shroud of deep opacity, to put them on the
defensive.
My position on innovation is to first question the
received wisdom (or some might say propaganda) ,
so as to bring to the fore new ideas on anti-opacity.
Unfortunately, modern finance is very abstruse, and
many say that the US corporate media are “bad” to
mediocre, generally speaking.
Stress and problems cause innovation to occur.
When everybody is fat, dumb, and happy the marketing people figure out how to sell the same thing in different colors while the financial folks make money out of thin air.
When you have various types of stress, you get problems that require real solutions. I think we are on the verge of one of those periods.
The world looked very different in 1920 compared to 1900, 1945 compared to 1930, and 1982 compared to 1966. Look at what the stock market did in those periods. Major things that happened during those periods included the advent of the airplane and automobile, Social Security, industrialization of America, and the Iron Curtain, pocket calculators/personal computers and pollution control.
Our focus is currently on financial stress but it is likely that environmental and resource stress is likely to drive much of the innovation over the next couple of decades. Sea level rise, increased stress on fresh water, repositioning for more competition for oil etc. are likely to be drivers.
Setting aside the politics and causes of climate change, we are at the end of a century of thinking that we can lock Nature into place with levees, sea walls, irrigation, monocultures, suburbs etc. In the same way that people have ignored growing instabilities in the financial markets, the same is happening with the world at large.
We know that the world is a variable system. Ocean levels were 200 feet lower than today 10,000 years ago, mega-droughts are easily found in the tree records of the US Southwest over the past 1,000 years etc. Similar to the financial systems, we have gone on the assumption that major shocks are merely historical artifacts that have no relevance to today since we know how to control them.
I think that we will be entering a period of significant innovation over the next couple of decades. Like Bernanke’s announcement that interest rates will remain at zero for the next couple of years that was greeted with cheers, it should not be viewed as good news because it means an extended period of difficulty and stress.
While I agree with the basic premise of your thoughts, I have one concern. Societies can respond to challenges and environmental stress if they have the right perspective and there are leaders with vision who can channelize their energies in a productive way. Leaders are important, very very important.
Now lets look around us, do you see any leaders? Do we as a society have the capability to recognize who the right leaders are?
If this societal decay is not stopped, instead of responding to the future challenges, we will end up in the dark ages and this time, it will be global in nature as the whole world is more integrated than ever before in history.
‘The world looked very different in 1920 compared to 1900, 1945 compared to 1930, and 1982 compared to 1966. Look at what the stock market did in those periods.’ — rd
Exactly! But don’t omit the best example of all for your thesis: the 25-year deflationary depression from 1871 to 1896, when the US repegged to gold after the war between the states. This is when Edison was at his apogee, including the first successful test of an incandescent bulb in October 1879. Electric lighting was an absolutely transformative technology.
Unpleasant though it may be, periods of economic dullness (particularly deflationary ones) incentivize invention. Whereas inflation lifts property prices, the classic ‘dumb money’ investment — just sit back, collect your rents and unearned capital gains, and have another drink! Asset price inflation — a la the 1990s — turns out to be another form of dumb money, leading to a muscle-bound, financialized economy full of zero-sum activities such as derivatives trading. DOH!
Stable money — preferably a gold standard — would shut down the financial casino and reorient a horde of talented financial engineers into productive activities that actually raise collective living standards — the whole point, as far as I’m concerned.
As our Phil-Pil sez, ‘I <3 Ayn Rand 4eva +111111 XOXO!'
Rearden metal, comrades — it ain't just for pots and pans no more.
Great, now I look like a Randroid. As I said to Yves once: “The dangers of using irony in print are endless…”.
All problems lead to this website…
http://www.randroidsolutions.com/
LOL. The Gold Standard was a creator of financial crisis. It was why the US went into a billion financial panics while the “casino” was quite alive then as gold forced financial crisis after financial crisis.
It was why it was dropped after the gold inflation of early 1900’s ended. It didn’t work.
Your point about innovation is dead wrong as well. Edison’s “light bulb” was not invented by him. He simply put together the final pieces which happened in the late 70’s/early 80’s. Most of that “science” was done by Humphrey Davy in 1806. The lack of public investment in this area, set back progress for decades.
The long depression sucked and was much worse in America than let on by historians. Millions starved either east in the cities or going west. The myth of booming growth was completely based on land. Without it, capitalism may have fallen. It took enough beating as it was. Capitalism was dead by the 1930’s.
The truth is, innovation should not be what drives capitalism. It if it is, then capitalism will eventually fail. Innovation is for enhancement and nothing more.
“Innovation” is today’s business management buzzword, like “sustainability” was a few years ago.
I actually do innovation (even filed for one patent). My basic rule of thumb is that the more somebody talks about innovation, the less they know about – same with sustainability.
We build off the shoulders of giants and many non-giant researchers and workers in the field. There are very few true “eureka” moments in innovation. I view Steve Jobs as one of the true innovators we have seen over the past few decades, but he didn’t invent the microchip or even do much of the grunt work on his own products. Instead he knew how to pull the various pieces together in a business framework and created true new areas of expansion.
Much of what we know as “innovation” (3M post-it notes, Corning Gorilla glass etc.) is really years of hard work in laboratories with people who can then look at the results from a variety of perspectives to see potential uses, and then figure out how to manufacture and market them.
From my personal experience, most company managers today are looking for “innovation” that can generate profits within one year. Unfortunately, it generally doesn’t work that way so they will have another management consultant give them a new buzzowrd to spout in company meetings and annual reports a year or so from now.
But, I still think the next couple of decades will produce real innovations as there are lots of major problems to solves, despite government and business’s efforts to squash real innovation.
Very weird post, I agree. It really fell apart after the diagnosis. What counts as innovative? Lots of us are working on community building food projects that may or may not pan out in the future. These relocalizations will eventually bump up against the establishment unless the latter “withers away” or implodes – unlikely but possible.
Meanwhile, I think it important to have a couple of interim “solutions” that can be tossed out there to be part of some alternative politician’s platform and which, if implemented, would help to slow the elites down. We have discussed them here: 1) make banking a public utility and 2) set limits to corporate charters. (If they are persons they should not be immortal, right?) I’ll bet a lot of non-elites could agree on those things
I wholeheartedly agree with attempter above, but thought a response to Ellen was appropriate.
Ellen, you are so right. There is indeed room for growth; growth of the commons! The commons has, for centuries, been decimated in the interests of monetary profit. There are other ways of improving our lives and enjoying them too. So let’s shrink the economy down to a bare minimum and innovate about how to reinvigorate the commons, including community, soil fertility, city-redesign, effective mass transport, energy efficiency, decent housing, renewables, and so on. Shrink government too while we’re at at, learn how to trust each other (a lot of work to do there, that’s for sure). There is so much work to do, we just need a monetary system that frees us to do it. The rewards will be enormous.
Attempter, Ellen, Toby, I agree. I’m relocating to a transition town so I can be part of this and learn. http://www.transitionus.org/
what a delicious teaser Toby…I want to go to that transition town too… where did you say it was?
Um the transition town was me. It’s here: http://www.transitionwhidbey.org/
Sounds great Sock Puppet. Have you come across these guys? They’re doing great work:
http://opensourceecology.org/
Good luck with your efforts.
Great link, thanks!
An enslaved population isn’t likely to innovate. Particularly when there is no Justice Department at work.
Jobs loss, income disparity, and government by bankers have converged to deprive people of civil rights and free speech with all corporate incentives to strengthen its own police state for its own benefit.
That the public consensus could go in 100 years from no prohibition on personal preferences for natural substances; alcohol, food, marijuana (which the public hadn’t heard of at that time) etc., because it plainly could lead to a ‘police’ state, to the current, ‘a police state is fine with us’ at the airport (put your hands up for a naked scan and don’t look crooked at us), in public places, and privately, with the power to enter, search and question has to change or nothing will.
An enslaved population isn’t likely to innovate. LeeAnn
Bingo!
Very good, LeeAnne.
An enslaved population primarily focuses on innovation that will liberate it from its oppressors.
Nevertheless, the circulation of samizdat literature in the former Soviet Union didn’t produce the inventions of either the photocopier or the internet.
One doesn’t see many patents emanating from North Korea, either.
Any place that calls itself by the ominous term ‘Homeland’ is pretty much finished for innovation. Talented inventors flee from self-styled Homelands. It happened in the 1930s, and it’s happening again today.
Right, the new plantation model—neo-feudalism—aside from its manifest moral depravity, is clearly unsustainable and grossly “inefficient”, yet that’s our current trajectory. Obama and fellow Neocon Dixiecrats seem determined to repeal the Emancipation Procalamation regardless of imminent collapse and conflict. Because the sinkhole ahead looms so obvious, it makes you wonder about Shock Doctrine “strategery”.
It seems Maxine Waters and other black progressives have finally had about enough of Obama’a laissez-faire. Coffee, anyone?
That the public consensus could go in 100 years from no prohibition on personal preferences for natural substances; alcohol, food, marijuana (which the public hadn’t heard of at that time) etc.,
Cannabis, as marijuana was then called, was freely available in early 20th century America. Even early federal drug laws allowed Americans to buy cannabis, opiates, cocaine, and alcohol without a prescription; the government’s only concern was that they be properly labeled.
(emphasis added, citations deleted)
http://en.wikipedia.org/wiki/Pure_Food_and_Drug_Act#Labeling_of_habit-forming_drugs
Major drug companies, such as Eli Lilly, even made standardized cannabis extracts — such as tincture of cannabis (marijuana’s active ingredients dissolved in 80% alcohol) — for retail and pharmacy sale.
http://antiquecannabisbook.com/images/Lilly96A.jpg
http://blogs.phoenixnewtimes.com/valleyfever/cannabis%20extract%20wiki.jpg
The USP labeling shows that the manufacturer followed standards for “identity, as well as strength, quality, purity, and consistency” set down by a government-backed regulatory body called the United States Pharmacopeia.
http://en.wikipedia.org/wiki/United_States_Pharmacopeia There were, in other words, FDA-enforceable standards for marijuana promulgated by a government backed body.
Mr. Gorbachov, tear down this wall
Doesn’t look and sound quite so spontaneous now that we know a little bit more about the US propaganda state.
Just look at all those spontaneous little American flags. And the sound isn’t convincing either.
Didn’t look spontaneous then either if you were living in, say, Holland at the time.
Nor if you read about why it went up in the first place and the agreement behind it.
Maam;
Very good of you to point that out. Who today knows the real history of the end of WWII? It turns out, the West, guided by America were the ones to betray the Yalta Agreements. Stalin was only being justifiably paranoid later. We WERE trying to stab him in the back. And after all that sacrifice the Russians did to stop Hitler.
“people want things they aren’t prepared to pay for.” That’s becoming quite the slogan. Paulson squeezed it out his battered forebrain at a lecture at Dartmouth last week. The people who are actually outclassing us are offering advice. How did these Sinophilic wise men fail to hear the Chinese tell Americans to stop blowing all your money on a parasitic military, and to respect and protect CESCR rights? Funny how the lessons of history invariably boil down to Bleed the Masses.
This post is full of vague generalities and platitudes and says nothing meaningful. We’re supposed to “innovate”, developing world, convergence, blah, blah, blah. Sounds great but Thomas Friedman already said it.
Yves said “This can, and should, lead to initiatives as profound as the invention of the mass produced automobile or the aeroplane. Which in turn will lead to new growth.
There are many potential technologies; there is no lack of invention. But there is a lack of capital, because capital mostly prefers the industrial and the familiar.”
The idea that economic growth can be maintained by newer technology or new inventions has elements of magical thinking, similar to the idea that a house only appreciates
in value. Little or no thought is given to money creation and its distribution since that would at its basic level implies a new social order not necessarily a top down model that has developed over the ages.
The next economic wave is firmly in place and that is higher levels of automation both in the developed and emerging economies which will lead to another round of massive over production of just about everything one can imagine and the end of industrial export as a model for growth.
The higher levels of automation which were supposed to grant us all “more leisure time”, but instead work as a conveyor belt to move money from the poor to the rich while consu,ing natural resources and creating pollution. It’s clearly unsustainable. It’s looking like a game of Monopoly. What are the rich going to do when they’ve won?
Mass production has freed us of repetitive boring work as surely as plumbing has freed us from carrying water on our heads.
But is that progress?
If the savings are going to be used to enslave 90% with substitute tedious work while the ‘innovators’ put the new technology to work employing the lower 90% to fetch and clean for them
Now your really thinking Sock Puppet. Once the plebes are looted in a militarized society the fascists go to war against other fascists. We are going to get regional ME war in 2013 and the global war that begins in Korea. My estimate puts the end of WW3 at 2021.
Besides storing some basic necessities to survive a winter without any form of supply chains, I am working in my town on local energy production so the town could survive a winter without supply chains.
Last, I built publishing software with information sharing for relocalization. I have had to be more than patient, awaiting a time for when some would wake up that unless investment is made in sustainable growth now, there won’t be a tomorrow to invest in. I have to say, this is the first year a few groups are also feeling like ‘innovate or die.’ But wealth (even on left) is still trying to figure out how much OPM it should be, the leverage games are still too firmly engrained in deep.
A few bright capitalists saw my original information sharing framework and knew I was building something far more interesting. But as others know about theft of intellectual proprerty, I had to keep much under wraps.
I am also having a tough time deciding to live in this country of muggers. Leaving for a warmer, better view and just deciding to ‘check out’ instead of local leadership and inventing is now a daily battle. Decent looking inventions draw attention of muggers that THINK I am rich causing downward mobility.
just curious, where’s worth moving to?
Ron, to clarify, this essay is by Sell on News, a macro equities analyst, and was cross posted from MacroBusiness
“Growth, it must be remembered, is transactions, not necessarily consumption of resources (something the Greens, with their Arcadian dreams do not understand).”
Really? Well then, let’s just sit around in our long underwear playing Texas Hold’em. That should launch us into a new age of prosperity. Transactions galore!!
Garbage.
Yes, I had a problem with that too.
Growth is not selling each other houses, doing each other’s nails, or investing in financial “products”.
Resource extraction is not real growth in that is consumes more than it produces, and is dying for precisely that reason.
Growing food in a sustainable way instead of developing suicide seeds, making things that are build to last, repairing things instead of throwing them away, learning and teaching, exercising and looking after your health, building communities – in other words activities that add more value than they consume – are examples of the kind of growth we need.
We need a better metric than GDP.
“We need a better metric than the GDP!”
How about the old misery index?
Here are some ideas.
Go back to the 60’s 70’s and chart the trend line in annual real wage growth. Using this projected wage growth %, apply it to the original minimum wage base and use this to set the curent minimum wage. This will put money in the working and lower middle class pockets and eliminate or reduce govenment food stamp subsidies. Increase demand.
Give recognition to the fact that technology and automation has drastically changed(reduced) the costs and processes of manufacturing goods and providing services. Reduce the work week to 21 hours per week(and adjust the minimum wage to reflect as required). Let’s face it 40 hours is an arbitray number and I’m sure when it was first suggested there were those who thought the sky would fall as a result. This will increase the number of jobs in the market.
Convert global trade to a barter system for raw materials only and require a balanced trade account. Trade coal, wheat, corn, livestock, and other commodities freely, but finished goods are to be bartered only(goods for goods). I know “but who’s going to buy our tanks and black hawks”, right?. Well the world doesn’t need them.
Each year the U.S. is to declare war on the poor country of choice and encourage other countries to do the same. A war on poverty that is. Shift the money spent on weapons of destruction to weapons of peace. Use the existing military industrial complex to shift production to building hospitals, schools, bridges, dams, railroads, and other infrastructure in these countries (much of this will come from our own production facilities which will keep our soldiers and military contractors employed). This will put a lot of people in America to work and certainly couldn’t be any more expensive than building bombs, tanks and destroyers. Besides, imagine the goodwill that would be created.
These are just a few ideas and I’m sure there are many minds much brightewr than mine that could think of even better solutions. But my point is that there are some radical changes we could make, but no one seems to want to discuss them seriously. Just grip and moan.
If we are going to get through this 21st century we are going to have to change the way we think and do business, or it’s going to be a long 100 yars. I say tackle it straight on.
Those are great ideas, John! Average working people have to be given power to buy. The unemployed, though, have to be given first priority. Lowering the hours worked each week for a “full-time” job will do a lot to make that happen. Most fundamentally, I’d say the solution is to spread the wealth. An average working Joe such as myself who already is gainfully employed probably doesn’t need an increase in spending power, but the poor certainly do. I see no other way but old fashioned redistribution. Tax the rich.
There is more short termism, in the social sciences than Wall St, when it comes to vague pronouncements by Nobel Prize winning economists with a 100 years view of 5000 year old civilizations. The world, especially Europe, has been responding to China, in the most relevant instance of developing vs developed. China has had markets, the world’s largest and hundreds of years without wars to drain its blood and treasury. It is the peculiarities of the European chaos, the lack of an imperial power that can simply enforce the peace, that has produced so much continuous warfare, which blunts economic productivity.
Innovation is for hedge funds and the cultural model of growth and shareholder value, not the essential characteristic of a social order. A sustainable, stable state, not predicated on growth, other than a side effect of population growth, is a model that needs exploring with China as good place to start looking. Does anyone really question why more money is going to the US to finance a mind numbing war in Iraq, Afghanistan and Pakistan and not a dime goes to Cuba? Exactly what does China gain by not pouring hundreds of billions into S America at the same rate that they under write the New American Century program? Exactly what did the US Government gain by going to war in Iraq and arming the Taiwanese with the most advanced Aegis Weapon Systems? Speed bumps on the Silk Road to China’s supremacy? The whole world can not live at the standard of living that most US citizens have achieved, because the US has consumed a disproportionate share of the natural resources in order to live this way. The Inter-State Highway system and local freeways will be downsized and replace by mass transit, much as it has always been the very densely populated NE megapolis.
But changes such as that are hardly what investment banking types have in mind when they promote innovation. Rocket back packs, flying cars and food synthesizers from Star Trek is usually what they have in mind. The promise of an unending river of new products, coming from the snowy peaks of science and technology is the modern mythos.
The real innovations are the ones that everyone is fighting mad about. MMT is in this arena, robotics, and what never is really talked about explicitly, the power over who will decide when people need to stop working 40 or more hours a week, in 2 income households, for the money economy, that is rapidly developing less and less of a need for people to run it. With the level of productivity achieved over the past 100 years, why are we not demanding a 3 day work week? Instead, we are fighting a ruling class that wants to recapitulate the Dickens industrial horror show.
The level of technology and productivity that we possess right now, does not require us to labor at the levels of when the 40 hour work week was first established. The innovations needed are NOT business, technology but political. A new set of social relations commensurate with a 21st world that will not give up unending fields of oil simply to be burned in auto engines so we can mindlessly drive about whenever we feel the urge to get a pack of cigarettes at 2 in the morning or see the beach, 200 miles from where we live, on a lark. Those days are going away forever, but a peaceful, just world of plenty of food, housing and comfort and education with all its benefits and improving technology to support all of this, is a real possibility.
Demanding more money, more markets, more government, more more is probably a fight that can not be won due to the constraints of everyone else in the world moving up towards our level of consumption and standard of living, as we seemingly move down, by consuming less. In a society that depends up the consent of its citizens to remain in power, the numerical superiority the people is the democratic advantage. The advantage of innovation from science and technology is only a stream of planned obsolescence, temporary state of the art luxuries that soon become tiresome and low profit commodities, that we in the West throw out every few years into the landfills of the rural spaces or garbage scows for ocean dumping. This is not a model of growth, but of certain exhaustion.
The stumbling block is clearly our “government.” Congress is insane and/or impotent. Totally. And the Obama “administration” is heartbreakingly incapable. It is obvious we cannot blame them but we can demand that they do as much as they can to prevent hardship, to begin to turn things around, and if they cannot help achieve the necessary goals, then we must demand they get out of the way. But what will we replace them with. We need some form of “authority” to make decisions. Shades of Russia 1917. I hope we go more smoothly into the future. Functioning locally can only accomplish so much. One of the things each state needs to fund is its own drug factory. We are really getting the run-around from the asshole drug companies these days.
Mz Susan the other;
(Old Geez Grumbles..) I say it all comes down to education, as it always does. Replace “Teaching to Test Taking” with “Teaching Character” and we might get somewhere worthwhile.
“Instead, we are fighting a ruling class that wants to recapitulate the Dickens industrial horror show.”
No they don’t. They want to replicate this:
http://en.wikipedia.org/wiki/File:Soweto_township.jpg
Yesterday I stopped at an estate sale, never really been to one. And there I wandered around viewing someone else’s “treasures” when in reality I walked into a squirrel’s nest of too many nuts and sparkly useless things tagged with dollar amounts. Strangers scavenging the decease’s life that filled the big house. And I stood there in the rundown home surrounded by junk asking myself is this what I want the end of my life to look like, an accumulation from without rather than within? The question is are we the owners of our possessions or do the possessions own us?
These are all very interesting points, but mostly skew to reality.
The “developing world” mostly does not exist. For example, India is not “developing” in the sense of higher per-capita living standards, it is simply an exponentially growing mass of subsistence-level human misery. India is a black hole for resources and technology: no matter how much you pour in, the condition of the average person will remain hopeless. If rich countries tie their economies to places like India, they will simply be dragged down to the same level. Using the phrase ‘restructuring labor markets’ as a code word for ‘becoming miserably poor’ seems not a very helpful way of thinking about this. “innovation” is irrelevant.
Remember that John Maynard Keynes was a famous disciple of Malthus, and that at the end of his most famous book he warned that all of what he proposed would not work unless population growth was moderated.
The big issue is the one that nobody talks about any more: that the rich are encouraging massive population growth to keep wages low and profits high – and perhaps more importantly, that they are discouraging any discussion of these issues. The Haber-Bosch process for making chemical fertilizer and the green revolution that exploited it to the full are just about tapped out, and all our technologies are at the point where they are subject to increasing diminishing returns. For now the rich think this is great, supply and demand always wins, and more and more people will drive wages down and profits up. So there is no incentive for the leadership to worry about this, they are doing great. Until it gets so bad that it all starts to fall apart…
Wow, “Green Cornucopian utopia”! I’m going to steal that, take it to a DC lobbying firm, and in the glorious New World Odor, become a Green Cornucopian Utopia Tycoon.
I will hopefully have enough money to start my own Utopian corporation that I am sure will involve Fat Cats and Big Whigs. Just share your personal info with me and I am in!
Here’s an “innovation” – totally ethical money creation. It’s not an innovation though; it is obeying “Thou shalt not steal.”
“[Government] will not fix things…because the problem is about a lack of creating the new, something governments have little or no influence over.”
What about the Internet, GPS or the New Deal socioeconomic reforms? One huge mistake the “free market” fantasists like Tyler Cowan make is to ignore the contribution of public goods in private enterprise and wealth creation. The rich make the same mistake, attributing everything they have to their hard work and supposed intelligence. It’s not different than CEO’s attributing all the good news to their own guidance and shrewd judgment and all the bad news to everyone and everything else including government regulation.
“In the 100-year view of Nobel laureate economist Michael Spence, the current global economic woes are linked to the slow and painful adaptation of the developed world to the growing economic clout of China, India, Brazil and other developing economies.”
Clearly, Michael Spence is correct in the obvious observation that economic globalization has brought about competition that has been growing since the end of WWII. But the “evisceration” of the American middle and working class is the primary result of pro-plutocratic political economic policies of the past 35 years including tax breaks and the free flow of capital.
Innovation is as rapid as ever but it is more oriented to providing trivial differences in the style of consumer products rather than profound innovations like the telegraph or telephone. That’s because 70 percent of our economy is driven by consumer spending. The financialization fraud that caused the collapse and Great Recession is like a casino game in which a few predators like Goldman Sachs prey on the economy with impunity and divert capital from productive uses that would create jobs and distribute wealth. They do this for the obvious reason that they can make themselves even wealthier then bribe the executive, legislative and judicial branches of the federal government to let them continue.
The poster writes: “There are many potential technologies; there is no lack of invention. But there is a lack of capital, because capital mostly prefers the industrial and the familiar.”
No lack of invention? True. People are always inventing things. But a lack of capital? No. He should have said a lack of demand. Capital is always available and will always gravitate to consumer demand, in whatever area of the economy it might be. A quaint example:
In 1970 Bernard Sadow invented wheeled luggage, a suitcase with 4 wheels and a leash. In 1987 Robert Plath invented the Rollaboard, the now-familiar suitcase with 2 wheels and a long handle.
Why suddenly a demand for easy-to-move luggage? Airplane travel (as opposed to rail or bus) was becoming popular and more women were travelling alone. No more porters, longer walks. So a desire for a new kind of suitcase sprang up. Production (ie. capital) was shifted from traditional luggage to the wheeled variety. The rest was, as they say, history.
Without the switch from ground to air travel, it is conceivable that the innovation of wheels on luggage would have failed, as most innovations do. To innovate in the face of a lack of demand is a fool’s errand.
If you’re a capitalist.
You want innovation? It’s time for a revolution.
Part of innovation will be the rediscovery of our symbiotic relationship with natures bountiful feast. Our diets have been selected not by us but by our ancestors and recently commercialism and Monsanto. The monoculture choice of bland foods that are vitamin and nutrient deficient are due to the selective cultivation of fruits, vegetables, and protein sources. Michael Pollan’s The Botany of Desire discusses the relationship of people and the domestication of plants. The “selected” plants based on commercial standards of taste, eye appeal, fast vs. slow growth, etc… As an example, potatoes. The chosen commercial potato is the russet burbank. Peru had over one thousand varieties of the potato providing bountiful harvests. The Spaniards invaded Peru and brought back home the potato that increased the population size due to its high nutrient values and ability to grow in many soils, etc. However, lack of genetic diversity, due to the very limited number of varieties initially introduced, left the crop vulnerable to disease. That leads us to The Irish potato famine. The famine would not have occurred if they had planted many varieties of potatoes rather than one or two. The banana, corn, and grains have been selectively bred when in reality there are many varieties that are ignored.
Monsanto thrives on the monoculture of selective grains, tubers, corn, soybeans, etc…Monsanto’s selective breeding added the introduction of GMO’s due to the static production of sameness that puts harvests at high risk due to insects and diseases of monoculture plants. When all the farmers need to do is plant many varieties rather than the same potato dictated by McDonalds choice for fries.
Innovation will most likely come in the rediscovery of nature’s varietal bounty of choices. We only see the colors we were taught to see. And so too with our foods.
Yes. And that in turn will be possible only through the political and economic innovations of a truly democratic relocalization movement.
Nowhere are capitalism/corporatism/commodification more directly government-created and antithetical to what’s rational, what’s practical, what’s moral, and for that matter what a truly free market would be, than where it comes to food commodification.
Dear attempter;
As I admitted on an earlier thread, I don’t know enough to really comment on the new Food Production, Small is Beautiful movement. However, if my reading is anywhere near to the truth of the matter, the economies of scale at work in ‘modern’ agriculture are the direct enablers of the present population levels worldwide. Thus, a conundrum is encountered when a change away from these ‘economies’ is contemplated. Will the populations of certain regions have to drop? How will this be accomplished, and on what time line? Who chooses who has to die, and when?
Secondly, what personal lifestyles will be forced upon the new peasant class? My own limited knowledge of pastoral existence teaches that farming is generally backbreakingly labor and time intensive. Where would the time and leisure for “higher” persuits come from? If you want to talk class conflicts, nothing gets more basic than “Nobles” and “Peasants.”
Finally, most ‘innovation’ and ‘progress’ in human afairs come out of new methods of powering the society. Look at the history of technology. Major advances, those that lead to increases in the general standard of living, involve making tasks easier to effect. The horse collar is an example. Simple in concept, but transformative in agriculture and transportation.
We need to keep our eyes open for that deceptively simple idea. So simple it will take a genius to think of it.
1. This piece
http://www.srfood.org/images/stories/pdf/officialreports/20110308_a-hrc-16-49_agroecology_en.pdf
is just one that summarizes the research of recent decades which strongly establishes that decentralized agroecology even now produces as much or more food per acre than corporate monoculture.
2. There’s no doubt at all that post-oil, decommodified agroecology will produce far more than the heavily fossil fuel-dependent globalized corporate system.
3. Therefore, we know from (2) that agroecology will maximize food production in the future, while (1) gives us reason to believe this maximal level will be able to feed far more people than those focused on resource limitations originally thought.
4. It’s true that pre-oil agriculture involved much arduous labor (though whether it was really much worse than today is a highly disputed question; for example, on a yearly basis even medieval peasants worked fewer hours than we do). This was because agriculture then, like agriculture today, was dominated and exploited by parasitic elites who stole all the surplus (and often much of the subsistence basis as well).
5. But if we combine the tremendous new agricultural knowledge we’ve gathered during the modern era with what ought to be the democratic consciousness we’ve attained (two things pre-industrial peasantries lacked), we can achieve a post-oil agriculture which will not only sufficiently feed us but where we’ll work less and better than our medieval predecessors as well as less and better than the grind we’re on today, and do it all while enjoying, for the first time, the full flowering of true economic and political democracy.
6. This is necessary if we’re to feed ourselves and preserve our humanity at all. if the choice you mention were left to the democratic people, then we’d choose to do the best we can, everywhere. (BTW, smallholder food stewardship on an autonomous and cooperative basis would, for the first time in history, attain permanent full employment at truly fulfilling, self-managed work. The fact that agroecology is skilled-labor intensive is something we should regard as a benefit, not a menace.)
But to the extent neoliberal kleptocracy fights this and tries to enforce a restored (but far worse) feudalism instead, it will cause great suffering and kill many people. But all this will be the result of the choices made by criminals, not the relocalizing people.
Much of what I’ve written on the subject is collected here:
http://attempter.wordpress.com/series-on-food-sovereignty/
Agree. There are many upsides to move away from corporate agrarian ownership and agricultural selections. Michael Pollan discusses how farmers have higher yields when they plant varieties of a tuber(example). They use what nature offers to prevent infestations and disease such as lady bugs to control insects attracted to tubers.
Corporations generous use of chemicals such as herbicides and pesticides that are deadly to humans and are sprayed onto our foods due to the religion of monoculture plant production. The chemical contamination is integrated in multiple ways into the food chain. Such as the GMO corn and grasses fed to the livestock, cows, chickens, pigs, and sheep, and in turn we ingest. Or the overproduction of farm-raised salmon in unnatural ponds.
And lastly, the corporate production of flowers. In their quest for perfection and longevity, sadly the red rose has no fragrance. our attraction to flowers is not perfection and longevity, it’s variety, color, and fragrance. Standing in a garden of odorless roses is denying our senses the sensual pleasures of nature. And we haven’t touched on our foods being wrapped in plastics that leak chemicals or artificial hormones used in livestock.
“As a child, I understood how to give. I have forgotten that grace since I became civilized. I lived the natural life, whereas I now live the artificial. Now I worship with the white man before a painted landscape whose value is estimated in dollars.” Ohiyesa
Dear attempter;
“Chasened stand I at the gate of your castle. Grant me this boon: The kiss of Peace.”
Very good info there, I had no idea all this had already transpired. And no public exposure on the MSM, hmmm…
I wonder how much progress Communitarianism has made lately.
Tis a wonder working Sunday indeed.
Here is my penny’s worth:
What the author does not say explicitly, but which underlies much of his opinion, is the importance of science and technology in underpinning an economy.
In the AngloAmerican economic model, science is a commodity. It produces new insights which can be patented and the technological spin-offs turned into new IPOs on the stock exchange. That is how the moneymen protect themselves from unpredictable innovation. We can see it clearly in the prices of medications but its actually across the board and seems to be the main reason why there is so much furtiveness about scientific research and so much private capital invested in it.
This is an area requiring government intervention. We need transparency and publicity. New insights can come from anyone, not just the scientists actually producing the data. People just need to see the information to form their own assumptions and the more of them the better. There are probably many new technologies hidden in data we have accumulated in observatories and laboratories but do not know how to analyse or recognise.
Now this planet has become over-crowded we need to send volunteers elsewhere. We have viable rocket technology to do so – both public and private money is used to make rockets. If JFK was around today we would have a national priority to make a moon base as a first step off the planet. It would have to be a truly international venture with national shares assessed on population not wealth.
Rocket technology would improve if there was more business for rocket manufacturers. We can easily address that by agreeing to throw all our nuclear garbage into the sun rather than leaving it in perishable containers in caves all over the surface. That would permit all our myriad ideas about propulsion to be used and compared.
There is a plausible technology to be developed in MagLev tethers, with this end embedded in the crust and the other attached to orbiting stations. Something like that seems essential for us until we crack the secrets of gravity.
Nobody talks much about this as the power centers draw their inspiration from the past and almost never the possible future but these are precisely the sort of ideas that can revitalise society and animate us as we should be animated. Life can be wonderful if we have the power to shape our existence in the ways we like.
Space travel is fine, but no cure. The rate of population growth outstrips any foreseeable rate of space emigration. And where would we go? If we were able to live on Luna or Mars we could just as well move to Antarctica.
>> As chairman of the World Bank Commission on Growth and Development since 2006, Spence is uniquely informed on the subject of growth. In his new book The Next Convergence, he judges that it will take until mid-century for developing economies, which represent 60 per cent of the world’s population, to reach advanced status. <<
We better get a second opinion on that one. How about we ask Dominique Strauss-Kahn what he thinks about it?…
Dear Psychoanalystus;
No, I’m afraid I for one am not up to watching DSK “grope” around for an answer.
“For some reason, governments, which have been demonised as useless for a quarter of a century, are now expected to fix things. They will not, because the problem is about a lack of creating the new, something governments have little or no influence over.”
WRONG! Were (1) a two-tier credit system imposed, obsoleting a bankrupt monetarist system (a role only available to government, with this action awaiting implementation via legislative passage of a carbon copy of the 1933 Banking Act — i.e. Glass-Steagall, and (2) a Bank of the United States reconstituted for the initial, primary purpose of financing at most favorable rates of interest (0-2%) transformative projects massively elevating productive capacities on which the U.S. economy operates, taken thus will be the necessary steps — indeed, the ONLY workable solution — to overcome the hyperinflationary breakdown of the trans-Atlantic physical economy whose beginning traces back to August 15, 1971 when the 1944 Bretton Woods accord was formally scrapped. This breakdown only has accelerated since the financial collapse of 2008 and will continue doing so until (1) a mountain of unproductive, illegitimate debt is purged from the financial system, and (2) massive sums of taxpayer-backed credit are allocated exclusively to the end of astronomically raising the productive potential of the physical economy.
There presently exists the technological means to simultaneously obsolete reliance on hydro-carbons in order to meet the nation’s energy needs, increase energy consumed per capita and per square kilometer, provide energy at far cheaper rates per unit of energy consumed, create energy densities facilitating revolutions in industrial processes, implement this through public sector, for-profit, monopoly corporations (see Alexander Hamilton’s defense of the Bank of the United States for conceptual legitimacy of such a public sector enterprise), and establish a new framework completely eliminating the nation’s current vulnerability to a sleazy, parasitical, fraud-rife, morally and financially bankrupt arrangement. HINT: The answer is neither windmills, nor solar panels.
I’m glad you mentioned corporations “sitting on piles of cash.” Yet sophistry you put forward to explain why this is does not pass muster. Truth is CFO’s are not dumb to the nation’s current vulnerability to a sleazy, parasitical, fraud-rife, morally and financially bankrupt arrangement. Tanya Beder explained this quite well a little over a year ago on CNBC’s “Strategy Session.” Of course, her language was not nearly as course as mine, but her message nonetheless was the same.
To think government still would be useless were it to turn away from its 40 year submission to a far weaker force now best described as a sleazy, parasitical, fraud-rife, morally and financial bankrupt enterprise is both ill-informed and dangerous. Yet “dangerous” only to the effect of feeding the present day’s confusion whose worst effect wastes time that, we simply cannot afford to waste.
“Growth … is transactions?!” Plainly, I’m out of my league, because I believe growth, in fact, is increase in the productive powers of labor such as raises an economy’s relative population density potential. No doubt, though, we are in agreement over potential innovations awaiting capital. Trouble is, trillions of the stuff has been offered up just these past few years, and the only thing to come of it is more proof the nation would rather be servile to a sleazy, parasitical, fraud-rife, morally and financially bankrupt arrangement than aggressively encourage these many potential innovations whose effect we likewise agree could be revolutionary.
Yet there will be no move in this direction without government committed to it. Here is where “innovation” simply must strike first. (I put “innovation” in quotes because it’s not like we have to reinvent the wheel. Just look to Hamilton’s national bank, Lincoln’s greenbacks, and FDR’s RFC and you will discover those unique, American innovations whose capacity for rendering impotent a sleazy, parasitical, fraud-rife, morally and financially bankrupt albatross is proven time and again.)
” Growth, it must be remembered, is transactions, not necessarily consumption of resources”
Really ???
Just what will you be transacting? Even services require labor that consumes goods to live.
test
pursuant of a new types of economy. means burn all the economics books.