Yves here. If you’ve read Das regularly, one of the characteristics of his writing is wry detachment. The shift to a sense of foreboding is a big departure.
By Satyajit Das, a former banker and author whose latest book, The Age of Stagnation, is now available. The following is an edited excerpt from Age of Stagnation (published with the permission of Prometheus Books)
If you look for truth, you may find comfort in the end; if you look for comfort you will not get either comfort or truth, only . . . wishful thinking to begin, and in the end, despair. C.S. Lewis
The world is entering a period of stagnation, the new mediocre. The end of growth and fragile, volatile economic conditions are now the sometimes silent background to all social and political debates. For individuals, this is about the destruction of human hopes and dreams.
One Offs
For most of human history, as Thomas Hobbes recognised, life has been ‘solitary, poor, nasty, brutish, and short’. The fortunate coincidence of factors that drove the unprecedented improvement in living standards following the Industrial Revolution, and especially in the period after World War II, may have been unique, an historical aberration. Now, different influences threaten to halt further increases, and even reverse the gains.
Since the early 1980s, economic activity and growth have been increasingly driven by financialisation – the replacement of industrial activity with financial trading and increased levels of borrowing to finance consumption and investment. By 2007, US$5 of new debt was necessary to create an additional US$1 of American economic activity, a fivefold increase from the 1950s. Debt levels had risen beyond the repayment capacity of borrowers, triggering the 2008 crisis and the Great Recession that followed. But the world shows little sign of shaking off its addiction to borrowing. Ever-increasing amounts of debt now act as a brake on growth.
Growth in international trade and capital flows is slowing. Emerging markets that have benefited from and, in recent times, supported growth are slowing.
Rising inequality and economic exclusion also impacts negatively upon activity.
Financial problems are compounded by lower population growth and ageing populations; slower increases in productivity and innovation; looming shortages of critical resources, such as water, food and energy; and manmade climate change and extreme weather conditions.
The world requires an additional 64 billion cubic metres of water a year, equivalent to the annual water flow through Germany’s Rhine River. Agronomists estimate that production will need to increase by 60–100 percent by 2050 to feed the population of the world. While the world’s supply of energy will not be exhausted any time soon, the human race is on track to exhaust the energy content of hundreds of millions years’ worth of sunlight stored in the form of coal, oil and natural gas in a few hundred years. 10 tons of pre-historic buried plant and organic matter converted by pressure and heat over millennia was needed to create a single gallon (4.5 litres) of gasoline.
Europe is currently struggling to deal with a few million refugees fleeing conflicts in the Middle East. How will the world deal with hundreds of millions of people at risk of displacement as a resulting of rising sea levels?
Extend and Pretend
The official response to the 2008 crisis was a policy of ‘extend and pretend’, whereby authorities chose to ignore the underlying problem, cover it up, or devise deferral strategies to ‘kick the can down the road’. The assumption was that government spending, lower interest rates, and the supply of liquidity or cash to money markets would create growth. It would also increase inflation to help reduce the level of debt, by decreasing its value.
It was the grifter’s long con, a confidence trick with a potentially large payoff but difficult to pull off. Houses prices and stock markets have risen, but growth, employment, income and investment have barely recovered to pre-crisis levels in most advanced economies. Inflation for the most part remains stubbornly low.
In countries that have ‘recovered’, financial markets are, in many cases, at or above pre-crisis prices. But conditions in the real economy have not returned to normal. Must-have latest electronic gadgets cannot obscure the fact that living standards for most people are stagnant. Job insecurity has risen. Wages are static, where they are not falling. Accepted perquisites of life in developed countries, such as education, houses, health services, aged care, savings and retirement, are increasingly unattainable.
In more severely affected countries, conditions are worse. Despite talk of a return to growth, the Greek economy has shrunk by a quarter. Spending by Greeks has fallen by 40 percent, reflecting reduced wages and pensions. Reported unemployment is 26 percent of the labour force. Youth unemployment is over 50 percent. One commentator observed that the government could save money on education, as it was unnecessary to prepare people for jobs that did not exist.
Future generations may have fewer opportunities and lower living standards than their parents. A 2013 Pew Research Centre survey conducted in thirty-nine countries asked whether people believed that their children would enjoy better living standards: 33 percent of Americans believed so, as did 28 percent of Germans, 17 percent of British and 14 percent of Italians. Just 9 percent of French people thought their children would be better off than previous generations.
The Deadly Cure
Authorities have been increasingly forced to resort to untested policies including QE forever and negative interest rates. It was an attempt to buy time, to let economies achieve a self-sustaining recovery, as they had done before. Unfortunately the policies have not succeeded. The expensively purchased time has been wasted. The necessary changes have not been made.
There are toxic side effects. Global debt has increased, not decreased, in response to low rates and government spending. Banks, considered dangerously large after the events of 2008, have increased in size and market power since then. In the US the six largest banks now control nearly 70 percent of all the assets in the US financial system, having increased their share by around 40 percent.
Individual countries have sought to export their troubles, abandoning international cooperation for beggar-thy-neighbour strategies. Destructive retaliation, in the form of tit-for-tat interest rate cuts, currency wars, and restrictions on trade, limits the ability of any nation to gain a decisive advantage.
The policies have also set the stage for a new financial crisis. Easy money has artificially boosted prices of financial assets beyond their real value. A significant amount of this capital has flowed into and destabilised emerging markets. Addicted to government and central bank support, the world economy may not be able to survive without low rates and excessive liquidity.
Authorities increasingly find themselves trapped, with little room for manoeuvre and unable to discontinue support for the economy. Central bankers know, even if they are unwilling to publicly acknowledge it, that their tools are inadequate or exhausted, now possessing the potency of shamanic rain dances. More than two decades of trying similar measures in Japan highlight their ineffectiveness in avoiding stagnation.
Heart of the Matter
Conscious that the social compact requires growth and prosperity, politicians, irrespective of ideology, are unwilling to openly discuss the real issues. They claim crisis fatigue, arguing that the problems are too far into the future to require immediate action. Fearing electoral oblivion, they have succumbed to populist demands for faux certainty and placebo policies. But in so doing they are merely piling up the problems.
Policymakers interrogate their models and torture data, failing to grasp that ‘many of the things you can count don’t count [while] many of the things you can’t count really count’. The possibility of a historical shift does not inform current thinking.
It is not in the interest of bankers and financial advisers to tell their clients about the real outlook. Bad news is bad for business. The media and commentariat, for the most part, accentuate the positive. Facts, they argue, are too depressing. The priority is to maintain the appearance of normality, to engender confidence.
Ordinary people refuse to acknowledge that maybe you cannot have it all. But there is increasingly a visceral unease about the present and a fear of the future. Everyone senses that the ultimate cost of the inevitable adjustments will be large. It is not simply the threat of economic hardship; it is fear of a loss of dignity and pride. It is a pervasive sense of powerlessness.
For the moment, the world hopes for the best of times but is afraid of the worst. People everywhere resemble Dory, the Royal Blue Tang fish in the animated film Finding Nemo. Suffering from short-term memory loss, she just tells herself to keep on swimming. Her direction is entirely random and without purpose.
Reckoning Postponed
The world has postponed, indefinitely, dealing decisively with the challenges, choosing instead to risk stagnation or collapse. But reality cannot be deferred forever. Kicking the can down the road only shifts the responsibility for dealing with it onto others, especially future generations.
A slow, controlled correction of the financial, economic, resource and environmental excesses now would be serious but manageable. If changes are not made, then the forced correction will be dramatic and violent, with unknown consequences.
During the last half-century each successive economic crisis has increased in severity, requiring progressively larger measures to ameliorate its effects. Over time, the policies have distorted the economy. The effectiveness of instruments has diminished. With public finances weakened and interest rates at historic lows, there is now little room for manoeuvre. Geo-political risks have risen. Trust and faith in institutions and policy makers has weakened.
Economic problems are feeding social and political discontent, opening the way for extremism. In the Great Depression the fear and disaffection of ordinary people who had lost their jobs and savings gave rise to fascism. Writing of the period, historian A.J.P. Taylor noted: ‘[the] middle class, everywhere the pillar of stability and respectability . . . was now utterly destroyed . . . they became resentful . . . violent and irresponsible . . . ready to follow the first demagogic saviour . . .’
The new crisis that is now approaching or may already be with us will be like a virulent infection attacking a body whose immune system is already compromised.
As Robert Louis Stevenson knew, sooner or later we all have to sit down to a banquet of consequences.
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@Yves Smith – Before giving serious credibility to what Satyajit Das says, what has his track record been? To me he is another one of those doomsayers who keeps fueling people’s anxieties and depressions while profiting off them through book sales. In my opinion,this is the second time in the last 2 months that Naked Capitalism has paid undeserving attention to doomsayers. I would be interested to know what Naked Capitalism’s opinion on Das is to understand why he and fellow doomsayers keep getting this otherwise brilliant website’s attention.
Das is not an asset manager. He’s a derivatives expert and he does not make market calls.
If you think selling books is a way to make money, you are smoking something very strong. The one book on which I am sure was profitable to Das did make a fair bit of change is what comes pretty close to being a technical manual on derivatives which sells at a high price because it’s aimed at a highly expert audience and very few people know the terrain well enough to sell it credibly. Das makes vasty more doing things like expert witness (he’s worked on every major international financial bankruptcy over the last decade, maybe even two decades) than he does writing books, I guarantee you.
@Yves Smith – Thank you for clearing that up.If you are not too short on time can you please cite some sources on his work in derivates and as expert witness?
Moreover, I still cant help but feel that his tone and writing style has been very similar to that of other doomsayers for the past few years that is very pessimistic, slightly condescending/arrogant and ultimately, as someone writing and posing as an expert on the global economy,not offering his audience any hope or solution to work towards. His talk at the australian festival of dangerous ideas is a good example,in my opinion – https://www.youtube.com/watch?v=3K2m7NnO7iY
This makes me very skeptical of him.
pLease use the search engine Google and do your own research….he is a known factor, an expert in derivatives and R I S K.
Sometimes there are no good answers. It is my considered opinion that the human race has seriously fucked up this planet and without a massive effort to turn this around, modern civilization and maybe even our species is toast. And I don’t see anything remotely approaching the mobilization we need, anywhere.
For starters, did you miss that we are in the midst of a human-induced mass species die-off, or that we run out of potable water around 2050? A new BBC report based on recent research suggests the water situation is even worse, that half of the human race is now experiencing water shortages.
If you want intellectual-sounding feel-good, the TED talks are that way. You are shooting the messenger.
Unfortunately most human being have an optimist bias due to limited perception and knowledge, extrapolating their immediate context to global reality. That’s why ‘all is good’ until it isn’t and not so sudden degradation happens.
Bob- When are those pressing the ideology of rapacious exploitation of the environment and the working poor ever held responsible for their failures and negative outcomes brought about by their actions? You talk about undeserving attention to doomsayers- you must be kidding. Ask a parent in Flint Michigan how they feel about their children’s future. Are they being too negative or exposed to too much doomsday propaganda? No, blind ideologues pursuing their desire for personal wealth and power caused that community great harm.
It is almost too much to contemplate the moral bankruptcy that has gripped our society. What is the social limit that can be placed on capital accumulation? Kicking the can down the road is the elite strategy for the simple reason that solving our current environmental and social problems would mean changing the system. The elites in power have neither the vision nor desire to do so.
Profiting off a persons anxiety and hardship sounds like a good description of a capitalist. Only sociopaths believe this is a good way to run society.
I agree with you.
If you look at doom saying, you have to evaluate it from sham dooms and real dooms.
Watching the republican debate last night, the boogy man of ISIS is used to address a threat that is essentially non-existent to the US – while the ever decreasing and stagnating incomes, are not addressed at all, except with the preposterous solution of lower taxes.
Bob, I have followed Das for over a decade and he is not a doom and gloomer. He is a realist who is simply identifying the current financial environment. People can choose to be a “Dory” as he says, and ignore things or position themselves for the potential volatility and consequences of poor past decisions. I still laugh when people say that no one saw the 2008 financial crisis coming. Many of us ” non-Dorys” did. Doesn’t mean something has to occur again, but probabilities are high.
Your post is far too manicured “Bob”. Your shilling is too obvious. I don’t know who Satyajit Das is and like most people I don’t care. What most people care about is the argument being made, and it makes sense.
You can continue to spread FUD, question motives, and other such tactics, but the argument remains and not only have you failed to present a counterargument, you have failed to even address it.
The rise of shilling and propaganda in all its forms is simply another symptom of the stagnation and backsliding of both our economic and intellectual enviornments.
Just because he is a “doomsayer” doesn’t mean he’s wrong. He’s a very sharp guy with a lot of knowledge on the particular subject of finance and economics. I for one, appreciate this stuff being on NC, and I also believe that he is spot on.
Bob,
I told you they’d gag on it.
Larry
Is it inappropriate to view the term stagnate as a aphorism for reduced lawful rights…
And “middle income trap” a euphemism for cleptocracy, and “deregulation” as the institutionalization of fraud, and “freedom” being “the powerful do what they can, the weak endure what they must.”
My gripe with Das is his use of Hobbes quote which has only occasionally been true about human history, utterly false for the long span of our species.
jsn, re the “occasional” truth of life as poor, brutish and short depends on which class you are looking at. The elite have always lived pretty well, but you cannot say the same for the majority of people who were peasants, farmers, slaves, etc. Just read a bit about the Roman Empire that lasted for hundreds of years and you will find that the rulers and their relatives and friends, and maybe the military, lived very well, but the slaves and the poor were another matter.
Nobody lived well in pre-industrial and early industrial societies. I just finished reading the diary of Gideon Welles, Lincoln’s Secretary of the Navy. In the first entry Welles, Lincoln, and Secretary of State Seward are in a carriage, on their way to the funeral of one of Secretary of War Stanton’s children. A few entries later Welles is mourning the death of one of his own children (of his 9 only 3 reached adulthood). And of course Lincoln lost a child while living in the White House, as well as earlier. Any biography from the 19th Century or before will describe similar events. And that was for the “elite”. Disease and early death were the lot of everyone in every society prior to our own. The world was not like Little House on the Prairie. It was more like Bangladesh.
Ok, I was a bit Panglossian, but to the following point, the nastiest conditions humans have lived with have been in that 5% of our history since “civilization” was urbanized. And much of the very worst is in the third world right now.
Don’t get me wrong, I love the city, but money and slavery came into existence in parallel around 5 to 7,000 years ago about the time cities did. And half of the total heft of humanity, a 200,000 year old species, has probably lived through the last 300 years and a great deal of that was indeed nasty brutish and short, as required by classical economic ideology. However, as it post dates Hobbes, can’t be what he was referring to.
Both ancient and more recent hunter gatherers have been modern is size and apparent health from the bones and artifacts found, although they were/are a great deal more likely to be/have been offed by human competitors than we industrial citizens are now. But pretty healthy, so not nasty, short for something like one in 5 killed by fellows/competitors and maybe brutish by our contemporary norms, or maybe “heroic” like they see it in the Illiad, its the value weights and the negative judgement of the nature of humans in the Hobbes quote I object to.
It’s like modern economists calling people “lazy” rather than “resource efficient” a quality lavishly lauded in corporate person-hood!
In all seriousness, this post strikes me as an antidote to the likes of Paul Coelho. (I grant you that PC has a certain sort of talent, but it is squandered.)
On the other hand, whatever the full truth is, it is very hard to sort through the BS that is produced daily for our entertainment, beguilement, and just plain distraction. And, what rings true in Das’s writing is that he points to several specific instances of that mind-numbing crap that is thrown at us daily. (As does NC in general. Thank you to all.)
Literate and intelligent, I think he is on to something, but although I hate quoting him I am reminded of a saying of Lenin’s; “Who whom?” which makes more sense, I have been told, in Russian, but translates more clearly as “who does what to whom?”.
Unwinding the damage is going to be costly, if it can even be done under the current dispensation of wealth, power, and resources. Who is going to pay the cost is a political question, and men like Das have trouble understanding that economic issues eventually boil down to who has the political power to do what to whom, i.e. who can make others pay more for the cleanup than they have to pay. Of course, we could spread the burden equitably, but that would require a degree of trust and civic mindedness that are absent in most countries.
I cannot imagine that Das does not know this.
I believe we (the little people) also have more agency than we imagine. Perhaps Das thinks so, too. But with our heads firmly stuck up our asses, it’s impossible to move forward. Many of us who have managed to peek out are terrified at the future we see. And as we all know, terror is not constructive. Ergo, heads back up asses.
Tiny Iceland continues to deal with the fall-out of its banking catastrophe — something that no other country I know of has had the courage to even contemplate, and that all of the “developed” nations claimed was impossible.
Maybe we are just way too big; perhaps a robust localism would provide a path out of this mess. Iceland has a population of 320,000.
Sorry to keep harping on this but all is not well in Iceland as much as many outside of Iceland would like to believe. They are very clearly heading for another crisis….just the crane count alone in Reykjavik is staggering. And what they are building is hotels under an assumption that tourism will last forever.
Today’s Capitalism has fundamental flaws that coincidentally benefit the wealthy and bankers.
Today’s flawed economics:
1) Ignores the true nature of money and debt
Debt is just taking money from the future to spend today.
The loan/mortgage is taken out and spent; the repayments come in the future.
Today’s boom is tomorrow’s penury and tomorrow is here.
One of the fundamental flaws in the economists’ models is the way they treat money, they do not understand the very nature of this most basic of fundamentals.
They see it as a medium enabling trade that exists in steady state without being created, destroyed or hoarded by the wealthy.
They see banks as intermediaries where the money of savers is leant out to borrowers.
When you know how money is created and destroyed on bank balance sheets, you can immediately see the problems of banks lending into asset bubbles and how massive amounts of fictitious, asset bubble wealth can disappear over-night.
When you take into account debt and compound interest, you quickly realise how debt can over-whelm the system especially as debt accumulates with those that can least afford it.
a) Those with excess capital invest it and collect interest, dividends and rent.
b) Those with insufficient capital borrow money and pay interest and rent.
Add to this the fact that new money can only be created from new debt and the picture gets worse again.
With this ignorance at the heart of today’s economics, bankers worked out how they could create more and more debt whilst taking no responsibility for it. They invented securitisation and complex financial instruments to package up their debt and sell it on to other suckers (the heart of 2008).
2) Doesn’t differentiate between “earned” and “unearned” wealth
Adam Smith:
“The Labour and time of the poor is in civilised countries sacrificed to the maintaining of the rich in ease and luxury. The Landlord is maintained in idleness and luxury by the labour of his tenants. The moneyed man is supported by his extractions from the industrious merchant and the needy who are obliged to support him in ease by a return for the use of his money. But every savage has the full fruits of his own labours; there are no landlords, no usurers and no tax gatherers.”
Like most classical economists he differentiated between “earned” and “unearned” wealth and noted how the wealthy maintained themselves in idleness and luxury via “unearned”, rentier income from their land and capital.
We can no longer see the difference between the productive side of the economy and the unproductive, parasitic, rentier side.
The FIRE (finance, insurance and real estate) sectors now dominate the UK economy and these are actually parasites on the real economy.
Constant rent seeking, parasitic activity from the financial sector.
Siphoning off the “earned” wealth of generation rent to provide “unearned” income for those with more Capital, via BTL.
Housing booms across the world sucking purchasing power from the real economy through high rents and mortgage payments.
Michael Hudson “Killing the Host”
3) Today’s ideal is unregulated, trickledown Capitalism.
We had un-regulated, trickledown Capitalism in the UK in the 19th Century.
We know what it looks like.
1) Those at the top were very wealthy
2) Those lower down lived in grinding poverty, paid just enough to keep them alive to work with as little time off as possible.
3) Slavery
4) Child Labour
Immense wealth at the top with nothing trickling down, just like today.
This is what Capitalism maximized for profit looks like.
Labour costs are reduced to the absolute minimum to maximise profit.
(The majority got a larger slice of the pie through organised Labour movements.)
The beginnings of regulation to deal with the wealthy UK businessman seeking to maximise profit, the abolition of slavery and child labour.
Where regulation is lax today?
Apple factories with suicide nets in China.
The modern business person chases around the world to find the poorest nation with the laxest regulations so they can exploit these people in the same way they used to exploit the citizens of their own nations two hundred years ago.
Labour costs are reduced to the absolute minimum to maximise profit.
Capitalism in its natural state sucks everything up to the top.
Capitalism in its natural state doesn’t create much demand.
Spot on, Keith
It’s interesting that the world’s two major religious documents, the Koran and the Christian Bible both prohibit lending for the purpose of collecting interest.
Unthinkable! What if people actually followed the rules they claim to believe in? Lenders would have to make loans in the anticipation of participating in a profitable enterprise rather than profiting from the Ponzi scheme that is contemporary bankster fiat money finance.
The Biblical restraint in Deuteronomy seems to apply only to the Chosen People. Wasn’t that the argument the money-lenders first put forward in Florence at the beginning of the system – that they could obey the word of God and loan to others at interest?
On the matter of debt generally, Yves published the solution a few days back – central banks have to monopolise the creation of credit and distribute it as well. May sound undemocratic but look where democracy has got us of late.
That’s not what I said. Any two parties can create debt. Indebtedness is the foundation of human society. A bar tab is a debt until you settle it. A store letting you run store credit is a debt. You borrowing $50 from a friend is a credit. You can’t stop this.
I said the payments system needs to be nationalized or operated as a utility.
I agree. What do you want to do about it?
Do you think our current capitalistic system is like a law of the universe? Do you think that we are stuck with it forever? Will the rich continue to get richer and the poor get poorer?
Or do you think that our current system is man-made and can therefore be changed to anything we would like?
Why do we have debt? Why not zero debt? Why do we have interest? Why not zero interest forever?
Why do we tax current income in order to have money to pay government expenses? Why don’t we eliminate taxes of all kinds, except sin taxes? Wouldn’t these changes make our system of economics better and more dependable?
Keith is right to question the very nature of growth. Here we see that Smith’s observations of labour and time, combined with the underlying assumptions of debt-based growth, only make clear that what Das calls stagnation is the eventual result of an economic system we choose to impose on ourselves. Only the social safety net separates us from reliving a not too distant past. What would today look like without food stamp supports, unemployment insurance, subsidized health, heating assistance?
It would look like 1912. We had unregulated capitalism without any fanciful notion of trickle-down, as I learned from this excellent book, in which we read of the very brutish Hobbesian existence of mill workers at the height of “real” economic productivity.
The author posts the entire first chapter, of which I’ve pulled the following quote:
“… but not many lasted that long in the mills. Inhaling fibers that floated through dank, humid mill rooms, a third died within a decade on the job. Malnourished, they succumbed to tuberculosis, pneumonia, or anthrax, known as “the woolsorter’s disease.” They were crushed by machinery, mangled by looms and spinners. In a single five-year span, the Pacific Mill had a thousand accidents, two for every three days on the job. Those who avoided accident or disease just wore out like an old suit. Doctors and ministers in Lawrence lived an average of sixty-five years. Mill bosses could expect to live fifty-eight years. The typical mill worker died at thirty-nine.”
from “Bread and Roses: Mills, Migrants, and the Struggle for the American Dream” By Bruce Watson. http://brucewatsonwriter.com/bread-roses-chapter1/
Today would look a lot like 1912, when there was no significant middle class. And this was at the end of a very productive era in the real economy, not one of financialized legerdemain as we have now. Are we are on a trajectory to repeat the past? Can we look beyond material emoluments and instead choose a true accounting; one which measures activity that produces well-being.
Perhaps we’re at an inflection point in history in which we are challenged to redefine “growth” and “stagnation”?
I think its increasingly clear that despite ‘official’ denials, business deep down seems to accept the thesis that the days of growth are over. As has been so wonderfully mapped out by Yves and Lambert here, pension funds are increasingly using dodgy accounting to hide gradual drop in returns from long term investment, modern companies are increasingly adopting policies of being vultures on existing wealth rather than invest in future wealth, banks are desperately trying to reinvent themselves as they run out of ways to make money from traditional avenues.
The core problem of course is that the incredible growth from the 19th Century onwards was mostly created by extracting fossil energy from the earth – and we’ve hit the limits of this. Fusion is still decades away, and renewables will never provide the same bounty as oil and coal. And we seem to have hit some sort of limit with technological change – there are still brilliant people inventing brilliant things, but there seems to be a limit to what these inventions are really doing. Just look at the fawning press given to Musk’s rocketships. Beautifully engineered yes, but essentially doing what Soviet technology was doing quite capably half a century ago.
If there is a source of optimism to be found, it is that we may well be at the tipping point of a revolution in renewable energy. But this will not provide a major long term growth spurt – a solar panel can never rival a tank of gasoline for utility. But it may be that a need to live within the limits created by the sun and wind might just lead to a realisation that Gandhi was right when he said that the earth was rich enough to satisfy human need, but not human greed.
If I were making policy I would be pushing extend and pretend too. However I would also look to start the process of expanding fiscal policy to cope with what is going to be a bumpy ride.
I guess we will have to wait for things to be really bad before we do the necessary. But yes, I do think that’s where we are heading…
As always, on this planet.
In reality fusion is safe at a 92 Million mile distance, where gravity is a very good (not perfect,, google Nova) containment vessel, and the inverse square law a wonderful protection from particle and radiation flux.
Controlled fusion on our planet may be decades away. Or centuries. Or, conceivably, unattainable. In the meantime we will have to use the energy resources we have and manage water and fertile land intelligently. This is hardly impossible although it will require a level of competence seldom seen in governments of recent decades.
Serious problems are almost never confronted until there is some tragedy: famine, war, epidemics, etc. The good news for those of us living in “rich” countries is that we are likely to be the last affected.
What disappoints me is that there is no sustained push towards sustainability, and the topic of climate change and alternative energy has found almost no focus in this election cycle. Improving US infrastructure can provide an estimated 30-40% reduction the national energy consumption from buildings (which constitute a major portion of our energy usage). But energy costs are so low that the risk in having a failed infrastructure project leads to reduced investment in infrastructure improvements. Interestingly, there is a group of companies known as ESCO’s which attempt to provide a type of risk pooling for investing in energy-efficiency upgrades. Given the size of the federal government, federal investment in sustainable infrastructure would naturally provide risk pooling for public infrastructure.
I largely agree with your points and would go further in saying that technological solutionism is a major problem. The world will not find a solution by developing new technologies, but in large-scale mobilization of the population to develop more energy-efficient infrastructure, deploy more alternative energy generation sources, and reduce our resource consumption. Technological solutionism provides a convenient excuse to ignore these issues in anticipation of some unknown future technology. Whether we are collectively able to find a solution to our energy problems before the situation seriously deteriorates remains to be seen. Reducing resource consumption is such a taboo topic in the US, that none of the major party presidential candidates have even paid lip service to such an idea. This will require reducing meat consumption, reducing driving, living in more densely populated cities, reducing flying, and generally “lower quality of life”.
Authorities have been increasingly forced to resort to untested policies including QE forever and negative interest rates.
Authorities are fallible and exclusively interested in their own personal welfare. We would all be better off if they were simply paid a BIG of $50,000 per year and told to spend the rest of their lives sitting on a beach. Then they couldn’t make the damage they do to us worse.
The Flint tap water crisis came about because the authorities are incompetent and corrupt.
The authorities constantly tout the benefits of globalization, with economists sitting on their throne at the policy table cheering on the wholesale shifting of manufacturing work to Mexico and China. Well, it doesn’t affect them personally, because they get their six and seven figure salaries no matter what happens. If they were fired wholesale like the employees of Carrier, a division of the tax sucking UTX, then they might have an idea of what the destruction of your workplace, through no fault of your own, other than it’s not possible to work for $2.00 per hour in our society and still pay the enormous bills of people whose jobs can’t be shifted to slave wage countries.
The authorities were in charge of the greatest heist ever perpetrated on humanity, the GFC of 2008, which was a planned crash with Goldman Sachs at the epicenter calling the shots.
It looks like we are having a repeat which will come to a head just before the election of a new president. Heist number two coming up. It’s in their playbook as a proven strategy now.
Authorities. A dirty word to my ears.
They’ll just foul the beaches too like they do everything else!
Here! Here!
I’ve found my own view of authority and government evolving in recent times.. At the very least, we are at the point of diminishing returns. The bigger the government the less good we get from it. I lean more towards the conclusion that authority – our governments – are the sole threat to our quality of life.
Now someone has to run things and it’s naive to imagine a world with no governments. I’d say smaller is better because the less authority you give others than the less power they have to interfere in your life.
One example: I used to be a good nationalist wishing for a united Ireland. Idealism as its worst as Ireland has only ever been united under British rule. Since then the Free State and Republic has been ruled by the Vatican and now the EU. To include the other six counties in such an agenda wouldn’t be doing them any favours. Instead, what I’ve come to favour is the GAA format of 32 independent counties. Ireland as divided as it could be! On such a smaller scale you have a better chance of direct democracy, which is the only way for average people to control the society they live in.
yes, precisely !!
Pre 1705 (William of Orange) it was unified.
Because English rule is so different than British rule… Please dont resort to semantics.
authority – our governments – are the sole threat to our quality of life.
Nah. I say its the wealthy. But considering that the wealthy always have and always will own the government, maybe taking the governments power will mean they hurt us less.
Or it might not. I dont trust those Right Libertarians. The way they would ‘shrink the government’ would be in such a way as to give the wealthy yet more power.
How bout those wrong libertarians ( sticks tongue firmly in cheek) who are just tired of being continually being ripped-off by government intermediaries, banksters, fraudsters (same), etc., for constantly increasing rents & fees, for less and less benefit…where does it end, besides impoverishment for the unrich ??
“How bout those wrong libertarians”
You mean like the ones that provided the philosophical underpinnings which enabled all corruption and looting… you know… how it was just used a front for corporatists…
Skippy… I’m sorry but I did not know the establishment of FEE was a socialist endeavor…
“How bout those wrong libertarians”
Yeah how about them corporatist lickspittles… what the religion did not match reality or is a case of blind faith by the congregation.
Skippy… Pavlovian response to everything with Kenyans… did it…
At the national and provincial/state level the wealthy control government. A bigger problem is that the entire political system is structured to benefit the wealthy. Also structured to not be changeable.
At the local level, however, the wealthy play no role. Municipal governments can be rather totalitarian when it comes to their by-laws. A power trip for local politicians and bureaucrats who grant themselves the power to interfere in others lives. One case in point: where I live utility bills can no longer be paid in cash. Must be paid electronically. I guess that if you don’t have a bank account or credit card you do without electricity and water. This is the kind of trivial crap you get from government. Nuisance value. Like the guy who comes to the door to question you on whether your dogs have a license.
On the national stage the biggest issue is all the wars our governments start. All citizens bear some responsibility for that because we’ve been perfectly happy to go along with it(so long as no one we know gets killed). Can’t help but think that America split up into 50 states would not have the resources to murder people halfway around the world. Instead the state governments would have to limit themselves to fighting with each other.
Please don’t use Right/Libertarian as if they are the same thing. Right wingers are power hungry warmongers who have nothing in common with true conservatives or libertarians. Politically, in the western world, there are no longer conservatives nor libertarians. That may explain your confusion. In Canada we had a Reform Party which became the Conservative Party. reform = conservative????? They’re just labels to attract the suckers who vote to a particular brand name. Most seniors in Ontario who voted for Harper’s conservatives likely thought they were getting Bill Davis’ red Tories! Ignorance is bliss.
The authorities are anything but “incompetent.” They know what they are doing. This is all according to plan. sometimes they get caught, most times they don’t.
In 1997, I watched the ABC-TV version of Huxley’s Brave New World, which, like the cartoon version of Orwell’s Animal Farm was a travesty that inverted the meaning of the original work.
It was while watching Brave New World that I realized –
It’s not that they don’t know what they’re doing – they know exactly what they’re doing!
Correction, cnchal.
“Goldman Sachs at the epicenter calling the shorts” ;-)
They’re Underpants Gnomes, then, you think? I’m not sure I agree.
Yes, I think the total moral bankruptcy of the current power structure is pretty obvious. What then is to be done? Perhaps we’ll be lucky and find a way to gently wrest power from the transnational kleptocrats– without too much human destruction. Unfortunately, some sort of even more authoritarian (right or left) structure seems likely to emerge from our current mess. :(
I was shopping for some trinket for the Mr. polecat yesterday. I paid cash for the items, and while doing so, mentioned of various pundits, economists, and vaunting professors, all calling for the end of physical currency, and the implications thereof……….It was like someone farted…….! a moment later someone mentioned using credit cards and such. I stated that it was predicated on theft of the plebes, and control of dissenters………
It amazes me just how unthinking the general public is regarding who controls what, and of the implications these and other dire policies that are pushed upon us!
Years ago, I was buying some woodworking tools from a small retail shop and the proprietor gave me a kindly lecture on the need to buy in cash- as the credit card companies were taking an unearned cut on the cost of the tools. I remember thinking at the time – that was one shop owner with a chip on his shoulder. I was young and never gave the implications of credit and the economic forces in play much thought.
His concern stuck with me over the years and now I have a better appreciation for his argument. However, its way to late in the game to save his shop and many other small businesses. All lost to big box stores and large chain retailers.
Our only hope is to keep learning and fight for the type of social relations we find desirable. Pointing out the dangers of the current system is but one small piece in that struggle- albeit an important one.
Yves, this particular quote from his book excerpt bothers me:
“Debt levels had risen beyond the repayment capacity of borrowers, triggering the 2008 crisis and the Great Recession that followed.”
It seems he is all but ignoring the part the banks played, putting the blame on the homeowners, instead.
Am I wrong in seeing it this way?
Debt levels rose as planned by the banks due to an active part by the banksters encouraging folks to refinance or buy following wildly false appraisals put into play to allow that, from what I’ve experienced.
Am I wrong in feeling he doesn’t put enough blame on the banks, or how the govt ignored what they were doing? (I do realize this is just an excerpt from his book).
The keyword in the beginning of the paragraph (‘financialisation’) carries the context. Borrowers seems to refer to corporate as well as consumers, including home-buyers. Das being a derivatives expert implies he holds as given the orders-of-magnitude bets built up on real estate. So the sentence you quote could look bad if taken out of context, but I don’t think that was the intent.
If our banks and the banks around the world accepted their part of the blame for the financial crisis of 2008, what would their solution be to help our economy, and the other modern economies out of stagnation.
They are already doing it and the its not working. They are trying to get people to take on more debt. People do not want to be slaves to more debt. The solution is not more debt created by the government, or the private sector. The solution is not more tax cuts either.
The solution is to reduce the excessive debt the private sector is burdened with. This will increase aggregate demand, and confidence in the economy. We can wait as the world pays down the debt,, or we can set an example and use the Feds excess income to help pay down the debt in the US,
wp.me/p42WQA-7Y wp.me/p42WQA-7c http://www.taxpolicy.wordpress.com
“Most of the great men of the past were only there for the beer.” ~ A.J.P. Taylor
I thought this was the most concise assessment of where we are at i have read in a long time.
When I look at my bank account, I can tell very well where this financial debacle will end. First, I saved and saved for retirement and was willing to depend on the interest paid on my savings. In the ’80s I did very well being both employed and having excellent interest rates to increase my retirement funds. The interest levelled off gradually until 2008 when the financial crisis hit. Since that time, my retirement funds have been halved and continue to decline with the decrease in interest rates. Now my poor savings will have to beware of the bail-in which will mean that I will have to pay (negative) .5% to my financial institution to just keep my unprotected funds in their safe. I don’t have to think too much about the future of my savings as they get gobbled up by the policies of the financial institutions of my country. Easy come; easy go. Bwahhahaha!
What about the mattress? Could be safer than the banks…
Good luck with the mattress… the pied piper is playing his music and the children are following…
http://www.forbes.com/sites/rickungar/2015/05/14/the-cashless-society-contemplating-the-ultimate-surrender-to-government-control/#486eaada7025
http://www.cbc.ca/news/world/the-international-movement-for-the-end-of-cash-1.1202565
Policymakers interrogate their models and torture data, failing to grasp that ‘many of the things you can count don’t count [while] many of the things you can’t count really count’.
Developing a Sustainable End Game for the Global Economy – Triple Pundit
http://cdn7.triplepundit.com/wp-content/uploads/2011/08/Developing-a-Sustainable-End-Game-for-the-Global-Economy.pdf
Das points to the necessity of reducing the global private sector debt overhang as a precondition to resumption of economic growth. How governments and their central banks go about doing so in the face of entrenched interests who are resistant to such a policy shift is a core issue IMO.
Further, in order to maintain or improve living standards in the face of such debt reductions, the velocity of money will need to be increased. Policies to increase the velocity of money in the economy will also likely meet with political resistance.
‘as a precondition to the resumption of Unbridled economic gwoff, without a care as to ANY environmentally externalized negative effects that may arise from said gwoff !!!………FIFY
Re your “FIFY”:
Think Das addressed this. In his post, Das said:
“Financial problems are compounded by lower population growth and aging populations; slower increases in productivity and innovation; looming shortages of critical resources, such as water, food and energy; and manmade climate change and extreme weather conditions.” Then he added salient observations regarding some of the profound effects of environmental degradation. Further down his essay Das said, “A slow, controlled correction of the financial, economic, resource and environmental excesses now would be serious but manageable. If changes are not made, then the forced correction will be dramatic and violent, with unknown consequences.”
He also said that policymakers are “failing to grasp that ‘many of the things you can count don’t count [while] many of the things you can’t count really count’.”
Are addressing excessive levels of private sector debt, economic growth, and arresting and reversing environmental deterioration mutually exclusive? I think not. Rather, they’re intertwined IMO.
this list of miseries will have a solution one way or another. it’s like an Aesop’s fable. the story of toilet paper, a small shovel and the smooth stone. when toilet paper became too costly to manufacture it was resolved by the townspeople to use the best alternative, which could be found in abundance along the river bank. And for free. They also soon realized that all the piles of used toilet paper that no one had ever cleaned up were slowly being digested back into the ecosystem. The place even started to smell fresher. The people then realized they had been fooled all along about money, they realized money had no value whatsoever, it was all an elaborate scam. Once they came to understand this they began to create a world in balance with nature and run by cooperation without so much as penny being exchanged. This is how the people learned to understand the true value of things.
Wonderful
When we control control everything….everything goes out of control. We deserve what we are about to get.
Like Nissan’s slogan used to say… Enjoy the Ride.
Slim Pickens comes to mind:
YEEHA………….YEEEEHA…………YEEHA………..YEEEHAAA……YEEH___________________
Control is an illusion, in a chaotic system There is no control.
There is guidance towards preferred outcomes, with appreciable unexpected consequences, and opportunism.
I’m just an RN so take my comment for what it is worth. It seems like QE worked very well. They gave money to banksters which the banksters spent on that which banksters spend. Financial markets and speculative real estate. A little trickled down, there is always some peasant hoping to be trickled on. But for the most part wealth was concentrated in the hands of those who had received the stimulus. It seems like QE worked for the most part as it was intended and if the masses haven’t kept up, well we just need to work harder, longer, more productively, or just be happy with what we have, or whatever. If a more equitable, stable, productive society had been the goal then the stimulus would have been directed to the people where the velocity of money would have stimulated inflation in productive vs. financial assets and where the money would have supported the goal of an equitable and stable society. I don’t think that the last forty years have been the only time in human history that this lesson has been taught. However with climate change fast approaching this may be humanity’s final failure of the lesson.
Yves (and Satyajit),
Firstly, may I request permission to republish your post in full over on Learning from Dogs? And, if granted, it will be fully linked and acknowledged; of course!
This is a brilliant post not only for the compelling extract from Satyajit’s latest book but also for the fabulous replies that your post has attracted.
What I find so compelling is how many people, including me and my dear wife, can see the headlights of the train coming down the line at us, know that the crash is going to be earth-shattering, both metaphorically and literally, and yet can hardly believe the total lack of integrity shown by our so-called leaders. Talk about the orchestra playing on as the Titanic sinks.
I’m not one for predictions (except for those things that don’t involve the future ;-) ) but I think the last half of 2017 is going to prove in spades the power of consequences. We will have a new President in the USA, the election afterglow will have faded out advertising ‘more of the same’ and Satyajit’s warnings will be seen to have been spot on.
Yes, that would be great. I had to check with Das and he gave his go-ahead.
That’s fabulous – thank you both! :-)
Wow. This is depressing. This is like “Where’s the xanax?” depressing. I wonder if C.S. Lewis was a fun guy to be around at parties or if he was one of those guys that gets mean when they get drunk — making shlt up like that quote. Wow, that’s a depressing quote. I had a girlfriend like that once, and since this is Valentine’s Day it does bring back kind of painful memories. She’d get mean when she got drunk, mean and dark and I could see her spirit light go dim and something weird and ugly took over.
She was so sweet and so gentle sober, so sensitive and so kind in spirit, and not in a manufactured way, in a real way. In a way that you knew, through Gnostic perception, was an inner reality. But put a few Scotches in her and she’d get quiet and moody, dark and sarcastic, mean and then she’d pass out. I won’t say any more, because there’s so much to say and it’s all so personal and it’s all so irrelevant to macroeconomic analysis.
Somehow your thoughts become your realities. And then somebody talks about debt as if it were something other than a framework of thinking. You won’t get this in a day or in an hour. You may get it iin a week or a month, if you start looking at things and not reading about them. At any rate, sometimes it takes a lot of reading to get so sick of artificial constructs that you seek a more endurable ordering of ideas. It’s a bit like math, but it’s not as objective. It may be as rigorous in its own way, the way art is rigorous. At any rate, we have 850 years until the asteroid hits — I do wonder if Mr. Das was on that alien spaceship in Ireland with that carpenter dude who went to the North Pole. It’s not impossible. It’s not like this is a probablility distribution or a random variable. If only it were that simple.
That’s why I’m getting the Edward Green shoes, or the Gaziano and Girling’s. I”m not sure yet. Either way, we have a bit more time to get things right. So why not look like a fashion icon. Things might work out, that’s weird. But if they do, you’ll be glad you looked good because people might remember.
Then don’t look at geographic – industry exposure by % of NAV
I think it’s clear that monetary policy has not proven to be enough.
Fiscal policy, anyone?
We can start with infrastructure and the electrical grid and move on to WPA style projects as well.
It’s good for the society and culture!
Recourse v non recourse…certainly for those who live in the non recourse borrowing world the jig is up…during the last great conversion of the post canalzone world of trade the royals were forced to convert their trinkets into tax free shares of globalonizationalists biggerbizco…but back in the 20’s and 30’s less than 5% of the population had gotten past high school and onto post mindmelding…today at least in these 50 states about half have at least graced a commons…most people who have danced at the edge of being corporate karabinieri at one point or another and have rejected that road have known the game is rigged…the difference now is that the rigging is easier to see and the korporate klown stenographers have only their fcc monopoly stations to keep them from having to buy a sandwich shop franchise…
Change always happens and although the othmans lost all that oil because the pasha was too busy trying to learn to play the violin and mister 5 percent converted the oil with the help of the french and the brits…istanbul survived…
Derivatives were an interesting experiment in revenue manipulation but the isda and its 900 plus members have never won (that i noticed) an appeals court ruling in either dc nor ny southern district…arbitrations usually need to be confirmed by a proper court with jurisdictional capacity…with all due respects to the queen, her navy cant even afford to pay to keep the trident subs going…rulings in the caymans and bermuda or the city of london are interesting but are marginally enforceable when push comes to shove…except by economic blackmail…
The delco bk almost burped up their game…derivatives ate up enron, worldcom and mister nasdaq computer system(made-off)…I tend to blame the nyssa and their insistance that the world needs to match their revenue projections…they over reach and some idiot gets chewed out on the 13th week to “make the numbers work”
I am an optimistic cynic…humans adjust and survive…have not seen too many dolphins riding a bicycle so we should be ok for another couple of hundred years…yes those who actually have waterfront homes should enjoy them while they can…your great great great great grandkids will have to visit the old homestead with some scuba gear…till then….live…
Das speaks the truth that many of us have known for years. We are well into “ecological overshoot” and some form of “collapse” is sure to follow. The only questions are the timing, the form it will take, and how bad it will be. If history is any guide, we’ll see a series of partial collapses followed by meager recoveries.Perhaps 2008 was the first of those and now the second is on the horizon. We live in extraordinary times.
Shamanic rain dances — what a brilliant idea. I’ve read that a certain indigenous American Indian tribe would throw all of their silver jewelry into the fire, which unbeknownst to them would seed the clouds with silver oxide and sometimes would make it rain. Maybe if all the goldbugs threw their assets into a volcano, there might be an eruption to effect global dimming. Or maybe we need to revive human sacrifice — central bankers get rounded up to go first.
Doomers talk of the five stages of grief as applicable to this new paradigm. Actually, there’s a sixth — Doomer’s Humor.
janet vs. the volcano?
I have come to realize that the thing we call, the “middle income trap,” is actually the natural default condition of a modern industrial society. That’s what a society based on our energy usage pattern and capitalist organization looks like, and lives like.
Declining fertility rates are, long-term and on the whole, a good thing, because environment.
Shrinking/aging demographics feels like a crisis, but it need only be a “crisis” for one generation, during which time the population “pyramid” looks more like a mushroom. Once the big earlier cohorts have lived their way up and off the chart, the result is a more columnar age distribution, which is no problem, indeed a theoretically efficient society.
We just have to eat some pain for 30 years. Real consumption standards, other things being equal, will decline somewhat during this period. If the cost of social and economic transition to a long-run low-fertility regime could be distributed fairly, we could enjoy the environmental benefits of columnar demography, without political instability.
Austerity is not in itself a big problem–the big problem is the distribution of the austerity.
Using migration to keep supplying working-age cohorts to high-cost develped countries is not a way to “fix” this. Even assuming that it’s a problem to be fixed, the solution is a failure on its own terms.
Migrants to a low-fertility society rapidly assimilate to the low-fertility social regime. In effect, mass migration does nothing but keep the “mushroom” demographic situation growing on and on, meaning more and more pain at some point in the future, and with more environmental damage in the meantime. This is the demographic equivalent of “extend and pretend.” Is it surprising that the neoliberal extenders and pretenders do the same sort of thing in all policy areas, from finance to foreign affairs to demographics?
There are good reasons why Western-style modern societies are always low-fertility societies. Housing costs are high, and education costs are high, so kids are too expensive for most people to make in a Western-style society. Anybody, regardless of origin, who lives in such a society is going to have low fertility. Low fertility is a rational adaptation to a high-cost society.
In Canada, migrants from high fertility societies assimilate to the low fertility regime in a single generation, regardless of ethnic origin or religion.
Looking at societies abroad that adopt Western-style modernity, everywhere we find sub-replacement fertility, regardless of race or religion: Iran is sub-replacement, China is sub-replacement, Japan is sub-replacement, Korea is sub-replacement, Mexico is sub-replacement, Brazil is sub-replacement.
Right now, modern Westerners externalize child-rearing costs. We import people from places where children are still cheaper to raise. That’s not sustainable since many source countries have falling fertility rates.
It’s going to get to the point where only disasters can reduce the price of life low enough to give the West a further supply of cheap people. That’s not sustainable, either–there are only so many places that can be destabilized and bombed. The process is difficult to manage for optimal flow while minimizing secondary effects. i.e. Destabilization is destabilizing. Duh.
Rich Western women find ways to use indentured labour to reduce the personal opportunity costs of raising their own babies. Because of the relatively lower numbers involved, this part of the larger social process can be sustained indefinitely. Something else in the society will break down before this trend does. i.e. it will be sustainable until their social class gets liquidated.
While globalist capitalist investors, living in their pseudo-cosmopolitan monoculture, might not put much value upon the sustainability of various ethno-cultural heritages (at least until they’ve claimed it all as IP), many of the people living within those various heritages may place a significant real value on sustaining those heritages.
But who values what, and how much? There is a political marketplace in which there will be real “price discovery” for these systemic bundles of cultural goods and services.
When political marketplaces have their “corrections,” we are accustomed to use an older, pre-capitalist nomenclature: we call it war or revolution. But perhaps if we describe these things as “market corrections,” it might help a globalist bourgeois to learn a thing or two about the world.
But in any case the science of history is empirical–there are propositions to be tested, and plenty of “mad scientists” will come forth to make experiments. These are entrepreneurs, developing new political product lines based on analysis of future market demand.
Mass media opinion influencing people postulate there will always be a technological solution to any stated problem such as pollution, water shortages, food shortages, and energy shortages.
What I find ironic, is that one media mentioned “problem” (for example, too few workers to support SocSec) never seems to be amenable to a future technological solution, that problem is a decreasing human population base.
Perhaps this is home team bias by human kind (or their leaders)?
One might expect those who believe that the world requires a continuously increasing human population base which will be always supported by some just-in-time technical miracles, maybe, just maybe, could also consider that the world might harness better technology, such as smarter robots, smarter tools and better infrastructure, to handle a shrinking human population base well.
I suspect there are too many influential businesses such as the media, real estate, entertainment, and consumer goods industries that plan on growing profits partially via a continually expanding customer base.
Consequently, there is never an appropriate time to stabilize or let the world population decrease even though a smaller population base should make resource shortages far easier for the world to handle.
Stagnation is the usual state of our economic path, punctuated with capitalism’s periods of boom growth due to that commodity which sets human activity into overdrive, super-exploitation rushing up the MT Everest of sales charts, until as all processes do, pass the mid point and then decline. Industrial capitalism for well over a hundred years was the co-mingling of Industrialization and Capitalism creating what appeared to be a single event, when really, capitalism preceded Industrialization and seems to have outlasted it by its ability to turn anything into a commodity in order to produce some kind of profits somewhere for those at the commanding heights of capitalism.
Financialization is the current state of commodification, without that burst of new technology which propels the dream of civilization into that Star Trek future of peace, science and a distinct lack of greed. No matter how you slice it, there does not seem to be any truly transforming inventions on the horizon, one after the other pushing humanity from the simple subsistence life of farming for the most part to a new age of skyscrapers, satellite communications and super sonic travel. Oh yeah, we lost that last one, didn’t we? But I digress.
The gloom of having to face the world the way it is, as the way it is, for the next hundred years, is a cause for depression, not so much that it would be great to just take a break and enjoy life without the pressure of keeping up with the Jones, BUT because the rich may stop getting rich, or have new rich to join their ranks and shoulder some of the burden of keeping the 99% in their places, busy at make work jobs 5 of the 7 days of the week or even more with a 2nd job to make ends meet or save up for that extra special stuff that one paycheck from one person just doesn’t make anymore.
Stagnation in one school of thought is due to the lack of a monopoly over something that can be sold to a wildly voracious market of consumers at price points that would make Microsoft salivate. When a new sensation takes the world by storm, say railroads, the smart money is into building railroads from here to there and everywhere just because of all of the money that can be made. And unless someone builds a competing line parallel to yours, you can charge anything for the freight. Until you can’t, like what happens when trucking and then a Interstate Highway System smashes your business model to pieces. Lots of abandoned tracks.
Or take consumer durables, please. Americans did not think Japan would ever compete for us with electronics, appliances or cars, yet not only did they, but also Koreans!!! And now, the Chinese are knocking at the door. GE just sold off its white appliance line of business. This is the pattern in economic history where the leading core nations of capitalism make the big time bucks in the early stages of the introduction of some new sensation, then, as the competition comes in, copies the the product and improves the quality/price aspect therefore taking the new sensation into the not so super profitable commodity phase. And then, something new needs to come on line to replace the monopoly position of first mover and shaker and profit maker, long enough to pile up the great fortunes of the era ala Jobs and Ellison and Gates, etc. Facebook anyone?
Stagnation meanwhile rears its ugly head during that between the era period of anxiously waiting for the next Elvis before the Beatles come out of nowhere and take the record business into the stratosphere. Rock&Roll saved by the Brits, who would have thunk it? That and Keith Richards is still alive and everyone else seems to dropping like flies. There is no justice, I mean, Keith can live forever, I love Keith, but come on, how is that man still alive? Again, I digress.
So, when the bloom comes off the rose, the autumn of our lives comes into clearer focus than the misspent youth portion of our lives. Capitalism is hounded by something more profound than the business cycle. It is absolutely dependent upon an ultra profitable commodity for a long enough period of time to build up a great fortune. A great fortune which of course is used under capitalism to politically dominate the social order. As the Medicics used to say, money to protect power, power to protect money.
When profits are to be made, power is accumulated, when profits are hard to come by, power keeps people in line, in the absence of paychecks. That is the capitalist business/power cycle. That is why the state and the market work together. The inevitable dry spell of stagnation allows too many people too much spare time on their hands and the police power of the state will be ready as needs be to quell the malcontents. Jobs keep people organized, in ways that keep them in service to the market mechanism. Placing markets under the control of the democratically controlled republic, placing markets in the service of the social order, not becoming the social order, is a way out.
The solution to our stagnant political economy is a political revolution of changing control. We saw a glimmer of this with the mixed economy of the Keynesian Era, an Era which is now well into a process of being erased by privatization. If there is enough public spending left before it can all privatized and political domination can be completed, we have a chance. The best Green Hope for humanity is the the massive capital investment and transformation towards a Heliocentric Powered Economy. A lot of new fortunes can be made. A lot problems can be solved. This transformation from fossil fuels to sustainable power, sustainable agriculture, sustainable politics is a way forward out of stagnation. What real choice do we have other than oblivion with capitalism?
It is clear that bad debt has thrown a spanner into the global economy. This down turn is due to China hitting the limits of its internal Keynesian debt stimulation. At best, we are facing global stagnation forever. At worse, the middle east regional holy war escalates into a world war.
Since the ruling elite are intent on replaying the sequel to the 1930’s why not once more Nationalize the Banks, write off the bad debt, and give Civilian Conservation Corps jobs to every able-bodied person?
Das worries about population/resource issues, but refers to declining population growth like it’s a bad thing, while going all in on the constant-growth fallacy, and spicing it up with neo-Calvinist and anti-intellectual hand-wringing. Walks right by the start of the fraud bubble in the 80’s and only sees it (omg! omg!) after its partial collapse in 2008.
Dude obviously has brain cells, needs to rub them together more, and grind out the garbage he’s emotionally invested in. In his defense, he’s got a world full of company.
… politicians, irrespective of ideology, are unwilling to openly discuss the real issues.
I’m not a huge Bible fan, but
Not that motes will be much of a priority at that point.
That’s the kind of thing that’s also my only concern with the Job Guarantee so often proposed on NC as a solution. It doesn’t go well with the resource issues that are also rightly addressed on this website. I’m hoping for someone to tie it all up one day.
I have scoured the stories and messages about the coming apocalypse…. and NOBODY wants to hear the reality.
THERE ARE TOO MANY PEOPLE…. too few places left… too few animals and plants…
And the current economic models are of no use to a population replaced by robotics and AI….
Everything must change. There can be no more GROWTH.
There must be an aging population and reduction…. AND a way to feed and keep 7 billion of us from killing each other during the population reduction and redistribution of resources.
And I am no socialist… but I am a realist.
Why does no one on this board face up to the Walking Dead scenario we are facing. The perceived enemies won’t be zombies… but migrants from places like Venezuela, Bangladesh…. the front lines of the failures.
Not to diminish the very real resource and environmental problems that we face, but I have trouble relating to this article. Where it seemed to me to go on tilt was in the short paragraph on Greece. “Despite talk of a return to growth, the Greek economy has shrunk by a quarter.” Etc. Written as though this was just one of those unfortunate things, a result of general extending and pretending. No mention of austerity, here or elsewhere in the article, no mention of the straitjacket of the Euro, no mention of the faux bailouts of Greece which were really bailouts of French and German banks. It’s all just part of our current unfortunate circumstances, our new normal.
Even as Central Banks make yet another transparent, immense effort to stabilize managed ‘markets’ on behalf of the banking kleptocracy that controls 70% of total assets, it is now evident to all but Bob, and perhaps a couple others, that the mass of the can is very rapidly approaching the point where any further kick will mean broken toes, feet, ankle, leg, hip bones – skulls.