Monday, December 22, 2008

Could you imagine a life without bubbles?

Paul Krugman can. It will require American elites to do something that they are not inclined to do: ditch Friedman's neoliberal orthodoxy and see it for what it is - a late 20th century version of Social Darwinism, which had been abandoned after the previous bubble economy burst in the late 1920s. What we can expect is that it will be years before a new economic architecture takes shape, and that the intervening period will be difficult.

The O-Man will find himself pressured to return to "business as usual" as soon as the worst appears to be over. His choice of economic advisors during his campaign and his cabinet choices do not bode well; they are adherents of Friedman's neoliberal philosophy who seem more inclined to return to the Clinton era's "neoliberalism with a happy face." If they act as I expect they will, we can look forward to a further bursting of the legitimacy bubble. We've seen how that has been playing out in Greece, and can look at that situation as a harbinger of things to come anywhere Friedmanism has taken hold.

The economic and political situation currently unfolding is one that could be seen a mile away. Here's something I wrote nearly a couple years ago, that not only describes the problem, but points to some tentative solutions:
Those of us who are on the bottom rung of the so-called "middle class" and points lower on the economic food chain have been feeling the pain for a while now. Consumer culture as we know it now is functioning by smoke and mirrors, folks. In the long run that won't be a bad thing, as what we as a society have done is to live way beyond nature's means. The birds are gonna come home to roost, if they haven't started already. Those who are relatively well off, including those who hold elected offices, seem perfectly content to remain in a delusional state. That delusion may or may not get shaken if the threatened war against Iran transpires, and the oil tap gets cut off; or if our government's creditors (China & Japan) decide they've had enough, and expect ol' Uncle Sam to settle those outstanding debts (given ol' Uncle Sam's gambling and spending addictions, the scene will get ugly fast).

Something I read a couple months ago seems quite pertinent, to the extent that I accept the premise that the US in its present form is doomed to crumble like all past empires: Closing the 'Collapse Gap': the USSR was better prepared for peak oil than the US. Now let's be optimistic for just a second and pretend that what passes for our government for once tries to be useful. The author Dmitry Orlov has some advice:
There are some things that I would like the government to take care of in preparation for collapse. I am particularly concerned about all the radioactive and toxic installations, stockpiles, and dumps. Future generations are unlikely to able to control them, especially if global warming puts them underwater. There is enough of this muck sitting around to kill off most of us. I am also worried about soldiers getting stranded overseas – abandoning one's soldiers is among the most shameful things a country can do. Overseas military bases should be dismantled, and the troops repatriated. I'd like to see the huge prison population whittled away in a controlled manner, ahead of time, instead of in a chaotic general amnesty. Lastly, I think that this farce with debts that will never be repaid, has gone on long enough. Wiping the slate clean will give society time to readjust. So, you see, I am not asking for any miracles. Although, if any of these things do get done, I would consider it a miracle.
In short, face up to the impending collapse and plan ahead. Will our Congress critters in DC be up to the task? Ho ho. I'm not betting my life savings on it (and I don't bet that nickel lightly, folks). The folks occupying the White House are so clueless as to preclude them from any useful activity. Whatever regime replaces Bu$hCo in the aftermath of the 2008 "elections" will not be much better (I'm sure that some of my partisan Dem friends would beg to differ, and that I'll continue to find their protestations and candidate cheerleading to be a source of amusement). More Orlov:
It's important to understand that the Soviet Union achieved collapse-preparedness inadvertently, and not because of the success of some crash program. Economic collapse has a way of turning economic negatives into positives. The last thing we want is a perfectly functioning, growing, prosperous economy that suddenly collapses one day, and leaves everybody in the lurch. It is not necessary for us to embrace the tenets of command economy and central planning to match the Soviet lackluster performance in this area. We have our own methods, that are working almost as well. I call them "boondoggles." They are solutions to problems that cause more problems than they solve.

Just look around you, and you will see boondoggles sprouting up everywhere, in every field of endeavor: we have military boondoggles like Iraq, financial boondoggles like the doomed retirement system, medical boondoggles like private health insurance, legal boondoggles like the intellectual property system. The combined weight of all these boondoggles is slowly but surely pushing us all down. If it pushes us down far enough, then economic collapse, when it arrives, will be like falling out of a ground floor window. We just have to help this process along, or at least not interfere with it. So if somebody comes to you and says "I want to make a boondoggle that runs on hydrogen" – by all means encourage him! It's not as good as a boondoggle that burns money directly, but it's a step in the right direction.
There may be some wisdom to that - today's incompetence may well be our friend when we look back at this bleak decade. Further:
Certain types of mainstream economic behavior are not prudent on a personal level, and are also counterproductive to bridging the Collapse Gap. Any behavior that might result in continued economic growth and prosperity is counterproductive: the higher you jump, the harder you land. It is traumatic to go from having a big retirement fund to having no retirement fund because of a market crash. It is also traumatic to go from a high income to little or no income. If, on top of that, you have kept yourself incredibly busy, and suddenly have nothing to do, then you will really be in rough shape.

Economic collapse is about the worst possible time for someone to suffer a nervous breakdown, yet this is what often happens. The people who are most at risk psychologically are successful middle-aged men. When their career is suddenly over, their savings are gone, and their property worthless, much of their sense of self-worth is gone as well. They tend to drink themselves to death and commit suicide in disproportionate numbers. Since they tend to be the most experienced and capable people, this is a staggering loss to society.

If the economy, and your place within it, is really important to you, you will be really hurt when it goes away. You can cultivate an attitude of studied indifference, but it has to be more than just a conceit. You have to develop the lifestyle and the habits and the physical stamina to back it up. It takes a lot of creativity and effort to put together a fulfilling existence on the margins of society. After the collapse, these margins may turn out to be some of the best places to live.
Increasingly, over the last few years, our family has been doing just that: finding a niche in the margins. The old habits have been hard to break, to be sure. But aside from the habit of buying an inordinate amount of reading material, it's all necessities (food, rent, clothes, etc.) and maintaining ties with friends and loved ones. All of that, by the way, is done cash on the barrelhead. Haven't had a credit card in something like six years - initially out of necessity, and now out of choice. Reinforcing what Orlov is saying, stay out of debt, get used to living on a less-than-steady income, get away from the whole workaholic scene (instead maximize free time - think of that valuable time spent with the kids, etc., instead), minimize participation in the current economy. In other words, don't contribute to the present system any more than is absolutely necessary.

The world that my generation is leaving behind for our kids and grandkids will in many ways seem much harsher than the one that we inherited. The thought used to drive me to depths of despair. The older I get though, the more stoic I have become - instead I'm realizing that those who've survived previous collapses find opportunities for finding meaningful existences, and even a measure of happiness. With crisis comes opportunity. I have little choice but to hold out hope that my kids' generation will seize that opportunity to create the beginnings of something beautiful out of the ashes of what we gave them. Hopefully a few of us middle-aged gen-x-ers can live long enough to pass on the lessons we learned of the folly of American Exceptionalism, and of the predatory capitalism that myth enabled. Maybe they'll take those lessons to heart.
The main bulletpoints from the above are to:
  • Ditch consumerism: learn to live with less stuff and more friends and family ties
  • Stop the wars currently being waged, and cease all plans for new wars - AND begin dismantling those 700-plus military bases in earnest. Like Orlov, the thought of leaving soldiers stranded is not acceptable.
  • Rebuild the infrastructure with an eye to life after the oil supply peaks. A functioning rail system will be a necessity if what we call the US is to remain even remotely viable.
That's a start.

No comments:

Post a Comment