Sunday, March 4, 2012

Dispatches from the Idiocracy

Anyone assimilating the facts from this blog or any other source of reality has to find some way to reconcile society's pervasive complacency in the face of economic annihilation.  The only way this is possible is to dissect and understand the zeitgeist of the time - or what I call The Idiocracy.

The term Idiocracy was introduced by Mike Judge in a movie by the same name and was based on a supposedly fictional futuristic account of civilization.  It was intended to be a humourous yet dark extrapolation of current societal trends into the future.

Unfortunately, the thesis of my blog is that the Idiocracy has already arrived and is indeed well entrenched.  We live in it, and those of us born after World War II were born into it, therefore most are not even consciously aware of its existence.  We don't have a choice whether or not to live in the Idiocracy, because we are immersed in it, and it's all pervasive.  We only have the choice to recognize it for what it is, to understand its long-term implications, and then to prepare for the crater that will be created from its inevitable collapse.

When I mean Idiocracy, I am referring to the largest economic bubble in human history.  A bubble largely characterized by over-confidence and over-consumption that emerged out of the Great Depression and World War II, slowly accelerating over time and then going parabolic in the past three decades.

It's no secret, that we (Westerners) live in the largest uninterrupted period of prosperity in human history.  When I say large, I am not measuring in years, I am measuring terms of scale and magnitude.  No other society in history has anything close to the level of wealth and prosperity (still) enjoyed by the West today.

The primary drivers and magnifiers of our current level of consumption and prosperity are industrialization, computerization, financialization and globalization.  It was these levers of growth working in combination that have inflated the current economic pyramid model beyond anything previously imaginable, let alone possible.

Coming out of World War II, the U.S. had a massive peace dividend.  It was the only major country with its industrial capacity intact and a prosperous middle class.  Japan, Europe and the Soviet Union had been devastated by the war.  China was a non-factor in global trade.  That advantage lasted until the late 1960s/early '70s by which time, the U.S. had lost its competitive advantage and was under increasing economic/financial distress from growing budget and trade imbalances.  Gold outflows were bankrupting the Treasury under the Gold Exchange (Bretton Woods) standard.  At that point, the writing was on the wall for the U.S. economy, but the U.S. had one more card to play, so Nixon took the U.S. off the Gold standard in 1973.

Enter Milton Friedman and Monetary Policy
That was the pivotal juncture, in which the U.S. had to decide how/if to restore its industrial competitiveness or find an easier way to deal with the recurring trade imbalances aka. unsustainable way of life.

That is when the U.S. made a deal with the devil and decided to use the long (rightly) maligned tool of Monetary policy to manage the economy.  Unencumbered by the gold standard, the Monetarists (Friedmanites) were finally able to exert full control over the U.S. economy.  There was one more obstacle however, and that was the "structural rigidities" of the U.S. economy aka. protections for the middle class - tariffs, unions, regulations, minimum wages etc.  Without removing those, manipulations in the money supply would directly lead to inflation, which is what occurred during the "stagflationary" 1970s.

Removal of those structural rigidities took root in 1980 when Reagan and his NeoCon handlers took office, guided by Supply Side Economics - what Bush Senior rightly derided as "Voodoo Economics" (before he became Reagan's VP).

Now, fully unfettered by the gold standard and labour laws, the Monetarists were totally empowered to take full advantage of a wide open world awash in cheap labour that would allow the U.S. to import unlimited  "disinflation" aka. cheap crap made elsewhere.

Frankenstein's monster
Yet, as always, there is no free lunch.  As Econ 101 would expect, for every dollar spent on net imports, there is a dollar borrowed (current account = capital account).  Therefore, from that point forward, debt levels for government and consumers grew unchecked until now where debt has now reached 360% of GDP (v.s. 50% of GDP during the 1950s).  As one would expect, systematically lowering interest rates for three decades straight (all the way to zero), has subsidized debt accumulation and systematically bankrupted the Middle Class.  Meanwhile, there are no real jobs being created (in any numbers) because small businesses have no chance to compete with the economies of scale, cheap capital, and outsourced labour readily available to the multinationals.  On the government side, massive fiscal deficits are now baselined into the economy providing no way to cut the deficit without killing economy.  The U.S. has no choice but to run massive deficits both during recessions and in times of "growth" as we are falsely deemed to be in currently.

Idiocratic Culture:
Accompanying this stretch of the largest (ephemeral) vacation from economic reality in history, are the set of behaviours and culture that give the Idiocracy its unmistakable signature.  First off, not surprisingly, each successive generation is taking longer and longer to mature and become self-reliant.  Recall Dennis Hopper's "50 is the new 30" retirement planning commercials?  Those were aimed squarely at the Baby Boomers who since their hedonistic hippy heydays of the 1960's, have been looking for every way possible to escape ageing. And you can't blame their children, the Gen-Y types for being the ultimate "Lost Boys", after all they were the Baby on Board culture who grew up at the epicenter of the cocoon.  They have never known anything but easy times and extreme coddling.  Don't expect them to give up the xBox, South Park or Jackass any time soon.

No surprise, this child-like culture has an overwhelming proclivity for escapism, denalism, hedonism and comfort seeking.  Subjectivity is the order of the day, as the laws of reality and consequence are conveniently ignored.  Beliefs are chosen like picking a wardrobe - "what do I want to believe in today?".  Issues of long-term relevance, such as Global Climate Change, never had any chance of being seriously considered, because they have no visible and immediate consequence.  Short of a tornado appearing every time someone climbs into an SUV, the Idiocracy will continue to invoke plausible deniability as its excuse to delay and deny.  The concept of planning ahead no longer exists on any level.  Instant gratification has overridden all other considerations.

This unfounded overconfidence and lack of humility is fed a steady diet of false bravado and bullshit from Faux News and other pseudo-news outfits, who take full advantage of the general population's need to believe in simple solutions (e.g. "Drill, drill, drill") as the best way forward.  The internet and the 24-hour news cycle have replaced objective journalism with non-stop editorializing.

Politics is a game to the Idiocracy
According to the documentary "The best Government Money Can Buy", there are now 14,000 lobbyists in Washington D.C. representing untold numbers of Special Interest Groups who essentially run the U.S. Government.  That conveniently frees up the President, Senators and Congressmen to campaign and raise campaign funds non-stop.  One lobbyist puts his return on investment at 100x for each $1 his SIGs spend on campaign contributions.  There have been no less than 27 Republican debates at this juncture, each one an asinine farce similar to a game show in which the same questions are asked over and over again of a dwindling set of candidates.  The only thing that changes, is the depth of rancor of the cat fights that ensue during the debates - fodder for a meat hungry crowd.  Rigorous depth and substance are assiduously avoided  for fear of losing viewing audience to American Idol or I Didn't Know I was Pregnant (true tales of fat women who didn't realize they were with child).

War is a business to the Idiocracy
One can't overstate the irony of the Baby Boomers who were the driving force for getting the U.S. out of Vietnam, now reinventing themselves as right-wing NeoCons, strongly endorsing and supporting the wars in Afghanistan and Iraq.  Apparently, it makes a big difference who is doing the fighting - them or someone else's children.  Contrary to how it was in the U.S. prior to WWII, which was largely a period of isolationism, now support for war, incursions, drone strikes etc. has become synonymous with patriotism.  If you don't support violence against foreigners, then you are deemed a Commie.  Here is a typical NeoCon buffoon, Rudy Giuliani, excoriating Obama for being too soft on Iran, while the U.S. is already engaged in two active conflicts in the same region and carrying out active drone strikes in Pakistan.  All he has to say is that Obama is "soft" and "liberal" to force Obama to do whatever the Military Industrial Complex requires him to do in order to maximize their profits.

The point of all this, is that we don't opt in to the Idiocracy, we have to opt out, by first acknowledging its existence and then reassessing one's own resources and priorities in a way that is sustainable in the longer-term i.e. beyond the latent collapse of the Idiocratic society.  Or in other words, recalling the joke about two hikers confronting a grizzly bear - the first hiker prepares to run and the second says - "what are you doing, you can't outrun a grizzly bear".  To which the first replies - "I don't have to, I only have to outrun you".