This is in response to and in support of David Ellis' thoughtful April 29 letter in the Statesman Journal "Population growth might be bad". I couldn't agree more, and I'd like to take it a step further, "Economic growth might be bad". I think in both cases it depends on where you're at in the spectrum of the physical limits of your environment. For the population issue experts concluded in the 1970's that we were nearing our planet's population limit, based on the fact that there are decades of lag time between an attempt to stop population growth and the realization of this goal. Here is the first conclusion of an abstract to "The Limits to Growth", a report to the Club of Rome (1972), "If the present growth trends in world population, industrialization, pollution, food production, and resource depletion continue unchanged, the limits to growth on this planet will be reached sometime within the next one hundred years. The most probable result will be a rather sudden and uncontrollable decline in both population and industrial capacity."
The idea that economic growth might not be desirable is really just an extension of the population growth discussion. If you think about it, continual economic growth depends on a growing population both to supply more labor and to supply more consumers. Likewise, a continually growing population depends on economic growth to provide jobs. Since the population limit is upon us, it follows that we are also at the point where economic growth is no longer good. This is a generalization, as there are still some parts of the world that desperately need this growth, but the developed world does not.
So if we can't have an economy based on continual growth, what should we do? Bill McKibben explores this idea very responsibly in his recent "Deep Economy", and it is discussed in great detail in the classic "For the Common Good" by Daly and Cobb. I suggest that we think about a system where we only manufacture what we need. This means an end to marketing ploys aimed at getting people to buy new gadgets or more stuff. It really means the end of the economy as we have known it, and a totally different way of life. I don't think this can be accomplished solely by the free market.
Wednesday, April 29, 2009
Monday, April 27, 2009
A promising hidden agenda?
Charles Hugh Smith raises an intriguing possibility in an essay entitled "Obama's Secret Plan"
http://www.oftwominds.com/blogapr09
I quote:
"In which we speculate that perhaps Obama has a secret plan to discredit the investment banker cabal and thus undermine their vast political power and reach.
Many observers, partisans non-partisans alike, have been mystified by President Obama's continuation of the Bush/bankers/Treasury's "privatize bonuses, socialize risks" campaign of taxpayer-funded bank bailouts, phony slight-of-hand "transparency" and political support for blatantly bogus accounting of banks' profits, assets and losses."
My comment here: I count myself among those so mystified.
Mr. Smith goes on,
"Is there any strategy would might actually work? How about "give them enough rope to hang themselves"? President Dwight Eisenhower has long been dismissed as a do-nothing who "got lucky" in his two terms. Perhaps--but he was also a canny politico who didn't say much because he preferred to give his opponents plenty of stout rope. And sure enough, most of the time they promptly hanged themselves with their own excesses."
My further comment: I certainly believe President Obama capable of this level of subtlety, and I only hope it's true. Smith goes on to suggest that we should watch Paul Volcker as an indicator of whether or not there is more to this than meets the eye. He says that if Volcker resigns, then Obama actually believes in his current policy and has nothing up his sleeve. But if Volcker stays on, even in deep background as he is now, then we may be in for a big surprise.
More from Smith,
"What better way to discredit the bankers than to give them plenty of rope to complete their tarnished, fraudulent "plan to save Capitalism from itself"? How can they complain when their own bankrupt policies have been supported? ...
Make like you're doing the banker/Plutocracy's bidding in every possible way. And what will be the result?
A complete repudiation of the entire Bush/Treasury/banker bailout and "free pass" to further plundering. And when the public rises up in righteous fury, then you appear to bend, almost reluctantly, to "the public will."
http://www.oftwominds.com/blogapr09
I quote:
"In which we speculate that perhaps Obama has a secret plan to discredit the investment banker cabal and thus undermine their vast political power and reach.
Many observers, partisans non-partisans alike, have been mystified by President Obama's continuation of the Bush/bankers/Treasury's "privatize bonuses, socialize risks" campaign of taxpayer-funded bank bailouts, phony slight-of-hand "transparency" and political support for blatantly bogus accounting of banks' profits, assets and losses."
My comment here: I count myself among those so mystified.
Mr. Smith goes on,
"Is there any strategy would might actually work? How about "give them enough rope to hang themselves"? President Dwight Eisenhower has long been dismissed as a do-nothing who "got lucky" in his two terms. Perhaps--but he was also a canny politico who didn't say much because he preferred to give his opponents plenty of stout rope. And sure enough, most of the time they promptly hanged themselves with their own excesses."
My further comment: I certainly believe President Obama capable of this level of subtlety, and I only hope it's true. Smith goes on to suggest that we should watch Paul Volcker as an indicator of whether or not there is more to this than meets the eye. He says that if Volcker resigns, then Obama actually believes in his current policy and has nothing up his sleeve. But if Volcker stays on, even in deep background as he is now, then we may be in for a big surprise.
More from Smith,
"What better way to discredit the bankers than to give them plenty of rope to complete their tarnished, fraudulent "plan to save Capitalism from itself"? How can they complain when their own bankrupt policies have been supported? ...
Make like you're doing the banker/Plutocracy's bidding in every possible way. And what will be the result?
A complete repudiation of the entire Bush/Treasury/banker bailout and "free pass" to further plundering. And when the public rises up in righteous fury, then you appear to bend, almost reluctantly, to "the public will."
Let's not forget the recent past
Try to remember, if you can, the first several years after 9/11/2001 and the political climate at that time. There were very few voices raised against things like the Bush doctrine of preemption, the plan to invade Iraq, and the use of torture. Anyone in the media daring to be critical of the Bush administration (and there weren't very many) was putting their career at risk. Paul Krugman was one of those few critics. I think what he says below is true - we failed a test of national character.
From Paul Krugman's blog, 4/24/2009:
"One addendum to today’s column: the truth, which I think everyone in the political/media establishments knows in their hearts, is that the nine months or so between the summer of 2002 and the beginning of the Iraq insurgency were a great national moral test — a test that most people in influential positions failed.
The Bush administration was obviously — yes, obviously — telling tall tales in order to promote the war it wanted: the constant insinuations of an Iraq-9/11 link, the hyping of discredited claims about a nuclear program, etc.. And the question was, should you stand up against that? Not many did — and those who did were treated as if they were crazy.
For me and many others that was a radicalizing experience; I’ll never trust “sensible” opinion again. But for those who stayed “sensible” through the test, it’s a moment they’d like to see forgotten. That, I believe, is the real reason so many want to let torture and everything else go down the memory hole.
Let’s hope that doesn’t happen."
From Paul Krugman's blog, 4/24/2009:
"One addendum to today’s column: the truth, which I think everyone in the political/media establishments knows in their hearts, is that the nine months or so between the summer of 2002 and the beginning of the Iraq insurgency were a great national moral test — a test that most people in influential positions failed.
The Bush administration was obviously — yes, obviously — telling tall tales in order to promote the war it wanted: the constant insinuations of an Iraq-9/11 link, the hyping of discredited claims about a nuclear program, etc.. And the question was, should you stand up against that? Not many did — and those who did were treated as if they were crazy.
For me and many others that was a radicalizing experience; I’ll never trust “sensible” opinion again. But for those who stayed “sensible” through the test, it’s a moment they’d like to see forgotten. That, I believe, is the real reason so many want to let torture and everything else go down the memory hole.
Let’s hope that doesn’t happen."
Thursday, April 23, 2009
High Marks for Obama So Far - Except on Economy
I don't mean this sarcastically, I sincerely believe that President Obama has done a very good job making important decisions and representing our country to the world. He has been everything I had hoped for, except in his handling of the economic crisis. I especially liked how he said that CIA agents who committed the legalized torture of waterboarding would not be prosecuted, but that the officials who decided this was legal might be. This should make future justice department lawyers and national security advisors think twice about returning to these practices.
If these were ordinary times, President Obama would be off to a great start. Unfortunately he has the privilege of dealing with an economic catastrophe that has been years in the making and that is different from anything we have seen before. His approach has been to try to restore the system; but this is not possible, as we have pointed out in previous posts. He has continued the bailout strategy begun by the Bush administration, when a clear-eyed reading of the situation should tell him and his economic advisors that this is just pouring money into a bottomless pit. It is clear that the economy as we knew it will fall apart without such bailouts, but it would be better to take it apart in a controlled manner instead of trying to prop it up. That economy is gone and bailouts only postpone the inevitable, and not for very long.
In fairness to Mr. Obama, he is a politician who has been elected President. You do not get a radical person elected to this office; instead they are a product of the general public will, which is not inclined to think very far outside the box. We should be glad that he does show some bold and revolutionary tendencies; his health care agenda, for example.
I believe Barack Obama does have the capacity to meet this extraordinary challenge, but it may take him a while to realize that something truly different and historic is called for. We need him to come to this place while he still has political capital and the public's trust.
If these were ordinary times, President Obama would be off to a great start. Unfortunately he has the privilege of dealing with an economic catastrophe that has been years in the making and that is different from anything we have seen before. His approach has been to try to restore the system; but this is not possible, as we have pointed out in previous posts. He has continued the bailout strategy begun by the Bush administration, when a clear-eyed reading of the situation should tell him and his economic advisors that this is just pouring money into a bottomless pit. It is clear that the economy as we knew it will fall apart without such bailouts, but it would be better to take it apart in a controlled manner instead of trying to prop it up. That economy is gone and bailouts only postpone the inevitable, and not for very long.
In fairness to Mr. Obama, he is a politician who has been elected President. You do not get a radical person elected to this office; instead they are a product of the general public will, which is not inclined to think very far outside the box. We should be glad that he does show some bold and revolutionary tendencies; his health care agenda, for example.
I believe Barack Obama does have the capacity to meet this extraordinary challenge, but it may take him a while to realize that something truly different and historic is called for. We need him to come to this place while he still has political capital and the public's trust.
Tuesday, April 14, 2009
Suggestion: controlled demolition of the financial system
Note: below goes against what George Ure is predicting, but Ure is saying what he thinks will actually happen based on the government policies chosen so far, while Ringoen is arguing for a different course of action. I agree with Ringoen's idea, but I would not be surprised if Ure's prediction turns out to be true. Ringoen's plan would be a drastic (and I think needed) change in government policy, a policy that extends back to the Bush administration and is being continued by the Obama administration.
This article by Gordon Ringoen
http://www.prudentbear.com/index.php/commentary/
makes some good points about the problem with the financial system being insolvency rather than lack of liquidity. Lack of liquidity would mean that all would be well if we could get financial activity back the way it was before things fell apart, but we know that isn't true because, as the article points out, for the last several years banks were operating a ponzi-based business model by making loans that they had no intention of keeping on their books. People were buying houses with borrowed money in order to to quickly resell them at profit, etc. But this business model is over, and we do not really want to return to it. As he puts it,
" If, in the unlikely scenario, they (the bailouts) do reflate the financial system, the bubble would still exist and huge amounts of additional credit would be needed to get the economy expanding again. The bubble would just be bigger for the next bust. The amount of credit required to perform this would surely bankrupt the country by making the U.S. dollar worthless and would chase away foreign investors and central banks who own 60% of our Treasurys. The total amount of bailouts necessary to reflate is unknowable but it is more that we can withstand."
Instead he says that the market needs to deflate to bring assets back into agreement with the real economy. I think this definitely means house prices and some other things as well.
Ringoen says that the choice is not between bailouts or systemic collapse, but suggests controlled system demolition as the right alternative. This is the difference between his argument and the mindless Limbaugh-Republican fake-populist tea party anti-bailout, anti-stimulus rhetoric. He at least acknowledges that there is no return to business as usual.
He suggests,
"Instead of giving non-discriminating bailouts, the government could let these insolvent financial institutions fail and then make direct grants or loans, where necessary, to avert total collapse. It could be considered a controlled demolition. Though painful, it would reduce the total cost to the government, and most importantly, would destroy uneconomic claims necessary to bring the real economy and the financial system back to balance."
Ringoen is also in favor of stimulus spending to put people back to work in value-creating jobs. I think we have to take the unemployed into account whatever we do. Unemployment is likely to increase, and the first duty of government and community is to take care of those who are not able to take care of themselves.
This article by Gordon Ringoen
http://www.prudentbear.com/index.php/commentary/
makes some good points about the problem with the financial system being insolvency rather than lack of liquidity. Lack of liquidity would mean that all would be well if we could get financial activity back the way it was before things fell apart, but we know that isn't true because, as the article points out, for the last several years banks were operating a ponzi-based business model by making loans that they had no intention of keeping on their books. People were buying houses with borrowed money in order to to quickly resell them at profit, etc. But this business model is over, and we do not really want to return to it. As he puts it,
" If, in the unlikely scenario, they (the bailouts) do reflate the financial system, the bubble would still exist and huge amounts of additional credit would be needed to get the economy expanding again. The bubble would just be bigger for the next bust. The amount of credit required to perform this would surely bankrupt the country by making the U.S. dollar worthless and would chase away foreign investors and central banks who own 60% of our Treasurys. The total amount of bailouts necessary to reflate is unknowable but it is more that we can withstand."
Instead he says that the market needs to deflate to bring assets back into agreement with the real economy. I think this definitely means house prices and some other things as well.
Ringoen says that the choice is not between bailouts or systemic collapse, but suggests controlled system demolition as the right alternative. This is the difference between his argument and the mindless Limbaugh-Republican fake-populist tea party anti-bailout, anti-stimulus rhetoric. He at least acknowledges that there is no return to business as usual.
He suggests,
"Instead of giving non-discriminating bailouts, the government could let these insolvent financial institutions fail and then make direct grants or loans, where necessary, to avert total collapse. It could be considered a controlled demolition. Though painful, it would reduce the total cost to the government, and most importantly, would destroy uneconomic claims necessary to bring the real economy and the financial system back to balance."
Ringoen is also in favor of stimulus spending to put people back to work in value-creating jobs. I think we have to take the unemployed into account whatever we do. Unemployment is likely to increase, and the first duty of government and community is to take care of those who are not able to take care of themselves.
George Ure shows why a policy of inflation should be expected
From his blog today: http://www.urbansurvival.com/week.htm
"Now, here's what absolutely must happen at a policy level in order to kick the country out of deflation - and this window won't be open too long: A policy decision will be made at the highest levels - and you may not even hear about it being made - that what America needs to survive is a good dose of inflation. Look at the PPI data trend - the last line in the table and it should scare the hell out of you:
(table follows)
March finished goods dropping 1.2% means an annualized rate of deflation of 15.4%.
Pop Quiz Time!
Name one large country whose government has just bet several trillion dollars of future taxpayer generated revenue (and ask what a 15.4% collapse in revenues will do to financial stability/viability of said country): ____________
See how inflation is now the only option?"
"Now, here's what absolutely must happen at a policy level in order to kick the country out of deflation - and this window won't be open too long: A policy decision will be made at the highest levels - and you may not even hear about it being made - that what America needs to survive is a good dose of inflation. Look at the PPI data trend - the last line in the table and it should scare the hell out of you:
(table follows)
March finished goods dropping 1.2% means an annualized rate of deflation of 15.4%.
Pop Quiz Time!
Name one large country whose government has just bet several trillion dollars of future taxpayer generated revenue (and ask what a 15.4% collapse in revenues will do to financial stability/viability of said country): ____________
See how inflation is now the only option?"
Monday, April 13, 2009
They are prepared for sustainable self-sufficiency, but for all the wrong reasons
And now to what I really wanted to talk about today: the Amish! I have frequently been intrigued by the fact that living right among us are communities of people who still know how to do everything for themselves and if necessary could get by quite nicely without modern infrastructure and technology. Although they are not totally detached from our economy (they use the gas/diesel engines sparingly and take advantage of modern medicine and sell things to non-Amish consumers), I believe that they would have no problem adapting if these things went away. I use the term "Amish" as a label for all sorts of religiously motivated simple-living farm communities; there are different varieties of these with differing religious beliefs and rules for living. But as a whole they represent an extreme contrast to the world most of us live in.
I was especially impressed by M.I.T. grad student Eric Brende's book, "Better Off: Flipping the Switch on Technology". Brende lives among this sort of community for 18 months, without electricity and many other things I take for granted. He comes away convinced that his life was not lacking during this period and may have been qualitatively better. He also describes the physical effort involved in a positive way and is surprised that it's not back-breaking bone-weary work. After learning more about these people he observes that about half of their crop is dedicated to providing feed for their horses, yet horses are not absolutely necessary to this lifestyle. Farming could be done by hand without that much more effort (and the total land farmed would be reduced if not providing for the horses). He concludes that a person could live like this by working only half the time, and would have the other half free for study, reflection, or other interests. It seems that the horse is the Amish equivalent of our car - they just like to have them so they can drive that buggy to church on Sunday!
This brings me to the "for all the wrong reasons" part: I did some more reading and discovered that the driving force behind the Amish lifestyle is not a desire for sustainability or even complete self-sufficiency. Instead it is the determination to keep their community intact and to keep their faith pure. This is accomplished through strict religious control and peer pressure, and by minimizing influence from the outside world. As a Christian you might think that I would agree with the idea of maintain purity in faith. My answer is that I don't wish to be someone who thinks they have all the answers and won't listen to other ideas, and I think this is wrong and unhealthy for a Christian community. We should not be afraid of the truth and we should not believe that we understand it perfectly.
Back to the Amish: cars, for instance, are prohibited because they would lead to working outside the community, would become status symbols disrupting the social order, and easy travel would bring more outside influence. Motorized tractors with rubber tires are not allowed because they could be driven into town, which would eventually lead to cars. However, horse drawn motors used to power farming operations are okay.
I am interested in these people because I think they can show us a way to a simple yet rewarding life. But can we accomplish this without their rigid social and religious control? Probably not, but when it comes to living this way because we have no other choice, they will be a great resource to learn from.
One thing that we need to learn from them is to think about long term outcomes. They give great thought and debate to making any changes that would possibly result in a change to their way of life. If there's a chance for this outcome, they simply don't do it.
I know you and I don't want someone making all our decisions for us, this is the standard argument against central planning and I think there is a lot of truth in it. But if we have no planning and restrictions at all, we end up where we are today.
I was especially impressed by M.I.T. grad student Eric Brende's book, "Better Off: Flipping the Switch on Technology". Brende lives among this sort of community for 18 months, without electricity and many other things I take for granted. He comes away convinced that his life was not lacking during this period and may have been qualitatively better. He also describes the physical effort involved in a positive way and is surprised that it's not back-breaking bone-weary work. After learning more about these people he observes that about half of their crop is dedicated to providing feed for their horses, yet horses are not absolutely necessary to this lifestyle. Farming could be done by hand without that much more effort (and the total land farmed would be reduced if not providing for the horses). He concludes that a person could live like this by working only half the time, and would have the other half free for study, reflection, or other interests. It seems that the horse is the Amish equivalent of our car - they just like to have them so they can drive that buggy to church on Sunday!
This brings me to the "for all the wrong reasons" part: I did some more reading and discovered that the driving force behind the Amish lifestyle is not a desire for sustainability or even complete self-sufficiency. Instead it is the determination to keep their community intact and to keep their faith pure. This is accomplished through strict religious control and peer pressure, and by minimizing influence from the outside world. As a Christian you might think that I would agree with the idea of maintain purity in faith. My answer is that I don't wish to be someone who thinks they have all the answers and won't listen to other ideas, and I think this is wrong and unhealthy for a Christian community. We should not be afraid of the truth and we should not believe that we understand it perfectly.
Back to the Amish: cars, for instance, are prohibited because they would lead to working outside the community, would become status symbols disrupting the social order, and easy travel would bring more outside influence. Motorized tractors with rubber tires are not allowed because they could be driven into town, which would eventually lead to cars. However, horse drawn motors used to power farming operations are okay.
I am interested in these people because I think they can show us a way to a simple yet rewarding life. But can we accomplish this without their rigid social and religious control? Probably not, but when it comes to living this way because we have no other choice, they will be a great resource to learn from.
One thing that we need to learn from them is to think about long term outcomes. They give great thought and debate to making any changes that would possibly result in a change to their way of life. If there's a chance for this outcome, they simply don't do it.
I know you and I don't want someone making all our decisions for us, this is the standard argument against central planning and I think there is a lot of truth in it. But if we have no planning and restrictions at all, we end up where we are today.
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