Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.

What needs to be done?

by vbo Sat Aug 20th, 2011 at 11:58:25 AM EST

OK. We are discussing for ages this horrific economic situation all over the world. We now know so much about what went wrong. What in your expert or humble opinion needs to be done and what consequences it will have in short and long term? Where is the hope?Please give us some answers...
Is it fixable at all even with good will (that we don't see right now)?
How long it would take?
If nothing reasonable is going to be done where we are heading, for how long and with what consequences for states, world and  as well  for (most) individuals?And how it will end eventually?
Is globalization and super free market here to stay and is it even possible to reverse it?Or is anything new on the horizon?
What would happen with economy if in some totally fictional scenario governments decide to tax super rich greatly?
What will happen with economy when at some point middle class become small and weak to hold this crazy concept of economy based on buying, borrowing, buying and borrowing?  
What is your best and worse scenario?
I would like to hear about your ideas for solving this mess...I am clueless...


Display:
Is globalization and super free market here to stay and is it even possible to reverse it?

Let me give a concrete example.  Fish caught off the Norwegian coast are immediately frozen, transported to China where they are gutted and turned into products, then put back on a ship where they are transported to a port (LA,) where the cargo container containing the fish is transported to a warehouse, the cargo container is opened and the boxes of fish are put on trucks, which then transport the fish to other warehouses (Albuquerque,) where the truck is unloaded, the boxes are then placed on short-haul trucks who take the fish to local retail outlets (my grocery store in back-of-beyond New Mexico.)

And that's how I get a nice piece of cod to tuck into for my dinner.

Globalization and the super free market depend on cheap oil, extracted at around 85 million barrels a day, for a 8 ounce piece of Norwegian cod to arrive at back-of-beyond New Mexico.

Put bluntly, this isn't going to continue long-term.  As oil prices rise, due to falling extraction, there will come a point where the cost of transportation overwhelms the ability of the consumer to pay for it.  

When the "What-Is" becomes the long-term is anybodies guess.  It all depends on how quickly we go sliding down the right hand side of the Hubbert Curve:

I note, as I write this the 85 m/b/d is being supplemented by (around) 5 m/b/d of higher cost fuel additives, such as ethanol.  Which to me - YMMV - indicates we're already past the peak and slowly starting to head downward.  Another bit of evidence is the fact OPEC, specifically the Saudis, can no longer increase production enough to counter rising oil prices.  

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Sat Aug 20th, 2011 at 01:55:46 PM EST
we've been heading down since the seventies... the cost of transport and the corresponding widespread inflation has only been offset by the access that fuel affords to the desperate enough to work for a dollar a day.

billions of extra dollars to the oil giants, billions of new workers far too poor to quibble about environmental destruction of their homes and habitats, and the extortion of their efforts by capitalism of the most ruthless and predatory kind, dragging round a tattered mask of democracy as raison d'etre.

the quest for happiness as prime mover has to learn to give way to considering others' fate as important to one's own future serenity as one's own, because there is no more 'own' to speak of, we are all daily more deeply linked by the knowledge of what's happening globally, and how the connections flow. for good, we realise that the class struggle is global, and for bad, we realise that the rise of the middle classes in brazil, china, singapore, malaysia is at the cost of middle classes in the 'first world'.

the system allows for only so many on that bus, it appears!

we need a system that balances itself with a middle class that is not zero-sum, and to expect the world elite class's captured politicians to give the voters'needs higher priority than their mates-in-class, well that's like wanting water to flow uphill, innit?

you need a ram pump, and a lot of head to do that.

the head may be the downward dive of social disaffection, the ram pump the energy emerging when enough people have nothing more to lose, and express their fury. then we may see change, until then, it's spray the lime of lies over the reality and hope people have too much on their minds to notice how foul the air's becoming.

olfactory fatigue, like after 15 minutes in a fish shop, it gets tuned out.

the paradox is that middle class kids are educated, and this leads to an understanding of history less burdened by the ignorant chauvinism of the past.

the young feel much more globally connected, it will be they who will unite the world in a juster system after we fade away. the petty squabbles we undergo today will be history, i don't think the present hologram is going to hold together much longer.

interesting diary, vbo, thanks!


'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Sat Aug 20th, 2011 at 06:32:03 PM EST
[ Parent ]
Yeah, half the stuff on the menu in the Alley Cantina in Taos is seafood...crazy...
by asdf on Mon Aug 22nd, 2011 at 08:13:19 PM EST
[ Parent ]
On their website they promote themselves with:

We ... are famous for our Fish and Chips.


She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Mon Aug 22nd, 2011 at 08:55:42 PM EST
[ Parent ]
What would happen with economy if in some totally fictional scenario governments decide to tax super rich greatly?

Ahh, were that to happen many hopeful futures would open up, along with some nasty ones, depending on how it plays out. The power to tax is the power to destroy. Governments inherently have that power. That is why the wealthy have been happy to pay for the political campaigns. By so doing they have assured themselves of subservient governments. The question is one of how the bottom 95% of the population gain any measure of real influence on policy. At present they are confounded by systematic mis-education and propaganda and by political kabuki theater and distracted by a myriad of salacious to outrageous but mostly irrelevant issues.

A scenario for an exit from the grip of government by the nominees of the super-rich is conceivable, if improbable. In a parliamentary form of government it is possible that a party or a coalition with a sufficient majority could decide to simultaneously turn on the wealthy who have supported them. This would be more likely were the situation very dire and the general public significantly aware that that situation was due to following policies that served the interests of the super-rich.

Perhaps a lever towards such a revolt of the MPs would be the possibility of refusing another bailout for banks and finance. Were that to happen, the super-rich would be a whole lot less rich. A charismatic popular leader who was substantially bullet-proof could, under such circumstances, lead a government that changed its policies and began policies that provided the nation with renewable energy and transportation based on same. The policies could be re-oriented towards providing widespread rising wages and reducing income inequality. There is nothing inevitable about the course we are on. It is a choice that has been made by a few wealthy people who have been able to convince enough that they are right and have prevailed.

They have created a perceived reality highly favorable to their interests and >> majority of the population view the world through that perceptual filter. It is like an evil spell and it must be broken in order that any but a very few can have a decent life. There are significant constraints due to physical constraints, but they pale in comparison to the mental restraints under which we labor.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Aug 20th, 2011 at 05:33:32 PM EST
Paul Ferrell is a mainstream public analyst on economics and finance. I have seen him on PBS's business news programs, read his comments in panel discussions in Baron's and the article below is from MarketWatch, a WSJ blog:

Tax the super-rich, or revolution will overrun America next

Yes, tax the super-rich. Tax them now, before the other 99% rise up, trigger a new American Revolution, another meltdown, a new Great Depression. Historically, revolutions build over long periods, bubbles growing to critical mass. Then, "something happens." Suddenly. Unpredictably. A flashpoint triggers ignition. Nobody saw it coming in Egypt. A suicide in a remote village uploaded on a young Google executive's Facebook page. Goes viral, raging out of control. Cannot be stopped. So think hard about these six warnings blowing a new mega-bubble that will soon explode in our collective faces:

4. Warning: The super-rich are blinded by their addiction to money

In "Free Lunch: How the Wealthiest American Enrich Themselves at Government Expense (And Stick You with the Bill)," David Cay Johnston warns that the rich are like addicts, and to "the addicted, money is like cocaine, too much is never enough." Recent data: 300,000 Americans in "the top tenth of 1% of income had nearly as much income as all 150 million Americans who make up the economic lower half of our population."

5. Warning: Politicians are corrupted by this super-rich addiction to greed

In "Washington's Suicide Pact," Newsweek's Ezra Klein warns: "Congress is careening toward the worst of all worlds: massive job losses and an exploding deficit." And the debt-ceiling drama just made things a lot worse. Millions of jobs were lost during Bush years, his wars, tax cuts for the rich. Yet, today the GOP is in total denial of that legacy, blinded by an obsession to destroy Obama's presidency, no matter the consequences.

6. Warning: Soon the revolutionaries will rage, then dominate `Third World America'

Yes, we are ripe for a surprise revolution. In "Third World America" Arianna Huffington warns: "Washington rushed to the rescue of Wall Street but forgot about Main Street." Now Bernanke's promise of cheap money through 2013 is just one more "free lunch" to the richest 1%. Meanwhile, "one in five Americans unemployed or underemployed. One in nine families unable to make the minimum payment on their credit cards. One in eight mortgages in default or foreclosure. One in eight Americans on food stamps. Upward mobility has always been at the center of the American Dream ... that promise has been broken... The American Dream is becoming a nightmare."

Wake up folks. Super-rich addicts are destroying the American Dream for everyone. They're destroying the American economy. They don't care about you. Yes, they hear the ticking time bomb. They're stockpiling cash. Don't say you weren't warned. The IMF sees a new collapse sweeping across the planet. Open your eyes. You're not watching a film. This is not a metaphor. Plan now for the revolution, class warfare, market crash, economic collapse, plan for another depression.



"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Aug 20th, 2011 at 08:15:12 PM EST
[ Parent ]
They have created a perceived reality highly favourable to their interests and >> majority of the population view the world through that perceptual filter.

Yes for long as I know they are telling us that we shouldn't tax rich because they are those who will invest their wealth and make jobs for us and prosperity for the state. Also they kept telling us that we should borrow on the equity of our homes to by investment properties as their prices were raising like mad, put the tenant in and woala you'll have free money too just by watching time passing. People bought it. We all are going to be rich, hurray!
Now we know that there will not be free lunch for us / middle class, there is not enough lunches so they/super rich will have their meal.
So (no matter how fictional this scenario is) if government decide to tax them is it really that "sky will fall down" as they are saying? I do not see super rich investing in their countries in this era of globalisation and that's probably why we are not seeing more jobs in our respective countries...just opposite. Looks like they see us from developed world as consumers ONLY and how we are going to consume without jobs is not of their interest. They blame governments for unemployment. It's a circle.
I would like to know what would happen in this fictional situation where superrich are taxed so they can not invest in China/India/wherever. So governments with tax money should make more jobs (they are not that good in this)? Logic tells me that governments can only really invest that money in infrastructure and they will again give those works to corporations. Corporation (because they are capable of big projects) will pay us low wages again and keep the fat profits. For us people there is no win situation but at least we'll have infrastructure instead of cheap Asian stuff. My head is spinning...
How would this play in a short run? I am afraid financial system as we know it would collapse totally in this circumstances (this may be good in brother picture) but how this all will affect us little people? They keep scaring us with domino effect...and it is scary...

Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Sat Aug 20th, 2011 at 10:04:28 PM EST
[ Parent ]
Unless someone emerges with the stature of an FDR I fear that the only way out of our current situation will be by going through a collapse. But alternatives are available. The USA in WWII gave the lie to the myth that government cannot do anything right. Had the US Government not directed the economy to produce the necessary goods and services we could not have prevailed.

The myth that the rich should not be taxed so that they can invest their wealth in creating jobs died in the 1970s in the USA. But, through propaganda and the spell it has woven, most people think it is still true. And the government has within its power the ability to raise minimum wages and to require businesses to pay for medical care and retirement.

The USA and Australia, to name two countries, could be substantially self sufficient should they choose to direct their economies to that end, as could the European Union, could it just see itself as one multinational union working together for the common good instead of as many nationalities with some prospering at the expense of the others.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Aug 20th, 2011 at 11:48:22 PM EST
[ Parent ]
they are telling us that we shouldn't tax rich because they are those who will invest their wealth and make jobs for us and prosperity for the state ...

Nice little graph posted on BooTrib today (h/t to ejmw) exploding that bit of intellectual drivel:



She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Aug 22nd, 2011 at 02:12:05 PM EST
[ Parent ]
I give another concrete example. If you buy something you need from the markets and the price of that object is it's production costs, you then receive your own labour value in exchange to other people's labour value.

However, if you pay 50% of your labour incomes rent and interest and other financial costs, you receive only 50% of your labour value from the markets.

All we need is to liberate ourselves from these unearned increments (rentiers and monopolists) and with modern technology we all could live free, equal, just and wealthy life.

by kjr63 on Sun Aug 21st, 2011 at 08:47:34 AM EST
..and don't underestimate the amount unearned increments in market prices. They are hidden in the system hundreds of ways. And the neoliberal academia works hard every day to keep it that way and growing.
by kjr63 on Sun Aug 21st, 2011 at 08:57:26 AM EST
[ Parent ]
All we need is to liberate ourselves from these unearned increments (rentiers and monopolists) and with modern technology we all could live free, equal, just and wealthy life.  

Hah, let's not go in to the fantasy world, hahaha
I am asking in these circumstances what is to be done so that we avoid total collapse. Something that CAN be done realistically and that we people can applaud governments for doing it?
As I am watching economic analysts here every day, their comments are darker and darker and predictions very grim. Seems like it's now either huge inflation (and eventually collapse) or default of USA and EU countries falling like dominos (and collapse sooner or later).As for EU seems like they are trying to find way to let all the others default except UK, France and of course Germany (and maybe Scandinavia)...But they are all attached on a same rope and "stone" is pretty heavy and will soon reach bottom of the "swamp".
So according to analysts collapse is unavoidable sooner or later , one way or the another...I saw the other day how in UK they have machines ( like money machines) but instead of money they give you small plates of gold...why do they need it? Is it going to be our money?
I have million questions because I never experienced crises this huge in capitalism...I know nighter did you but at least you have some experience and knowledge from your ancestors...
When I asked people in New Zealand how was it during the crises in 1987 ( I think) they told me : "Everybody you know had lost job...many people lost their houses...it was dangerous to walk CBD cause rich  were jumping from those high buildings"...OK maybe they exaggerated things a little.
And it was market crash...now we have banks very much exposed...

Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Sun Aug 21st, 2011 at 09:55:58 AM EST
[ Parent ]
Yes, fantasy world indeed.

In these circumstances? Debt restructuring.

The real solutions are however long term.

by kjr63 on Sun Aug 21st, 2011 at 12:46:23 PM EST
[ Parent ]
I am asking in these circumstances what is to be done so that we avoid total collapse.

I see my proposals as completely compatible with kjr's. Ironically, for a true solution to our current difficulties, one that is sustainable, the danger is in doing too little to change the existing system rather than too much.

The problems with compound interest are only further compounded by the criminality which our current system regularly encourages. We need to eliminate the the incentives to criminality along with the opportunities. Our current problems with banks are the direct and understandable consequences of having allowed about half of all supposed real estate financial assets in the system to be bogus or counterfeit. Even the most honest, creditworthy borrower who bought at the top of the real estate bubble has a loan half of the value of which is bogus -- as they have discovered to their sorrow.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Aug 21st, 2011 at 02:00:06 PM EST
[ Parent ]
criminality which our current system regularly encourages

You are right...They do not even realise how dehgerous this is.

Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Sun Aug 21st, 2011 at 06:45:25 PM EST
[ Parent ]
I saw the other day how in UK they have machines ( like money machines) but instead of money they give you small plates of gold...why do they need it? Is it going to be our money?

See two years ago

Long attracted to the safety of solid gold, Germans will soon be able to sate their appetite for the yellow metal as easily as buying a chocolate bar after plans were announced on Tuesday to install gold vending machines in airports and railway stations across the country.

...

"German investors have always preferred to hold a lot of personal wealth in gold, for historical reasons. They have twice lost everything," said Thomas Geissler, the owner of the company, who hopes to install "Gold to go" machines in 500 locations in German-speaking countries this year.

"Gold is a good thing to have in your pocket in uncertain times."



Economics is politics by other means
by Migeru (migeru at eurotrib dot com) on Tue Aug 23rd, 2011 at 05:31:04 AM EST
[ Parent ]
You asked, so I'll answer even though I know you don't want to hear it. Monarchy is the answer. Or some similar sort of strong-man government, maybe with some rudimentary rules about hereditary succession that are ignored any time the king's son isn't strong enough.

All this Enlightenment rights-of-man democracy crap is an interesting intellectual experiment that was sort of nominally successful during the industrial revolution, but in reality, you need to have a king to tell the rabble what to do.

Who wants to put money on any of the recent revolutions in North Africa developing into liberal republics? Ain't gonna happen. Some jumped-up army colonel will be running each one of them in a couple of years...reality...

by asdf on Mon Aug 22nd, 2011 at 08:23:09 PM EST
Monarchy is the answer.

Well NO. At some point during those terrible years under Milosevic after ex YU collapsed a really thought that monarchy may be the answer at least for Serbia. But our monarch was distant, born in UK, he cannot speak Serbian (even today)...not that Tito was very good in Serbo-Croatian (who knows where he was born and who he was actually)...And I realised that you cannot go backwards and monarchy is a thing of past and should be.
At the time, being naive, I had a great trust in democracy...not anymore. I am feeling like I am disappointed twice now. First with socialism that also was a very good idea ...as idea...as theory...but in reality it was nothing short of dictatorship. Now I am disappointed with democracy that also is a good idea, in theory but reality is it is just a smart type of dictatorship of the few rich. Freedom of speech, well nice, I can say whatever I want and not end up in jail, I can organize (to some extend) with others but if what we can "speak" is totally irrelevant and can't change anything it's just a kind of entertainment. Whoever tries to really enter political field will find all those same barriers. And with minimal difference between left and right why bother entering?
I am looking forward to the times when together with other professions that are disappearing thanks to technology we'll see profession of politician disappear, ha-ha. Not in my life time...or probably ever.
There are times when "strong hand" is needed but it also can be wrong because we know now whose "strong hand" it could only be.
The way things go one could expect that at some point human consciousness may develop enough to be able to work for the better for all of us...but with manipulations of giant proportions as we see it nowadays I am  afraid that time is very very distant. Our generation had not passed the test...maybe young will think of something? Seeing them right now paralysed and confuse in this world that we are leaving to them I am not that optimistic unfortunately...  but who knows...

Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Mon Aug 22nd, 2011 at 09:25:34 PM EST
[ Parent ]
Sure, your remote king was not a practical leader. But looking at the broader picture, most societies have had a hierarchical government with a strong leader at the top, not chosen by the general population.

Somebody's going to hit me now with statistical proof that that's not the case, I suppose. But still, I think there is a tendency for strong personalities to work themselves into positions of power while weaker "normal" personalities will put up with it as long as they get their football and beer.

by asdf on Mon Aug 22nd, 2011 at 09:40:31 PM EST
[ Parent ]
I think there is a tendency for strong personalities to work themselves into positions of power while weaker "normal" personalities will put up with it as long as they get their football and beer

That's reminiscent of Bob Altemeyer's "double highs" leading a pack of "right-wing authoritarians". But the "low RWA" kinda like the "Enlightenment rights-of-man democracy crap".

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue Aug 23rd, 2011 at 02:37:55 AM EST
[ Parent ]
vbo:
Seeing them right now paralysed and confused in this world that we are leaving to them

well i thought that more a couple of years ago, but i have been meeting/hosting many young people these last two years, and actually i am impressed how many have a major clue, and are navigating the changes with resilience, optimism, and of course the sheer joy of being young and interacting with others of their age.

certainly there are more deeply damaged individuals too, those who shut down emotionally because the hypercomplexity of today's world overwhelms them, i'm not trying to paint a completely blue sky but notwithstanding the general trend collectively is towards sanity, they are less apolitical than many of the BB generation were, less hedonistic, and more attuned to the importance of global solutions to global problems, mastering easily the social media and intuiting how to use it to expand and improve their worlds.

naturally i try and select for these kind of people, and have largely succeeded. i have become much more positive through the experience, as before i was hanging out too little with young people, and that can jaundice one's outlook not a little...

if we can somehow hold back from totally ripping the ecological rug from under their feet, i think the best thing we can do for them is move over and pass down more power to them. they already see how futile many of our preoccupations are, and will not willingly reclone them. sure they need a little guidance sometimes, we all do, especially at that age.

we are very fortunate to have your voice here, vbo :)

 

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Aug 23rd, 2011 at 03:38:50 PM EST
[ Parent ]
Thank you for your kind words...I can be annoying sometimes, haha
I have a hope for young generation too. They are navigating "world full of mines" and that's not easy.
Their lives are not going to look like ours...my problem is that I don't see it necessarily as a good thing.
I think we should have a diary about young people today and explore different segments of the issue...and hear from them.

Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Tue Aug 23rd, 2011 at 05:41:13 PM EST
[ Parent ]
vbo:
the issue

which one? global systems collapse? they have need for confidence, so i try to avoid damaging it with doomery.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Wed Aug 24th, 2011 at 05:32:20 AM EST
[ Parent ]
which one? global systems collapse?

No. I was thinking a diary about problems that they are facing in today's world and how they manage... you know : education, work, family ,etc. How they feel about changes that they have to endure in their lives. Because their lives will not going to look like their parents lives...so they do not have example to follow. Stuff like that...

Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Wed Aug 24th, 2011 at 06:14:42 AM EST
[ Parent ]
Monarchy is the answer. Or some similar sort of strong-man government, maybe with some rudimentary rules about hereditary succession that are ignored any time the king's son isn't strong enough

Germanic tribes used to have an elected monarchy and that carried into the 19th century with the Holy Roman Empire.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue Aug 23rd, 2011 at 02:35:37 AM EST
[ Parent ]
The germanic tribes up here had a form of election where the tribe of Svear chose a king at Mora stenar (exact forms of election unknown) who then had to travel to each landskap and there respect the local laws. If he failed to follow the local laws he could be killed, if so the process started over.

I think better processes could be designed,.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Tue Aug 23rd, 2011 at 08:05:55 AM EST
[ Parent ]
Karl Knutsson Bonde was elected king, deposed, and then elected king a second time. And Mora stenar is 10 km from where I live. :)

Peak oil is not an energy crisis. It is a liquid fuel crisis.
by Starvid on Sun Sep 11th, 2011 at 12:18:31 PM EST
[ Parent ]
UK riots were product of consumerism and will hit economy, says City broker | Business | The Guardian

The recent riots in London and other big cities were the product of an "out-of-control consumerist ethos" which will have profound impacts for the UK economy, a leading City broker has said.

The report by the global head of research at Tullett Prebon, Tim Morgan, is part of a series in which the brokerage analyses bigger issues for the UK. It details recommendations to resolve what it sees as a political and economic malaise: new role models, policies to encourage savings, the channelling of private investment into creating rather than inflating assets, and greater public investment.

It warns: "We conclude that the rioting reflects a deeply flawed economic and social ethos... recklessly borrowed consumption, the breakdown both of top-end accountability and of trust in institutions, and severe failings by governments over more than two decades."

The note pinpoints the philosophy behind the riots as consumerism.

A typical internet user sees a hundred adverts an hour, the report says, and the underlying message many receive is: "Here's the ideal. You can't have it." Accompanying this is an inflation of government and private debt, a key theme of Morgan's other work.

... all of which is bleedin' obvious. What I find interesting in this article is the mega-status accorded to stockbrokers. They are such experts in everything that they do social research, and we are expected to sit up and take notice...

... perhaps the Pet Groomers' Federation has something interesting to say about the riots?

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Tue Aug 23rd, 2011 at 02:42:03 AM EST
It details recommendations to resolve what it sees as a political and economic malaise: new role models, policies to encourage savings, the channelling of private investment into creating rather than inflating assets, and greater public investment.

Well, the guy does a better job at policy than the current office holders in much of the OECD...

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue Aug 23rd, 2011 at 02:45:19 AM EST
[ Parent ]
In the early 1990s I read Beyond the Limits, a 20th anniversary reapprisal of the original The Limits to Growth. Then some time 3 to 5 years ago while I was visiting my parents I grabbed the book from the bookshelf in my old teenager's bedroom and looked at the scenarios they were considering. The last scenario which avoided a mid-21st-century global collapse required the introduction of sustainable policies by 2000. Introducing them later would not prevent the collapse itself, just change its character. Considering how well the 1970s model runs compared to the actual history up to 2005, things are not looking good.
In 2008 Graham Turner at the Commonwealth Scientific and Industrial Research Organisation (CSIRO) in Australia published a paper called "A Comparison of `The Limits to Growth` with Thirty Years of Reality". It examined the past thirty years of reality with the predictions made in 1972 and found that changes in industrial production, food production and pollution are all in line with the book's predictions of economic and societal collapse in the 21st century. In 2010, Peet, Nørgård, and Ragnarsdóttir called the book a "pioneering report", but said that, "unfortunately the report has been largely dismissed by critics as a doomsday prophecy that has not held up to scrutiny.
So, if you want to know
Is it fixable at all even with good will (that we don't see right now)?
How long it would take?
If nothing reasonable is going to be done where we are heading, for how long and with what consequences for states, world and  as well  for (most) individuals?And how it will end eventually?
I suggest that you get a copy of the 2004 book Limits to Growth: The 30-Year Update. Then you can diary it for us <grin>.

When you ask

What will happen with economy when at some point middle class become small and weak to hold this crazy concept of economy based on buying, borrowing, buying and borrowing?
I'm not so concerned with the middle class in its role as consumer engine of the economy. What I'm more concerned with is the industrial processes that are the necessary life support system of a human population numbering in the several billions. You need an educated middle class to keep that going! And by educated I don't mean economics and management "sciences" but natural science and engineering. See, for instance, the philosophy underlying The Lessons from the Veblen Farm. If that worldview is lost, and it is in real danger of being lost, the processes that keep our societies, countries, cities alive will begin to break down. In 50 to 100 years we may be like medieval people looking in wonder at decaying but still magnificent Roman structures with no clue how on Earth the Romans managed to build them. Or, even worse, early medieval people with an awareness of how they were built but also of their own inability to replicate the work. I see even peer-reviewed published scientific research degenerating into cargo cult science. Sort of like the sterile scholasticism of the middle ages compared with the work of the Hellenistic cultural elite.

When I think of best and worse scenarios I don't think so much about mortality rates in the great mid-century collapse (think 14th century Europe) but on the kind of culture that will emerge at the other end.

We are now in a position to use the last years or decades of the petroleum-fuelled material-growth industrial-production economy to lay the foundation for a sustainable material-stationary economy. But politically we in the West will do nothing in this direction. I wonder whether places like Japan will be able to push in a different direction, but it's possible that the entire OECD (the "rich" countries of the last 30 years) will pursue business as usual and wither with it. So, maybe if we want to imagine what the world might be like in 100 years we should imagine what the BRIC would be like in 100 years without the OECD's intellectual baggage weighing them down. China, Brazil, India, Russia, seem to pragmatically do what they must (as long as they can keep the wheels on their own carts), while the European policy elite are ideologues and do talking points.

In the short term, in Europe, I expect a 4-year cycle of total EPP dominance presiding over a Hooverian disaster. The second half of this decade would be one of real societal upheaval. After 2020, who knows. The one thing I'm confident about is that Jérôme will continue to help build wind farms through the political and socioeconomic turbulence.

Economics is politics by other means

by Migeru (migeru at eurotrib dot com) on Tue Aug 23rd, 2011 at 04:52:58 AM EST
Its hard to think of "what does Japan do?" independently of "what does China do?" For the entire western Pacific Basin, whether China makes it through the camel's eye or collapses into political chaos is the number one question for any future scenario over the two decades ahead.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Tue Aug 23rd, 2011 at 05:53:54 PM EST
[ Parent ]
But that relationship is a one-way street: If China goes tits-up, it's Bad News for Japan. If Japan goes tits-up, it's only moderately inconvenient for China.

And it is trivially easy to come up with scenarios in which China pulls through while Japan thirdworldizes. The easiest way would be for Japan to spend the next thirty years pursuing a full Thatcherist lobotomy of its industrial culture.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Aug 23rd, 2011 at 06:28:03 PM EST
[ Parent ]
I'm not sure I see Japan doing that ... for one thing, China is right there next door, so doing a full Thatcherite lobotomy of their industrial economy is a scarier thing.

And on the other hand, its something more than an inconvenience to China if Japan goes belly up, at least in the next decade or so. Lots of Chinese exports go out with Japanese designs under Japanese QC and with a Japanese brand, including assembled with Japanese components. My impression is Japan is a more integral part of the production side of the Chinese economy than North America or the EU.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Wed Aug 24th, 2011 at 03:34:02 AM EST
[ Parent ]
Sort of like looking at Britain separately from the rest of Europe? Interesting coincidence that the UK and Japan both drive on the left...stubbornly rejecting the "normality" of their huge neighbors...
by asdf on Sat Aug 27th, 2011 at 11:02:31 AM EST
[ Parent ]
Yup.

We're teaching entire generations digital, and not bothering with analogue......

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Aug 23rd, 2011 at 07:00:32 PM EST
[ Parent ]
I just ordered the book...for my kindle. heh.

And when I wrote this comment, the process you describe below is more likely than my "parasitic wealthy kill[ing] off the technicians" - although I can envision scenarios where the difference is very hazy.

You need an educated middle class to keep that going! And by educated I don't mean economics and management "sciences" but natural science and engineering. In 50 to 100 years we may be like medieval people looking in wonder at decaying but still magnificent Roman structures with no clue how on Earth the Romans managed to build them. Or, even worse, early medieval people with an awareness of how they were built but also of their own inability to replicate the work.


you are the media you consume.

by MillMan (millguy at gmail) on Wed Aug 24th, 2011 at 06:16:28 PM EST
[ Parent ]
http://www.youtube.com/watch?v=IcDkcQVWxYc&feature=relmfu

Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Mon Aug 29th, 2011 at 02:22:26 AM EST
I have recently seen few more comments...like:

"We can only hope FOR HOPE"

Science without religion is lame, religion without science is blind...Albert Einstein

by vbo on Mon Aug 29th, 2011 at 10:12:13 PM EST
http://w3.newsmax.com/a/aftershockb/video.cfm?PROMO_CODE=CD97-1

Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Thu Sep 1st, 2011 at 07:17:23 AM EST
What do you think?

Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Thu Sep 1st, 2011 at 07:21:55 AM EST
[ Parent ]


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