Saturday, January 31, 2009

Credo in $

Today's guest post is by Frank, who uncovers what must be the deeply held beliefs of those who still have hope that the status quo can be maintained. (We're just going through a rough patch, right, people?) Axiomatically, to have hope, you must have faith. (And if your hope turns out to be false, there is always charity.) Hast thou yet hope, O {username}? If so, please genuflect, direct your gaze heavenward, and repeat after Brother Frank:

I believe in worldwide Ponzi schemes and universal gullibility. I believe that reckless lending can be cured by reckless borrowing and that fraudulent borrowing can be healed by fraudulent lending. I believe that a housing bubble fueled by loose credit can be corrected by easing credit. I believe that each trillion of hallucinated dollars that disappears in a puff of Wall Street smoke then always reappears magically from behind a Treasury Department mirror.

I believe in America's almighty financial geniuses and monetary officials, who destroy wealth indiscriminately and indefinitely, and whose kingdom shall have no end. It is divine justice that those who cause financial catastrophes are rewarded with public money, while innocent bystanders are punished in their stead. I believe that central banks can print all the money anyone will ever need. I believe that if one stimulus package does not work, the next one surely will.

I believe in the redeeming power of financial complexity. I believe that hedge funds and sovereign wealth funds are righteous to enter into incomprehensible contracts having convoluted ownership and no inherent value. And I believe that opaque, secretive companies which pretend to insure those investments are offering a valuable service, even if this requires the use of public money.

I believe that economic stability and confidence will return when every failing business is bailed out, with no failure too small to be left behind. I believe that all dying institutions shall be consolidated, merging the smaller basket cases with the larger ones. The lion and the lamb shall lie down together in a new spirit of national competitiveness.

I believe
that the end of days shall come when there is only one institution left, comprehensively unified, far too big to fail, owning everything and controlling nothing. All shall come and supplicate before its holy ATM machines, for they are subtle and quick to anger. It is in this one true financial institution that I put my faith, truly gigantic, truly bankrupt, amen.

Monday, January 26, 2009

Boondoggles to the Rescue!

Economic collapse has a way of turning economic negatives into positives. It is not necessary for the United States 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 result in more severe problems than those they attempt to solve.

Just look around 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 and legal boondoggles like the intellectual property system. At some point, creating another boondoggle becomes the preferred course of action: since the outcome can be predicted with complete accuracy, there is little risk. Proposing a solution that might work runs the risk of it not working.

So why not, as a matter of policy, only propose solutions that are guaranteed to simply create more problems, for which further solutions can then be proposed? At some point, a boondoggle event horizon is reached, like the light event horizon that exists at the surface of a black hole. Beyond that horizon, the only possible course of action is to create more boondoggles.

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.

Once you understand the principles involved, boondoggling will come naturally. Let us work through a sample problem: there is no longer enough gasoline to go around. A simple but effective solution is to ban the sale of new cars, with the exception of certain fleet vehicles used by public services. First, older cars are overall more energy-efficient than new cars, because the massive amount of energy that went into manufacturing them is more highly amortized. Second, large energy savings accrue from the shutdown of an entire industry devoted to designing, building, marketing and financing new cars. Third, older cars require more maintenance, reinvigorating the local economy at the expense of mainly foreign car manufacturers, and helping reduce the trade deficit. Fourth, this will create a shortage of cars, translating automatically into fewer, shorter car trips, a higher passenger occupancy per trip and more bicycling and use of public transportation, saving even more energy. Lastly, this would allow the car to be made obsolete on about the same time line as the oil industry that made it possible.

Of course, this solution does not qualify as a boondoggle, so it will not be seriously considered. The problems it creates are too small, and they offer too little scope for creating further boondoggles. Moreover, if this solution worked, then everyone would be happily driving their slightly older cars, completely unprepared for some inevitable, cataclysmic, economy-collapsing event. It is better to introduce some boondoggles, such as corn-based ethanol and coal-to-liquids conversion. Ethanol production creates very little additional energy but it does create some fantastic problems for further boondoggling: a shortage of food and higher food prices, malnutrition among the poor and inflation. It also reinforces a large existing boondoggle: by funneling resources to petrochemical-based agribusiness, which depletes and poisons the soil and has no future in an age when petrochemicals are scarce, it helps undermine future food security. Coal-to-liquids conversion offers similarly excellent opportunities. By attempting to alleviate a shortage of gasoline, it will cause a shortage of coal, resulting in power outages and dramatically higher electricity rates. It will add more carbon dioxide to the atmosphere, accelerating global warming. It will probably call for some coal imports, inefficiently moving a very bulky fuel from far away, and fostering energy dependence on suppliers such as China and Russia, further enhancing the trade deficit. Along with corn-based ethanol, this excellent boondoggle reinforces the erroneous notion that Americans will be able to continue to drive cars into the indefinite future, conditioning them to clamor for more boondoggles in place of any real solutions.

With a bit of practice, you should be able to come up with some excellent boondoggles of your own in your own field of endeavor. If your boondoggle works, it will create more problems for you to solve in the next round, as long as there is time for one more round. And if there is not, then you will be where you want to be: at a ground-floor window, staring into an abyss of only a couple of feet. Although by then it may feel unnatural, at that point you must resist the temptation to create yet another boondoggle by jumping down head-first. [Reinventing Collapse, pp 118-120]

Saturday, January 24, 2009

Bankers on Permanent Holiday

This is a guest post from Justin, which explores some interesting possibilities for cultural responses to the changed economic conditions. You see, some people may decide that they are bankrupt before they actually run out of all options, and start acting accordingly. Others, I suppose, would wait around for Joe the Plumber to show up and repossess their toilet. But this short story is about the former category. You see, our physical survival is not yet under threat, but our economic survival certainly is. How should we react? To put it in Clintonesque terms, "It's the culture, stupid!"

Three-month update: What Justin wrote as provocative pseudo-fiction is now echoed faithfully as reporting in the mainstream press.

After the markets crashed there were so many more subway musicians: fifty-something men whose close-cropped hair had disappeared under fezzes or down the drains of their showers. Not only were there more of them, but the collective mood of these "buskers" had changed to suit the times. For every cheery trio of Mexicans on guitar and accordion, blitzing the commuters from Queens with their syncopated, sped-up waltzes, there appeared four of five lone keyboardists or tenor sax players, instruments liberated from rec room closets in Scarsdale, who provided the definitive soundtrack to this special moment in New York. No one will ever forget the guitarist at Astor Place who played "Knockin' on Heaven's Door" all day long. Or the guy with the Theremin at South Ferry.

They'd decided to give up — or forgo entirely — the demeaning hunt for potential sources of (diminished) income or jobs whose own expiration dates were approaching ever closer. The presence of each new musician in the subway was an invitation out of the house to the others: he exerted a camaradic pull, irresistible as a game of tennis, and contributed to a positive feedback loop predicated on the lure of performing. The insistent, daring therapy of it. The mental calculus must have gone something along the lines of: "After risking so much of others' and my own money unawares, why not? What is the big deal? At least I'd be aware of the stakes were I to take my tenor down onto the platform."

The danger of the platform! The horizontal, subterranean equivalent of a leap from 22 stories up rumbled by every seven or so minutes. Even more often during rush hour. Only the most erratic, the most demented of these new buskers dared position himself at the dangerous end of the platform, the one near the tunnel mouth from which the trains entered the station. These were the guys who didn't wear shades, whose eyes locked onto a magic ceramic tile across the tracks visible only to themselves. Not surprisingly, these men, some of whom were the best musicians, drew not quarters or dollar bills but rather a five-yard buffer zone of sideways glances. No one stood between them and the yellow line.

Perversity, of course, ran rampant. The word "business" meant something new, or, more accurately, something it hadn't meant in a long while. Nihilism was the new black. Smoking was back in, fuck the ban in the subway. In fact, to hell with all the old rules. Shaming, self- and otherwise, was an essential part of one's act: to wit, the subversion of the "must have bag," whereby a musician would replace the familiar instrument case "cash box" with his briefcase or corporate-branded messenger bag. (Someone from marketing...) Another fad involved wearing one's company softball team uniform. Indeed, so popular were these shirts that some of the more unrepentant capitalists were soon back to work, having identified a profitable niche market specializing in ironic Bear Stearns and Lehman Brothers team jerseys.

One group of guerilla musicians would play for tips outside their former employer's office building. Like modern-day Pinkertons, the cops were called in to break up the fun. They loved that, the cops did, because they hated everyone. They had no sympathy for the musicians, who "deserved a taste of reality," and they despised the Fortune 500 assholes whose precious "peace" was being disturbed, twenty stories above, despite double-glazed windows that don't open, by a handful of their disgruntled ex-employees. To signify their loathing in the clearest possible manner, the cops would take their time arriving, waiting for a second and a third complaint call, and then use excessive force to bust up the festivities.

It was always embarrassing the first time one encountered a former office mate behind his Casio, what with him wearing black Levi's, a T-shirt, shades, and a beret. Worse still, the working were usually slow to recognize former colleagues out of their natural environment, which meant that one was occasionally startled by one's former manager — between songs or, more shockingly, even mid-song — barking out one's name. One would think these guys would be too embarrassed to do that, the colleague-as-remembered would never do that. But times had changed. The awkwardness of these encounters was magnified by the decision whether to leave money. After deciding not to pay once or twice, one was obliged to find a new way to Grand Central even if that meant having to take the Times Square Shuttle across town.

Billy Joel songs were huge. The upbeat ones played slow, the ballads played even slower. At the end of the day, you could count on hearing "Uptown Girl" at least once between Bowling Green and Grand Central. They played this one song straight, played it the way Billy did, hoping for the impossible as they smiled through salt-and-pepper goatees and sang to the female temps and secretaries of the Upper East Side. When one felt one's inner poet, one went with Springsteen, usually "Blinded by the Light."

Women who could afford to take cabs did; those forced by circumstances to ride the MTA learned to ride in groups, ideally with one of their few remaining male colleagues. But these men were too stressed — preoccupied as they were with the added burden of new responsibilities, proffered and accepted with the tacit consent (often betrayed) of a few months' insulation — to enjoy this new-found privilege. Indeed, many a working stiff regarded these busking ex-colleagues with jealousy. The still-working were invited to weigh the rapidly diminishing marginal benefits of a chosen career against the novelty and the certainty of musical self-employment. Like the steady outward spread of the crisis itself, a note of fatalism began to creep into these evaluations: Never mind the light at the end of the tunnel, when was the other shoe going to drop... on me?

Days the Dow rose were the worst. Not because some guy was making a killing — some guy was always cleaning up — but because it felt like losing. Whenever the three major indexes rose in unison, like obedient little children, one thought about all the missed opportunities that had accrued over the years. Before, one felt entitled to share in the giddiness, even if it put money in your pocket only indirectly. Now, one was rooting for big declines. Every day. Either way, the ups and downs of the market still correlated (albeit inversely) to one's own sense of being. Thanks to decades of conditioning, phenomena such as the phantom-limb adrenaline rush on Friday afternoons, persisted until one's biological clocks reset itself, until one became habituated to respond to a new set of stimuli.

The widely held practice of buying a yearly MetroNorth pass meant that the musicians became nearly permanent fixtures in the subway. They took an even earlier train into the city than they had when working on Wall Street. And they went home later, too. Much later. By Thanksgiving, a special camaraderie had sprung up among them, one that was far more profound than anything they had know in their offices. They became competitive about something other than money, and they loved themselves and one another for it. Instead of Harry's or the Campbell Apartment, they met "after work" at bars like the Turtle Bay or the Holiday Cocktail. Inevitably, they began to jam.

Wives stayed away, but the amazing thing were the old intra-office liaisons, the flames rekindled, defying both odds and propriety, after a chance encounter below ground. First there was the shock of a former lover spied behind a tenor sax followed by the disbelieving double-take, which was met with a wink and a quick riff in the key of b-flat, signaling "let's get horizontal." Women who met friends after work at the W, Savoy, or the Mercer Kitchen but were suddenly recommending the Turtle Bay Café happy hour so they could show off — the gall of it! — their new/old trophy.

Divorce lawyers were doing a brisk business, busier than they'd been at any point since the recession in the early '90s. Exes and children remained in Westchester and Greenwich, while the word went around that the musicians were congregating in Far Rockaway. It made sense, actually: an abundance of cheap vacant condos, quickly filled and now often shared. And the surfing. Instead of closing for the winter in November, the surf shop on 116th Street instead sold a record 63 boards! The atmosphere out there was like Coney Island without the rides, or Williamsburg before the gentrification: life was for the taking, for the young at heart. A sleepaway camp mentality prevailed. It became normal to see dozens of grown men in wetsuits paddling their boards out into the surf on weekday afternoons, "days off" from the new grind of playing for spare change. Conventional notions of time lost sway and were replaced by something the musicians called "post-apocalyptic endless summer." Indeed, these men were survivors, they'd taken the best shot from life, and now it was their turn to swing back.

Twelve hours of practice, daily, improved the musicians' playing — that plus the confidence of playing before an audience. Novice musicians invariably started with familiar material, then mastered it, grew bored, and then fought the boredom, deconstructing the piece from within the confines of the piece. In short, they became proper musicians. The smartest, most creative ones stopped showing off in obvious ways and instead realigned one's orientation to a piece, turning you askew to what you knew. This improvement, combined with the musicians' ubiquity, made the subway a much more fun place to be. The homeless, and artists, were no longer the only ones yo-yoing for days on end. The scene down at Union Square boomed with teen-age jazz freaks off the trains from Bridgeport, Port Washington, and New Brunswick would "dip in" to the city for a few days with their instruments.

The A Train to Far Rockaway on Friday nights was the hippest party in town. A live studio set with unwinding pros, informally swapping phrasings and new ideas, laying new base lines down to unsettle answers to questions long thought to have been resolved. By journey's end, one had arrived at a destination named Weekend. One moved from car to car on a sea of discarded brown paper bags that crunched softly underfoot like empty peanut shells, all volume and no substance. Each car contained its own ninety-minute "unplugged" jam, so this hopping back and forth between cars formed the organizing principle of the "Rockaway Beach Sound," which Sascha Frere-Jones described as "a nagging hangover baseline of Chick Corea and Herbie Hancock, the soul of Billy Joel, Jonathan Richman, and the Beach Boys — washed down with a long, sweet, straight-from-the-bottle shot of the Ramones." In short, it was irresistible. It was a sound that said, "Fuck you very much," to the idea of joint custody and every other weekend.

Thursday, January 22, 2009

Perestroika 2.0 Beta

Congratulations, everyone, we have a new president: a fresh new face, a capable, optimistic, inspiring figure, ushering in a new era of responsibility, ready to confront the many serious challenges that face the nation; in short, we have us a Gorbachev. I don't know about you, but I find the parallel rather obvious.

Obama wishes to save the economy, and to inspire us with words such as "We will harness the sun and the winds and the soil to fuel our cars and run our factories." [Inauguration speech] At the same time, he cautions us that "We will not apologize for our way of life, nor will we waver in its defense" -- an echo of Dick Cheney's "The American way of life is non-negotiable." And so we descend from the nonexistent but wonderfully evocative "clean coal" to the more pedestrian "Put a little dirt in your gas tank!"

But these are all euphemisms: the reality is that it is either fossil fuels, which are running out while simultaneously destabilizing the planet's climate and poisoning the biosphere, or the end of industrial civilization, or (most likely) both, happening in that order. According to the latest International Energy Agency projections, the half-life of industrial civilization can be capped at about 17 years: it's all downhill from here. All industrial countries will be forced to rapidly deindustrialize on this time scale, but the one that has spent the last century building an infrastructure that has no future -- based on little houses interconnected by cars, with all of its associated moribund, unmaintainable systems -- is virtually guaranteed to fall the hardest. An American's two greatest enemies are his house and his car. But try telling that to most Americans, and you will get ridicule, consternation, and disbelief. Thus, the problem has no political solution. Tragically, Obama happens to be a politician.

"Whenever we confront a problem for which no political solution exists, the inevitable result is an uncomfortable impasse filled with awkward, self-censored chatter. During the Soviet establishment’s fast slide toward dissolution, Gorbachev’s glasnost campaign unleashed a torrent of words. In a sort of nation-wide talking cure, many previously taboo subjects could be broached in public, and many important problems could suddenly be discussed. An important caveat still applied: the problems always had to be cast as “specific difficulties,” or “singular problems” and never as a small piece within the larger mosaic of obvious system-wide failure. The spell was really only broken by Yeltsin, when, in the aftermath of the failed putsch, he forcefully affixed the prefix “former” to the term “Soviet Union.” At that point, old, pro-Soviet, now irrelevant standards of patriotic thought and behavior suddenly became ridiculous — the domain of half-crazed, destitute pensioners, parading with portraits of Lenin and Stalin. By then, fear of political reprisals had already faded into history, but old habits die hard, and it took years for people’s thinking to catch up with the new, post-imperial reality. It was not an easy transition, and many remained embittered for life.

"In today’s America, it is also quite possible to talk about separate difficulties and singular problems, provided they are kept separate and singular and served up under a patriotic sauce with a dash of optimism on top. It is quite possible to refer to depressed areas, to the growing underclass and even to human rights abuses. It is, however, not allowable to refer to America as a chronically depressed country, an increasingly lower-class and impoverished country or a country that fails to take care of its citizens and often abuses them. Yes, there are prisons where heroin addicts are strapped to a chair while they go through withdrawal, a treatment so effective that some of them have to be carried out in body bags later, but that, you see, is a specific difficulty, a singular problem, if you will. But, no no no, we are a decent, freedom-loving country in spite of such little problems. We just have a slight problem with the way we all treat each other... and others. We did recently invade a country that had posed no threat to us and caused about a half a million civilian deaths there, but no no no, we are a freedom-loving country! That is just a specific difficulty with our foreign policy, not a true reflection of our national character (which is to squirm when presented with unpleasant facts and to roll our eyes when someone draws general conclusions from them based on a preponderance of evidence).

"When it comes to collapse mitigation, there is no one who will undertake an organized effort to make the collapse survivable, to save what can be saved and to avert the catastrophes that can still be averted. We will all do our best to delay or avert the collapse, possibly bringing it on sooner and making it worse. Constitutionally incapable of conceiving of a future that does not include the system that sustains our public personae, we will prattle on about a bright future for the country for as long as there is enough electricity to power the video camera that is pointed at us. Gorbachev’s perestroika is an example of just such an effort at self-delusion: he gave speeches that ran to several hours, devoted to mystical entities such as the “socialist marketplace.” He only paused to drink water — copious amounts of it, it seemed — causing people to wonder whether there was a chamber pot inside his podium.

"There are few grounds for optimism when it comes to organizing a timely and successful effort at collapse mitigation. Nevertheless, miracles do happen. For instance, in spite of inadequate preparation, in the aftermath of the Soviet collapse, none of the high-grade nuclear fissile material has ended up in the hands of terrorists, and although there were a few reports of radiation leaks, nothing happened that approached the scale of the Chernobyl catastrophe. In other ways, the miserable experience had by all was mitigated by the very nature of the Soviet system, as I described in Chapter 3. No such automatic windfalls are due the United States; here, collapse preparation, if any, is likely to be the result of an overdue, haphazardly organized and hasty effort." [Reinventing Collapse, pp. 108-110]

I sincerely hope that Obama manages to do better for himself than Gorbachev. History can be mean to do-gooders. On that fateful day when Gorbachev lost his job, his wife suffered a stroke, and he, since that day, hasn't been able to wipe that deer-in-the-headlights look off his face. Trying to solve problems that have no solution is a fine thing to try to do. Even if it is utterly futile, it makes for great drama. But I hope, for his sake, that Obama doesn't give up any of his hobbies. should he still have any.

Monday, January 19, 2009

Doom Boom

I got a write-up in the New Yorker, in an article by Ben McGrath, Boom time for doomsayers, in the January 26 issue, which is on newsstands starting today. Also featured in his piece are James Howard Kunstler and Nassim Nicholas Taleb. Ben has been researching the subject for a couple of months, and his reaction to all he's learned is a thoughtful and friendly one. He says that it has started to color the way he sees the news; perhaps now he is more inclined to see ongoing collapse where before he saw nothing more than the usual "ups and downs" projected by the media hologram. But, as he confesses in an online interview, due to a combination of inertia and peer pressure, he is yet to make any changes in his life to make himself better prepared for what's coming. The article is worth reading, and I hope that, for your own sakes, you can pick up where Ben leaves off.

Saturday, January 10, 2009

Back by popular demand

I previously thought to curtail my blogging activities, prompted, among other things, by my wife's observation that I "never get a break." But then I got a flurry of emails from my readers asking me to continue. How many readers do I have? Well, I looked at the Google Analytics report and was shocked to discover that there are almost a hundred thousand of you out there! (95,508 to be exact). I can't bring myself to disappoint that many people, and so the normal sporadic posting will continue.

That Bastion of American Socialism

Over the past few months the American mainstream chatter has experienced a sudden spike in the gratuitous use of the term "Socialist." It was prompted by the attempts of the federal government to resuscitate insolvent financial institutions. These attempts included offers of guarantees to their clients, injections of large sums of borrowed public money, and granting them access to almost-free credit that was magically summoned ex nihilo by the Federal Reserve. To some observers, these attempts looked like an emergency nationalization of the finance sector was underway, prompting them to cry "Socialism!" Their cries were not as strident as one would expect, bereft of the usual disdain that normally accompanies the use of this term. Rather, it was proffered with a wan smile, because the commentators could find nothing better to say – nothing that would actually make sense of the situation.

Not a single comment on this matter could be heard from any of the numerous socialist parties, either opposition or government, from around the globe, who correctly surmised that this had nothing to do with their political discipline, because in the US "socialism" is commonly used as a pejorative term, with willful ignorance and breathtaking inaccuracy, to foolishly dismiss any number of alternative notions of how society might be organized. What this new, untraditional use of the term lacks in venom, it more than makes up for in malapropism, for there is nothing remotely socialist to Henry Paulson's "no banker left behind" bail-out strategy, or to Ben Bernanke's "buy one – get one free" deal on the US Dollar (offered only to well-connected friends) or to any of the other measures, either attempted or considered, to slow the collapse of the US economy.

A nationalization of the private sector can indeed be called socialist, but only when it is carried out by a socialist government. In absence of this key ingredient, a perfect melding of government and private business is, in fact, the gold standard of fascism. But nobody is crying "Fascism!" over what has been happening in the US. Not only would this seem ridiculously theatrical, but, the trouble is, we here in the US have traditionally liked fascists. We had liked Mussolini well enough, until he allied with Hitler, whom we only eventually grew to dislike once he started hindering transatlantic trade. We liked Spain's Franco well enough too. We liked Chile's Pinochet after having a hand in bumping off his Socialist predecessor Allende (on September 11, 1973; on the same date some years later, I was very briefly seized with the odd notion that the Chileans had finally exacted their revenge). In general, a business-friendly fascist generalissimo or president-for-life with no ties to Hitler is someone we could almost always work with. So much for political honesty.

As a practical matter, failing at capitalism does not automatically make you socialist, no more than failing at marriage automatically make you gay. Even if desperation makes you randy for anything that is warm-blooded and doesn't bite, the happily gay lifestyle is not automatically there for the taking. There are the matters of grooming, and manners, and interior decoration to consider, and these take work, just like anything else. Speaking of work, building socialism certainly takes a great deal of work, a lot of which tends to be unpaid, voluntary labor, and so desperation certainly helps to inspire the effort, but it cannot be the only ingredient. It also takes intelligence, because, as Douglas Adams once astutely observed, "people are a problem." In due course, they will learn to thwart any system, no matter how well-designed it might be, be it capitalist, socialist, anarchist, Ayn Randian, or one based on a strictly literal interpretation of the Book of Revelation.

However, here a distinction can be drawn: systems that attempt to do good seem far more corruptible than ones that have no such pretensions. Thus, a socialist system, inspired by the noblest of impulses to help one's fellow man, quickly develops social inequalities that it was designed to eradicate, breeding cynicism, while a capitalist system, inspired by the impulse to help oneself through greed and fear, starts out from the position of perfect cynicism, and is therefore immune to such effects, making it more robust, as long as it does not become resource-constrained. It seems to be a superior system if your goal is to keep the planet burning brightly, but when the fuel starts to run low, it is quickly torn apart by the very impulses that motivated its previous successes: greed turns to profiteering, draining the life blood out of the economy, while fear causes capital to seek safe havens, causing the wheels of commerce to grind to a halt. It could be said that an intelligently designed, well-regulated capitalist system could be made to avoid such pitfalls and persevere in the face of resource constraints, but the US seems laughably far from achieving this goal.

Taking intelligence itself as an example, if having more of it is a good thing, then a bit of socialism could have helped a lot. Let us start with the observation that intelligence, and the ability to benefit from higher education, occur more or less randomly within a human population. The genetic and environmental variation is such that it is not even conceivable to breed people for high intellectual abilities, although, as a look at any number of aristocratic lineages will tell you, it is most certainly possible to breed blue-blooded imbeciles. Thus, offering higher education to those whose parents can afford it is a way to squander resources on a great lot of pampered nincompoops while denying education to working class minds that might actually soak it up and benefit from it. A case in point: why exactly was it a good idea to send George W. Bush to Yale, and then to Harvard Business School? A wanton misallocation of resources, wouldn't you agree? At this point, I doubt that I would get an argument even from his own parents. Perhaps in retrospect they would have been happier to let someone more qualified decide whether young George should have grown up to incompetently send men into battle or to competently polish hub caps down on the corner.

Many countries, upon achieving a certain level of collective intelligence, or upon finding themselves blessed with a sufficiently intelligent benevolent dictator, followed a similar line of reasoning, and organized a system of public education that meted out educational opportunities based on the ability to learn, not the ability to pay. In countries where such reforms were successful, society benefited from the far more efficient allocation of resources, becoming more egalitarian, better-educated, and more stable and prosperous. The United States is one such country, where, following World War II, the GI Bill did much to mitigate against the oppressive social stratification of American society during the Great Depression, giving it a new lease on life. In a politically honest country, this achievement would have been touted as a great socialist victory. Here, instead of building on this success, it was allowed to ebb away, until now fewer and fewer qualified candidates can shoulder the high cost of higher education, and even these have to forgo education proper in favor of vocational training, in order to be in a position to pay back student loans.

Other traditional socialist victories include securing the right to housing, child care, health care, and retirement. In the context of US public policy, many people will point to Roosevelt's New Society "middle-class entitlements" as examples of such victories, Social Security and Medicare being the big ones. As they point, they should also laugh. What pitiable excuse for public housing are these "projects" in which many of the poor are forced to live? Are inner-city public schools "education," or are they, as many of the teachers who work in them would agree, jails for young people? Is free medical care such a great achievement if you have to survive to retirement age, either as a wage slave, or without access to health care, in order to qualify for it? To add insult to injury, there is a limitless supply of pundits and experts, who can always get free air time to claim that even these feeble attempts at an equitable society are fiscally unsustainable and therefore must be curtailed. Poor embargoed Cuba can afford to provide such luxuries, but the United States is too poor to do the same? Pardon me while I attempt to knit my brows into an incredulous frown while simultaneously twisting my lips into a disdainful sneer! Might there perhaps be another reason? Could it be that the lack of socialist education policies has allowed our collective intelligence to drop to a level where the bulb glows too dimly for us to see what is being done to us? No, these are not victories, and they are certainly not socialist.

You might think that an argument could be made that this is all irrelevant, because the flip side of a socialist defeat is a capitalist victory. You might think that all of this talk of social rights causes erosion of respect for money and property, followed by other kinds of moral decay. You might also think that it is unfettered free enterprise that has made mainstream American society the economically stratified, downwardly mobile and economically insecure place that it is, which is just as it should be. Alas, that argument is no longer plausible: the flip side of a socialist defeat is a capitalist defeat. No matter what your political persuasion might be, there is simply no way that an economically insecure, badly educated, badly treated population can be made to thrive, and this sets the stage for some very bad economic performance. As the economy collapses and economic losses mount, social and political instability become inevitable.

Luckily, the converse of case is not inevitable: a capitalist defeat does not automatically mean a socialist defeat. While an economy that has lost its ability to grow signals the onset of terminal illness for any capitalist system, socialist institutions can operate at a loss virtually ad infinitim, delivering worse and worse results, but distributing them equitably, so that no-one has more cause to complain or to rebel than anyone else. In an age of dwindling resources – be they mineral, ecological or financial – a socialist system stands a better chance of holding together than a capitalist one.

To further elucidate this fine point, let us consider two different environments: the cruise ship and the life boat. Aboard the cruise ship we find Bill Gates, Larry Ellison, George Soros and Warren Buffet, along with their assorted henchmen, fellow-travelers and capitalist stool pigeons. While they are aboard the cruise ship, these four worthies try to outdo each other in their outlandish spending behavior, and all rejoice in their orgy of conspicuous consumption. But now the cruise ship hits an iceberg and starts to go down, and the four capitalist luminaries take to the lifeboat, along with the passengers and the crew. While leaping aboard, Warren Buffet falls overboard and sinks like a rock because of all the gold bullion sewn into his belt, leaving three worthies to contend for the meager supply of biscuits and fresh water. They hold an auction, and Gates wins all of the biscuits. But before he manages to wolf down a single biscuit, he is compelled, under murky and tumultuous circumstances, to swallow a great quantity of seawater, bringing on hallucinations, renal failure, and death. Larry Ellison then announces that he has just gone on a diet, while George Soros looks around in confusion and says "Don't worry everyone, I am buying." The captain of the sunken cruise ship then asserts his authority, and, with everyone's vocal consent, confiscates all money and all provisions, and institutes biscuit and water rations. Luckily, it is the monsoon season, and the plentiful rain allows everyone to drink their fill by catching water in their hats, but the biscuits soon run out, and it becomes necessary to eat someone. They draw lots, and Ellison gets the short straw. Before he gets done explaining how many millions he is willing to spare in exchange for them sparing his life, a member of the crew drives a boat hook through his eye socket, and he is promptly eaten. By a strange and suspicious coincidence, Soros is eaten next. But then, after a month adrift, the castaways are finally rescued by a passing freighter. No charges are brought against any of them, because the acts of murder and cannibalism were deemed necessary to survival, and were performed fairly, by the drawing of lots, in accordance with the ancient custom of the sea. If their rescue were delayed, they could have eaten each other down to one final ancient mariner, who would then starve to death, all fair and square and above board.

But how, you might reasonably want to rejoin, might the sinking cruise ship of the United States conceivably effect a transition from a highly-capitalized, highly-leveraged system of for-profit private enterprise to a more socialist-minded lifeboat model? What institutions can aide with the transition? Would the whole thing need to be scrapped and rebuilt from the ground up? Now, these are very serious questions indeed.

Currently, a great many people are filled with hope that the incoming Obama administration will bring much-needed change. Unfortunately, Mr. Obama inherits an office much tainted by his predecessor, whose attempt at securing his legacy included a clandestine trip to Baghdad where, when he attempted to speak of victory, someone threw shoes at him and called him a filthy dog, all on international television. The US presidency is now a carnival side show: "Step right up, ladies and gentlemen, and toss your shoes at Mr. President, for a chance to win an all-expense-paid stay at our luxurious Abu Ghraib suite!" Alas, Obama inherits an imperial mantle that has been trampled in the mud. Due to a certain quirk of the national character, most Americans have trouble understanding that honor is something you lose exactly once. (As H. L. Mencken pointed out, in America honor is used only in reference to members of Congress and the physical integrity of women.) This quirk may not be significant in domestic politics, but the US crucially depends on the rest of the world for every kind of support. There are countries, in the Muslim part of the world especially, where honor is of paramount importance, and having the highest office in the land turned into a laughing-stock is not conducive to securing their support.

And then there are the additional problems of poor advice and lack of authority. To build support for his plans, Mr. Obama must rely on the consensus advice of mainstream American economists. These astrologers to the wealthy, with their fancy astrolabes they call "models," may be popular during flush times, in spite of the feeble predictive abilities of their "science," but they start to seem downright foolish and feckless once the economy starts to implode. Still, these pseudo-scientists, with their pseudo-Nobel prizes and their tenured faculty positions, are quite entrenched, and will be difficult to dismiss, because the fiction they spin is so much more cheerful than the physical reality it is designed to obscure.

Add to this the fact that the financial and economic levers of control that are available to Mr. Obama are no longer connected to anything real. Mr. Obama's plans at economic stimulus may succeed in filling our pockets with newly printed money, but that money will promptly turn out to be worth its weight in kindling as soon as people try spending it, because there is no longer any faith or credit to back it up, and no growing economy in which to invest it. Should these money-printing initiatives succeed in stimulating a quarter or two of the usual anemic growth, the economy will again run into the same set of resource constraints, cause the next spike in commodity prices, another round of demand destruction, and economic collapse will resume apace.

What is needed, of course, is a concerted effort to build a new, vastly different economy, not squander remaining resources on attempts to resuscitate the current, moribund one. But politicians are never willing to dismantle the system that got them into power, and, like Gorbachev before him, Obama will do all he can to restart the current economy instead of letting it shut down and concentrating on planting the seeds of a new one.

If Presidential authority is unlikely to do the trick, then what of the US Congress? Even supposing that it members could betray their friends the lobbyists who write much of the legislation they pass without even reading it, as well as their base of well-heeled supporters, what could they do? What they do do is legislate. Perhaps someone might want to argue that there is a critical shortage of legal documents in the United States, and too few lawyers to creatively interpret them. No, if there is anything that is still in sufficient supply, it is tortuous legalese, the minions who toil over it, and the various courts, offices, and jails in which they toil. When it comes to economic collapse and social disintegration, an old and venerable legal codex is no handier than an old and venerable phone book. What is generally needed, to preserve life and order, is to commandeer and redistribute resources, and to compel people to do what needs to be done, legal niceties be damned. There is no time to stand idly by and wait while swarms of lawyers exercise their legal jowls. This calls for men and women of action, not a deliberative body that is accustomed to controlling the purse strings of a purse that they have finally succeeded in emptying. The third and final branch of American government – the judiciary – does not seem capable of the sort of judicial activism the situation calls for, and is entirely unlikely to try to get too far ahead of the legislative curve. So much for civics.

What, then, remains of that elusive American dream of having a country, rather than a country club, that offers something to everyone, and not just its most privileged members, even as the situation becomes progressively more dire? Well, there is just one such institution, but it is huge. I choose to call it, with all due bombast, the Bastion of American Socialism. Not only is it a huge institution in America itself – in fact, it is the largest, – but it is arguably the most powerful institution on the entire planet, at least in its destructive abilities, at least for the moment. It is the United States military. Since it is undeniably a bastion of sorts, I will concentrate on explaining why I think it is a socialist institution.

The various branches of the armed services provide numerous benefits to the enlisted men and women, the officers, and the veterans. These range from free family housing and day care to free medical care to access technical training and to higher education. For many sons and daughters of working class families, the military offers the only path away from the farm, the poor neighborhood or the ghetto, and toward a more prosperous life in the trades and even the professions. The Air Force even provides unlimited free travel and a chance to see the world. It is the single most socially progressive large institution that the United States has. In a bitter twist of irony, it is also its most brutal, designed, as it is, for politically sanctioned mass murder.

Of the working-class elderly, about the only ones who receive adequate medical care are those who have access to the Veterans Administration medical system. True, the services are often rationed, there are waiting lists to see specialists, and proving that you were injured in the line of duty often involves an exhausting paper chase. True, certain popular ailments, such as exposure to Agent Orange and depleted uranium, Gulf War Syndrome and the increasingly popular Post-Traumatic Stress Disorder are politicized and judiciously misdiagnosed and ignored. But this is exactly what one generally expects to see in a system of socialized medicine.

I would like to assure everyone that I am definitely not any sort of American military triumphalist. The American military tradition is heir to the British one, and, as H. L. Mencken pointed out, the Anglo-Saxon has never been known to seek out a fair fight. The British military did its best work using rifles against pygmies armed with ripe fruit, and using machine guns to cut down cavalry. A wealth of racist terminology was brought to bear, to dehumanize the enemy, making such massacres palatable: the kaffir, the jap and the gook. They were all brutes, to be exterminated. The Americans have carried this tradition into the nuclear age, and used a nuke or two to subdue the Japanese, who had all the other weapons that were modern during that era. In the other theater of that war, on the Western front, the supposedly good fight was won by sitting it out for as long as possible, then ponderously bombing various hitherto picturesque historical districts of Europe in order to time the entry into Berlin to coincide with the arrival of the Soviet troops, who had a great deal more to lose, and could be relied upon to do all of the heavy lifting and most of the dying. So much for valor.

It is valid to ask whether the US military, aside from its socialist policies for those who serve it, is the least bit useful. Perhaps it is just a colossal, incompetent public money sponge that ruins countless lives and gives the country a bad name. In all the more recent conflicts save one (Reagan's invasion of the island of Grenada) the US military has not come out as the victor. Korea, Viet Nam, Gulf Wars I and II, Afghanistan, Lebanon, Somalia are all fiascos of one sort or another. It can be said that the US military cannot win; it can only blow things up. Now, blowing things up can be great fun, but it cannot be the only element in a winning military strategy. The key element is winning the peace, and here the US military has, time and again, demonstrated outright incompetence, remaining stalemated and waiting for political support to be withdrawn and the troops pulled out and sent home.

In spite of these many failures, the US military blunders on undeterred. This immunity to the effects of failure is also a socialist trait: if a company does badly, the government gives it more money and hopes for the best. This trait extends to military contracts. For instance, Raytheon's Patriot missiles, as delivered, would shoot down trees, apartment buildings, each other – anything but the target. This was hushed up, and then Raytheon got more money and told to try again. Another example: the greatest threat to the US Navy is not any enemy, foreign or domestic, but Microsoft's Blue Screen of Death, because their heavily computerized systems run on the notoriously crashy Windows NT. The response is to reward Microsoft's inability to write reliable software with more government contracts.

It is also valid to ask whether the US military, in its current highly mechanized, mobile form, has any sort of future in a world of dwindling oil supplies, much of them controlled by foreign governments. The US military is currently the single largest consumer of oil in the world, maintaining over a thousand military bases on foreign soil, and burning prodigious amounts of fuel in resupplying them, rotating the troops, and maintaining patrols. As fuel supplies dwindle, these bases will have to be abandoned, and the troops repatriated. Luckily, such extreme mobility and global reach will be neither necessary nor desirable once the United States finds its new place in the world as an inward-looking failed former superpower. Once Hawaii is claimed by Japan or China, and Alaska reverts to Russian control, the remaining United States will be a contiguous landmass that can be traversed on foot. Thus, the US military may yet have a bright future, as an infantry equipped with small arms, horses, mules, bicycles and canoes.

Such a downsized military would not be able to project force halfway across the globe on a moment's notice, but it may be able to redeploy to a neighboring county, or even a neighboring state, by sometime next month, provided the weather cooperates. The modest defense services it would be able to provide would certainly be needed: the citizenry of the United States, much more than that of most other countries, needs to be defended from itself at all times. The number of unresolved social conflicts, old grievances and injustices waiting to be avenged, requires a constant police presence to be maintained at all times in most of the thickly settled areas – a presence that will dwindle along with municipal budgets. Add to that the already very high homicide rate, and the huge prison population – largest in the world – that will be released en masse once the municipal and federal funds needed to maintain it can no longer be allocated to the purpose, and you have a recipe for non-stop murder and mayhem. To mitigate against these effects, federal troops can be strategically stationed in some of the more troublesome areas. Local and state troops would be far less effective: it has been known since Roman times that forces brought in from another province are far more effective at quelling unrest than those drawn from the local population.

Beyond maintaining order and preventing unnecessary bloodshed, the military possesses a property almost unique among government agencies: the ability to execute arbitrary orders, not subject to political authority, not limited to job description, and not subject to questioning, because "an order is an order!" Issuing orders is quicker and easier than legislating, because laws are blunt instruments, and are always subject to interpretation. Don't even try telling a lawyer "A law is a law! Shut up!" It just doesn't work. To get things done in an emergency, it is better to bypass lawyers and courts altogether.

One useful order would be: "Grow potatoes!" As the current system of industrial agriculture runs out of the chemicals, fuel and credit needed to fund and run its large-scale operations, many more hands will suddenly be needed to operate hoes, shovels and pitchforks in order to grow enough food to meet even the minimum caloric requirements of the population. Although I am sure that my gentleman-farmer friends will do their patriotic utmost to keep us all fed, bringing to bear all that they are currently busy learning about organic farming methods, permaculture, no-till agriculture and other helpful techniques, having access to an organized, disciplined labor force would help the process immeasurably.

Despite these significant positives, life under what would amount to a military occupation, where the customary civilian rights are routinely disregarded, and where the citizen is constantly faced with arbitrary authority backed up by the threat of force, can hardly be described as pleasant. But here, too, the result may be an improvement of sorts. Since the end of the Civil War, Americans have become accustomed to thinking of war as something that happens elsewhere, to other people. Thus, the news that the US is bombing this or that land, for no adequate reason, killing and maiming numerous civilians, produces in us neither the normal human reaction of revulsion, nausea and disgust, nor the conviction that we must take the fight to our own monstrous leaders, lest we too become monsters. Life under domestic military occupation might bring home some welcome realizations, and start Americans down the long road of atoning for the sins of their forefathers, who have run roughshod over much of the rest of the planet for far too long. Paradoxically, as the legacy of US militarism fades away, it may leave behind a society that is far more humane, socialist even, than the one that gave rise to it.

Friday, January 09, 2009

Upcoming events

I will be making a quick trip to Northern California this February, for at least 3 events:

  • Book reading and book signing in Point Reyes, to be held at Point Reyes Books on Thursday, February 12.
  • I will be giving a talk at the Long Now Foundation on Friday, February 13, in San Francisco. The title of my talk is "Social Collapse Best Practices."
  • Peak Oil get-together in SF the following Sunday!