Posts Tagged ‘economy’

Apocalypse in the Wings—Hint: It’s Not Zombies

January 23, 2017

The turns of history predict we’re approaching a Crisis in the next 5-15 years. There are many candidates proposed. If you were to watch popular television, it’s gluttonous zombies. If you’re PC, it’s global warming, repackaged as climate change. If you’re a historian, war and/or economic collapse rate high on your list. If your leanings are more to the celestial, it’s that pesky rogue asteroid or a well-aimed electromagnetic pulse (EMP) flaring from the sun. They’re all plausible speculations (well, maybe not the perambulating re-vivified carcasses), but let’s examine them in the light of reason.

War and economic collapse certainly occupy the 1 and 2 slots, in either order. The Middle East is a hotbed, we’re doing our best to fight, in as limited a fashion as possible, the neo-Nazi neo-Caliphate, and we’re printing money and borrowing cash as breathlessly as we can to keep up with our insatiable urge to create a more utopian society and bolster a standard of living we always seem to be just one or two paces behind (if only ancient Rome had had the Federal Reserve!).

If these weren’t enough, we’ve got the specter of global cooling to deal with (oops!; that was the 1970s). There is evidence that we’ve had progressive warming of the planet, AKA climate change. Some of my more expert acquaintances on the subject tell me that longer term evidence on past climate patterns does not jive with the short term temperature records used to define the trend. Other analyses suggest that many scientists who support the concept of global warming don’t necessarily feel the evidence supports the level of short-term risk trumpeted in the media. But the mainstream warns that such views are tantamount to denying the Holocaust. Accepting as fact that we’re into a long term warming trend, and the cause an increase in atmospheric CO2, the second proclaimed non-controversy is that mankind is the culprit. Assuming this too as fact, we must deal with (or ignore, which is safer in this political climate, pun intended) the issue that some experts have calculated that if we were to impose all the carbon restrictions the world has proposed in recent edicts, it would have a miniscule effect on the trend, but a major impact on the world economy. So, in my cataclysmic conjecture, that brings us back to economic collapse. No matter where the truth lies, we can all agree that reducing carbon emissions and levels of associated pollution isn’t a bad idea. The solutions, I believe, will come not from arbitrarily imposed carbon restrictions but from technology, which I expect to be the source of abundant, reduced-carbon and carbon-free energy much sooner than people think. Unfortunately, as I will point out, this technology boon or boom comes at the cost of one of our greatest threats. So, for your edification and convenience, I provide the true and incontrovertible risk assessment for the next Apocalypse (drum roll, please):

  • 1/2. War (including cyber warfare and man-made EMP attacks)
  • 1/2. Economic collapse.
  • 3. Artificial intelligence.
  • 4. EMP from the sun.
  • 5. Climate change (of the hot variety)
  • 6. Asteroid collision.
  • 7. The Walking Dead.

AI as number 3, you ask? Too much scifi in my entertainment diet, right? Scoff if you will. It’s true that science fiction has given about the same emphasis to numbers 3 and 7, trivializing  and desensitizing us to the former. That has been a tragic mistake. Because number 3 is very real, and coming at us like a freight train (or, more apropos, a hurtling asteroid).

I strongly recommend viewing Sam Harris’s brief but excellent TED talk on the subject here, then rejoin me at your leisure (if we’re all still here) for additional thoughts on the matter.

THE GOOD, THE BAD, AND THE UGLY—OR REWARDING BAD BEHAVIOR

June 3, 2013

Last weekend I had dinner with a friend who is well-read, opinionated (no surprise) and conservative in his political and fiscal viewpoints (again, no surprise). He had an interesting take on our economic and energy future.

Until a few months ago, he, like me, saw no way out of our ultimate economic decline. More recently, he’s come to believe that we’re on the road to become the ascendant power (read: energy) broker in the world. Citing the huge shale deposits in the plains and the advent of fracking, he claims we have not only enough energy to become self-sufficient, but to supply the rest of the world with a competitive energy source for not just decades, but centuries to come. He believes the concern about contaminating the water table so high above the deposits is bogus, and that there is so much money to be made and jobs to be had that political and environmentalist opposition will ultimately be washed away like sand castles by a tsunami. He uses Pennsylvania as an example of a state that is beginning to make inroads on its debt by embracing the new approach while New York’s recalcitrance pushes it further into the red. He claims that Berkshire Hathaway’s demonstrated interest in rail transportation with the purchase of the Northern Santa Fe Corporation reflects their recognition of the changes to come. Where the oil companies used to waste billions of dollars looking for product, in the new order they will know exactly where it is and be able to turn the spigot on and off at will according to market demand. Our massive debt will slowly recede into the annals of history.

If he’s right, no one can argue that a way out of our fiscal catastrophe, a miraculous road to economic recovery, isn’t a good thing. But it comes at a price—the bad news is that we’ll still be relying on potentially polluting, non-renewable energy stores. Contrary to liberal beliefs, we conservatives don’t want to sacrifice clean air and water at the altar of money; we just don’t want the government foisting expensive, not-ready-for-prime-time energy technology on us and picking winners and losers.

The ugliest fallout from this new economic order will be the effect on our values as a nation. If we defer the consequences of growing a big, inefficient government in a debt-ridden welfare state, even for a few centuries, we will not escape the ultimate demise of the liberty our Founding Fathers had hoped to assure by instituting a system based on limited government, charity and self-sufficiency. In Thomas Jefferson’s own words, “A wise and frugal government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned.” And, “If we can prevent the Government from wasting the labors of the people, under the pretense of taking care of them, they must become happy.”

The old saw, “money can’t buy happiness,” carries a great kernel of truth. If my friend’s assessment of our economic future is accurate, it may buy us something almost as important—time. Whether we use that time to return to our roots or continue down the same, well-trod path to fiscal dependency is up to us.

WHAT AM I WORTH?

April 9, 2013

Recently, mimimum wage workers in NYC went on strike for a higher salaries. They’re arguing that the current wage floor is incompatible with a sustainable economic existence. And arguments can be made that it has not kept pace with inflation. The larger and more appropriate questions we should be asking are, what should anyone’s wage be, who should decide, and based on what?

I’m in favor of a law that doubles my salary. And so are you. Heck, let’s double everyone’s salary. With the increased buyiing power we can pay off the debt, rev up the economy and have money to spare. OK, you see the absurdity of it. But I’m not trying to trivialize the plight of the low income earner, just point out the hazards of economics by decree. We can try to shift the balance by legislation, but where do we draw the line, and who gets to do  it?

Government interference creates odd inequities that we’ve come to accept as a way of life. While we all see the value of having everyone working at greater than subsistence wages, the government, in its meddlesome ways, does much more than that. Let me give an example from my personal experience: Recently, I fielded three after-hours calls over a short period of time. I generated zero income from this, as the government, through Medicare, has kept costs down by deciding this over-the-telephone work is not reimbursable; this has extended to other insurers and has become the standard. Howerve, if you were to get on the phone with your accountant or tax lawyer, the meter would be running, and you would receive a bill for a not insubstantial hourly rate. Their time is, apparently, infinitely more valuable than mine. Ironically, their jobs are artificial, existing only because of, you guessed it, government meddling. If we didn’t have the arcane and ridiculously complex tax code our ruling class spends much of its time tweaking and finessing to assuage special interests and to give the appearance of actual work, rather than doing something they were hired to (like making a budget), there would be no tax lawyers or accountants. Now, I don’t expect anyone to feel sorry for me, nor is that the purpose of this rant, only to illustrate the hazards of government legislation when it comes to the marketplace.

So what should I be paid? How should my worth be detemined? And yours for that matter? In a socialist system the government decides by fiat. We all know how well that works. In a true democracy, the people decide. Of course, the largest number of people are making less than the fewest wealthy, so they run the risk of succumbing to the temptation of taking what isn’t theirs (often using altruistic slogans as cover) and degenerating into socialism (as aptly illustrated by the old saw that democracy is two wolves and a sheep meeting to decide what’s for lunch). Our Founding Fathers tried to navigate their way around this pool of quagmire by devising a democratic republic. But they recognized it would only work for as long as morality held sway over avarice. So, if not government, and not the people, then who? I submit: The marketplace. The value of goods and services can only be fairly determined there. The more we meddle with it, the more distorted and absurd it becomes.

Ultimately, the question of the right minimum wage falls into the same nebulous territory as how  much welfare and unemployment we should grant. Liberals will argue that more defines us as compassionate and libertarians will argue that the law of unintended consequences mandates a hands-off policy, with conservatives somewhere in the middle. I like to park in the middle.

Keep the safety net low, the playing field clean, and let the marketplace do its thing. Its can be a harsh taskmaster, but ultimately it’s the only umpire I trust.

ANOTHER SHELL GAME

February 25, 2013

As a young man, I’m ashamed to admit, I fell prey to a street con based on a playing card variant of the old shell game. Until a short time ago, I was nearly hoodwinked again, in the form of a game nicknamed “sequestration.”

Unless you’ve been hiding in a tunnel, you can’t have missed the escalating rhetoric about the looming financial catastrophe come March 1st, when, assuming our legislators can’t reach a consensus (almost as certain as death and taxes), the automatic spending cuts go into effect. Our president, who se idea it was and who signed it into law a couple of years ago, perhaps naively believing it would galvanize our lawmakers to pass a rational budget, now uses its impending activation as a club to beat them up, citing the pending dire consequences of their inaction. It reminds me of the talking heads before the impending Y2K disaster-that-never-was.

Get ready to quake in your economic boots: It turns out that the coming cuts amount to a measly 2.5% cut in spending. And that’s actually a reduction in the rate of growth in spending. But even the hint of a change in behavior to try and get a handle on our runaway spending causes the media alarms to go off. It’s true that the way in which these cuts will be implemented is like a club, rather than a scalpel, but our ruling class doesn’t know how to wield sharp instruments; they’re afraid they might cut themselves. Besides, I don’t know that I’d trust them with one. So, in my opinion, sequestration is a good first baby step that we should celebrate rather than fear.

Don’t expect to look to the stock market for clues as to the future effects of sequestration. Like a person with generalized anxiety or bipolar disorder, it capriciously goes up and down in response to the events of the day. As an example, when Ben Bernanke prints money, the stock market sees dollar signs and rises, even in the setting of weak economic growth and lagging employment.

The window for the short-term fix is rapidly closing. You can only pump saline into a dying man for so long without giving blood and actually trying to cure what ails him.

And you can’t make money in a shell game.

3-D WITHOUT GLASSES

February 11, 2013

Last week I raised the question of what the world will be with the new economic order, and how technology will impact this change, not all in a good way. This week I was reminded how easy it is to forget just how big a force technology is, and how unexpected that change may be.

People, like myself, that grew up in the pre-computer era know first-hand how liberating it can be to research minutia in the flash of an electron instead of trudging to a library, sifting through dusty shelves and card files in an endless, and sometime fruitless, search for that elusive bit of knowledge. Then we would hack away on mechanical and then electric typewriters, fixing errors first with erasers, then “White-Out,” then (convenience of convenience!) “Correcto-tape.” For copies we used carbon paper, mimeograph and then Xerox machines. Before my day, people spent endless hours washing clothes they hand-stitched with washboards and hanging them on lines to dry, before technology handed us machines to sew, wash and dry, things we take for granted even more than our beloved computers and smart phones. The poorest of us in this country, if you think about it, live better in many way than the kings of yore (how many of them got to enjoy the luxury of an ice cream cone?).

Now we may be on the brink of the next major paradigm shift in global world production. Like a little tremor presaging an earthquake, the ink jet printer appeared on the scene a few decades back. As the price plummeted, it joined the ranks of prosaic technology cluttering the background of our homes and offices. Then someone said, “If we can print in 2 dimensions, why not 3?” And so the one-color, one substance, prohibitively expensive new desk toy was born. We should have realized it wouldn’t stop there. The technology is growing to encompass many different substrates, including biological ones, and machines from just over $1,000 to $1 million have quietly been making their debuts. Manufacturing will never be the same. And neither will the job market.

The stage is set for laborers of a new ilk: the new manufacturer; i.e., the programmer. Instead of rivets and robots, 1’s and 0’s. First in commercial settings, then someday in the home, we will purchase the program for our next thing-a-ma-jig and whatchamacallit and it will be printed for us. This is not a distant future Star Trek replicator, but something quietly marching over the horizon. Complex parts are already being manufactured in this way, and seeing how technology advances geometrically, we can expect items of increasing sophistication to begin rolling out of the maws of the new-age printers in the next decade.

Big change is coming. The only question is which of the colliding forces, major technologic advance or dramatic economic implosion, will trump the other. I hope I’m around long enough to find out.

Beam me up, Scotty.

THE WORLD AFTER CAPITALISM

February 4, 2013

The current slow, inexorable drift toward progressivism, or “socialism light,” will end—eventually. As I (and Charles Krauthammer) have said, something unsustainable will continue until it can no longer be sustained. Based on our fiscal behavior, we may not get to see the full evolution and implosion, though. It took about 70 years for the Soviet Union to fall and I don’t think our quasi-capitalist economy will last long enough in light of current circumstances.

Even before the bust in 2007, however, I anticipated an inevitable drop in our standard of living. Ignoring the debt (something we’ve always been adept at), we still face the challenge of competing in a global economy with an uneven playing field. Americans have hard-fought rules that prohibit unfair practices and exploitation (i.e., minimum wage laws and safety standards to name a couple) that increase the cost of production here relative to the international workplace. While there has been some effort to discourage domestic consumption of goods from foreign “sweatshops,” it’s clear from the migration of jobs overseas that the benefits of  lower prices are being offset by fewer workers here earning enough to purchase them. I don’t see an easy way out of this conundrum until our standard of living falls and that of the international worker rises, a homogenization of wages, so to speak. And that will take time.

There is another elephant in the room. As a fan of science fiction, I often speculated on the effect technology would have on the economy. Already we’ve seen examples of consumer items that can be made cheaply and last for years—or decades—for a fraction of what it would cost to produce the technology they replace. A good example of this is the LED lightbulb. While the price hasn’t fallen enough for most of us to shell out the tens of dollars per bulb to replace our incandescents and fluorescents yet, it illustrates the principle. If you make something without built-in obsolescence, you either have to charge a lot of money, regardless of what the cost of production is after R&D and overhead are recouped, or you go out of business. And more and more of the manufacturing can be done robotically, so the employment opportunities keep diminishing. There may have to be an entirely new economic model to deal with this. A fascinating three-part article dealing with the interplay of technology and jobs can be found here.

I’ve also tried to speculate how this new economic model might be implemented. Perhaps the greater scope and number of service-related and software-related jobs would absorb some of the slack. Still, with less work and more free time, more leisure-, music- and art-related industries will crop up. The problem is figuring out how the distribution of wealth will be adjudicated. In unfettered capitalism it’s decided by the marketplace, a system that, eventually, reliably defines worth. It also has the benefit of conforming with the natural human desire to be rewarded proportionally to one’s effort (although arguably we’re in the current mess because too many have come to feel entitled to rewards for little or no effort). Socialism goes against the grain of human nature; hence its ultimate, inevitable failure as the takers outstrip the producers. The Star-Trek saga regales us with a world of plenty without money, but they never make it clear just how this worked. They imply a gratifying change in human behavior that, idealistic as it is, I don’t see coming in the next 400-600 years (sorry, Captain). Good and evil, the yin and yang of our nature, in the aggregate hasn’t really changed much over the past 10,000 years. We’ve just found ways to devise more efficient means to self-destruct.

So, in the world after capitalism, I haven’t a clue as to what will grow in its place. Perhaps some hybrid that will better fit a changing world. The only certainty is that there will be hard workers struggling to keep what they earn and thieves and socialists (in some view two sides of the same coin) trying to take what they don’t.

There’s a certain comfort in predictability, isn’t there?

TOUGH LOVE

December 30, 2012

Now that the season of love and giving is coming to a close, I can once again revert to type and foray into the world of what will be as opposed to what we all wish it would be.

The Affordable Care Act, more colloquially known as Obamacare, has promised us more coverage for more people, both highly laudable offerings that may have contributed to his return to the Oval Office. In an era of shrinking revenues and ballooning debt, how is this possible? I’m going to prognosticate.

The healthcare world of the not-to-distant future will, by necessity, implement the following changes:

  1. Comorbidity, i.e., the number of severe, chronic medical conditions, will determine whether or not a procedure or treatment will be a covered benefit. Age will be one of these comorbidities, but not the sole one, unless things become pre-cataclysmic. No percutaneous valve replacements for a 91-year-old grandfather with diabetes and kidney disease.
  2. Medical care for prisoners will be titrated to the offence. Rapists, child molesters and serial killers with no longer be escorted by two highly paid guards for diagnostic testing and expensive surgery so that they can be housed for a few more decades at great taxpayer expense. When things get bad enough, single murderers will find themselves in the same boat. When things get even worse, attempted murderers may succumb to the same fate.
  3. Drug addicts will be denied care for ongoing abuse. When things get worse, tobacco abusers better watch their backs.

Of course, before any of this occurs we will have to bring the economy to its knees. Our dysmorphic view of how a compassionate society is defined (and the powerful trial lawyers lobby) will fight these kinds of changes to the very end. All of the above, to some extent, should have been implemented years ago, but we tend to be a much more reactive than proactive culture. Perhaps it’s human nature, wanting to put off the suffering for as long as possible, even if it means an even worse fate down the line. Maybe it will take an intervention, like falling off the fiscal cliff or banging our skulls against the debt ceiling.

Tough love hurts.

THE BAD PARENT

December 10, 2012

I’ve had conversations with parties of opposing views that seem to think a job is a job, whether it be in the public or the private sector. After all, what’s the difference between someone getting a paycheck for a service provided through government employment and that same service through a company in the private sector?

Plenty.

The government, by virtue of its ability to legislate, shields itself from market forces, rather than operating within them. It can, for a while, manipulate the marketplace by printing, borrowing, and stealing (legally, of course, through fees and taxes). Hence the inflated retirement benefits that are driving all our governments at all levels to the brink of bankruptcy. We’re like one big, bloated General Motors, with the exception that no one exists to bail us out if (and I fear it’s when) we fail. Many people have become so used to these ploys that have seemed so successful or decades that they think it can go on forever. They also point to the corruption in the private sector as justification for growing the government slice of the economy, failing to recognize that crony capitalism that aids and abets this bad behavior is government-mediated. How many people in the street really know that the Dodd-Frank legislation, 800 pages of directions for more regulations, defines the big banks as “systemic” and therefore “too big to fail,” providing them with government (read: taxpayer) guarantees? This enables them to borrow at lower rates than their small brethren, giving them the edge they need to perpetuate the precarious status quo. Almost all governmental good intentions have toxic unintended consequences.

The marketplace can be a cruel mistress, but left to its own devices it is self-correcting. Governments can’t beat it. Delaying a tremor only leads to an earthquake down the line. That’s not to say that bad behavior shouldn’t be monitored and punished. Government policy, however, goes well beyond this, trying to manipulate market forces and pick winners and losers. The only real losers, ultimately, are the American people.

Currently, the Democrats and Republicans are fighting over how to deal with the upcoming “fiscal cliff.” In a bygone era the ruling class placed politics above the public good, but were loathe to admit it. In this new, progressive society, they revel in it. To wit: Zerlina Maxwell, a Democratic strategist, has suggested that Republicans put forth their idea for the entitlement cuts, as Democrats have already put their piece, the tax rate increases, on the table. This seems to parallel the president’s approach to date in his dealings with the legislature. The administration taxes the top one percent, a populist move (that generates little revenue), and requires the Republicans to do the heavy lifting—define the unpopular entitlement cuts that must happen if any hope of reversing the economic decline and paying off the burgeoning debt is to occur. This is a politically unbeatable “good parent/bad parent” strategy for the Democrats. One tells the child he can watch TV and play on the X-box and the other makes him eat his broccoli and clean his room. Bad parenting, it seems, wins votes.

It just doesn’t pay the bills.

ATEOTWAWKI

December 3, 2012

Forty-eight percent of the country knows that we’re in serious financial trouble—I mean the kind that requires urgent change, and that includes at the leadership level. A bit over 50% thinks this is a bump, perhaps a big one, in the road that will iron itself out over time by following the same course.

Those of us that are most alarmed, or pessimistic, or however you want to view it, see the potential for the end to the world as we know it, not through an electromagnetic pulse from the sun, or a shift of the Earth’s magnetic fields, or a tsunami or earthquake or level 5 hurricanes or global warming or even world war, not discounting those possibilities. Most likely, it will be a man-made disaster of unprecedented proportions through fiscal impropriety over decades, the way paved for it by the slow, steady deterioration of values and common sense inherent in every human empire over the course of history.

Sounds pretty depressing, doesn’t it?

Let’s look at after the end of the world as we know it. After all, the wildly successful run of the USA did occur post the fall of the Egyptian, Greek, Roman and Ottoman empires. New societies will arise from the ashes. The ones based on a strong work and moral ethic, equal opportunity (not outcome), merit-based reward, and frugality will prosper. The others will go through their shorter cycles and vanish. The biggest danger in the short term, as I see it, is the inability of an economically frail U.S. to counter the rising Islamist terrorist threat. But I prefer to look past the storm to the break in the clouds that follows.

What will keep us going through the difficult times is family and friends. There will be a reversal of the nuclear family as the institutions we’ve constructed to fill the void disappear, and this will be a good thing. Materialism will begin to take a back seat, since wealth will be much harder to come by. God willing, we’ll re-embrace the good things from an earlier time without the bad—racism and sexism.

So keep your loved ones close and cherish them. iPads come and go but the people close to us are our lifeline to happiness—and sanity. In the next five to ten years I think we’ll see some major societal shifts. A storm may rage, and some will fall from the ark and be lost, but those that weather it will find renewal is a good thing.

A MENAGERIE OF THOUGHTS

November 19, 2012

Now that the election’s behind us we know that the net ideology of the voting public has changed. The pundits tell us it’s a demographic shift, and they are probably right. To me it was truly astonishing that more than half the country’s electorate looks at the same abysmal economic performance and is convinced that no change in leadership is needed. Considering Romney’s clearly superior credentials in the area we’re most in dire need of fixing—the economy—it surprised me even more.

In speaking to my liberal friends (yes, I do have them) they paint a picture of a Republican party that is frighteningly Neanderthal with respect to social issues. That belief, in association with a woeful lack of understanding of the seriousness of the economy’s failings (in my opinion) led them to reenlist Obama. But I believe that another, less cerebral motivation brought many others to the polls—the addiction to government handouts. I don’t think that the majority that reelected the once and future president are laggards; there are now just enough to move us from a net center-right to a center-left nation. The old saw about democracy being two wolves and a sheep meeting to decide what’s for dinner is coming to pass.

The term democracy has been bandied about so much that people forget we’re supposed to be a democratic republic. It was not our Founding Fathers’ intention to create a democracy—they recognized that democracy slowly morphs into socialism which, history has taught us (or has tried to), slowly morphs into nonexistence. Producers will only work harder for non-producers for a finite period.

Most liberals are neither lazy nor of evil intent, just as most conservatives are not really heartless Neanderthal money-mongers. And now the left has another four years of a standard-bearer who will continue to make promises and raise taxes in an earnest but ineffectual quest to “give everyone a fair chance.” But the land of opportunity wasn’t built on a foundation of equality of outcome, only equality of opportunity.

I hope we don’t strangle the goose lays the golden egg in a noose of good intentions.