For Those Who Thought The Last Decade Was Bad....You Ain't Seen Nothing Yet!
For the past couple of weeks, as the 2000s approached their sunset, countless columns have bid the decade a sneering good riddance, looking back unfavorably on the bad news that has kept clubbing us over the head, from 9/11 to the multiple wars it triggered to the worst-since-the-Great-Depression economic collapse. Fair enough. It was a lousy decade, with promise after promise after promise conveyed to us by the "experts", common sense be damned, failed to materialize and America became the nation in decline that was inevitable to anyone who was paying attention to our economic and cultural trajectory since at least the Reagan years. But the mistake that so many are making is looking to the decade ahead with optimism. The almost certain reality is that the 2010s will make the 2000s seem like the good old days.
It's hard to gauge what's in store for us on the terrorism or foreign policy front. It's hard to see the situation in either Iraq or Afghanistan fully dissolving at any point in the decade ahead, but it's conceivable the worst is behind us. History suggests that periods free of military entanglements are usually pretty short-lived though, so even if we get those two wars behind us, it's a safe bet another headache will be right around the corner. And with terrorism, I don't think anybody is capable of coordinating our intelligence agencies in the way necessary to thwart attacks. The mindless agency turf wars will transcend whatever "reform" happens to be passed by fist-waving lawmakers demanding change. So will a major terrorist attack occur this decade? Hard to say, but I think the odds are better than even.
That brings us to the economy, where continued American decline is an almost certainty. The dirty little secret that few talk about but which the 2000s proved to us is that the American economy no longer produces anything of value. Our political leaders sold the American working class into endemic poverty a generation ago by expediting the global market forces that exported our production economy to the globe's lowest bidders. Much of the high-value service economy has more recently followed suit. Last year's bailout that saved, for the time being, the final throes of the American auto industry should have served as a terrifying wake-up call about just how much we've lost. Instead, it led to the same mindless cretins who helped engineer the decline to complain about "the government taking over the auto industry", an industry that would not exist in America in January 2010 had the bailout not occurred 12 months ago, thus leaving our national unemployment rate 3-5% higher than its current 10%.
America's economy since the 1980s when so much of our industrial base headed overseas has been based on finance and credit, neither of which was sustainable. The finance industry thrived with Ponzi schemes made possible by reduced levels of regulation and growing numbers of Americans thrust into the "investor class" vis a vis 401Ks, a class of financial amateurs who were easy to take advantage of by financial sharks seeking to turn a huge profit at their expense and leave the wreckage for someone else to clean up. They orchestrated two giant economic bubbles, in the tech industry a decade ago and in housing this decade. Most everybody acknowledges this, but what they don't acknowledge is that these artificial bubbles are the only source of economic growth that can be produced in a nation that produces less and less in the form of raw, tangible goods every year, choosing to let these industries head overseas and telling us America is somehow better for it.
Down on Main Street, the economic bubbles even at their peaks failed to trickle down in the way that a production-based economy did in the past. The only way the peasantry could maintain the rampant consumerism needed to fuel the economy was through credit, another way in which financial sharks were able to thrust their fangs into our exposed necks. And that's how we ended this decade. The excesses of the financial industry final took their toll and the credit card-financed consumer binge of the average American family was no longer sustainable. And after all that, we still don't make anything people want to buy and which may renew economic growth.
So where do we go from here? Barring a miraculous and unforeseen return to a production economy, we either continue our fast decline or we start blowing the next bubble. The next bubble is almost certain to come from "green technology", with the same not-ready-for-primetime investor class desperately seeking to refill their emptied 401Ks with the "next big thing", buying into irrationally exuberant rhetoric from every nickel-and-dime green energy upstart with fork-tongued corporate pitchmen. Many of these new companies will be offshoots of the same energy industry barons already fleecing us. But a financially desperate people seeking vitality any way they can get it will surely take the bait, enlarging an unsustainable green economy bubble that will leave us at the dawn of the next decade with hundreds of thousands of wind turbines sitting idle in Midwestern fields, or even sold for scrap at pennies on the dollar.
Now there may be real sources of economic growth in the decade ahead. I doubt anybody could have imagined 20 years ago how much mileage the economy would get from the Internet. But whatever impact the next big thing in technology, or even the Internet up to this point for that matter, it's unlikely it will translate to anything that benefits the American economy proportionate to the rest of the world. It may very well exacerbate the pace in which the rest of the world gains at our expense.
And on top of all this, the 2010s will be the decade where the wolf finally starts knocking on the door about our retiree entitlements. Baby Boomers will begin retiring by the tens of millions, rapidly draining the Social Security trust fund and bankrupting Medicare outright. This will require either extending retirement ages, cutting benefits, or dramatically raising payroll taxes, none of which will go over well and all of which will hurt yonger Americans. Even raising retirement ages will make it harder for younger Americans to penetrate the fading job market. There are incredibly few good options for the generation ahead, and the extent of resource redistribution to our parents and grandparents will make it even harder for America to find its footing in the global economy. Meanwhile, instead of preparing for the demographic time bomb ahead, our clueless political leaders are encouraging and even mandating "healthy lifestyles" that will dramatically magnify the already monstrous problem we face of being a nation of economically unproductive geriatrics.
So despite all the cheering crowds at Times Square, there is very little to look forward to at the dawn of this decade. Thankfully, you can always count on "Mark My Words!" to give it to you straight no matter how bad the news.
It's hard to gauge what's in store for us on the terrorism or foreign policy front. It's hard to see the situation in either Iraq or Afghanistan fully dissolving at any point in the decade ahead, but it's conceivable the worst is behind us. History suggests that periods free of military entanglements are usually pretty short-lived though, so even if we get those two wars behind us, it's a safe bet another headache will be right around the corner. And with terrorism, I don't think anybody is capable of coordinating our intelligence agencies in the way necessary to thwart attacks. The mindless agency turf wars will transcend whatever "reform" happens to be passed by fist-waving lawmakers demanding change. So will a major terrorist attack occur this decade? Hard to say, but I think the odds are better than even.
That brings us to the economy, where continued American decline is an almost certainty. The dirty little secret that few talk about but which the 2000s proved to us is that the American economy no longer produces anything of value. Our political leaders sold the American working class into endemic poverty a generation ago by expediting the global market forces that exported our production economy to the globe's lowest bidders. Much of the high-value service economy has more recently followed suit. Last year's bailout that saved, for the time being, the final throes of the American auto industry should have served as a terrifying wake-up call about just how much we've lost. Instead, it led to the same mindless cretins who helped engineer the decline to complain about "the government taking over the auto industry", an industry that would not exist in America in January 2010 had the bailout not occurred 12 months ago, thus leaving our national unemployment rate 3-5% higher than its current 10%.
America's economy since the 1980s when so much of our industrial base headed overseas has been based on finance and credit, neither of which was sustainable. The finance industry thrived with Ponzi schemes made possible by reduced levels of regulation and growing numbers of Americans thrust into the "investor class" vis a vis 401Ks, a class of financial amateurs who were easy to take advantage of by financial sharks seeking to turn a huge profit at their expense and leave the wreckage for someone else to clean up. They orchestrated two giant economic bubbles, in the tech industry a decade ago and in housing this decade. Most everybody acknowledges this, but what they don't acknowledge is that these artificial bubbles are the only source of economic growth that can be produced in a nation that produces less and less in the form of raw, tangible goods every year, choosing to let these industries head overseas and telling us America is somehow better for it.
Down on Main Street, the economic bubbles even at their peaks failed to trickle down in the way that a production-based economy did in the past. The only way the peasantry could maintain the rampant consumerism needed to fuel the economy was through credit, another way in which financial sharks were able to thrust their fangs into our exposed necks. And that's how we ended this decade. The excesses of the financial industry final took their toll and the credit card-financed consumer binge of the average American family was no longer sustainable. And after all that, we still don't make anything people want to buy and which may renew economic growth.
So where do we go from here? Barring a miraculous and unforeseen return to a production economy, we either continue our fast decline or we start blowing the next bubble. The next bubble is almost certain to come from "green technology", with the same not-ready-for-primetime investor class desperately seeking to refill their emptied 401Ks with the "next big thing", buying into irrationally exuberant rhetoric from every nickel-and-dime green energy upstart with fork-tongued corporate pitchmen. Many of these new companies will be offshoots of the same energy industry barons already fleecing us. But a financially desperate people seeking vitality any way they can get it will surely take the bait, enlarging an unsustainable green economy bubble that will leave us at the dawn of the next decade with hundreds of thousands of wind turbines sitting idle in Midwestern fields, or even sold for scrap at pennies on the dollar.
Now there may be real sources of economic growth in the decade ahead. I doubt anybody could have imagined 20 years ago how much mileage the economy would get from the Internet. But whatever impact the next big thing in technology, or even the Internet up to this point for that matter, it's unlikely it will translate to anything that benefits the American economy proportionate to the rest of the world. It may very well exacerbate the pace in which the rest of the world gains at our expense.
And on top of all this, the 2010s will be the decade where the wolf finally starts knocking on the door about our retiree entitlements. Baby Boomers will begin retiring by the tens of millions, rapidly draining the Social Security trust fund and bankrupting Medicare outright. This will require either extending retirement ages, cutting benefits, or dramatically raising payroll taxes, none of which will go over well and all of which will hurt yonger Americans. Even raising retirement ages will make it harder for younger Americans to penetrate the fading job market. There are incredibly few good options for the generation ahead, and the extent of resource redistribution to our parents and grandparents will make it even harder for America to find its footing in the global economy. Meanwhile, instead of preparing for the demographic time bomb ahead, our clueless political leaders are encouraging and even mandating "healthy lifestyles" that will dramatically magnify the already monstrous problem we face of being a nation of economically unproductive geriatrics.
So despite all the cheering crowds at Times Square, there is very little to look forward to at the dawn of this decade. Thankfully, you can always count on "Mark My Words!" to give it to you straight no matter how bad the news.
posted by Mark at 3:54 PM
4 Comments:
Happy new decade, I guess. I do look forward to the next decade with some cautious optimism, though I too have some fears about what it holds for us. I am afraid that our messing around in the MidEast may eventually come back to bite us, big time.
I also hold some cautiously optimistic hope for green technology, especially with recent news about some interesting ideas from California such as from genomic pioneer J. Craig Venter of San Diego, where researchers in his labs are studying ways to convert algae into oil, coal into natural gas and human wastewater into electricity. I won't jump in right away, though. I intend to just sit back and wait about five years to see if these technologies take off, meaning that they have reported profits for at least five years. (Such a shame that so few Americans know that waiting for five years of steady profits is the smart strategy of investing.) Given California's reputation as "the future of America", culturally and technology-wise, I wouldn't be surprised to see some of these creative new technologies catch on nationwide. (There is the saying that when California sneezes, the whole country catches a cold.)
And as for the demographic crunch, a big reason why Medicare is near bankruptcy, besides the raiding of its funds, is the fact that many insurance companies are dropping coverage for the "expensive" 55-64 year olds, who go without until they reach 65 and bring with them tons of expensive problems that they might not have had had they been able to get adequate care beforehand, and more emphasis should be placed on keeping people active and productive longer, rather than just keeping them alive longer.
On Social Security, I got some lessons from financial books as well as from my grandfather, who is 87 and receives most of his income from investments in bonds rather than from Social Security, though I think he also has a military pension from his WWII service in the Navy. Social Security was intended to be an income supplement, rather than the only income, of seniors. Another thing that makes me sad is that so few Americans receive even basic lessons about money. (And a funny thing I heard from financial consultant David Bach was that parents actually find it easier to talk to their kids about sex than about money.)
And this is off-topic, but I ended the 00s with two snowy days, in north Texas! And one of those snows happened to give me another white Christmas!
On entitlements, I believe that Democrats will block any attempt to cut them, raise the retirement age, or raise taxes unless they fall completely on the wealthy.
I think the green jobs talk is nothing but a myth at this point. Cap and trade wont pass and there will clearly be no incentive for the kind of technology boom needed to create these jobs.
Sara, perhaps you're right about the green economic boom being more substantive than my cynicism allows me to believe. You certainly no more specifics about it than I do. I've long been hearing good things about hydrogen fuel cells, but I've been hearing these things for well over a decade now with little to no tangible progress, making me wonder if they're the modern-day equivalent of the hypothethical George Jetson flying car. At the very least, I'd be surprised if the innovations you describe are able to come about fast enough to save this decade from being another lost decade.
Interesting point about Medicare. I know alot of 50-somethings who got downsized out of their jobs by employers looking to cut out their most expensive employees. That trend speaks for the need of unions to protect seniority rights and of the need to detach health care benefits from employment.
Regarding savings offsetting Social Security, the catch-22 is that an endless consumer binge is the only thing that will keep America's economy solvent, but at the same time if this money was saved it could cushion the blow of Social Security reform.
Congratulations on the Texas snowfall. Do you live in the Dallas area or elsewhere in north Texas? Central Iowa had a record December for precipitation and everyone here is already sick of winter with mountainous snow drifts blocking our view at every intersection. Yesterday morning, one town in Iowa got to 37 below zero. Here in Des Moines the mercury dropped to a much more temperate 18 below zero.
Mr. Phips, I fully support raising or even eliminating the income cap on payroll taxes. It wouldn't solve the problem, but it seems like a no-brainer to at least partially filling back the fast-depleting trust funds for Social Security and Medicare. At least as it pertains to wind technology, the "green revolution" is hardly a myth. There are new wind turbine developments about every 10 miles here in the Midwest. My suspicion is that their shelf life won't be much longer than the 70s solar panel fad though.
Yeah I do live near Dallas. We have been getting some record cold also for this area, with the mercury barely reaching 50 degrees here since Christmas, and we've had plenty of nights where the mercury fell well into the 20s.
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