Why we have a wage inequality problem

Wage inequality is a topic in elections around the world. What can be done to provide more income for those without jobs, and those with low wages?

Wage inequality is really a sign of a deeper problem; basically it reflects an economic system that is not growing rapidly enough to satisfy everyone. In a finite world, it is easy for an economy to grow rapidly at first. In the early days, there are enough resources, such as land, fresh water, and metals, for each person to get a reasonable-sized amount. Each would-be farmer can obtain as much land as he thinks he can work with; fresh water is readily available virtually for free; and goods made with metals, such as cars, are not expensive. There are many jobs available, and wages for most people are fairly similar.

As population grows, and as resources degrade, the situation changes. It is still possible to grow enough food, but it takes large farms, with expensive equipment (but very few actual workers) to produce that food. It is possible to produce enough water, but it takes high-tech equipment and a handful of workers who know how to use the high-tech equipment. Metals suddenly need to be lighter and stronger and have other characteristics for the high tech industry, thus requiring more advanced products. International trade becomes more important to be able to get the correct mix of materials for the advanced products needed to operate the high-tech economy.

With these changes, the economic system that previously provided many jobs for those with limited training (often providing on-the-job training, if necessary) gradually became a system that provides a relatively small number of high-paying jobs, together with many low-paying jobs. In the United States, the change started happening in 1981, and has gotten worse recently.

Figure 1. Chart comparing income gains by the top 10% to income gains by the bottom 90% by economist Emmanuel Saez. Based on an analysis IRS data, published in Forbes.

Figure 1. Chart comparing income gains by the top 10% to those of the bottom 90%, by economist Emmanuel Saez. Based on an analysis of IRS data; published in Forbes.

What Happens When an Economy Doesn’t Grow Rapidly Enough?

If an economy is growing rapidly enough, it is easy for everyone to get close to an adequate amount. The way I think of the problem is that as economic growth slows, the “overhead” grows disproportionately, taking an ever-larger share of the goods and services the economy produces. The ordinary worker (non-supervisory worker, without advanced degrees) tends to get left out. Figure 2 is my representation of the problem, if the current pattern continues into the future.

Figure 2. Authors' depiction of changes to workers share of output of economy, as costs keep rising for other portions of the economy keep rising.

Figure 2. Author’s depiction of changes to workers’ share of output of economy, if costs keep rising for other portions of the economy. (Chart is only intended to illustrate the problem; it is not based on a study of the relative amounts involved.)

The reason for the workers’ declining share of the total is that we live in a finite world. We are using renewable resources faster than they replenish and continue to use non-renewable resources. The workarounds to fix these problems take an increasing share of the total output of the economy, leaving less for what I have called “ordinary workers.” The problems we encounter include the following:

  • Pollution control. Pollution sinks are already full. Continuing to use non-renewable resources (including burning fossil fuels) adds increased pollution. Workarounds have costs, and these take an increasing share of the output of the economy.
  • Energy used in energy production. When we started extracting energy products, the cheapest, easiest-to-extract energy products were chosen first. The energy products that are left are higher-cost to extract, and thus require a larger share of the goods the economy produces for extraction.
  • Water, metals, and soil workarounds. These suffer from deteriorating quantity and quality, leading to the need for workarounds such as desalination plants, deeper mines, and more irrigated land. All of these take an increasingly large share of the output of the economy.
  • Interest and dividends. Capital goods tend to be purchased through debt or sales of stock. Either way, interest payments and dividends must be made, leaving less for workers.
  • Increasing hierarchy. Companies need to be larger in size to purchase and manage all of the capital goods needed to work around shortages. High pay for supervisors reduces funds available to pay lower-ranking employees.
  • Government funding and pensions. Government programs grow in size in good times, but are hard to cut back in hard times. Pensions, both government and private, are a particular problem because the number of elderly people tends to grow.

It should be no surprise that this type of continuing pattern of eroding wages for ordinary workers leads to great instability. If nothing else, workers become increasingly disillusioned and want to change or overthrow the government.

It might be noted that globalization also plays a role in this shift toward lower wages for ordinary workers. Part of the reason for globalization is simply to work around the problems listed above. For example, if pollution becomes more of a problem, globalization allows pollution to be shifted to countries that do not try to mitigate the problem. Globalization also allows businesses to work around the rising cost of oil production; production can be shifted to countries that instead emphasized coal in their energy mix, with much lower energy used in energy production. With increased globalization, people who are primarily selling the value of their own labor find that wages do not keep up with the rising cost of living.

Studies of Previous Economies that Experienced Declining Wages of Ordinary Workers

Researchers Peter Turchin and Surgey Nefedov analyzed eight civilizations that collapsed in detail, and recorded their findings in the book Secular Cycles. According to them, the typical economic growth pattern of civilizations that collapsed was similar to Figure 3, below. Before the civilizations began to collapse (Crisis Stage), they hit a period of Stagflation. During that period of Stagflation, wages of ordinary workers tended to fall. Eventually these lower wages led to the downfall of the system.

Figure 3. Shape of typical Secular Cycle, based on work of Peter Turkin and Sergey Nefedov in Secular Cycles.

Figure 3. Shape of typical Secular Cycle, based on work of Peter Turchin and Sergey Nefedov in Secular Cycles. Chart by Gail Tverberg.

In many instances, a growth cycle started when a group of individuals discovered a way that they could grow more food for their group. Perhaps they cleared trees from a large plot of land so that they could grow more food, or they found a way to irrigate an area that was dry, again leading to sufficient food for more people. A modern analogy would be discovering how to use fossil fuels to grow more food, thus allowing population to rise.

At first, population grew rapidly, and incomes tended to grow as  well, as the size of the group expanded to the carrying capacity of the improved land. Once the economy got close to the carrying capacity of the land, a period of Stagflation took place. There no longer was room for more farmers, unless plots of land were subdivided. Would-be farmers were forced to take lower-paying service jobs, or to become farmers’ helpers. In this changing world, debt levels rose, and food prices spiked.

To try to solve the many issues that arose, there was a need for more elite workers–what we today would call managers and high-level government officials. In some cases, a decision would be made to expand the army, in order to try to invade other countries to obtain more land to solve the problem of inadequate resources for a growing population. All of these changes led to a higher needed tax level and more high-level managers.

What tended to bring the system down was the growing wage inequality and the resulting low wages for ordinary workers. Governments needed ever-higher taxes to pay for their expanding services, but they had difficulty collecting sufficient tax revenue. If they raised taxes to an adequate level, workers found themselves without sufficient money for food. In their weakened state, workers became subject to epidemics. Governments with inadequate tax revenue tended to collapse.

Sometimes, rather than collapse, wars were fought. If the wars were successful, the resource shortage that ultimately led to low wages of workers could be addressed. If not, the end of the group might come through military defeat.

Today’s Fundamental Problem: The World Economy Can No Longer Grow Quickly

Because of our depleted resources and because of the world’s growing population, the only way that the world economy can now grow is in a strange way that assigns more and more output to various parts of “overhead” (Figure 2), leaving less for workers and for unemployed individuals who want to be workers.

Automation looks like it would be a solution since it can produce a large amount of goods, cheaply. It doesn’t really work, however, because it doesn’t provide enough employees who can purchase the output of the manufacturing system, so that demand and supply can stay in balance. In theory, companies that automate their operations could be taxed at a very high rate, so that governments could pay would-be workers, but this doesn’t work either. Companies have a choice regarding which country they operate in. If a tax is added, companies can simply move to a lower-tax rate jurisdiction, where no tax is required for automation.

The world is, in effect, reaching the end of the Stagflation period on Figure 3, and approaching the Crisis period on Figure 3. The catch is that the Crisis period is likely to be shorter and steeper than illustrated on Figure 3, because we live in a much more interconnected world, with more dependence on debt and world trade than in the past. Once the interconnected world economic system starts to fail, we are likely to see a rapid drop in the total amount of goods and services produced, worldwide. This will produce an even worse distribution problem–how does everyone get enough?

The low oil, natural gas, and coal prices we are now seeing may very well be the catalyst that brings the economy to the “Crisis Period” or collapse. Unless there is a rapid increase in prices, companies will cut back on fossil fuel production, as soon as 2016. With less fossil fuel production, the total quantity of goods and services (in other words, GDP) will drop. Most economists do not understand that there is a physics reason for this problem. The quantity of energy consumed needs to keep rising, or world GDP will decline. Technology gains and energy efficiency improvements provide some uplift to GDP growth, but this generally averages less than 1% per year.

Figure 4. World GDP growth compared to world energy consumption growth for selected time periods since 1820. World real GDP trends for 1975 to present are based on USDA real GDP data in 2010$ for 1975 and subsequent. (Estimated by author for 2015.) GDP estimates for prior to 1975 are based on Maddison project updates as of 2013. Growth in the use of energy products is based on a combination of data from Appendix A data from Vaclav Smil's Energy Transitions: History, Requirements and Prospects together with BP Statistical Review of World Energy 2015 for 1965 and subsequent.

Figure 4. World GDP growth compared to world energy consumption growth for selected time periods since 1820. World real GDP trends for 1975 to present are based on USDA real GDP data in 2010$ for 1975 and subsequent. (Estimated by author for 2015.) GDP estimates for prior to 1975 are based on Maddison project updates as of 2013. Growth in the use of energy products is based on a combination of data from Appendix A data from Vaclav Smil’s Energy Transitions: History, Requirements and Prospects together with BP Statistical Review of World Energy 2015 for 1965 and subsequent.

Are There Political Strategies to Solve Today’s Wage Inequality Problem?

Unfortunately, the answer is probably, “No.” While some strategies look like they might have promise, they risk the possibility of pushing the economy further toward financial collapse, or toward war, or toward a major reduction in international trade. Any of these outcomes could eventually bring down the system. There also doesn’t seem to be much time left.

Our basic problem is that the world economy is growing so slowly that the ordinary workers at the bottom of Figure 2 find themselves with less than an adequate quantity of goods and services. This problem seems to be getting worse rather than better, over time, making the problem a political issue.

These are a few strategies that have been mentioned on political sites for fixing the problem:

  1. Provide a basic income to all citizens. The intent of this strategy is to try to capture a larger share of the world’s goods and services by printing money (or borrowing money). This money would hopefully allow citizens to purchase a larger share of the goods and services available on the world market. If the pool of goods and services is pretty much fixed in total, more goods and services purchased by one country would mean fewer goods and services purchased by other citizens of other countries. I would expect that this strategy would not really work, because of changing currency relativities: the level of the currency of the country issuing the checks would tend to fall relative to the currencies of other countries. The basic problem is that it is possible to print currency, but not goods and services. There is also a possibility that printing checks for everyone will encourage less work on the part of citizens. If citizens do less work, the country as a whole will produce less. Such a change would leave the country worse off than before.
  2. Lower interest rates, even negative interest rates. With lower interest rates, the interest portion of the Interest and Dividend sector shown on Figure 2 can theoretically mostly disappear, leaving more money for wages on Figure 2 and thus tending to “fix” the wage problem this way. Low interest rates also tend to reduce dividends, because companies will choose to buy back part of their stock and issue very low interest rate debt instead. If interest rates become negative, the sector can completely disappear. The ultra-low interest rates will have negative ramifications elsewhere. Banks are likely to have a hard time earning an adequate income. Pension funds will find it impossible to pay people the pensions they have been promised, creating a different problem.
  3. Get jobs back from foreign countries through the use of tariffs. Some jobs might be easier to get back from foreign countries than others. For example, programming, call center operations, and computer tech support are all “service type” jobs that can be done from anywhere, and thus could be transferred back easily. In situations where new factories need to be built, and materials sourced from around the world, the transfer would be more difficult. Businesses will tend to automate operations, rather than hire locally. The countries that we try to get the business from may retaliate by refusing to sell needed devices (for example, computers) and needed raw materials (such as rare earth minerals). Or a collapse may occur in a country we try to get jobs back from, so fewer goods and services are produced worldwide.
  4. Keep out immigrants. The theory is, “If there aren’t enough jobs to go around, why give them to immigrants?” In a world with sagging GDP, job growth will be slow or may not occur at all. There may be a particular point in keeping out well-educated immigrants, if there aren’t enough jobs for college-educated people who already live in a country. Of course, Europe has been doing the opposite–taking in more immigrants, in the hope that they will provide young workers for countries that are rapidly aging. (Another approach to finding more workers would be to raise the retirement age–but such an approach is not politically popular.)
  5. Medicare for all. Medicare is the US healthcare plan for those over 65 or having a disability. It pays a substantial share of healthcare costs. The concern I have with “Medicare for all” is that because of the way the economy now functions, the total amount of goods and services that we can choose to purchase, for all kinds of goods and services in total, is almost a fixed sum. (Some people might say we are dealing with a zero-sum game.) If we make a choice to spend more on medical treatment, we are simultaneously making a choice that citizens will be less able to afford other things that might be worthwhile, such as apartments and transportation. The US healthcare system is already the most expensive in the world, as a percentage of GDP. We need to fix the overall system, not simply add more people to a system that is incredibly expensive.
  6. Free college education for all. As the situation stands today, 45% of recent college graduates are in jobs that do not require a college degree. This suggests that we are already producing far more college graduates than there are jobs for college graduates. If we provide “free college education for all,” this offer needs to be made in the context of entrance exams for a limited number of spaces available (reduced from current enrollment). Otherwise, we sink a huge share of our resources into our education system, to no great benefit for either the students or the overall system. We are back to the zero-sum game problem. If we spend a large share of our resources on college educations that don’t really lead to jobs that pay well, more people of all ages will find themselves unable to afford apartments and cars because of the higher tax levels required to fund the program.
  7. Renewables to replace fossil fuels. Despite the popularity of the idea, I don’t think that adding renewables provides any significant benefit, given the scenario we are facing. Renewables are made using fossil fuels, and they tend to have pollution problems of their own. They don’t extend the life of the electric grid, if we are facing collapse. At most, they might be helpful for a few people living off grid, if the electrical grid is no longer operating. If the economic system is on the edge of collapse already, fossil fuel use will drop quickly, with or without the use of renewables.

Conclusion

It would be really nice to “roll back” the world economy to a date back before population rose to its current high level, resources became as depleted as they are, and pollution became as big a problem as it is. Unfortunately, we can’t really do this.

We are now faced with the question of whether we can do anything to mitigate what may be a near-term crisis. At this point, it may be too late to make any changes at all, before the downward slide into collapse begins. The current low prices of fossil fuels make the current situation particularly worrisome, because the low prices could lead to lower fossil fuel production, and hence reduce world GDP because of the connection between energy consumption and GDP growth. Low oil prices could also push the world economy downward, due to increasing defaults on energy sector loans and adverse impacts on economies of oil exporters.

In my view, a major reason why fossil fuel prices are now low is because of the low wages of “ordinary workers.” If these wages were higher, workers around the globe could be buying more houses and cars, and indirectly raising demand for fossil fuels. Thus, low fossil fuel prices may be a sign that collapse is near.

One policy that might be helpful at this late date is increased focus on contraception. In fact, an argument could be made for more permissive abortion policies. Our problem is too little resources per capita–keeping the population count in the denominator as low as possible would be helpful.

On a temporary basis, it is also possible that new programs that lead to rising debt–whether or not these programs buy anything worthwhile–may be helpful in keeping the world economy from collapsing. This occurs because the economy is funded by a combination of wages and by growing debt. A shortfall in wages can be hidden by more debt, at least for a short time. Of course, this is not a long-term solution. It simply leads to a larger amount of debt that cannot be repaid when collapse does occur.

 

 

 

 

1,299 thoughts on “Why we have a wage inequality problem

  1. Dear Finite Worlders
    I have written about David Levitin, Sherry Turkle, and the senior at Duke playing Brahms and the human need to sometimes concentrate and sometimes think broadly, and the dangers of being distracted too much of the time.

    Here is another take on the subject:

    Click to access WBB10.2.pdf

    The author recommends spending some time doing nothing. Or maybe meditating. At any rate…not subjecting oneself to the distractions of the modern world. Near the end of his article, note that he teaches at Google on occasion.

    Now it is strange to me how Google can both present someone who recommends ‘getting away from distractions’ while simultaneously making their living by promoting distractions.

    At any rate, I will tell one story to perhaps illustrate the point the author is making. A former neighbor had been a United States Official in some of the Pacific territories shortly after WWII. Life was never very hard for these people, but it got easier when the US started supplying food. Since they didn’t perceive that they needed very much, and the government was giving them food, they did nothing. My neighbor would get furious describing how the men would just sit and look out to sea all day. After all, he spent his days pushing paper…didn’t they have some forms to fill out and letters to reply to? Well…no, apparently they saw little use in forms and letters. (At that time.)

    Don Stewart

  2. Dear Finite Worlders
    This next clip isn’t exactly evidence, but it may be suggestive:
    ‘Rob Fenton emphasises that the value for a farm is when he markets his produce not when he grows it. In this clip he talks about the margin he can get per egg which is about $.40 compared to the market going price on average which is $.01-$.02’

    So wholesaling an egg may make you a penny or two, but selling it yourself can get you 40 cents (of course, you also have the cost of selling and the time involved).

    When some of the thermodynamic models for oil are run, they give results not unlike the egg business. That is, the cost of extraction is not the whole story by far. Processing the oil and retailing the products also account for a lot of the total cost. Quite a few people who read Peak Oil blogs are resistant to that message.

    If you look at the cost of a cracker in a shrink wrapped package and compare that price with the cost of raw materials, the raw materials tend to fade into insignificance. If you look at this article which is about eating well on a food stamp budget:
    http://www.resilience.org/stories/2016-04-15/eating-well-on-nearly-nothing

    you will find that omitting processed foods and especially drinks are very high on her list. The cost of the water and syrup to produce a cola have to be minuscule compared to the price. As compared to a slice of lemon in water, the cola drink is astronomically more expensive.

    Don Stewart

    • How do you counter those who say that the shrink wrap and the marketing represent the economic web whose demise would spell immediate doom?

      • Artleads
        The legend says that when the Buddha achieved enlightenment, Mara (the devil) challenged him: ‘How do you know you aren’t deluded?’s\. Supposedly Buddha reached down and touched the soil, and said ‘Earth is my witness’.

        I haven’t gotten within a country mile of enlightenment, but I figure if touching the soil was good enough for Buddha, it’s good enough for me. So I go out and work in my garden.

        And all that babbling seems to just fade away.

        Don Stewart

      • I don’t particularly need shrink wrap. But my fridge is extremely useful. So if I got food in the form presented at, say, a farmers market, I’d be fine.

        The old car I have is very welcome and appreciated. It’s new enough to be one of those computerized deals that I couldn’t fix myself. But I couldn’t fix it myself even if it were as simple as Lego toys. I’m very glad that the repair shop I go to is not that bad or out of reach financially.

        I’d say we need a high level of cardboard box production. From middle school up, every kid would have a utility knife and a supply of duct tape. There should be an exceedingly high level of water-tank production, since every yard should have one or more water tank. PVC pipes are extremely convenient. Silver-lined beverage containers are a great gift, and can be reused indefinitely for outdoor purposes.

        A huge new industry could be geared to excavating landfills and making new products from the fill. Degrading large swathes of land with landfill which build up methane is not more economically helpful than digging up what’s there now and reusing it.

        My point in all this is that I wonder why not stepped-up production of useful things while getting rid of the less useful stuff. I’m not sure why this can’t be done under industrial civilization.

        • because whatever is got rid of requires someone to order it to happen–ie, someone has to say what is useful, and what is not. That means a “committee” who will never agree on anything–or some kind of commissar who will issue diktats.
          and that will create an uproar in the segment of society affected by whatever ”change” is brought about., jobs lost etc.
          Not sure if your comment about excavating landfills is made “tongue in cheek” or not—forgive me if it is.
          Anything that goes into landfill starts to degrade immediately. A prime example might be a tin can you find at the bottom of your garden—all thats left usually is the top and bottom rings–the rest has rusted away
          Most of the other stuff in landfill in viable quantities are glass and plastic
          Anything got out of landfill requires heat to excavate it and heat to reprocess it.
          If you want to get an idea of what excavating landfill looks like, take a look at kids doing it in India and Africa.
          http://www.theguardian.com/global-development/2014/oct/06/smelly-contaminated-disease-worlds-open-dumps
          Not a pleasant sight, toxic and highly dangerous.
          Use machines?—But then you’re back into fuelburning again, to separate out all the minute quantities of stuff in there. Almost certainly it would require more energy to extract stuff than the value of whatever was obtained.
          trying to reverse entropy doesn’t seem to work

          • Norman,
            “trying to reverse entropy doesn’t seem to work”

            Yes it does! It’s actually the whole thing about dissipative structures and so on.
            The point is from where you look at things: when you lower entropy locally, there’s more of it generated globally.
            The latter is generally disregarded, until it reaches unmanageable levels. That’s where we are now.
            In the end of the day, and globally speaking, your statement is true, of course. You can’t get rid of the 2nd law.

            • I guess the point I was trying to make was, that to give the appearance of entropy reversal, you have to keep pumping more and more energy into the system.
              ! swim a couple of miles every week–to stave off the inevitable—but—
              In the short term that works, but in the long term, as you say, entropy wins every time.
              Hope it doesn’t catch up with me just yet

          • “That means a “committee” who will never agree on anything–or some kind of commissar who will issue diktats.
            and that will create an uproar in the segment of society affected by whatever ‘change’ is brought about., jobs lost etc.”

            I’m not so much talking of what I expect people to do; it’s more about what they COULD do if they were rational.

            “Not sure if your comment about excavating landfills is made ‘tongue in cheek’ or not—forgive me if it is.”

            Apologies for wasting people’s time with stuff I don’t know. I read a long time ago about dumped phone books which still could be read after decades in landfills. I will be cautioned by what you say, but won’t totally change my views until I learn a lot more about the subject. (Caveat: I probably won’t learn a lot more about it, and it’s not only up to me to do so. I often intuit things, only later to see that others closer to the issue are doing tangible things about them.)

            But back to rationality: We don’t just have to dig stuff up from landfills; we can instead stop dumping things into it. There is a LOT of manual work to be done stuffing cardboard boxes with not-too-toxic materials otherwise slated for landfill. Lots of cardboard, paper and plastic, even tin. The stuffed boxes then constitute a “industrial detritus” strawbale that can be plastered over with mud, creating a well insulated building material that uses less FF energy than landfill dumping, creates work, and sequesters waste for a long time.

          • Smokey Mountain is a very cool place to visit… how often do you get a chance to visit hell on earth.

          • “If you want to get an idea of what excavating landfill looks like, take a look at kids doing it in India and Africa.
            http://www.theguardian.com/global-development/2014/oct/06/smelly-contaminated-disease-worlds-open-dumps
            Not a pleasant sight, toxic and highly dangerous.
            Use machines?—But then you’re back into fuelburning again, to separate out all the minute quantities of stuff in there.”

            I’m acquainted with dump programs in the US where artists are given grants to take what they need to create a public art project at the dump. From what I saw, that small program was not dangerous. And the piles of junk out in the sun from the link above look like what millions of people have been searching through for a long time. They take metal, wire, wood, broken furniture, toys, and make use of them. This activity doesn’t seem exceptionally toxic. As to energy use–I’m thinking in terms of reusing discard at the local level to substitute for materials taken from the ends of the earth and transported/manufactured at great energy/environmental cost for the global economy.
            All of this can be done rationally, humanely, and respectfully. Of course, that isn’t how the global economy works now.

            • Simon Michaud says we will be soon mining landfill dumps, as they have more minerals than many mines do even today. This video has appeared here before, but it’s an important one;

  3. A bit weird clip about why the GOP fears Trump… he has not been initiated into the secret society

    • Well, I think that just means he isn’t presently part of the Deep State, which doesn’t mean he wouldn’t be co-opted if he were elected. . .

    • Or perhaps the minions of the Elders believe their masters are losing control of things… that they will no longer be able to hold up their side of the deal which stipulates we will make you rich but you must not oppose us…

      And Trump is the designated front man for the crew that is getting ready to go to war with the Elders.

      Or maybe not. Probably not. But maybe…..

      • Trump’s mantra has been from the start: “We will take back this nation and make America great again !”

        Take it back from who ? The globalists ? The lobby groups and vested interest groups ? The corrupted politicians ? The secret societies ?

        American politics are becoming stranger by the year. Is he just a don Quijote fighting windmills ? Or is there a secret cabal behind the scenes ? A power that is creating all these supranational entities like the UN, IMF, NATO, NAFTA, EU, TPP, TTIP and TISA ? He has attacked most of these organizations. Does he really believe that he can take that power down ?

        And who are we ? All his political advisers so far seems to have a military career behind them, people who have a lot of classified information on domestic and foreign affairs…

        • It’s all Primitive Politics, the Balkan/Italian/Arab/Turkish paranoid complex:

          ‘If things are wrong here, it’s all THEIR fault – the traitors, the crooks, the unbelievers, they’ve destroyed our Paradise!’

          ‘But we can take it back! And we have the Strong Man to do it! We can be Great Again!’

          It’s rather a bad sign: the USA turning -I do not mean to offend in any way – Balkan, turning 3rd World, in its modes of thought.

          Turning away from the assumptions of the European Enlightenment.

          People are calling it ‘fascism’, but that is quite wrong in many ways. Anyway, Trump is just a precursor, the first phase.

          • agreed Xabier
            Trump is the vision of future, even though he won’t get elected .
            The economy needs to seriously crash before things really get bad politically.

            When that happens, you’re going to get “super Cruz”, a real godnut, who will promise that prosperity will only come back if you pray hard enough….and will begin to create a theocracy to enforce it.
            And I do mean enforce

            Ridiculous? Not when 50+% of Americans believe the world is less than 10k years old. Fertile ground for godfreaks I’d say.

            When the economy finally tanks, there will be civil unrest. That will bring in the military, who will be working for a godbothering government. Crazy governments make sure their military are well fed, because they know they have to keep them on side (check out North Korea)—the ordinary soldier or his generals are locked into the same survival bargain, they have no option, whether they believe it or not,
            So they help to prop up the (temporary) move to a theocratic regime to “save” democracy, It doing so, democracy is wiped out of course.

            The side effect of this will be the Disunited States of America

            How long—10-20 years at most

            • Hm, general agreement perhaps, but where we part ways, it’s on the issue not mere side effect but instead being the core element of the story, so that one thing is theocracy/autocracy/general ideology on the ascent trajectory, while it takes completely different meaning on the overall descent phase of “civilization”. Basically, the former is a creative building force of sorts, while the latter is sectarian isolationist opt out as temporary shield from chaos.

              I’d think the situation post 2008 should be clear enough for most of us here, the dominant western globalist model survived the non usury alternative model by mere few decades (1991 or ~1985). They papered it over “digitally” somehow up to this point since 2008, now we are approaching the inevitable violent fragmentation phase, semi-peripheries and semi-cores are already ricocheting away like Greece and Japan, today we have the “Tory civil war” with the likely-hood of Brexit (and its effects) due starting in few months time etc. In that light just silly linear trends extrapolation into next 2-3decades might be a predictor of quite nastier future on many fronts, not talking about the window ~2050-2100, which some of us might yet to observe in person, chilling vision indeed.

              But for the moment the switch still brings light and heating, shelves and freezers are overflowing with food, overall strange calm sense before the storm..

            • Norman, the U.S. is not a monolith. Yes, the bible belt could go for a super Cruz but that would not sell in the northeast (educated), the west coast south (money and military), the west coast north (eco and tech both independent), Texas (?, good Catholic from Mexico with no need of new Pope). As to the empty space east of the Rockies and west of the Mississippi who cares.

              The south was correct in 1860 we would all be happier separate. There are six nations between Mexico and Canada. Only one might go in the direction you fear.

            • Ed
              My thinking about the USA as a viable nation hangs of the availability of energy to hold it together.
              when there isn’t any—or there’s too little to use in that respect–transport, road/rail/aircraft maintenance etc, then as i see it, the nation cannot hold itself together,
              any more than the EU can, or China, or Russia for that matter.
              This where conflict is likely to come from, as leaders hang on to their denial mode, and try to hold on to what is falling apart

              (don’t know if this comment will appear in the right sequence re this discussion)

          • xabier, the U.S. has always been a strong cooperation between business and government, corporatism as Mussolini put it. This will continue uninterrupted regardless of who is elected president. Trump seem to fit in just fine.

  4. Very cumbersome governance stuff. But does this seeming trend toward resiliency planning represent a sort of post-collapse thinking within BAU?

    https://www.colorado.gov/pacific/dola/%E2%80%8Bdola-releases-new-resiliency-guide-and-website-local-governments

    Colorado Department of Local Affairs releases “Planning for Hazards: Land Use Solutions for Colorado,” a guide and website to help Colorado agencies prepare for natural disasters and reduce risks through resilience and hazard mitigation.
    The Colorado Department of Local Affairs (DOLA) Division of Local Government released a new Planning for Hazards: Land Use Solutions for Colorado guide and website designed to help Colorado counties and municipalities prepare for natural disasters and reduce risks through the integration of resilience and hazard mitigation.

    The guide and website provide a unique compilation of comprehensive materials, disaster recovery strategies, and lessons learned assembled over the years since the state’s devastating fires and floods in 2012/13. The guide includes information about creating a planning framework, hazard identification, and risk assessments to help communities implement resiliency strategies. The website provides users a variety of options to obtain specific information on targeted topics that will be supplemented over time with additional videos and links to new resources. The University of Colorado Denver, who participated in development, will manage and maintain the website.

  5. I am visiting my grand toddler ( no longer grandbaby ) in Los Angeles. Oh the glitz, Glitz, GLITZ !!!

    This brings to my mind a former post which is reposted below.

    This reminds of a passage I read in a recent ( highly recommended ) novel The Water Knife by Paolo Bacigalupi . It takes place in a very parched American Southwest, where states are fighting over water not only in the courts, but with militias, with a weakened US government unable to intervene. Some states have collapsed, such as Texas, sending millions of refugees to other states which have fortified their boundaries. The refugees are in camps supported by FEMA and the Chinese Red Cross. Here is a discussion of what they leave behind in their flight.

    “You can have any of the clothes the renters left. ….. There’s good stuff in them, high end designer and sh*t. … You can dress classy, Prada and Dolce and Gabbana, Michael Kors, Yan Yan.. I use it for rags mostly”

    • After the Great Plague of the 14th century, the poor grabbed the clothes of the rich and danced around in them……

  6. Ok. The only answer to a finite world with exponential growth is to shrink.

    A worldwide coordinated blow to growth. Eliminate all non necessary activities. Like Facebook. Like Hello Kitty. Like luxury cars, private jets, jewelry, pink coolers.

    Accept coolers in the color they come. That way you don’t have to waste recources on color, and transportation of sources.

    Accept labour without profit. Accept a lifestile without growth.

    On a finite world, there’s no room for profit.

    • I am involved with a few businesses… they employ people… i.e these people get to eat … as do I…

      Because the businesses generate profits.

      In case you hadn’t noticed… communism failed because entrepreneurs will not lift a finger without the opportunity to make a profit… and workers will not work unless they get paid ….
      t

  7. The April Emergency The Fed Doesn’t Want You To Know About – Mike Maloney
    Mike Maloney 131,237 views
    2K48

  8. Trump is one notch better than Satan.

    “If Satan had the lead on him and was one delegate away from being nominated as our candidate, and Donald Trump was the alternative, I might vote for Donald Trump”, said Craig Dunn, a local GOP leader who is running to represent Indiana’s 4th Congressional District at the national convention in Cleveland.

    Indiana Awards 57 Delegates Before Primary Vote, Only 1 to Trump

    Thank god America is not a democracy but a republic.

    • These primaries are a complete faux show. Have you ever been to one? A complete pretense that anyone who is not someone gets to decide. My prediction. Trump meets his end in in Endiana. Not because of the will of the Indianaians (say it three times fast) but TPTB. It will be Cruz VS Hillary and Hillary will win. Hillary is the chosen.

      “Thank god America is not a democracy but a republic.”

      I assume you mean the USA? I am pretty sure god disavows all association at this point. Its certainly neither a democracy or a republic at this point. Just what it is is pretty undefined to me at this point. I dislike the term “America” . I am certainly fond of many of the people and culture that reside in that particular piece of dirt. Is that “America”. Then there is the government of the USA. Why I dislike the term “America” is it lumps those two things together. What the government does is totally removed from the will of the people. Not that it would be any better if it was ruled by the will of the people. What the government does is none of my business. I disavow all association with them. Oh yes I pay my taxes. I pay my protection $. And I stay clear far from there power as I can lest I be squashed like a bug. Not my government. Not my wars. I was born here. Some of this dirt is mine. The rest is BS.

      • I have to laugh when I read this…

        I could tear this commentary limb by limb to shreds… much as an angry elephant might rip apart and trample an infant ….

        But let’s just focus on tearing the head off…

        ‘Not my wars’

        I trust you are aware that pretty much all wars are fought over the control of resources?

        I trust you are aware of this:

        In 2012, world total primary energy consumption was about 529 quadrillion British thermal units (Btu). Primary energy consumption in the United States was about 95 quadrillion Btu, equal to 18% of world total primary energy consumption.

        Why do you think that your standard of living is so high?

        It is because your leaders live in Realitystan – and you live in Delusistan.

        They understand that resources are a zero sum game — that there are not enough to go around — that they are becoming scarcer by the minute…. and that if your tribe is not willing to fight for as much as possible … you end up like Somalia.

        Because others will – and you will get kicked in the teeth and trampled

        It’s kinda like taking 50 vicious dogs — all alpha males — putting them in a cage — and every 3 days tossing enough food into the cage for 20 dogs….. seriously – it is NO different.

        It always amuses me when the liberal do-gooders in America froth at the mouth when the country goes to war — when their comfy lifestyles depend on the resource pillage that comes with victory…

        Fools.

        • The way the world works — and always will:

          – The luckiest, fittest, smartest, with the capability for ruthlessness survive – always have – always will

          – Resources are finite and therefore ownership is a zero sum game

          – The strong always take from the weak – if they do not then that is a sign of weakness and a competitor will take from the weak and will usurp the formerly strong dropping them into weakling status

          – Humans tend to group by clan or on a broader basis by nationality (strength in numbers bonded by culture) and they compete with others for resources

          – Competition always exist (I want it all!) but it becomes fiercer when resources are not sufficient to support competing clans or nations

          – Tribal societies understand these dynamics because they cannot go to the grocery store for their food – so they are intimately aware of the daily battle to feed themselves and the competition for scare land and resources

          – Modern affluent societies do not recognize this dynamic because for them resources are not scarce – they have more than enough.

          – One of the main reasons that resources are not scarce in affluent societies is because they won the battle of the fittest (I would argue that luck is the precursor to all other advantages – affluent societies did not get that way because they started out smarter — rather they were lucky – and they parlayed that luck into advances in technology… including better war machines)

          – As we have observed throughout history the strong always trample the weak. Always. History has always been a battle to take more in the zero sum game. The goal is to take all if possible (if you end up in the gutter eating grass the response has been – better you than me – because I know you’d do the same to me)

          – And history demonstrates that the weak – given the opportunity – would turn the tables on the strong in a heartbeat. If they could they would beat the strong into submission and leave them bleeding in the streets and starving. As we see empire after empire after empire gets overthrown and a new power takes over. Was the US happy to share with Russia and vice versa? What about France and England? Nope. They wanted it all.

          – Many of us (including me) in the cushy western world appear not to understand what a villager in Somalia does – that our cushy lives are only possible because our leaders have recognized that the world is not a fair place — Koobaya Syndrome has no place in this world — Koombaya will get you a bullet in the back — or a one way trip to the slum.

          – Religious movements have attempted to change the course of human nature — telling us to share and get along — they have failed 100% – as expected. By rights we should be living in communes — Jesus was a communist was he not? We all know that this would never work. Because we want more. We want it all.

          – But in spite of our hypocrisy, we still have this mythical belief that mankind is capable of good – that we make mistakes along the way (a few genocides here, a few there… in order to steal the resources of an entire content so we can live the lives we live) — ultimately we believe we are flawed but decent. We are not. Absolutely not.

          – But our leaders — who see through this matrix of bullshit — realize that our cushy lives are based on us getting as much of the zero sum game as possible. That if they gave in to this wishy washy Koombaya BS we would all be living like Somalians.

          – Of course they cannot tell us what I am explaining here — that we must act ruthlessly because if we don’t someone else will — and that will be the end of our cushy lives. Because we are ‘moral’ — we believe we are decent – that if we could all get along and share and sing Koombaya the world would be wonderful. We do not accept their evil premises.

          – So they must lie to us. They must use propaganda to get us onside when they commit their acts of ruthlessness.

          – They cannot say: we are going to invade Iraq to ensure their oil is available so as to keep BAU operating (BAU which is our platform for global domination). The masses would rise against that making things difficult for the PTB who are only trying their best to ensure the hypocrites have their cushy lives and 3 buck gas (and of course so that the PTB continue to be able to afford their caviar and champagne) …. Because they know if the hypocrites had to pay more or took at lifestyle hit – they’d be seriously pissed off (and nobody wants to be a Somalian)

          – Which raises the question — are we fools for attacking the PTB when they attempt to throw out Putin and put in a stooge who will be willing to screw the Russian people so that we can continue to live large? When we know full well that Putin would do the same to us — and if not him someone more ruthless would come along and we’d be Somalians.

          – Should we be protesting and making it more difficult for our leaders to make sure we get to continue to lead our cushy lives? Or should we be following the example of the Spartans https://www.youtube.com/watch?v=eZeYVIWz99I

          – In a nutshell are our interests as part of the western culture not completely in line with those of our leaders – i.e. if they fail we fail – if they succeed we succeed.

          – Lee Kuan Yew is famous for saying ‘yes I will eat very well but if I do so will you’ Why bite the hand that whips the weak to make sure you eat well…. If you bite it too hard it cannot whip the weak — making you the weak — meaning you get to feel the whip….

          – Nation… clan … individual…. The zero sum game plays out amongst nations first … but as resources become more scarce the battle comes closer to home with clans battling for what remains…. Eventually it is brother against brother ….

          – As the PTB run out of outsiders to whip and rob…. They turn on their own…. As we are seeing they have no problem with destroying the middle class because it means more for them… and when the weak rise against them they have no problem at all deploying the violent tactics that they have used against the weak across the world who have attempted to resist them

          – Eventually of course they will turn against each other…. Henry Kissinger and Maddy Albright bashing each other over the head with hammers fighting over a can of spam – how precious!

          Now just be thankful you are on the winning team!

    • Yep, the most probable explanation for the activity, is how to creatively massage the economic drop of Q1-Q2 2016 (and previous months), i.e. the official announcement of recession that has just started. Perhaps they will make it public before the election, perhaps not, but it’s going to happen eventually, since the global growth is simply not there anymore. The IMF is now calling for another round of easing/QE asap, so their internal numbers must be flashing..

      There is an hour plus ytube video from a recent panel of D.C. “experts” on the EU/Brexit, the takeaway message: it is going to be very bad (for the globalists) in either case, e.g. even shallow margin for the stay put inside camp, would be considered as weak position and instability into near term anyway; Russia’s happy; Germany and France tasked from that point on to consolidate aka command directly the rest of member countries even more, etc.

      It’s all falling apart now, but that doesn’t mean attempts for creative plateauing for awhile.

    • I know I have reading about this elsewhere too. Also the Doha meeting that didn’t go well–no surprise. Getting agreement to hold down oil production is problem.

      By the way, I was hoping to get a post about debt up tomorrow, but it looks like it will be Tuesday instead (got interrupted today). Comments will probably be cut off for a day or so.

    • Thanks Don,

      From the future book by Taleb, linked in Cobb’s article:
      “The main idea behind complex systems is that the ensemble behaves in way not predicted by the components. The interactions matter more than the nature of the units.”

      Such a -universal- statement, if applied to human societies, questions quite a lot of individualistic / rationalistic / selfish / freewillistic(?) views.

      • Stefeun
        The phenomenon Taleb mentions is responsible, I think, for some of the paradoxes we think we see. A population of critters in the soil can appear to be entirely selfish at one level of analysis, but cooperative at a different level of analysis. Adam Smith’s ‘invisible hand’ followed the same line of reasoning.

        The stability of the Edo, Japan’s population for over 200 years, when there was no central authority enforcing any population controls, is another example?

        Ugo Bardi mentions Edo’s mastery of metallurgy, yet, in contrast to Europe, they rebuilt their forests simultaneously. How did that happen, and why?

        Don Stewart

        • Don,
          At same period Edo was regenerating their forests by a sort of bottom-up process, we in France were implementing that top-down.

          See e.g. Colbert (Finance minister of Louis XIV, Roi Soleil(!!)) and management of the Forêt de Tronçais, aiming to supply a strong marine industry (maybe serve the people too, but indirectly…)
          https://en.m.wikipedia.org/wiki/Forêt_de_Tronçais#History

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