Today's World presents some truly amazing contrasts. For example, about a billion people on the planet enjoy human history's only episode of mass affluence. On the other hand, about two billion people endure the most profound poverty. Most economists believe that it is entirely possible for everyone to enjoy an affluent lifestyle. On the contrary, our opinion is that mass affluence was a transitory phenomenon based on aggressive exploitation of nature, and nature is nearing exhaustion.
What prospects are there for enterprising individuals in this exhausted world? Let's start with food.
Modern farming is a grotesque of the natural cycle of sowing and reaping. It poisons the soil, killing its inhabitants and stripping its nutrients. Modern agriculture's 'soil' becomes merely a medium into which to put chemical fertilisers. This strategy, this 'green revolution' is declining in efficacy. Farmers of the future will simply have to return, gradually or all at once, to more classical methods.
The consequence of that retreat from modernism will be a tremendous decline in yields and the end of agricultural abundance. Food will become more expensive relative to other goods. Enterprising individuals will learn to eat lower on the food chain - tending towards vegetarianism. Perhaps more significantly, they will learn to prepare this diet for themselves, as the current food marketing system - from fast food restaurants to the purveyors of prepared meals - is still pushing the burger, fries and soda version of nutrition.
Moving on from food, we take up shelter. In North America, at least, the modern concept of shelter has also become a grotesque. The 'McMansion' and the strip mall in their suburban seat is a dreadful distortion of living space. Sadly, most North American compact towns and cities were more or less destroyed to make way for sprawl. Unfortunately, there is very little money to build space that is worth living in, so people are going to have to make do with what exists.
If you are lucky enough to live in a place that remains along the traditional village or urban neighborhood line, then you can simply enjoy it. For the rest, you will have to make the best of what is closest to that. Enterprising individuals will take care to site their living situations optimally. If you can't get to pretty much everything you need to in a 15 minute walk (or less), you should move on. Car-dependent place have no future. Consider making do with as little space as you can manage, sharing larger abodes with more people, if necessary.
Clothing is by far the easiest item to manage for the time being. It can be bought by the bag at many thrift stores, or at least quite inexpensively. Clothing can be mended to keep it going for quite some time. Do not be vain about clothes. It is silly. Having clean clothes in adequate repair is much more important than fashion. And in any case, fashion that you create with what you find is much more interesting than fashion that you buy.
Food, shelter, clothing. That is pretty much all anyone needs materially. Beyond this is luxury. If you don't agree - well, you're entitled to your opinion - but remember your 'needs' are just what you perceive them to be, and please don't force the responsibility of their satisfaction upon others.
Showing posts with label affluence. Show all posts
Showing posts with label affluence. Show all posts
Friday, May 1, 2009
Monday, March 23, 2009
Unemployment versus Contraction
We were reviewing the statistics at Shadowstats - a service that reports relatively honest economic data for the USA - and noticed a 19% unemployment rate (ouch!) and a 4% rate of GDP contraction (bad, but not that bad). Two points immediately leapt up: one, there is a fairly wide divergence; and two, this is divergence in an opposite direction from the Great Depression.
The divergence points to the chronic unemployment and underemployment that exists in the US. Even at the peak of the economy in 2000, approximately 12% of the workforce was redundant. If GDP is to contract in this Depression as much as in the Great Depression (50%), and unless there is to be 60% or more unemployment, more currently employed workers are going to have to take reduced hours or rates of pay.
The nation is faced with a highly problematic scenario. At some point in the not-too-distant future, the Federal Government will have exhausted its borrowing power to maintain welfare payments and its own operations. We have discussed in prior posts how both welfare payments and government salaries will have to be cut. We expect these to be cut through price inflation.
Many private sector organisations will be facing the task of whether to cast redundant workers into a fraying social safety net, or 'sharing the pain' by cutting hours accross the workforce. Self-employed persons will be facing involuntary 'part-time' status. Price inflation will also deliver pay cuts to the private sector.
The course the nation takes to adjust the population to lower economic output will have a decisive impact on how orderly the adjustment is. The more desperately 'turf' is defended and groups attempt to clutch onto their income, the greater the polarisation of income and the potential for social disruption. If there is a consensus to 'share the pain' - even if through inelegant methods such as inflation and higher taxes on the remaining productive elements - there is less potential for acute stife. Unfortunately, the more coercively the pain-sharing is achieved, the more long-term harm is done to the economy: inflation distorts investment decisions, and taxation inhibits productivity.
Clearly, the nation is still sufficiently affluent to handle some economic abuse - but there is a limit to how much. We are not optimistic that there is any collective will to institute a sounder basis for economic development. Alert individuals, on the other hand, will find even in a less benign environment adequate possibilities of prosperity.
The divergence points to the chronic unemployment and underemployment that exists in the US. Even at the peak of the economy in 2000, approximately 12% of the workforce was redundant. If GDP is to contract in this Depression as much as in the Great Depression (50%), and unless there is to be 60% or more unemployment, more currently employed workers are going to have to take reduced hours or rates of pay.
The nation is faced with a highly problematic scenario. At some point in the not-too-distant future, the Federal Government will have exhausted its borrowing power to maintain welfare payments and its own operations. We have discussed in prior posts how both welfare payments and government salaries will have to be cut. We expect these to be cut through price inflation.
Many private sector organisations will be facing the task of whether to cast redundant workers into a fraying social safety net, or 'sharing the pain' by cutting hours accross the workforce. Self-employed persons will be facing involuntary 'part-time' status. Price inflation will also deliver pay cuts to the private sector.
The course the nation takes to adjust the population to lower economic output will have a decisive impact on how orderly the adjustment is. The more desperately 'turf' is defended and groups attempt to clutch onto their income, the greater the polarisation of income and the potential for social disruption. If there is a consensus to 'share the pain' - even if through inelegant methods such as inflation and higher taxes on the remaining productive elements - there is less potential for acute stife. Unfortunately, the more coercively the pain-sharing is achieved, the more long-term harm is done to the economy: inflation distorts investment decisions, and taxation inhibits productivity.
Clearly, the nation is still sufficiently affluent to handle some economic abuse - but there is a limit to how much. We are not optimistic that there is any collective will to institute a sounder basis for economic development. Alert individuals, on the other hand, will find even in a less benign environment adequate possibilities of prosperity.
Friday, March 20, 2009
Debtoholics
This article from Maclean's shows the sorry state of a typical middle-class family with poor money management skills whose ambitions for affluence exceeded their income-producing capacity. Stories such as this one are becoming ubiquitous as ever more households suffering from job loss and overindebtedness careen toward bankruptcy.
At least one organisation - Debtors Anonymous - looks at using debt for spending as a seductive but destructive process. We wonder how much of the current economic woes result from people having a serious borrowing problem.
It was, after all, the sub-prime mortgage fiasco that set this whole Depression thing rolling. People become bad credit risks (sub-prime) because they don't manage their money well. Often that results from compulsive borrowing and spending.
We suspect that the damage to the borrowing class as a result of the Depression will be so dreadful that everyone now living will be very cautious about borrowing any money ever again. This development would be horrifying to the financers of consumerism and their minions (a.k.a. the Government and the Media), so we expect a tremendous push to coax the populace into perpetuating their spendthrift ways. The recent hatchet piece by Newsweek is a good example.
We hope that the people will not be so unintelligent. Happily, savings rates are rising, and household debt is falling. Unfortunately, there is a good chance that a false spring of recovery will get the masses borrowing again. But that will be the last hurrah for the debtoholics.
At least one organisation - Debtors Anonymous - looks at using debt for spending as a seductive but destructive process. We wonder how much of the current economic woes result from people having a serious borrowing problem.
It was, after all, the sub-prime mortgage fiasco that set this whole Depression thing rolling. People become bad credit risks (sub-prime) because they don't manage their money well. Often that results from compulsive borrowing and spending.
We suspect that the damage to the borrowing class as a result of the Depression will be so dreadful that everyone now living will be very cautious about borrowing any money ever again. This development would be horrifying to the financers of consumerism and their minions (a.k.a. the Government and the Media), so we expect a tremendous push to coax the populace into perpetuating their spendthrift ways. The recent hatchet piece by Newsweek is a good example.
We hope that the people will not be so unintelligent. Happily, savings rates are rising, and household debt is falling. Unfortunately, there is a good chance that a false spring of recovery will get the masses borrowing again. But that will be the last hurrah for the debtoholics.
Tuesday, January 27, 2009
Hard Work Ahead
I have always been impressed at how easy my life has been compared to my ancestors. I am especially humbled to have seen a small town in Washington State carved out of the forest by my great-grandfather (among others) over 100 years ago.
Up until now, I couldn't imagine myself hewing down huge trees day after day, sawing them into logs, and so forth. But I am changing. The economic system that gave me and so many others the 'good life' for so long is failing. I don't think it will go all to pieces in one go, but there will never again be as much affluence and leisure as there was in North America from 1950-2000.
I am faced with the prospect of being a global economic citizen competing for a global income ($10,000 per year or so) with billions of other hard-working souls. We won't be working just a few hours per day for this either, but 10 or more hours every day of the week. It's a daunting prospect. At present, I don't really have the energy for it, but I am working on getting myself fit enough and accustomed enough to constant work that I can manage it.
I see many others around me very much not ready for this - whether from being out-of-shape, having various 'medical' conditions, or being just plain lazy. Many of them are on the dole, or involved in some sort of income-producing racket that makes minimal demands on their efforts. There is probably no helping most of them as times get harder and harder.
For the rest who are willing to change, the prognosis is not so bad. For those who are willing to make the effort, there will always be the rewards of hard work. In the future, being housed and fed will feel like enough.
Up until now, I couldn't imagine myself hewing down huge trees day after day, sawing them into logs, and so forth. But I am changing. The economic system that gave me and so many others the 'good life' for so long is failing. I don't think it will go all to pieces in one go, but there will never again be as much affluence and leisure as there was in North America from 1950-2000.
I am faced with the prospect of being a global economic citizen competing for a global income ($10,000 per year or so) with billions of other hard-working souls. We won't be working just a few hours per day for this either, but 10 or more hours every day of the week. It's a daunting prospect. At present, I don't really have the energy for it, but I am working on getting myself fit enough and accustomed enough to constant work that I can manage it.
I see many others around me very much not ready for this - whether from being out-of-shape, having various 'medical' conditions, or being just plain lazy. Many of them are on the dole, or involved in some sort of income-producing racket that makes minimal demands on their efforts. There is probably no helping most of them as times get harder and harder.
For the rest who are willing to change, the prognosis is not so bad. For those who are willing to make the effort, there will always be the rewards of hard work. In the future, being housed and fed will feel like enough.
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