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 mcmansion. Show all posts
Showing posts with label mcmansion. Show all posts
Friday, May 1, 2009
Friday, April 3, 2009
The Worst is Yet to Come
What caused this Depression? Can anything be done to make things better? Can anything be done to make them worse?
A lot of things caused this Depression. It might be easier to to list what didn't cause it. At the top of the list would be 'a loss of consumer confidence'. In a nutshell, the origin of the Depression can be found in the prosperity which preceded it. Flaws in the economic system eventually crashed the system. There are many theories of what causes Depressions - many of them have much merit and they are not mutually exclusive.
One theory is that disparities of income and wealth create Depressions. These disparities were glaringly obvious in both the 1920s and the 1990s. So, to answer the second question, perhaps ameliorating these disparities would be helpful - some novel approaches could include creating a maximum wage, or introducing property taxes on financial assets. And, to answer the third question, if the opposite direction is being taken by public policy, it is probable that policy is actually making things worse.
In the present bailout-of-banks mode, financial assets are being protected even as millions of ordinary workers lose their jobs. The result of this is that the very wealthy are becoming less poor than they otherwise would in a freer system, while workers become comparatively much poorer. Thus disparities of wealth and income are not being allowed to narrow and lay the groundwork for a healthier economy. Public policy is actually making the situation worse.
Another theory of Depressions is that too much capital has been allocated towards uses where it is not really productive. This applies very neatly in the present circumstances to - say - automobile manufacturers or making McMansions in exurbia. What could be done to make things better is allow capital to slip away from these uses and towards what people want. Unfortunately, public policy is attempting to prop up both failing automakers and sagging house prices. Again, this will make the Depression worse.
We could go on. At almost every step, the reaction of policy makers is not only to not do helpful things, but to do exactly the worst possible thing. It's going to be a rough ride, folks.
A lot of things caused this Depression. It might be easier to to list what didn't cause it. At the top of the list would be 'a loss of consumer confidence'. In a nutshell, the origin of the Depression can be found in the prosperity which preceded it. Flaws in the economic system eventually crashed the system. There are many theories of what causes Depressions - many of them have much merit and they are not mutually exclusive.
One theory is that disparities of income and wealth create Depressions. These disparities were glaringly obvious in both the 1920s and the 1990s. So, to answer the second question, perhaps ameliorating these disparities would be helpful - some novel approaches could include creating a maximum wage, or introducing property taxes on financial assets. And, to answer the third question, if the opposite direction is being taken by public policy, it is probable that policy is actually making things worse.
In the present bailout-of-banks mode, financial assets are being protected even as millions of ordinary workers lose their jobs. The result of this is that the very wealthy are becoming less poor than they otherwise would in a freer system, while workers become comparatively much poorer. Thus disparities of wealth and income are not being allowed to narrow and lay the groundwork for a healthier economy. Public policy is actually making the situation worse.
Another theory of Depressions is that too much capital has been allocated towards uses where it is not really productive. This applies very neatly in the present circumstances to - say - automobile manufacturers or making McMansions in exurbia. What could be done to make things better is allow capital to slip away from these uses and towards what people want. Unfortunately, public policy is attempting to prop up both failing automakers and sagging house prices. Again, this will make the Depression worse.
We could go on. At almost every step, the reaction of policy makers is not only to not do helpful things, but to do exactly the worst possible thing. It's going to be a rough ride, folks.
Wednesday, February 25, 2009
Another Sign for the Bottom
We like to keep ahead of popular trends in society. For instance, a few years ago the typical American citizen was a debt-addicted consumer: they borrowed, borrowed, borrowed, so he or she could spend, spend, spend. We saw that, and tried to go the other direction: keep debt within easily-manageable amounts.
Fast forwards to today, and people are fretting about their McMansion, their big-screen plasma TV, and their automobiles; all were bought with credit, and all are pretty expensive when one doesn't have a job. The average 'consumers' are only just beginning to realise just how unsustainable their lifestyle once was.
However, it's going to take a quite awhile to obliterate unsustainable 'common knowledge.' 'Common knowledge' holds that everyone can own their own home, their own car, and live in the suburban paradise. 'Everyone' knows that one should pay for as much as possible with credit; it's so much more convenient that way.
We are on the fringe when we write this, but we feel it is true: consumerism is dead; the 'every family in their own home' fantasy is dead; there will be no chicken in every pot and car in every garage. Buying a house with no-or-little money down is a bygone memory, no matter what any bank may say or advertise.
Frankly, we know we're a Cassandra, screaming the bleak truth toward disbelieving ears. However, if one day, you should read on the front page of USA Today that, not only is buying a home with credit is a terrible idea, owning a home is a terrible idea, the worst is over. Simply put, when what we write today becomes the mainstream knowledge of the future, the bottom of the 2007 Depression has been found. When that happens... buy stocks! Buy apartment buildings! Buy everything that can generate a profit! Buy, buy, buy!
Fast forwards to today, and people are fretting about their McMansion, their big-screen plasma TV, and their automobiles; all were bought with credit, and all are pretty expensive when one doesn't have a job. The average 'consumers' are only just beginning to realise just how unsustainable their lifestyle once was.
However, it's going to take a quite awhile to obliterate unsustainable 'common knowledge.' 'Common knowledge' holds that everyone can own their own home, their own car, and live in the suburban paradise. 'Everyone' knows that one should pay for as much as possible with credit; it's so much more convenient that way.
We are on the fringe when we write this, but we feel it is true: consumerism is dead; the 'every family in their own home' fantasy is dead; there will be no chicken in every pot and car in every garage. Buying a house with no-or-little money down is a bygone memory, no matter what any bank may say or advertise.
Frankly, we know we're a Cassandra, screaming the bleak truth toward disbelieving ears. However, if one day, you should read on the front page of USA Today that, not only is buying a home with credit is a terrible idea, owning a home is a terrible idea, the worst is over. Simply put, when what we write today becomes the mainstream knowledge of the future, the bottom of the 2007 Depression has been found. When that happens... buy stocks! Buy apartment buildings! Buy everything that can generate a profit! Buy, buy, buy!
Wednesday, December 31, 2008
Energy Independence the Hard Way, Part 2
Read Part 1 here.
Yesterday's post asserted that the United States will painfully achieve energy independence in the coming years, through economic collapse and demand destruction so pervasive and deep that it boggles our mind. Nevertheless, we see this eventuality as a certainty for the U.S. Today we give details.
The 2007 Depression, as we have said many times before, is lowering income; that is the nature of an economic depression. In the United States, one can expect to see income on par with the global average ($10,000 per person). This means an approximate loss of 78% of present United States average income ($45,800).
This destruction of income will come hand-in-hand with several other, global trends. The first is peak oil: the unstoppable decline in oil production, ever since production peaked in 2005. Oil exporters, like Saudi Arabia, are already beginning to divert more of their production for domestic use, and less for exports. Once the fall in global oil consumption, due to the Depression, is overtaken by the fall in oil supply, the price of oil will inexorably rise.
Additionally, the U.S. Dollar is rapidly facing its demise as the world's reserve currency. As the world savours one last economic violation at the hands of Bretton Woods, the call has gone out for Bretton Woods II, and a global central bank. This is the death knell for the privileged position the U.S. Dollar enjoys, and the end of inexpensive imports for the USA.
Putting these trends together, everyone will be poorer in the United States. Gasoline will be far more difficult for the average American to buy. Because of both these trends, personal vehicles as they are known today (i.e. gas-sucking commuter tanks) will no longer be affordable for all but a tiny minority. We posit mopeds will be the more attractive option, or motorcycles, if one feels affluent.
This change in income and transportation will necessarily bring a change in living space (see an earlier post). In 1950, the average American enjoyed 292 square feet; the McMansion binge makes today's number around 900 square feet per person. A 75% drop in today's average living space per person seems about right to us. This, taken together with improvements in energy efficiency, will greatly diminish the need for home heating, lighting and cooling. Commercial space, especially retail, can expect a equivalent slimming down.
In conclusion, we come back to President-elect Barack Obama's economic stimulus programme at change.gov. Billions of dollars, if not trillions, are going to be thrown at the "energy problem"... but we will bet good money it will have no lasting effects. The economic collapse we've outlined is an unstoppable force that has a programme of its own.
Smell that in the air? That's change.
Yesterday's post asserted that the United States will painfully achieve energy independence in the coming years, through economic collapse and demand destruction so pervasive and deep that it boggles our mind. Nevertheless, we see this eventuality as a certainty for the U.S. Today we give details.
The 2007 Depression, as we have said many times before, is lowering income; that is the nature of an economic depression. In the United States, one can expect to see income on par with the global average ($10,000 per person). This means an approximate loss of 78% of present United States average income ($45,800).
This destruction of income will come hand-in-hand with several other, global trends. The first is peak oil: the unstoppable decline in oil production, ever since production peaked in 2005. Oil exporters, like Saudi Arabia, are already beginning to divert more of their production for domestic use, and less for exports. Once the fall in global oil consumption, due to the Depression, is overtaken by the fall in oil supply, the price of oil will inexorably rise.
Additionally, the U.S. Dollar is rapidly facing its demise as the world's reserve currency. As the world savours one last economic violation at the hands of Bretton Woods, the call has gone out for Bretton Woods II, and a global central bank. This is the death knell for the privileged position the U.S. Dollar enjoys, and the end of inexpensive imports for the USA.
Putting these trends together, everyone will be poorer in the United States. Gasoline will be far more difficult for the average American to buy. Because of both these trends, personal vehicles as they are known today (i.e. gas-sucking commuter tanks) will no longer be affordable for all but a tiny minority. We posit mopeds will be the more attractive option, or motorcycles, if one feels affluent.
This change in income and transportation will necessarily bring a change in living space (see an earlier post). In 1950, the average American enjoyed 292 square feet; the McMansion binge makes today's number around 900 square feet per person. A 75% drop in today's average living space per person seems about right to us. This, taken together with improvements in energy efficiency, will greatly diminish the need for home heating, lighting and cooling. Commercial space, especially retail, can expect a equivalent slimming down.
In conclusion, we come back to President-elect Barack Obama's economic stimulus programme at change.gov. Billions of dollars, if not trillions, are going to be thrown at the "energy problem"... but we will bet good money it will have no lasting effects. The economic collapse we've outlined is an unstoppable force that has a programme of its own.
Smell that in the air? That's change.
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