John Monchhichi
Cursed by Success
Paul Krugman recently suggested that the root of current economic woes is a glut of investment cash with nothing real to invest in. This leaves us with a purely bubble-driven economy. Now, Thomas Friedman submits that this indicates a fundamental flaw in our entire economic model. I agree with this basic premise, but I think it is still too limited in scope. My theory is that, on a worldwide basis, humanity has just gotten too good at making things. This translates to ever lower demand for both capital and labor to make the same things.
Since I am linking to Thomas Friedman, it seems wrong not to tell a questionable anecdote of the international common man. I was in China in 2001 (which is when the current economic stagnation really started if you don’t count the intervening housing-bubble motivated artificial recovery). Through a series of bizarre events, I and two friends found ourselves as the lunch guests at a family farm in the shadow of the Great Wall. The family owned no tractor, one donkey, and one pig and lived in a concrete-floored three room house. Still, they had a nice-sized TV and DVD player. The farmer remarked that he pretty much had the same income as he’s always had, but that everything had gotten cheaper, especially electronics. Low cost manufactured goods from China have not only been flooding the United States, they have shown up in Chinese markets and markets all over the devloping world. Still, though, China is nowhere near operating at manufacturing capacity. There are still many more people available to work, to say nothing of people all over the world who have no jobs.
So here’s the problem. What do you do when you need only a fraction of the world’s available labor supply to take care of all the world’s needs? What happens when human technology outgrows the economy? Is this actually what’s happening? The symptoms are all there: Unprecedented levels of cheap goods, but with large swaths of the population still poor because they have no jobs such that they could buy even cheap goods. Too many investment dollars perpetually chasing too little actual investment. If this is actually what’s happening, how does it get fixed? I have no answer. The massive scope of the problem implies a solution equally massive in scope.
Disassembling the Empire
This is my first post on Urbanagora, so here is your brief how do and hello before I get right into it. Politically, I am probably most accurately described as a left/libertarian. I was a big (though growing ever more disillusioned) Obama supporter. I am increasingly convinced of the basic correctness of the foreign policy views of the Ron Paul wing of the Republican Party, summarized well here.
The United States has been on a war footing now nonstop for 65 years. It spends more on its military than the next twelve nations combined. The notion that we need to militarily dominate the world is not seriously questioned in political circles, and it is time for that to stop. The reasons for having a large military, notably WWII and the Cold War, are gone. So why then has American defense policy not seriously changed? The reason, I submit, is that this is how everyone alive has always remembered it, and it would be weird for it to be any other way. Add this to the entrenched economic interests of the military industrial complex that Eisenhower warned us about, and it is a recipe for inertia.
It should be clear now that we just can’t afford it anymore. The bases all over the world, the foreign and military aid, the new weapons systems, it all costs money, money that we obviously need to bail out banks. It has gotten to the point that we are only fighting our own blowback, no doubt creating the next Osama bin Laden, who will, in turn, be used to justify the same bloated defense budget years down the line. The current economic situation presents an opportunity. The country is long on obligations and short on cash. Now is the time for bold deeds. Now is the time to disassemble the empire.