Change is good
Right now, in early April of 2019, the U.S. economy seems to be in great shape.
Inflation is minimal. Money is cheap. Unemployment is down. Wages are rising.
Here is why I think this is all going to collapse, and that right soon.
Deflation.
As I have said here many times, technology creates deflation. Deflation is the primary subject of my Moore’s Law book, which I’m getting ready to rewrite for 2020.
To understand deflation in action, look in your hand.
Note: This story emerged from a small brainstorm. We know that climate change is driven by over-use of fossil fuels but what if, instead of an invention that burns coal or oil, someone had invented a machine that just sucked energy out of the air?
With just a tweet of encouragement from a well-known alternate history writer, I set to work
____________
The old man put on his “Juan Valdez” hat, a term his young employees did not understand, and walked slowly into the greenhouse, a sling across his left shoulder, the basket against his right hip.
The delicious fruit, with its precious stones, awaited him. His hands shook in anticipation.
Carefully, he pulled down a branch and picked only the ripest, reddest cherries, placing them one-by-one in the basket. It took him nearly an hour to fill the basket, not due to his age but to his care, for he avoided all the green, unripe fruit that had long been pulled routinely by those desperate for what lay within.
By the time his young workers arrived for work, chattering in a half-dozen languages, the old man was sitting at their shared lunch table, picking fruits from his basket like an aged chimpanzee, stripping off the thin fruit layer with his teeth and gums, then carefully placing each seed beside him in a dish. Satiated, he hefted the remaining fruit in its basket and placed it in the hopper of a processor.
The fruit had an intense, citrusy taste and a grape-like texture. He rubbed his hands together after emptying the basket, then smelled them with pleasure. The fruit not only tasted great, and energized him, but left a waxy residue which made his hands look younger. The fruit would be separated from the stones, dried into a pulp, and become a second harvest for the greenhouse.
His workers would go through the greenhouse today harvesting from several trees, separating the red fruits from the green, and processing them all so that, when the seeds were dried green, then roasted, they could be crushed to create what was now the most expensive beverage in all the world.
Coffee! Glorious coffee!
After the market falls, when everyone is in despair, is when I get the most excited about the future.
That’s because recessions aren’t so much an ending as a beginning.
A recession means the old games no longer work. The oldest business processes disappear entirely. WE have seen this during every recession of my working lifetime.
Small towns fell under the onslaught of Walmart in the 1980s. Big boxes replaced department stores in the 1990s. In the 2000s, whole layers of middle management disappeared. In this decade, gatekeepers like insurance agents have gotten the boot.
When you win the popular vote by 9.5% but still lose ground, as Democrats did November 6, your problems are systemic.
The result underlies tech’s obligation to come out of its shell and fight for the political system that birthed it.
Tech moguls have done some things. Jeff Bezos bought The Washington Post, Marc Benioff bought Time Magazine, Laurene Powell Jobs bought The Atlantic. The key to gaining more power will be in creating journalism business models beholden to tech interests.
Tech must do to Bizarro Carter what oil did to Jimmy Carter, and for the same reason -- to protect its self-interest.
One thing that has surprised me over the last two years is how almost no one understood my point right after the 2016 election, that Donald Trump is a sort of Bizarro Carter.
By that I meant he is completely the opposite of Jimmy Carter. Carter was a Democrat. Trump is an Autocrat. Carter believed in human rights. Trump believes in the divine right of kings. Carter championed the environment. Trump trashes it. Carter said he’d never lie to us. Trump lies 6 times before breakfast.
What they have in common is they represent the end times for the Political Thesis that birthed them. Carter was elected 44 years after Franklin Roosevelt and was the last President to run on those principles. Trump came 48 years after Nixon and will be the last President elected under the Nixon Thesis of Conflict.
When I wrote my “anti-Trump polemic” early this year I thought I was writing about politics.
It turns out I was writing an economics book.
I learned this while reading a biography of the late Jane Jacobs, best known for her fight against the “urban renewal” of Robert Moses. After that fight Jacobs moved to Toronto, becoming one of Canada’s most beloved intellectuals, and there she wrote an economics history book, Cities and the Wealth of Nations.
In this book Jacobs identified cities, rather than farms, as the original source of wealth. It was cities that turned wheat into bread and beer. It is cities that transform everything.
True, as far as it goes. But how and why remained a mystery to Jacobs. The nature of money eluded her. It’s something my recent book explains by looking at American history and seeking what I first saw as political patterns in our national life, and later concluded were economic patterns.
The answers, in our time, strike at the nature of money, the nature of man, and why, even after Hurricanes Harvey and Irma, there remain people like John Stossel who continue to deny the reality of man-made climate change.
Wealth, it turns out, is entirely man-made. This is more controversial than it seems. Politicians have always believed wealth to be a product of holding land, or of exploiting it. They see history as great men moving lesser men around like pawns on a chessboard. Social historians, by contrast, focus on the real lives of ordinary people. These are important, but they are no more relevant to economic history than land is.
Reporters on all beats are so obsessed with the here-and-now they ignore what is going on beneath, the trends that will make up tomorrow.
This has always been my indictment of the business I have called home for nearly 40 years. It’s why I didn’t make more of my news career than I did. I was constantly looking around corners, seeking the future, rather than looking closely at what was in front of me.
That’s OK. I’ve had a good life. No, make that a great life. A wonderful life partner, two great kids, a home we have built together, comfort in our old age, and memories of good times.
But I’m still looking around corners, still trying to figure out what’s next. Ask any old person. Inside them you’ll always find a 20-year old going “what the fuck?”
For a decade now, ever since I began seeing that technology was going to achieve political power, and sustain that power, meaning all that’s happening now is a play I foresaw, I have been thinking about what comes next.
The Internet of Things? Renewable energy? Artificial Intelligence? All these of the now. They’re what is happening. I foresaw IoT nearly 15 years ago now, and reported on it here to you, as “The World of Always On.” I began covering renewable energy just as that area began to boom, and predicted we would achieve crossover with fossil fuels by 2016. As we did. Artificial intelligence? I’d settle for some of the real kind, frankly.
It has been clear to me for years that the 2010s are, in many ways, a bizarre recapitulation of the 1970s.
I just didn’t know how much.
While the 1970s represented the rise of oil, the 2010s represent its twilight.
The 70s were marked by two key crises, in 1973 and 1979, during which supplies were cut and prices skyrocketed.
The 2010s have already seen one price collapse, in 2014. It is going to see another before the decade is out.
It is against this backdrop that I would like to revisit the administration of Jimmy Carter. This time, especially if you’re a liberal, try to imagine yourself in opposition.
This isn’t difficult for me, because I began the 1970s as a genuine conservative activist. My politics shifted left, slowly, during the decade, but I still voted for Gerald Ford in 1976, and still refused to support Carter in 1980. (Sorry, Jimmy.)
What conservatives saw during that decade was just what liberals see today, in reverse. In the 1970s conservatives saw a natural majority growing, with power tantalizingly out of reach. Democrats in 1977 held all branches of government, as Republicans do now, and were very optimistic about putting their program into motion.
Continue reading "Another View of the Carter Administration" »
Usually an election offers two similar, if contrasting, economic programs, both of which are equally valid.
The 2016 election was different, offering a simple choice between smart and stupid. Voters chose stupid.
So, you’re going to get stupid. I think you’re going to get Stoopid. Trump and his Republican friends are too stupid to merit a correct spelling.
As the advance of technology has accelerated, evidence has become more-and-more important to policymakers. Trump rejects that reality and substitutes his own personality. His followers substitute a rigid ideology.
This is the epitome of Stoopid.
Back when I was at Rice, 40 years ago, oil was a fairly benign political force. Or so it seemed to me, lost in my studies, surrounded by oil money, which was rapidly building the huge Texas Medical Center before my very eyes.
We know different now. We know how power corrupts every industry, and how absolute power corrupts absolutely. We saw that with George W. Bush, the spoiled son of an oilman, installed in power by a Supreme Court created through political action, unelected by the people. Since then we’ve seen Iraq, we’ve seen Katrina, we’ve seen the Great Recession. We’re seeing climate change, threatening the whole human race.
Worse, we’ve seen D.C. vs. Heller, idiots thinking Thomas Jefferson wants them to own AR-15s as some natural right. We’ve seen Citizens United, billionaires who think they have an absolute right to control us with their dollars, simply because they have them. These last injuries will abide. They are examples of how the oil industry, which took political power only to be left alone in the 1960s, eventually abused it to the detriment of the whole world.
Just as railroads pushed farmers and working people too far in the 19th century, and utilities collapsed the economy in the 1920s, just as manufacturers used political power to go to Vietnam in the 1960s, so oil eventually became a noisome element in the national political equation, and was overthrown by technology in 2008.
Recent Comments