The Economic Collapse…

Posted by efarmer at peakoil.com, Sun Oct 03, 2010 4:42 pm

I find fault with the notion that Americans are against intellectualism or afraid to learn new skills as a central theme to what is taking place. More to the point is that the practical experience over the last 20 years or so, as we have seen the information economy and service economy touted as the wave to ride for response to the older industrial economy seeking the global destination of cheapest labor, least environmental regulation, least taxation / most emerging economy government subsidy, etc., a simple fact that strikes people right between the eyes in their everyday experience has become manifest.

There is often no reason for the service economy and information technology sectors not to simply seek the equivalent offshoring the industrial economy has for the exact same reasons. China builds things and more and more designs them. The contract manufacturer of the 1980’s is now a turnkey design, manufacture, and more and more often a product support source with American companies providing concepts, brand names, and consumer interfaces for goods that are thin shells and simply market American consumers to Asian manufacturing and Indian (subcontinent) or alternative English speaking and well educated telephone support, or online support. American enterprises have shifted from being vertical integrations to being advertisers, order processing, and grunts in vans to install and swap modules and boxes. This is true for IT, automobiles, and on a increasing basis for a wide range of industries. The service and support aspects of this system on the American end of the global corporation are often borderline living wage affairs. Some voices tout that a national goal would be to ramp up to attempt to now maintain a vast infrastructure we implemented during the waxing our our economic prowess and then during the leveraging and derived wealth manipulation of same until it simply exploded in our faces. Does anyone have a real plan here?

As Nasim Taleb (Black Swan) pointed out on the financial industry in particular, the approach is that exceptionally large systems are built and managed by globalizing supply chains, monetary as well as material, manufactured, and increasingly service products and reducing inefficiencies to build a structure that is managed with the mathematically derived data from it’s own past existence to carve away at any inefficiencies and leverage from the strengths to as great of a level as can be done and to design stability into the system from metrics acquired by intensive analysis of the past performance and upsets that have taken place within the structure. We build huge sleek global machines that can’t take a punch without collapsing because they are not designed for anything unexpected. We know on this forum that resource limits and climate change will deliver great blows and unpredictable civil and social aftermaths of those blows on a rotating basis around the world, and yet our economic system is building systems without redundancy and compartments because that’s how you make the fastest money possible, and in fact, the most money until the system is destroyed by a Black Swan.

This is a crippling strategy and philosophy, because in the pursuit of the efficiencies anything redundant is cut out and everything useful is pushed to it’s highest performance to produce the most profit. It sounds wonderful. But in practice it is not. It is like making a large ship without individual compartments that can be damaged and flooded and sealed off to stay afloat, or like the Titanic, a ship that relies on barriers that contain flooding so pumps can be used to keep up with damage.

When a nation that is large enough to be fundamentally self sufficient, like America, pursues an approach based on highest profit and strips away it’s internal compartmentalization in the vertical stack of critical industries and activities that makes it ‘seaworthy’ it gives away it’s ability to provide for itself and it’s people in return for the opportunity to return the highest profit on economic activity until such time as an accident takes place and it does not have the internal structures to stay afloat.

As we moved further and further into this vulnerability, each compartment to be abandoned railed against the notion, manufacturing, small farming, local retail, domestic technical support, etc.
The rallying cry was that we would retrain, and embrace the high technology and new technology growth areas as if they for some reason are a uniquely American niche that was immune from the pressures that felled the employment bastions that fell to globalization preceding these new great hopes. I see no reason if the global communications and transportation systems stay intact that American high technology, portions of health care, and service industries that are not actually hands on, will be immune from the forces that hold sway. I fully expect to see a brutal doubling down of the past trends to manifest as the way American corporations will seek profit at reduced overhead to recoup stock values as/if we abate from the present economic slump.

It is cynical, but I see the retraining and re-educating push being made in America as being another wealth extraction game for the higher education mills and associated finance (with auspicious Federal, State, and local taxpayer funding rolled in) to train people for jobs that will simply not emerge here, but will emerge in the cheapest place they can be accomplished globally instead.

The American government did not have a long term plan, they had a series of exploits and had fallen into lucrative military industrial and petroleum centric global strategies by simply staying at them in the 65 years since the end of WWII. They do not have a plan at compartmentalizing the nation to make it a persistent and resilient (resilience is inefficient and is slain like a vermin for profit) place that can weather the shocks that get delivered region by region globally, in such a fashion and pattern to be a
a long term global player.

I don’t think the intellectual argument about the American workforce moving into the future and being retrained will find real purchase until the people promoting it have a plan for where the nation is headed, and they do not, as well as a promise for protecting the economic pursuits associated with the new field or endeavor they are imploring their citizens to educate themselves to inhabit.

Our government is sold out to corporate influence on a massive basis, corporations pursue profit and abandon national compartmentalization and resilience as an affront to global efficiency. Our government does not have a comprehensive plan, because they serve corporations that have global plans and dare not and need not formulate one.

Our national strategy is essentially that we are too big to fail and will not be allowed to because so many others need our military protection and we owe them too much to allow us to fail.

It is so obvious, we go into tribal societies as part of the terror wars and are amazed that the people in comparative abject poverty would rather be left alone that become liberated and a part of a great global enterprise and all it would take it their minerals or perhaps labor. We don’t understand people who have lived locally resilient lives for thousands of years, and they understand why we are so damned interested in saving them all of a sudden.

We might try to figure out what we are going to do over the long term before we feel like our way of life is an export product of great value.

We might start with showing people where to win in America and putting in place the plan and protections required to protect the win if it can be achieved. Otherwise this whole line of challenge and bait crap is just another versions of the great wealth extraction that began with Reagan and culminated with the Necon debacle and Obama smelling salts and glucose IV line of the recent past.

This was a stream of passion rant, forgive me the typos and such.

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