January 22, 2011

Peet's-Fueled Cogitation on the Collapse of a Complex Society

I hasten to add that when I use the word "collapse," I am paying un hommage to Joseph Tainter, who, when I think about it, must have been studying at Berkeley at about the same time I was. He went on to write The Collapse of Complex Societies; I went on to write this blog. Oh well.

1971 was an unusual year for me. I was marginally attached to the university, living in a rather strange habitation in Berkeley near the Oakland border, and waiting to see what the federal government wanted me to do. I had been through my pre-induction physical at the Oakland Induction Center (1-A, baby!), and the question was whether Richard Nixon was going to ramp up that misbegotten war or wind it down. In modern times we always know the answer: we're going to keep fighting the same wars no matter what because "military Keynesianism" requires us to keep fueling the Pentagon or the economy will sputter and die completely. In 1971 we still had a functioning economy with some actual productive, revenue-raising parts, so we had choices. I can virtually guarantee you that as soon as the Ungrateful Nouri finishes evicting our troops from Iraq, those 50,000 souls, and a lot more, will be rotated into some new theater of operations somewhere in the Middle East. Maybe Syria, maybe Yemen, probably Iran.

Anyway, Berkeley, 1971. The "apartment" I lived in was actually an enclosed porch in an old house on Claremont. The main part of the house was also divided into rooms, and there were a lot of tenants. I paid $65 a month for my one room. The floor had two levels, and on the raised part was the bed and a trap door which led to the basement. That's where the shower was and a laundry tub which I used as a sink. A grad student, a nice lady, lived in a converted greenhouse out in the garden, and she and I shared the "bathroom." To be respectful and polite, I learned to knock on the trap door before descending the short flight of steps to the basement. I guess there must have been a toilet down there too; gee, all these things you need for "civilization." I didn't have a television or a telephone, however, and I used an electric heater to warm up my uninsulated dwelling (which I'm sure was an illegal unit and rife with code violations - good ol' People's Republic of Berkeley!).

My marginal attachment to the university(I had already finished my undergrad work but was titrating my app for a diploma based on Nixon/Kissinger calculations) allowed me to take a couple of courses, one in the literature of Shakespeare and one grad-level course in mathematical applications in social sciences. As you might note, I had no clear focus, career-wise, a condition which never completely abated. The second course introduced me to the work of Herbert Simon, the brilliant, hard-to-classify polymath who did a lot of work in the new field of systems analysis and complexity theory. Tainter must owe something of a debt to Herbert since most thinkers in the social sciences do.

Joseph Tainter's book is definitely worth reading, particularly for his modern interpretation, based on complexity theory, of the reasons for the collapse of the Roman Empire, probably the best anthropological precedent and cognate for the American Empire. "Collapse," as in the Western Roman Empire, refers to the disassembly of the big, complex system into smaller independent parts. I think this is what is going to happen in the United States after we thrash around in the La Brea Tar Pits of chaos and indecision for some indeterminate period of time. If we can get China to do the same that would be very helpful.

The basic idea in complexity theory is marginal utility or diminishing returns. Essentially, the idea is that when a social system becomes excessively complex, the marginal cost of keeping the whole thing together, of the communications necessary to keep the system hooked up, and of supervising and regulating the mess, and of the impenetrable complexity of the information necessary to understand what the hell is going on and how everything relates to everything else -- finally leads to the breakdown of the system. I would say, beyond a shadow of a doubt, that the United States has crossed that threshold.

One symptom of the breakdown is the instability of the political system. We're now into a kind of impulsive changing of the guard - get rid of these Republicans, we need Hope & Change ™! Okay, that didn't work. Let's get the Republicans back in, or this Tea Party! That's the ticket! Oh hell, they're going to raise the debt ceiling after all. Let's get the Democrats back in! Look, Obama is the Comeback Kid! One effect of this kind of societal nervous breakdown, for example, is that the House of Representatives is now full of Creation "scientists" and global-warming deniers. Maybe that's not why these people were elected but they're part of the net result of a loss of control over the system.

The fiscal mess in the federal government is simply beyond the pale. America cannot admit to itself what the obvious, simple mathematics point out, that our "standard" of living is overstated by about 40%. Since there is only chaos, and no informed consensus on which to make rational decisions, the political elites have succeeded in convincing the booboisie that this obvious truth is not real, that's it's just a matter of time before the national income reaches $3.5 trillion and is in equilibrium with the irreducible federal budget (oh, excuse me - Boehner's got a plan for shaving $100 billion from a $3.7 trillion budget, or 2.7% - we're saved!) I mean, gosh, we added 100,000 jobs last month; true, you need to add about 125,000 jobs, at least, per month to cover new entries into the job market, but the U-3 unemployment rate fell to 9.4% because we stopped counting all the people who've completely given up hope of ever finding a job! The system works!

No, it doesn't. We're way beyond that now. However, folks, wouldn't you rather have France and Spain and Germany and Holland than one big ugly Roman Empire speaking a dead language? I sure would. It will be okay, more diverse, and a lot more interesting. So cheer on the chaos and dysfunction. Raise that damn debt ceiling, to the moon, Alice!

January 20, 2011

Globalization redux

I think if Thoreau were suddenly to appear on the scene today, it would take him a while to get his bearings, certainly, but he would get a handle on globalization eventually and would recognize it for what it is: another unsustainable instance of mankind becoming the tool of its tools. He warned against that over and over in Walden. As with so many of the developments in modern civilization, human society has adapted its living arrangements to what is technologically possible. Thus, in the "gee whiz" writing of essentially shallow and unscientific thinkers like Tom Friedman, the circumstance that a technology like fiber optic cables can be used to hook up faraway call centers so that formerly poor peasants in Bangalore can answer your questions about your Dell Computer is something that has to be done because it's possible to do it. First the technological breakthrough, then the adaptation of society.

In a similar, lower-tech way, the fact that American businesses can open factories in China and other Asian and Latin American countries where the cost of labor is much lower, and the environmental damage can be treated as someone else's "externality," means that this has to be the way to go. Again, because it can be done. Following on such massive integration of the world's economies, it is only natural that the financial systems should be melded into banking behemoths like the World Bank and the International Monetary Fund, which act as proxy governments and fiscal armies for the developed world to control the economies in the Third World. Such integration can lead to very severe unintended (although inevitable) consequences such as runaway inflation in countries such as Tunisia (and now spreading to the Middle East) causing food riots, as the money printing by the West slops over into vulnerable economies where the peasantry is forced to spend upwards of 50% of their income for food and water. Also, when one large economy engages in systematic financial fraud, as the United States did during most of the period 2000 to 2008, the entire world economy is brought down because of all the monetary and economic connections among the various nations.

One is accused, of course, of being a Luddite and an unrealistic person if you assert that this state of affairs is a kind of consensus insanity. It is complex beyond human control or comprehension, it is inherently unstable and subject to Black Swan events, and it's a drag to think about it all. It is defended primarily because those in a position to profit from the complexity and integration control the organs of government and power, such as the U.S. Congress, a wholly-owned subsidiary of Lower Manhattan.

A different question would be posed by Henry David Thoreau: is it a good way to live?

One of the major victims of globalization has been the American economy. With the full complicity and even enabling of the U.S. government, the industrial economy of the United States has been hollowed out and made dependent on inputs of recycled fiat money that American citizens sent abroad in the first place to (a) buy things we don't make anymore or (b) buy things we're running out of and refuse to replace, such as oil. The typical answer to such observations is that, well sure, it's unfortunate that the U.S. is sinking in terms of its output, its educational and quality of life standards, and that it bases its economy now on financial swindles and money printing, but hey - that's just the way the modern world is. The USA cannot be an island. Instead, we should be grateful that our largest employer, Wal-Mart, stocks a lot of stuff we don't really need, all made in China, and sells it to Wal-Mart employees whose money is sent to China so that it can be reinvested in U.S. Treasuries and then doled out to banks who can lend it to Wal-Mart employees who want to buy an inflated-price McMansion and live in it for a couple of years until they lose it to foreclosure. Or so the system used to work until a few years ago. Now it doesn't work at all. The Chinese cannot even lend us enough so we've taken to buying our own debt and calling the process "GDP growth."

A moment's reflection reveals that this answer cannot possibly make any sense. If one thinks of the USA more as a commune and less as a switchboard and "platform" for the wealthiest 1% to take advantage of globalism to achieve a lifestyle unavailable to the other 99% (and to widen that gap year by year), one can see that the United States, more than virtually any other country, does in fact have the complete wherewithal to sustain itself with only moderate inputs from the rest of the world. (Note to the NSA: I'm using "commune" not in the sense of Karl Marx, but perhaps more in the sense of collective action, as in a kibbutz or similar communal arrangement.) We export food because we raise more than we need. We are in a latitude almost uniquely favorable to massive development of solar and wind power. Instead of selling off our 3rd largest solar power manufacturer to China (as is contemplated in the Obama-Hu meetings underway now), we could build a huge alternative manufacturing industry here. We could revive what was once the greatest railroad system in the world.

In short, we have everything necessary to sustain our vital heat, with a lot of margin left for building the necessary complements to a full life. It isn't necessary at all to go all-in on this globalization insanity. Water seeks its own level, and what we are allowing the U.S. to do is to sink to a level commensurate with the wretched of the Earth so that an elite which profits from global integration can continue to get obscenely rich.

If the Tea Party, or someone, could figure all that out, we could start moving away from unstable, unprofitable complexity and toward self-reliance and a sane life. The problem, however, is that as C. Wright Mills told us many years ago, the governing principle of those in power is to make decisions which tend to perpetuate their power. Thus, change will come about, in the American instance, following collapse, when there is no other choice.

January 19, 2011

Just read this book and nobody gets hurt

Thomas L. Friedman is on book leave.

These are among the most frightening words in the English language. They are posted now on the Op-Ed page of the New York Times. These words, really six words and an initial, portend another disaster for American society, for they mean that Thomas L. Friedman is going to publish another book. There is probably no way to stop him. I am personally a supporter of First Amendment rights, I do not believe in prior restraint, and I don't suppose there's a way to characterize a Friedman book as yelling "Fire!" in a crowded theater. Although it's a close call.

It could be argued, and I suppose I'm arguing it now, that Thomas L. Friedman has been perhaps the single-most deleterious force in American society over the last 15 years or so. Certainly from the time he began cheerleading for the Iraq War in 2002, but his destructiveness cannot be confined to his insane insistence that after 9/11 the important thing was to attack an Arab country, virtually any Arab country, as he told Charlie Rose in that infamous interview. No, all of that, even his hypnotically boring insistence that the Iraq war could produce a "decent outcome" if we would all just give it another Friedman Unit (6 months) - all of this was very bad for the country, indeed, but it was not fatal.

No, what was fatal was Tom's pimping for globalization. In a series of books with the clunkiest, most infelicitous titles in the history of American letters, The Lexus and the Olive Tree, The World is Flat, Hot Flat & Crowded, (it's painful just to look at them), Tom laid out his case for the unalloyed blessings of the "plug&play world," of integrated world markets, of offshoring of American manufacturing jobs so these "old economy" careers could be replaced with higher-tech jobs worthy of our educated, dynamic work force, and so that peasants in China and India and Malaysia could be lifted up out of poverty to become insatiable consumers of all that wonderful stuff America was going to be making in its New Economy.

It didn't really turn out that way. Instead, we went to Hell in a handbasket, replacing those solid middle class jobs with Wal-Mart greeters hired out of the probation department of the local medium security prison. Still, Tom had a lot of fun making up names for all the technological razzle-dazzle that made globalization such a cool thing: in-sourcing, for example. Throwing all those hip techie terms around like "fiber optics" and "work flow software." I had the sense, when I tried to read parts of one or two of the books, that Tom's real grasp of the underlying technical detail was nonexistent, that just using the names was as deep as it went. Still, here's the important point: the one certain way to make money from globalization, aside from being a multinational exploiter of the lax labor and environmental laws of the Third World while dumping all of your overpaid American factory workers who had the audacity to demand a living wage - is to write books about it. True, they're terrible books. The writing is awful, the metaphors don't work, his neologisms make you cringe. But how do we measure the success of a book in America? I guess by its presence on...the New York Times Bestseller List! Here it must be admitted that Friedman has something of a built-in advantage.

I think we're beginning to see the end of globalization now. It depends so much on the availability of cheap and abundant fossil fuels to move all that stuff around (including oil itself), and even though Tom is a big advocate of "geo-green" technology (writing about it in the den of his 12,000 square foot house in Bethesda, Maryland, affluence made possible in part, aside from all the awful books, by his marriage into one of the largest shopping mall fortunes on the face of this Flat World of ours), we're probably not going to be able to "scale" such technology (one of Tom's favorite "verbs") in time to avoid a major disruption. Thus, along with surging food prices now leading to social unrest and revolution in Third World countries, secondary to the massive inflation caused by all the fiat money printing in the developed world, the table has been set for the general collapse of all this misguided global integration.

Like the guy at the Pond said, simplicity really is best. Organization on a "scale" that humans can actually understand and exercise some control over. The way it used to be before guys like Friedman came along with their grandiose, half-understood nonsense. Of which there appears to be more in the pipeline.

January 17, 2011

Dr. Martin Luther King, Jr.

I thought he was a great man, one of the most inspiring and courageous in American history. I can't watch his "I Have A Dream" speech without choking up, and I don't know any people of goodwill who can.

(The photo above is mine, taken of the King Mural in the basement of the Dexter Avenue Baptist Church in Montgomery, Alabama.)

Martin Luther King was really from another era, an era less about superficial appearances and more about achieving just results, whatever the cost. As great as his speech before the Lincoln Memorial was, I was more impressed by his "Letter from a Birmingham Jail," which I read for the first time when my brother and I happened to be in Birmingham, waiting for my mother to arrive by train (how else?), about ten years ago. A diorama of King in jail is part of the Civil Rights Museum in that city. I would place that letter, that manifesto of courage, on a level with the great founding documents of American history.

The other members of the Southern Baptist Leadership were becoming concerned that Martin was perhaps pushing things a little hard; look where it landed him-in jail. Here is what King wrote, in part, in reply:

In any nonviolent campaign there are four basic steps: collection of the facts to determine whether injustices exist; negotiation; self purification; and direct action. We have gone through all these steps in Birmingham. There can be no gainsaying the fact that racial injustice engulfs this community. Birmingham is probably the most thoroughly segregated city in the United States. Its ugly record of brutality is widely known. Negroes have experienced grossly unjust treatment in the courts. There have been more unsolved bombings of Negro homes and churches in Birmingham than in any other city in the nation. These are the hard, brutal facts of the case. On the basis of these conditions, Negro leaders sought to negotiate with the city fathers. But the latter consistently refused to engage in good faith negotiation...

We have waited for more than 340 years for our constitutional and God given rights. The nations of Asia and Africa are moving with jetlike speed toward gaining political independence, but we still creep at horse and buggy pace toward gaining a cup of coffee at a lunch counter. Perhaps it is easy for those who have never felt the stinging darts of segregation to say, "Wait." But when you have seen vicious mobs lynch your mothers and fathers at will and drown your sisters and brothers at whim; when you have seen hate filled policemen curse, kick and even kill your black brothers and sisters; when you see the vast majority of your twenty million Negro brothers smothering in an airtight cage of poverty in the midst of an affluent society; when you suddenly find your tongue twisted and your speech stammering as you seek to explain to your six year old daughter why she can't go to the public amusement park that has just been advertised on television, and see tears welling up in her eyes when she is told that Funtown is closed to colored children, and see ominous clouds of inferiority beginning to form in her little mental sky, and see her beginning to distort her personality by developing an unconscious bitterness toward white people; when you have to concoct an answer for a five year old son who is asking: "Daddy, why do white people treat colored people so mean?"; when you take a cross county drive and find it necessary to sleep night after night in the uncomfortable corners of your automobile because no motel will accept you; when you are humiliated day in and day out by nagging signs reading "white" and "colored"; when your first name becomes "nigger," your middle name becomes "boy" (however old you are) and your last name becomes "John," and your wife and mother are never given the respected title "Mrs."; when you are harried by day and haunted by night by the fact that you are a Negro, living constantly at tiptoe stance, never quite knowing what to expect next, and are plagued with inner fears and outer resentments; when you are forever fighting a degenerating sense of "nobodiness"--then you will understand why we find it difficult to wait. There comes a time when the cup of endurance runs over, and men are no longer willing to be plunged into the abyss of despair. I hope, sirs, you can understand our legitimate and unavoidable impatience. You express a great deal of anxiety over our willingness to break laws. This is certainly a legitimate concern. Since we so diligently urge people to obey the Supreme Court's decision of 1954 outlawing segregation in the public schools, at first glance it may seem rather paradoxical for us consciously to break laws. One may well ask: "How can you advocate breaking some laws and obeying others?" The answer lies in the fact that there are two types of laws: just and unjust. I would be the first to advocate obeying just laws. One has not only a legal but a moral responsibility to obey just laws. Conversely, one has a moral responsibility to disobey unjust laws. I would agree with St. Augustine that "an unjust law is no law at all."

January 16, 2011

One hand is on the tightrope walker

Paul Krugman, Ace Economist of the New York Times, uses the FRED site for just a whole lotta his research into the vast detail of the American economy. It's maintained by the St. Louis office of the Federal Reserve Bank, and graphs such as those above (click on the graphs and they'll open in a separate window so you can see the whole thing) are available in pretty profusion. They're not too politicized, either, as far as I can tell, although a little of the Administration's propaganda bleeds over into its reporting. For one example, notice that little upward tick at the end of the graph of receipts (taxes, mainly) up above. The Treasury is sticking to that forecast of $2.4 trillion for Fiscal 2011, and I wish them well. Currently, through three months or 1/4th of the year, the total take is about $500 billion, so I'm not sure how that extrapolates to $2.4 trillion, but hey...We Are The Change We've Been Waiting For.

Down below you see the Federal Government's expenditures. No real legerdemain there, just the grim facts. The slope of that line is, I believe, called "going parabolic." It looks like FRED is trying to tell us we're going to spend in the neighborhood of $3.7 trillion this fiscal year. Thus, it would be nice if the more optimistic forecast of receipts is accurate, although the gap is still $1.3 trillion if it is, versus, say, $1.5 trillion if national income is like last year.

The Capitol Rodeo Clowns (a/k/a Congress) are currently up in arms about the "debt ceiling." You can take one look at these two pictures and realize this is a great deal of sound and fury signifying nothing. When your books look like this, you have no choice - you have to keep borrowing. The federal government is in the ridiculous position of spending $3.7 trillion of which $1.5 trillion is borrowed, per year, and the national debt is growing at the rate of $2 trillion per year, or over 50% of its yearly budget.

A question to ask oneself is this: how does a nation manage to get itself into such a predicament? It's absurd, isn't it? Another question that comes to mind is this: do these two graphs suggest that Congress (a) should have extended the "Bush tax cuts" and (b) cut another $120 billion from income over the next year with the "FICA holiday" ? (I wonder how that rosy forecast of $2.4 trillion is affected by that second little detail, by the way.)

The U-6 unemployment measure is stuck at around 17%. The economy is not creating jobs. Tax receipts would be flat, except for Congress's self-inflicted wounds, which mean they will go down, not up, in Fiscal 2011. The cadres of the vaunted "Tea Party" revolution currently throwing their weight around have already ruled every last single item of the federal budget "off limits" to any meaningful reduction (most particularly, defense). The one currently, actually reliable way Congress has of raising money is by borrowing it, particularly since "Quantitative Easing II" allows the Federal Reserve to buy about half the issuance of the Treasury's new debt (on the open market, of course - wink, wink).

I'm trying to imagine how this could possibly end well. When the situation is this precarious, the slightest hiccup can spell disaster. An abandonment of the Treasury auctions by foreign buyers. A sudden spike in interest rates of T-bonds and bills (just a reversion to their historical mean in the 5-7% range would be ruinous). An idiotic Congress refusing to raise "the debt ceiling." Ben Bernanke, a tightrope walker high above Niagara Falls with his foot on a banana peel, has to have everything go right and not a single thing go wrong. How many things in human life proceed along such a sunny path?