DREAD

Posted in Rants on July 7th, 2010 by Ed

The older I get, the less long term planning I do. Since the early Aughts, when it became apparent that the nation was heading down an unsustainable economic path, I've given up on saving for retirement and other sensible things that I used to take very seriously. This has accelerated since the economic collapse of 2008 and my foray into the post-Ph.D. job market. My employment pays just enough to keep me living in lower-middle class comfort (which is oxymoronic, given that the defining feature of this class stratum is uncertainty) and is both literally and figuratively a year-to-year arrangement.

In the back of my head I still understand that retirement savings and personal financial planning are necessary, but every time I try to wrap my head around the future I'm filled with something much more powerful than uncertainty: cold dread. With this economic downturn and our political leaders' pathetic response, I feel like the potential exists for really, really bad times ahead. Krugman has started talking about a Depression and it's a healthy sign that we are in deep trouble when one reads such an opinion and thinks, "Yep, that makes perfect sense." How can I talk myself into retirement saving when the return on traditionally safe investments (MMAs, CDs, bonds, etc) are in the 1% range? And how can I roll all of my money into the stock market when there exists a very real possibility of it collapsing when all of the short-term profit maximizing tricks have been exhausted?

Our problem is very simple, as this shockingly insightful but thin-on-solutions article from Intel big shot Andy Grove explains: we are not creating jobs. And the only political solution we are willing to accept since the canonization of St. Ronnie is to cut taxes, as if there is some magical tax break that will offset the fact that Chinese workers make a buck per day. There is already nothing made in the U.S. that can't be made more cheaply in Asia. Soon there will be nothing done in the U.S. – including the professions that the 1980s zeitgeist assured us were American for all time like accounting, engineering, and business – for which the same cannot be said. We will become an economy that consumes everything and produces nothing. What remains of this house of cards will collapse.

It is conceivable that The Worst is Yet to Come because we have absolutely no industrial policy, no economic policy, and no political solutions other than to keep cutting taxes. This is not to say that we have a bad economic policy; we simply do not have one. We have one of the most stunningly effective propaganda machines in the history of the mass media convincing the same people getting ground up in the gears of Progress that there is no solution but to double down on the policies that brought us here. We are, in short, fucked. The idea that if only our taxes were a little lower or if only our schools produced smarter graduates we would suddenly be able to compete with Chinese and Indian wages is ludicrous. We pushed the boulder of free trade and globalization down the hill in the 1980s and now there is no stopping it.

I am not thrilled to count myself among the Sky Is Falling crowd, but the disturbing speed with which elected leaders from around the world clasped hands and agreed that Austerity is their new god among economic buzzwords has drained me of any kind of hope for the future. At best we are about to enjoy a protracted ten or twenty year Japan-style deflation / recession combo. At worst we're going to re-live the 1930s. It is not that the time for decisive action has passed. It is just completely obvious that the only remedies any of our elected leaders will consider are the worst possible ones, guided by an ideology that needs no actual results to sustain itself.