Hey La, Hey La, my ….Well, anyway, John Michael is Back

During the last three months, while on hiatus from blogging, I’ve looked back over the eleven-year run of The Archdruid Report. As my regular readers know, the point of that prolonged experiment in online prose was my attempt to explore the primary historical fact of our time—the accelerating decline and impending fall of industrial civilization—from every angle I could think of, including some I never imagined addressing at all when I started blogging back in 2006.

So…Head on over and read the rest

Trying to find my way home

I am trying to get a grip on the huge mass of data that constitutes my world view.

Current working model doesn’t look that good.

We are heading into a rough bit coming up.  I am impressed beyond all measure that they have managed to hold the thing together for this long.

I was depressed that, for a while, the Laird of CKM3, came to his senses and ended his string of fruitful leads.  But wives and boredom are mighty foes, and he retreated from his well deserved rest.

You are probably wondering about this digression from my original thought, but in a sense him leaving made me thing about my decision to “blow it off” a couple years ago.   I can understand the Laird’s desire, but then I started to think about it harder.

As the Laird knows, we have moved well past the point where we can retrace easily.  I am hoping that the break point comes after the completion of the Boyo’s getting their feet under them.  But the truth of the matter is, there is a reasonable chance that might happen in spite of my possibly misplaced hope.

If we are going to navigate the next five-ten years, I really can’t think that hard about retirement.  Like it or not, if this is to work, I get to keep my nose to the grindstone for a bit.  Oh yes, I could blow it off, but that would start becoming a cost that may tip the balances the wrong way.

There might damn well be a whole bunch of pain coming soon.  Might as well keep things as stable as I possibly can for the time being.  Might be the only way that the lot of us get through this.

For you listening pleasure.


The Invisible Thief

Josephus is one of my friends and he still out there, trying to nail down his first billion.  I support him completely in this endeavor and wish him the best.  Mostly is this is because he has put him money where his mouth is and went out, started a company, worked his butt off, and stands to lose if the deal doesn’t go down.  He is in the first stage of clinical trials after stellar performances in animal and toxicology studies, I have my fingers crossed and keep him in my prayers.

He had some fine news about his business recently, and after I had called him to congratulate him, I got to thinking about what it is we call “Investment” here in the good old USA.  Ponzi scheme keeps coming to mind.  But it is a diffuse sort of Ponzi, not run like the good Mr. Madoff ran his, nope it is a Ponzi scheme where the early-adopters cream the benefits and the firm just is there to provide the press releases essential to the pump and dump operation that we call Wall Street.

In this pump and dump scheme, the actual company gets a very limited amount of the money involved.  They get the share price off of the initial IPO to build the firm and to make the ideas happen in the real world.  Once a share has passed the IPO stage, the stock price increases accrue solely to the person(s) who bought the shares in the IPO.  The firm gets nothing.  This is good and fair and the way that it should be.  It is what happens after that is what is wrong.

Now that the share has been sold post IPO, it is a piece of paper that accrues nothing to the firm.  Now I realize that the firm will retain additional shares and sell them at need, so the rise in stock price will provide value to the firm, but really, the money made after the IPO from the passing back and forth of these initial shares is gambling by others.  The current state of the American economy reflects this penchant  for gambling.  Nothing is really built, the wealth of the past is traded back and forth between people trying to make a little money selling to greater and lesser fools.  No productivity is enhanced, not new ideas are built.  Just a big casino where people live and die at the roll of the die.

The management of the firm is playing another game entirely.  The give themselves compensation in shares for the job that they are being paid to do.  The shares that they are given are a time honored way of looting a company that you work for.  The management gets coin that doesn’t show directly in the W2 and they don’t pay taxes at the “Income” rate, they pay taxes at the “capital gains” rate, which is a pretty big savings.

So what say we just get rid of the capital gains tax altogether.  Now, I can imagine you all squealing out there….read on.  Lets start looking at capital gains as only the money that accrues directly to the firm in the case of an IPO or sale of the stock from the firm to the public.  If the money from the sale is from the first iteration of stock sales, that it, the money that allows the firm the capital base to expand it operations, the profit from the sale of these shares should be tax-free.  Once the shares have been sold by the initial owner, all proceeds would be taxed at full income tax rates. 

The profits made by any compensation to an individual in terms of shares would be taxed at income taxes.   All stock issued as compensation would be entered as income at the share price of the day of award and taxes paid upon the the value of the shares.  All profits made from the sale of the stock in subsequent years would be subject to income tax.

Now there are going to be a bunch of people who will give any number of good reasons why this shouldn’t be done.  One of the big ones is that the share prices themselves will come crashing down.   I will even allow this as a truth.  The prices of shares, if they are treated as a means for firms to accrue money for the development of capital would be significantly less than the amount of money that they fetch as casino chips.  So the IPO share price would decrease and the amount of money available for capital projects would be decreased.  As a response to this I merely smirk and point to the recent IPO of facebook to make my point.

The other reason people will throw out is that people will be effected by the loss of their savings in the stock market if this plan is put into place.  Well, it is the stock market, people lose their shorts all the time.   The loss would be hellish at first, but it looks like we are heading that way anyway, maybe some folks smarter than me could create a system to cushion an inevitable fall.

No Real Problems

So, Judge Roberts just had his Earl Warren moment.  When he gave the finger to the far right and did something that wasn’t conservative dogma.  It both surprised and pleased me to no end.

So, the Affordable Health Care Act is still standing.  I have no particular love for this duct tape and bailing wire contraption, but it is least an attempt to deal with the lack of health care for a major portion of the populace.  Mostly I just loved seeing the right wing wackos go into gibbering fits at the “socialized medicine” aspects of the plan.  I would have paid huge money to watch some of their faces when Roberts himself voted to retain the ramshackle affair.

So, maybe now we can move on and begin improving the system.  A couple of additional tweaks and changes and improvements and it might start looking like a good program. 

What I do hope is that the Obama campaign will take the time and effort to make sure and personally  compliment Mitt Romney profusely and publicly for all the hard work and inspiration that Governor gave to the program.  After all, the plan was modeled from the  Massachusetts plan that Mr. Romney gave as a present to Boston.

This will serve two purposes.  Show a mature appreciation for a job well done, and send the earlier mentioned right wing wackos into a fresh set of gibbering fits when they realize that they poster boy is a commie too.  That vision itself may well be worth the price of admission.  Might even piss off the foaming rabid right into kicking off a third party in order to bleed votes from the mittster.

Versus the Long Term

Ramesseum, the mortuary temple for Ramses the Great

I am sitting down this morning with a cup of coffee looking out on a rainy day.  It’s true summer and it is still raining, which is beginning to piss me off just a little.  But it will be summer again soon and my little-bitty garden likes the moisture.

Today is a lesson in perceptions and consequences.  It is also a primer of why, unless some remarkably cruel policies are put in place soon, we will fail in staying a first world power and will go the way of Greece.  There isn’t any moralizing here.  What a democracy spends its money on is its own damn business.  The taxpayer who whines about government largess usually just whines about government largess that he doesn’t receive.

Neither is this going to be a defense of the idea that the sad set of rituals and symbols that pass for the American Dream are worthy of any spirited defense.   This quote from a recent posting on The Automatic Earth says quite a bit about the current state of affairs.

Some of us chase dreams of wealth, while others simply dream of happiness. But we – almost – all have cars and TV sets and computers and many other possessions that are so ubiquitous in our societies that we don’t even ask anymore why we have them, or what we would do without. We unquestioningly assume they contribute to what we perceive as happiness.

Nope, this is merely a discussion of what I see as the most likely future.  It isn’t a polemic about how, should we choose, we could change the trajectory of a failing country.  It is a simple set of observations about how the change will come to us unbidden and out of our control.

Consider for a moment, this little gem:

United States Population Pyramid for 2010
Age and sex distribution for the year 2010:
Thanks to http://www.nationmaster.com

We have a 300-odd million total population.  Take 80 million off the top as being under 19yo and not really in the work force.  The 19-24 group is sitting on a 20% unemployment rate.  The main body of the employables is at the 24 to 60 range which gives us around 150 million folks in the truly productive workforce.  Sixty-three million folks are above sixty.

Doing a little unauthorized math here, and considering a 63% labor participation rate, for the main body of the labor force (24-60) I am figuring that only 94 million folks are out there working in a serious way (please, don’t bring me to task with some lame anecdote about how some person is really still fabulously productive while celebrating his 99th birthday, I am unconcerned with statistical outliers which make you feel better about getting old).

OK, so the real magic number is ninety-four million supporting two-hundred and fourteen million, or one productive worker supporting 2.27 non-productives human who has a set of desires similar to those who are working along with a fully formed set of rights to vote and petition government.

Now let us look at the levels below the >60 crowd on the histogram.  It is here that I am going to concentrate my arguments.  If there is an age group where long-term thinking is possible that is the age cohort of 25-50.  Simply put, this group has sufficient time remaining in their productive years to plan and execute difficult tasks with a project horizon greater than ten years.  The folks below this age group aren’t truly fully formed yet (but they are pretty damn close).  The folks above them are scrambling like maniacs on the supremely difficult task of getting ready for old age, a task which is becoming increasingly dicey.

There are right around 100 million folks in the 25 to 50 age group.  I am going to arbitrarily assign them a higher workforce participation (70%) than the average and make them a group of around 70 million souls in full productive mode, or twenty-two percent of the population.   It is my belief that this is not an adequate number to support a population the size of the US.  This doesn’t even take into account the number of folks who aren’t working full time or who are not really productive but who are pulling down a salary anyway (probably a distressingly large number).

These seventy million souls would, if allowed the access to resources, could theoretically put together a long-term project that could allow the successful transition to a lower-energy society.  The project would necessarily be quite expensive and have a high possibility of failure, but it could be done, allowing access to the necessary resources and allowing for a “what’s in it for me” to the persons executing the project.

But right now our resource base is steadily dwindling.  Our country’s wealth is questionable and we may potentially be technically insolvent at this point.  The limited resources will be allocated per democratic whim to the 78% of the population with no real desire to lose access to the resources that gives their lives comfort and continuity.  Not to mention the truly astounding amount of fraud that has sucked a major portion of the wealth of the country into the bottomless pit of the rentier class and out of the means of productivity.  I won’t even begin to discuss the truly amazing amount of debt that is hanging over our heads.

I don’t see a way out of the decline and fall of the Imperial United States in the next ten years.  I am hoping for a deus ex machina, but I think that I will be sorely disappointed.  The resources needed to execute a difficult long-term strategy are being sucked dry by an overlarge assembly of needy and low-productivity youngsters and oldsters with a set of manufactured needs incapable of being met.

Now, if I were a nicer person, I would probably have phrased the last statement differently.  It by no means is the “fault” of these folks.  But the cruel reality of economics is that one has to put in more than one takes out to make the equation balance.  We have too many people who by dint of age, ability, education, an intelligence cannot meet this goal.  There is a tendency to demonize these folks.  Parasite, welfare queen, greedy pensioner, shiftless, etc., etc., etc.  None of these appellations are valid, they just stem from the anger of folks who cannot access resources to attempt something to help the problem or who themselves want more than what they already have and aspire to the rentier class.

So the many will take away from the whole the means necessary to slow and control the transition to a low-energy future.  The few that will be sucked dry in the process and the collapsed system itself will serve as a rich compost for the next system to grow from.  DOn’t think for a moment that I see this as the preferred option, it just appears to be the most likely.

All these things have always been true.  They raised their heads in the time of Sargon and Augustus.  Louis Quatorze knew it in his soul and Queen Victoria laid her dainty head on a pillow of these simple truths.  The collapse of the American empire is not the end of the world or the end of America.  It will be what the next phase of America will grow from.  Things will not be worse.  They will be different.

The new America will not spring into being fully formed as did Minerva, but will be a series of missteps and contradictions.  Might be a theocracy in there.  Might have a touch of a military dictatorship.  Might have a new republic, the whole place may split into a set of warring states.  Hell, we may well even manage to keep hold of the current constitution and make adequate changes to allow it to survive.

But all of these futures will be from a smaller and more constrained set of economic ideas.  The idea that all can live as owners of richesse and comfort on an ever increasing scale will be finally put to rest.

Parthian Shot

A Different Path

A Substitution of Faiths

I always take the time to read “The Automatic Earth” and the wonderful commentary and articles that make it a treasure.  The post in question is “Ruminations on Faith and Humanity“.  But I was genuinely shaken to see the following quote expounded upon by the reader “Alfbell” in the most recent post.

No system will ever be successful until the human mind, and the spiritual being that utilized it, have been isolated and fully understood. Psychiatry, psychology, psychoanalysis, et al. have failed in this area as well. Very too bad because THIS is the key to man’s future survival.

Find the source of evil and destructive intentions; the need to dominate; the need to destroy what another creates; man’s inhumanity to man; man’s illogic; man’s low level of morality; man’s “animalistic” tendencies; man’s inability to predict consequences; etc. and you will save mankind.”

Wow, where do I start?  Just another go at having a particular, parochial set of thoughts shoved down the throats of others in a sincere, open-hearted attempt to “help”

The human condition is quite simply not one of perfectibility.   That is not the point of human existence.  The point of human existence is the messy striving and learning and other such unpleasantness that makes up our sin-stained existence.  In a very real sense, the world defined by Alfbell is not one where I wish to live.

We are not proto-gods, trying to build ourselves into perfect, luminous creatures.  We are a bunch of apes who are trying to get along in a world where we have overshot (by a large margin) the constraints placed on us by a limited world.  We are now just getting this little factoid through our collective thick skulls.  What is proposed by the oh-so sincere readers of the Automatic Earth is a more thorough understanding of the animal nature so that we can save mankind.  Well folks, I think that it is pretty easy to figure out that a pretty complete understanding of human nature is quite possible.  Just ask the folks on Madison Avenue.

An individual has a chance of figuring out how to rid himself of illogic, to control his baser desires, to use analytical skills to better produce desired outcomes for himself, etc., etc., etc.  But that ability is located solely in the individual.  The ability for an external effect to change or “make right” another individual is laughably limited.  But that doesn’t mean most people don’t want to give it a try.  But what most people want is for the great mass of other folks to just do whatever the person speaking wants them to do.  There is no particular moral suasion that is de facto “right”.  There are only personal preferences.  What most folks want is to die well-fed and comfortably in bed with a minimum of fuss and bother and pain.

Yet individuals such as “Alfbell” request and beseech over and over again for “more study” to be put into the nature of mankind so that the unwashed masses can made civil and subsequently be invited in for high tea.  What will be done with the “additional study” will be what has happened every time.  Those who desire power and influence will use that same information to garner their heart’s desire.

Folks, there is a reason that there are different disciplines for psychology, sociology, and economics.  There is also a reason why all must be taken into consideration when anyone who is intellectually honest makes any call for action in the world of men.  We are not fragments of the divine encased in a vulgar shell.  We are messy, somewhat greedy apes with the odd bit of potential showing through.  The actions of the individual are different from the actions of crowd and different still from the sciences of greed.  Taking all three together and trying to make some “Grand Unified Theory” has been a fruitless and sterile bit of research for going onto 12,000 years.

Folks who come to the Church of the Doomer and its silly assortment of motley priests and deacons are partaking in that oldest of human traits, the tribe.  When they do so and folks start coalescing around a one set of sect-leaders or another, they are just looking for the seed to create a movement to shove their flavor of the truth down the throats of an unwilling world.  Consider another quote from the same article:

Candace asks…

“What I’m trying to figure out is if we all fail to be our best selves at least some of the time, are there any structures we can impose on ourselves that will at least keep us from causing massive damage to ourselves and the planet?”

Folks, my real and true belief is that, barring alien intervention or a sudden insight into the laws of physics which allows a shortcut around the second law of thermodynamics, our descendants will be living in a world populated by around a billion and a half people by 2200.  Now, some of the faint of heart might immediately start shrieking and gibbering and pulling their hair and begin mouthing loaded words like “near extinction”.  Nonsense.  It will just be Professor Ehlich contentedly having the last word.  The earth will abide.

The train has already left the station on the current overpopulation on “Mam Gaia” and the concomitant damage to the environment.  The work-arounds and patches that have allowed the current state of affairs are beginning to fray pretty badly.  The downslope is now ahead of us.  No amount of “spiritual” effort will help anyone in the long run except as helping in the crossing we will all make.

Economics boils down we all want more than our share.  Sociology boils down that when you get us together in large groups, all bets are off.  Psychology boils down to the fragile and flawed set of tools that we have developed to understand a world well out of our control.  When you begin tacking words like spirituality, what you are trying to do is grab some shred of an erstwhile moral high ground and use it as a tool to shove your desires and expectations down the throats of others.

Parthian Shot

Down by Vancouver Lake in the Winter