Thursday, February 12, 2009

Complacency and The Will To Radical Reform

Despite the current gloom, the U.S. is firmly entrenched in a complacent faith that traditional methods like Keynsian borrowing/spending will "repair" the U.S. economy. For an explication of just how destructive such deep complacency can be, I turn to the excellent account of the causes of the Roman Empire's collapse by Michael Grant, The Fall of the Roman Empire .

Enmeshed in classical history, all he can do is lapse into vague sermonizing, telling the Romans, as many a moralist had told them throughout the centuries, that they must undergo an ethical regeneration and return to the simplicities and self-sacrifices of their ancestors.

There was no room at all, in these ways of thinking, for the novel, apocalyptic situation which had now arisen, a situation which needed solutions as radical as itself. His whole attitude is a complacent acceptance of things as they are, without a single new idea.

This acceptance was accompanied by greatly excessive optimism about the present and future. Even when the end was only sixty years away, and the Empire was already crumbling fast, Rutilius continued to address the spirit of Rome with the same supreme assurance.

This blind adherence to the ideas of the past ranks high among the principal causes of the downfall of Rome. If you were sufficiently lulled by these traditional fictions, there was no call to take any practical first-aid measures at all."

When does supreme confidence turn into supremely dangerous complacency? When you read fawning accounts of U.S. innovation saving the day. The mainstream media is chockful of predictably mealy-mouthed mea culpas: OK, we missed the subprime meltdown, the housing bubble, the derivatives insanity, the inevitable collapse of over-leveraged lenders and insurers, the corruption and lax oversight--but really, some of our reporters did cover these things--on page B-11...occasionally....

And when the MSM isn't pronouncing its innocence, it's running over-confident, hubris-choked paens to American innovation and entrepreneural drive, blah blah blah. In other words, we don't need to do anything about the current Depression except stand back and watch that good old American "can-do" attitude and spirit of innovation run right through this "temporary downturn."

Nice--but too bad they're not reporting the decline of the engine of innovation: small business. As described here numerous times, what few are willing to look at squarely is the crushing of small business by high junk fees and taxes, high rents and a general disdain for business by government at all levels.

If you look at BusinessWeek and other "standard-bearers" of the status quo, bookending their now-rabid attacks on zombie banks (where were you guys 2 years ago, huh?) and lax regulation are happy-happy stories about some new tech innovation or new start-up which is just about to bust out and repeat the meteoric rise of Apple or Google.

Maybe, but what if the situation is no longer favorable for start-ups? What if the regulatory and other cost barriers are now so high that the garage tinkerers are doomed to be stuck in the garage?

Meanwhile, back in the bankrupt state of California, the state's political "leaders" are proposing a mere $10 billion in new borrowing to bridge the deficit--along with $15 billion in new taxes and $10 billion in cuts. Hmm, how exactly is adding yet another $10 billion in borrowed money a solution to a deficit which grows larger by the day? Isn't that the very acme of irresponsibility and complacency?

The basic complacency is this: "Everything will bounce back in a quarter or two; all we need to do is patch things over until 2010, when everything will return to endless prosperity." But what if the $40 billion deficit facing the state widens even further in 2010? What's the "leaders'" plan then? Borrow $20 billion more?

Would someone on Wall Street please become an adult long enough to tell the state of California, "No, we're not rating your new bond A, or B or even C. They're rated junk, and nobody will buy them." That is expecting too much, of course; Wall Street will palm off the guaranteed-to-default California bonds as "safe" and collect the fat fees: business as usual.

There can be no will to radical reform as long as a deep, untouchable complacency is the status quo. The MSM consensus is that this "recession" will be like every other recession of the post-war era--two or three quarters of declining consumer spending and then it's back to rising assets, lending and spending.

Just like the Romans of the fast-crumbling Empire circa 450 A.D., our "leaders" are pontificating about illusory strengths and making pious appeals to past glories (we beat the last Great Depression, and by golly, we're not making those mistakes again! We're going to lick this thing right now, etc.)

Yet as we examine the "solutions" being offered--borrow and spend, borrow and spend, brawk!--we see the same old tired script being played out. New ideas? Basically zero, at least to date. Where is the recognition that any economy fundamentally dependent on cheap, abundant oil and ever-rising debt, tax revenues and consumer spending is mortally wounded?

The Barbarians of Depression are metaphorically already across the Rhine and Gaul and heading straight for Rome. Will our leaders continue wrapping themselves in the false confidence of complacency until our latter-day Rome is surrounded and the Empire totters? The will to radical reform is presently non-existent in the halls of power and influence, and that does not inspire confidence that our leaders recognize their own complacency is perhaps our greatest enemy.


NOTE: I just returned from a week of dealing with a family medical emergency which has fortunately passed from critical to watchful. My attention is still spread thin; my apologies for the missed entry and my generally haphazard presence the past 7 days.


Thank you, Paul M. ($50) for your outrageously generous contribution to this site. I am greatly honored by your support and readership.

Thank you, Judd H. ($40) for your extremely generous donation via mail to this site. I am greatly honored by your support and readership.



Terms of Service

All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.


Our Privacy Policy:


Correspondents' email is strictly confidential. This site does not collect digital data from visitors or distribute cookies. Advertisements served by a third-party advertising network (Investing Channel) may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative). If you have other privacy concerns relating to advertisements, please contact advertisers directly. Websites and blog links on the site's blog roll are posted at my discretion.


PRIVACY NOTICE FOR EEA INDIVIDUALS


This section covers disclosures on the General Data Protection Regulation (GDPR) for users residing within EEA only. GDPR replaces the existing Directive 95/46/ec, and aims at harmonizing data protection laws in the EU that are fit for purpose in the digital age. The primary objective of the GDPR is to give citizens back control of their personal data. Please follow the link below to access InvestingChannel’s General Data Protection Notice. https://stg.media.investingchannel.com/gdpr-notice/


Notice of Compliance with The California Consumer Protection Act
This site does not collect digital data from visitors or distribute cookies. Advertisements served by a third-party advertising network (Investing Channel) may use cookies or collect information from visitors for the purpose of Interest-Based Advertising. If you do not want any personal information that may be collected by third-party advertising to be sold, please follow the instructions on this page: Limit the Use of My Sensitive Personal Information.


Regarding Cookies:


This site does not collect digital data from visitors or distribute cookies. Advertisements served by third-party advertising networks such as Investing Channel may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative) If you have other privacy concerns relating to advertisements, please contact advertisers directly.


Our Commission Policy:

As an Amazon Associate I earn from qualifying purchases. I also earn a commission on purchases of precious metals via BullionVault. I receive no fees or compensation for any other non-advertising links or content posted on my site.

  © Blogger templates Newspaper III by Ourblogtemplates.com 2008

Back to TOP