Monday, July 25, 2016

Why Real Reform Is Impossible: We Can't Believe the Mighty Titanic Could Actually Sink

Unfortunately for those partying on the upper First Class decks, they are as doomed as the steerage passengers when the ship goes down.
Why did passengers remain on the Titanic even as its bow sank deeper into the ice-cold Atlantic? They believed the experts and authorities because they wanted to believe the ship was "unsinkable." And why did they want to believe the ship was "unsinkable"?
Two visceral realities fueled their misplaced faith in the ship's supposed safety:
1) The warm ship seemed so mighty, and the alternative--open lifeboats drifting in the dark cold night--seemed so vulnerable, uncomfortable and risky.
2) It was much easier to believe the experts' assurances that the ship was safe than it was to clamber into a small lifeboat and bob around the open Atlantic.
We all know which alternative turned out to be safe and which one was fatally unsafe. The apparently risky open lifeboats were the sole source of survival and the enormous, complex "unsinkable" ship sank, ending the lives of everyone who clung to the appealing fantasy that the mighty ship was too technologically advanced to sink.
We are all on a Titanic, a complex system that experts and authorities declare safe and unsinkable for all time. Our money, our government, our Social Security, our Medicare and our entire debt-based way of life is mighty and invulnerable. Those few who see the eventual need to prepare "risky" lifeboats are mocked and ridiculed.
But the status quo's bow is already sinking into the ice-cold waters of reality.The only way the status quo can support the debt-based financial system and government that funds all these vast systems is if the economy creates 10 million more "breadwinner" jobs (in David Stockman's definition, a job that earns enough to support a family of four) a decade.
These new jobs are needed to raise the additional $1 trillion per year in payroll and income taxes needed to keep the fiscal ship afloat, and to provide the household income needed to support trillions more in private-sector debt--new home mortgages, auto loans, student loans, credit card debt, etc.--that's needed to support consumption.
If the status quo can't create at least 10 million new breadwinner jobs a decade, it sinks just as surely as the Titanic, which was doomed the moment the fifth watertight compartment was ripped open by the iceberg.
And please don't tell me we can raise $1 trillion in new annual taxes by "taxing the owners of the robots," another "unsinkable" fantasy I dismantle in my books Why Our Status Quo Failed and Is Beyond Reform and A Radically Beneficial World.
Now that software and robotics are commoditized, the scarcity value of these tools and the goods they produce is plummeting. Take a look at profits in commoditized goods: they're razor-thin, and getting thinner by the day. As the cost of software/automation tools drops, they become affordable to an ever-larger pool of owners/producers, which means the competition from new owners will increase until there is no profit at all.
And exactly how do you extract $1 trillion in phantom profits from "owners of robots" who happen to be overseas? The belief in "taxing the owners of robots" is identical to the doomed souls on board the Titanic believing the ship was unsinkable.
The belief in the status quo's permanence is exactly like the belief in the Titanic's invulnerability. The systems we depend on are so vast and seem so mighty, it doesn't seem possible that they could unravel and fail. But their eventual unraveling and failure are already baked in and cannot be undone by the modest tweaks of what passes for "reform" in the status quo.
The financial realities of systemically stagnant jobs, incomes and tax revenues have already ripped a fatal gash below the waterline of the status quo. The bow is sinking but the parties on the First Class deck continue. The passengers in steerage are getting anxious because they see the cold water sloshing around the lower decks, but few on the upper decks care what mere steerage passengers are experiencing.
Unfortunately for those partying on the upper First Class decks, they are as doomed as the steerage passengers when the ship goes down.
As the supposedly risk-free status quo decays, the supposedly "risky" lifeboats-- decentralized private-sector arrangements of multiple income streams derived from ownership of productive assets that are debt-free and not dependent on debt-based government funding or global corporate cartels--will be cooperating and collaborating with each other.
Those seeking lifeboats will benefit from the Mobile Creative credo: trust your network, not the corporation or the state.
My new book is #10 on Kindle short reads -> politics and social science: Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle ebook, $8.95 print edition) For more, please visit the book's website.

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