Monday, May 30, 2022

Why America Decays: The Tyranny of Self-Interest

Only those societies which still have a functional public interest / common good will survive; those ruled by the tyranny of self-interest will fall.

I've discussed the moral rot consuming the American Project in blog posts and my books. This moral rot--perhaps better described as civic decay--is so pervasive and ubiquitous that we are forgiven for assuming "this is the way it's always been."

This inability to discern the rot is the result of the gradualness of the decay. There are many analogies: the slowly boiled frog, the way in which weight gain creeps up on us, and so on. This is the result of humanity's finely tuned knack to habituate to any new environment and normalize what would have been intolerable in the recent past.

We adapt to changing expectations, incentives, values and realities over time and forget the way our world functioned in previous eras.

There are many examples of this. Many of the changes in our society, politics and economy can be traced back to the early 1980s, when financialization (and its offspring, regulatory capture and pay-to-play) began its rise to supremacy.

Forty years ago, student loans were unknown and healthcare costs did not bankrupt households. Forty years ago, relatively few Americans were obese. Go back a decade further, prior to the explosion of fast-food outlets, and a small percentage of the money Americans spent on food went to eating out / away from home, i.e. fast-food and restaurants. Eating out was a treat reserved for special occasions, not a daily ritual / birthright.

In the post-Vietnam era, Americans were wary of foreign entanglements. The Presidency wasn't quite as Imperial as it is today. Congress still held some modest power over foreign entanglements. This is no longer the case.

The most insightful way to grasp the pervasive moral rot is to examine the tyranny of self-interest: in the past, the public interest / common good still had a foothold in the nation's values, incentives and expectations. Now the public interest / common good are nothing but paper-thin PR cover for maximizing private gains by any means available, i.e. the supremacy of self-interest.

Our ability to discern the difference between serving the public interest / common good and making a modest profit doing so and harming the common good to maximize private gains has been lost. There are many such examples. The financialized self-interest behind student loans, healthcare, national defense, Big Pharma, Big Ag, Big Everything--i.e. cartels and monopolies--is visible in every nook and cranny of the U.S. economy, political structure and economy.

Synthetic opioids offer a good example. Under the preposterously false guise of "serving the common good" with painkillers, Big Pharma caused the deaths of tens of thousands of Americans and ruined the lives of hundreds of thousands more via the devastation of addiction-- addiction which Big Pharma was pleased to promote as non-addictive because this served to maximize profits.

As is now the norm, no one is held personally responsible for this completely needless public health catastrophe. A few wrist-slap fines are administered and life in America goes back to the relentless urgency to maximize private gains by any means available: fraud, deception, overbilling, embezzlement, regulatory capture, pay-to-play, and so on.

The phony PR cover for the the tyranny of self-interest is that the pursuit of maximizing profits by any means available magically benefits the public. The apologists trot out various example of planned obsolescence as "proof" that the supremacy of self-interest is the golden road to a glorious society, but all this careful cherry-picking doesn't make the moral rot and civic decay go away.

America is doomed to decay as long as we can't tell the difference between the public interest / common good and self-interest. The two are not the same, but we've lost the ability to discern the difference. Only those societies which still have a functional public interest / common good will survive; those ruled by the tyranny of self-interest will fall.




Recent podcasts/videos:

The Big Problems And Crash Dynamics Of The Spring/Summer 2022 Housing Market Crisis, Simplified (1:08 hr)

My new book is now available at a 10% discount this month: When You Can't Go On: Burnout, Reckoning and Renewal.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.



My recent books:

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 Kindle, $10 print, ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 Kindle, $8.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
Read the first section for free


Become a $1/month patron of my work via patreon.com.




NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, William J. ($5/month), for your splendidly generous pledge to this site -- I am greatly honored by your steadfast support and readership.

 

Thank you, Terry L.-M. ($10.80), for your most generous contribution to this site -- I am greatly honored by your support and readership.

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Friday, May 27, 2022

I'm Looking for Ten Readers Willing to Pony Up $1 for the Crazy-Valuable Content Here

Thank you very much for considering this beggar's banquet.

OK, I get it: money's tight. A great many bets and certainties have turned to dust. 401K accounts have been decimated and the level of uncertainty about the future is pegged to 11.

It's times like this when the crazy-valuable content on Of Two Minds becomes even more crazy-valuable. Yes, many people reckon it's simply crazy, but look how many times what was dismissed as crazy by the mainstream turns out to be right.

For example, What If All the Cheap Stuff Goes Away? (March 30, 2018).

I try to turn a uniquely pragmatic, independent eye on the world, avoiding ideological tunnel-vision. My interest is in real-world solutions, both systemic:
The Only Non-Totalitarian Solution to Resource Scarcity: Decentralized Degrowth and The Community Economy Needs Its Own Money.

--and on the individual-household level:
Livelihoods in a Degrowth Economy and The Epidemic Nobody Talks About: Burnout.

I'm interested in grounded optimism, not empty optimism: Doom Porn and Empty Optimism.

I'm interested in what's becoming increasingly scarce, starting with common ground. The number of issues that divide us is expanding like a supernova as polarization disintegrates what few islands of common ground still exist. I'm interested in preserving the remaining bits of common ground and perhaps even establishing a few new ones.

The world is being forced to transition to degrowth, and this opens a path to a much more sustainable, human-scale way of life that is antifragile rather than precarious. Sure, we can cling to waste is growth, but why self-destruct when a brighter future beckons?

I can't help being frugal (see photos below) in both the tangible world and the world of ideas, where I try to identify the core systems dynamics in play, for example, What Happens When Complexity Unravels? (May 6, 2022) and Checking In On Five Long-Term Cycles.

I tend to focus on what one reader described in this way: "money richness and wealth are vastly different animals."

For reasons beyond my feeble comprehension, this led to Of Two Minds being shadow-banned, starting with my inclusion in the infamous anonymous hit-list PropOrNot in 2016. So far I've avoided being renditioned to a rat-infested cellblock in the 'Stans, so life here on the margins is lively though not exactly lucrative (see below).

Let's not overlook the entertainment/amusement value of crazy. Crazy has its own unique value, and if there's one thing that everyone can agree on, it's that Of Two Minds is unique (ahem, in a good way).

I don't expect you to agree with everything I post, or agree with any of it--that's not my goal. I don't see content as a popularity contest, I see it as an opportunity to contribute to our understanding and the debate on how best to respond to problems and obstacles. A mix of differing proposals and critiques is essential to the process of moving forward. You and I are part of that process.

I tend to keep expectations low, as my experience tracks Churchill's definition of success: going from failure to failure without loss of enthusiasm.

So in the spirit of maintaining low expectations, I'm looking for ten of you thousands of readers who reckon the crazy-valuable (or just plain crazy) content here is worth a dollar. Heck, let's call it a dollar a month, or 12 Washingtons a year.

Those ponying up a Lincoln ($5) every month get the weekly Musings Reports, an incredible bargain given what you get. The goal here at Of Two Minds is to not just scrape through crises but emerge with greater skills, adaptability and real wealth--the kind that can't be taxed, stolen or expropriated because it's social and experiential capital. (A cushion of a few extra quatloos is also a goal, as they may come in handy.)

Alas, I'm never going to mint a million on TikTok or YouTube. Yes, I understand the value of video and podcasts, but this site is focused on data-driven analysis and marked-up Federal Reserve charts. (I fear my photos of garden veggies are not going to mint me a million on OnlyFans, either.)

So here's my question to you: are you one of the few, the daring, the foolhardy, the insanely generous readers willing to pony up a dollar a month to extend life-sustaining encouragement to the one-person content factory here at Of Two Minds?

If you are one of those rare and precious souls, please accept my sincere gratitude:

Yes, I'm rattling the begging bowl.

I'm asking you to consider becoming a patron or contributor. If you need a doorstop, paperweight or sleep-aid, buy one of my books. Heck, buy one as a doorstop and another as a paperweight; they work splendidly in these utilitarian roles.

Become a patron of my work via patreon.com

How to Contribute / Subscribe to Of Two Minds

Thank you very much for considering this beggar's banquet.








Recent podcasts/videos:

The Big Problems And Crash Dynamics Of The Spring/Summer 2022 Housing Market Crisis, Simplified (1:08 hr)

My new book is now available at a 10% discount this month: When You Can't Go On: Burnout, Reckoning and Renewal.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.



My recent books:

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 Kindle, $10 print, ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 Kindle, $8.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
Read the first section for free


Become a $1/month patron of my work via patreon.com.



Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency. All contributors are listed below in acknowledgement of my gratitude.

Thank you, Cheryl N. ($100), for your outrageously generous contribution to this site -- I am greatly honored by your steadfast support and readership.

 

Thank you, Bill S. ($50), for your magnificently generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Read more...

Thursday, May 26, 2022

Livelihoods in a Degrowth Economy

The sooner we start preparing for degrowth, the better off we'll be. A Chinese proverb captures this succinctly: By the time you're thirsty, it's too late to dig a well.

Let's consider livelihood options in an unsustainable economy of extremes that are unraveling, an economy that is being forced to transition to Degrowth.

Nassim Taleb's book Antifragile explains the differences between fragile systems (systems that cannot survive instability), resilient systems (systems that can survive instability and stay the same) and antifragile systems (systems that adapt and emerge stronger).

The ideal way of life is antifragile: resilient enough to survive adversity and adaptable enough to evolve solutions to whatever comes our way.

The key antifragile traits are adaptability and rapid, flexible evolution. Adversity puts selective pressure on organisms: only those organisms which adapt successfully survive.

The more antifragile our livelihood and way of life, the better prepared we will be to recognize and pursue opportunities.

An unsustainable, unstable economy puts a great deal of pressure on its participants. Only those with the skills and agency to move, adapt and experiment will emerge stronger.

Adaptability requires agency. Those without much control are stuck with the consequences of others’ decisions and actions.

In my experience, self-reliance is integral to an antifragile way of life. Self-reliance and self-sufficiency are similar but not identical.

Self-sufficiency means reducing our dependence on resources provided by others: growing our own food, doing our own repairs, etc. Self-sufficiency can also be understood as shortening dependency chains.

Compare being dependent on food shipped thousands of miles to relying mostly on food grown within 50 miles of home. There are so many ways long supply chains can break down because the entire system breaks down if even one link in the dependency chain breaks.

Total self-sufficiency isn’t practical. We all rely on industrial production of metals, tools, plastics, fertilizers, etc. But reducing our dependence on systems that are fragile by consuming less and wasting nothing increases our antifragility.

Self-reliance is being able to take care of oneself, being independent in thought and action, and maintaining control of decision-making--what I’ve been calling agency.

Self-reliance means being able to go against the crowd. This requires independence and confidence in one’s inner compass.

Being able to take care of oneself means drawing upon inner resources, being able to identify the essentials of a situation and coming up with solutions that are within reach.

Since households with multiple incomes are far more resilient than households with all their eggs in one basket, our goal is to develop income streams that we control. The ownership is more important than the scale of the income. A modest income we control is far more antifragile than a larger income we have little control over.

Developing income streams is easier if we approach the task with an entrepreneurial mindset.

This mindset looks at work in terms of markets, unmet demand, pricing power, networks of trustworthy peers, trial and error (experiments), optimizing new skills, seeking mentors, learning to make clear-eyed assessments of what’s working and what isn’t, and then acting decisively on the conclusions.

All these skills can be developed. They are very useful in navigating unstable conditions because they prepare us to act decisively rather than passively await others to decide what happens to us.

Some skills can be applied to virtually every field: project management, bookkeeping, working well with others, computer skills and communicating clearly. Being a fast learner is valuable in every field.

In my books and blog posts, I've covered the difference between tradable work--work that can be done anywhere--and untradable work, work that can only be done locally. Having skills that are untradable is advantageous, as the competition is local rather than global.

Skills that can't be automated are also advantageous. Robots are optimized for repetitive tasks and factory / warehouse floors with sensors. They are not optimized for tasks that must be figured out on the fly and that require multiple skills.

Who fixes the robot when it fails out in the field? Another robot? Who replaces the dead battery in the drone? Another drone? The point is there are real-world limits on robotics, artificial intelligence, machine learning and automation that proponents gloss over or ignore.

Those with multiple skills who can problem-solve on the fly will continue to be valuable.

The models of work are changing, and this offers a wider range of options which is especially valuable to those emerging from burnout.

Combining various kinds and modes of work is called hybrid work. This could be mixing work from home (remote work) with occasional visits to an office, or it could be mixing a part-time job with self-employment.

I’ve written about one example in Japan called Half Farmer, Half X, where young urban knowledge workers move to the countryside to pursue small-scale farming while keeping a part-time, high-pay tech job they do online. Since the cost of living is so much lower in the countryside, these hybrid workers don’t need to work many hours remotely to cover their expenses, nor do they need their small-scale farming to be highly profitable.

Not all work is paid. Indeed, only a slice of human work globally is paid. The work that gives us the greatest fulfillment may well be unpaid or poorly paid. We may have to do some work to pay the bills while looking forward to the work we do that doesn’t earn much money.

Personally, I have always been drawn to both knowledge work and hands-on work. I worked my way through my university with a part-time job in construction. This was the ideal mix for my enthusiasms. Whenever I’ve been limited to one or the other, I feel dissatisfied. For me, hybrid work means having both knowledge work and hands-on physical labor, and having control of both.

Many people believe they need additional credentials to expand their opportunities. The alternative is to accredit yourself.

Since I’m enthusiastic about working with fruit trees and vegetable gardens, let’s say I decide to offer my services to potential customers.

One avenue is to spend money and time to get a certificate in horticulture. Alternatively, I could take photos of my own yard to document the trees I planted and how fast they’ve grown under my care. In other words, I could accredit myself, providing direct evidence of my skills and experience.

Employers have learned that completing a credential doesn't mean the graduate will be productive. The diploma doesn’t prove the graduate learned much or has what it takes to work well with others.

The diploma actually tells us very little about the graduate. We learn much more from someone who accredits themselves by documenting projects they’ve completed.

The only real source of prosperity is improving productivity: doing more with fewer resources and labor. Economists expected the adoption of computers and the Internet to boost productivity. Instead, productivity gains have been extremely modest, 1% or 2% per year, far lower than the 10% annual gains achieved during industrialization.

This productivity paradox has puzzled economists for decades. One reason why the productivity of knowledge work ((white-collar work) has barely improved when compared to factory productivity (blue-collar work) is the methodical optimization of tasks is more difficult to apply to knowledge work. Much of this work is done by rule of thumb and what was passed down by senior workers.

There are a number of reasons for this. One is it’s easier to study the assembly of products than it is to break down the production of services.

Another is that many fields of knowledge work are so new that it’s difficult to optimize tasks because they’re constantly changing.

A third factor is that we’ve been wealthy enough to waste labor and capital on unproductive bureaucratic friction. Just as we waste water when it’s abundant and free, we also waste energy and money when they’re abundant.

In Global Crisis, National Renewal I describe the changes in the process of obtaining a building permit in the past 40 years.

In the early 1980s, I could submit a set of plans for a modest house in the morning and pick up the approved plans and building permit that afternoon. Now the process takes many months, even though the house being built hasn’t changed much at all. What changed was the permit approval process became terribly inefficient.

Since there’s few incentives to improve efficiencies in bureaucracies, it now takes a decade or longer to approve a bridge or landfill While the number of professors and doctors has increased modestly, the number of university and hospital administrators has soared.

Now that energy will no longer be cheap over the long term, incentives to improve the productivity of knowledge work will increase.

Unsustainable economies are prone to sudden changes in finance and the availability of essentials. We're accustomed to predictable stability, and so few are prepared to respond effectively to instability.

If our lives only work when things are stable, our way of life is fragile. Recall Sun Tzu’s advice: "If a battle cannot be won, do not fight it." If we’re only prepared for everything to stay the same, we’re fighting a battle we can’t win. We want to be prepared for sudden changes and scarcities by planning ahead and being flexible, nimble and responsive.

One facet of being antifragile is having a buffer or cushion against sudden shocks. In a 2018 interview, Nassim Taleb said, “Money can’t buy happiness, but the absence of money can cause unhappiness. Money buys freedom… to choose what you want to do professionally.”

Taleb went on to note that it takes great discipline to keep enough money stashed to give us the freedom to maintain our agency when faced with adversity. Self-reliance requires a buffer so we have time to figure out solutions and the means to pursue them.

In my experience, our willingness to consider all options, our ability to make careful decisions and take decisive action are just as important as a cushion of cash. Cash widens our options, but if we’re frozen by inexperience and fear then our options are severely limited.

The wider our range of skills, the greater our opportunities to add value. The basic needs of human life must be met and so those who can meet those needs will always be valued. This range of skills is also a buffer because it gives us more options in adversity.

How much money do we need as a cushion? The less we need, the lighter our expenses and the more options we have. If we need $10,000 a month just to pay our basic expenses, that demands a large cushion. If we’ve simplified and downsized our way of life so $1,000 a month is enough to keep us going, our cushion can be much smaller.

In other words, frugality, self-reliance and simplicity are key parts of antifragility, for they lower the cost of freedom. Money can lose its value in crisis, but our buffer of skills and self-reliance cannot be taken from us or devalued by a global crisis.

One final consideration is timing. The sooner we start preparing for degrowth, the better off we'll be. A Chinese proverb captures this succinctly: By the time you're thirsty, it's too late to dig a well.




Recent podcasts/videos:

The Big Problems And Crash Dynamics Of The Spring/Summer 2022 Housing Market Crisis, Simplified (1:08 hr)

My new book is now available at a 10% discount this month: When You Can't Go On: Burnout, Reckoning and Renewal.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.



My recent books:

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 Kindle, $10 print, ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 Kindle, $8.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
Read the first section for free


Become a $1/month patron of my work via patreon.com.




NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Glenn H. ($5/month), for your splendidly generous pledge to this site -- I am greatly honored by your support and readership.

 

Thank you, Ron G. ($50), for your marvelously generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Read more...

Tuesday, May 24, 2022

The Consent of the Governed Is Slipping Away

The realization that we're not actually being represented at the federal level has eroded the consent of the governed for the national government.

The foundation of any government is the consent of the governed. Democracies and republics are founded on the consent of the governed earned via representational or direct democracy: those who have a say and a stake in the system will give their consent to the government, even if an opposing view is in the majority because their opinion is part of the governance structure.

Even totalitarian states ultimately depend on the consent of the governed, as repressive states that lose legitimacy cannot imprison or kill a majority of their populaces, or restore legitimacy via coercion once the populace has nothing left to lose and the organs of state oppression realize the regime is doomed.

It feels like the consent of the governed is slipping away in the U.S. The reason is so obvious we dare not acknowledge it or discuss it: those in power--elected and unelected--only give lip-service to "serving the public interest and common good." Beneath this flimsy facade of PR, every action serves the interests of a wealthy, politically potent elite or the self-interests of those in power.

Commoners have no real say in governance. We are consenting to rule by self-interested elites under the guise of being represented by an elite who governs at the behest and expense of hyper-wealthy individuals, families, corporations, cartels and monopolies.

Consider the issue of legalizing cannabis. Poll after poll shows the majority of the American citizenry favor legalizing cannabis, yet our federal representatives and regulators insist on ignoring the public will, public interest and the common good by continuing to classify cannabis as a Schedule 1 drug, as addictive and dangerous as heroin and fentanyl.

This is patently false and absurd. Hundreds of thousands of American die from alcohol and opioids every year, while deaths attributed solely to cannabis use are near-zero. Yet the federal government and our elected representatives refuse to accept the reality that cannabis isn't equivalent to fentanyl and other synthetic opioids which continue to kill thousands every year.

Why? It's the money, honey, greasing their palms and paychecks. Big Pharma views cannabis as a competitor so it lavishes billions of dollars on campaigns, lobbying and shaping the media narrative to serve their agenda of maximizing profits by any means available.

The War on Drugs Gulag of private prisons, law enforcement and the judiciary also skim billions of dollars as a result of cannabis being Schedule 1 (i.e. just as deadly as fentanyl). These powerful elites would lose billions in funding if the will of the people actually counted for something.

The realization that we're not actually being represented at the federal level has eroded the consent of the governed for the national government, and pushed the electorate to seek legitimate representation at the state and local level. In response, states are openly flouting federal statutes (for example, the Schedule 1 absurdity of federal cannabis regulations) and claiming sovereign rights on issues such as currency (declaring gold coins as legal tender in the state, etc.) and cryptocurrency.

We can anticipate a cross-migration as residents who disagree with the majority views in their state move to states where the majority-approved policies align with their own preferences. This cross-migration will strengthen existing majorities into super-majorities, further accelerating cross-migration as policies that were considered extreme are normalized within states.

Within states, this relocalization of the consent of the governed is trickling down to counties, which are increasingly under pressure from the citizenry to ignore (or leave unenforced) state mandates which the residents disagree with.

Capital also manifests the consent of the governed. Capital will migrate away from states where it's treated poorly, science-based enterprises will migrate away from states which restrict or starve research and development and manufacturing will migrate to states with willing, educated workforces and attractive infrastructure and tax structures.

States and counties whose policies are detrimental to capital will become poorer as capital chooses to locate to places where it has a say in governance, just as individuals want to live in a place where they have a say.

As the consent of the governed unravels, citizens may increasingly decide which statutes they're going to obey and which ones they'll ignore. Locales with strong community values will rely less on statutes and enforcement and more on social norms and community standards to maintain social order, while locales without any coherent community standards and shared values will have to rely on enforcement to avoid social disorder or meltdown.

Choose your community wisely. Thousands of pages of regulations won't preserve the social order if the the consent of the governed and the social contract both unravel.




Recent podcasts/videos:

The Big Problems And Crash Dynamics Of The Spring/Summer 2022 Housing Market Crisis, Simplified (1:08 hr)

My new book is now available at a 10% discount this month: When You Can't Go On: Burnout, Reckoning and Renewal.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.



My recent books:

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 Kindle, $10 print, ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 Kindle, $8.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
Read the first section for free


Become a $1/month patron of my work via patreon.com.




NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Glenn H. ($5/month), for your splendidly generous pledge to this site -- I am greatly honored by your support and readership.

 

Thank you, Ron G. ($50), for your marvelously generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Read more...

Sunday, May 22, 2022

What Could Go Right?

Our economy is not resilient or antifragile, it's a fragile sand castle of debt and denial.

What could go off the cliff that hasn't already gone off the cliff? Rip-roaring inflation, check.Hot war in Europe, check. Global food crisis, check. Semi-permanent supply-chain snarls, check. Geopolitical blackmail, check. Semi-permanent energy scarcities / supply issues, check. Geopolitical tensions through the roof, check. Public discontent, check. Extreme political partisanship, check. Hard-landing recession already baked in, check. Shrinking corporate profits, check. Extremes of weather, check. Investor sentiment is in free-fall, check. Confidence in the political and financial systems' ability to navigate all of the above is tumbling into the abyss, check.

Other than all that, everything's going great.

None of this is terribly surprising to those of us who questioned the wisdom of making doing more of what's failed spectacularly the default "solution" to every problem. But thanks to the The Contrarian Curse, now that everyone is profoundly bearish, I'm wondering: what could go right?

Though it may seem that the answer is "very little," a surprising number of things could go right. The first is a sharp recession: yes, that would be a big positive.

All sorts of extremes of stimulus, over-ordering, consumption catch-up and manic speculation are not actually healthy, despite boosting short-term "growth." One reason why inflation is rip-roaring is enterprises and consumers were no longer price-sensitive: people want what they want and pony up the dough for overpriced rent, overpriced resort rooms, overpriced used cars, etc.

The conventional narrative is this is all pent-up demand that must be met, regardless of price. But recessions tell a different story: when you can't afford the sky-high rent, you move to a cheaper locale. When you can't afford sky-high resorts, you cancel the vacation. When chicken wings become more expensive than other kinds of meat, you give up chicken wings.

Extremes of stimulus, borrowing and consumption have pushed capacity beyond what's sustainable. Can every big city support hundreds of high-end eateries? If not, then reducing capacity is healthy, as painful as it is for marginal enterprises to close.

A variety of idealistic policies have been revealed as failures. These painfully obvious failures enable a change of course to more realistic, affordable solutions.

Consider the policy narrative that the way to wean ourselves from hydrocarbons is to stop investing in hydrocarbons. What's missing, of course, is reducing hydrocarbons without funding and planning a transition to other energy sources means the economy will not make the transition. Getting rid of hydrocarbons doesn't magically create substitute sources of energy. Those have to be constructed, at great expense, before you can reduce hydrocarbon consumption.

Despite the focus on higher prices, our economy is still larded with immense waste. Just unplugging chargers and devices not in use would save up to 5% of the nation's electricity consumption. A large percentage of food is thrown away or left to rot. Millions of low-mileage vehicles are idling in congestion, each transporting one person.

If prices were truly high, a wide variety of time-honored methods to reduce waste and improve efficiency would be reinvigorated. The easiest way to reduce expenses is waste nothing. We're far from that ideal.

The systems we depend on are accustomed to expanding regardless of inefficiency or cost. A recession that slashed consumer spending, enrollments, permits, tax revenues, etc. would provide what's been missing for decades: the discipline of aligning expenditures with revenues.

Institutions have avoided the pain of slashing expenditures by jacking up tuition, student fees, property taxes, business license fees, utility fees, income taxes, etc. Private monopolies continually raise prices, supremely confident that consumers can't cancel the service because there are no alternatives. But people find ways to cancel monopoly services anyway, once they're faced with hard choices.

Being forced to stop borrowing more money as a "solution" and having to align expenditures with revenues will greatly strengthen the economy. Although Martian lenders may demand their quatloos (see below), you can't get blood from a stone and enterprises that default will clear the system of zombies that were only kept alive by rolling over debt at lower rates of interest.

As for interest rates rising--the non-wealthy been paying high rates of interest for years. Credit card interest is 15% and up, student loans 6% and up--what difference does it make that the Federal Reserve raised interest rates from near-zero? None.

The lenders who charge us 15% will now have to pay a few percentage points for their previously-free money. Oh, boo-hoo. The spread between lenders' costs and what they charge consumers will narrow, but it's not like consumers were able to borrow at Fed Fund Rates anyway.

As for mortgage rates rising, the popping of the housing bubble will improve housing affordability.

The solution to supply-chain insecurity and geopolitical blackmail is obvious: incentivize the reshoring of production and supply chains. Which is more important, corporate profits to make the wealthy even wealthier, or National Security, as in food security, resource security, production security and supply-chain security? Globalization is insecurity, blackmail and vulnerability.

How about a zero corporate tax rate on all products and services made entirely in the U.S., with exemptions for materials unavailable domestically? How about a one-month permit process for new mines instead of a decade-long travesty of a mockery of a sham of regulatory friction and regulatory capture?

An economy that has lost the discipline of aligning expenditures with revenues and the ability to place national security above profits is not healthy. Borrowing more money rather than eliminating friction, waste, fraud and useless regulatory burdens has severely weakened the economy. Our economy is not resilient or antifragile, it's a fragile sand castle of debt and denial.

incentivizing the lost discipline of aligning expenditures with revenues is the only way to transform a fragile economy into an adaptive antifragile economy. Debt that can't be paid will be dematerialized, one way or the other.




Recent podcasts/videos:

The Big Problems And Crash Dynamics Of The Spring/Summer 2022 Housing Market Crisis, Simplified (1:08 hr)

My new book is now available at a 10% discount this month: When You Can't Go On: Burnout, Reckoning and Renewal.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.



My recent books:

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 Kindle, $10 print, ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 Kindle, $8.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
Read the first section for free


Become a $1/month patron of my work via patreon.com.




NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Mark S.C. ($15), for your splendidly generous contribution to this site -- I am greatly honored by your steadfast support and readership.

 

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Thursday, May 19, 2022

The Solution for Social Media Spam Bots Is Already Here

The right of free speech should not be confused with an obligation for privately owned enterprises to allow spamming and spoofing under the guise of free speech.

The problem of bots on Twitter is in the news. This is of course a problem in all social media: fake accounts, spamming accounts, spoofing (expropriating your identity) accounts, and so on, all courtesy of anonymous account creation.

The solution to the tsunami of social-media bots is already here and already in use. It's known as identity verification.

For a preview of how this works, try updating your out-of-date AirBnB account. I just did this, and found that the identity verification process is rigorous:

1. Solve 20 puzzles--yes, 20--to prove you're not a bot.

2. Upload photos of a current government ID (driver's license, passport, etc.)

3. Take a selfie which the software compares to your government ID photo.

4. Verify your mobile phone number and email address.

5. Verify your credit card.

Wouldn't this process eliminate virtually all bots and spam/spoof accounts? It would take quite a lot of effort to gin up a fake government ID, and even then the other links to the spammer would have to verified: email, mobile phone and credit card (which has a physical billing address attached).

In other words, simply eliminating anonymous accounts and verifying identity would eliminate the spam bot / fake account issues.

Some will claim that eliminating anonymous social-media accounts is an infringement of free speech, but free speech would not be impaired by identity verification. Everyone would still be free to assemble in public places, hand out leaflets on street corners, set up a server and post content anonymously on the Web on their own web page, etc.

I have long argued that social media is a new type of public utility and should be regulated as such. I've made the case in a number of essays:

Facebook Is a Utility Which Can't Charge Its Users (July 22, 2010)

How Much of our Discord Is the Result of the "Engagement" Advert Revenue Model of Social Media? (October 24, 2017)

Should Facebook, Google and Twitter Be Public Utilities? (March 5, 2018)

Is Profit-Maximizing Data-Mining Undermining Democracy? (March 19, 2018)

If social media were understood as a public utility, then identity verification would be understood as serving the public interest and common good. Note the difference between the Web, a global network of servers, and a privately owned social media corporation. Regulating privately owned social media corporations wouldn't limit anyone's access to the Web. Requiring identity verification on social media would simply connect an individual's speech acts with their real-world identity.

Those who want to publish content and speech acts on the Web anonymously are free to do so, just as they are free to assemble, free to publish and distribute leaflets, etc.

In other words, we have to differentiate freedom of speech from freedom to spam, spoof, etc. on privately owned social media sites. Is robo-calling protected as a "right" granted by the Bill of Rights' clause on free speech? No. Neither is spamming, spoofing, etc. on social media sites.

Privately owned and operated enterprises are not obligated by the Bill of Rights to publish whatever content someone submits, any more than a privately owned and operated newspaper is obligated to publish every letter to the editor submitted by readers.

The right of free speech should not be confused with an imagined obligation for privately owned enterprises to allow spamming and spoofing under the guise of free speech. The confusion benefits spammers and spoofers, but not the public interest or the common good.

Social media corporations' revenues may well drop once all the fake spammer / spoofing accounts are deleted. To the degree the accounts were fraudulent, so too were the social media corporations' profits gained from hosting spammer / spoofing accounts.




Recent podcasts/videos:

The Big Problems And Crash Dynamics Of The Spring/Summer 2022 Housing Market Crisis, Simplified (1:08 hr)

My new book is now available at a 10% discount this month: When You Can't Go On: Burnout, Reckoning and Renewal.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.



My recent books:

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 Kindle, $10 print, ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 Kindle, $8.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
Read the first section for free


Become a $1/month patron of my work via patreon.com.




NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Evan R. ($50), for your magnificently generous contribution to this site -- I am greatly honored by your steadfast support and readership.

 

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Wednesday, May 18, 2022

The Epidemic Nobody Talks About: Burnout

Burnout makes everyone uncomfortable, so it's largely a silent epidemic.

Epidemics are not just biological in origin. A strong case can be made that a silent epidemic has been sweeping the nation for years, an epidemic few acknowledge: burnout.

People say "I'm really burned out," and most of the time they mean they're temporarily exhausted, but after a weekend of respite they're back at work on Monday.

The epidemic kind of burnout isn't temporary. Taking a weekend off doesn't restore one's ability to work. This kind of burnout is the collapse of one's ability to go to work at all, a physical, emotional and psychological collapse.

Burnout isn't just the result of overwork. It's the collapse of the entire no limits, self-exploitation way of life.

People who haven't burned out are at a loss to understand this collapse, as it's so far outside their experience. Those who love their jobs and have boundless energy can't understand those who have been running on empty for far too long and are now too exhausted to get out of bed.

Lacking any direct experience of such a collapse, the non-burned-out person may offer suggestions that work on temporary exhaustion but do not help the truly burned out: take the weekend off, listen to calming music, etc.

I could not understand what burnout felt like until I experienced it myself. I burned out at age 33 and more recently, again at age 65.

Work has changed dramatically in the 52 years I've been working. Some jobs have remained pretty much the same, but most have changed in ways few recognize or understand.

The pressure on workers has increased on multiple levels. Insecurity is the norm. As I've repeatedly documented, the purchasing power of labor has declined for 45 years.

Financialization and globalization have tended to make the already-wealthy much wealthier while increasing the psychological and financial pressure on the non-wealthy.

From the point of view of the already-wealthy who dominate the media, politics, healthcare, academia and institutions, the status quo works great because they're doing great.

In my view, our society and economy are now optimized to burn people out. It's cause and effect: the only possible output of a system optimized for self-exploitation, financial insecurity and open-ended work responsibilities is burnout.

Even those with high status and income are burning out. (See chart of physicians below.)

I realize many people will object to this characterization of our economy, and by extension, our society. But those who object must ask if their own privileged position has something to do with their objection.

I've addressed these changes in the economy and work since 2009. The pressures on non-wealthy participants have accelerated sharply since 2008.

Burnout Nation (May 14, 2019)

Push Them Hard Enough and the Productive Class Will Opt Out of Servitude (April 26, 2019)

Three decades ago, there were near-zero resources to aid the burnout. There are more resources now, but the vast majority are focused on getting the burnout back to the life that burned them out in the first place.

I couldn't find any book or account that spoke to my experiences. None provided what I was looking for: a practical guide to the entire experience and recovery process of burnout.

I realized that I should write the book I wanted but could not find.

This book is my account of what helped me: a practical reckoning that laid the foundations for a practical renewal. This book is focused on burnout in the context of the society and economy we live in. My hope is that it will help those who aren't burned out better understand those who have burned out.

I am not an expert in burnout, I am only an expert in my burnout.

You can read the Introduction and Table of Contents and the first chapters for free.

Burnout makes everyone uncomfortable, so it's largely a silent epidemic.

In my experience, there are no easy one-size-fits-all answers to burnout, but there is a way forward.








Recent podcasts/videos:

The Big Problems And Crash Dynamics Of The Spring/Summer 2022 Housing Market Crisis, Simplified (1:08 hr)

My new book is now available at a 10% discount this month: When You Can't Go On: Burnout, Reckoning and Renewal.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.



My recent books:

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $24, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 Kindle, $10 print, ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 Kindle, $8.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
Read the first section for free


Become a $1/month patron of my work via patreon.com.




NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Harvey D. ($100), for your outrageously generous contribution to this site -- I am greatly honored by your steadfast support and readership.

 

Thank you, David C. ($108), for your outrageously generous contribution to this site -- I am greatly honored by your support and readership.

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Monday, May 16, 2022

Checking In On Five Long-Term Cycles

The decline phase of S-Curves can be gradual or a cliff-dive.

Way back in 2007 I charted five long-wave cycles that I reckoned consequential:
1. Public debt (accumulating federal deficits)
2. Inflation
3. Oil (energy)
4. Interest rates
5. Speculative fever

Fifteen years ago, my chart look-ahead was about three years, to 2010, with the basic idea being that these long-term cycles had already turned or were about to turn. Looking back, I should have added a few other long cycles: demographics, for example.

I have two takeaways looking at this chart 15 years later. You probably have similar takeaways.

1. I underestimated the status quo's ability to kick the can down the road for a decade. The motivation to kick the can down the road was never in doubt; what was in doubt was the system's ability to respond to doing more of what's failed spectacularly and keep on keeping on more or less unfazed.

2. After 15 years of frantic can-kicking, the cycles have indeed turned. I would say the predicted turns were correct but frantic can-kicking extended the existing cycle of hyper-financialization / hyper-globalization an extra decade.

Various dynamics extended the hyper-financialization / hyper-globalization bubble phase. Fracking in the U.S.--funded by the massive expansion of cheap credit--extended the global energy abundance as the resulting losses were swept away in a tsunami of cheap credit. Zombie frackers were fed as many billions in new loans as were needed to keep the cheap oil flowing.

The whole shebang was at risk of unraveling in 2011, but China's gargantuan credit expansion saved the day, and did so again in 2016. But China's credit expansion has now reached systemic limits, and so those relying on China to save the global economy yet again from the banquet of consequences are about to be severely disappointed.

The Federal Reserve's ten-fold expansion of its balance sheet artificially suppressed interest and mortgage rates while various gaming-how-we-measure-what-we-measure tricks understated real-world inflation while hyper-globalization continued deflating costs by shifting production to the lowest-cost regions.

The success of frantic can-kicking to extend hyper-financialization / hyper-globalization pushed speculation into hyper-speculation. The monumental bubbles in stocks and housing 1999-2008 now look modest compared to today's Everything Bubble. The past 20 years have "proven" the profitability of buying the dip which is essentially a bet that there are no limits on frantic can-kicking.

Alas, it is now clear that at long last there are limits on frantic can-kicking, and the cycles have turned. The 40-year decline in interest rates has turned, the four-decade quiescence of inflation has turned, the era of low-cost extraction of abundant hydrocarbons has turned, the cycle of being able to "borrow our way out of trouble" has turned and the era of rewarding hyper-speculation has turned.

How gradual or dramatic the new cycle will be is unknown. If we imagine all these dynamics as a pendulum, the pendulum has been pushed by frantic can-kicking to systemic extremes that will reverse to extremes at the other end of the spectrum (minus a bit of friction).

The decline phase of S-Curves can be gradual or a cliff-dive. While we don't know the decay / unraveling trajectory yet, we can anticipate all these long cycle turns reinforcing each other. It's all one system, after all, and the decay / unraveling of each subsystem will accelerate the decay / unraveling of the other subsystems.

As a general rule, it's a good idea not to stand in the way of the pendulum. Put another way, it's considerably safer to be in the stands watching the great beasts slouching towards Bethlehem than being on the blood-soaked sand of the Coliseum, clutching a wooden sword and a shredded net.








Recent podcasts/videos:

The Big Problems And Crash Dynamics Of The Spring/Summer 2022 Housing Market Crisis, Simplified (1:08 hr)

My new book is now available at a 10% discount this month: Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $8.95, print $20)

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.



My recent books:

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $25, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 Kindle, $10 print, ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 Kindle, $8.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
Read the first section for free


Become a $1/month patron of my work via patreon.com.




NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

Thank you, Heather L. ($50), for your splendidly generous contribution to this site -- I am greatly honored by your support and readership.

 

Thank you, Gerald B. ($5/month), for your superbly generous contribution to this site -- I am greatly honored by your steadfast support and readership.

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Friday, May 13, 2022

Curveballs in the Housing Bubble Bust

All these curveballs will further fragment the housing market.

Oh for the good old days of a nice, clean housing bubble and bust as in 2004-2011: subprime lending expanded the pool of buyers, liar loans and loose credit created speculative leverage, the Federal Reserve provided excessive liquidity and the watchdogs of the industry were either induced (ahem) to look away or dozed off in a haze of gross incompetence.

The bubble burst was also straightforward: unsustainable debt, leverage, fraud and speculation all unwound in 2009-2011. The cause was obvious and the effect easily predictable.

Alas, today's housing bubble and bust has these curveballs:

1. A stupid amount of cash sloshing around the world.

2. Who has the cash and an interest in using it to buy houses.

I considered the two conventional explanations for the current bubble in Is Housing a Bubble That's About to Crash?: 1) a housing shortage and 2) the Federal Reserve buying mortgage-backed securities and flooding the economy with cheap credit, causing mortgage rates to plummet to record lows.

As the per-capita housing chart below shows, the number of housing units per person (per capita) is now at the same level as the previous bubble. This doesn't support the housing-shortage explanation on a national scale (though local scarcities could be driving prices much higher), and points to a speculative cheap-credit-fueled FOMO frenzy as the primary source of the bubble.

Now that mortgage rates have risen from 3% to 5%, the speculative credit-FOMO bubble is popping.

Unlike the national bubble bust in 2009 - 2011, the current bust will be highly fragmented due to the huge number of wealthy people with stupid amounts of cash at their disposal, thanks to the Everything Bubble that made the already-wealthy much, much wealthier.

The housing bubble will burst in places where buyers must borrow to buy, not where wealthy cash buyers want to live. Those with cash don't care much about mortgage rates, nor are they terribly sensitive to price. What matters is they get to live where they want to live.

One reason why people with cash will be interested in using it to buy a house is the urban migration is reversing. The rich people who snapped up tony homes in tony urban neighborhoods are quietly selling to the unwary and moving to rural towns and exclusive enclaves far from decaying urban centers.

The places the wealthy want to live don't want sprawl and new homes sprouting up, so supply will be limited. Locals who preceded the wealthy also have a dim view of sprawl, congestion, overcrowded schools, and all the other blights of building booms.

Strong demand from cash buyers and limited supply equal home prices which don't drop, they only notch higher. Note that 1) mortgage rates don't matter to those with stupid amounts of cash and 2) these are not the average speculative buyer, they're buying for themselves, and are protective of everything that makes the place somewhere they want to live: they are Super-NIMBYs (not in my back yard). "Growth" is fine as long as it's somewhere else.

A large number of people with insane amounts of cash are not U.S. citizens, and they're seeking safe havens and nice neighborhoods in places like Canada, Australia and the U.S. Smart populations (for example, Switzerland) place restrictions on foreign ownership for the obvious reason that foreign cash can quickly drive prices beyond the reach of the homegrown populace. Citizens become landless serfs in their own country.

Absent such limits on foreign ownership, housing prices in desirable locales quickly rise beyond the reach of the non-rich and keep on going higher.

Many of these foreign wealthy are escaping capital controls and the potential clawback of ill-gotten gains, and so they are highly motivated buyers.

Corporate owners and buyers are another curveball. Corporations which snapped up hundreds or thousands of rental houses may have confused greed with investing genius, and a nice little recession may leave them with hundreds of vacant homes or newly unemployed renters resisting eviction for non-payment of rent.

As these corporations unload their massive inventory, prices could fall considerably lower than pundits anticipate.

Yet another curveball is urban decay. It's been roughly 50 years since U.S. cities unraveled in a self-reinforcing spiral of decay, and so the conventional view is rapid decay of basic services and the resulting collapse of housing values is "impossible." Before making any rash conclusions about "impossibility," research New York City circa 1971 - 1980.

What's been forgotten is the urban decay of the 1970s was reversed by two one-off miracle-saves: the exploitation of recently discovered super-giant oil fields, which brought energy costs down in the 1980s and beyond, and 2) the hyper-financialization of the U.S. and global economies.

Discoveries of new super-giant oil fields has petered out. The planet has been scoured and there are no more. As for financialization, boosting debt and leverage are now negatives, not positives. There will be no miracle-save by expanding debt, leverage and speculation.

Urban decay--declining tax base and tax revenues, soaring costs and crime and the out-migration of the wealthiest taxpayers--is a curveball few understand. It's "impossible" until it's unstoppable. People vote with their feet.

All these curveballs will further fragment the housing market. If national home prices fall 20%, locales blighted by corporate dumping of rentals and urban decay could fall 50% on their way to "impossible" declines. Locales favored by the wealthy with stupid amounts of cash could go up 50%.

Generational and regional inequalities have reached extremes that further fragment the bubble bust. Folks who bought homes for $150,000 decades ago in bubblicious coastal areas are selling out for $1 million in cash, while those who paid roughly the same price in a less-bubble-blessed region have $250,000 after selling-- $100,000 less than the current median home price. When you bought and where you bought makes all the difference.

This will drive further fragmentation as the sorta-wealthy with $1 million in cash scoop up the tier below the mega-wealthy. The $2.5 million house in the exclusive enclave is out of reach, but the one for $950,000 in a highly desirable locale is still do-able for the top 5%. Those having to borrow a mortgage and make payments out of wages will have to look for locales that have good fundamentals but aren't quite attractive enough to be over-run by those with stupid amounts of cash.

Paul of Silver Doctors and I discuss these topics in depth in The Big Problems And Crash Dynamics Of The Spring/Summer 2022 Housing Market Crisis, Simplified (1:08 hr).








Recent podcasts/videos:

The Big Problems And Crash Dynamics Of The Spring/Summer 2022 Housing Market Crisis, Simplified (1:08 hr)

My new book is now available at a 10% discount this month: Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $8.95, print $20)

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.



My recent books:

Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States (Kindle $9.95, print $25, audiobook) Read Chapter One for free (PDF).

A Hacker's Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World
(Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 Kindle, $10 print, ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 Kindle, $8.95 print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 Kindle, $15 print)
Read the first section for free


Become a $1/month patron of my work via patreon.com.




NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.

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

 

Thank you, Edward M. ($5/month), for your superbly generous pledge to this site -- I am greatly honored by your support and readership.

Read more...

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