Wednesday, June 03, 2020

When Institutions Fail, Fragmentation and Decentralization Become Solutions

That which has failed is unsustainable, no matter how many trillions the Federal Reserve tosses against the tides of history.
The chapter titles of Michael Grant's excellent account of The Fall of the Roman Empire identify the core dynamics of decline:
The Gulfs Between the Classes
The Credibility Gap
The Partnerships That Failed
The Groups That Opted Out
The Undermining of Effort
Every one of these is a manifestation of institutional failureThe Gulfs Between the Classes (see chart of soaring inequality below) manifests a completely broken economic and social order, and the abject failure of core institutions (for example, the source of wealth inequality, the Federal Reserve).
The Gulfs Between the Classes also reflects our pay-to-play political system, in which wealth buys political power and everyone else gets to watch a pantomime of democracy.
The Credibility Gap is as wide as the Grand Canyon, as unaccountable insiders comfortably secure in institutions do what serves their interests, which can be summarized as: Truth Is What We Hide, Cover Stories Are What We Sell.
Government agencies widen The Credibility Gap with bogus, rigged statistics and complexity thickets ("We have to pass the bill so that you can find out what is in it.") designed to make accountability and transparency effectively impossible.
The Partnerships That Failed include the alliances of various warring elites and the pantomime partnerships of elites and constituencies ("We pretend to obey and you pretend to listen to us.")
The Groups That Opted Out are as yet largely invisible because all the small business owners who closed down and stopped being Tax Donkeys are under the radar, and all the debt-serfs who have renounced their debts are carefully hidden by the appropriate bureaucracies, lest the enormity of the debt-serf opt-outs becomes visible.
The Groups That Opted Out include those who have lost trust in the corporate media, the government's statistical claims and the leadership of failing institutions.
The Undermining of Effort manifests as the impossibility of reforming the institutions that have lost their legitimacy due to self-serving looting, incompetence and the disavowal of accountability, a topic I addressed in my books Why Things Are Falling Apart and Why Our Status Quo Failed and Is Beyond Reform.
When institutions have lost public trust and thus their legitimacy, the solution is fragmentation and decentralization so the unit size is reduced to the point where accountability and transparency can be enforced by the citizenry and/or members.
Management author Peter Drucker (Post-Capitalist Society) noted that in the transition to a post-capital economy, legacy institutions in everything from higher education to healthcare are the wrong unit size, meaning that they are too large to be effective, accountable and transparent, as their sheer mass encourages processes and thickets insiders can use to avoid accountability and transparency.
When fiat currencies fail, fragmentation and competition between transparently priced currencies will be the solution. The ideal solution is a spectrum of currencies ranging from bitcoin and other mined cryptocurrencies to privately issued gold-backed currencies, state-issued gold-backed currencies, local currencies intended for use in local economies, and my proposed labor-backed currency which I outlined in my book A Radically Beneficial World.
Politically, city-states on the model of the Hanseatic League may prove to be the appropriate unit size, a topic Mark, Jesse and I discuss in our latest podcast AxisOfEasy Salon #6: The Hanseatic League of Decentralized Crypto-States (55:44).
That which has failed is unsustainable, no matter how many trillions the Federal Reserve tosses against the tides of history. The current travesty of a mockery of a sham system will fragment no matter how desperate the looters, parasites and predators are to maintain their swag.
Recent Podcasts:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


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.

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, Asad Z. ($5/month), for your superbly generous pledge to this site -- I am greatly honored by your support and readership.
 
Thank you, Terry M. ($50), for your stupendously generous pledge to this site -- I am greatly honored by your support and readership.

Read more...

Tuesday, June 02, 2020

The Post-Covid Economy Will Be Very Different From the Pre-Pandemic Bubble Economy

As the old models break down, opportunities for new models will arise.
Unstable, unsustainable systems can lull observers into a comfy complacency as instability increases beneath a thin veneer of apparent stability.
That's the systemic story of the past 20 years: all the extremes that were needed to maintain the veneer of stability have increased the instability building beneath the complacent confidence.
But sadly for the status quo, all bubbles pop, all extremes revert to the mean and all that is unsustainable implodes as apparently linear systems (snow accumulating on a mountainside) suddenly go non-linear (avalanche).
The majority of the Pre-Pandemic Bubble Economy was unsustainable:
1. Bubbles in the stock market and housing-- unsustainable
2. Soaring debt: corporate, household and public-- unsustainable
3. College costs paid by trillions of dollars in student loan debt-- unsustainable
4. Healthcare consuming 20% of the GDP-- unsustainable
5. Bubble in commercial real estate (CRE) -- unsustainable
6. Long supply chains to Asia-- unsustainable
7. Fracking industry dependent on ever-expanding debt to fund operations-- unsustainable
8. Over-supply and over-capacity for almost everything-- unsustainable
I could go on but you get the idea.
As I've been discussing in recent months, these unsustainable systems are tightly bound and incredibly fragile. Each is a row of dominoes that intersect with all the other rows, so one domino falling in any row will topple all the dominoes in every row.
Consider just one unsustainable sector: commercial real estate. Thanks to decades of overbuilding caused by the Federal Reserve's super-low interest rates, there is too much commercial space in the U.S.: too much retail space, too much office space, too much self-storage, etc. There are also too many new buildings on soon-to-be empty college campuses and too many hotels, etc.
The decimation of retailers has been underway for the past four years. The chart below is from 2017, and the store closures have only accelerated.
The U.S. has between 8 and 10 times more retail space than other developed economies. That suggests 50% or more of all the commercial retail space in America is superfluous.
The demand for commercial space is crashing, and nose-bleed valuations are under pressure. This charts shows that valuations could fall in half--and that wouldn't necessarily rebalance supply and demand.
All the trillions of dollars in debt piled on over-valued CRE is at risk of default. That alone will trigger a widening financial crisis as the dominoes fall.
As Richard Bonugli and I discuss in our recent podcast on "the new normal," as the old models break down opportunities for new models will arise. For example, the entire education complex based on the outdated, dysfunctional "factory model" of large campuses and hundreds or thousands of students packed together is ripe for disruption.
Why not have small decentralized classes without the bloated administration and centralized curriculum--not to mention the improved security of small, decentralized groups? In my book The Nearly Free University I describe how small, decentralized "apprenticeship" groups could improve actual learning while eliminating the entire bloated administration and campus costs (lab work could be performed onsite in existing work places).
Rather than accredit the institution, accredit the student.
The unsustainably costly healthcare sector is equally ripe for disruption as demand destruction and soaring costs undermine the current model of profiteering.
Decentralizing the economy sacrifices the long global supply chains and corporate monopolies for local jobs and local supply chains. All the corporate and state monopolies and cartels that have hollowed out the economy and the social order were exploitive, parasitic and predatory as well as unsustainable, and their slide into the dustbin of history is accelerating as linear systems cascade into non-linear dynamics.
The post-Covid economy will be very different from the pre-pandemic bubble economy, in ways few anticipate: non-linear creative destruction and DeGrowth will be the dominant dynamics. Models that obsolete the old, unsustainable, dysfunctional models will blossom, and that is how civilization advances.
Maybe "shareholder value" has been the greatest con in history, a PR cover story for the greatest rise in wealth and power inequality in American history.
Recent Podcasts:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


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.

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, Claudia W. ($10), for your most generous contribution to this site -- I am greatly honored by your support and readership.
 
Thank you, Donald D. ($50), for your stupendously generous contribution to this site -- I am greatly honored by your support and readership.

Read more...

Monday, June 01, 2020

Truth Is What We Hide, Cover Stories Are What We Sell

The fact that self-serving cover stories are now the norm is making it difficult to love our servitude with the slavish devotion demanded of us.
The need to suppress the truth and competing narratives arose with the emergence of urban elites whose power and wealth were threatened by any exposure of the self-serving nature of their rule.
Though suppression of the truth has a long history, it accelerated in the 20th century as totalitarian regimes embraced the technologies of mass communication and the marketing techniques of propaganda.
With the decay of the social contract and the emergence of monopolistic search and social media platforms, the suppression of competing narratives has accelerated as ruling elites tighten their grip in response to the unraveling of the social order.
Thus we get Federal Reserve Comedian Jay Powell claiming the Fed doesn't create wealth inequality, when it's pathetically obvious the Fed is the primary engine of wealth inequality. (Give me $10 billion at near-zero interest rates and I'll get rich, too.)
We can summarize the current era in one sentence: truth is what we hide, cover stories are what we sell. Jean-Claude Juncker's famous quote captures the essence of the era: "When it becomes serious, you have to lie."
And when does it become serious? When the hidden facts of the matter might be revealed to the general public. Given the regularity of vast troves of well-hidden data being made public by whistleblowers and white-hat hackers, it's basically serious all the time now, and hence the official default everywhere is: truth is what we hide, self-serving cover stories are what we sell.
The self-serving cover stories always tout the nobility of the elite issuing the PR: we in the Federal Reserve saved civilization by saving the Too Big To Fail Banks (barf); we in the corporate media do investigative reporting without bias (barf); we in central government only lie to protect you from unpleasant realities--it's for your own good (barf); we in the NSA, CIA and FBI only lie because it's our job to lie, and so on.
Three essays published long before the pandemic speak to the degradation of data and factual records in favor of self-serving cover stories and totalitarian political correctness.
"It's not just that isolated individuals are unmasked as corrupt or self-interested (something that is as old as politics), but that the establishment itself starts to appear deceitful and dubious. The distinctive scandals of the 21st century are a combination of some very basic and timeless moral failings (greed and dishonesty) with technologies of exposure that expose malpractice on an unprecedented scale, and with far more dramatic results.
Perhaps the most important feature of all these revelations was that they were definitely scandals, and not merely failures: they involved deliberate efforts to defraud or mislead. Several involved sustained cover-ups, delaying the moment of truth for as long as possible.
(The selective coverage) "generated a sense of a media class who were adept at exposing others, but equally expert at concealing the truth of their own behaviours.
Several of the defining scandals of the past decade have been on a scale so vast that they exceed any individual's responsibility. The Edward Snowden revelations of 2013, the Panama Papers leak of 2015 and the HSBC files (revealing organised tax evasion) all involved the release of tens of thousands or even millions of documents. Paper-based bureaucracies never faced threats to their legitimacy on this scale."
From the Late Founder and Editor Robert Parry of the Consortium for Independent Journalism (via John S.P.)
When I was a young reporter, I was taught that there were almost always two sides to a story and often more. I was expected to seek out those alternative views, not dismiss them or pretend they didn't exist. I also realized that finding the truth often required digging beneath the surface and not just picking up the convenient explanation sitting out in the open.
But the major Western news outlets began to see journalism differently. It became their strange duty to shut down questioning of the Official Story, even when the Official Story had major holes and made little sense, even when the evidence went in a different direction and serious analysts were disputing the groupthink.
Looking back over the past two decades, I wish I could say that the media trend that we detected in the mid-1990s had been reversed. But, if anything, it's grown worse. The major Western news outlets now conflate the discrete difficulties from made-up 'fake news' and baseless 'conspiracy theories' with responsible dissenting analyses. All get thrown into the same pot and subjected to disdain and ridicule.
In truth, facts today are deemed controversial if they deviate from accepted narratives, and professors must self-censor out of fear of being condemned and losing their jobs.
Based on conversations I've had with colleagues still working in academia and from what I can tell about recent cases of censorship, the antagonism is primarily from left-leaning colleagues attacking other liberals.
These instances are indicative of a larger, worrisome trend -- instead of debating contentious ideas, those in opposition to them throw words ending in '-phobic' around, shutting the conversation down and pretending they don't exist.
For those who say ideas that denigrate members of society shouldn't be entertained, silencing the debate doesn't make hateful beliefs go away. In many cases, it isn't controversial findings that pose a threat; the threat comes from the possibility that others will use these facts to justify discrimination. But it's important that we distinguish between an idea and the researcher putting forth that idea, and the potential for bad behaviour.
With academics avoiding entire areas of research as a result, knowledge currently being produced is constrained, replaced by beliefs that are pleasant-sounding but biased, or downright nonsensical. The recent 'grievance studies' investigation, led by academics Peter Boghossian, James Lindsay and Helen Pluckrose, laid bare how bad the problem has become. The trio managed to get seven fake papers (but oh-so politically correct and hence "good to go"--CHS) accepted in high-ranking humanities journals.
In a consumerist-based culture accustomed to 24/7 selling of one self-serving story or another, the fact that self-serving cover stories are now the norm is making it difficult to love our servitude with the slavish devotion demanded of us. I've noticed a new twist on self-serving propaganda: an alternative opinion isn't debated, it's debunked, as if questioning the authorized narrative is by definition a "conspiracy theory" that can be "debunked" by repeating the authorized cover story enough times.
Of related interest:
Orwell and Kafka Do America (March 24, 2015)
The Ghosts of 1968 (February 14, 2018)
Recent Podcasts:
Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).


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.

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, Carol L. ($5/month), for your splendidly generous subscription to this site -- I am greatly honored by your support and readership.
 
Thank you, Ron G. ($50), for your stupendously generous contribution to this site -- I am greatly honored by your steadfast support and readership.

Read more...

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 third-party advertising networks such as Adsense and 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.

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