The Musical Chairs Economy
Ok, for some time, folks have been after me for a formal economics post. What’s going to happen in the future in the US?
The answer, for around the next 5 to 6 years, maybe longer, is the musical chairs economy. Let’s lay out the basics.
- Oil and Gasoline consumption in the US has been crashing for years and the trend shows no sign of stopping.
- The US is now a net exporter of petroleum products. Oil imports have dropped 10% since 2006.
- The majority of people who lost their jobs in the aftermath of the financial crisis have not found new jobs. Nor are they going to. Those who did, have generally found jobs which pay a lot less than what they had before.
- For those people who did manage to keep their jobs, things aren’t so bad, just as people who kept their jobs in Great Depression did ok.
What has happened is that the general circle of prosperity has been reduced. Less people now live in the “good” US economy. When they drop out of that economy they also use a lot less oil and gas, and even electricity.
Since the US can no longer sell nearly as much paper in exchange for real resources and goods, the US now has to sell something the rest of the world wants. One part of that is intellectual property, which is why you will continue to see stricter and stricter IP laws. The other part of that is hydrocarbons. The world is still hungry for oil. And if Americans use less of it, and if the US moves massively to fracking of unconventional oil (which it is) then the US can, again, become an oil exporter. (Remember, for much of the 20th century the US exported oil.)
This plan includes impoverishing large numbers of Americans, since the reduction in oil use is not primarily being produced by providing the same services with less energy, but that is not an issue to those who run America’s industry or politics, since they do not, despite rhetoric, care about the welfare of ordinary Americans.
This game, in a lesser form, has been going on for a long time. In the older version, going on since at least 1980 or so) production was offshored or outsourced, workers laid off and they never found good jobs again. Industries of the past were offshored, but industries of the future were mostly not created (the internet boom being the last large-scale industry creation episode). When they were created, they “went to scale” in other countries–once how to produce was understood, the production was done overseas, where it was cheaper, not just in wages but in terms of regulations (for example, batteries are made in China by hand. Batteries, of course, are mostly acid containers.)
The game has now moved into a more virulent stage. During the 2000’s various economists and financial gurus used to laugh that the fools overseas were giving America real goods and resources in exchange for worthless paper. They thought they had found a free lunch, and many of them were right, form themselves, individually (who cares about fellow Americans? If they can’t make too bad for them.)
So what happens now is a recovery of sorts. Life is not so bad for the upper middle class and the upper class (I don’t include the oligarchs in the upper class, they are the ruling class, the upper class are the lawyers, doctors, judges, county pols, mid-level real-estate developers and so on.) Since the majority of the population who wants a job can find one, who cares if millions of Americans are unemployed? They are not economically functional in this economy, it is better for them to just go away, so that oil can be sold overseas.
Bear in mind that the short history of American economics in the post-war period can be summed up as “suburbanization.” Wave after wave of developments, and the money which were made from them. Suburbanization, by its very nature, requires gasoline, because it requires cars. Suburbs do not, and probably cannot, have rapid transit. They are also not economically self-sufficient, generally deliberately (the horror of some one working from home causes vapors amongst developers and suburban homeowners, it seems.)
Peak oil may or may not be here, but it’s pretty clear that peak cheap-oil has passed. The American lifestyle of the 20th century, which has not been fundamentally changed by the internet and assorted telecom gadgets, is oil based.
So, there will be recessions and non-recessions (amidst what is an ongoing long Depression). And in each recession those who fail to grab a chair will be cast out into the dispossessed. Those who keep their chairs will be allowed to keep some facsimile of the “American lifestyle”.
The people who run the American economy and political system will continue along these lines so long as it continues to bring them money or power. As noted, they do not have fellow feeling for other Americans, they believe they earned everything they have, and that if someone else isn’t prosperous, it’s because they didn’t earn it. Such useless eaters are a drag on society.
I emphasize the thought process, which some will find polemical, because it is at the heart of the problem. It is the most important part of the post. There are other options, from the managed decline favored by environmental purists through to various types of smart growth. They are not being pursued and will not be pursued because they are more work with less certainty of who will reap the profits and power than simply managing the current decline, and culling the herd from time to time, as necessary.
“The powerful do as they will, the weak suffer what they must.”
As long as you, the people, believe you are weak, you will suffer what you must.