The horizon is not so far as we can see, but as far as we can imagine

In A Crisis We Can Only Afford What We Can Already Do

I’ve written, prescriptively, that money shouldn’t buy anything that matters: not healthcare or education, for example.

Anything we can do, we can afford

But at the top level money can’t buy anything you couldn’t do anyway. Anything we can’t do, we can only buy from others. The Britian of the thirties was still, despite all its problems, a great industrial power. They could do most things, and it was ridiculous to pretend they didn’t have the money. They could build ships and buildings and refine medicines and so on.

There we some things they couldn’t do: they couldn’t produce as much food as they wanted: they bad to buy that from others. But since other people wanted what they could do, they would accept British pounds.

And there were things no one could do, and money wouldn’t buy those things: go to the moon, for example.

Today, for all our money and science, we still can’t just buy an end to cancer.

There’s a little, largely bullshit “law” in economics called the “law of comparative advantage.” If we all do what we’re best at, we’ll produce the most stuff, including services and we’ll all be best off. There’s a certain technical truth to this law.

But if you can’t produce something yourself, you can only buy/do it if those who produce it are willing to sell to you, and if you must have it, they can charge very high prices if they sell at all.

Britain couldn’t produce enough Destroyers in WWII, so they had to go begging to America to get them, and the price the Americans charged was extremely, extremely high. (The book “That Man” by Justice Jackson goes into this.)

Ukraine wants a lot more missiles and artillery shells, but Europe and America don’t make enough or won’t sell large chunks of their reserves.

When you don’t have or, or lose the ability to produce something yourself you lose the ability to buy it with your own currency without other countries having a veto. Produce can mean many things, for the Japanese and Germans in WWII, it meant not having enough oil production of their own.

When America and the West in general shipped their productive capacity overseas they assumed that it didn’t matter: that in the world of free trade, they’d always be able to buy what they needed, and that they’d have effectively infinite money.

It doesn’t work like that. If we produce less, in time our standards of living will decline and in times of crisis, others will keep what matters for themselves first. (Covid vaccines illustrated this, and even if you think they didn’t work, well, at the time the vast majority didn’t believe that.)

As climate change, ecological collapse and civilization collapse continue, we will also find our ability to buy what we need constrained: not enough water in large areas. Not enough fertile farmland. It isn’t that there is nothing we can do: we can try varieties of indoor farming and we can de-salinize water and so on, but we won’t be able to buy enough of what we need. We won’t be able to easily buy insects or bees, or fish in the ocean or low CO2 in the air.

Anything we can do, we can buy. But it we can’t do it, we can’t buy it.

People forget this, both ways. Both in learned helplessness, as if we couldn’t easily house everyone and feed everyone (the absolute food shortages are in the future): we have massive food subsidies and enough ability to build homes, after all.

Anyone saying ‘we can’t afford’ is either a fool, or feeding you bullshit.

But there are some things we can’t afford, and the number of those things will increase over time.

 

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12 Comments

  1. Purple Library Guy

    Yup.

    As a side note, the “certain technical truth” to the law of comparative advantage is more minimal than is generally realized. There are two basic problems with the law of comparative advantage. One of them was already a fatal flaw back when Ricardo came up with it–it assumes there is no such thing as the future or change. So, if your country is bad at manufacturing, it will ALWAYS be bad at manufacturing so there is no point in trying to do it or build up your ability to do it. The people Ricardo was lecturing about this largely ignored him if they had any choice–notably the Americans, who the British would have preferred if they just kept growing cotton or tobacco or whatever and kept importing British manufacture. Had the Americans followed this advice, history would have been very different. But they didn’t, they went protectionist and worked hard to build up indigenous industry.

    The other was not a problem in Ricardo’s day, and might well have led him, if he arrived in the present, to point out that his law does not apply to modern circumstances. That is, in Ricardo’s day capital mostly did not move across national boundaries; foreign investment wasn’t much of a thing. When foreign investment is a thing, it changes the math and comparative advantage stops working.

    Back when free trade first started being a thing, when I was much less politically and economically radical than I am now, even then I pointed out repeatedly that everyone was talking about free TRADE, but a lot of the big stuff in the agreements was actually about free INVESTMENT, which was a very different thing likely to have very bad results. IMO it has.

  2. The few nations who have become developed since 1950 did so because they understood this (Ex: South Korea, Taiwan and China).
    They didn’t stick with selling low valued added goods. They industrialized even in industries where they were at a natural disadvantage. South Korea’s steal industry had to import natural resources over long distances whereas western competitors didn’t. The government built a steal industry anyways.

    Almost all Left and Right governments in the Global South (as well as the north) do not understand the importance’s of industrialization.
    The right thinks a country can get rich by giving assets to oligarchs, financialization, and letting infant domestic companies compete with rich highly developed foreign ones.
    The left thinks a country can get rich with construction, and services such as health care and education.

    The results speak for themselves. In 1950 China was as rich/poor as Africa and South Asia and Latin America was 2-4 times richer. Now China is over 3 times richer then South Asia and Africa and richer then Latin America.

    The Western oligarchs don’t necessarily fear China. What they fear is the entire Global South gaining consciousness of how Western neo-liberal policies impoverished them while those “commie” Chinese are now so rich they are off building hospitals, schools, airports and roads all over the world.

  3. GrimJim

    I was talking with my wife the other day about how completely dysfunctional every company we have ever worked for has been.

    For most of my adult life I worked in a small industry with small businesses, usually held by the founder or a small group of founders. I believed that the dysfunction I encountered in those companies was a result of the lack of business sense of the founders and the fact that the companies existed as much to expand the reach if their egos as to produce product and make a profit.

    Then when that industry went pear shaped I started working in the “real world,” for companies for whom the profits of that prior industry would seem like a quarterly accounting error.

    I discovered that, contrary to my belief that I’d finally be working for a “professional company,” that the vastly bigger companies were vastly, exponentially more dysfunctional, from the bottom all the way to the top.

    I’d now long considered that this was a fairly recent development, since Reagan and etc., but after long discussions with older workers and this recent conversation with my wife, realized…

    American business has always been a dysfunctional shit show, buried in piles of waste and foolishness.

    It was only ever the vast, “unexploited” resources that were seized from the natives that allowed US businesses to operate as they did and do. That was a HUGE leg up, and still, with all the US industry, for lost if it’s history it was barely able to support it’s own needs.

    Recall that until WWII, most Americans lived under effective Third World conditions for the time, living a subsistence lifestyle combining wage slavery and gardening their small farm like plots that enabled them to survive through recessions and depressions. Of course their corporate masters lived in palatial mansions that put the castles if kings to shame.

    But then WWII left the rest of the industrial world in rubble, usually with severe manpower issues, and the US hit it’s peak. The Average Joe got yo at least lick the brass ring, for a while.

    And it’s all been downhill from there, ca. 1970s and peak oil, further exacerbated by off shoring and other shenanigans designed to return all the profit back to the hands of the corporate masters.

    And it all survived American’s utter inability to properly run businesses in any reasonable manner. The egos of owners and managers have ALWAYS been paramount in US businesses, profitability or even survival be damned.

    Now that business, like society, is reverting to type here in the states, it will be interesting to see how quickly and completely remaining business collapses once all the regulations are taken away and the egos are completely free to wallow in their own crapulence with the rickety house of oil soaked moth eaten cards that remains…

  4. Joe

    Some businesses are in fact still well run in the U.S.
    Competence Is the key. Giving a shit about quality is the key. Knowing who does a good job and sells a good product that one can use in their part of the manufacturing process is key. There is still a place for small run high quality product. Small buisness is still subject to the headwinds of reality.

  5. bruce wilder

    civilizations and states must reproduce themselves continuously, as any organic thing does

    it is as that reproduction cycle fails that the real trouble begins — when the political economy no longer has the capacity to produce what it produced in the past but which must be replaced

    rapid technological advance has meant that many elaborate systems built historically have been abandoned, replaced not by reproduction so much as displaced by new production we never replaced sailing ships we never replaced the elaborate network of streetcars we are not replacing copper-wire telephone systems

    but our collective instinct in the face of the challenges of climate change, resource depletion and ecological collapse seems to be a panicky conservatism wanting to replace the petroleum-based automotive transportation system with an exact analog powered (magically?) by electricity

    the thing is, we have never had to generate sufficient surplus from the depreciation of existing inherited systems to reproduce them nor to maintain the capacity to produce them (which is much the same thing) the U.S. does not have the capacity to produce steel or concrete neither the organizational and management skills nor the technical “manual” skills to build efficiently and effectively have been maintained — they’ve been liquidated to maintain consumption on the cheap while transferring massive wealth claims to the top

    as we go forward, i would expect the falter to come one disaster or catastrophe at a time, but unfolding in slow motion Boeing furnishes a prime example the resources to design a fresh design as successor to the 737 could not be allocated given the desire to cash out executives and shareholders — classic failure to reproduce with generational succession — a series of expedients are employed to reproduce on the cheap and the space the 737 occupied gradually falls apart

    the Key bridge in Baltimore collapsed like a cheap suit the first thing i thought when i saw the video was “what a stupid bridge design! . . . cheap obviously but no thought to what might happen” we don’t hold anyone accountable we look at this and think “accidents happen there’s nothing anyone could do” we do not collectively ask “who approved such an idiotic design that the whole thing falls apart, not just the parts directly connected to the impacted column no one asks, where is the disaster recovery plan? if you have a bridge that is this vulnerable, surely there’s a plan?

    it won’t take much painful, prolonged delay in clearing the bridge to destroy Baltimore as a working port. maybe i will be pleasantly surprised and rapid action will take place despite the instant excuses of the helpless, hopeless Buttiegieg.

    but in the medium-run, i expect more failures to rebuild rapidly or adequately or at all too much of the upward redistribution of income and wealth depends delicately not on returns on investment but on cashing out depreciating assets and capabilities by not repairing or replacing

    the fires in Maui nothing is being rebuilt for the (soon to be former?) residents Gaza, yeah no Ukraine, ha ha a Florida hurricane or three? an earthquake amongst the San Juan islands? a major city actually running out of drinking water? or a heat wave with sustained wet bulb temperatures that make its region uninhabitable?

  6. Eric Anderson

    At the end of the day, I’m not sure convinced any country will be able to afford to do much at all but triage. Art precedes reality, and the near future sci fi writers like Kim Stanley Robinson and William Gibson have gamed it out pretty well. We live in a staggeringly complex biosphere that is constantly in cyclical flux. We’ve pushed our particular cycle to the very absolute edge through population pressure and pollution.

    One small perturbation to the natural system and dominoes begin to fall. No country will be immune. They’ll all just be fighting for their own internal survival.

    Ian, this one is from Canada. RCMP report. It speaks to the hairline margin civilization is clinging to by its fingernails.
    https://www.ctvnews.ca/canada/secret-rcmp-report-forecasts-a-bleak-future-in-canada-1.6821642

    We can’t “afford” to deviate from the homeostatic mean one iota.

  7. Eric Anderson

    This post is highly instructive of what Ian is talking about. Start here, then map to the present. Cheap plentiful oil + industrial policy = the massive ahistoric U.S. middle class. Lay the same map on the demise of the middle class and the demise of cheap oil and industry.

    We tried to do it again with the fracking boom, but the energy cost of energy is way too high. I go back to one of my pinned toots over at Mastodon:

    “Capitalism is little more than an ideological hangover produced from a time long past when low hanging fruit was everywhere for the taking and people thought it would never disappear. The fruit is gone, folks. If we ever want it back, capitalism won’t take us there.”

  8. different clue

    @Eric Anderson,

    Several decades ago an American historian named Walter Prescott Webb wrote a book about just this subject, called The Great Frontier. His thesis was that with the Columbian intrusion in Turtle Island ( the “discovery of America”), that the teeming masses and grasping classes of Western Europe suddenly had a whole new feast of matter, things and energy to grab and take. Medieval concepts of steady state living became obsolete and a feast of grab and take opened up which allowed the invention of new attitudes and ideologies ( like capitalism) to self-organize the approach to all those “free buffets”. Here is a link to that book.
    https://www.goodreads.com/book/show/2569175-the-great-frontier

    Here is a link to a whole bunch of images of that book, of Walter Prescott Webb his own self, and related things. Every image has its own url, so more might be found out by extensive url diving as guided by the images.
    https://images.search.yahoo.com/search/images;_ylt=AwrEm2OuAgdmlgQAZCNXNyoA;_ylu=Y29sbwNiZjEEcG9zAzEEdnRpZAMEc2VjA3Nj?p=walter+prescott+webb+the+great+frontier&fr=sfp

    Mother Earth News magazine has reposted a legacy article about Walter Prescott Webb at their current website.
    https://www.motherearthnews.com/sustainable-living/nature-and-environment/walter-prescott-webb-zmaz80sozraw/

    And here is a Texas Monthly article about Walter Prescott Webb called . . . ” Texas’s Most Famous Historian Looks Back at His Own, Legendary Life “.
    https://www.texasmonthly.com/arts-entertainment/texas-famous-historian-looks-back-at-life/

    It seems to me that the whole Space Race, back to the moon, conquering other planets, etc. is a desperate effort to keep the Great Frontier open a while longer so as to avoid facing up to Hitting The Wall of nowhere left to grow and nothing left to grow with. Those societies or subsocieties which can successfully “go Indian” will be the ones that adjust most survivably to the coming Great Window SlamShut.

  9. Soredemos

    What is the book you’re referring to, That Man by Justice Johnson? Searching both the title and the author hasn’t gotten me anywhere.

  10. Soredemos

    Ah that clarifies it, thanks.

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