1) the majority of new jobs are bad.
2) the economy has still not recovered all lost jobs, either in absolute #s or as a percentage of the population
3) so there are fewer jobs, and what new jobs have been created are worse. They pay worse.
4) The upper middle class job market has recovered, which is why those folks are no longer panicking and are telling you that the economy isn’t so bad as all that.
5) the failure to force the rich to take their losses and to break up the banks means that the same people who caused the 2007/8 financial crisis still control the economy and the government.
6) failure to restructure the economy to get off oil and over to an electrical economy means that the US (and the world) are caught in the oil price dilemna: any real recovery increases oil price and will be derailed by those high oil prices.
7) Europe, ex. Germany, is in recession.
8 ) the developed world is in depression, it never left depression. During depressions there are recoveries (such as they are) and recessions, but the overall economy is in depression.
9) China’s economy is slowing down. Since China is the main engine of the world economy, followed by the US, this is really bad. If it goes into an actual recession, bend over and kiss your butt goodbye.
10) Austerity is a means by which the rich can buy up assets which are not normally on the market for cheap.
11) the wealth of the rich and major corporations has recovered and in many countries exceeded its prior highs. They are doing fine. Austerity is not hurting them. They control your politicians. The depression will not end until it is in their interest for it to do so, or their wealth and power is broken.
12) The US play is as follows: frack. Frack some more. Frack even more. They are trying the Reagan play, temporize while new supplies of hydrocarbons come on line. Their bet is that they’ll get another boom out of that. If they’re right, it’ll be a lousy boom. If they’re wrong (and the Saudis think they are, and the Saudis have been eating their lunch since 2001) then you won’t even get that. Either way, though, they’ll devastate the environment, by which I mean the water you drink and grow crops with.
13) For people earning less than about 80K, the economy never really recovered.
14) If you’re out of work more than 2 months your odds of getting another job drop through the floor. If you do get one, odds are it will pay much less than your previous job.
15) Canada is undergoing austerity madness at all levels of government, and the corporations, with historically low tax rates, are not going to spend either. With Chinese demand for commodities dropping, expect a nasty recession.
16) Australia, having tied itself completely to China is about to reap the downside of that decision.
17) Wages are being systematically broken in the developed world. The rich do not believe they need you, except as wage-slave labor. You will all be company store slaves, paying rental streams to everyone to be allowed to continued to eke out a miserable existence.
18) Since the US sells protected works (so called “intellectual property”) you will continue to see a massive attempt to break anyone who doesn’t pay IP rent to the US. Some countries (Sweden, Germany, among others) are going along. But there are signs of rebellion. Apple may have won against Samsung in their ridiculous attempt to enforce patents on obvious solutions, but both Japanese and Korean courts threw the cases out. Paying rent to America, the hegemon, when the world system is working is one thing, paying rent when the world isn’t working is another.
19) Stirling Newberry says, and I agree, that none of this is stable, but it will last as long as the majority of the baby boom, the silents and a good chunk of the Xers still think they can hang on to their little piece of the pie, and screw everyone else. It will most likely break down in 2020/24, which is when the demographics turn. Young people today are completely screwed, they have astronomical student loans, no or shitty jobs, can’t afford a house and can’t afford to start a family. Note that the places where revolutions, peaceful or otherwise, are happening, are places where the majority of the population is young. Latin America, the Middle East.
Addendum
20) The economic numbers you hear don’t mean squat. Headline inflation does not matter, ask yourself instead “what are my fixed expenses?” Start with food. Jobless claims #s cannot be compared to prior numbers because less people have the sorts of jobs that let you make those claims. For the #s to make sense you’d have to adjust them for the reduced # of jobs which allow claims. The unemployment rate has dropped even though there are, in absolute terms, less jobs, because people have given up looking.
21) The money the Fed floods into the financial markets (quantitative easing, among others) is mostly NOT getting to ordinary people, and whatever Bernanke and his apologists say, it was never intended to. It is intended to prop up financial actors, and keep the rich richer. It has done what it is supposed to do.
Pathman
This is a nice summary. Unfortunately, there are only 1 in 100 people who understand it or really want to understand it. Living in denial is much easier. For now.
Cloud
Been reading The Collapse of Complex Societies by Tainter.
The depressing thing about Rome is not that it fell, but that it took so long to fall.
Rome’s expansive / “middle-class-prosperity” period (slaves and subjugated peoples excepted, naturally) lasted maybe 250 years, till the late second century. Then there was a century-long period of political crises, military coups, civil wars and general clusterfuckery until the Dominate emerged — i.e. the classical analogue of totalitarianism: the introduction of serfdom, the establishment of the Church, and crushing taxes. This latter system held on for roughly another century and a half.
So there were about 250 years of prosperity (for citizens), followed by fully 250 years of misery for almost everyone. More, if you see the subsequent dark age as the hangover following the party, as I do.
Empires do not go quietly or quickly into the night.
Cloud
also: Frak the frackers.
Greg T
The 8-10 year time horizon for systemic change sounds about right, Ian. I actually think it can happen sooner, because there remains a significant probability of crisis that will accelerate it. Another financial crisis is possible, since the banks were never declared insolvent and unwound as they should have been. Another recessionary downturn could end up breaking another bank or two, which could trigger another bank run. The danger of a Euro exit by a peripheral country could also set in motion a financial panic. The Middle East is a tinder box right now, and even a limited war could easily escalate into a larger one or throw the global economy into a tailspin.
Assuming no catalytic event like a crisis, however, it’s clear that the oligarchy is angling for everything you describe above.
Mary Mac
The oligarchy has so overplayed its hand. It may take a while for the rest of us to catch up to the bastards and pound their beady little heads. I hope I am still alive to witness and help. Since I am 62, I may have to give encouragement to my kids and grandkids to get the job done. I have faith in them.
Ian Welsh
It’s also worth noting that the solidarity of the boom has been broken. The younger boomers didn’t make it to retirement before the crash, and they are so so fucked.
Yes, a crisis could push things over the edge. But if it does before the Millenials are ready, it’s much more likely to lead to a right wing revolution, coup, etc…
Mary Mac
” it’s much more likely to lead to a right wing revolution, coup, etc…”
That would suck. I think we might see a little of that during this election cycle.
Tom Hickey
“It will most likely break down in 2020/24, which is when the demographics turn.”
Hard to put a clock on these things, but that has been my projection, too, for a similar reason. Not only demographics hitting, but climate change will be biting too.
Take to take provision now, if you haven’t already, and that means working yourself as free of the system as you can through networking and exploring alternatives with others of like mind and heart. Those dependent on the system will become progressively trapped and exploited by it unless they join the exploiters.
Tom Hickey
“But if it does before the Millenials are ready, it’s much more likely to lead to a right wing revolution, coup, etc…”
The noise on the right is getting louder about this, but government has already militarized the security force and established the surveillance state, so violent revolution in the US is unlikely to be successful. The fast, violent and coordinated response to Occupy showed that the government expects resistance to grow and it stands ready to suppress it by any means.
The way to take the system down is to join the people not participating in it. As more and more people get that the American Dream is over permanently, then the numbers making their own way in solidarity will rise.
Greg T
The Affordable Health Care Act may serve as an accelerator. Virtually no policy expert thinks it will work as presently constituted. Without meaningful cost controls, corporations could decide to dump their group plans, pay the fines and throw the workforce into the individual market. Its main provisions kick in 2014, so the effects of this are just around the corner.
I’m not sure how the resistance plays out, Tom. I agree with you about the oligarchy’s brutal response to the Occupy protests. Rather than address the grievances, they folded up the encampments. The shut down was indeed orchestrated by the Feds in DHS. So we know they will use violence and the surveillance state to break protest movements. But the number of people surplused in the coming years will be very large. When enough people are moved to desperation, anything can happen.
someofparts
There are two things you mentioned that I’d like to hear more about.
If China goes into recession, what does that look like in street-view, so to speak, for the average U.S./Canadian person on the street?
Also, the demographic change in 2020-24 that you speak of, what do you seeing happening when that tipping point is reached?
Tom Hickey
Greg, I see open revolt as very late stage if it is even necessary. Non-violence is a much better option in most cases. Look at the non-violent movement that Gandhi led in India. Most people think of it in terms of large non-violent protests but a great deal of it was massive non-participation in an exploitive system. It was not until the end-game that violent was used to finish it off. The Brits were brutalized by WWII and they had no appetite for more in India. Actually, many claim that the violence wasn’t needed at all, since the Brits were already folding up their tent, tired of foreign adventures that were draining them.
someofparts
Well, you answered the question I realized was kind of inherent in the two questions I asked above. What happens if a crisis pushes things over the edge before the Millenials are ready?
I agree with your answer. Cloud’s account of the era of the Dominate in Roman history added a dismal resonance.
Greg T
That’s an excellent historical point, Tom. So then we’re looking at a sort of Communist bloc-style collapse, where there is no public unrest or outbreak of mass violence, but a sort of collective ” good riddance ” to a system that has lost is legitimacy.
You may be right. The public may decide to simply throw sand in the gears.
Tom Hickey
someofparts, even if the best of scenarios comes to pass in the approaching reset, I think that we are looking at a fate to the aftermath of the Roman empire due to a variety of challenges that won’t go away with a political shift in the US. The global system is going through a complete reset that will last a long time whatever happens, unless there is huge scalable technological breakthrough.
As Tainter and other point out, the issue is rate of increasing complexity relative the rate of adaptability and return on coordination. The level of collective consciousness is not rising quickly enough to adapt on a large scale to increasing complexity.
That’s why I have been saying to make provision. This civilization is hanging by a thread and that thread is energy, on one hand, and the other is group intelligence, really species intelligence in global society. Rise and fall of civilizations is correlated with energy. We had a huge run up due to cheap oil, and the carbon age is now in the process of winding down. There is no scalable energy source to replace it on the horizon at the level we are accustomed to in the developed world, especially with the developing world now coming online.
If the challenges are not met, then the result will be significant population decline, likely involving conflict. The Pentagon is now considering this as a principal scenario to anticipate and prepare for. Politicians, not so much.
Ian Welsh
If it’s right wing, then parts of the military/security state will be complicit.
Also, people have still not internalized the lessons of Iraq and Afghanistan and Mexico with regard to area denial and asymetrical warfare. There will be Iraq/Afghan vets on both sides of whatever goes down.
2020/24 – if it goes well, a takeover of one of the parties by millenials, who then win majorities and do what they think needs to be done. Expect the IP monopoly to go away, for example, they will not tolerate it. If things don’t go well, well, it’ll be a lot messier.
Ian Welsh
People who were actually there in India, aka. my family, know that there was violence, and that the main factor in the British leaving when they did was massive US pressure. That pressure led to over a million deaths in the ill-timed, ill planned partition (my father hated Mountbatten with a passion because he got to watch the killing). The Brits were exhausted by the war, unable to resist US pressure, had a declining industrial base and had lost the stomach a few decades before to do what was necessary. Rest assured that the British of 1870 would have dealt with a Gandhi the moment he became a problem, and would have happily slaughtered as many non-violent protesters as necessary to make their point clear.
Nor is the US ruled by foreigners, who are always far far easier to get rid of than ones own corrupt elites.
But as soon as Americans are actually willing to do what Gandhi said, aka. come out in the Millions, we’ll see. I think it stands a good chance of working, if you can get it to that scale.
But can you?
Radical Livre
I agree with everything except ” failure to restructure the economy to get off oil and over to an electrical economy”
There’s no such a thing as an electrical economy. You still need stuff to transform into electricity. In today’s world, that basically means either fossil fuels or nuclear fission. Fukushima probably destroyed any hopes for nuclear fission for a long time. So either way we’re going to be burning a lot of oil and\or coal in the foreseeable future.
An electrical economy based in hydroelectricity is plausible, but dams take a while to build, are not exactly environment-friendly and not every country has the rivers for it (the US does. In fact, it probably could build a decent hydroelectric economy, if its political\economic elite wasn’t busy squandering time and money in its delusions of building a global empire).
Tom Hickey
“But as soon as Americans are actually willing to do what Gandhi said, aka. come out in the Millions, we’ll see. I think it stands a good chance of working, if you can get it to that scale.
But can you?”
There were millions of students and other people that were actively demonstrating in the streets at the height of the anti-war protest in the Seventies, and many universities were shut down. This was largely suppressed in the media, and the only means of communication that the protesters had was alternative newspapers and word of mouth. The Internet changed all that, of course, so this time everything is different communications-wise.
At that time it was large the young and the principled that were involved, and many of the young due to the draft. Ordinary Americans, in particular labor, were opposed to the protests and sided with the government. And the time were different, too. Liberals were heavily involved in the power structure, and it was they who brought Nixon down. That’s no longer in place, and we cannot rely on the judiciary.
The situation is quite different now that it was then with rising domestic hurt the further one goes down the social ladder. Youth no longer sees a future, and for the fist time in memory, the present generation will not be as well off on average as their parents were.
I would say that we are in a global depression now, and conditions are worsening. There is a reason that the US is militarizing its entire security force and coordinating operations under DHS, the first domestic security “ministry” in US history.
I don’t think we that far into this yet, for example, projecting the flashpoint around 2020-24. So I don’t think that millions in the street is at all far-fetched. But it’s impossible to predict in advance what twists and turns lie ahead.
From what I can see, many in Occupy have concluded that the movement has to go asymmetric to be competitive in current circumstances. Occupation is just not a viable strategy. It really would not have been anyway, even if the authorities had not shut it down. It served is purpose well, and now the game has shifted, with the direction not yet clear. But we are not even at 1967 yet on the timeline of the Sixties and Seventies.
Tom Hickey
Radical Livre, too many moving parts to discuss in a comment, but suffice it say that it’s not just a matter of ramping up thorium-based nuclear power, hydro, solar, wind, biofuels, or a combination. Taking all the parts into consideration, the numbers don’t add up to maintaining the standard of living to which the present lifestyle has accustomed people in the developed world, especially with the emerging world aspiring to live like the presently developed world. There either has to be huge technological breakthrough that can be scaled, or else the world has to revise lifestyle aspirations to something more realistic.
Basically, the wealthy get this already and are craving out their niche and planning to let the expendable population forge for itself as best it can. It really is a matter of eliminationism. When enough people get this, then we’ll see what happens.
Bolo
Radical Livre:
A combination of nuclear fission for base load with an increasing share of renewables, combined with a more intelligent and resilient (“smart”) grid could do it. Solar PV production is going exponential right now and there are many promising technologies or techniques currently in the R&D phase that are making the technology longer lived and more efficient. Same goes for wind power, which is even further along in deployment.
If, for example, the US government decided tomorrow to invest in solar PV and wind power generation on a large scale, to invest in the facilities to build and maintain this infrastructure, and to invest in the people and skills necessary to maintain and build all of the above, you’d see huge inroads made in low GHG emitting power production. The electrical grid would have to be reworked, national energy storage facilities developed, etc., but it could be done.
It’s not technologically impossible, but in the current climate it is politically impossible.
Bolo
Tom Hickey:
Do you have any references for this view? Especially with an eye toward energy generation?
Tom Hickey
Bolo, the biggest problem is not energy generation, although the experts I have been reading are not as sanguine as you are about alternatives replacing carbon in a way the would allow maintaining current lifestyle.
Theoretical physicist Michio Kaku projects that we can get there eventually, e.g., fusion to replace most other energy, but there may be a gap of a generation where energy is insufficient. That could be devastating.
There are other big problem, too, one being transportable energy and another environmental heat-generation, heat being a result of work. That heat dissipates into the environment and raises atmospheric temperature.
Physicist Tom Murphy has written quite a bit about this. His latest post at Energy Bulletin — Do the Math is Battery performance deficit disorder.
Gail Tverberg (an actuary) at Our Finite World looks at it from all angles. I also look at Peak Oil, Oil Drum, Joe Romm Climate Progress at Think Progress, and Post Carbon Institute’s Energy Bulletin.
These are numbers people, and they say that it doesn’t add up yet. There is also the question of time relative to global warming presuming it to be human caused. If we don’t cap carbon globally in a more timely way than is projected, the result could be devastating by the end of the century.
To succeed in a timely way, we need global coordination on this and a global Manhattan Project to develop and scale technology. We are also going to need the media to honestly and forthrightly educate the public on it, too. But with lots of vested interests blocking the way, too.
Ian Welsh
You make a hard run for breeder reactors, an entire new generation, and not meant to create nuclear weapon fissiles. You move hard to energy efficiency (there is a building in Canada which is able to maintain energy neutrality in -30 degrees celcius). You move hard to electrical cars. You move hard to high speed rail and cut down plane travel for anything that doesn’t require going over oceans. You move hard to point-of-presence generation. You move hard towards the mod/printing economy so you don’t have to move so many finished goods around, especially internally in continental areas (shipping on oceans is fine, the second you get to land the cost soars.) You end suburbs as consumption. There is no way we can do this fast enough without throwing in nuclear, it cannot be done.
The rest of the world, aka. China and India, are not going to accept that they can’t have a good standard of living, the developed world is not going to average their standard of living with the third world’s. Not without some big wars. We fix this, or we will see some really nasty shit go down, including some really nasty cyberwarfare crashing infrastructure, causing meltdowns and so on. Not to mention we are past the point of no return on climate change and even a crash program will not save us from losing hundreds of millions of people.
The left is screaming for austerity. Every time someone says that people need to settle for much less, I die a little inside. That way leads to global war. People will /not/ accept it.
We have to change the outward form of prosperity (aka. cars and suburbs). We can have prosperity, for everyone, but not if we cling to the forms of the past.
Breeder reactor fission is what we have to use to bridge the gap between where we are and fusion. If we don’t do it, we are so, so fucked.
doug33
millennial here,
One big factor that you are missing is race. The effect of massive third world immigration combined with the acceptance of non-white power movements inside the US has radically fracture my generation. We can no longer act as a whole despite our shared job and debt troubles. Mexicans and Black and even Asians now aggressively advocate for their own race rather than generation.
For the under 25’s i would guess that almost 50% are not white. And when the going gets tough, people will stick to their own tribe. They will develop racial identities not class or generational ones.
Phil Perspective
The left is screaming for austerity.
What left do you mean? The left “political class”? Certainly not the DFH’s.
Mary Mac
The DFH’s should be pleading for simplicity. Austerity is a completely different animal.
guest
Sorry to be so picky, but it’s really annoying. Fewer jobs, not less (less milk, less water, less justice, less pain). If there is an “s” at the end use fewer. No “s”, use less and 99 times out of 100 you won’t sound like the stupid people who say “between you and I”.
Ian Welsh
Between you and I, I made the change. 😉
Kidding, kidding, don’t send the grammar thugs to my house!
Chaz
I like this although for education and information purposes it may have helped many if each of the points were linked to the evidence.
Ian Welsh
That, Chaz, would take me much, much longer than this post did. And since I’m not being paid for it, I rarely bother anymore.
Geoff DeWan
You may not be paid for it but your posts are worth more than gold to me. I’m grateful that your day job allows you to do as much as you do. It’s a lot.
Thanks.
Bernard
i mostly read this blog instead of commenting a lot because ,i.e., it shows how ignorant i am/how little i know and how idiosyncratic my thoughts are, lol. this is a wonderful conversation blog. thank you Ian for this and your time spent on it.
Fulll speed ahead with the comments anyway.lol
i think we are so so screwed, too. Divide and Conquer really has done a number on America. I kind of think Romney will speed up the collapse scenario if he is elected. otherwise, i think we will drift along in the miasma we call America until some “great Leader” arises. ouch, goodbye America, it was nice.
Radical Livre
Ian Welsh, I agree with your analysis. The technology allows for a much more efficient society. The thing is, I don’t see the reforms you point out happening without some major political changes. The current world capitalist elite has already shown that, if they have to choose between long-term efficiency and short-term exploitation, they will choose exploitation every time (thus the factory automation race became a factory outsource race).
I think revolution is inevitable at this point, the only question is whether it will happen before total social breakdown. I’m not optimistic.
nihil obstet
I think the IP issue is going to have a lot of repercussions. As Ian notes, the U.S. oligarchy relies more and more on rent extraction both domestically and abroad. Increasingly, the U.S. sells three things: military/police services, financial schemes, and IP licenses. Although I read a lot about the global elite who share more with each other than they do with their own nation-states, it seems to me that that’s based on the U.S. enforcing agreements that make global intangible assets valuable. As the sources of the U.S. oligarchs’ wealth and income decline — people are no longer willing to pay IP rent, the financial schemes keep imploding, and the U.S. keeps losing wars — they will face their own decline. That will change the domestic situation as well. They’ll need the consent and cooperation of the population just as that consent and cooperation are being withdrawn. My imagination kind of fails at anything other than a Soviet Union style collapse.
Bolo
Thanks for the references Tom–I will check them out. I have a background in engineering and energy, but have not been keeping up with the conversations in that area. I still maintain that its possible to get through this with mostly existing technologies (plus general improvements in them over time) but that we just won’t invest in the necessary solutions.
I think the technological hurdles can be cleared, but the social and political ones are currently stopping us.
Ian Welsh:
Yes. This is the prevailing thought of our era though–we either keep on going as we have and ignore the impending crash, or we all reduce our standard of living to misery. The lack of imagination and lack of will to outline alternatives is astounding. I think that we may live in the least socially or politically creative era since the pre-Renaissance middle ages.
There are people working on industrial-style carbon sequestration from the air. The numbers on it are horrible–cost is somewhere around $1000/ton sequestered and you need to run off solar or nuclear to avoid putting more net carbon into the air. But its at least something, and we can always hope that some new process or technique will be developed. The potential payoff is so huge that we should be investing in a lot more R&D here.
My ideal carbon capture facility would pull it out of the air, strip off the O2, and then deposit bricks of solid carbon to be used by industry for construction materials, etc. Given our current knowledge, this would probably take horrific amounts of energy, but I bet a solution could be found eventually. Plus, we’d have the ability to regulate our global climate to some degree by balancing the amount of CO2 in it.
Notorious P.A.T.
“the wealth of the rich and major corporations has recovered and in many countries exceeded its prior highs”
For more on this:
“Growth of Income Inequality Is Worse Under Obama than Bush”
http://www.nakedcapitalism.com/2012/04/growth-of-income-inequality-is-worse-under-obama-than-bush.html
Notorious P.A.T.
Right now we burn coal or oil or something to produce heat that spins a turbine. We should be using concentrated, reflected sunlight to produce that heat.
http://en.wikipedia.org/wiki/Concentrated_solar_power
Notorious P.A.T.
“I think the technological hurdles can be cleared, but the social and political ones are currently stopping us.”
This is my belief as well.
“This is the prevailing thought of our era though–we either keep on going as we have and ignore the impending crash, or we all reduce our standard of living to misery.”
Here’s something to ponder: if we reduced the amount of energy we use, could we live as well as we do now, if not better? Does your gas-powered lawn edger improve your existence? Are you better off commuting half an hour to email a report to your boss from the same physical location? Does watching 8 hours of television a day enrich your life? Our military consumes more energy than many nations. If we downsized in the right way, we might be better off.
Petro
They’re called “trees.”
Antifa
May I stress that a whole generation — globally — prevented from decent options of marrying, having a family, forging a future for themselves and their children will blow down any oligarchy that tries to manage things in that state. You won’t have to organize to find them putting sand in the gears. Effing up the State will be life’s one delight.
Algae will play a major role both in supplying hydrocarbon fuels in future, and in supplying protein foods. Eating animal flesh will be a (very) rich man’s luxury. The rest of us will be vegans of some sort because that’s what food will be — grains, algae and mashed micro-organisms.
No one has mentioned the incalculable energy available by tapping extremely deep geothermal heat for electricity, for heat, and for steam-powered subways crisscrossing oceans and continents. The technology to drill 5 to 10 kilometer boreholes using hydrogen/oxygen drill heads that melt the rock is already being explored in Russia. In theory, they can reach any depth desired, leaving a fused borehole that needs no lining.
I also believe that geothermal is the best option for generating the electricity needed for carbon sequestration stations to pull CO2 our of the atmosphere. It may also prove the best means of purifying fracked groundwater back into H2O suitable for agriculture and drinking. Ordinary distilling of fracking-poisoned groundwater (at 212 F) won’t do. That kind of water needs to be incinerated, broken down into its individual elements to ever extract pure H2O from it.
Oh, and yes to drinking our own distilled urine in the future. Every household will have a recirculating supply of its own water. You sure as hell won’t want to drink the rainwater, the groundwater, or from the river. Fracking took care of that.
Petro
Geothermal sounds like a great thing but, in reality, has some horrible ecological externalities that rival fracking. Ask the Hawaiians…
Ian Welsh
The main issue with geothermal is the conductor. As my friend Stirling likes to say ‘we don’t have a lot of problems that a room temperature super-conductor wouldn’t solve.’
Notorious P.A.T.
“The technology to drill 5 to 10 kilometer boreholes using hydrogen/oxygen drill heads that melt the rock is already being explored in Russia. ”
That sounds absolutely sweet, and I would gladly ride a subway across the ocean, but do we have time to wait for new technologies to come online? Assuming they will, of course.
misterhorsey
hi Ian, just curious, but checked the most recent trade figures re: Australia and China (that I could find)
http://www.dfat.gov.au/geo/fs/chin.pdf
Australia exports 27.3% of its output to China, and imports 18.6% from China. Given the amount of objects i come into contact on a daily basis that are manufactured in china, I’m suprised that the import figure isn’t actually higher. Its expressed as a $ value however. Presumably iron ore (at relatively historically high prices) is/was worth more than the vast multitude of products churned out of Chinese factories.
Anyway, my point is – noting the slightly hyperbolic tone of your list, since when does is a trade relationship that equates to a quarter of domestic product equivalent to a an exclusive trade relationship, as suggested by point 16:
“16) Australia, having tied itself completely to China is about to reap the downside of that decision.”
I am an Australian. I have no doubt that China’s slow down will have a negative impact on the Australian economy. I’m curious, however, to what extent your comment is bearish sentiment or supported by some data. Softening demand for imports of that 27.3% would have a real impact, I’ve no doubt – but I don’t think it will be the end of the world.
Then again, whether or not the Australian government or population is sufficient prepared for it, financially or pyschologically is another matter. There is a enormous sense of wealth and entitlement over here at the moment. It wouldn’t be the worst thing to see that pulled back.
beowulf
“Liberals were heavily involved in the power structure, and it was they who brought Nixon down. ”
If by liberals you mean the Pentagon and CIA, then yes. :o)
http://whowhatwhy.com/2012/05/07/watergate-revelations-the-coup-against-nixon-part-1-of-3/
Ian Welsh
27.3% is more than enough to throw you into a horrible recession. China is your #1 trade partner and that percentage has been rising. Australia has made a decision, a state decision, to emphasize trade with China and to push for as much of that trade as possible. And when commodity prices crash (and price on iron ore are crashing in China), you don’t just send less, you get less per ton. Multiply the losses. Miners get laid off, mining companies spend less, that cascades through your economy.
Who are you other major trade partners? The US, South Korea, India and Japan. Japanese manufacturing going to recover? No. South Korean? No. Indian–maybe, not sure.
If China, which is the driver of world growth goes down, so goes Australia. Every other major nation except perhaps India, who you trade with, is tied to China.
Marginal thinking is what it’s about. What happens at the margins is what matters – where the marginal dollars are going.
Australia’s current sense of wealth and entitlement is based on commodity prices. It is not based on a massive increase your manufacturing sector. So if the commodity trade goes south, so goes Australia.
Now, it could be that China manages a soft landing. It could be that they pump in another Keynesian stimulus and keep things going a couple more years. It’s hard to say, China is somewhat opaque to me. But China is in the position that the US was in in the 20s. It’s where the growth is. The other major developed economies don’t really want to spend, they want to sponge off Chinese (and to a lesser extent, US) growth.
That’s not sustainable. It cannot go on forever. When it will stop, is the question. But if China gets a cold, Australia will get the flu, as they used to say about Canada and the US.
misterhorsey
Thanks Ian. I appreciate you fleshing out your thoughts on the Australia/China relationship a little more. There’s already debate regarding ‘the end of the Mining Boom’ in Australia occurring at a Prime Ministerial level and every level below
I think it unlikely that all of 27.3% would ever be lost. But, I agree with your point about the action being at the margins, as well. Even if this would drop by a quarter, everyone would inevitable focus on the lost 6.825%!
I’m personally a little more bullish about the global economic scenario, but this may be because i’m still insulated via my Australian world view. It should also take into account that my kind of Bull is a lethargic and slothful version of the breed that will get to where he’s going, even if it takes seemingly forever.
Its partly because I see China continuing with its momentum beyond this current phase. I’d been briefly in 1991, and then made another visit earlier this year. The change was amazing, but I’m not going to assume my personal experience provides an accurate picture of the economy as a whole. What struck me however was how much further it had to go in terms of inculcating a consumer culture in the population. I don’t necessarily think a consumer culture in China is a desirable thing – but who am I tell a country of 1.2billion what is desirable? But I do think the chinese people want greater prosperity and that much of this demand will be domestic. And this will result, I think, in quite dramatic shifts in family life, social expectations, relationship with money, materialism etc etc. I mean this is already happening with mass migration from poor rural areas into urban factories
One is tempted to make a comparison with the industrial revolution of Europe and America – I don’t think there’s quite the same fit however. On the upside, at least there is a lot more opportunity to engage with environmentally aware means of production.
Thanks again for your thoughts – and the opportunity to air mine!
David
misterhorsey,
What Ian outlines for Australia seems a bit like a repeat of what happened to the country in the late 80’s to early 90’s. Then, the nation that was the number one
destination for Australian raw materials was Japan, and when it went into what they called their “bright depression”, Australia was hit hard economically. I remember PM Keating stating that Japan was the most important country economically to Australia.
One doesn’t hear quite so much about Japan in Australia anymore.
One difference though from that time is that the current strong Australian dollar must be hurting the export of manufactured goods.
David
Ian,
If you have the time, what do you think of the Quebec election results and what it
may mean ?
Thanks
Ian Welsh
David/Misterhorsey,
there is always an end to every commodity boom. Always. The question is always when. As a Canadian I know this very well. Doubling down on resources so hard, the way Canada and Australia have both done is brain dead goddamn stupid.
David,
I don’t know. We’ll see if they push for independence again, seriously. This shooting was bad news, not just for the people killed.
If Quebec leaves Canada it will be disastrous for both Quebec and Canada. But rationality isn’t super strong on the issue. Harper is hardly the PM to make a case for Canada, since unlike Chretien he doesn’t really believe in it, and he doesn’t have the necessary ties to Quebec to fight the necessary vicious ground war in a referendum.
Formerly T-Bear
Don’t overlook the 8,000 pound heftalump in the room. Every empire in the modern period has run aground upon the costly shoals of militarism, the exceptional are no exception. Best bet, there be a military coup d’état long before the X generation has their chance. Look to the intentional failure of governance leading to the Spanish Civil War for the archetype. The military is a stomach that will be fed and goes on diets with great reluctance.
Ian Welsh
Yes, I mentioned that Dems glorifying militarism more than Republicans at their convention was bad on twitter and was attacked for it by “progressives”.
Y’know, in most western democracies, the military is not glorified on the stage at political conventions and political spouses who are not themselves elected are not political figures. I watched the NDP leadership race and I never saw anyone’s wife or husband give a speech. (May have happened, it didn’t happen in any major venue.)
When I went to the DNC in 08 I was struck by (read appalled by) the emphasis on the military, family and God.
Even people I consider relatively good liberals don’t understand why a politician who spews about how their family is the most important thing EVAH shouldn’t be elected to any position of power.
carlos
thanks for the rational discussion of such a compelling topic. I’d like to just disagree with one of the commenters who thought that racial divisions would inhibit any social movement’s cohesion. I don’t think so. I think the bigger threat is race looming in from the right. Down here in Texas there are lots of not so subtle signs of a re-invigorated/militarized white supremacist wing of the republicans/tea-partiers. They scare the bee-jeesus out of me.
DPirate
Endless blather. Fact is we are all dead.
Cloud
There is no way we can do this fast enough without throwing in nuclear, it cannot be done. … If we don’t do it, we are so, so fucked.
I would agree with your sentence above except probably would omit the phrase ‘without throwing in nuclear’. So, so fucked we must be, then? In a word, yes, and life grinds on. To speak in terms of a popular meme, half of the earth’s milkshake has been drunk. Now there are more people with straws and, as you say, they will /not/ accept that there is not infinite milkshake. And yet, only half a milkshake remains.
Il faut cultiver notre jardin.
Bolo
Not efficient enough. Photosynthesis is something like 0.1 – 2% efficient for most plants. Plus, you have to wait for them to grow.
Cloud
DPirate — I am not dead, yet. Have you ever visited the Colorado Plateau? Sometimes the red desert rejuvenates, makes you feel alive.
I suspect the most likely result of a such a massive nuclear infrastructure program, to provide the incredible amount of electricity it would take to replace hydrocarbons, would be that our descendants suffer from a radioactive food chain for ten thousand years or more instead of, say, a few centuries due to future failures of current reactors.
More Tainter:
Bolo
Here’s a thought, and let me know if I’m completely out to lunch with it:
The reactors we currently have are not the only reactors we can build. Current reactors were built for profit in an era of cheap electricity. If we want to build out a massive nuclear infrastructure then we should put engineers and environmental experts in charge with an explicit mandate to provide reliable and safe power, with profitability a distant third concern (or no concern at all). Baseload energy should be government owned, not for profit, and designed to be as environmentally benign and safe for people as possible. If meeting that last requirement necessitates running it at a monetary loss, then so be it.
Ian Welsh
The current generation of generators was not created to be profitable, it was created to be able to prosudce material for nuclear weapons.
scruff
This is incredibly depressing. Our choices are global war over unwillingness to adopt less energy intensive lifestyles (if we don’t go nuclear), or biosphere collapse from the results of humans doing what humans have always done every time they obtained a newer and juicier source of energy (if we do).
Celsius 233
scruff PERMALINK
September 6, 2012
This is incredibly depressing. Our choices are global war over unwillingness to adopt less energy intensive lifestyles (if we don’t go nuclear), or biosphere collapse from the results of humans doing what humans have always done every time they obtained a newer and juicier source of energy (if we do).
~~~~~~~~~~~~~~~~~~~~~~~~
It is depressing; but in my rare moments of clarity, it seems that if one can see, it’s the first step in understanding our species. We’re just doing our thing; so, what do you (all inclusive you) want/expect?
I see the question as critical…
S Brennan
To:
“I suspect the most likely result of a such a massive nuclear infrastructure program, to provide the incredible amount of electricity it would take to replace hydrocarbons, would be that our descendants suffer from a radioactive food chain for ten thousand years or more”
I say, most radioactivity encountered by humans is what spews from the smokestacks of coal burning power plants…yes, that’s that’s right, coal…not nuclear is the source of radioactivity [& Mercury] on planet earth.
Liquid Fluoride Thorium Reactors [LFTR] are the answer.
http://en.wikipedia.org/wiki/Liquid_fluoride_thorium_reactor
Cue an anti-nuclear posing as a disinterested reader who will direct you to a “cloaked” anti-nuclear site that argues with emotion and innuendo with every mention of Thorium.
Elizabeth Block
Canada has a colonial economy, i.e. exports raw materials and imports finished products. The US is going in that direction too.