the lost decade: a hang five for prosperity

Socially, politically and economically, we are entering uncharted waters. We appear to be at the cusp on some major transformations. The issues are rather complex, seemingly beyond the comprehension  of the present crew of economic advisers. The result is a dogmatic fallback to past practice and the sustaining rhetoric of ideology which serves to aggravate the chasm and foretell profound and perhaps not reconcilable positions. But, as Yogi Berra said, “its tough to make predictions, especially about the future.” and “the future ain’t what it used to be.”

The public’s faith in our economic and political institutions is as low as its ever been. They have been wrong too often, and have proven untrustworthy occasionally. This lack of trust will only increase. We seem to be under the influence of something Bob Dylan once told the press, “I’m just a song and dance man.” Where are we headed?…

xaviera simmons. 2007. Ferguson:Future historians will undoubtedly consider the Audi 'Race up Pikes Peak' and IBM's Watson's defeat of past Jeopardy champions as two seminal events in The Transformation. It is only a matter of time, and likely a short time at that, before these technologies start eliminating whole classes of jobs. Through improved A.I. nearly all clerical level jobs are at imminent risk. Drivers may be universally replaced in less than twenty years. Construction sites will be dominated by specialized fabrication robots with only a handful of human over-seers. The medical industry, from lab techs to physicians will be replaced with robots and expert systems. The back office of nearly all restaurants will flawlessly prepare to the orders delivered by more or less window dressing wait staff. Read More: image:

Michael Ferguson: Beyond any doubt there is nothing to be done with those who are befuddled and don’t know it. To attempt to instruct them reminds me of  ( Robert A. )Heinlein’s admonition, “Never try to teach a pig to sing. It wastes your time and annoys the pig.’ So hence forth I will simply chuckle and walk away.To which I might add this from Henri Bergson: “The comic comes into being just when society and the individual, freed from the worry of self-preservation, begin to regard themselves as works of art.”

However, there is no shortage of pigs willing to try. There is something about American culture that spawns these singing pigs and the field of economics is not excluded. It is rife with Billy Mays style pitchmen and women, generally individuals of middling intelligence but tremendous salesmanship. Incredibly, some of the most loquacious become ensconced as authorities resulting in many actually believing in the pronouncements, often to a greater extent than the author’s themselves. Its hard to fathom that at one juncture Paul Samuelson and Lester Thurow were marginalized as wild and irresponsible and today the nation is blessed with the media savvy of a Nouriel Roubini and Paul Krugman, who, on the public level often seem more preoccupied with burnishing their brand and keeping fresh cash rolling in through speaking engagements.

---Ferguson:Over the last few years the Federal Reserve has increased its holdings in U.S. Treasury Debt Securities to over $1.5 trillion. It intends to continue its purchases, at least in the short-term. This practice is a portion of what is referred to as 'quantitative easing' or, specifically, 'monetizing the debt.' It is an inflationary practice, but is also considered to be stimulative to the economy. There is no theoretical limit to the extent of its use. However, at some point, it will cause hyperinflation and, most likely, a collapse of the dollar against other currencies. So, while it has useful features, it is not a panacea. Read More: image:

Krugman: “Central bankers have really spent their whole careers being tough on inflation, and what we really need to do is the reverse right now. What we really need to do is borrow some central bankers from Argentina.”…Such conditions call for the continuation of expansionary deficit spending, which can serve as an antidote to excessive private-sector saving, he argued.

Yet concerns about price increases continue to fuel the argument for monetary contraction, when, in fact, some inflation could be helpful in reducing the real burden of debt, he said. “In a way, we inflated our way out of the Great Depression.”…”We are in a very, very strange time. We’re in a time where things that would normally be the sensible, reasonable thing to do can actually be disastrously wrong,” he said. “We’re living in a time in which, for the time being, virtue is vice, prudence is folly.” Read More:

Constance Rourke’s pioneering “study of the national character,” from 1931, singled out the archetypal figures of the Yankee peddler, the backwoodsman, and the blackface minstrel to serve as examples in showing the fundamental role of popular culture in fashioning a distinctive American sensibility. It was, and is, vagabond nation in perpetual self-pursuit.De Tocqueville also remarked on this, latching onto the concept of American exceptionalism and the seeming facility of the citizens to change identities.

Ferguson:So, we see that The Transformation, if nothing new is done, will result in deflation along with rising unemployment rates. So far, our more complete understanding of the 'mess that we are in' is leading us inexorably to the conclusion that matters are actually worse than we are being told. They are. Overly alarming statements that are not a part of the conventional wisdom, lose votes, readership, standing in intellectual communities, etc. Consequently, they generally aren't made even if they are correctly apprehended. Read More: image:

Roubini, Krugman et al.are something out of nineteenth-century burlesques and comic almanacs. The same soil that nourished Melville and Poe who went on to expo

merica’s fascination with what can be termed “untrustworthy narrators”

Ferguson:America is headed for a divorce. And the rest of Western civilization is not far behind. The cultural cocoons being created by the fragmentation of content consumption and the isolation of like minded people into virtual communities is destroying whatever cultural homogeneity that may have existed in America. As people isolate themselves from those who have different values and allow the politically motivated to describe the other side to them, they become progressively more sure of the correctness of their viewpoint and the moral turpitude and misguided notions of those belonging to other principled beliefs….

Ferguson:Most likely, the anemic economic growth continues with several short recessions. The unemployment rate stays stubbornly high and then, around 2013 or 2014 it starts to move upward. High levels of foreclosures, short sales and bankruptcies become chronic as the 'under water' problem continues to play out. Every time the economy begins to recover, enterprises increase their capital expenditures which initiates another round of technological unemployment. By 2020, chronic long term unemployment hits 20%. Read More:

…These factors lead inexorably, over time, to the death of nation states and representative democracies and the emergence of virtual nations and market based governance. The emergence of boutique villages will exacerbate the situation by creating a physical cocoon to go along with the information one. The multiple residences in multiple governmental units that will come to typify the Knowledge Class will weaken national identity. Dual citizenship will become common. People will begin to ask the question, ‘What benefit do I derive from sharing a body of laws, programs and policies with people that fundamentally disagree with my world view, cultural outlook and value system?” Progressively more often the answer will be ‘none.’…

---Rourke insisted that minstrelsy was more than a white theft of black culture -- or rather, she insisted that it really was a theft, not just a travesty, and thus the goods that had been stolen were authentic. Like the frontiersman, the minstrel exaggerated. His special contributions to the American character, in her opinion, were a taste for nonsense and a "tragic undertone."--- Read More: image:

…Boutique villages will begin to aggregate in global networks of cultural homogeneity that will engage in larger scale social projects and programs. These virtual nations will, with greater frequency, demand political autonomy from the the nation states and provinces within which they are geographically imbedded….

Ferguson:Over the first half of this decade, the political rhetoric, stuck in the Industrial Age, won't change much. The Republicans will continue to propose tax decreases to encourage companies to hire more people. They will continue to resist increases in the minimum wage. They will continue to push for spending decreases to 'balance the budget.' The Democrats will push for expanded safety net programs. They will continue to push for increased taxes on corporations and 'the wealthy.' The Federal Reserve will continue to monetize the debt to the minimum degree that is feasible while chastising Congress for not getting its fiscal house in order. The Social Security and Medicare problem will be seen as becoming critical. By the latter half of this decade, everyone will begin to recognize that neither the Republicans nor the Democrats have any plan that can fix the situation. Read More: image:

…This will not be a Utopia by any stretch. Read More:

Ferguson:Our objective should not be to eliminate debt or even freeze debt, but rather to determine prudent debt levels as a percent of GDP and then enact budgetary constraints that will ensure that we stay within those boundaries. We may say, as the most liberal constraint, that the Federal Debt as a percent of GDP should stop increasing. That actually gives us a great deal of wiggle room….there is absolutely no doubt that Federal Deficits of $1.4 to $1.5 trillion, at this time, are not sustainable. They need to be brought under control. However, the Democrats are misrepresenting the situation in order to find cover for tax increases and the Republicans are misrepresenting the situation in order to cut programs with which they disagree. Neither is giving an accurate representation of the actual situation. Furthermore, for whatever reason, the pundits are not correcting the demagoguery….

Xaviera Simmons. 2008. Paul Krugman. July 24:A further point: even if Obama really does cut spending, will anyone notice? Even people who are supposedly well informed believe that there was a vast expansion of government under Obama, when in fact there wasn’t. So we’re supposed to believe that independent voters will actually be able to cut through the fog — the deliberate fog of Fox, the he-said-she-said of most other media organizations — and give him credit for spending cuts? Remember, whatever he does Republicans will claim that the government is getting bigger — and news organization will report only that “Democrats say” that this isn’t true. What a disaster.....Read More: image:

…It is critical for Congress to begin the dialogue toward enacting legislation that will assure that the Debt does not increase as a percent of GDP and that , over time, budgetary constraints assure that debt levels reach and remain at an appropriate level. This can be done, as it was in the past, while continuing to engage in prudent deficit spending….Read More:

Yogi Berra. 1953. ---Because of the difficult times many people have withdrawn from the labor market and become part of the discouraged who are not considered unemployed because they are not looking for work. We also have an unprecedented number of people incarcerated in our jails and prisons. Add to these the homeless, the recipients of welfare and students who are not working you will add to an increasingly large proportion of our population who are not working. But, does this add up to an indictment of technological innovation. Consider some of these facts. When jobs are lost due to advances in technology, it is often not only the people who lose their jobs, but a job requiring the kind of skills that person has is lost. And that is also an indications that similar jobs will be shrinking elsewhere in the economy. Automation is not the only cause for the growing significance of unemployment but it is a major one.---Read More: image:


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