Monday, June 6, 2011

Bummer -- Ian Welsh Envisions the Permanent Depression

Ian Welsh predicts we're headed into a more or less permanent economic depression due to an unshakable addiction to fossil fuel and a refusal of the political class to face up to the reality of the situation.

"Baked into the cake" as he says.

Ian Welsh has been one of my favo(u)rite bloggers for quite a long time. His often sour Canuk insight into things going wrong is typically spot on. And I'll grant that the ingredients of the cake he's talking about -- that is to say governments' response to the financial unpleasantness of the last few years -- were spoiled and inadequate before the cake was made, but I'm not so sure he has it right otherwise.

The deal is that the economy that crashed was, much like the post-WWI economy, a "bubble economy." In other words, its promise and progress weren't "real." Some of us saw very well how frail its underpinnings were, and some of us did our best to sidestep the Juggernaut, just stay out of the way. Of course some of those who did are prancing around now in a kind of triumphalist stupor, but Ian is not one of them.

He saw how bad things were likely to get and why: unfettered greed, craven indifference, stupid and passive publics, governing incompetence and complicity. Well, at least in North America.

What I've called the Endless Recession, he suggests is going to be a very long Depression, far outlasting the Great Depression of the 1930's. Could be.

It’s gonna be a long 20 to 30 years folks. Does this have to be the future? In theory, no. In practice, well, yes, apparently it does.

On the other hand, I see what's going on from a somewhat different perspective. It's been obvious to me from the beginning of the Crash way back when -- and the collapse really began in 2007 -- that this situation would become the catalyst, whether intentional or not, for a major economic restructuring in the "Developed World."

The problem of bubble economics is only part of what's been going haywire in the United States for a good long time. As has been often repeated, bubble economies are not sustainable, yet once on a bubble track, it's very hard to get off it. When the only way -- or the "best" way -- to make money is the way it's been done in this country for many a long year, by inflating and deflating bubbles over and over again, you're on a collision course with catastrophe, guaranteed.

It's happened frequently in Western history, and the constant inflation and deflation of economic bubbles in Europe was a big spur to colonization and settlement in North America. People wanted to get away from what was going on back in the Old Country. To some extent, European imperialism of the 18th and 19th Centuries can be attributed to the exhaustion of bubble economies within Europe itself (and a case can be made that the bubbles themselves were partly spurred by the seizure of immense quantities of gold and other valuables from the Natives of the Americas and their wide distribution through Europe from Spain and Portugal.)

Now we're talking about never re-inflating a bubble economy again. That's an interesting concept, and it is not necessarily a depressing one. If bubble economies are unsustainable, as they are, and they have a tendency to spur -- maybe even require -- Imperialist expansion to avoid the Ultimate Economic Collapse or what seers consider the Ultimate Collapse, maybe it's a good thing, not a bad thing, to just get off the bubble economy treadmill altogether.

The Developed World has reached the point where it cannot -- apparently -- sustain itself without seizing the assets and potentially the territories of others. That's primarily what the current Imperial Project is all about. The Arabs have been designated as the "Indians" to be crushed, exterminated and stolen from, much as the United States developed its domestic empire by exterminating the Natives and stealing their land (and much else.)

Oil is the lubrication for all this, control of oil is the reason for it, and an unsustainable fossil-fueled global economy is the consequence. Domestic and overseas populations are forced to pay for Imperial Projects through seizures of their assets. But it can only go so far, and in the end various Imperial Projects collide with unfortunate results.

"Those who will not learn from history are condemned to repeat it." Sure, sure. But the repetition is never quite the same each time out, and if we are going through yet another bubble-collapse-Imperial-Overreach-let's-not-do-this-again phase, it is not without learning some of the lessons of the past.

What Ian sees as an Enduring Depression may well be something else, and it may well be directable toward positive rather than negative ends. Figuring out how that might be done is the challenge...

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