“As far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality.” – Albert Einstein
Well, we continue to hold our breath while we wrangle with a number of beasts: the “fiscal cliff” in the U.S., the resolution of Europe’s debt crisis, the slowdown of growth in China, increasing unrest in the Middle East, and last but not least, elections in the U.S. Significant as they are in the near-term, their respective outcomes will definitely have longer-term impacts. As of this writing, the stock market seems to have priced in a fairly optimistic view on how these issues may be resolved over the next few months, although that optimism seems to have moderated a bit in recent days.
Regardless of the outcome on these issues, we can look to the past for some insights (although of course, past performance is no indication of future results). Bottom line, and I’ve said this before, our modern lives are predicated on the faith that manufacturing, communication and transportation systems will continue to function (and improve) and that we will continue to expand our economy through innovation or demand or some “magic” we aren’t even aware of (like the printing press). On a side note, I recently read that by 2016 it is estimated that nearly 45 percent of the world’s projected population will use the Internet and that there will be nearly 2.5 Internet connections for every person on earth.
I believe our system of government is based on the need to manage our own self-interest for the greater good. And I believe government intervention limited the severity of the devastation that otherwise could have occurred during the Great Recession of 2008/2009. But I don’t think we need “magic” from the government to fix our problems (fiscal discipline, a return to civil discourse and a commitment to well-informed policy-making are not magic, but simply elements of a mature civilization). I know that may sound treasonous in some circles, but as with the real estate and corresponding stock market bubbles of the last decade, using an artificial hand to prop up the economy can be as ill-fated as relying on Adam Smith’s “invisible hand” to guarantee equal outcomes. Once the artifice is exposed or removed, the aftermath may be no less damaging than the smack-down that will happen when we find out that corporate masters are not nearly as beneficent as a government “of, by and for the people.”
Of course, none of this should officially be considered political or economic commentary, nor does it approach a historical treatise; I am simply expressing my humble personal opinion. Because we have come to rely on someone else to fix our problems, we still haven’t owned up to the fact that through a combination of greed and short-sighted policies we’ve exported most of our manufacturing jobs elsewhere over the last decades. For ever-diminishing returns, we continue to drill, mine, and pursue industrial agriculture with evangelical fervor (although some may say not nearly enough), and have expanded our pursuit of those exploits to others’ backyards while neglecting our own garden. We also have an aging population, many of whom have little to no savings of their own, who will continue to place huge demands on our social safety net, and our middle class has been replaced by a few millionaires and a whole lot of folks in the underclass. In short, I believe we’ve made a series of choices that suggest short-term wants (lower prices, lower taxes, less regulation) are more important than long-term needs (clean air and water, education, an enduring economy).
Unfortunately, it’s much easier to blame someone else than it is to enact real fixes. If we didn’t have immigrants or gays or terrorists or the IRS or Obama or gun control or public education or . . . then everything would be A-okay. The real story behind the causes of our problems is far more complex, however, and literally hacking our way through the rhetoric to implement real solutions is a daunting task. It’s a wonder anyone really wants to run for political office, especially when they get to run a gauntlet of character assassins before they even get the privilege of working in a hostile environment on politically unfavorable outcomes.
Over the next generations, I believe we’ll see a gradual leveling among the various middling classes throughout the world, which will continue to occur in classic evolutionary fashion – much like a series of earthquakes. Despite the fact that we see a widening between the upper and lower classes, on a global scale, a middle class continues to emerge from the squalor of poverty in the developing world and the middle class in the developed world continues to see their standard of living erode. It will be interesting to see if the newly minted middle class of the developing world and the disenfranchised middle class of the developed world aligns along shared interests in years to come. One aspect of this reality may favor economic growth in developing economies while limiting economic expansion in the developed world.
I also believe that as our industrial economy copes with the increased costs of business as usual – including diminishing supplies of natural resources (especially water), environmental challenges we have yet to face, and widespread social unrest among folks who cannot or will not adapt to a dynamic global paradigm – these realities will further contribute to slower growth in the developed world relative to years past. As a result, I believe we would do well to continue to invest the time, energy and the resources we do have in promoting the world we want to see, while making sure to protect ourselves from ruin by not stretching beyond our means or relying too heavily on others for our sustenance and salvation.
I wish you all peace and goodwill (and successful hunting) this fall, and welcome you to reach out and contact me at any time and/or share these thoughts with others as you see fit.
All the best,