A Debased Liberty
Elected officials haven’t got the memo – we’re out of cash. Printing new money (human debt) is a tourniquet on a massive internal hemorrhage – it provides short term pain relief while the internal bleeding worsens. The Great Depression became “Great” largely because of government intervention. It took a massive war to bootstrap a decade of failed fiscal policy. Ben Bernanke (Fed Chairman and Great Depression scholar) admitted this in a 2002 birthday party speech for Milton Friedman:
Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna, regarding the Great Depression… you’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.
Ben is right – we won’t do it again. While we may see massive economic disruption, we will not see another Great Depression. The fundamentals today are different than they were in the 1920s. Then, money reflected a tradable finite asset which more closely reflected human labor. Cash was a physical place-holder for human energy.
A small percentage of debt is a prudent wager on a prosperous future. Excessive debt is a prescription for collapse of any social contract. Ponzi has many names and faces, but behind his myriad complex personifications, he is raw debt built upon layer after layer of unsustainable debt. Our founders warned us:
“When the people find that they can vote themselves money, it will herald the end of the republic. Sell not liberty to purchase power.” -Benjamin Franklin
But greed seems embedded in the human condition, and systems which foster excessive leverage become imbalanced by design. There is only so much human energy, hence only so much real wealth (tangible goods and services) that can be created and sustained. Any so-called “wealth” beyond the common balance of human labors will eventually be exposed for what it is – a greed-based sucker bet against the house. Global bankers knew this, hence their goal was to be the penultimate sucker before their Ponzi scheme imploded.
While we won’t see another Great Depression, we are now apparently so deeply buried in global and domestic debt that capitalism – as we know it – is dead. Unchecked consumerism built on debt is coming to an abrupt end.
U.S. industrial-consumptive life has been largely defined by amassing the unessential. And these unessential diversions (spending beyond normal human needs and comforts) had defined a fair percentage of consumer spending. As we define our lives with increasingly unessential consumption, we move father away from a sustainable, organic relationship with the earth, our communities, and ourselves.
We may soon see how our self-discipline and laws hold the population at bay when the trappings of technological civilization dissolve and we pay the price of no longer having tribes and “natural law.” –Jan Lundberg, Energy Guru
A deep, prolonged recession will force us to rethink our lives. As we and our neighbors are redirected to consider a more cooperative and shared approach to living, with unessential and self-focused consumptive habits stripped bare, perhaps we will find a greater sense of balance on a local level that will help redefine a sustainable, bottom-up economic model.
Consumerism has become a debased form of liberty. This is the freedom of “me” and “I.” This is the freedom of pigs rooting in a trough. – Frankie Schaefer
One thing is clear – creating massive amounts of new debt to bail out a failed financial system is insanity. We are buying temporary relief, while further propping up an unsustainable future.
We should instead be focusing our efforts on creating a new kind of capitalism that seeks to immediately prioritize the fundamental needs of all stakeholders, creates airtight disincentive to personal and corporate greed, mandates leverage limits (ALL types of debt: individual, corporate, legislative, equity markets) at conservative levels – while encouraging human creativity towards the development of long-term sustainable systems and energy alternatives.
I’ve written and studied extensively for years on energy and “peak oil” theory. I’ll admit – I’m stunned that oil prices are in the $50 range, but then I would have never predicted an economic pullback so severe that oil demand would have fallen so dramatically. Given that our equity markets lost nearly $10T in just three weeks, I’m not alone in this shock.
And I hope I’m not being far-fetched to suggest that we may have just passed the all-time GDP peak of global capitalism – perhaps never to be seen again. Peak Capitalism. Bloomburg reports that October’s cost of living drop was the greatest in nearly 60 years – led by commodities, energy, and consumer price cuts. And November is shaping up to be even bigger.
Which brings up one last point – the economic meltdown and the election. New Republic Editor Peter Beinart offers this fascinating political insight:
If liberalism collapsed in the 1960s because its bid for cultural freedom became associated with cultural disorder, conservatism has collapsed today because its bid for economic freedom has become associated with economic disorder… The Obama majority is sturdy for one overriding reason: liberalism, which average Americans once associated with upheaval, now promises stability instead. (Time Magazine)
November 16th, 2008 at 10:49 pm
Thanks for your eloquent and beautiful post (especially re: the need for more cooperative sense of living, with “self-focused consumption habits stripped bare.”)
However, as a pragmatist, I’m wondering what suggestions you might have for where do we go from here? What do you suggest we do, as citizens, given this knowledge? (besides spreading the word about this post?)
November 17th, 2008 at 2:14 pm
Hi George. I see greed as a very powerful force, and none of us are immune. Pragmatically, I’m not sure anyone, or any government, can (or should) mandate consumption habits. But I do sense that we’re heading into a serious, prolonged economic downturn in which many of us will be forced to learn how to live with less “stuff.” This is a great opportunity for Americans (and others on the top of the consumption pyramid) to retool their hearts and expectations. Living with less is healthy, but I’m concerned that we have become so deeply initiated into a “religion of economic growth at any cost” that the structure itself may not allow for a graceful transition.
I think the bailout of failed banks was a terribly unwise decision – I think it’s going to cause far more damage in the long run than if we had simply let these failed banks die – I don’t believe the world would have come to an end. The management teams behind these failed banks should be on the street with resume-in-hand, or flipping burgers. Instead, we have lavishly rewarded gross incompetency.
I see this downturn as an amazing opportunity for social and cultural growth, but corporate-controlled media and political systems will not send this message. Instead, we will hear that an economic downturn is something to be feared, and that our governments (our taxes) must keep this system propped up at any cost. There are powerful forces at the highest global levels (energy, world banking, military-industrial, media, etc.) that are doing everything they can to sustain a largely unsustainable system.
November 18th, 2008 at 1:44 am
These are excellent ideas, but it seems like the whole system is against anything except bailouts and trying to inject more life into a dying system. It is frightening to watch the world’s financial powerhouses fail to address the real issues.
November 18th, 2008 at 10:49 am
[...] worse than hearing good ideas and knowing they will be ignored. This is from Microclesia’s A Debased Liberty. One thing is clear – creating massive amounts of new debt to bail out a failed financial system [...]
November 22nd, 2008 at 1:33 am
Excellent content and style…keep up the good work!
December 4th, 2008 at 11:16 am
John,
“I see this downturn as an amazing opportunity for social and cultural growth…”
It seems to me that the debt that underlies this downturn is also a flywheel keeping us from adopting new ways of living: If consumerism dies so will the ability to pay the excessive debt–tragically, a moral in addition to an economic failure would result from adopting a more moral and responsible way of living.
Has it come to that, or can we find economic ways to value non-consumer goods? It seems that churches and other non-profit organizations do that on a limited scale, governments on a much larger one. Perhaps employee-owned businesses that provide essential services are another way of fostering the “right” kind of capitalism?
I’m way over my head here, but I know this. The thinking you are doing in this post is CRITICAL. Thank you!
Tracy
December 10th, 2008 at 10:28 am
Tracy, I doubt that economic ideals will improve that quickly
though the potential for pure economic melt-down is very high, I fear. One way I’m trying to “be the change” is by altering our companies towards B-Corporation ideals. http://www.bcorporation.net
Here’s the charter:
We envision a new sector of the economy which harnesses the power of private enterprise to create public benefit. This sector is comprised of a new type of corporation – the B Corporation -
which is purpose-driven and creates benefit for all stakeholders, not just shareholders.
As members of this emerging sector and as entrepreneurs and investors in B Corporations, we hold these truths to be self-evident:
- That we must be the change we seek in the world.
- That all business ought to be conducted as if people and place mattered.
- That, through their products, practices, and profits, businesses should aspire to do no harm and benefit all.
- To do so requires that we act with the understanding that we are each dependent upon another and thus responsible for each other and future generations.