Monday, September 05, 2005

Apocalpytic Thoughts (Well, In the Literal Sense)

An apocalypse is really a revealing. It's a time when a culture's deep and scary flaws are let out into the open air and this is usually expressed, in apocalyptic literature of all types, as highly, physically destructive. But, the way I see it, Rome didn't fall in a day (Did it? No, I'm sticking to that, it didn't).

In five years, we've had three major, destructive events that revealed flaws in our own systems. Three? Hey, people like to talk about the Post 9-11 world, but I talk about the Post-March 2000 world. Think about it this way, if you'd enetered the stock market in 1998, after the Russian, Asian and Latin American financial disasters, you would have pretty much made no money, 7 years later. That's a little arbitrary, but, if you're using the stock market as a gauge of our economic worth, it gives the United States roughly the same value now as it did seven years ago and all of the crackberries and Wi-Fi hot spots in the country haven't so far changed that.

9-11 and the two wars that followed it (one related, one not related but sold that way) served to hamper the recovery from our admittedly mild 2001 recession. Unemployment is still low, as is inflation, but wages have generally not kept up, even with the historically low inflation we've had. Low inflation might also be over. After Katrina, we lost 12% of our oil refining capacity. The outlying high gas prices are now hitting $6 a gallon. $3.50 and up isn't uncommon. Sure, we have a strategic oil reserve but, even before losing the southern refineries, there was a glut for turning oil into gasoline. Prices will probably soon fall from disaster highs, but... they're not going back to $1.75 a gallon. One of the revelations here is that we were probably all getting gas too cheaply, given supplies available and now global demand. Welcome to inflation.

Here's another revelation -- the US government has so overextended itself abroad and has become so fixated on terrorism that it is unable to properly respond to a major natural disaster in the US. Only good news is... the US doesn't have major natural disasters every month. The problem with that good news is, if you understand probability in its most basic sense, it doesn't mean that we're in the clear for awhile any more than me flipping tails with a coin means the next flip will bring up heads.

Another revelation -- there are some very good things that have happened over the past 20 years. For example, unemployment has kept to around 5% nationally and it's become a new norm. That used to be unthinkable and used to be a number that meant the best of times. Now, it's a norm. We have grown. But, throughout our current recovery, we have not created enough new jobs to keep up with new people entering the work force. The US has been growing on productivity, more than anything. Productivity only kind of creates jobs. Eventually, a very productive company will expand. But, in the short term, a very productive company is just getting a lot of work out of as few workers as possible.

Another revelation: Our technology has not made us invincible. Iraq is a quagmire. Rumsfeld famously said, "You go to war with the Army you have." But, the Army we have is all volunteer. In that sense, its size and strength serves as a public statement about how much we're willing to fight. Perhaps we need to start, "Going to wars that the Army we have can handle."

Because, and to bring this back to the beginning of this loopy little screed, I think that what's most been revealed are the costs of our belligerence. The National Guard, meant to guard the nation while other parts of the military are abroad, is at half strength in many places. Being constantly at war has spooked corporate executives and investors, making them less willing to commit money towards expansion. Some people think wars help economies. But that's only true in the case of say, World War II, when you can take a bunch of out of work people from the Depression and say, "You know, we're willing to pay you to build tanks and bombs." That's when companies like Ford, who can't sell cars to an impoverished public, start making fighter plane engines. Those aren't the kinds of wars we fight these days. The wars we fight are bad because they just kind of scare everybody.

People say about George W.H. Bush that he was too concerned with foreign policy while the domestic economy was a mess. The same is true of George W. Bush, but, for awhile, he framed all of his foreign interventions in the name of national security and since the country was attacked from abroad, people bought the argument. But, really, I think it's now been revealed that the son not only made the father's mistake, but made it much worse.

We never really properly recovered from the bubble bursting in 2000. The stock market says we haven't recovered at all. Our domestic situation has suffered from a lack of attention. That's the big revelation.


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