Doomed By Debt

I am a sucker for a good infographic. Here is one for the problem of sovereign debt.

 

This is only the debt of the national governments. No personal or corporate debt is included. Also the imputed and unstated debt of the various governmental pensions and senior medical retirement programs like Medicare. 

How much does the average person have in retirement savings? 

Just how much has the average American family saved up? According to the EPI, the mean retirement savings of all families is $95,776.

But that number doesn't tell the whole story. Since so many families have zero savings and since super-savers can pull up the average, the median savings, or those at the 50th percentile, may be a better gauge. The median for all families in the US is just $5,000, and the median for families with some savings is $60,000.

Note that this is the savings for each family. This means that once you include the national debt the net savings rate is zero because most families have more than one member. 

I am not sure that any president, even St. Trump, can really do much about the lack of savings and high debt level. No one is even talking about the unfunded liabilities.  

The True Cost of Living

While I think that these kind of calculations overstate inflation, it seems obvious that the cost of living is growing much higer than is admitted. Admitting it would help bankrupt Social Security. 

I have discussed the inflation rate before. 

What Rough Beast Slouches Towards Bethlehem to Be Born?

TURNING and turning in the widening gyre

The falcon cannot hear the falconer;
Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

Surely some revelation is at hand;
Surely the Second Coming is at hand.
The Second Coming! Hardly are those words out
When a vast image out of Spiritus Mundi
Troubles my sight: somewhere in sands of the desert
A shape with lion body and the head of a man,
A gaze blank and pitiless as the sun,
Is moving its slow thighs, while all about it
Reel shadows of the indignant desert birds.
The darkness drops again; but now I know
That twenty centuries of stony sleep
Were vexed to nightmare by a rocking cradle,
And what rough beast, its hour come round at last,
Slouches towards Bethlehem to be born?

This is one of Yeats’ most well-known poems. The purpose of a poem is not to predict the future but to capture a moment. Bible Prophecy can work that way too. 

We are in a transition period. But a transition to what? That transition certainly was evident to Yeats in 1921 when this poem was published. The Second Coming, the title of this poem, is not referring to the return of Jesus. It is insisting that something else is coming. We hold our breath as it comes. I think we can all feel it—with dread. 

That is why we have so much fear. I have written against the survivalist mentality here on the blog, but I too share that dread. Something is coming that will shatter our shared culture, our shared lies. I too see the event that the "preppers" see. I just do not think one can prepare for the Apocalypse. 

That does not mean one should not have some food stored. Nor does it mean one should not reduce debt. These are the things we should do anyway. 

I am not worried about a zombie attack. Or its actual real equivalent. But I am concerned that we are headed toward a decades-long period of decline like the Great Depression in the 30's. Are you ready? Get ready. You can prepare for this scenario. 

Herb Stein once said that if something cannot continue it won't. Our current economic situation cannot continue, so it won't. We are reaching the end of our culture, and its dominance in the world. As Leviathan heads toward Bethlehem to be born the most we can hope for is that we are somewhere else when it happens. 

Here is what Spark Notes, I suppose the internet equivalent of Cliff's Notes, has to say about the poem:

... the next age will take its character not from the gyre of science, democracy, and speed, but from the contrary inner gyre—which, presumably, opposes mysticism, primal power, and slowness to the science and democracy of the outer gyre. The “rough beast” slouching toward Bethlehem is the symbol of this new age; the speaker’s vision of the rising sphinx is his vision of the character of the new world.

The reason so many people are afraid is that they see Leviathan coming and see destruction. They may be right. I suggest that instead you look for the opportunities that this time might bring—for in crisis comes opportunity. 

Gilligan’s Island as a Metaphor

Hearing my daughter play the theme from Gilligan's Island over and over again as she practices piano has led me to consider the hapless castaways. They seem to be a metaphor for the mess we are in. As you can see, others have had this thought too. I even saw an author interviewed on his book on the subject. But I doubt that each islander represents one of the seven deadly sins. Maybe the castaways were actually dead and in hell. No, No, that can't be right, no TV show would do that! Nor do I think Sherwood Schwartz's explanation that the show is a metaphor for international relations is valid, if he really said this. (It is dumb enough to be true.) 

But the analogies are so obvious they could not have been intended.

First there is the millionaire, and his wife. They never actually seem to do anything, and he seems to always have an alcoholic drink with a straw. Everyone seems to have brought along a lot of possessions for a three hour tour—the Howes especially. The wealthy actually do a lot more than is realized, but often stereotypes have some basis in reality. The Howes are always ready to provide advice as long as no work is involved. What is weird is that every other castaway gives then deference even though on the island there is no reason for it. 

The professor represents old-fashioned American ingenuity. He will get them off the island! But the Skipper and Gilligan seem to always mess everything up.

This is natural as the Skipper and Gilligan are the authority figures, the government, on the island. The government always messes everything up. 

My blogging predecessor suggested that Ginger represents the propaganda machine. Maybe. In any event I always picture her meeting up in the jungle with the professor. 

This leaves the unfortunate Mary Ann. Neither she nor the professor were important enough to be mentioned in the first season's theme song. She represents the common person who does all the work. While it seemed that Ginger helped, Mary Ann seemed to do most of the cooking. 

Poor Mary Ann!Romantically Mary Ann's choices were limited—the Skipper or Gilligan. Not the best of choices. That's right, Mary Ann's only options, just like the common man she represents, was to be screwed by the government. 

As for our heroes in real life, they got no residuals for their work. In real life they got screwed too.  

Middle Class Angst

Trump is benefiting from the angst the middle class is feeling. The middle class has been hammered for 30 years, and while the middle class may not understand it, they feel it. 

First, what do I mean by middle class? This would be what used to be called blue and white collar workers. Here is one definition from a small business website: 

The terms "blue collar" and "white collar" are occupational classifications that distinguish workers who perform manual labor from workers who perform professional jobs. Historically, blue-collar workers wore uniforms, usually blue, and worked in trade occupations. White-collar workers typically wore white, button down shirts. and worked in office settings. Other aspects that distinguish blue-collar and white-collar workers include earnings and education level.

There are differences between these two groups. The office and lower managerial part of the middle class, white collar, have not been affected as much by the generation-long malaise that the statistics say the middle class is experiencing. The office staff does not care where the widget their company sells is made, New Jersey or Taiwan, they just don't care. The worker making the widget obviously does care.  

The obvious solution from the blue collar perspective is tariffs against the lower wage countries.  Trump and Sanders are the only ones talking about this, and the other Republican candidates are opposed to tariffs for ideological reasons. Of course the fact that those who give money in Republican primary elections tend to be of the class that benefits from a lack of tariffs is just a coincidence.  

The ideology advanced by free trade advocates is supported by what was called "comparative advantage," invented by an Englishman 200 years ago. Of course it is again a coincidence that the country that invented it at the time had all the trade advantages. 

What is comparative advantage? 

Concept in economics that a country should specialize in producing and exporting only those goods and services which it can produce more efficiently (at lower opportunity cost) than other goods and services (which it should import). Comparative advantage results from different endowments of the factors of production (capital, land, labor) entrepreneurial skill, power resources, technology, etc. It therefore follows that free trade is beneficial to all countries, because each can gain if it specializes according to its comparative advantage.

While this is "settled science," I am not at all convinced. First it needs to be pointed out that the playing field between countries is not at all level. I am not talking here about the low wages, although that is a significant factor. A good example is the fact that a modern industrial society's that does not have to properly dispose of its toxins has a much lower cost factor. Health and safety, the lack of worker's compensation, and lower taxes all play a part. Modern economic theory has turned American manufacturing into a wasteland of abandoned factories. 

Russia has also learned that relying on others for essential goods leads to economic dependency, and when sanctions are installed, essential products are no longer able to be purchased. We will see how this plays out as Russia implements a policy of import substitution, where domestic goods are used instead of foreign imports. 

As for the coming election, the number of people that are hurt by free trade are greater in voting power than those that benefit. It is, of course, just a coincidence that those that are hurt are powerless and those that benefit hold the reins of power. Trump is tapping into the angst of the middle class, and Trump will receive a lot more votes from this angst than anyone realizes. This includes tripling the black vote that Romney received in 2012. Ridiculing this phenomenon as "angry white men," in addition to being inaccurate, has increased the alienation felt by the middle class. 

While I still expect another President Clinton in our future, Trump is being lifted up by real economic trends that the establishment refuses to recognize, or gives lip service to without any intention to act on it.