ECONOMIC MIRACLES

Churning

Recent news has pricked the "don't worry, be happy ..." bubble that started last Fall, or maybe last summer (2003).  There were reports of increasing production, productivity and profits,  and some signs of decreasing unemployment.  Consumer confidence was up,  especially confidence about the future.  All of that was good news for a beleaguered Bush Administration,  which was being blamed for an America stuck in Iraq and at home.

The height of this rapture was reached with the capture of Saddam Hussein,  who most Americans still think was responsible for the attack on the World Trade Center.  The Bushies stopped making apologies for their neo-conservative foreign policy,  in effect saying, 'See how well things are going.'

Since then, things have been sliding backwards.  On January 9, 2004, Secretary of State Powell (once again) denied he had any "hard evidence" of a connection between Al Qaeda and Saddam Hussein or Hussein's Iraqi government.  Dr Kay's team searching for WMD has been sent home,  having found none.  The Carnegie Endowment for International Peace issued a report denouncing the Bush Administration for having false pretexts for going to war.  In a forthcoming book, former Secretary of the Treasury Paul O'Neill says the Bush Administration was planning to invade Iraq within a few weeks of its inauguration.  All of that,  against a background of increasing terrorism in Iraq,  and the clear intent of some Iraqis to conduct a guerrilla war against the American occupation.

Howard Dean was right, when he insisted that America was no safer despite the capture of Saddam Hussein.  Nonetheless,  many Americans and the media preferred to believe the war in Iraq over,  so they turned their attention to the economy.  During the Holiday Season,  they found nothing disturbing there, so most of America descended into the annual self-congratulatory gifts, greetings, and alcohol.

But,  America was not safer.  Just before Christmas,  Homeland Security Secretary Tom Ridge upped the alert status from "yellow" to "orange."  In the following days, international flights were searched or cancelled.  One young lady was subjected to inquisition, on account of wearing a heated motorcycle jacket,  but, more significantly, because she was traveling on a  French airplane under a Jordanian passport. On December 26,  extended unemployment benefits expired for a large number of people;  I don't remember how many.  After New Year's Day, we were told Christmas retail sales were somewhat disappointing,  and then that only 1,000 jobs were created during December in all of the United States.  Apparently, retail stores were able to handle the Christmas sales "boom" with few or no extra employees.

Meanwhile,  stocks kept rising rapidly,  both in the United States and in Asia,  but not Europe.  The € rose to as much as $1.29,  while $1 now buys ¥110 or less;  i.e.,  the $ dropped a lot. This brought a windfall to those who moved their money to Europe and Asia last year,  but also means import prices are going up in the United States.  Chinese made goods are everywhere,  but their prices are not going up because the Renminbi (RMB) is pegged to the $.  Worry not, despite the approx $130B trade deficit with China (30% of the total trade deficit), the Bushies are trying to force China to float the RMB.  If that happens, the $ is likely to sink against the RMB,  making US exports less expensive in China,  and Chinese exports more expensive in the US.  Presumably, that would create a few more US jobs and many more profits for US corporations,  at the cost of a few dollars more from every American.

Ross Perot's "giant sucking sound" has moved from south of the border to places well east and west of here:  India and China.  Millions of American jobs,  - and Mexican jobs, too - are moving to Asia.  When this only affected the lower classes,  we scarcely heard a whimper from the political classes,  and not a sound from Republicans.  Now that IBM, among others. is closing whole "white collar" plants and sending them to India,  we hear their pain.  Entire States, such as Ohio and North Carolina, are being stripped of manufacturing jobs.  The recent economic improvement has brought some relief to services industries, at least to those not sent to India, but none to manufacturing.

The huge loss of (2.7 million) jobs during the Bush Administration undermined consumer confidence until last summer.  Then, with a hint of a warming trend after a long recessionary winter, people looked forward to spring and better times.  This lasted right up to Christmas,  when it was suddenly re-discovered that jobs were still hard to get. Could it be the lack of Christmas hiring undermined Christmas sales? What of Henry Ford's old idea,  that the company should pay sufficient wages so that every worker could afford the product?

One Miracle of recent years is that the Republicans - the party of the Bosses, management - has been able to pull the wool over the eyes of millions of workers for so long.  I am noticing this, because it is still a Miracle in progress.  This is a Miracle of the same order of magnitude as Americans believing in the Virgin Birth of Jesus, which 89% do.

What I cannot understand, is how few of you believe me?  Apparently,  not-miracle-believing is not a transitive verb, whereas the inverse is.

Kaleidoscopic Patterns

Today, I watched a rerun of C-SPAN2's Sept 18, 2003 "BOOK TV" panel discussion on "The New Humanists," including Profs Daniel C Dennett and Marvin Minsky.  Prof Dennett brought up the most interesting idea that is floating around in the astrophysics community:  that there have been an unknown number of Universes,  of which ours is the latest version.  In each Universe v.1, v.1.1 ... v.2 ... v.n.m ... the laws of physics change and evolve.  This is an application of Darwinian evolution to cosmology;  that we live in an evolving Universe.

Darwinian explanations are once again popular,  in both progressive and conservative circles. Conservatives, especially those who are "market fundamentalists",  are again taking up the Darwinian cause as it applies to the social and economic order.  Strangely,  conservatives refuse to accept, and do not extend, Darwinian ideas on those subjects Darwin intended:  the descent of species.  Liberals and progressives,  to the contrary, are just the opposite.  This unusual and heated division about a scientific theory has been going on almost since the moment Darwin's "Origin of Species" was published.  On second thought, maybe the division is not so unusual.

Recent conservative Darwinism runs along the lines of a Social Darwinian revival.  That philosophy claims to establish that the winners and losers of the social competition earned their just rewards.  Social Darwinians do not like words, such as "struggle," "battle,"  "lottery," or "class warfare,"  as they feel such words are too hostile,  too sharp.  In their view,  whatever it is that put them on top was far more genteel.  Of course, it is mostly the winners who are Social Darwinians;  I assume some losers must also be believers although I haven't met any.

Social Darwinism may be a restatement of an older religion, Calvinism:  'the successful are the chosen of God' shortened to 'the successful are the chosen.'  "The Chosen" seems to be the key phrase for adherents,  for they take it as justification of their status.  They want to feel invested by higher authority,  as they believe their position is thereby secured.  There is some merit in that notion,  especially if the authority is mysterious and not immediately accessible to those deemed inferior ("not chosen," the masses).  Seen in that light, another earlier version of such a doctrine was "Divine Right of Kings."

Being "chosen" is itself a weapon against overthrow,  as well as self-promotion. It matters not that you got in by luck, murder, theft, lies, influence or any of the other devices that get people to the top;  it just matters that you are there. This applies at every stage of promotion above the very bottom. That is why the select don't like harsh words,  or words suggesting violent means.  Once you are "in," everything should be arranged to make it appear your being in is a part of the natural order. It leaves no clues to would-be kings;  they must invent their own conspiracies. This prepares winners for the next promotion.

This is why conservatives love royalty,  kiss hands, bow and curtsy.  Once upon a time in America,  republican (note the small "r") patriots refused such displays.  In America,  it is still illegal to bestow titles. Still, things have changed:  today, refusal to bow and scrape constitutes "class warfare,"  a mortal sin.  Such sinners are necessarily consigned to the Democratic party,  the party of sin.  (I'm sorry to offend your righteousnes,  but Democrats do advocate sin, don't they?  Why else would I be on that side?)

In the 1930s,  the conservative economist Joseph Schumpeter invented the phrase "creative destruction."  The phrase is again popular today among market fundamentalists because it describes what is happening to our economy.  The weak are being sacrificed on the altars of modernity and  efficiency by the strong.  Whatever parts of the weak are not without merit are eaten by the strong. Soylent Green. The same thing was practiced not so long ago in Teotihuacan,  among the Maya, and elsewhere in North America.  Maybe it is something about the water or the dirt or the air in America,  but in a vague, general way, "creative destruction" has been going on here for a long time.

For simplicity,  let's call it the Big American Game, or BAG.  Its been going on for, maybe, 1500 or 2000 years.  As I read the history,  sometimes this city or hero rises to the top,  at other times that one.  Then, out of nowhere, there's another winner.  Come to think of it, that sounds like European history, too, doesn't it?  The North American version is different from Old World BAG in one important respect:  the winners don't last long.  Maybe someone is on top for a few years or a generation,  even 100 years;  almost never more than that.  Winners just don't last long.

Every BAG winner seems a miracle at first.  Remember Babe Ruth? He was the miracle man that put the Yankees on top. But, Yankee total dominance is already a thing of the past.  The same thing happened with the NFL teams of yore.  Pete Rose, once again in the news, was quickly dispatched for his vice.  The same thing happened among giant corporations,  such ATT, Pan-Am,  even Woolworth's.  So, why not countries? 

We've had the American Century.  BAG statistics suggest time's up.

The latest economic miracles are happening in India, China and other places like that.  Yesterday's heroes are today's bums.  As the Bible has it somewhere, 'the first shall be last, and the last, first.'  So, after all, it's really same old, same old.

Better check carefully before you buy stock in miracles.  That applies double in 2004,  Leap Year, Year of the Monkey.  What miracle?

January 10, 2004

Last update: 11/02/2007

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