We’re all Doomed!

It seems like everyone, right now, is convinced of their own doom. The pages of the Guardian are full of angry leftie types who feel betrayed by 52% of the electorate, while the pages of the red-top papers are little better and filled with angry accusations of treachery and imagined attempts to subvert the result of the Brexit vote. Bizarrely, every side feels under threat simultaneously, but in crazy times like these maybe they’re all right. When the rules of the game fall apart, no-one can be sure anymore what it takes to win, or what winning even means, even if the team captains themselves were the ones who shot the referee and are now warring for possession of the rule book. The village has to be destroyed in order to save it.

According to Google and Wikipedia, the original sense of the word doom was judgment, someone receiving what they deserved:

Old English dōm ‘statute, judgement’, of Germanic origin, from a base meaning ‘to put in place’; related to do.

And there’s certainly a lot that needs judging. The Brexits and Trumps of the world weren’t random events, they were responses to the faults that run through the way we organise the world, and the increasingly desperate papering over the cracks. Every system contains the seeds of its own destruction (as Marx supposedly said of capitalism), and when those seeds germinated there were two choices:

  1. Be honest about the problems and the drastic changes required to fix them
  2. Lie, pervert and distort all law and reason to delay burying the bloated but familiar corpse as long as possible

It doesn’t take much to see which way our illustrious leaders went.

Large societies always find it hard to fundamentally reform, because the illusion of permanence is the only way they can work. Imagine what would happen if people with pounds in their pockets didn’t believe that the pound was a stable store of value, with a stable and strong government behind it? Or if they didn’t believe that their pensions would deliver what was promised? If they didn’t act as if institutions, which are composed entirely of rules and therefore in theory more mutable than anything physical, would endure forever?

In such a world, the only thing you can trust are friends and family, but no system of 60+ million people (such as the UK itself) can be run on that basis. It’s been tried in Africa and other parts of the world where small tribes were randomly allocated to states, and the result has generally been massive corruption and a state that barely functions at best. The ability to work together with strangers, the historically bizarre cultural belief that the system itself can substitute for personal links, is what makes the advanced economies work, but that very illusion means that nothing fundamental can be fixed without bringing into question the very basis of the system, even when the system is tearing itself apart. There’s always a temptation to tweak and paper over the cracks and hope.

Let’s take our current repeat of the Great Depression as an example:

  1. SUCCESS: In the post-war period, Keynesian policies created a much more equal society with a much higher standard of living for the working class than before.
  2. FAILURE: The pursuit of full employment gave organised labour a lot of bargaining power. In the 70s when the economy hit the rocks, workers were basically unable to reach a compromise with the investment class about how to divide limited spoils. The result was the three day week and a country at war with itself.
  3. SUCCESS: Margaret Thatcher broke the UK unions and redistributed power towards the investment class. After a sharp recession, the economy started functioning again and, combined with a boost from North Sea gas and oil, things seemed to improve.
  4. FAILURE: Instead of rebalancing power between labour and investors, the pendulum swung massively too far the other way. Not only was the power of organised labour destroyed, but the government deliberately pursued policies to increase competition in low-skilled jobs by bringing cheaper labour into the EU and pushing free-trade deals that facilitated off-shoring of jobs. This caused a shortage of demand for the goods being produced – the propensity to spend at the bottom is higher than the top, and there has to be enough money spent to buy the goods being produced or the economy enters a death spiral. The lesson of Keynes was ignored by Thatcher and other followers of Friedman.
  5. SUCCESS: A liberalised financial sector (also due to Thatcher) propped up consumer demand by creating a debt bubble. Secured lending on housing, and unsecured lending via credit cards, created money to plug the spending gap (yes, banks create money, and the money multiplier model is empirically wrong). Everything seemed to be OK as long as the bubble was inflating. Since the liberalisation of finance also occurred across borders, positive feedback loops crossed borders too to reinforce the bubble.
  6. FAILURE: In parts of the system, the bubble popped. Strong connections between banks meant that instead of one national bubble popping, the entire international debt bubble went pop.
  7. SUCCESS: Banks were bailed out, and continue to be bailed out (the latest being Italy’s third biggest bank, Monte dei Paschi). At first, economies were stimulated by governments to maintain consumer demand and avoid an even bigger recession. Things seemed to stabilise.
  8. FAILURE: Government debts soared faster than for a long time, causing panic among politicians and influential people. Austerity was imposed to try to slow the growth of debt or decrease debt, causing a return of the lack of demand problem which was ‘solved’ by the debt bubble in the first place. Some parts of the world entered a death spiral (Greece).
  9. SUCCESS: Everything can be solved by better public relations! Politicians rely on animal spirits to magically solve the problem. Unemployment and inflation statistics are calculated in misleading ways to make people more optimistic. Crapification is progress: zero-hours contracts and a replacement of well paid full-time roles with minimum wage and part-time jobs is presented as a good thing. In the UK, politicians succeed in restarting debt fueled house price inflation, for a time.
  10. FAILURE: It turns out that the dogs won’t eat the dog food. Long-standing anger at economic policies at the bottom combine with anger of the previously insulated to deliver Brexit and Trump. Spain is ungovernable. Le Pen and other right wing populists rise in France, Austria, the Netherlands. The 5 Star Movement has a good chance of being the biggest party in the Italian parliament, and want to withdraw Italy from the Euro.
  11. SUCCESS: ???

Another example might be our inability to solve the environmental problems of economic growth, or to accept that growth itself, of both populations and economies, is limited in a finite world.

Note that the first failure has been returning to haunt us for decades now. We started down this road because of the difficulty of maintaining a balance between demand and supply, labour and capital. Now we have exactly the same problem, but we also have:

  1. The aftermath of the biggest debt bubble in history
  2. A zombie financial system
  3. A government that regards lying (everything is fine!) and perverting justice as a problem solving mechanism (no bankers were jailed!)
  4. The disintegration of the political centre (Brexit, Trump, …)

How much easier might it have been if the fundamental flaw in the system, the need to maintain some kind of equilibrium between supply and demand, workers and capitalists, had been comprehensively solved in the seventies? But to do that would have required an admission that this man-made system can be whatever we want it to be, that the only constraint is what we’re willing to collectively live with, and admitting that would have destroyed the system all by itself. So instead we get the sticking plasters and the gradual march towards total disintegration.

4 thoughts on “We’re all Doomed!

  1. Looking back at it, one thing I ignored (to make the argument clear) is that some of this isn’t deliberate, or at least not conscious, because many of the actors involved fall into one or more of the following categories:

    (1) Can’t imagine anything different from the way things are now

    For the last 40 or 50 years, change has been gradual. Even the big changes have been aimed at preservation, not revolution. Any fundamental change is scary, and for a majority of decision makers to favour it would require huge challenges. It’s not a coincidence that the last big reset of the system took place between and after the two greatest wars in human history.

    (2) Don’t think in terms of long-term system dynamics (e.g. feedback loops)

    Going by the previous occupations of MPs, we’re led by lawyers and accountants, not scientists or engineers. Lawyers aren’t taught to ask the big questions, or to think mathematically. In law, truth in contested in purely human terms, but the wider world doesn’t work that way. Macro-economics doesn’t work that way. Just because we decide something’s true, it doesn’t mean the world has to take any notice.

    (3) Aren’t acting for the overall good

    Finally, there’s the issue of intent. Of course there’s illegality and corruption, and the massive grey area of the revolving door between political and private post-government jobs. But even legal behaviour may lead to decision making bad for the country as a whole.

    For example, banks sell debt, it’s their product, so bank CEOs will advocate for light regulation even if they know it’ll probably blow up in everyone’s faces at some point. Politicians tend to listen to those same CEOs and assume they (a) know what they’re talking about, and (b) that what’s good for the banks is good for the country.

  2. Interesting post. Nice use of technical terms like “Crapification” 🙂 A word to throw into the day at some stage for sure.

    As normal I come at many topics from slightly different angles. In this case I can only see “Money” at the heart of all the Successes and Failures. In the 80’s Maggie Thatcher was a bit of a hero of mine, which could be argued as the beginning of the great god money but the 70’s also look like a money issue with everyone wanting more and striking when they didn’t get it.

    The problem as I see it, is every fear, every failure and every success is measured purely by money. The last x number of decades and governments has focused on using money as both a carrot and stick. Every big topic is reduced to money, Scotish independence ended up being about how better off or worse off people would be, Brexit has been the same, even now we are hearing how many Billions of trade deals have been done, or if we leave we’ll still have to pay and buy into the common market. Education isn’t discussed at a level of how good or bad teaching would be, it’s about how much University courses will cost, how much debt you’ll be in if you vote this way or that. NHS is discussed as to how much drugs cost, how much debt it is in, whether or not this government is cutting funding in real terms or not. Even discussions about the BBC are reduced to how much the stars are on, how the license fee will be paid, how big the cuts are.

    Nothing is discussed at a level of worth, in human terms or fulfilment terms. The one common word for both sides, left or right wing politics, in or out of Europe, Benefits, NHS, Tax system, Education is money. Houses are only discussed in terms of value, can you get onto the ladder, can you sell it for more and move on up.

    Since everyone has now been brought into the debate about anything or everything using the same measure you only have 2 sides to every argument. Everyone is polarised into one camp or the other, therefore everyone has fear of the other side and everything is measured as success or failure based upon those fears of money.

    Everyone is now looked at as a “has” or “has not” with both sides of the argument trying to convince the “have nots” that they can be a “has” if they vote right. Everything has been dumbed down to a simplistic message.

    Having forced myself out of the rat race, scratching a living, barely, and having got a house to live in rather than grow in value I have started to see the value in quality of life, the quality of time and enjoying the fruits of simple things. Only now can I see that money isn’t quite as important as we are told. Brexit is irrelevent, success or failure of economic policy is neither here nor there.

    When everything is measured by one thing, money, there is a stress built into the system where no one has enough, everyone is stressed either about getting it, or not having it and there is never an ultimate goal for anyone. No one is told once you have this much you are sorted stop worrying. If there is no end goal no one can succeed, all you have is a path that leads to a never ending horizon. No one is satisfied. Everyone is against everyone else.

    We are all doomed if there isn’t a point when people can sit back and say I’ve arrived, I can now live how I want.

    The problem with the system we have is when you do stop, and live, stop striving for more money, stop being interested in politics, the system tries to force you back into earning more money, inflation.

    Inflation, in my terms, is the fact that my idyllic lifestyle of opting out is about to see my water bill go from £180 a year (no sewage) to an estimated £500 to £800 a year based on a meter. I’m now getting to my point 🙂

    That one piece of inflation takes away all my spare cash so I am now forced to earn more disproportionately. That’s a big bill increase for me and a lifestyle changing one.

    I’m now in a position of being forced back into looking at the system and saying is this a “success or failure”. I’m now looking at what side I’m on and because I’m not interested in the details anymore I want to give the system, the establishment a good kicking. What ever the system wants, No brexit for example, I’ll vote against. If I was in America I’d vote for Trump. If the system wants immigration I’ll vote against.

    I think we have reached a critical mass where there is now enough people who don’t think the system is right (what ever that means) that we will see lots of changes, or a fight to keep things the same, depending on who wins.

    It’s not a revolution, it’s disruption of the presumption that our leaders are right.

    The points you make are all good ones but in today’s climate I think they miss the part that half the population don’t think details are relevant. The economic policy, the political system, Brexit or details of anything, left or right politics end up with the people at the top getting more and people at the bottom either getting less or paying for those at the top.

    There wasn’t a financial crisis or bubble, what there was was something that stopped the poor from borrowing money, and which made the poor pay more to the bankers. There isn’t a housing bubble or crash, what there was or is, is a situation where the poor can’t have houses the same as the rich, zero hour contracts aren’t the issue, it’s the fact that the poor don’t have proper jobs, it doesn’t matter who the politicians are it’s the fact that none of them work for the poor (not even labour) they work for their own class of people. It’s not fear of change it’s the fact change doesn’t seem to benefit the poor, government debt isn’t a problem it’s the fact that only the poor feel they pay for it. Crapification wouldn’t be a problem apart from the fact it only effects the poor.

    The poor have become all those that can’t get what they want, where as before there was rich and poor and the majority in the middle, now the middle people feel like they are poor (when they aren’t).

    You can see all your points as success or failure but the only people that now view things in that way are the people doing well, the rest are simply unhappy with everything.

    It seems to matter where and how you live. In my poor area, all change, all progress, all political parties have lead us to towns failing (no shops), no jobs, everyone seems to be on benefits or income support, loads of normal people now take drugs, illegal or not, anti-depressants, we are all ill, on statins, fat, unfit, communities have broken down, no pubs, no post offices – all the normal way of life has changed (as seen 30 years ago) has gone, no one has real friends they are all facebook numbers, kids are statemented because they have too much energy, no where to play and need drugs to slow them down. There’s no good food only junk in the shops. Bins don’t get emptied weekly, you can’t even take rubbish to the tip on the day of your choosing, you need a license to do anything.

    I think I agree with what you say but the reasons are all more basic.

    Sorry for the long reply but you are getting into the habit of “pressing my buttons” 🙂 A sign of a good post.

    • Sorry I didn’t reply to this earlier. I was away over Christmas visiting family, and unfortunately a power cut messed up the Raspberry Pi until I got home and rebooted it. I’ll write a proper reply tomorrow evening hopefully!

    • I agree completely about the money angle. To a certain extent there’s no escaping from the need for real resources – drugs and medical equipment are needed in the NHS for example. But I agree completely that just maximising income at all costs is no route to a better world.

      And you shouldn’t do a course you hate just because you might earn 10% more, but when the course costs are jacked up to such a high level you might feel you don’t have a choice. You’re right that the problem is the system, not the individual – you’ve succeeded in opting out, but doing it is very hard. Taxes and rents and fees for access to everything conspire to keep you integrated and in wage slavery.

      To continue with the NHS example of how the world is broken: Having less stressed, friendlier staff and cleaner hospitals would go a long way. There are plenty of unemployed and socially isolated people in the country, and unless we want to let them starve on the street they need to receive the means to live. So… we live in a system where we exclude people from the economy and, since everything needs money, from society, while at the same time there are socially useful roles unoccupied.

      There’s also a certain false accounting to all the talk of GDP. Take the Thatcher years again as an example. There was a big boost to GDP (income) from increasing North Sea oil and gas production for most of the Thatcher years. But when we call this income, we ignore the fact that the natural capital of the country was being eroded. Gas and oil can only be extracted once, as the recent collapse of production demonstrates. Eroding your capital and calling it income is a basic accounting error, but national accounts don’t capture it.

      I’m not sure that the polarised debate is completely due to money though. People do have a tendency to form sides/groups wherever they are, and there’s strength in numbers. That process then produces very odd coalitions – take the mostly pro-Brexit AND pro-business Conservatives, or a Labour party seemingly simultaneously in favour of mass migration AND increasing wages.

      The passive resistance that we’re seeing is also driven by the growing difference between the official line and reality. We’re told the economy is growing, but either that’s not true (due to incorrect inflation numbers, money printing, …), or if it is true then most of the benefits accrue to a very few. The majority don’t see major increases in their standards of living, especially the younger generation. House ownership amongst young people is going down while more and more of the relatively well-to-do decide that building a “portfolio” to retire at 35 is a great idea.

      This is all probably another big failure of the attempts to “fix” things, but in a different arena. As you say, the solution to every problem for decades now has been to introduce markets, incentives, processes, paperwork, to add additional complexity to the system to try to make it deliver what the political class want, typically GDP growth. But this process is ultimately another self destructive one, because what makes things actually work is the unwritten. The relationships between people, in communities, the differences between places and their local solutions to their problems are what give people the ability to come together. These relationships are the basis of trust, and trust is ultimately the foundation of all contracts and markets – if courts had to arbitrate everything then the transaction costs would destroy most markets outright. The more the hyper-marketisation process is pushed, and the more it destroys the social fabric, the more it destroys its own long-term basis. Without the social fabric there is no real market, there can only be force and coercion.

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