Here, then, is the opening of what was intended to be a chapter in a book.
A DIFFERENT LOOK AT THE GREAT STAGNATION
Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.
– Kenneth E. Boulding
It's no secret that the general economic environment in the U.S. has changed dramatically since some poorly defined moment within a few years of 1980. The dramatic decrease in the volatility of aggregate economic activity is commonly known among economists as The Great Moderation. The traditional view (circa 2005) was that this is a good thing, resulting from the absence of energy price shocks, improved monetary policy, and better inventory management techniques. This interpretation looks pretty hollow in the wake of the 2007 recession, when the economy collapsed, monetary policy was reduced to relative impotence, and energy price shocks are again dominating the economic landscape.
My view is that the volatility reduction is the result of a gradual decline in economic health over that time period – what skeptics like me call The Great Stagnation. In fact that is the title of a recent e-book by George Mason University economist Tyler Cowan.
I'm a bit on the skeptical side of agnosticism regarding Cowan's main point – that we have run out of low hanging technological, financial, and resource-based fruit. The technology claim, if it has any merit at all, might be an artifact of a slow down in government spending at all levels – coincidentally, also since about 1980. I’ll let those with more specialized knowledge sort out the rest of Cowan’s claim. My position is that, while Cowan's argument might (or might not) have some intrinsic value, it largely misses the point.
More on the mark is Cowan's corollary – that we are poorer than we realize. He thinks measurement techniques currently in vogue overstate our wealth. While this may be true, there is plenty of data available to demonstrate in directly measurable ways that, in the aggregate, we are poorer than we should be. And what makes this even worse is that growing income and wealth disparities have led to an economically top-heavy society that is probably unstable. Ultimately, this will require either effective mechanisms to redistribute wealth downward, or effective mechanisms to repress an increasingly impoverished and unruly population. The latter could be accomplished by a stark and impenetrable stratification of society into haves and have-nots – the kind of forced repression that leads to either South American style banana republicanism or 12th century European style feudalism. On the other hand, forced redistribution led to America's post WW II golden age.
I have not been a long-time observer of the deterioration of the human condition, so I did not have a keen view of the long, slow slide that has been taking place since the post WWII golden age ended. My awakening came with the impeachment of Billy-Bob Clinton, our first Bubba President. This, for me was a real WTF?!? event. To say there was no there there is to wildly overstate the significance of Clinton's history of dalliances with various consenting adults.
With my eyes thus opened, I watched the
And now we have some significant minority (oh god, please let it be no more than that) of the American people openly embracing a rouge's gallery of even worse Rethug presidential hopefuls. People who cheer for Herman Cain's claim to be a surrogate Koch brother, and increase their donations in the light of his sexual harassment revelations.
The intellectual nihilism of conservatives is perfectly demonstrated by Shrub, Cheney, McCain, Cain, Bachman, and most especially by the idiotic Rick Perry. You see, it takes anti-intellectualism, ignorance or outright dishonesty to embrace the Rethug policies of upward wealth redistribution, and all that they imply.
I am seriously fearful of the world we will hand to my grandchildren - now aged from 4 to 14. We are on a road to to deep repression or revolution, and eventually, perhaps, even another World War.