A Turn for the Worse

This is a syndicated repost courtesy of Kunstler. To view original, click here. Reposted with permission.

The Democratic Party has steered itself into an exquisitely neurotic predicament at a peculiar moment of history. Senator Bernie Sanders set the tone for the shift to full-throated socialism, and the primary election win of 28-year-old Alexandria Ocasio-Cortez in a New York congressional district seems to have ratified it. She promised voters free college tuition, single-payer health care, and free housing. Ah, to live in such a utopia!

One can actually understand why New Yorkers especially would fall for that agenda of promises. When I was a child there in the 1950s and 60s, New York was a mostly middle-class city. City College of New York, with a really distinguished faculty, was free. That’s right, stone free. Much of that middle-class was educated there, including most of my high school teachers. In the 1950s and 60s, it cost a few hundred dollars to have a baby in the hospital, and less than that to receive three stictches in the ER. Back then, New York real estate was mostly rental housing and not subject to the deformations of wandering global capital.

You can’t overstate how fortunate this country was after the Second World War. The mid-twentieth century was the apex of American industrial wealth. We produced real goods and lived in extraordinary comfort. Now, of course that has all turned around, the industry is mostly bygone, the magnificent energy supply is getting sketchy, and all that’s left is a false-front financialized economy based on swindling and accounting fraud. Medicine and health care have become unabashed rackets, and good luck finding a place to live for less than half of your monthly income.

Things have changed, as Bob Dylan once noted in song, and the times they are a ‘changing once again. This is probably the worst time in recent history to go full-bore socialist. Look, it’s as simple as this: the 20th century saw the greatest rise of global GDP ever. The prospect of that is what drove the various socialisms of the period — the belief that there would be evermore material wealth and that a lot of it had to be fairly redistributed to the workers who brought into being. You can debate the finer socio-ethical points of that — and indeed that’s what much of politics consisted of throughout the industrialized world — but the stunning bonanza of wealth compelled it.

That is the world we are moving out of right now, despite the fantasies of Elon Musk and the many techno pied pipers like him. GDP growth has stalled, the implacable trend is toward contraction, and the wizards of financial hocus-pocus are running out of tricks for pretending that they create anything of value. In short: there’s no there there. All that’s left are IOUs for loans that will never be paid back — and that kind of loan (especially in the form of a bond) doesn’t have any value.

So, the Democratic Party has embarked on a crusade to redistribute the wealth of the nation at the exact moment when the “wealth” is turning out to be gone. Good luck with that.

A perhaps more high-toned and fine-tuned version of this program is the new scheme called “universal basic income” (UBI). A Silicon Valley zillionaire named Andrew Yang has launched a 2020 presidential bid based on this UBI. You can listen to his pitch in this excellent discussion with Sam Harris here. Yang is obviously sincere. He proposes to give every citizen around $1,000 a month whether they have a job or not. You can mount any number of arguments about how this might incentivize behavior for better or worse, but if something like that were ramped up, I assure you it could only be done with a debased currency on track toward oblivion. The wealth is no longer there and the representation of it in “money” will be obviously false.

Don’t get to worked-up, either, over the Big Story that robots will soon be doing all the jobs lately done by humans in America. That fantasy of the next economy is actually already dead-on-arrival due to the energy predicament that virtually no one in the public arena is paying any attention to. The century-long oil bonanza is winding down again. The oil companies know it. They’re not spending any money on exploration, meaning they won’t replace the energy we’re currently burning up with new supply. To make matters more interesting, the alt-energy industries will not survive the demise of oil. You have no idea how this dilemma will shove the life our nation into something like a new medieval age. And don’t be surprised if it comes complete with a new feudalism — which is just a way of describing a deeply local economy, if you can make one at all.

The Democratic Party’s return to socialist nostrums could not happen at a less propitious moment. It’s one thing to spend other people’s money during an age of steadily rising GDP, and another thing when GDP is collapsing. It might even prove to be a winning strategy in a few elections. But that depends on how delusional the voters remain.


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