The WaPo headline reads: “Economic Signs Turn From Grim to Worse: Another Wave of Evidence Of A Deepening Recession.” The BBC reports from Davos: “We are not about to turn the corner, we do not know where the corner is.”
There is increasing acrimony over the shape and implementation of the federal “stimulus” and “bailout” legislation.
On one hand the Donkey Clan says “action” is imperative.
On the other hand the Elephant Clan says the proposals for action are shameful wastes of citizen’s money. The Elephant Clan has offered few alternatives except to imply that the bromides from the feel good 80s are still the right medicine.
For those who want to look under the hood, the 1 February WaPo has a great summary graphic on A9 of the current packages.
AN AD SAYS IT ALL, OR DOES IT SAY NOTHING?
A clear encapsulation of the 80s bromides that are a root cause of the current Global Meltdown – and especially of the last eight years of Agency malfeasance, Enterprise greed and Institutional filibuster – can be found in the 29 January full page ad by the Cato Institution that ran in WaPo and other MainStream Media outlets. The cottage industry “right blogs” was touting this ad the day before it appeared so this was a well orchestrated public disinformation blitz. See End Note One
The Cato ad features a list of 200 academic economists who apparently agree with a statement in the ad, the bottom line of which is:
“Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.”
There are several levels of deception in this one sentence:
Boosting “growth” is not a rational strategy to achieve economic prosperity, social stability and environmental sustainability in a Global context of finite resources. It is also NOT the way to preserve democracies with market economies. See NEED FOR A NEW METRIC FOR CITIZEN WELL BEING
Business-As-Usual ‘growth’ is a recipe for disaster because the Global Financial Meltdown was caused by the shelter based speculation bubble. (See 29 Jan 2009 report by Brookings: “The Origins of the Financial Crisis”)
Even a temporary re-acceleration of recent (unsustainable) patterns and rates of ‘growth’ (aka, Mass OverConsumption and dysfunctional human settlement patterns) will mean burning through more of the remaining Natural Capital and cause an upward spiral of prices, especially for energy.
Let there be no mistake, neither the Donkey Clan, nor the Elephant Clan have faced the reality that a return to recent “growth” is NOT the “answer.” However, the Elephant Clan and supporting Institutions calling for application of the bromides of the 80s is inviting Collapse as articulated by Jared Diamond.
The path to ‘growth’ that the Cato ad champions: “Lower tax rates and a reduction in the “burden of government” is Trickle Down. One of the Thomas Jefferson Institute’s “bipartisan public policy” newsletters reminds readers that Trickle Down is another word for “supply side economics.”
There are applications of “supply side economics” that make sense but Trickle Down in shelter to achieve Affordable and Accessible Housing and in Mobility and Access via Large, Private Vehicles are NOT among them.
WHO PAYS FOR ADS LIKE THIS?
Near the end of the 14 January post “THE TRAGEDY OF TRICKLE DOWN” EMR said:
“No one questions the existence of, or the danger of the Wealth Gap”
One reviewer wrote in the margin: “Really? I think plenty of folks think the Wealth Gap is just dandy”
Of course he is absolutely right! (The text that will appear in PART FOURTEEN of TRILO-G has been edited.)
Many in the top five percent of the Ziggurat – The Happy As Clams – are very pleased with the Wealth Gap and with Trickle Down. They believe they can amass enough wealth to shield themselves and their children from Collapse. They have not yet considered their grandchildren or the need to achieve a sustainable trajectory for the society upon which the depend.
It is interesting to note that at the Elephant Clan’s National Committee conclave this past week, it was pointed out that one of the groups that had “abandoned” the Elephant Clan is “the very rich.” Perhaps some at the top of the Ziggurat are starting to look beyond next summer at The Hamptons.
Who is paying Institutions to run ads like the Cato ad? The recent obit of Holly Coors provides some insight. So do web sites that profile the activities of Richard Mellon Scaife.
Their money, and that of those with similar proclivities, support The Heritage Foundation, The Cato Institute, Reason and other Institutions as well as the lobbyist Enterprises that push Trickle Down. Smaller sums and millions of hours from similarly motivated individuals support the electronic blizzard of “right blogs” that sing the same song – over and over and over.
These expenditures were very effective as long as they helped secure 50.5% of vote in election after election. The 50.5% strategy worked so long as the illusion that a rising tide (growth of GDP) was raising all boats could be maintained. It was being maintained by running up citizen, Agency and Enterprise debt.
That was then;
This is now.
That past has collapsed. The Wealth Gap can no longer be papered over. Red is turning blue.
As EMR has noted before in this forum, it will be hard to find more than of the 20% voters to supports any one of the core planks that have comprised the Donkey Clan platform and almost no one will support all the planks now that it is clear that it is a physical and economic impossibility to rely on ‘growth’ to raise anything like ‘all boats.’
Until the last general election, both dominate political clans have been able to rely on funders tossing crumbs down from the top of the Ziggurat. That no longer works.
THE UNDERLYING PROBLEM
Broad based (aka, real) democracy and a narrowing the Wealth Gap is not supported by the genetic proclivities that drive individual behavior.
Humans “do it because they can.” As long as they can get away with it, humans will continue to carry out activities that they believe are in their best short term interest, with out regard to the commutative impact.
It is not just Enterprise greed such as that of Indymac, Countrywide, Lehman Bros, Bear Sterns, Freddie Mac, Fannie Mae, AIG, CitiCorp, Bank of America, UBS, et. al. that is the problem. How about Tyco, Enron, World Com and the rest. Step away from the Enterprises and look at Institutions. What about the scandals that have rocked many large religious Institutions?
Trickle Down is an easy path to political party success in times of great affluence – the 1870s and 80s, the Roaring 20s and the past 35 years of escalating Mass OverConsumption. The idea of Trickle Down appeals to a spectrum of interests from the self-righteous to the soft porn “just-so-logical-and-it-feels-good” to the “go-along-to-get-alongs.” When the party is over, it is hard to make a virtue out of selfishness.
The bottom line is that citizens are finding they cannot trust individuals or small like-minded groups unless there is transparency and sunshine. Electronic media can pound deceitful messages but it can also expose deceit.
There must be more effective Agencies that reflect the economic, social and physical structure of contemporary society to turn on and to maintain the sunlight.
Humans in groups with lots of sunshine and accountability can do great things. Turn out the lights, limit participation of stakeholders or move the level of control from the level of impact and you get AIG.
The opposite poles of “fear” and “trust” have become the magnetic field to social structure as explored in Chapter 30. But that is getting ahead of the story. Here is how Trickle Down is summarized in Chapter 29.
THE TRAGEDY OF TRICKLE DOWN
The Wealth Gap is so large that relying on Trickle Down to provide shelter (Affordable and Accessible Housing) has become a sick joke. Even with a less obscene Wealth Gap, for Trickle Down to operate, the value / value of dwellings must go down not up. With a dwelling being many Households largest “investment” growth in cost is essential.
Even more important, the dwelling units must be the right size and in the right location.
Mortgage packaging, securitizing and leveraging by Fannie and Freddie exacerbated the shortcoming of municipal land use controls yielding grossly dysfunctional and unsustainable Regional settlement patterns.
To overcome the long term impact of decades of Trickle Down in Affordable and Accessible Housing (and in Mobility and Access because of reliance on Large, Private Vehicles) there are two choices:
• Massive, forced redistribution of wealth between layers / levels of the Ziggurat which almost no one thinks is a feasible much less ‘good’ idea, or
• A fundamentally different mix of dwelling types and settlement patterns.
Citizens and their leaders have failed to evolve a Regional governance. States and the feds “let them eat cake” by turning the use and management of land over to self-serving municipal governments. See “The Role of Municipal Planning in Creating Dysfunctional Human Settlement Patterns” in RESOURCES, PART FOURTEEN OF ACTION.
The result is:
• Far too much land devoted to and planned for urban land uses. A factor of three or four, nation-wide is a conservative estimate.
• Far too much of the land planned for urban land uses was and is designated for “employment,” “commercial” aka, tax base uses land uses. See End Note Two
• Municipal jurisdictions planned and zoned an unsustainable mix of dwelling units – far too many Single Household Detached Dwellings, far too few Single Household Attached Dwellings and Multi-Household Dwellings.
Unless there is a massive forced redistribution of wealth – which no one supports for good reason – those who need Housing cannot afford it.
Then there is the issue of Access. The only way to Access the dysfunctional human settlement patterns that result from the intersection of bad land use controls and in informed market is Large, Private Vehicles.
According to some estimates, 1 in 13 jobs in the US of A depend on designing, building, selling, repairing and loaning money for Large, Private Vehicles. The Autonomobile industry, like the Housing industry, runs on OPeoM – Other Peoples Money – and has become addicted to unsustainable levels of high ‘growth,’ low interest and large debt.
Large, Private Vehicles and the Wrong Size House in the Wrong Location is a toxic mix and a recipe for disaster. A disaster now called Global Financial Meltdown. Trickle Down of dwellings and of Large, Private Vehicles drive dysfunctional human settlement patterns and thus:
It really is the settlement pattern, stupid
And who is to blame. Pogo had the answer but “us” has received no help from the leadership of Agencies, Enterprises or Institutions.
EMR
END NOTES
1. Beyond the obvious problems, the Cato ad is worth a careful review for several other reasons. The list of university and Nobel economists is interesting. George Mason University has eight endorsers. At first glance that seems to be at least twice as many as any other educational institution. It would be hard for a student to escape from GMU without a huge dose of Trickle Down. The role of ads such as this one is explored as activities of the new Third Estate in THE ESTATES MATRIX
2. Two adjacent counties that fell outside the logical location of the Clear Edge around the Core of the National Capital Subregion in the ‘90s tell this story well. Eastern Loudoun County, Virginia had the non-residential capacity planned for two Mid-Town Manhattans and West Prince William in Prince William County, Virginia had the non-residential capacity of four Mid-Town Manhattans. Further from the Core of the Subregion, Fauquier County, Virginia currently has land designated for employment / tax base uses that would support around 10 times the current population and Fauquier is considered a “leader” in land use controls from some perspectives.
