In the face of systematic threats from increased complexity inherent in the global financial and industrial machinery that is the legacy of the 20th century, we are… making things more complex, more tightly connected, more unstable.
Ross Douthat does a good job of characterizing this on a political/national fiscal policy level:
Ross Douthat, The Great Consolidation Of Power
[…] From Washington to Athens, the economic crisis is producing consolidation rather than revolution, the entrenchment of authority rather than its diffusion, and the concentration of power in the hands of the same elite that presided over the disasters in the first place.
Consider the European situation. For a week after Greece’s fiscal meltdown began, all the talk was about the weakness of the European Union, the folly of its too-rapid expansion, and the failure of the Continent’s governing class to anticipate the crisis.
But then the E.U. acted, bailing out Greece to the tune of nearly a trillion dollars, and dictating economic terms to Athens that resemble “the kind of thing a surrendering field marshal signs in a railway car in the forest at the end of a bloody war,” in the words of the Washington Post columnist Anne Applebaum. If the bailout succeeds, the E.U.’s authority over its member states will be dramatically enhanced — and a crisis created by hasty, elite-driven integration will have led, inexorably, to further integration and a more powerful elite.
This trajectory should be familiar to Americans. The panic of 2008 happened, in part, because the public interest had become too intertwined with private interests for the latter to be allowed to fail. But everything we did to halt the panic, and all the legislation we’ve passed, has only strengthened the symbiosis.
From the Troubled Asset Relief Program to the stimulus bill, from the auto bailout to health care reform, we’ve created a vast new array of public-private partnerships — empowering insiders at the expense of outsiders, large institutions at the expense of small ones, and Washington at the expense of state and local governments. Eighteen months after the financial crisis, the interests of our financiers, C.E.O.’s, bureaucrats and politicians are yoked together as never before.
A similar, quieter consolidation has taken place in the realm of national security. After campaigning against the Bush administration’s foreign-policy overreach, President Obama has retained nearly all of the war powers that George Bush took up in the wake of 9/11.
Yes, some of the previous administration’s more sweeping claims have been repudiated. But the basic post-9/11 architecture of executive power — expansive powers to detain, interrogate and assassinate, claimed for the duration of an open-ended war — looks destined to endure for presidencies to come.
Taken case by case, many of these policy choices are perfectly defensible. Taken as a whole, they suggest a system that only knows how to move in one direction. If consolidation creates a crisis, the answer is further consolidation. If economic centralization has unintended consequences, then you need political centralization to clean up the mess. If a government conspicuously fails to prevent a terrorist attack or a real estate bubble, then obviously it needs to be given more powers to prevent the next one, or the one after that.
Douthat doesn’t get into the swirling dangers inherent in a globally interconnected food system, managed by a small number of multinationals, and deeply in cahoots with so-called regulators; and witness the same patterns in international energy markets.
Everywhere you turn, there are increasingly powerful oligarchies pushing on one side and increasingly inbred elite politicos and policy makers pulling on the other, and the rest of us are out in the cold.
And we seem to have raised this conflation of interests to an almost celestial level. Whenever troubles arise, we want to connect things tightly together, like adding extra buttresses to a cathedral heeling in a strong wind, but not suspecting that the additional weight is undermining the foundation.
Worst of all, this increasingly fragile set-up guarantees maximum whipsaw whenever any jitter happens. Downturn in Greece? Euro drops, Wall Street sells, and bonds zip all over the place. A drought in Argentina? Food prices shoot up in South East Asia.
The only answer to complexity is to decouple the large fragile systems into smaller, resilient, more local systems. We shouldn’t have a single food economy, but tens of thousands of them, which a reasonable amount of cross-trading. The solution to energy can’t be a single unified world energy economy based on low-cost oil and coal, but myriad solutions based on local conditions, like solar, geothermal, wind, and, yes, coal, oil, and nuclear. The answer to Europe’s financial woes may not be the Euro, but a return to fiat currencies for the many nations of Europe.
But we seem to be headed for a local maximum for complexity, which probably foretells a local minimum for stability, as well.
A good time to short the markets, I bet.
![pantslessprogressive:
“As demonstrators converged on Wall Street — with police blocking them from reaching the New York Stock Exchange — much of the news media paid little attention to the protests. Meanwhile, much of the conservative punditry has taken to mocking the demonstrations, with conservative Twitter users lambasting the “hippies” in New York City. CNN contributor and RedState blogger Erick Erickson labeled the protesters as “profoundly dumb.”
Certainly, debates about the tactics and strategy behind an anti-Wall Street campaign are warranted. But in a country where much of the populist energy has been absorbed by a movement that compared expanding access to private insurance to “death panels,” it’s worth reviewing why Americans and others should be protesting against Wall Street.
While many of the conservative defenders of Wall Street may be quick to portray protests against the American financial establishment as driven by envy of its wealth or far-left ideologies, the truth is that people have a very simple reason to be angry — because Wall Street’s actions made tens of millions of people dramatically poorer through no fault of their own. In 2010, the International Monetary Fund and World Bank conducted studies of the effects of the global recession — caused largely by Wall Street financial instruments that were poorly regulated by government policies — and found that the recession threw 64 million people into extreme poverty:
The International Monetary Fund estimates that the global economy contracted by 0.6 per cent in 2009 and the implications of this have been severe for many. Economic growth in developing countries was only 1.7 per cent in 2009 compared with 8.1 per cent in 2007. However, if China and India are excluded, the economies of developing countries actually contracted by 1.8 per cent. The World Bank has estimated that an additional 64 million people will be living in extreme poverty on less than US$1.25 a day by the end of 2010 as a result of the global recession.
And nearly three years after the start of the global economic crisis — where taxpayers in multiple countries were called upon to save the financial industry — most of the banking elite’s top executives remain virtually untouched. There have been almost no high-profile convictions for fraud and related financial crimes, banking profits continue to soar, and unemployment not just in the U.S. but globally remains very high.
Given these facts, the question is not why more than a thousand people demonstrated on Wall Street yesterday. The question is, why aren’t even more people in the streets of the financial district in New York City?” - Zaid Jilani, ThinkProgress
[Photo: Paul Weiskel]](http://25.media.tumblr.com/tumblr_lrq7u2RYT01qzr73ro1_500.jpg)
