How much can a nation not get it? Would $100 oil ignite a new orgy of “consumer” spending and another round of investment in commercial real estate? Welcome to the Futility Economy. This is the economy where Nature and its material companion, Reality, punish us for our stupidity and fecklessness. This is the economy that will tear the United States apart, after it bankrupts us at every level, and mercilessly drives the population down by one-third through starvation, homelessness, violence, disease, and sheer political cruelty.

Whatever you thought our economy was the past thirty years — whatever model of it you have in your head — that is definitely not what we are going back to. Like one of Dickens’s Yuletide ghosts, Reality is leading us by the hand into new circumstances. We resist like crazy. We throw our hands over our eyes. We don’t want to look. We want to return to the comfort of our dreary routines — living in places that aren’t worth caring about, weaving endlessly in freeway traffic, drawing a paycheck at the air-conditioned cubicle, inhaling Buffalo wings by the platterful, with periodic side-trips to the state-chartered casino where there’s always a chance of scoring a lifetime’s income on one lucky bet. And at the end of the day, you can retire with a simulated prostitute on your laptop screen! And not even have to fork over a dime — except perhaps for the Internet connection fee.

Reality is taking us out of that familiar, if sordid, realm, whether we like it or not. Our destination is an everyday economy where you rarely travel far from the place you live, where you have to make provision for you own health, your own old age, your own income, your own diet, your own security, and your own education. If you’re really fortunate, some or all of these necessities can be obtained in conjunction with your neighbors in the place where you live — but don’t expect an increasingly mythical federal government to supply any of it. Expect a new and different way of organizing households based on extended families and kinship groups. Be prepared for agriculture to return to the foreground of everyday life, where farming is back at the center of the economy. Think about how you will cultivate your best role in a social network so the things you do will be truly valued by the other people who know you. Learn how to make your own music and write your own scripts. Try to study history. Resist cults. Keep your mind clear and your senses sharp.

Even if you have a dim sense that this is where we’re headed, most of you probably want to stay where you are. The investments we’ve made in the current mode of existence are so monumental that we can’t imagine letting go of them. This will be the theme of American life for the next couple of years as we struggle mightily to escape the confining armor of the Futility Economy and move closer to ways of life that have more of a future. Right now, all the power and authority in our culture has dedicated itself to remaining inside that old armor.

The Master Wish around the country, including among people who ought to know better, is that we can “solve” our economic problem by finding some other way to run all the cars. Even hardcore environmentalists yammer incessantly about hybrid and “plug-in” cars as the “solution” to our blues. One of Barack Obama’s first acts as president was to “save” the giant car companies. This is exactly the kind of signature behavior of a Futility Economy. It’s based on the idea that we have to continue driving cars all the time and for everything, at all costs.

The religion of the Futility Economy is Techno-Triumphalism, which is the belief that an endless sequence of magic tricks performed by shaman scientists can defeat the Second Law of Thermodynamics, which rules the universe — which true scientists ought to know cannot be defeated. Their colleagues, the shaman economists believe in parallel magic tricks, such as the idea that increased borrowing can “solve” a problem of runaway over-indebtedness. These are the actions that currently engage the people in charge of things in our society.

Given this current state of things, and the current course we’re on, my guess is that when the falsity of these ideas and actions are exposed, they will become evident not gradually but very rapidly and shockingly. The people in charge of things will lose their vested legitimacy in a flash, and the institutions they command will become irrelevant overnight. The process would be traumatic for all of us as routines we counted on for a thousand particulars of everyday life vanish or collapse. A Great Indignation will rise across the land over the perceived swindles involved. A lot of effort will go into avenging the swindles instead of rebuilding an economy out of the ashes of futility.

Regards,
James Howard Kunstler

January 5, 2010

Oil Prices Will End the Futility Economy was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

Mr. Obama has really offered no satisfactory explanation for why he larded his department of the US government from the get-go with so many agents and recent graduates of Wall Street’s biggest firms.  Nor has any clear reason emerged for the absence of criminal prosecution – or even investigation – by the Attorney General in such obvious cases of criminal fraud and insider trading as Goldman Sachs’s double-window technique for hedging its own issues of mortgage-backed securities. By comparison, the Savings-and-Loan scandal of a decade ago led to thousands of criminal convictions.

Last week, the Right Reverend Lloyd Blankfein, still “doing God’s work,” announced in a “cash-for-pitchforks” deal that the top thirty executives of his company, Goldman Sachs, would not receive dollar bonuses this Christmas but instead will get stock that ostensibly can’t be sold for five years. Those of us in the USA who enjoy a good mystery are wondering exactly what fine language in this memorandum drawn up by a team of thousand-dollar-an-hour lawyers contains the magic catch that frees up the GS execs to convert this stock into money, say, on February 2, 2010 – because you know it’s got to be in there somewhere.

Anyway, insofar as the top 30 GS employees is made up strictly of people who are already multi-deca-millionaires, notice that the other 31,670 employees of GS, including not a few hundred in the upper income tranches, will be receiving cash bonuses as usual this year from a bonus pool that amounts to about $16 billion (sixteen thousand million dollars). Of course, being a publicly-held company, GS will have to announce soon what those cash bonuses are. Perhaps this is why the news also got out about GS employees seeking handgun permits in bunches. Exactly how they get around New York City’s special “Sullivan Law,” which supercedes the New York State permitting rules, has not been explained.

Meanwhile, all the stops are being pulled out to produce a mighty wall-of-sound in dubiously-reported statistics pertaining to national unemployment and retail sales – the first way down and the latter up, supposedly – in an attempt to squeeze one last giant potlatch Christmas out of the dying “consumer” economy. Jew though I may be, I confess that Christmas is for me. I’m sorry, fellow Chosen People, but Hanukkah is just plain boring – the equivalent of Danish Modern furniture for the spirit. Give me Christmas, with its pagan yule logs, feasts, and revels! One can enjoy the holiday doings and trappings without subscribing to either the divinity of Santa Claus or the Babe of Nazareth. But Christmas does invite us to indulge in all kinds of “hopes” and delusions, and the main one crackling through the American zeitgeist this year is the wish that our national life will resume the yeasty expansion of goodies that most living citizens regard as baseline normality – namely, a never-ending orgy of credit card spending and real estate flipping.

This wish is doomed to disappointment. The cold boney finger of reality, like Dickens’s spectral Ghost of Christmas yet-to-come, points to many a tableau of desolation in the decade ahead… of a lost “normality,” of evictions, foreclosures, tragedies, ruinations and most of all dashed expectations – assuming that the vast public clings to habits and behaviors no longer suited to the mandates of new circumstances in our world.  And it is the greatest disservice of all at this holiday time for respected authorities to pimp that wish.  What a shabby thing it has become anyway – a sordid spectacle of multitudes moiling in chain store checkout lines en route to the certain anguish of buyer’s remorse in the parking lot.

Can’t we come up with a better American Dream, even one that includes Christmas?  I think we can.  It would require the liberation of American citizen’s minds from their thralldom to bigness in every realm from work to worship to recreation.  If you think Barack Obama is a hostage to Wall Street, reflect for a while on the people’s self-surrender to the tyranny of everything that diminishes us to mere “consumers.”  We’re on a journey – and we don’t know it – back to a nation of communities where your character really matters, and where character rests on whether your deeds comport with truthfulness. Many will be dragged kicking and screaming upon that journey, and many a dark night will be passed in the cold and damp on the way. But it will take us to a place where the hearths are burning brightly and the estranged spirits of our national character await a reunion with us: fortitude, patience, generosity, humor. That will be a Christmas to live for and remember!

Regards,
James Howard Kunstler

December 16, 2009

Obama Hostage to Wall Street, Americans Hostage to Consumerism was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

For now, the “bottom” is in — that is, the bottom of this society’s ability to process reality. It may continue for a month of so, even after the “stress test” for banks is finally let out of the massage parlor with a “happy ending.” But events are underway that are beyond the command of personalities. We’re done “doing business” in all the ways that we’ve been used to, but we just can’t get with the new program. Let’s count the ways:

1) The revolving credit economy is over. It’s over because we can’t increase energy inputs to the system, which is one way of saying “peak oil.” Of course hardly anybody believes this right now because the price of oil crashed nine months ago, along with global manufacturing and trade. But nothing has changed on the peak oil scene — except perhaps that ever more new oil projects have been cancelled for lack of financing, which will boomerang on us (even if swine flu doesn’t) in the form of much lower future oil production. In any case, the credit fiesta is over, and the “consumer” economy with it, because industrial growth as we have known it is over. It’s over globally, too, though all regions of the world will not experience its demise the same way at the same rate.

The Asian nations may swap things around a while longer but China is basically screwed. They have less oil left than we have (which is saying, not much at all) and they won’t corner the rest of the global oil market without starting World War Three. Meanwhile, they’re running out of water and food. Good luck becoming the next global hegemon. Oh, and Japan imports 90 percent of its energy; India over 80 percent. Fuggeddabowdit.

Credit will not vanish everywhere overnight — even in the USA — because it is not distributed equally everywhere. But it will vanish in layers, and here in the USA a very broad layer of the lower and middle classes are now losing their access to it in one way or another — personally, in small business — and they will never get it back. Anyone who intends to thrive in the years just ahead had better plan on doing it on the basis of accounts receivable — and what they receive might not even necessarily come in the form of US dollars. It may come in the form of gold or silver or in the promise of reciprocal services rendered.

This has enormous implications for two of the items in which our credit-dispensing operations are most deeply vested: houses and cars. Unfortunately, these are exactly the things that economic life has been based on for decades in our nation, which leads to the next categories:

2) The suburban living arrangement is over, along with all its accessories and furnishings. Taken as “all of a piece,” the suburban expansion was one sixty-year-long orgasm of hypertrophy. We did it because we could. We won a world war and threw a party. We had lots of cheap land and cheap oil. It made lots of people lots of money and all its usufructs have become embedded in our national identity to the dangerous degree that the loss of them will provoke a kind of national psychotic breakdown. In fact, it already has. The completely unrealistic expectation that we can resume this way of life is proof of it.

The immediate problem is that we can’t build anymore of it. The next problem will be the failure of the stuff that already exists. The first stage of that is now palpable in the mortgage foreclosure fiasco and, just beginning now, the tanking of malls, strip centers, office parks and other commercial property investments. The latter will accelerate and become visible very quickly as retail tenants bug out and weeds start growing where the Chryslers and Pontiacs once parked. The next stage, which involves large demographic shifts in how we inhabit the landscape, has not quite gotten underway.

3) The Happy Motoring fiesta is over. You’d think that with Chrysler crawling into the bankruptcy court, and GM just weeks away from the same terminal ceremony, the news media would begin to suspect that the foundation of everyday life in this country was cracking. Instead, all we hear is blather about “market share” shifting to Toyota. News flash: not only will we make fewer automobiles in the USA, but Americans will buy far fewer cars made anywhere. We’ll keep the current fleet moving a while longer, but when it’s too beat to repair, we won’t be changing it out for a new fleet — despite all the fantasies about hybrids, plug-and-drive electrics, and so on. The masses will be too broke to buy these things. What’s more, they will be very resentful of the shrinking economic “elite” who can afford them. And, anyway, our roads and highways are destined to fall apart very quickly because there is no way we can sustain the necessary rate of normal maintenance. Meanwhile, we remain completely un-serious about public transit — even about fixing the vestiges that still exist. The airline industry, of course, will be toast inside of five years.

4) Our food production system is approaching crisis. There’s no way we can continue the petro-agriculture system of farming and the Cheez Doodle and Pepsi Cola diet that it services. The public is absolutely zombified in the face of this problem — perhaps a result of the diet itself. President Obama and Ag Secretary Vilsack have not given a hint that they understand the gravity of the situation. It is probably one of those unfortunate events of history that can only impress a society in the form of a crisis. It also happens to be one of the few problems we face that public policy could affect sharply and broadly — if we underwrote the reactivation of smaller, local farm operations instead of shoveling money to giant “agribusiness” (or Citibank, or Goldman Sachs, or AIG…). I maintain that this may be the year that the crisis gets our attention, because capital is suddenly harder to get than fossil-fuel-based fertilizer.

All these epochal discontinuities present themselves, for the moment, as a season of muted “hope” and general apathy. The days are suddenly mild. We’ve resumed old and happy habits of grilling meat outdoors and motoring to those remaining places that were not blanketed with franchised food huts and discount malls. We have a new, charming president with an appealing family. Newly-minted dollars are flowing to the “shovel-ready.” The new bad news is less bad than the old bad news (or seems to be). And the year just past has been such a bummer that our hard-wired human nature tells us that good things must be just around the corner.

Personally, I think a lot of good things await us, but not the ones we’re expecting — not a return to buying slurpees on credit cards. It will be very salutary to leave behind the junk empire we’ve accumulated and move into an epoch of quality and purpose. For the moment, though, our hopes reside elsewhere.

Regards,
James Howard Kunstler

May 8, 2009

The Bottom for Credit Thanks to Peak Oil was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

I maintain that there are countless constructive tasks waiting to occupy us on a long national “to do” list for rebuilding a national economy, but they are way different than the ones currently preoccupying government and the mainstream media. The Obama White House, Congress, and The New York Times are hung up on exercises in futility — “rescuing” banks and insurance companies that cannot be rescued (because they are hopelessly trapped in “black hole” credit default swaps contracts), and re-starting a “consumer” binge that was completely crazy in the first place, based, as it was, on a something-for-nothing standard-of-living.

Meanwhile, if the buzz on the blogosphere is a measure of anything — and I think it is — then a new consensus is forming out there about where to start doing things differently. Unfortunately after less than two months in office, President Obama finds himself awkwardly behind-the-curve on this. It begins with the understanding that a general bank rescue is hopeless and, going a step further, that the people who caused the train wreck of “innovative” securities have to be prosecuted. The public’s collective voice on this is muted but growing. It has been muted by the general air of blackmail that the banks have used to enthrall policy and opinion — the “too big to fail” idea — in effect holding the nation’s future for ransom.

Last week, New York State Attorney General Andrew Cuomo hauled Bank of America chief Ken Lewis into his office to explain who, exactly, received an aggregate several billion dollars in bonuses late in 2008 after the US Treasury forked over billions of dollars in TARP money to his bank. That was a good start. Mr. Lewis, being lawyered-up to the max, had the temerity to reply that answering the question would compromise his ability to keep talented people in his employ. For that impertinence alone, Mr. Lewis ought to be dragged over fifteen miles of broken chardonnay bottles behind a GMC Yukon — but that is not how we do things in American jurisprudence. To be more realistic, a simple indictment would be in order, and then Mr. Lewis can answer this question, and a few others, in the comfort of an air-conditioned courtroom. Ultimately, that might lead to Mr. Lewis becoming the wife of a bodybuilder in one of New York State’s houses of correction — a just outcome that would go far in rejiggering the nation’s expectations about how people in authority ought to behave. And such an outcome might lead to the conviction of many other brides-to-be from the Wall Street debutante pool.

Now it has come to light, just last week in the wake of AIG’s latest bail-out, that previous AIG bail-out money to the tune of $50 billion was distributed to a set of banks including Goldman Sachs (former employer of then Treasury Secretary Hank Paulson and then New York Federal Reserve Governor Tim Geithner), plus Morgan Stanley, Merrill Lynch, Mr. Lewis’s Bank of America, and a long list of European banks with operations in the USA. Since the transactions took place in New York State, the investigation of these irregularities alone could solve the unemployment problem here if NY Attorney General Cuomo were given a free hand in hiring staff to depose everyone involved — including the hiring of caterers to bring in coffee and meals for round-the-clock proceedings.

All of this raises another awkward question: where is United States Attorney General Eric Holder in this situation? Surely the federal statutes offer some grounds for inquiring about the misuse of Treasury funds — and many other issues arising from Wall Street’s stupendous orgy of misbehavior. What I’m hearing out in the blogosphere is a growing clamor to call people to account before we are really able to move on to the massive task-list that awaits us in rebuilding our economy.

The bigger question for now is whether any of these authorities will act effectively before the public simply goes apeshit and starts burning down Greenwich, Connecticut. The dangerous shift in public mood is liable to occur with shocking swiftness, in the manner of “phase change,” where one moment you see a bewildered bunch of flabby clown-citizens vacuously enraptured by “American Idol,” and the next moment they are transformed into a vicious mob hoisting flaming brands to the window treatments of a hedge funder’s McMansion. The moment of opportunity for avoiding that outcome is looking sickeningly slim right now.

Another thing that President Obama can set into motion anytime — and pull himself back to the head of the curve of leadership — is to either by executive order or by proposal to congress, shut down the credit default swap system for a period of time while procedures are drawn up to place all these dubious contracts in a “clearing” market, where the holders of them will have to come clean about what they’re sitting on. The lack of this procedure is allowing zombie banks to hold the United States hostage for never-ending bailout ransoms. None of these banks are going to survive another six months anyway, so the basic blackmail motif that the whole money system will collapse if ransoms are not paid is a bluff that has to be called sooner or later in any case. So Mr. Obama might as well get on with it.

Once these two matters are dealt with — an earnest start-up of prosecutions and disabling the credit default swap blackmail racket — then perhaps a stressed-out and impoverished public might be induced to not go apeshit and instead get on with the mighty task of rebuilding our nation along lines that have a plausible future.

Regards,
James Howard Kunstler

March 10, 2009

The Consumer Economy Isn’t Coming Back was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

The minority reality (let’s call it The Long Emergency) says that it is necessary to make radically new arrangements for daily life and rather soon. It says that a campaign to sustain the unsustainable will amount to a tragic squandering of our dwindling resources. It says that the “consumer” era of economics is over, that suburbia will lose its value, that the automobile will be a diminishing presence in daily life, that the major systems we’ve come to rely on will founder, and that the transition between where we are now and where we are going is apt to be tumultuous.

My own view is obviously the one called The Long Emergency.

Since the change it proposes is so severe, it naturally generates exactly the kind of cognitive dissonance that paradoxically reinforces the Status Quo view, especially the deep wishes associated with saving all the familiar, comfortable trappings of life as we have known it. The dialectic between the two realities can’t be sorted out between the stupid and the bright, or even the altruistic and the selfish. The various tech industries are full of MIT-certified, high-achiever Status Quo techno-triumphalists who are convinced that electric cars or diesel-flavored algae excreta will save suburbia, the three thousand mile Caesar salad, and the theme park vacation. The environmental movement, especially at the elite levels found in places like Aspen, is full of Harvard graduates who believe that all the drive-in espresso stations in America can be run on a combination of solar and wind power. I quarrel with these people incessantly. It seems especially tragic to me that some of the brightest people I meet are bent on mounting the tragic campaign to sustain the unsustainable in one way or another. But I have long maintained that life is essentially tragic in the sense that history won’t care if we succeed or fail at carrying on the project of civilization.

While the public supposedly voted for “change” this fall, I maintain that they underestimate the changes really at hand. I’m far from convinced that Mr. Obama really sees the kind of change we are in for, and I fret about the measures he’ll promote to rescue the Status Quo when he moves into the White House a few weeks from now.

Where We Are Now

Without reviewing all the vertiginous particulars of the year now ending, suffice it to say that the US economy fell on its ass and that the “global economy” did a face-plant as well. The American banking sector imploded spectacularly to the degree that investment banking actually went extinct — as if a meteor landed on the corner of Madison Avenue and 51st Street. The response by our government was to shovel “loans” onto the loading dock of every organization that pretended to be something like a bank, while “bailing out” an ever-longer line of corporate claimants with a pitiable song-and-dance. The oil markets went on a roller coaster ride. The housing bubble collapse grew to avalanche velocity (taking out whole colonies of realtors, mortgage brokers, and construction contractors in its path), the commercial real estate sector developed hemorrhagic fever, retail drove off a cliff on Christmas Eve, the stock market fell in the toilet, jobs and incomes went up in a vapor, and tens of millions of ordinary citizens addicted to revolving credit found themselves in a life-and-death struggle for the means of existence. None of this is over yet.

The Year Ahead

Much of what has been lost in 2008 will not be recovered: enterprises, personal fortunes, chattels, reputations.

I expect a period of euphoria to mark the early weeks, perhaps months, of the Obama team. It will be a relief to have a president who speaks English correctly and has experienced something like real life prior to politics. Restoring credibility and legitimacy in leadership will be a big deal. If nothing else, we may recover a collective sense of consequence from a president who tells the truth, even the harsh truth. The age when it was enough to claim that “mistakes were made” might be over. A sign of this sort of change may be the commencement of prosecutions for misdeeds in banking and securities that are now destroying the entire system of deployable capital. A good place to start will be an investigation of Henry Paulson for insider trading stemming from Goldman Sachs’s shorting of its own issued mortgage-backed securities when Mr. Paulson was the company’s CEO. Beyond his case, there should be enough work at Attorney General Eric Holder’s office to employ a line of law school graduates stretching from Brattle Street to the planet Mars. It will be salutary for the nation to see those who engineered the banking collapse come to greater grief than the mere surrender of their Gulfstream jets and Hamptons villas. By the way, being allergic to conspiracy theories, I don’t believe for a minute that there is some kind of shadow elite of “Bilderburgers” standing in the background to protect these grifters — and I also believe the reason these paranoid notions persist is because it is otherwise hard to account for the extravagant irresponsibility of the Bush circle and its servelings.

Apart from “cleaning up Dodge,” so to speak, and from issues of collective character-and conscience-in-office, I worry that the avalanche of troubles already ongoing will overwhelm Mr. Obama and his people. It’s also well worth worrying whether they will pursue policies similar in kind to the ones pursued by Bush, namely throwing money at everything and anything, and it sure looks like they are planning to do just that. I am especially concerned about an “infrastructure stimulus” project aimed at highway improvement at the expense of public transit. This would be the epitome of a campaign to sustain the unsustainable. We need to begin planning right away for a transition away from automobiles, not in order to be good socialists but because Happy Motoring is at the core of our unsustainability trap. The car system is going to fail in manifold ways whether we like it or not, and it will fail due to circumstances already underway. For one thing, it will cease to be democratic as the remnants of the middle class find it impossible to get car loans, or pay for fuel, or insurance, and that will set in motion a very impressive politics-of-grievance setting apart those who are still able to enjoy motoring and those who have been foreclosed from it. Contrary to what you might make of the current situation in the oil markets, we are in for a heap of trouble with both the price and supply of petroleum (more on this below). And there is no chance in hell that any techno rescue remedy to keep all the cars running by other means will materialize.

A consensus in the blogoshpere says that the stock markets will rebound strongly during the first Obama months. This is possible just on the basis of pure “animal spirits,” but the Obama Bounce will occur against a background of continued dismal business and financial news. It will appear to defy that news. By May of 2009, the stock markets will resume crashing with the ultimate destination of a Dow 4000 before the end of the year. Meanwhile, jobs will vanish by the millions and companies will go bankrupt by the thousands, especially in the so-called service sector, and in all the suppliers of such, along with the landlords in all the malls and strip malls. The desolation will mount quickly and will be obvious in the empty storefronts and trash-filled parking lagoons. In the event, two things will become increasingly clear to the nation: that the consumer economy is dead, and that there is no more available credit of the kind that Americans are in the habit of enjoying.

Regards,
Jim Kunstler

January 1, 2009

Forecasts 2009 was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.

A case in point: The car industry. The Big Three, all functionally bankrupt, are now lined up for bailouts from the treasury’s bottomless checking account. Personally, I believe the age of Happy Motoring is over. Many Americans have already bought their last car — they just don’t know it yet. The current low-ish price of oil is a total fake-out, having to do much more with asset-dumping in the paper markets than the true resource supply-demand equation. Most of the world (the media for sure) has ignored preliminary leaks from the International Energy Agency’s (IEA) forthcoming report which forecasts global oil depletion to be 9.1 percent in 2009. This is a staggering figure, very likely to offset whatever slack we see in global demand from the worldwide economic crisis. In fact, the global oil markets are poised for the most severe dislocations ever seen, meaning it’s a toss-up what happens first in the USA: A major leg back up in oil prices, or shortages, hoarding, and rationing.

For my money (literally) there are only two main reasons that any portion of the car industry should be rescued at the present time: One, because we need somebody to manufacture engines for military vehicles, and two, because we need somebody to manufacture rolling stock for the revival in passenger railroad service that will have to be a centerpiece of the future economy if we want to remain a civilized nation.

Even the progressive factions of the public may be in for much more “change” than they bargained for. The global economy as we knew it is finished (despite British PM Gordon Brown’s fatuous suggestion that we are ready to formalize it). The world is about to lose its “flatness” (sorry Tom Friedman) and get much rounder. For one thing, the racket of American “consumers” gobbling up the output of Asian factories in exchange for paper promises is over. For the moment, the Chinese are struggling with epic factory closures with the sudden prospect of a restive lumpenproletariat. The situation there is bound to get worse. Before long, these broke-and-hungry masses may actually challenge the present government. In the meantime, there’s no telling what the (unelected) Chinese government might do either to keep itself in power, or genuinely defend its country’s perceived economic interests. One thing is self-evident: We are not returning to the old racket of toys-for-treasury-bills. One thing China might do in economic self-defense is shed whatever U.S. dollar-denominated paper is moldering in their vaults before it becomes valueless altogether.

As global trade relations wither, and they will, the U.S. will be thrust back on its own devices, at the same time that oil resources grow punishingly scarce. Mr. Obama will have to contend with the necessary radical reform of all the activities necessary for daily life here. Near the top of the list — invisible to most of the public so far — will be the question of how we produce the food we need. Industrial farming is done, just as suburbia is toast. Mr. Obama will have to apply plenty of ass-time to the first stages of negotiating this bottleneck. I don’t even know what he can do policy-wise, though he can certainly make it plain to the public that we have to grow more of our food close to home and do it with fewer engines and fewer oil-based soil supplements. It is a problem of such surpassing difficulty that it was not even close to being in the election arena. The transition will probably occur by means of “emergence.” Self-evident necessity will prompt different behavior and different ways of doing things. Sooner or later, the new arrangements will self-organize — if we don’t squander resources defending an unsustainable status quo. One thing we can certainly predict is that growing our food will require more human labor and attention — meaning there will be plenty of work for people currently losing their jobs at The Footlocker and Arby’s, but it’s far from certain whether they will be happy in their new vocations.

We’re going to have to resume making things in the USA again, too, probably at a more modest scale, and probably fewer things than we are used to. We have no idea yet how this is going to happen. Like agriculture, manufacturing culture may have to return, if at all, emergently, as individuals and communities see opportunity in advantages like proximity to water-power and water transport. My guess is that corporate enterprise as we have known it — at the continental and global scale — is done for. I would not bet on any of the Fortune 500 carrying on the manufacturing work of the future using the plants-and-equipment that are familiar to them. The manufacturing of the future may be more like cottage industry than Proctor and Gamble. Yet, obviously, there will be tremendous efforts to prop up failing corporate enterprise and prevent natural bankruptcies from occurring.

Similarly, the retail part of the economy. Many observers think that Wal-Mart and its clones are immune to the larger forces swirling around us. Just because many cash-strapped people are hunting for bargains at Wal-Mart these days does not insure the survival of the Big Box model very far into the future. In fact, in every trend we can see — from the oil markets to events in China to the impoverishment of the U.S. working class to the coming crisis in truck transport — you can easily discern fatal weaknesses in this model. Local retail (and its support structures) is coming back. We just don’t know how, yet, and we don’t know how much capital and effort will be squandered trying to rescue Wal-Mart, when the time comes. But the imperative re-scaling of commerce in America also represents huge opportunities for young people to get into their own businesses.

Mr. Obama will preside over the potential restructuring of all our systems, some of them in ways he and his supporters have not imagined. We haven’t begun to see where fate will take higher education, but my guess is that it will no longer be a “consumer” activity, and that the hypertrophied land-grant diploma mills will have to shrink or die as state financial support withers away, and all sorts of unnecessary professions from “public relations” to “marketing” cease to require certified graduates. The luxurious central high schools, utterly addicted to their yellow school bus fleets, will be left as a problem for the states and municipalities. I don’t believe they can be rescued, and they are already failing in many other ways, not least, educating and properly socializing young humans.

In the months just ahead, Mr. Obama will certainly be swamped with straight-ahead cash problems in every area of American life, from the foundering pension funds to the bankrupt state treasuries to the beggaring corporations to the starkly dispossessed and hungry masses of the jobless and re-poed. I wasn’t kidding when I came up with the label, “the long emergency,” to describe the storm that we are heading into, along with Mr. Obama. Of course, the current president — and Mr. Obama has been shrewd to point out there is only one president in office at a time — has more than two months to wreak additional havoc in the financial system. Right now, he’s asking Mr. O, “…do you want fries with that sandwich I made for you?”

Regards,
Jim Kunstler
November 14, 2008

Unanticipated Change in Store was originally featured on Whiskey and Gunpowder. Visit Laissez Faire Books for the best selection of libertarian book titles.