10/12/2009

10-12-09 - The Great Recession

In Praise of the Recession

Most people are only looking at the bad side of the recession, but it's also doing a lot of good things. For one thing, I believe that the malfeasances of wall-street have been rather over-stated as the cause of the recession. Yes, they were the straw that broke the camel's back, but the fundamental problem with the US economy is structural and has been building for nearly 40 years : a steady loss of middle class jobs leading to fall in median income, coupled with growth of imports and consumption. We've basically all been living in a fantasy land house of cards where people can get no education (college degree = LOL), have absolutely no skills, do no useful work (being middle men = LOL), and yet live in ridiculous luxury. Well, perhaps that time is over, and that's neither a huge surprise nor a huge tragedy.

People write about the behavioral changes caused by the recession as if giving up ridiculous unnecessary consumption is some kind of crisis. My god I might not be able to buy a new car this year !? WTFBBQ. If you look at the behavorial changes that are being blamed on the recession, things like : eating out less, doing more work at home, not using gardners or nannies, buying less new things, sewing, repairing, kids seeing parents being domestic, reduced work hours - these are all positive steps towards a simpler more home oriented life that will benefit all of us in the long term.

These are all changes that we should be making anyway, because our natural resources and our population growth will not tolerate the continuation of our lifestyles of constant disposable consumption. But people don't respond well to gradual changes. Over all these years that income growth has not matched inflation, people should have been simplifying, cutting back, but of course they don't. They need a punch in the nose. People respond to shocks - in fact they generally over react. The general pattern of human behavior is : ignore obvious warnings, ignore obvious warnings, oh shit something happened, severely overreact. Well, IMO we needed a big correction, so yay.

I think most Americans still aren't facing up to the reality of our humbler future. They think of this recession as a temporary setback, and afterward they'll go back to being an unskilled "loan officer" in a local bank and make $200k a year. No, most of you won't. America has very little advantage over the rest of the world, and in many crucial areas (education, IT infrastructure, energy infrastructure) we are way behind. Yes, I believe Wall Street will be just fine and traders will go back to making megabucks, but that is one small area where we do have an advantage, and the rest of you will not benefit from that.

The future of America is even further income inequality than we have now, with an even smaller upper class. The lucky few at the top will still be massively successful, but most Americans will be worthless cogs that scrape by an existance by scooping up the scrabs that fall from the table of the rich.

As our country falls into the shitter, we upper class need to think about how we are going to preserve a nice place to live for ourselves, and stop worrying about the rabble - they are already lost.

One issue is the blight of fallow properties. Seattle has not been terribly hard hit by this recession, but even we suffer now from vacant lots and half-finished construction projects, empty condos, vacant homes, etc. These badly hurt the neighborhood. It seems pretty easy to fix, you simply make some "use it or lose it" laws like Brazil : empty vacant lots that sit undeveloped become city property and then are either converted to parks or auctioned. Empty apartments and condos and homes are forced to sell at auction (to someone who will actually live in them, not absentee owners for speculation).

Another issue is that all the cool broke artist kids are being driven out of desirable neighborhoods. In the future America in which only the top 1% can afford to live decent lives, we don't want to exclude the young beautiful fresh blood. The easiest way to fix this is to make subsidized housing for hot young people. We should construct and provide hip urban lofts as low income housing, but rather than the current low income qualifications, require applicants to submit nude photos and write a condescending music review for pitchfork.

Another big issue is health care - we need to make sure that the massive burden of keeping alive the rabble is not too much of a drain on the wealthy. In particular we need to find a way to change the expectations of the rabble so that the idea that they deserve to be completely healthy throughout their lives and kept alive as they get old is out of their heads. If someone poor in China gets a disease, they don't expect to get treatment, they hope it passes, and might ask the doctor for some drugs to ease their pain as they die. That's a massive competitive advantage that China has.

1 comment:

old rants