One of the key insights in Joseph Tainter's The Collapse of Complex Societies is that once an economy's primary surplus dwindles to zero, it is doomed to implosion. The U.S. surplus has been less than zero for decades.

Correspondent Michael S. recently recommended this article on Joseph Tainter's work: Professor at USU says U.S. society may collapse:

Tainter, who heads the department of environment and society at Utah State University, told the newspaper that the current course of the economy and what some believe is a desperate effort to shore up the complex and almost inscrutable financial sector of the economy are manifestations of at least a partial collapse that invariably follows a society's boom.

That the U.S. economy is primarily "top-level" consumption teetering on a dwindling foundation of real surplus is painfuly obvious. This "you can't parody American life, it's a self-parody" article, Growing Up in a Recession (BusinessWeek) appears to be sympathetic to the poor folks who once raked in $250,000 a year producing nothing of value and cheers their valiant attempts to "re-invent" themselves into some equivalently useless work which they hope will produce $250,000 of "value".

The recession has been one long reckoning with expectations for Nicole and her two kids, Maguire, 8, and Payton Grace, 5. Nicole had been earning more than $250,000 a year for nearly a decade. She rented a posh three-bedroom condo with a yard. The beach was nearby. They traveled. It was a good life.

As 2008 began, potential buyers of the multimillion-dollar homes she listed were hesitating, and then deals started to fall apart. By March there was no business at all. She didn't sell another house until almost a year later: it was in foreclosure, and her commission was $2,000.

From $250,000 a year to $2,000. Hmm. And what does being a realtor prepare you to do now that real estate isn't come back?

Continuing the self-parody, another former high-earner's daughter bemoans that her Mom had to cut the hours of her personal assistant. Wow, I had no idea how tough life could get! Even worse, her favorite cafe closed. My oh my, call the pastor for grief counseling.

Mom, meanwhile, is busy turning her expertise in providing AIG with logo-imprinted umbrellas to helping would-be artists/writers etc. make it big vis social networking.

Heh. If you set out to parody a flailing, absurdist response to the complete collapse of frivolous corporate and consumer spending, could you top this? I can't.

Elsewhere in the article, other people who once earned $240,000 are stunned that the merry-go-round actually ground to a halt. Unable to confess that their former "professions" were top-level frivolities without any real economic value, thay are picking through the shards of the consumer society, hoping that magical thinking will get them through "this rough patch."

Uh, I hate to be the one to tell you, folks, but this rough patch will last about 20 years--or maybe longer. The reason is that the entire 25-year bull market in everything from 1982-2007 was built not on surplus production which could be traded at a profit but on ever-larger mountains of debt: debt taken on by our government, corporations and households. Behold reality:

The chart clearly shows that debt has replaced production and surplus as the source of spending money in every level of the U.S. economy. But credit has this funny characteristic: it is based on collateral of some sort. Once the collateral (houses, office towers, stock portfolios, net income, etc.) decline in value then there is no basis for additional credit.

Next up: the horrific plight of "trustafarians" facing cuts in Mommy and Daddy's largesse: Parental Lifelines, Frayed to Breaking (NY Times)

Famed for its concentration of heavily subsidized 20-something residents — also nicknamed trust-funders or trustafarians — Williamsburg is showing signs of trouble. Parents whose money helped fuel one of the city’s most radical gentrifications in recent years have stopped buying their children new luxury condos, subsidizing rents and providing cash to spend at Bedford Avenue’s boutiques and coffee houses.

But as the recession deepened last fall, his parents had to cut the staff at their event planning company to 30 workers from 50. Asked for his help, Mr. Drury cast aside his other pursuits and started work as a project manager for his parents.

May I be the first to predict that this event planning company will soon cut the other 30 staffers, reducing the payroll to Mom, Dad and Junior? And that may well be just a brief stop on the one-way ride to total insolvency.

Again, it strains imagination to parody such a trove of self-parody. Careers mentioned include the usual grunge band (so what if music is now free--I'm gonna be a rock star!), wallpaper designer, intern at a modeling agency and party organizer. Apparently the trustafarian youth of America (or at least of New York City) have degenerated to the point that they need to hire a pal to organize their parties. Or maybe they're just too busy... but doing what?

And can organizing a few parties for buds really net out the $2,500 per month you need to pay $1,500 rent and pursue your career designing wallpaper while also "having fun"? Somehow I doubt it.

The U.S. runs a surplus in agricultural products, aircraft, software--and precious little else. On the other side of the ledger, we import hundreds of billions of dollars of goods. Little things like oil (2/3 of what we consume is imported).

The sad truth is the chief export of the U.S. is the simulacrum "value" of the U.S. dollar: we ship you this worthless paper and you ship us actual stuff. The con has worked brilliantly for 25 years, only now the marks (exporters) are slowly waking up to the realization the paper they took is, well, paper--and a "promise" that the U.S. won't depreciate the paper to zero too quickly.

Yeah--and the check's in the mail, we promise.

The boldness and longevity of this con still amazes me. Yes, I understand that exporters had no choice; there was literally nobody else to sell to except the magical-thinking-lovin' U.S. consumer. So taking the paper con (dollars) was still slightly more attractive than the alternative: economic decay and domestic insurrection.

Various cheerleaders in the mainstream media hawked America's vaunted surplus in services as the "way we're gonna balance the trade deficit." Nice idea, but it turned out much of that supposed surplus was just a higher-level con: so-called "financial services" of the innovatively fraudulent sort which have now cost the rest of the world trillions of dollars in losses.

An economy with little surplus in goods and services has no foundation. The con worked for 25 golden years. Now we as a nation will soon find the marks have finally grown weary of the dollar con. Soon they will demand a lot more dollars for the goods they ship, or they will demand payment in other currencies or in gold. One way or the other, the marks are moving away from the shell-game table where they have lost trillions, and the dollar will lose half its value.

When the dollar loses half its value, then oil will double in price for those of us paid in dollars. And everything else which is imported will also double in price.

How much grunge music, wallpaper designs, social networking marketing and event planning can we export and sell at a profit? Would you part with a barrel of oil for any of the above? Maybe for a bushel of wheat--especially if the "street" is hungry and a mob is forming.

But growing food has a funny little characteristic: it's bloody hard work. Ditto making anything you can exchange for something of tangible value. As for services: the only services of measurable value are those which enhance, repair or enable productive output which can be traded for tangible goods. Designing wallpaper and planning parties don't cut it.

I don't mean to pound on those of you fortunate enough to make a living planning events or designing wallpaper patterns; great gigs if you can get them. I am the first to admit this blog is not exactly an exportable good.... (maybe an exportable bad....) My point is simply that productive assets and labor will be scarce/in demand while superfluous services will be in oversupply/not in demand. Thus everyone hoping to make a living providing superfluous/frivolous services would be prudent to have a Plan B trade/craft/service.

I am not going to trade the hours spent repairing a chicken coop (food production) or solar-water heater (energy capture/production) for some trust-baby's ability to organize a party or program an iPod. Amazingly, perhaps, I can manage the former on my own (it's called potluck) and have zero need for the latter service. I can also figure out the worthlessness of social networking on my own as well.

Examples of things for which there will probably be demand globally:

-- flexible thin-film photovoltaic cells which can be installed on any surface

-- thin-film polymers which when placed on windows cut heat loss dramatically

-- inexpensive solar ovens

-- homebrew beer

-- software which simplifies and improves network security

A powerful concept, scarcity; where there is no scarcity, there is little value. Cash and net income will be scarce, while there will be few scarcities in services of any kind. That's what happens when a top-level economy crashes back down to its foundations.

Here are a few titles of note on food/diet:

It's a Long Road to a Tomato: Tales of an Organic Farmer Who Quit the Big City for the (Not So) Simple Life

The Urban Homestead: Your Guide to Self-sufficient Living in the Heart of the City

Diet for a Small Planet

The Omnivore's Dilemma: A Natural History of Four Meals


And some classics in case you missed them:

The Long Emergency: Surviving the End of Oil, Climate Change, and Other Converging Catastrophes of the Twenty-First Century by James Howard Kunstler

The Future of Life E.O. Wilson

On Peak Oil:

Beyond Oil: The View from Hubbert's Peak

The Party's Over: Oil, War and the Fate of Industrial Societies

The End of Oil: On the Edge of a Perilous New World

Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy

On chemical/toxins overload:

Our Stolen Future: How We Are Threatening Our Fertility, Intelligence and Survival

On the demographic time bomb about to explode:

Fewer: How the New Demography of Depopulation Will Shape Our Future

The Coming Generational Storm: What You Need to Know about America's Economic Future

On collapse of advanced civilization:

Collapse: How Societies Choose to Fail or Succeed (Jared Diamond)

The Collapse of Complex Societies

A realistic appraisal of alternative energy:

Sustainable Energy - Without the Hot Air

Our previous lists of hot reading and viewing can be found at Books and Films.


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