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The Great Unraveling (Chuck D., August 1, 2007) Somewhat belatedly I would like to offer a few thoughts on three things you mentioned in last week's theme, The Great Unraveling. Specifically they are the looming bankruptcy of municipal and government pension plans, the cost of health care, and the role of cycles in this whole affair. I want to illustrate the first two by sharing three vignettes from my own experience. 1. I knew a husband and wife. He retired as postmaster of a small city (metropolitan population of about 50,000). She retired as a nurse. During their working lives they lived comfortably but modestly in a nice house in the suburbs on a one half acre lot. They were never big spenders. When they retired, they received Social Security, his federal Postal Service pension, and her pension as a nurse. To their surprise, they had more money coming in than they needed to spend to maintain their lifestyle. They actually had to begin diverting some of the money to their children by annual gifts so it would not accumulate in their names and be subject to death taxes. 2. My best friend is a public high school teacher. He and I both belong to an organization that meets once a month. Several months ago we were both at a meeting together. After the meeting was over, a teacher colleague of his from another school district and he began to talk about retirement. (The colleague is nearing retirement age based on years of service, less so on age.) The conversation quickly turned to discussing the ways they can legitimately “game the system“ while working so as to maximize their monthly retirement benefit. It turns out that for various reasons – among them no more 7.5% withholding, and the fact that state employees pension benefits are not subject to state income tax – they will see an 18% increase in disposable cash flow when they retire. I confess to a case of schadenfreude with my friend. This is insane. As a self-employed person who is expected to provide for his own retirement, why is anybody entitled or deserving of an almost 20% “pay increase” just because they retired? Is it because somebody else paying for it? Part of me would be pleased to see him get his comeuppance if the state pension system is unable to provide him with his promised benefits and he has to get by like the rest of us slobs do with whatever we have. Unfortunately, we both live in a state where municipal and state pension benefits are constitutionally protected. The state legislature can always vote to increase state workers’ benefits, but they can never reduce them short of submitting a constitutional amendment to the voters for approval. Nice security, huh? We will probably have to endure blackmail with public employee strikes until something resembling a literal revolt makes the legislature more terrified of the taxpayers than they are of the state municipal employee unions. Well, as you pointed out, this is why the French invented the guillotine and why others use the firing squad – you don’t have to pay the pension if there’s nobody there to collect it. 3. As a result of too much sun, too little sunscreen, and too light a skin, I recently developed a couple of actinic keratoses. My attending physician removed one of them and he gave me a prescription for Aldara to treat the other one as well as other areas of skin that have suffered UV damage. And therein lies a tale in the packaging and the pricing of the product. The course of treatment for keratoses using Aldara is 16 weeks, two treatments a week. You therefore need 32 doses of the medication. The doses come in the form of packets in a box. The manufacturer, 3M, supplies it in allotments of 12 packets to a box. Therefore unless the physician writes the script for 32 packets and the pharmacy breaks up the box, you end up buying four extra packets that you don't use. Not a bad way to guarantee a little extra profit, don't you think? The real issue is that Aldara is outrageously expensive. I priced it at our two chain drugstores, the pharmacy in our chain grocery store, and Wal-Mart. No surprise, the best price I came up with was at Wal-Mart -- $265 for one box of 12 packets. Doing the math, that amounts to $795 for three boxes needed for the course of treatment. There is no discount if you buy more than one box at a time. I then checked online for prices from a Canadian pharmacy. First there is a discount -- it is cheaper to buy three boxes at once than if you buy one box 3 times on refills. The price? For the brand-name product Aldara manufactured by the patent holder 3M -- $320 for three boxes. In addition, because the patent laws are different in Canada, the generic equivalent imiquimod is available there. The price for it is $200 for three boxes. I have to wonder at the price differential here. Aldara is unique. There is neither a brand nor generic equivalent to it. It is not as though the 3M Co. is competing with other drug manufacturers with a similar product vying for doctors’ attention. Do I smell the sweet scent of greed and monopoly here? Is it any wonder that health care costs are out of control in this country with an example like this before us? Cycles I have come to believe that the ancient Greeks and Romans had it right. Far more than we like to believe or admit, our lives are governed by the web of cycles we find ourselves enmeshed in while we live. To the ancients time and the natural world that existed within it were cyclical. To us they are linear. Hannah Arendt in her great book The Human Condition pointed out the source of this change of thought or idea. The birth of Christ was a unique event that divided time into a linear progression that had two parts -- the part occurring before His birth, and the part that is occurring after it. To use Arendt’s analytical framework for a moment, this is an example of the split between thought and action that has bedeviled Western philosophy since the time of Socrates and Plato. As a matter of philosophical thought, we see time as a linear. But as a matter of action and how we conduct ourselves in the human world and make our way through it, we continue to act in the cyclical framework we have inherited from the old Greek and Roman world. We can see this cyclical framework most clearly in economics and social studies since the record they leave behind is actually a reflection of the collective actions of mankind at a given time. It is what Kondratiev rediscovered in his long wave work with wheat futures. And it is what Ralph Nelson Elliott found in the patterns of his Elliott Wave Principle. This record left behind is actually a psychological one. Since the psychology is hardwired into the human mind, it never changes and it can repeat itself. This is why Elliott's accomplishment is so brilliant. Despite the daunting complexity of its plethora of rules, the lines and squiggles of Elliott's patterns are simply objective manifestations of internal subjective psychological states. No one ever thought to see them in this way before. Bob Prechter's fascinating and sometimes brilliant insights of his Socioeconomics come from his understanding the psychological roots of Elliott Wave Principle and applying it to all sorts of social phenomena. The patterns of the Elliott Wave Principle also reflect a chaotic system under Chaos theory. We know this first because the patterns are scalar, which is always a hallmark of a chaotic system. Second, one doesn't have to take more than a cursory glance at Elliott's introductions to his writings to see that he was actually describing a chaotic system even though he didn't know to call it that. When we take the insight that Elliott Wave describes human psychological states as we move through a chaotic system and expand the scale back out from the individual to collective actions of mankind, where do we end up? Pretty much where the ancient Greeks and Romans did as I stated the beginning -- that we live our lives enmeshed in a web of recurring cycles. We also gain an insight into one of the traditional issues of political theory -- the uneasy and seemingly contradictory relationship between freedom and order. Over the years I would think gallons of ink have been spilled and thousands of trees have died to produce paper upon which this point has been debated. The answer is that there is no contradiction. In the chaotic system that is the human world we live in it is entirely possible for each of us to operate at an individual level in freedom while at the same time those free actions take place on a larger scale in a framework that limits what actions will occur and how they will play out. And what does this all have to do with The Great Unraveling? Two things, I think. First, if it is true that we are surrounded by and live in a web of cycles greater than we are, then perhaps The Great Unraveling is going to happen because it is simply time for it to occur and there is little we can do about it except prepare ourselves to get through it as best we can. Secondly, perhaps we are so oblivious to what is apparently about to come upon us for no other reason than we have lost our ability to think on any greater scale in the chaotic system than our own individual one. Or, to conflate Auden and Yates, we may be too busy leading our doggie lives to notice anything remarkable falling out of the sky, or what beast may be slouching toward its Bethlehem to be born, until they come upon us in complete surprise. For more on a wide array of other topics, please visit the oftwominds.com weblog. 
HTML, format and art copyright © 2007 Charles Hugh Smith, copyright to text and all other content in the above work is held by the author of the essay as of the publication date listed above. All rights reserved in all media. The views of the contributor authors are their own, and do not reflect the views of Charles Hugh Smith. All errors and errors of omission in the above essay are the sole responsibility of the essay's author. The writer(s) would be honored if you linked this Readers Journal essay to your site, or printed a copy for your own use.
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