It’s amazing to me how many otherwise intelligent human beings actually believe this bullshit (embodied in the title, above). As though the GNP or the GDP were the sole measure of our nation's collective soul’s happiness, health or worth. As though one’s personal income or wealth were the measure of, well, everything. As though, what you can buy or sell is your sole value; as opposed to the value of your Soul (sorry, I couldn’t resist).
A very influential shrink (Abraham Maslow, 1908 – 1970) once proposed a “Hierarchy of Needs” Simply put, they are:
Biological / Physiological (air, water, food, sleep),
Safety / Security (from physical harm),
Love / Belongingness / Acceptance,
Ego / Esteem / Power,
Each higher level requires the satisfaction of the previous level. In other words, of what use is economic wealth (level 4) if you are hungry or being beaten up? Measuring the world in solely economic terms (as does George the 1st's mantra: "It's the Economy, Stupid") forgets all the men and women who are hungry, sick, lack permanent shelter and good clothing, or are otherwise not free to do what they would; and it also ignores the not inconsiderable minority who have been blessed by having grown beyond economic fulfillment needs (Mother Theresa, and teachers who love their work, come easily to mind). In other words, money IS an adequate measure of life’s successes and failures for those fortunate enough to have attained level four comfort and unfortunate enough to be stuck there.
Money as our sole measure ignores these niceties, as though every American is free and healthy and prosperous, and the only goal worth pursuing is maintenance and enhancement of this gilded throne, not pursuit of a higher good or giving aid to your less fortunate brothers and sisters.
In times not long past, wealth was the reward for doing your job well. Now amassing wealth is the job. It used to be that a newspaper’s job was to print the news, and if enough folks appreciated its efforts, the paper succeeded and turned a profit. Now it’s the newspaper’s job to turn a profit; if they print the news along the way, why that’s terrific. This shift in priorities has the following unintended consequence: when the newspaper was a newspaper, it lifted the level of its readership; when a newspaper is a profit-maker first, its ignorant readership pulls down the level of the news. It is as though we have determined to have our fourth grade students choose their own syllabus; ignorance begets ignorance.
Having addressed the issue of Money as the Measure of All Things, I want now to turn my attention to Money Matters. I want to consider briefly how some apparently non-economic influences will affect the Economy, the Stock Market and you, in the near-term (now thru 10 years) and long-term (thru 50 - 100 years). The factors I want to consider are:
Technology and Political Non-Interference
The Economy: The national Economy is in trouble, deep trouble. If you haven’t sensed this, you haven’t been paying attention. The Economy during the Clinton years was the greatest Stock Market Boom this Country has ever seen. The Dow Jones Industrials soared from 1616 after the crash in 1987, 3225 after Election Day in 1992, to 11,750 in January 2000. The Nasdaq rocketed from 320 in 1991, 620 after Election Day in 1992, to 5130 in March 2000. The last not quite three years have been Hell: the DJ is hovering near 9000 (a 23% drop) and Nasdaq is weightless at 1400 (a 73% drop). The reason for the Bust was: the Tech Bubble grew too fast, too big, too soon. The bubble has not exploded; it has merely shrunk, as not every player who wanted to play could survive.
Technology: Whatever you think about the cause of the Boom -- Reaganomics or a Republican Congress or whatever -- the reason for the boom was the New Technology, in a word, the explosion of inexpensive Computing and Communicating power. But the so-called New Economy is here to stay and the Economy will never be the same. The efficiencies of the New Economy allowed Businesses to cut Costs drastically, thereby increasing Net Incomes (Net Income = Profit = Revenues minus Costs). But as Costs were cut, competition forced price reductions; so the Net benefits of New Economy efficiencies were not permanent. Were cost-cutting and price-cutting the only consequences of the rise of Tech, we would be booming yet, as Joe Consumer would be major beneficiary of the Boom. When Joe Consumer is happy, so is Wall Street. But Joe Consumer is being roughed up!
Political Non-Interference: Capitalism was defined by its original spokesperson, Adam Smith, as a free-market of goods and services. Monopolies were obviously not examples of free markets; monopolies, statist or otherwise, are inherently anti-capitalistic. Oligopolies (a market condition consisting of a small number of dominant players) are also anti-competitive, therefore another exception to Free Enterprise. Clearly, since the suspension of Anti-Trust actions against emerging giants in an industry (Reagan years) -- in short, since the the emergence of weekly Mergers and Acquisitions -- our Economy has NOT been playing by the rules of Classical Capitalism; we live in an Economy dominated by giant non-competitive firms. We do NOT live in a nation of free-enterprise capitalism. This has not hurt businesses, at least those giants, who have taken advantage of the Big Business-friendly atmosphere provided by Administrations from Reagan on as they have merged and prospered. But while it has not hurt business, it has hurt people.
Did’ya ever wonder why exactly businesses Mergered and Acquisitioned? Well, for one, to squash competition. And, for another, to reduce costs of operation. Certainly since the advent of computers, particularly PC’s, large companies have been able to get the job done with fewer people doing the work that was needed. Whereas before, if a business grew, the number of folks in Accounting grew too; computing power enabled businesses to grow at the same time as the Accounting Department shrunk. And a merger could accomplish these cost reductions very fast, one entire team could be let go after the organization was achieved. Much corporate prosperity was paid for using the coin of reduced man-power.
High-Tech & Non-Interference: So, binky, didya think that what was good for the Economy (read: Wall Street) was good for you? Sorry. Outside of the Tech firms themselves, other companies’ growing Earnings were attributable to reduced costs (read: Cutbacks, Layoffs, re-Organizations). Thousands, perhaps tens of thousands, of millionaires were created in these fabulous decades; but millions were added to the permanently unemployed. Look around: how much building is going into middle-income housing, how much into luxury housing (much of it second and third homes for the really well-to-do)? And are you really better off than you were in 1980, 1985, 1990 and 1995? If your savings and assets haven't at least tripled, you're not really better off, as a savings account at 5 1/2 % for twenty years would triple your one-time contribution to savings. While you may or may not have kept even, the average CEO's compensation has gone ballistic.
I am suggesting that there are those who benefited enormously from the Tech Boom and there are those who paid for it, either through stagnation or unemployment. Ten times as many Americans got the shaft as benefited from this Boom.
And guess who’s going to pay for the Bust?
How, if at all, do the recent business scandals (Enron, Global Crossing, ImClone, Tyco Labs, Adelphia, Qwest, WorldCom, etc.) relate to all this? The Boom times raised expectations of stock performance: if a stock's price wasn't going to at least double or triple, it was gonna tank because folks would take their money out of conservative stocks and put it into a high-flyer. So, out of Self-Defense, some companies with loose morals chose not to let their ordinary or bad earnings get to the street, at least until their Execs bailed out at a fat profit. Did these guys break some laws, do they belong in jail for a long time? Sure, but criminal prosecution is the domain of the Justice Department, an arm of the government. Write yer local Congressman, demand prosecution of these bastards! Then sit back and wait for these favored politicos to betray their business buddies who made them wealthy too. You want a Revolution, binky? Then go out and make one yourself.
BUT, and here’s the rub: you ain’t seen nothing yet! I assert we are not in a business cycle correction, we are not in a Recession. Were it not for the “War” you’d see this better. I dare not even call it a Depression, as it is SO different. Without a real turnaround by government, do you see any reason for these trends (cost savings through permanent layoffs and greater concentration of wealth in the pockets of the few) not to continue?
Lemme wrap up my consideration of this first factor, the rise of High-Tech and the impotence of governmental regulation:
The Rich will get Richer;
The Rich will grow in Numbers;
The Poor will get Poorer;
The Poor will grow in Numbers;
The Number of new Poor will grow at least ten times as fast as the number of new Rich;
The Middle Class will grow smaller, virtually disappearing in time;
Corporate Cost Reductions will continue unabated;
Net Incomes of Corporations whose products and services are targeted to the Rich few will prosper;
Net Incomes of Corporations whose customers are the Middle Class will begin to collapse, because these folks are increasingly becoming destitute;
Net Incomes of virtually all Corporations will collapse, because Rich people cannot permanently remain rich selling yachts to each other, especially as the Stock Markets will all have collapsed in anticipation of the obvious.
We have been doing Items #1-7 for two decades; if nothing substantial interferes to change the economic rules, we can expect a total Market collapse soon and an Economic super-Depression, maybe not this year, but certainly not more than 5-10 years from now. As a matter of fact, for the last two to three years we have witnessed early signs of a Market Meltdown already, haven't we. I can't say we're going to crash finally any time real soon now; I can and will say that we will crash if we don't change our rules. No one will be spared.
Short term, one of the biggest factors underlying the markets' crumbling is investors' loss of confidence in Corporate financial reporting. And the government's non-response to it. Damn me, does anyone in the whole country believe that no law exists NOW that would put Kenneth Lay (Enron CEO) in jail for the rest of his life? Yeah, but before he goes to jail, he has to be charged with breaking a law on the books. In other words, he can have broken 1800 laws, but if he ain't charged, he doesn't do time. But who's in charge of charging him? His buddies in government! Yup, both sides of the aisle. So what do they do to mollify the public's mood? Why, they pass a law that criminalizes his criminal behavior. Can they charge him with breaking this new law? Absolutely not, that would be "Ex Post Facto." American justice demands, fairly, that a man not be charged with breaking a law that was not on the books until after his misdeeds. So, Ken Lay remains free, the ignorant public is happy, and politicians can crow about the law they passed that will prevent the felonious actions responsible for the market's collapse, but only in the future. Ain't American democracy wonderful, everyone wins! I put it to you: ask yourself, every time a new criminal law is passed, is someone in high places being spared prosecution under existing law?
What do I believe? I believe we will crash first then work it out. Why do I believe we won't take the necessary steps to avert the avoidable? Because I believe that overfed Americans won't give up their spoils without a fight, they either die off or come to a sudden end; and I believe that most underfed Americans would rather whine about baseball than act on the premise that their country actually belongs to them and they can change the rules any god-damned time they want to. And I believe that no politician is up to the challenge because I've been listening for signs of political courage for 20+ years and I've heard none, not from any Republican or Democrat anyway.
Therefore, I am in despair of rescue before the Super Depression hits.
The movie The Matrix posits a time in the not-so-distant future when robots are in control and humans are their servants, not their masters. That “seminal” article (“Why The Future Doesn’t Need Us”, Wired magazine, April 2000) by Bill Joy, the nerd half of Sun Microsystems’ founding brothers, suggests that computers, artificial intelligence and robots will supplant us as the dominant species on Earth; to a technologically literate person, this is no surprise, it’s obvious. The REAL question is not IF but WHEN. Joy (irony) suggests within 50 years. But we will continue to feel its effects along the way, as more and more technology replaces more and more human labor.
Millions of jobs have already been lost to computers and robots, a few billion more will go their way. Why not? They do rote work perfectly, they can work 24/7, they don’t organize into labor unions and they get replaced by better models that are even cheaper to purchase and run. And, frightening prospect, the idea of what is “rote” or routine work expands every year as A.I. advances.
What can we do? Not only will the children of the third and fourth generations after us not have the dignity of work (notice I didn’t say “jobs”), they will not have a planet worth calling home. This is the direction things are going today; and if we continue in this direction, moving down the same path, why should it surprise us that the same CAUSES produce more of the same EFFECTS?
I can sense (not really: I’m not that good that I can read the mind of someone I can’t even see) that you can’t believe what you’re reading. You acknowledge that what I say has happened has indeed happened, and that it seems inexorable in its persistence. What you can’t believe is my conclusion. Yes, non-employment seems to be the wave of the future, but it’ll have to stop somehow, won’t it? Well, yes, maybe it has to. Non-employed folk don’t buy cars, don’t lead the good life, don’t build new homes. They get a little bit of Unemployment, then perhaps they go on Welfcare, but that’s not permanent either. Hopefully they die. Before they see their collective problem that is.
I contend that if we open our eyes we can see that we are on this path. NOW, not tomorrow. Have you followed the Cutbacks, Layoffs and ReOrganizations of the past 20 years? The market just noticed. I suggest that, Tech Bubble notwithstanding, the market is suffering from chronic reduced-consumption of essential products and services, fed by Americans with no little or no income, a growing pool of humanity. The result of job automation is, short-term, reduced costs and increased Net Income; long-term, the results of even greater automation and larger pools of non-employed humans include reduced Revenues and dropping Net Income, with no bottom in sight.
I believe that we Americans will have a hard-time handling this problem; the Politicians and Business people will continue to throw up that old canard of Free-Market Capitalism, and they will scream Communist and Socialist at whoever attempts to discuss this issue. They’ll also bring God into the picture, on the side of the business leaders who “create jobs” (10 new jobs for 500 they destroy). Indeed, if the Bible-thumpers and the Business Leaders and the Politicos win, if they won and WE lose, freedom is gone from the planet, to be followed shortly thereafter by Extinction.
“Why is this happening? How could this happen when everything you paint seems so bleak? Who would want this to happen?” Gimme a break! It is not all bad! There are those who profit, ENORMOUSLY!
Why it is so easy to keep on this path, why it is so easy to keep people from seeing what’s in front of their eyes, is ignorance. The ignorance begotten on a population that has contempt for education, frequently putting the word of the Lord in its place, as though the Lord wrote only that one book, the one Americans from the Bible Belt revere. The states that are the most Born-Again, the most God-fearing, are the states with the most disastrous ignorance and the most devastating poverty. How will we lift them when they will not be lifted, when they are doing God’s work?
Our Democracy is in trouble, not because it could elect a G W Bush, but because the Body Politic is so ignorant of the issues that OUGHT to be before them. Ignorance is not good for Democracy. When the common man is ignorant, he makes bad decisions. Ignorance is also not good for the poor when they see each other as each others’ enemy.
Let me sum up before I lose you here. If the economic machinery continues going in its current direction without major adjustments, the number of poor will continue to grow and be dependent upon others or be expendable or become slaves. Democracy will be dead as will the American Dream. We will reach a point where violent Revolution or Slavery are the only paths available.
Economically, I am talking about a chronic Depression for goods and services heretofore marketed to the Middle Class.
Am I suggesting this will be our future? NOT FOR A MOMENT? Why not? Because we CANNOT ALLOW IT!
What do I suggest we do to avoid this future; indeed, what am I suggesting will happen, no matter what? First, enough folk have to see what’s facing them. Seeing the future clearly gives us power to choose an alternate future. Need I say that today’s power and wealth alignment will have to go; the future demands it, The Times They Are a Changing, Heaven will not be enough if they don't.