Sunday, November 19, 2006

Consequences, take 2.

Entry for Monday, 21 November, 2005

I read a book over the weekend that chronicled the stories of several holocaust survivors who lived in the "underground" world of Berlin during the War. What I read was both inspiring and depressing. I wonder if anyone could survive that way today? I doubt it. They got by on fake ID's and people willing to hide them and let them use ration cards. That couldn't be done today - at least not the ID's and ration cards. Everything now will be biometric.

And self-sufficiency is not really possible, either. I read an article about transportation difficulties that will surface when we pass peak oil production. Not personal cars but commercial transportation. The vast majority of people now get their food basically from halfway around the world. There aren't any local farms selling their produce to local grocers anymore. There aren't any local farmers canning and processing their produce for the winter. And this is not a situation that can be remedied, either. The farmland is basically gone, the cost of starting a farm from scratch is now far too high, and local farmers can't really compete with giant corporate agro-business firms that can pay pennies on the dollar for their products due to "economies of scale" and then turn around and sell them to you at a cost that necessarily includes oil at $100 or more a barrel. And you are a captive audience. The only real chance of competing comes from organic farms, who can charge more - but it takes years to get an organic certification.

And the textile industry, of course, has been almost completely driven out of the US by greedy corporate CEO's who still haven't figured out that people making minimum wage at wally-world service jobs aren't going to be able to afford most of their 1000% marked-up products. Ditto for shoes, sheets, towels, rugs... They just aren't made in the US any more.

It will be amusing, in a sick sort of way I admit, to watch the dismay of these corporate fat-cats when the next economic downturn or recession comes. Aside from the peak oil problem, the business cycle naturally cycles up and down. But this time, average wages are down and will keep going down as "high" paying manufacturing and technology jobs go overseas. The CEO's will whine and gripe that "something" needs to be done to keep people spending money so the economy will keep going. How they think anybody can forever spend money they no longer make is beyond me. Apparently these guys all flunked math. When the minimum payments on everyone's credit cards meets or exceeds their available income, they will have to stop spending. It isn't exactly rocket science.

On the upside, over time the idiotically high cost of transportation will make it more attractive to bring farms and factories back near local markets. The question is how long that will take.

Already people are starting to feel the pinch of high fuel costs. One article this weekend mentioned that there has been a "suspicious" rash of "thefts" of SUV's that were later found to be burned. Ordinarily, the value of the parts is such that a stolen car is stripped completely and sold to shady dealers. But now nobody wants SUV's, especially their owners, who apparently can't sell them for enough money to cover what they owe - so they are evidently torching the cars hoping to get insurance to pay (or possibly some kindly Robin-Hood-type thief is doing it for them).

Movie producers are griping that even though the cost of tickets is outrageous (and so is their profit), that attendance is down and less and less people go to see movies. The critics complain that the quality of the movies sucks. Well, yes, but that has mostly been true forever - trust me on that, class. (Rent a few oldies and then tell me they were so much better.) The real problem is the same problem everybody I know is having - nobody can afford to take the family to the movies any more, so they only pick 2 or 3 movies a year to go see. The rest they wait until they hit video (if they still remember they wanted to see it when the video comes out! Image) Usually, by that time, the kids aren't interested any more, which is even better, because then I don't have to rent it, either.

What is about to happen to the economy is a demonstration of trickle-down economics in reverse. When there is no large upper-middle income class with jobs to pay all those service guys, there isn't any trickle down. Now the only high income earners are corporate CEOs and their senior staff. But there aren't enough corporate CEO's in this country to hire every service worker out there. They don't have enough staff for that, either. And everybody else is too poor. It is entirely useless to try and sell lawn service and all that to people who can hardly make their minimum payments as it is. But everyone still has to buy food and clothes and household objects. The money will trickle-up to the corporate fat-cats who have a stranglehold on production ability and there it will stop. It won't come back down - the rich will get richer and the poor will get poorer, end of line.

Historically, when income gets this imbalanced, revolutions occur. Just a thought.

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