Don't let the part essentially about the USA being the USSR just with a different economic model for decades scare you too much. It is, of course, more complex than that.******************************
Via Pundita - Not the lightest read, nor the heaviest - but quick enough. In my opinion it's the most efficient, serious disposition on how we got here, where we may be going and what obstacles we face.
It may challenge your thinking on certain things. Are entrepreneurial Hippies a conservative/libertarian thinker's best friend? Is Obama the ideal corporate Republican candidate? And does any resurgence of Libertarianism and/or conservatism demand that two legs of the Republican Party part company? It's well-enough referenced to suggest it must be taken into account. And solving the puzzle of "Globalism" is our primary challenge.
There's follow-on discussion here as it pertains to Alinsky's concept of "localism - something very different than that of which Pundita writes.
In the February 15 Ducking götterdämmerung post I wrote, "As a short-term fix, as the means to duck trade wars that would lead to the twilight of the global financial system, the SDR could be the best shot. [...] The long term-solution is outside the power of financial wizards."
The situation that led to the financial crisis is not really rooted in finance. The problem, strangely enough -- or perhaps not so strangely, given the adage that your best talent can easily become your worst blind spot -- is also the business world's greatest accomplishment: recognition of the critical role of efficiency in production and distribution. To understand how this strange state of affairs came about, we have to walk the cat backward:
Europe's welfare states are well known and understood outside Europe; the same holds true for the Energy Banana Republics in the former Soviet Union and the Middle East, which also created a form of the welfare state. What few people even in America understood until the financial crisis is that the United States had taken a back-door approach to creating a welfare state via easy credit to people who couldn't afford to buy or borrow.
In other words, trade in complex financial instruments, which fueled the credit boom, became a proxy for U.S. government welfare programs.
The failure of Lehman Brothers should not have touched off a conflagration in the financial markets. But no one realized just how much dead brush there was in the credit markets here and abroad. What did become quickly evident was that with faith in the credit system collapsed, American consumers couldn't continue to finance the global exporting boom with their purchases.
How did it come to pass that so many hard-working Americans couldn't afford to buy or borrow above the bare necessities, and ended up financing everything else on credit? I'll let Phillip Blond, the author of Rise of the red Tories, which was published in Prospect magazine this month, explain. He's writing about Britain but when you toss out the specific examples he cites you have the foundation of the problem for Americans as well -- indeed, for all people in highly developed modern societies:
The more that price is our only measure of competition, the bigger the economies of scale required to compete, and the higher the barriers to entry for small local competitors. Our fishmongers, butchers, and bakers are driven out -- converting a whole class of owner occupiers into low wage earners, employed by supermarkets. And, once you have a monopoly, it demands that other monopolies serve it, just as Tesco demands economies of scale from its suppliers, driving out small and medium-size farms.I'm not sure that "monopoly" is the right word but you get the picture: efficiency-driven business production demands more and more efficiency to stay competitive, which in turn demands more and more economies of scale, which again drives the need for greater efficiency to get the edge in competition.
At some stage in the spiral there's little room left at the production end for humans. At that point efficiency no longer really serves its ultimate purpose. Instead, humans become the consuming end in an elaborate distribution network that demands greater and greater efficiency to be cost-effective -- and yet paradoxically becomes less and less efficient for human users.
What is efficient about sitting in a car for three hours a day to commute to a job while burning gasoline you can't afford to purchase except on credit, in order to earn enough money to pay interest on debt for purchases such as frozen green beans imported from China by a supermarket, when you could buy fresh green beans from a local grower for the same price if you had the cash?
But how the frozen green beans got to your supermarket, and how the gasoline got to your gas station, is the model of efficiency. It's just that your personal life is left out of the efficiency chain.
Of course there are many small businesses in the United States, but many of them service consumers who can't afford to own homes or anything else unless it's financed on credit which they can't afford. So the consumers are perpetually in debt that must be somehow financed with more debt.
In short the business production model, which runs on credit, came to dominate the domestic or 'personal life' model -- but the domestic model, which consumes instead of produces, can't exist on ever-deepening debt.
Ergo, easy credit became a socially-acceptable form of welfare and picked up the shortfall until the merry-go-round spun so fast that everyone fell off.
And that's how the efficiency chase led by twists and turns to a financial debacle affecting the entire world. End of story.
Where do we go from here? Is there a new story? Sure there's a new story; the system had spun out of control several years ago -- by the 80s, by some estimates -- and several of those who got thrown off the merry-go-around earlier on didn't curl up and die. They dusted themselves off and created a new story called "Localism."
I warn there are different types of Localism and that the Authoritarian Left in America has already co-opted the concept; this, in a sneaky ploy to shut up Right-wing media outlets by bringing in a version of the Fairness Doctrine, which is so blatant in its attack on free speech that the Authoritarians had to get sneaky.
Wikipedia has a helpful introductory article on the topic of Localism, which is already divided into New and Old Localism.
(Don't cringe; you'll have to learn this stuff sooner or later because within a year everybody will be arguing about Localism.)
Then there's American Localism and the British New Labor Localism and the emerging British Tory Localism that Phillip Blond represents. There's also hybrid Localism, which is an attempt (not very successful so far, it seems), to devise Localism programs from the central government level.
And again, there's Faux Localism, which Jim Boulet, Jr. explained wonderfully for National Review Online in 2008. Readers who are familiar with Canada's Free Speech issues will quickly pick up on how Faux Localism works because it's a play on the multi-culturalism/diversity laws, which paved the way for the infamous federal Section 13 speech-muzzling law and its provincial copycats.
However, we're concerned here with the real deal. A quick introduction to the basic concept behind Localism can be found in an interview with Greg Stelenpohl, an American who founded Odwalla health juices.
Odwalla started as a hippie-type natural foods product, but it tasted so good that it became a hit with the mainstream consumer. To shorten a story, Greg ended up ousted from his company's board of directors just before the company was bought by Coca-cola and Coke's highly efficient distribution network and economies of vast scale.
Greg took his five percent of the profits from the sale and set out to build local business and investing networks; note that he speaks of their "efficiency."
[...] He is extending the warehouse where he lives and works into a "regional slow food centre" serving the Monterey Bay area. But that is just the most visible part of his activities.If all that sounds terribly Granola, Localism makes efficiency work for humans again.
"Out of a portfolio of $3 million, most of the individual investments are in the smaller $100,000 range," Stelenpohl said.
He cites a herbal medicine company, a sustainable industries publishing house, a developer of software for non-profits, and an eco retreat centre.
Apart from Adina, his two commitments of over $1 million are the slow living centre and Interra, a new kind of loyalty card which aims to give small local businesses the same infrastructure to offer customers loyalty incentives as major brands such as Starbucks already have.
"By increasing the density of local interactions we stimulate small business job creation and the recirculation of local dollars," he said. "This creates more efficient energy and transportation dynamics and more rewarding social lives as well." [...]
But does Localism lead invariably to anarchy? To the death of the state and federal government? Here is where all the argument about Localism comes in.
To help us wend our way through the political and philosophical thickets that have already grown up around Localism, Phillip Blond's Red Tories is a manifesto for Britain's Tory party that has Localism as its centerpiece. As an introductory blurb at Prospect puts it:
[...] Conservative party advisor Phillip Blond in this month’s cover story, which unveils a new “progressive” agenda for the British right. Blond, the director of Demos’s new Progressive Conservatism project, argues for a break with free-market Thatcherism, to be replaced by a bold new “Red Toryism” that is socially conservative, sceptical of neo-liberal economics and radically localist; the most challenging new political thesis of the post-credit crunch era.Blond is not only an advisor to the Conservatives, he's also a theologian and a card-carrying philosopher educated at Cambridge. So you might want to preface your read of the manifesto with this Wikipedia article, in order to familiarize yourself with his somewhat Jekell-and-Hyde style of thought. He goes in one direction, then the theologian pulls him in another, then the Conservative politician yanks him back in the other direction. After 20 or so paragraphs you get used to it. Here's an example from Wikipedia:
Phillip Blond labels himself a 'Red Tory', proposing a popular capitalism which respects traditional values, local communities and allows the 'little man' to participate in the economy, as opposed to neoliberalism, socialism and communism.It's at that point that Blond loses me, and loses his most eloquent critic thus far, David Green. Green's In Defense of Liberal Democracy, also published this month in Prospect, straightens out Blond's reasoning on some points, which clears the way for Blond's excellent crash course on how Britain became a "broken society," as he terms it, and his manifesto.
Blond considers that a true conservative should reject present-style capitalism because it has increasingly concentrated ownership to a few 'oligarchs' and created a dispossessed group at the lower level of society, thus preventing many ordinary people from maintaining their own lives and communities. Blond argues the economic gap has widened during the last 30-40 years and the development is similar to that of the 19th century.
Blond is a figure in the 'radical orthodoxy' school of theology and a fervent critic of secular liberalism. He argues that liberalism is equivalent to moral relativism, and that liberal politics can therefore only be actualised through power.
The caveat is that Green makes what seems some unwarranted attacks on Blond, such as calling him an enemy of modernity. From my reading of the essay, I think what Blond doesn't like is that citizens have not mustered adequate responses to the greatest downsides of the business-driven model of society. The dislocations in 'modern' societies arising from the collapse of the credit markets make that argument for him.
Yet Green's criticism is on the whole good because Blond is struggling to articulate a model of modern social order that has been growing in the manner of Topsy, and doesn't yet have strong philosophical underpinnings, much less political ones. He's made a good stab at developing the theoretical framework, which leaves much room for improvement, of course, as with the development of any new philosophy.
The bonus is that in the process of laying out his arguments Blond highlights contradictions that caused the American Republican party to implode.
What Republicans who voted for John McCain don't seem to understand is that it's Barack Obama, not McCain, who is the best representative of their party platform, which is strongly weighted toward globalized big business.
From that viewpoint Obama is a Republican dream come true: neither white nor black, too rootless in his background to be strongly associated with any particular ethnic group, sect, creed or even any country. His strongest identification is with Chicago -- a big city, the kind of urban center where many of the world's consumers now reside. He is the perfect person to represent America's globalized, export-driven society; a persona that can't offend any customer overmuch, anywhere in the world.
If Republicans say that's not what they want; that they want to be more than big business and keep to America's Western roots and values, they'd better trouble themselves to study Blond's essay. Then hunker down and work out the contradictions in their platform.
I will close by noting that one of the articles I read about Faux Localism mentions that President Obama has stated that he's in favor of Localism. The article did not provide a reference for the remark or elaborate on it.
Given that interpretations of Localism vary, I don't know what Obama means by the term. However, from all I know about his political career, I venture that he supports the Authoritarian Left's interpretation of Localism, which I think is false, and which boils down to giving the wishes of minority populations primary importance. In other words, multiculturalism was slapped onto the concept of Localism.
Of course Localism of all kinds supports diversity of thought, as does democracy, but as you'll see when you read Blond's essay, Localism does not refer to multiculturalism or ethnic diversity. To cover up this fact is, I suspect, a stealth attempt to bend Localism to authoritarian agendas.
February 19 Update
This entry is linked at Riehl World View, Sea Blogger, and Free Canuckistan!
The entry is also cross-posted at RBO. The blog's author, "Procrustes," chose some highly evocative artwork to illustrate various points I made in the post.
She also found a picture of Phillip Blond to add my post at her site; after I saw what he looks like it could be that David Green was not simply being catty when he complained that Blond is anti-modernity. Phillip Blond looks straight out of Middle Earth. Quite Hobbitish.
Procrustes sent me a very interesting article on Localism -- another offering by the late Jim Boulet, Jr., which goes into some detail about Obama's view of Localism.
Check out the book linked to at the post and the page that's highlighted in the Google Books reader.
After reading the page I note that once you start digging into the history of Localism, it seems that it was co-opted, decades ago, by the Authoritarian Leftist Saul Alinsky and his crowd from writings by Thomas Paine and Thomas Jefferson.
It also seems, from the Boulet article, that it's Alinsky's view of Localism that Obama favors.
So this is much food for thought. I'll have more to say about the issue in the coming weeks, after I cram. For now I venture that Blond's Localism is firmly grounded in economic issues, whereas it seems that Alinsky's is grounded in getting more of the power pie from the government.