We're in for a wild ride. Exponentially accelerating technological, cultural, and socioeconomic evolution means that every year will see more developments than the previous one. More change will happen between now and 2050 than during all of humanity's past. Let's explore the 21st century and ride this historic wave of planetary transition with a confident open mind.

Thursday, April 28, 2011

Mega Engineering and the Economy

Nature doesn't cut back during an economic depression. The idiocy of infrastructural austerity will remove humans from vast stretches of formerly inhabited territory.

It appears that Washington DC is waiting for a new Dust Bowl style event before pushing for mass scale infrastructure projects. Annually increasing water shortages in the southwest, flooding, and tornadoes remain an abstraction to these congress critter geriatrics. They forget that the only thing keeping our economy still functioning (in the face of mass scale looting, funding cuts, and inflationary policies) is the 1930s-1960s era dams, levees, bridges, etc. Would we consider a country like Saudi Arabia to have any economy without its irrigation, its water infrastructure, and its highways? Without constant and often accelerating human effort, the desert would reclaim the whole country. It is the same everywhere. If the current socioeconomic system doesn't quickly roll back and increasingly dominate the environment where the homo sapien dwells, then the socioeconomic system must be thrown into the dustbin of history.

United States still has a major trick up its sleeve, namely the most massive military industrial complex in the world. This enormous job creation behemoth has done a good job at keeping many domestic high tech factories, research labs, and assembly lines running. As I have written, rather than rapidly dismantling the military-industrial complex as many now want, we need to rapidly transform it to serve in the name of infrastructuralism, of physical nation building right here in North America. National guard and army corps of engineers are already often providing relief efforts during natural emergencies (inadvertently created by neoliberal "economic theorists".) We need to utilize the industrial capacity of the military to begin to mass manufacture tools, equipment, and advanced machinery needed to start reclaiming territory from mother nature and to fortify existing human habitats.

We should remember that FDR asked for emergency powers to begin putting large amounts of humans on the offensive against the elements. Quickly arranged industrial armies began to pro-actively open up entire regions to human settlement and development. In the process, a superpower economy was created. Modern technology and macro engineering allows us to make the efforts made in 1930s look like a beaver dam. iPads and social networking start ups on the other hand are a pleasant superficial distraction, not the basis of building tangible human power.

The future US president (or presidents depending on the country splitting or not due to living through a form of debt default) must put to use the technological knowhow accumulated from trillions of dollars spent on "defense"/empire. They must do so quickly to co-opt brain drain abroad and to prevent former defense contractor blue collars losing managerial skills.

We understand that mass amounts of energy will be required for this type of national rebirth. Energy difficulties and shortages will continue in the short term even if the government takes the necessary steps to nationalize key strategic industries (agriculture, mining, energy, transport, middlemen distributors like Wall-Mart, etc). Such nationalizations will make it easier to begin efforts to mass produce hundreds of small fission reactors which will be vital to the infrastructuralist thrust of the future. At the very least, the factories that assemble military vehicles should begin to work in concert with "government motors" (hur hur hur) to mass produce electric vehicles to be used in strategic sector logistics.

It is not enough to simply prevent a humanitarian catastrophe born out of higher prices for energy, inflation related loss of savings, and tinpot dictator wannabes like Scott Walker. It is not enough to prevent a scenario of millions of internally displaced people once gas goes over $200 a barrel, something that may occur even if food is distributed for free to all (since millions would need to drive to food distribution points, something harder to do with rationed gas).

A "reach for the stars" inspirational goal should be provided by a forward looking faction of the ruling elites to galvanize, focus, and concentrate efforts. Macro engineering provides such a vision. Chinese have already began a long term multi-generational effort to reclaim the deserts for human settlement. The final product will make the Three Gorge Dam look like a footstool in terms of human advancement. Both Russians and Americans have very similar continental scale irrigation projects already planned out and ready to go. Not only will efforts like American NAWAPA and Russian Northern River Reversal create dozens of millions of jobs and build powerful economies of the future, but they will greatly reduce this shameful bullying by nature. Humans will stand on their two feet again instead of cowering like rats before the elements.

It appears that millions of young nihilistic Americans are willing to do hard labor for basically free to "find themselves" and escape the humiliating and meaningless service sector drudgery of the dying capitalist world. Lets give these humans a rallying cry, something like "Screw the Cubicle!". I guarantee millions of volunteers would be found (plus there'd be lifetime stipend of food/shelter and retirement at 40). Once the economic crisis enters terminal velocity, real national or subnational leaders will emerge (who cant even be compared to the current mass murderer in chief).

Nevada desert can be turned into a lush forest and/or farmland. It is only a matter of exponential construction of fission/fusion/solar power sources and technology already in existence. If that is not inspirational, nothing is. Sahara and Gobi deserts are to follow.

"But.. but.. Colonizing the Western hemisphere is too expensive!! Colonizing Siberia is too expensive!! Erie canal is too expensive!! Suez and Panama canals are too expensive! Transcontinental and TransSiberian railroads are too expensive! Hoover dam is too expensive!! Man on the moon is too expensive! We want to live in cheap mud huts! Public education for all is too.. blah blah blah"

Such luddite human traitors always get silenced when their children are enjoying a brand new civilization (that grew out of seeds that turned out to be relatively cheap in the long term).

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Wednesday, April 20, 2011

BRIC countries and South Africa

Looking beyond the size of its economy, it gets clearer why SA was asked to sit with the big players. Namely, key geostrategic port location and resources that allows BRIC to better compete with G7 in shaping planetary unification.

If one had to assemble a coalition of countries to serve as the backbone of an alternative future governing order, how would one go about it? Sure, the size of the economy and population would be a key initial criterion in selecting candidates but not the only one. Diversity of underlining reasons for economic strength would be a second one. Just like with humans in a group, a country coalition would function best if there were specializations among them (manufacture, IT, energy, agriculture, etc). A third criterion may be a country's ability to augment the coalition by serving as a strategic bridgehead between member states and others.

This is where Jacob Zuma comes in. Besides being an alleged rapist, he also rules a very resource rich country that also overlooks one of the 3 essential shipping lanes in the Eastern hemisphere. In fact, considering ship size limitations of the Suez Canal and the residual ice threat existing in the waters around Russia, South Africa's Cape Agulhas is likely to continue to witness many super shipping tankers in the future. One should keep in mind that some of the world's biggest tanker ship yards are now in China and that Suez Canal is not dependable since it could be closed down by hostile powers (a prospect all too real considering recent destabilizing foreign pressures on Egypt).

Here we see the 3 routes. Both South Africa and Brazil establish a sort of a beachhead in what Zbigniew Brzezinski called Eurasia's periphery. Each country opens up an entire continent to trade. In addition, both Jacob Zuma and Dilma Rousseff have independent minded socialist background and can link up other BRIC nations with similarly minded regional players like Angola, Bolivia, Uruguay, etc.

There is great symmetry to the timing. As Westerners are trying to reestablish imperial presence in Africa from the north (to counter China receiving 60%+ of the continent's resource exports), BRIC is beefing up its presence in the south. Perhaps leaders of Africa's large resource rich and multi-ethnic nations finally sense that some measure of protection is required. After all, Sudan and Libya have had their oil rich regions amputated in a very brief amount of time. Nigeria, Algeria, and SA thus have a couple things to worry about.

Additionally, Chinese military leadership is worried that NATO's divide and conquer resource grab in Africa may ultimately serve as a springboard to fan the fires already started in Afghanistan, Iraq, and Pakistan (China's ally being bombed as we speak). In other words, attempts at Balkanization in the soft underbelly of Eurasia (Central Asia) are more ominous than simple theft. Two of the BRICs have already created Shanghai Cooperation Organization (India, Pakistan, and Iran have observer status) to prevent the exactly the same thing now engulfing Libya.

It would be logical to create SCO affiliated regional security organizations with Brazil and South Africa at the helm (SA, Angola, and Nigeria for instance can unite to provide security that African Union is apparently incapable of doing). In effect, this would mirror the past practice of United States picking a local power and subcontracting regional security to it (see Indonesia and Shah's Iran during the cold war).

The strategic position of South Africa demonstrates the rapid transformation of mentality within the BRIC coalition. Many Western observers scoffed at any meaningful cooperation within this coalition due to diversity of political systems and economic strengths. Now they seem puzzled why a much smaller economy was allowed to join. However, the mere fact that a countries like Nigeria or Indonesia (fast growing, populous, adds a Muslim bridgehead for BRIC) were not invited, shows that there is a degree of consolidated forward looking geopolitical thinking within BRIC leadership. SA has the gold that China and India have been accumulating recently (Russia as well although it buys from its own mining sector) and it got the docks for mega ships.
The existence of such strategic movement is most likely explained by prior SCO cooperation. One should keep in mind that SCO was created to put out the foreign made fires in Central Asia (once Operation Enduring Freedom a.k.a. welfare for NATO wraps up, SCO will be doing serious clean up/overspill prevention duties). It is not surprising then that some blurring of SCO's geostrategy and BRIC trade centric strategy should happen. The two are not mutually exclusive and it stands to reason that safety and trade should go hand in hand. China, Russia, India would want to not only ultimately expel Western influence from their neighborhood but move on to peripheral areas of American empire where Washington DC is losing ground. This means Africa first (US never overcommitted itself there even during the Cold War, leaving the dirty dictator prop up work to Europeans) and Latin America second (we'll know the Imperial mortal coil is about to be shrugged off when Mexico is cooperating with BRICS).

Ultimately, if the current Washington backed revolutionary wave in the Middle East is stopped/reversed, Iran will be asked to join. If Iran is successful at forcing out US from Iraq (right now DC and Tehran appear to have an odd couple joint imperial rule over that long suffering country), then the Indian ocean and the coasts of Africa/South America will be seeing more ships resembling this, possibly protected by SCO/SCO affiliated convoys:

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Wednesday, April 13, 2011

Comparing Deflationary and Inflationary Collapse

Both mainstream and dissident observers are coming up with "biflation" as an explanatory term to describe where we are as a planetary economy. That is a signal we're in a conceptual dead end (considering biflation has always been with us for the past half a century at least).

Some reactionary factions in the Western world desire a global return to a system of deflationary non-fiat industrial capitalism. I've began to write how "sound money" advocates are actually biting more than they can chew since deflation leads to collapse of capitalism a lot quicker than inflationary fiat funny money system. There's other very serious structural problems with the current world production and distribution system (such as machine efficiency rising faster than demand for workers) but lets focus on inflation and deflation first to see why there isn't a simple escape from current international fiat casino.

Caused by: Wage prices falling less fast than prices of goods
Result: Crisis of overproduction and profit collapse leading to shut downs of industry due to insufficient funds to run it, bringing corresponding misery.
Illustration of Industry versus "Consumer"/Worker deflationary cycle: 

Industry makes KitchenBots (representing needed durable goods in general) and exchanges them for "sound" commodity backed currency. Consumers benefit in the mid stage of the cycle until overproduction leads to insufficient capital accumulation and horrendous social disturbance                                

1) Industry cycle begins

Pricey and new KitchenBot exchanged  >>>>>>>>>>>>>>
                                                    <<<<<<<<<<<<<< for 100 SoundBucks

Trickle in supply of KitchenBots begins some profit generation,  "consumers"/workers on average spend 2/3 of their total money on needed goods. Wealthier people/ early adopters create trickle of demand for the pricey good

2) Midstage of the industry cycle

Affordable and well known KitchenBot exchanged  >>>>>>>>>>>>>>
                                                            <<<<<<<<<<<<<< for 50 SoundBucks

Lots of supply as mass production slashes the price of the useful and desired KitchenBots yet profits increase on volume, workers on average spend 1/3 of their total money on goods (since their annual salary cuts are less drastic than cuts in the price of goods)

3) Final destructive stage of the industry cycle

Old and busted stamped out KitchenBot exchanged  >>>>>>>>>>>>>>
                                                            <<<<<<<<<<<<<< for 10 SoundBucks

Super supply and insufficient demand leads to inability of industry to make razor thin margins profitable. Profit collapses, capitalists cant afford to run factories and close them, laying off workers/"consumers". Workers on average spend 1/10th salary on goods yet they are now without income stream to afford the oversupply of goods all around them

Conclusion/Possible Solutions: We start out great on at least the light industry level and end up in a brutish destitute 1930s style depression (think of overproduced livestock being butchered instead of sold/given away to keep some profits). Everything grinds to a halt just as post-scarcity is within reach. One must keep in mind that life cycles of various goods overlap yet the general cumulative tendency is what is illustrated above. Possible remedies include introducing fiat inflation (see below) with serious state provided safety nets, war to destroy surplus goods/industry, and the state taking over some production to run factories without a profit motive (see 1930s-1970s socioeconomic experimentation in Europe)

And now lets turn to our current problem,

Caused by: Wage prices rising slower than prices of goods
Result: Crisis of overproduction and profit collapse leading to shut downs of industry due to insufficient funds to run it bringing corresponding misery.
Illustration of Industry versus "Consumer"/Worker inflationary cycle:

Industry makes KitchenBots  (representing needed durable good) and exchanges them for "fiat" faith backed currency. Consumers don't really benefit at any stage of the cycle until overproduction leads to insufficient capital accumulation and horrendous social disturbance 

1) Industry cycle begins

Pricey and new KitchenBot exchanged  >>>>>>>>>>>>>>
                                                              <<<<<<<<<<<<< for 100 FiatBucks
Trickle in supply of KitchenBots begins some profit generation,  "consumers"/workers on average spend 2/3 of their total money on needed goods. Wealthier people/ early adopters create trickle of demand for the pricey good

2) Midstage of the industry cycle

Well known, yet still pricey KitchenBot exchanged >>>>>>>>>>
                                                              <<<<<<<<<<<<<< for 200 FiatBucks

Industry greatly increases supply of KitchenBots and KB price even briefly dips to 80-90 FiatBuck range. Yet soon enough new KitchenBots appear for 400 FiatBucks while the older generation ones are sold for 200. Industry is now trying to plan production in batches to prevent strong technology generated deflationary trends from surfacing even now. For the average "consumer", industry also designs shoddy goods that need constant replacement. Profit remains precarious yet stable with proper application of monopoly, cartel, and state ties. Workers meanwhile now spend 9/10th of their income on goods

3) Final destructive stage of the industry cycle

Old and busted KitchenBot exchanged >>>>>>>>>>
                                                              <<<<<<<<<<<<< for 1000 FiatBucks

At this stage we see normal consumer market destroyed, leaving only the luxury consumer market left standing. To overcome relentless international competition and fiat related higher prices on building materials, Industry goes all out to create super supply for ordinary people and hope to make money on mass production (whether technologically induced or using outsourced wage slave labor). These efforts fail as total mass production for KitchenBots was never fully developed due to sneaky attempts to prevent overproduction in the mid stage of the cycle. Workers now spend 10+/10 of their income on goods and increasingly only buy essential goods before gradually beginning to run out of those as well. Run away commodity inflation is the final straw of the fiat cycle. Since the rich do not need too many KitchenBots and since the rest of the workers prefer food and fuel instead, Industry begins to shut down factories and lay off people due to inability to fund further operations.

Conclusion/Possible Solutions:

We start out not that great and end up in the same poverty amongst plentiful resources scenario just as we do in the final stage of the deflationary cycle. We have witnessed what happens to a global system and its peoples under shocks from deflationary financial capitalism in the first half of the 20th century (historically, international financial cartels appear to take over the international industrial cartels regardless of fiat or sound status of the currencies).

We have not yet seen a planet wide inflationary fiat chain of collapse yet. This would imply all major currencies on the planet being affected relatively simultaneously via some failure on the part of Bank for International Settlements strategists to react quickly enough to systemic shocks. In many ways, inflationary monetarism allows Industry a variety of tools and more breathing room to play around with prices and thus survive a while longer. Inevitably, prices rising faster than wages destabilizes the whole system as surely as wages rising faster than prices.

Implications and alternatives

It appears that BOTH paths described above eventually lead real industry into a profit collapse and corresponding large scale social crisis (factory management not having the funds to keep production and distribution running and paying the workers). This would occur even if we minimized the influence of capital allocation industry (global banking cartels) on global industrial cartels. Symbiosis and convergence of finance and industry is as organic and essential to the system as is symbiosis between industry and state, banks and state, etc.

Austrian economists have done a good job continuing where original old school Marxist economists left off (when it comes to expanding a critique of capitalism in general). Namely, they ripped into the disastrous consequences of credit growing faster than real productive economy and the "statism" that often allows this. It is rather hilarious that both Marxists and Austrian economists really rely on victory by default. That is, the former group gets legitimacy by saying the planetary capital accumulating system we had for the past few hundred years is unstable, inefficient, and ultimately unworkable even with mass state subsidies. The latter group get their legitimacy on saying the fiat version of the same planetary system is unworkable due to statist interference. "If only we could purge statism from the world system!" This absurd cry rings forth from various corners of the Western dissident movement.

One way to proceed would be to expand the credit supply at exactly the rate at which expansion of the real physical economy occurs. Some dissident thinkers believe we can bypass the inflation/deflation debate by having the state provide credit for high technology infrastructure (thus creating real economic growth). Another way to proceed would be to overlap the dying capitalist system (whatever form it'll take in the next 10 years) with energy accounting. Both can easily function in parallel for a time. Indeed, if we think of the global socioeconomic transition and experimental period in the decades ahead, overlaps and diverse systems running in parallel will be a must. Which of these experimental sandboxes will expand to swallow the imagination of the whole globe will be left for us to determine.

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