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ska_mna

Jon Taplin: Brave New World, Redux

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This is an awesome blog post by Jon Taplin on the current macro economic picture.

It was from earlier this month, so sorry if it's already been posted but I couldn't find it on a search here.

I've highlighted some key passages in bold.

It's American-centric, but issues raised are obviously key to our own economy here in the UK too.

http://jontaplin.com/2011/08/04/brave-new-world-redux/

Brave New World, Redux

August 4th, 2011 by Jon Taplin

After Thursday’s stock market crash, we find ourselves staring into the abyss of a potential double-dip recession. Republican’s, having ignored the history lesson of the business lobby 1937 Austerity Push, which managed to push America back into depression, seem to be clueless to the fate of most Americans. Of course, As the New York Times reports, their financial base is doing very well and luxury spending is reaching new highs. But America’s economy lives and dies on the confidence of the average consumer.

In the go-go years of the late 1990’s the concept of “mass affluence” and “affordable luxury” dazzled marketers into believing that “aspirational marketing” was the path to the streets of gold in which the majority of citizens would have 60” inch flat screen TV’s running 500 channels of cable TV and 100 MBPS Broadband services, even if they had to hock their house to get it. But, as a new White Paper from Ad Age entitled, “The New Wave of Affluence” points out, “In 2011 however, in the wake of a massive reset, it appears that mass affluence may be a thing of the past.” Ad Age goes on to suggest that marketers concentrate their attention on the 3% of the American population earning more than $200,000 per year, “who account for almost 50% of consumer spending.” The esteemed Telecom analyst Craig Moffett, in a report titled “How the Other Half Lives” chose to look at the darker side of this picture. “After paying for food, shelter, and transportation, the average bottom-40% family is left with…. wait for it…. just $1,215 per year, or $100 a month, for everything else. That’s $100 per month for all discretionary purchases, telecom services, cable or satellite TV, movies… and everything else. Indeed, after Healthcare, the number drops below zero.” A recent report on consumer discretionary spending from the Federal Reserve Bank of New York shows “this time is different.” Going back decades, such spending had never fallen more than 3 percent per capita in a recession. In this slump, it is down almost 7 percent, and still has not really begun to recover.”

​This set of circumstances should be a topic of great debate and begs the question of our political and economic future: democracy or oligarchy? It may very well be that the affluent can sustain brands like Apple, Lexus and Nike far into the future but it paints a worrisome picture of a world of gated communities and private police forces and certainly signals a break from the Horatio Alger myth of upward economic mobility The New York Times recently reported that high quality guard dogs for executives were selling for $230,000.. One of the sellers, Wayne Curry justified the price tag, “When you compare the costs of a full-time bodyguard versus a dog, the dog makes a lot of sense,” Mr. Curry said. “And the dog, unlike the bodyguard, can’t be bought off.”

What are these executives planning for with their $230,000 guard dog? Civil unrest. We may in fact be reaching a point where a majority of the country feels they have no stake in the general well being of the society—a New Anarchy. Imagine an explosion of technology aided Flash Robs. This amazing anomie has been exploited by a sort of uber-libertarian like Michelle Bachman, who clearly expressed a desire in the last three weeks to see the U.S. Government default. Lulz Sec and Anonymous’ desire to crash the computers running PBS, Sony, Citibank or the Defense Department is equally anarchic. As Bob Dylan once wrote, “When you ain’t got nothin’, you got nothin’ to lose.” The collective consciousness of a nation that brought us through a revolution, a Civil War and two world wars is being destroyed by the Ayn Rand fantasies of the uber-libertarians.

Whatever political will the country might have had for a WPA style program —putting millions of unemployed construction workers back on the job fixing America’s third world infrastructure—now seems to have evaporated. It was perhaps our last chance to avert the Coming Anarchy. With no government infrastructure programs to put people back to work, the private sector is left trying to create jobs for the 28 million people who are either officially unemployed, working part time but wanting full time work or “discouraged workers” who have stopped looking for a job. This of course is not going to happen—and so we are all facing the problem of a “new normal”, in which a large portion of the high school only population may never find work. Liberal pundits mourn the loss of good jobs for this cohort, but as Bernard Avishai warned in “Strategy and Business” way back in 1997, “Any job that is still simple and repetitive enough to employ a semi- or non-skilled person is going to be even more pressured by new software or by contractor-suppliers in China and Brazil.”

Look at the transformation of business in the communications sector that we study at the USC Annenberg Innovation Lab. Apple and Google have revenue per employee well over $1 million per year. Contrast WalMart’s $192,000 in revenue per employee to Amazon’s $1.8 million and you can see that the productivity of these new businesses are not going to employ a lot of Americans. Imagine a dozen giant Amazon warehouses manned by robots, “picking and packing”, compared to 5000 giant WalMart supercenters, manned by thousands of employees with health and welfare benefits. The workforce growth that will take place in the new economy is among a large talented group of undergraduate engineers. And unfortunately, as any one walking on a campus like mine can see, the Chinese and the Indians are making a lot more smart engineers than we are.

That’s why economists now believe we have a structural unemployment model. There is a profound mismatch between the talent growth companies need and the American workforce. The other irony is that these new communications giants are sitting on record hoards of cash: Apple-$41 Billion, Google-$41 Billion, Microsoft-$55 Billion, IBM-$41 Billion. More cheap money from the Fed would make no difference to their investment policy. Quite frankly, they see nothing of scale to invest in, so they are under pressure to return the cash to their investors in the form of a large dividend. They are loath to do this, but their margins are so high that they can’t possibly reinvest the profits. Apple’s gross margin is 41.7% , Google’s is 67%. These are businesses that never have to compete on price and so they do not adhere to nostrums of the perfect market beloved by conservative economists.

<snip>

It's worth reading the whole article.

C'mon then HPC'ers. How do we turn this tanker around or are we already on the rocks?

Edited by ska_mna

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I suspect even the people who currently benefit from the situation realise it's going to end badly now- but how to unwind a globalised wealth extraction/concentration system twenty years in the making?

Perhaps an unaticipated consequnce of taking control is the reality of being in control- but not really being coehrent enough to really do it?

Who- really- is in charge today? The politicans :lol: clearly not. The market? not really- the market is just a cacophony of hungry mouths without a brain.

It seems we have created a globalised structure that answers to no one, has no discernible overall strategic capability and cannot now be undone without destroying ourselves. :lol::lol::lol:

It's like living in a really badly plotted sci fi B movie in which the human race have created an artificial unintelligence that has taken over the world and is too dumb to reason with but too powerful to destroy.

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This is an awesome blog post by Jon Taplin on the current macro economic picture.

It was from earlier this month, so sorry if it's already been posted but I couldn't find it on a search here.

I've highlighted some key passages in bold.

It's American-centric, but issues raised are obviously key to our own economy here in the UK too.

http://jontaplin.com...ew-world-redux/

It's worth reading the whole article.

C'mon then HPC'ers. How do we turn this tanker around or are we already on the rocks?

1. We're on the rocks.

2. I believe this was by design. As Patton said after beating Rommel in a tank battle in Tunisia "Rommel...you magnificent *******, I read your book!". What is being done to us (mass immigration, globalisation, servitude via credit stuffing, oligarchic rule in charge of making laws that suit them, etc.) is in the history books. It all happened at the time of the Roman Empire and lasted for centuries. The police makes sure the status quo lasts.

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I've just finished reading this article and it comes with a tail. The body of the article is common sense but it then ends with a seemingly out of nowhere push for Cities to replace national governments. This is a globalist agenda driven from the UN. Recently I posted about a book by Jacques Attali, a prominent eurocrat who was promoting the same thing. I keep coming across this theme from a variety of sources, usually out of context with the piece it comes packaged in.

The article is written to promote this particular concept of state and national government destruction in favour of 'world cities' that would be even easier to manipulate and control by today's oligarchs.

I don't know the blogger but this particular idea is not his own and I have to wonder why he is spreading it.

I think the idea is that if you hear something for long enough from a variety of sources, you automatically end up thinking it is self evident, without questionning the matter.

Here's the tail:

I think these are good ideas, but my belief is the core change that needs to come from Democrats is a fifth principle should govern their strategy for the next decade—a return to Jeffersonian principles about Federalism and a return to championing the city. I have been writing about this idea of the New Federalism since 2007 and I am convinced that the experimentation that is needed to find our way out of this crisis will only be found at the local level. In my first essay I cited Justice Brandeis who said, “It is one of the happy incidents of the federal system that a single courageous state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country.” Where are the governable progressive polities in America? In cities like Los Angeles, New York, Boston, Austin, San Francisco, Seattle, Chicago, Miami and Portland. Yes they have revenue issues, but they also have a solid tax base from sales and property taxes that probably can be raised to pay for essential services like education, public safety and infrastructure. In addition the municipal bond market with it’s 5.5% tax free yields looks remarkably stable compared to much lower yielding paper. As Parag Khanna has written “In this century, it will be the city—not the state—that becomes the nexus of economic and political power. Already, the world’s most important cities generate their own wealth and shape national politics as much as the reverse.” Democrats need to stop defending the Federal government as the solution to all of the nation’s problems. If it shrinks in the next decade (which it surely will) there will be less money to fight senseless wars in the Middle East and perhaps more money that local cities and towns can raise to fund the things that really matter in our lives.

The present political cultural trajectory is unsustainable. Republics cannot function as Oligarchies or Corporatocracies. The only way we are going to rebuild this country is at the City Level, where the broken down schools, bridges, airports, train stations and highway’s are supposedly maintained. There is a whole new Locavesting movement that is trying to help make it easy for people to invest in their own communities. Most Republicans (and much of the media) will take issue with my dystopian view of our immediate future if we are left with the current Republican economic austerity plan that eliminates any public investment. Their belief is in the media’s power to induce what William Gibson called a “mass consensual hallucination” to keep civil unrest at bay. They have more belief in the passivity of the young, the colored and the disposed than I do. Let us hope that the country comes to it’s senses before the coming anarchy really takes hold.

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....but my belief is the core change that needs to come from Democrats is a fifth principle should govern their strategy for the next decade...

The fifth principle sounds a bit like a fifth column.

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I've just finished reading this article and it comes with a tail. The body of the article is common sense but it then ends with a seemingly out of nowhere push for Cities to replace national governments. This is a globalist agenda driven from the UN. Recently I posted about a book by Jacques Attali, a prominent eurocrat who was promoting the same thing. I keep coming across this theme from a variety of sources, usually out of context with the piece it comes packaged in.

The article is written to promote this particular concept of state and national government destruction in favour of 'world cities' that would be even easier to manipulate and control by today's oligarchs.

I'll have to check that book out.

But for the sake of playing devil's advocate -

I'm guessing that this local vs federal argument is somewhat one of the central themes of the Tea Party movement in the States? Now, I think that the Tea Party has a lot of misguided solutions and has been somewhat hijacked by the usual ultra libertarian nonsense of abortion, gun rights etc., but on the issue of the problem the US has with a corrupt central government, their hearts are, arguably, roughly in the right place.

So I guess the question arising from this is why stronger local government (City Level) would be more, not less, likely to be corrupted by big money in the same way the federal government has?

And if local government is just as prone to this problem as federal then, well, what is the answer..?!

(I'm not arguing either way necessarily btw, just interested in the central themes)

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I'll have to check that book out.

But for the sake of playing devil's advocate -

I'm guessing that this local vs federal argument is somewhat one of the central themes of the Tea Party movement in the States? Now, I think that the Tea Party has a lot of misguided solutions and has been somewhat hijacked by the usual ultra libertarian nonsense of abortion, gun rights etc., but on the issue of the problem the US has with a corrupt central government, their hearts are, arguably, roughly in the right place.

So I guess the question arising from this is why stronger local government (City Level) would be more, not less, likely to be corrupted by big money in the same way the federal government has?

And if local government is just as prone to this problem as federal then, well, what is the answer..?!

(I'm not arguing either way necessarily btw, just interested in the central themes)

I don't have a view. All I can say is that it is pointless IMO to change anything until we have got rid of the core problems such as: the immense power of corporate concerns of the citizenry, the complete corruption of the political process (today I cannot think of a single politician that hasn't been bought) and the corruption of the UN which I believe is destined to be the main recipient of world political authority (but unfortunately works for Monsanto, Areva and Exxon, not for you and I).

Assuming these were sorted out I can see a number of problems with this 'world cities' initiative:

- Some ideals I can sympathise with such as the end of nationalism are quite clearly (IMO) mixed with objectives that are in no way altruistic. The globalisation of labour and capital for example has served to insanely enrich a small number of VIs while the majority of the world population is (or is about to be) impoverished in the process.

- Whoever is pushing for this is trying to obtain popular consent via propaganda rather than via honest means. And looking at Europe we know that even if they don't obtain consent by these underhand means, they go ahead with their agenda anyway.

- Corruption is just as bad at the local level than it is at national level.

- A smaller organisational unit would entrench the existing dominance of 'markets' and corporations over the democratic process. Some people of influenece hate the democratic process and sometimes for good reasons but I'd like to keep it.

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The principle way blue chip non-industrial corporations make obscene profits is through virtual monopoly. Apple might not appear to be a monopoly, since there are Android phones and PCs in competition. But when you look at Apple's control over their own peripherals, core software, apps and the clever way (or is that corrupt way) they release technology which is apparently satisfactory but is actually incomplete (example: ipads with no USB connection and no Flash player), it is easy to see how they can use their market power to gain even more market power.

Google's method was to INITIALLY release good quality search engines, and having done so, and obliterated the opposition, they then begin deconstructing their search engine into a wholly commercialised, advertising driven system which no longer returns searches as to subject, but as to commercial links. Example: Five years ago a google search on "sewing machines" would have as perhaps the first 100 entries, and many more on following pages, the history and development of automated sewing, articles on sewing machine technology, etc. But now a similar search will return hundreds of first entries ENTIRELY linking to BUYING sewing machines.

On the surface it could be claimed there is little wrong with this, but in the end the domino effect of supressing all competition through apparently providing a balanced service, then replacing it with intrusive abuses of privacy, collusion with despotic regimes, and an obsession with corporate giantism with commensurate abandonment of perceived original intentions, each successive David becomes a Goliath, helped along by fickle and gullible consumers who are complicit with the commercial model they willingly subscribed to, not realising that the heroic challenger to Bill Gates' monopoly now becomes the new evil exploiter.

Maybe Stephen Fry, the enthusiastic Apple fan, who used to spit at the mention of Microsoft, will soon be spitting at any mention of Apple, for Apple are exactly repeating the financial model which gave Microsoft a bad name.

The huge cash surpluses these pseudo creators of wealth generate are distributed to a tiny circle. Very little of these vast profits are ever used to improve the infrastructure of the economies they exist within. Housing, health, education or manufacturing rarely benefit in the long term, and there is emerging evidence that Apple, and no doubt other similar corporations, are involved in slave labour, employee suicides, and exploitation of the kind that was reviled and criticised in the case of appalling employment conditions offered to Asian children and others by the cheap clothing and chav footwear manufacturers.

The only salvation comes with reliance on the guilt-generated Bill Gates's of this world to salve their consciences by effectively taxing (arguably more efficiently than some governments) their customers through diverting their vast accumulated wealth into charitable works in Africa and other third world nations. We need to look at whether that is really a satisfactory way of creating and then distributing wealth.

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This will end either with less centralised wealth or with dead elites.

Or dead protesters I mean ... feral leftie activist rats.

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  • 337 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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