Let's assume the best outcome of the election — Obama is elected president. Then what?
Clearly the economy will be his top priority. But what that means to all the 'traditional' thinkers in Washington and on Obama's team is getting the economy growing again. And by my reckoning that is actually not a good thing for the world and the long run. As I've pointed out it is the growth economy that is killing us even while we think it is our salvation. Mankind has already exceeded its realistic presence on this planet. It was only possible because of our discovery of easily obtained energy available to do useful work — the fossil fuels. We have expanded our economic activity without any foresight or planning. We have thus expanded our numbers without regard. We have collectively scoffed at Malthus and ignored Adam Smith's most cogent message about the moral aspects of economics, something Alan Greenspan recently realized to his surprise. And here we sit, sensing that we are deeply in trouble, indeed starting to expect the worst since none of our economic geniuses can tell us where this financial melt-down is going. And all anyone can think of is getting the economy growing again.
If my hypothesis about the flow of energy being diminished such that we will actually never recover in any meaningful way is correct, then all of the struggles that will ensue to get things growing like the old days will be wasted effort, waste precious energy, and only result in making things worse, not better.
In point of fact this economic slump could be an opportunity for humanity to get its priorities straight. And the USA needs to do the most getting straight. If Obama is honest and capable of grasping what is really going on in the economy he will tell the American people that it is time to grow up, stop thinking you are entitled to an on-going party of consumption, and start directing resources to what needs to be done. This isn't going to be painless. People will be strapped over the next several decades. But it is the price we pay for thinking we could have our cake and eat it too. We have been ignorant and definitely not wise to have squandered our wealth on playthings and luxuries and fast foods. We have been delusional to believe that we should be able to eat tomatoes year round by shipping them thousands of miles. We were out and out selfish to think that we had every right to become fabulously wealthy when people in other nations were starving. Obama has to tell Americans that the party is over. And he has to lead the American people to a new understanding of what it means to live within your means.
To be sure he will not be particularly popular. The vast majority of Americans have grown up believing in American exceptionalism and the so-called American dream. We don't give up delusions easily. But trying to 'fix' things with band aids, as is currently being done by Paulson, Bernanke and the Congress, will only end up deepening the depression. Obama must turn to the people who have actually understood these problems for a while now. The need right now is for the federal government to fund research and development of the energy infrastructure (without clean coal thank you) and put a lot into conservation and reduction of discretionary spending. The president will need to reorient people's thinking from being consumers to being savers. He should begin to hammer away at the message that we have to be frugal from here on out if we are going to leave anything worthwhile to our children.
He should also not be afraid to tell the truth about how the future will be paid for. The simple fact is that we the people will have to start ponying up to fund the salvage operation to come. He will need to make sure the government spends wisely on a variety of energy projects but he should make it clear to the American citizens that their attitudes about taxes have been childish and selfish. No one wants to pay to line someone else's pocket, or see money wasted on needless defense spending (BTW: the need for defense spending is likely to go down simply because no one else will be able to pay for mounting a serious threat in the not-too-distant future). But given extraordinary efforts to budget wisely and oversee spending carefully, we citizens had better begin to be willing to pay our fair share.
And this will mean paying according to ability. Sorry rich folk. We are all in this lifeboat together. No one is going to be able to pull rank or have special privileges. Not unless they want to risk a real class war — one with bloody consequences. The average person is really angry now. They have played by the rules (foisted on them by the rich guys) and had expected to taste a little of that wealth themselves. Now they are beginning to realize that it was all a clever scheme to keep them down and funnel wealth to the already wealthy. The bail-out/rescue, or whatever the bankers and Wall Streeters are calling it, is an attempt to keep the rich guys rich and keep the plebes from rioting. But it won't work. Jobs are already being lost and it will only get worse.
So the formula is pretty simple in one sense. Tax the wealthy (I prefer a progressive sales tax with a carbon and luxury surcharge) to fund jobs on infrastructure building. The middle class, what is left of them, should also expect to pay for much of this work. Whatever money is left in the system after the credit bubble completely deflates better represents energy available to do useful work. It needs to be put to doing truly useful work which means increasing our renewable inputs and diminishing our wastage. Put people to work retrofitting buildings with better insulation. Put people to work rebuilding soils and organic farming. Put people to work building solar thermal electric generation and the smart grid. If people lose their jobs building TV sets, put them to work building computer controls for the grid. Something akin to the World War II industry conversion effort is what is needed. Get people out of selling insurance and into collecting data on human welfare. Train people for nursing and medical adjunct jobs.
But in another sense, of course, it is not so simple. The fundamental problem is one of educating people about reality. They will get it when the whole society collapses into chaos, but that will be too late. Yet without some major catastrophic event (and it appears the crash of the stock market won't do it) people just don't want to listen. They won't take action and close the door until after the horse is out of the barn. So Obama's job is going to be really, really hard. I don't envy him.
If I have to guess, though, it would be that Obama won't do these things as soon as he takes office. He still believes in the American dream himself. My hope is that he is a fast learner and quick to see the writing on the wall when things he and his conventional thinking people try just don't do the job. If we are lucky, he will soon see that the conventional wisdom is really conventional foolishness and he will eventually start thinking creatively. I hope he will be able to see that there are people who have thought this thing through and turn to them for advice (like the advisory board folk I mentioned in the last blog).
I haven't yet seen any evidence of a wise Obama. He is plenty smart, no argument there. But the very fact that he brashly entered the primaries with so little national-level experience doesn't suggest a great deal of wisdom. Of course, being extra sapient and being wise don't always correlate at his age. He may have the capacity to become wise if his brain is wired the right way (sapient). But without the life experience that produces the tacit knowledge needed for real wisdom, it remains to be seen if his judgment really is superior. I wonder, do we have time for him to mature?
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