History On Vacation

What experience and history teach is this — that people and governments never have learned anything from history, or acted on principles deduced from it …

— Hegel

We solved Hegel’s pesky problem in 1998 when Francis Fukuyama posited the prospect of universal liberal democracy, along with it, the end of history:

What we may be witnessing in not just the end of the Cold War, or the passing of a particular period of post-war history, but the end of history as such: that is, the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government.

This is not to say that there will no longer be events to fill the pages of Foreign Affairs yearly summaries of international relations, for the victory of liberalism has occurred primarily in the realm of ideas or consciousness and is as yet incomplete in the real or material world. But there are powerful reasons for believing that it is the ideal that will govern the material world in the long run …

… because that is the futurist narrative in its entirety: to consign whatever it deems obsolete/old/unfashionable including history itself, to the dustbin of history!

By 1998, the narrative made some sort of sense: the outré Soviet Union had crumbled under its own weight even as the Chinese export ‘miracle’ was gathering force; in Europe the ground was being prepared for the euro. The West had triumphed over what it had painted as socialist tyranny — the absence of consumer choices. Gone were the, gloomy, paranoid Stalinist dictators in Russia and across Eastern Europe, swept aside by cheap color televisions and counterfeit Levis, menthol cigarettes and Ronald Reagan. The nuclear boogeyman had been seemingly stuffed back into a bottle then redeemed for a 10¢ ‘peace dividend’. Oil prices were low and American confidence in endless Ponzi wealth was high. Technologies were appearing out of what seemed to be nowhere offering solutions to problems we did not know existed: robots (to replace workers), Internet (to replace more workers) and genetic engineering (to replace the remaining workers). Certainly all of the above would bury history forever … right?

The West was to become a Keynesian paradise of endless abundance and leisure, a suburbanite fairyland of Negro-free gated ‘communities’, of pastel McMansions and luxury SUVs; of gourmet meals crafted from GMO ingredients washed down with magnums of Veuve Clicquot and narcissism. We would play croquet as eternal children under the glorious sunshine of prosperity while ‘disutility’ (labor) would be performed ‘somewhere else’ (Mexico). The waste and destruction associated with industrialization would vanish because we would all be rich enough to hire robots to clean up after us.

There were a few clouds: the tail-end of trivial conflicts in Central America; the ‘War on Drugs’, the Asian finance crisis in 1997 and the collapse of the Russian economy the following year. Long Term Capital Management followed the Russian economy into the toilet in early 1998 necessitating the first ‘rescue us or else’ mega-bailout of Wall Street. These events were diversionary theater: people who could afford it lost some money, bosses who badly needed new jobs lost theirs. All in all the entire reconfiguration process turned out to be remarkably painless.

Looking back, the notion of final geopolitical resolution was naively optimistic, a quaint artifact of a particular zeitgeist, like Beatle Boots or flip cellphones. What was really happening was the ending of the ending: ancient monsters were not vanquished only hibernating so as to take new forms. Now, when we need it most and want it least, history has stormed out of its coffin like a vengeful, blood-hungry vampire, reminding us all why we wanted to be rid of it in the first place.

Enter the new millennium and (quasi-)liberal democracy and finance capitalism are being shellacked and nobody can figure out why. Extreme events are tripping over each other like – add your favorite cliché here – cheese and macaroni. Radicals are ascendant as the status quo proves unable to prevent the consumption utopia from slipping out of reach. Strategies that once bore fruit are revealed as nonsense; military ‘stimulus’, central bank witch doctoring, austerity, institutionalized discrimination, trivial interest rate- and foreign exchange manipulation. The outcome is credit transfers from those with less to those with everything … and fury. With chaos on one side, dithering on the other, the public turns toward autocrats while societies — particularly across the arc of northern- and central Africa to south Asia — blow apart at the seams, writhing in agony, frantic to escape the vice-like grip of ‘less’ and unmet expectations.

This is the terror that dares not speak its name; not to be engulfed by refugees or shot by militants but forced by desperate necessity to become one! Rage is fear by another name.

Events rise up like rogue waves, smash with shocking force … and then vanish. In the space of a month there is the #Brexit vote — against the backdrop of faltering credit — US police shootings, also people shot by police; terrorist truckers, airport attackers, car bombings in city markets, nightclub massacres and more nightclub massacres. There are the coups that aren’t and the rounding up the usual suspects … the droughts and floods, grinding wars, food shortages and millions of desperate refugees, all lingering on Twitter for an instant then … gone. Staring us in the face is the breakup of the Eurozone and the end of the euro, currency- and economic failure in Venezuela and Brazil, environmental degradation and habitat collapse, the deflation of property/asset bubbles worldwide … unraveling is no longer a matter of ‘if’ but ‘how bad’.

Mazama-Turkey 071816

Figure 1: … the status quo proves unable … Mazama Science (click on for big). Turkey has almost nothing in the way of domestic oil resources yet it burns through three-quarters of a million barrels per day, paid for with borrowed euros and dollars. Turkey earns some hard currency from tourists as well as a modest margin from pipeline fees. These last are far from enough: without loans the economy collapses in a hurry, with loans the collapse takes a little longer. The Turks could save themselves by way of stringent conservation but choose instead to wager the rent on a New Ottoman Caliph, betting that utopia can be rationed away from domestic enemies or stolen from its (even more bankrupt) neighbors.


Figure 2: Turkish lira relative to the US dollar, chart by XE (click for big). Depreciation of lira is the means by which Turks are forced to conserve against their will. With the passage of time, more liras are needed to obtain the dollars and euros needed to pay for imports. Economic theory suggests that currency ‘values’ run in cycles and that the lira will eventually regain its footing. History suggests the lira is a disposable relic and that markets have not yet ‘caught down’ with reality. Turkey’s currency represents little other than empty gestures and voracious demand. When history was on vacation, symbols and demand were assets to be leveraged; in the new Age of Less these things are liabilities. As the Turkish inter-temporal balance sheet breaks down so does the currency.

Tyrants like Trump and Erdogan (and Clinton) are products of industrial resource capitalism no different from McMansions and automobiles, they are also fetishes. Unlike vicarious pleasure-pussy Taylor Swift, tyrants symbolize power, ruthlessness and control … and increasing surpluses. Their promise to harvest gains by whatever means is the substance of their public appeal. The relationship between tyrant and followers is symbiotic and self-reinforcing. Adherents give form and color to the tyrant’s outline while the tyrant suspends- or outruns institutional restraints, providing the necessary sanction for adherents to act out their own impulses, destructive or otherwise.

The emergence of tyrants like Trump and Erdogan (and Clintons) is suggestive: that technology cannot produce the consumer outcomes we are desperate to preserve. If technology could save us autocrats would not be necessary. They are reductive rather than creative, their first- and last resort is coercion as when governments dragoon pensioners rather than machines to rescue finance.

We are in the middle of a crisis that has been ongoing for over five years: the managers demand the economic system be bailed out. Of whom do they make demands? Entrepreneurs? Innovators? The finest minds of a generation?

A: Pensioners.

The economies must become more productive which means increasing the efficiency of output. Consequently, pensioners are called upon to sacrifice their retirements in the UK, Europe, in the US … in cities and states: pensions everywhere are under attack.

Why not more machines? If machines are productive, wouldn’t deploying more machines solve the economic problems around the world rather than deploying our grandparents? Technology is supposed to save us but the raiding of pensions insists otherwise: the scraping of the bottom of the barrel in real time. It’s an admission that technology doesn’t work, from the people who are in a position to know.

What happens after the retirements are pillaged? Who knows? Nobody has a plan.

The world’s Trumps and Erdogans (and Hitlers) are First Law change agents and as such are integral/inevitable components of national- or supranational surplus aggregation … one of the costs of our ‘success’. History shows us that empires at the point of decline choose rotten emperors and incompetent caliphs. This is analogous to Hyman Minsky’s ‘Financial Instability Hypothesis’ that suggests periods of investment success are by themselves destabilizing w/ speculative malinvestments leading to crashes. Socio-political ‘Minsky Moments’ are products of long periods of dominion by a particular clique or political enterprise which becomes fertile ground for corruption and self-dealing, also malinvestments in perverse reasoning.

Because industrialization has produced outsized surpluses, the rottenness of caliphs (cost) is increased in proportion. Tyrants’ failures are more destructive; so are the failures of well-intentioned elected caliphs. The First Law outcome is invariably surplus reduction, nothing can stop it; conventional policies only makes things worse. Resource depletion is both unpleasant and permanent, the only strategy is to carefully navigate decline; to surf the smashing waves rather than be swept away by them. Depletion cannot be defeated in battle or outmaneuvered, it cannot be negotiated away or paid off. Less can only be adjusted to: unwillingness to adjust leads to exhaustion and ruin. Sadly, no leader, not one … no economist, no central banker or financier proposes to voluntarily make do with less, to embrace the ancient virtues of restraint, patience and modesty; to corral our competitive greed and tread lightly upon our life-support system …

Appearance is higher than mere Being −− a richer category because it holds in combination the two elements of reflection−into−self and reflection−into−other: whereas Being (or immediacy) is still mere relationlessness, and apparently rests upon itself alone.

— Hegel

“It is only shallow people who do not judge by appearances. The true mystery of the world is the visible, not the invisible….”

— Oscar Wilde

In the twilight of modernity we have become intoxicated with the idea of power, to have our way at the expense of others who are powerless to do anything to stop us. The idea (appearance) has more potency than does the thing itself, as the exercise of power carries with it consequences.

American Exceptionalism boils down to a kind of property right; to own human and mechanical slaves, to stake claims against the entirety of nature; the plants and animals and water even the rocks under our feet … to possess whatever is in sight like a chair or pair of pants … and with the same degree of accountability/carelessness.

There is our pitiless assault on everything, living and non-living, without which there is no ‘our’. The frenzy is to burn the world before someone else beats us to it, to render and distill and catalyze everything into money. Our precious tycoons will burn that as well … we have gone insane.

The fetishes have us in their thrall: the rifle and machine gun, the tank and the airplane and the hydrogen bomb … also the strip mine, the excavator, the chain saw and the automobile. Also the lies on television.

If we possessed the wits we would be mortified, would beg forgiveness and search for wisdom … As inhabitants of Sodom and Gomorrah we are simply cursed to live out the consequences of our own madness.