So what's the endgame?

So how do we exit the current economic crisis? We could have a massive war that required the full efforts of all Americans to build a vast war machine capable of arming the world, I suppose, but massive wars in an era of nuclear weapons tend to get rather... radioactive... so forgive me if I don't think that's really a viable option.

Then there's the option of resuming American consumer culture in its full glory. But the problem is, as some commentators have noted, the world is simply running out of resources to support Americans in the lifestyle to which they aspire.

Right now I am seeing two possibilities:

1. Mexico North, where there is a small and insanely wealthy oligarchy that owns everything and everybody else lives in abject poverty eking out a meagre living on whatever crumbs the oligarchs throw out their way, or
2. something a bit more socialist than what a lot of Americans feel comfortable with.

Option #1 is not acceptable for reasons that should become clearer as I continue here. The basic problem, as I've pointed out before, is that idle hands are the Devil's workshop. The purpose of an economy is a) to keep people employed doing something other than plotting trouble (i.e., you want to maintain as close to full employment as is practical in an economy that retains labor mobility), b) optimize the production and distribution of goods within that economy, and c) optimize investment into future innovations that can make life for the people within that economy easier. The ultimate goal of any economic system is not the blind worship of Communism or socialism or capitalism or whatever, but to get the best life for the most people. In other words, the outcome -- a good life for most people -- is what's important here, not the ideology being pushed by various groups of religious ideologues.

Unfortunately, (b) and (c) are to a certain extent incompatible with (a). Communist systems have perpetual labor shortages (and thus perpetual full employment) because they are so inefficient at (b) and (c), but we've rendered a large portion of our population redundant by being so good at (b) and (c), meaning that they've spent the past thirty years selling real estate to one another when not selling each other burger and fries or pretending that they're day traders. It takes less longshoremen to operate the Port of Oakland today (or let's say last year, when the port was operating at full capacity) than it took forty years ago when the Port handled far less tonnage of cargo, because most of the cargo today is containerized and basically gets plucked off the ship by a crane, plopped down on a railroad flatcar, and hauled off to its final destination with very little human intervention.

So while our system is pretty good at (b) and (c), we have to do something about (a). As I've pointed out elsewhere, we can't simply ask our surplused population to starve to death for our pleasure. People don't willingly starve to death. They find a scapegoat for their problems and go kill him. And as one of those potential scapegoats (especially after my recent promotion and pay hike), I value my neck too much. And putting them on the dole, as some countries do, simply isn't a viable option -- they're idle hands, they're not contributing *anything* not even sandwich artistry or real estate salesmanship in that case, and it merely papers over the problem rather than putting them to work doing something at least somewhat useful.

So in the end, I believe we're going to have to introduce some deliberate "socialistic" inefficiencies into our economy to keep everybody employed. Which is going to give our oligarchs a real cardiac problem, and the stupid ones will fight against it tooth and nail, trying to turn the USA into Mexico North. But there simply isn't much alternative if we want to prevent a bloody revolution by the people that our modern high-tech economy has rendered useless. I believe that we're going to end up with a lower overall standard of living because of this and because of the higher taxes needed to pay for it all, but the good news is that we might end up more like Europe -- more irrelevant to the world, but where people are happier with less "stuff" because their "socialist" governments give them more work-place protections and more paid vacation time.

So what are these "socialist" things that might be done? I'm still thinking on that. In the meantime, go study the German economy and try to figure out how they manage to give their workers six weeks of paid vacation per year yet still be quite competitive in the world market...

-- Badtux the Sombre Economics Penguin