Whatever ultimately happens with Europe’s debt crisis, or Bernanke’s QEs, or China’s housing bubble, it seems pretty clear the world economy is pretty much in shambles. The diagnostics vary but in general everyone agrees there is too much debt, huge trade imbalances and lots of unemployment without end on sight. Today all branches of the Cathedral are arguing how to tinker with the accounting to save the day and stave off another crisis, but in general it is agreed that deep structural changes are unavoidable.
So what is it then?
The HBD preferred hypothesis for the economic decline of western nations is, duh, HBD. i.e. You bring hordes of third worlders to our countries, our countries become third worldish. Which is to say a huge fall of human capital, with all the evils that diversity brings: conflict, segregation, unsolidarity, welfare scams, general state corruption, etc.
But of course the official explanation can’t touch that. We are all the same, right? So the real problem is… free trade! i.e. we can’t really compete with 2 billion Chindians with and their sweatshops. Which is of course a good point. I know China well and there’s no way in hell a western country would tolerate that standard of living. S.A.M Adshead tells in his awesome history book how the West from the late Middle Ages already showed a trend to luxury, while Chinese stoic populace just used any extra income to have more kids to be exploited.
The other, more recent meme is that western decline and unemployment problem is caused by machinery. Most of the technical advances these days are concentrated in software, particularly enterprise software. Huge areas of clerical work have become obsolete, and its getting better (worse). Factory robotics is also growing well, too much that even Foxconn Taiwanese boss dreams of getting rid of its chinese serfs.
All this instantly triggers the old Luddite passions of how machinery dehumanizes people and threatens good old workers’ livelihoods. Maybe I am too young, growing up in the postproletarian era, but I don’t have any warm feelings for the working class. Besides the lost sense of shared culture between leftist-brainwashed proles and us traditionalists, Democracy has given them a huge sense of entitlement (we all have 1 vote so we are all equal value), and any functional business works out of the ego of the managers. As Steve Jobs’s biography shows, a huge part of a successful venture is sheer bullying of your employees. Well you can’t do much of that anymore. As a business owner I find myself constantly thinking about software solutions to reduce my workforce. Automation is the only defence against communism.
But of course what might save my business and sanity won’t save the whole economy. We basically have two solutions to our problems, Butlerian Jihad (i.e. destroy computers) or Autarky, that is to say Protectionism. As a foreign trained linguist and trader the idea of trade barriers scares me, alas I don’t see the solution. As much as the Cathedral likes the whole Invite the world, in hock to the world we just can’t pay for it anymore. The money is not there. For better or worse we must use the clay we have and make some bricks home. I see trade blocks coming back with a passion. That’s what the EU was all about. Let’s see how America’s TPP turns out.