Imagining the crisis

Willem Buiter has an article (The fiscal black hole in the US) in which he lays out a scenario for political systemic failure at the federal level:

Exaggerating slightly, the Democrats will veto any future public spending cuts and the Republicans will veto any future tax increases.

As goes California, so goes the nation?  Let’s see what California does.

Joseph Stiglitz has a great article (Wall Street’s Toxic Message) in which he says that the emerging nations of the world might think twice about following “the American model” for their countries.  (Duh.)  But can high productivity and “optimal levels of inequality” be achieved in societies with heterogeneous populations?  We seem to have done it once in America in the postwar period—so why not?  (See previous post.)

Given their prescience in seeing what was coming from the mid-1990s, Straus and Howe’s outline of factors likely to be involved in the “crisis at the end of the saeculum” merits our attention as we march inexorably toward some sort of major social dislocation:

• Economic distress, with public debt in default, entitlement trust funds in bankruptcy, mounting poverty and unemployment, trade wars, collapsing financial markets, and hyperinflation (or deflation)
• Social distress, with violence fueled by class, race, nativism, or religion and abetted by armed gangs, underground militias, and mercenaries hired by walled communities
• Cultural distress, with the media plunging into a dizzy decay, and a decency backlash in favor of state censorship
• Technological distress, with cryptoanarchy, high-tech oligarchy, and biogenetic chaos
• Political distress, with institutional collapse, open tax revolts, one-party hegemony, major constitutional change, secessionist authoritarianism, and altered national borders
• Military distress, with war against terrorists or foreign regimes equipped with weapons of mass destruction

This may sound like a recipe list of ingredients for a Tom Clancy thriller.  But we’re getting to the point where reality is becoming much more interesting than fiction.  Yet the Aristotelian imperative to imagine the apocalypse remains.

Of course the unfolding of the crisis will take years to play out.  The end of the saeculum isn’t scheduled until about 2020.

But we can watch California in the meanwhile.