Links 3/21

A couple of articles from the rich troves put forth by www.nakedcapitalism.com and www.ritholtz.com that I’d like to comment on.

Via:  Too Smart to Fail by Thomas Frank

Notes on an Age of Folly

The “sound” banker, alas! is not one who sees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows so that no one can really blame him.
    –John Maynard Keynes

In the twelve hapless years of the present millennium, we have looked on as three great bubbles of consensus vanity have inflated and burst, each with consequences more dire than the last.

First there was the “New Economy,” a millennial fever dream predicated on the twin ideas of a people’s stock market and an eternal silicon prosperity; it collapsed eventually under the weight of its own fatuousness.

Second was the war in Iraq, an endeavor whose launch depended for its success on the turpitude of virtually every class of elite in Washington, particularly the tough-minded men of the media; an enterprise that destroyed the country it aimed to save and that helped to bankrupt our nation as well.

And then, Wall Street blew up the global economy. Empowered by bank deregulation and regulatory capture, Wall Street enlisted those tough-minded men of the media again to sell the world on the idea that financial innovations were making the global economy more stable by the minute. Central banks puffed an asset bubble like the world had never seen before, even if every journalist worth his byline was obliged to deny its existence until it was too late. […]

The thesis is basically that the elites stick together, trash the economy for short-term personal profit (that may be long-term in terms of their own financial futures).  You got to walk the walk, and talk the talk.  You couldn’t say the Iraq was was stupid and budget-busting until a quorum of your peers said so.

This resonates with me personally because I have a few friends on the East Coast, where I’m not, who are part of the Establishment, and it always amazes me how unaware they are of being in the bubble.  Of course, to them, with my free-thinking ways, I’m clearly just an ignorant country bumpkin, not suitable for showing off to their friends.

Via:  No-Growth Capitalism’s post-crash manifesto

“It’s about revolution,” warns Sir Richard Branson, founder and chairman of Virgin Group, in his new book “Screw Business as Usual,” a declaration of war against today’s out-of-control capitalism.

Branson’s at war, on the attack. His command center is the Carbon War Room where message becomes action, rallying an army of entrepreneurs into what I see becoming a game-changing New No-Growth Capitalism.

“My message is a simple one: business as usual isn’t working … business as usual is wrecking this planet … Resources are being used up; the air, the sea, the land are all heavily polluted ... The poor are getting poorer … Many are dying of starvation or because they can’t afford a dollar a day for lifesaving medicine.”

Sounds like a profile of Ike, Patton and MacArthur, generals who successfully waged a near-impossible war. The world needs more like them to wage this war, “turn capitalism upside down-to shift our values from an exclusive focus on profit to also caring for people, communities and the planet.”

Yes, capitalism is wrecking the planet … is using up resources … creating poverty, starvation, disease … epidemics, inequality, climate failure … and yes, warfare … remember the Pentagon prediction that by 2020, the planet’s “carrying capacity” will be so drastically compromised that they’re already planning military defense systems for the coming “all-out wars over food, water, and energy supplies.” Yes, by 2020.

Capitalists are short-term thinkers, don’t care for people, planet

The Carbon War Room is the command center for the counteroffensive: But they better act fast. As economist Bill McKibben wrote in Foreign Policy, it “might already be too late.” Former Greenpeace CEO Paul Gilding went further in “The Great Disruption”: “It’s time to stop worrying about climate change … brace for impact.”

Why? Population growth is out of control, headed for 10 billion by 2050, predicts the United Nations. And Jeremy Grantham, whose firm manages $100 billion, warns the planet can’t feed 10 billion. Still, global leaders turn a blind’s eye to the consequences, ignore this hot button issue to our peril.

Yes, Branson’s heard all these warnings. But his optimism is as infectious as his smile. He senses a new global dawn sweeping the world, a “vibrant and definite sea change from the way business was always done, when financial profit was a driving force.”

He hears more and more people openly shouting “screw business as usual.” More accurately: Screw capitalism. It is “time to start caring for people, communities and the planet,” caring for someone other than just their shareholders and their insiders. Now that shift would indeed be a historic game-changer.

How to survive in a world without Perpetual Growth economics?

In planning ahead, we do need Branson’s sea change, a totally new way of thinking and a dramatically new economic system that focuses on three goals for the next generation outlined in our earlier “Save the World” manifesto, goals that parallel Branson’s. Goals that today’s capitalists are certain to fight, just as they’ve been fighting to kill all reform efforts since the 2008 crash.

But after the coming global economic collapse these essential goals will define the New No-Growth Capitalism, if the planet is to survive:

• Does it support the prosperity of all economic classes worldwide?

• Will it help create a sustainable planet for the future generations, in 2050 and beyond?

• Will our leaders encourage stabilization of the world’s population?

Classical economics is fatally flawed, driven by Perpetual Growth mind-set. We will self-destruct unless we “turn capitalism upside down … shift our values.” […]

Now the manifesto makes some common thought errors, like saying that the planet cannot feed the existing population.  The problem is the distribution, gentlemen.  However, at least they are acknowledging that.

What makes this interesting is that it recognizes that we are getting closer by the day to the “stop” event, the next collapse, when the most pressing question will be “Am I my brother’s [and sister’s] keeper?”

These leaders are saying, “Yes, I am,” and urging us to figure out how to equitably take care of our species before we self-destruct…. And I would judge a return to animal barbarism and war as the solution to every problem as a form of self-destruction.