Game Over

For many years I have been formulating my view of where American society is headed in the next fifty or so years.

In a nutshell, I see a substantial decline in the American standard of living. This is based on the observation that: 1) we cannot keep up our pace of material acquisitions when it is funded by debt; 2) it is a global economy now and the US is no longer the dominant economy in the world to the exclusion of others; 3) our legacy costs (wage and benefit levels, cost structure) in relationship to the rest of the world make us uncompetitive (see GM as a micro-example); 4) the resources of the world are finite and dwindling while population is continually expanding, which will lead to shortages of critical materials and exorbitant costs as demand vastly exceeds supply; and 5) humanity is inherently selfish and cannot work cooperatively on a large scale to resolve these issues and live peacefully on a shared and equal basis. This may seem pessimistic, but it is in line with the biblical view of the last days.

I see an unavoidable simplification of life that will be enforced upon us absent the US enforcing (militarily) its demands on the rest of the world. Families will need to go back to multigenerational households. Widespread unemployment, high taxation, and high-cost basic necessities will cause this. Unemployment will occur (even as I type this) as we buy less of the meaningless stuff we've been buying (for heaven sake, we have four TVs in our house!), are forced to eat out less, etc. as our discretionary income shrinks.

I could go on but don't see the need to since I found a book that generally lays out my vision of the future far better than I can. The book is Game Over: How You prosper in a Shattered Economy by Stephen Leeb, PhD. It is a simple read as it is written more in summary form without a lot of supporting material, but what is there is compelling. It is written, admittedly, in an alarming fashion because the author believes, as do I, that an alarm needs to be rung. If not, game over for our society. It is not a perfect book - he dismisses conservation efforts too easily and doesn't give enough consideration to the military actions that will occur when the shortages occur and civilization rebels/panics. But it fairly captures my concerns. I'm not sure his recommedations on how to prosper are practical for most people.

Another economic book I recommend every one read is the Communist Manifesto by Karl Marx. We read it in college (community college, not the four-year institution where I received by business degree). Most people don't realize it is, at its core, an economic document. The gist is that societies over time will slowly polarize into a few who control the majority of money, resources and power and the many who do not. The few will exploit and oppress the many to the benefit of the few until such time as the many can't take it any more and rise up and physically overthrow the few and disburse the spoils to the many, at which time the cycle begins to repeat itself. Does this story/cycle sound familiar BOM readers? Does this sound like the direction of American society?

In the US, I see the role of government being to manage this revision in the standard of living to avoid outright revolt and chaos that will result when large-scale urban unemployment occurs. People will not be able to feed themselves and we do not any longer have the ability to sustain ourselves on our own. This will lead to massive tax increases on those who have the means. The dole will be the reality. The illegal drug business will thrive as a means for people to be employed (see Mexico, Columbia, etc. as examples). It can happen here.

We have leaders who have forewarned and are forewarning us of these events. My best advice is to be knowledgeable of long-term trends that will proceed beyond my lifetime. Situate yourselves to deal with them. Have skills that are useful by others. Stay out of debt. Live frugally and within your means. Be able to sustain yourself when others won't be able to. Maintain relationships with fmaily and friends that you can ally yourself with in times of need. If not, game over.

I reiterate that this will not occur overnight but over an extended period of time, although that time period may be accelerating. The recent collapse of our banking system and the forcing of the government to prop it up via unprecedent national borrowings means we have mortgaged our future. Eastern Europe is on the verge of economic ruin which will take down the Western European banks which have financed Eastern's growth since the end of the cold war in the 1980's. China and India have emerged from being underdeveloped nations on the back of their primary resource - 2 billion low-wage citizens who have provided the labor for the rest of the developed world's stuff. Those people have tasted the better life that economic properity brings and will be reluctant to go back. Already unemployment is rising rapidly in China as the US stops buying TVs, DVDs, etc. In the past year, there have been over 20,000 protest in China over the loss of jobs. That would have been unheard of under previous totalitarian regimes. if these people become violent in their protest, look for China to quickly revert to military control of its masses, the only way a government can survive when it is trying to manage a billion poor people.

Lastly, take heart in the eternal nature of things and our bond to each other.

Comments?