Eastern tiger swallowtail (Papilio glaucus), female, dark color form
Ice Age National Scientific Reserve Unit, Wisconsin, USA
8/15/2019 _F2A0130aaa3 2020 Photos\Old Postable
This from Umair Haque
Title: “The Three Trends That’ll Define the Extinction Economy, AKA Our Present And Future”
“"Why Is It So Painful Out There? Welcome to the Extinction Economy" With surplus gone we will experience: ever decreasing real incomes and ever increasing inflation until the economy finally chokes itself to death and society collapses
Full text of Umair's article:
"See that chart above? That’s the big picture. It’s economic growth over time. See it slowing? And that was before Covid hit. See it trending down to…zero? Which is about where our forecasts for growth this decade…are…now? Gulp. We need to talk.
I stepped off the plane and practically felt the pain. We’d arrived back in the States, away since the autumn. And after dropping things off at the house, we headed to the small town cafe where I do some…economics. I call it the Small Town America Cheeseburger Index, and it’s the best gauge of economic pain I know. When I was growing? Now, it’s a good burger. Seven or eight bucks. Then, over the years, it rose to ten. Fair enough. By this bout of inflation? $15. And now? It’s almost $20.
That’s a lot of money for a cheeseburger. Add a shake and fries, and you’re looking at north of $30. For a random lunch?
Welcome to the Painconomy. This? This is just the shock front. Of the Extinction Economy. I’m going to explain, it’s not going to be pretty, but at least you’re going to know the truth, in a far more sophisticated way than you’ll hear Jim Cramer tell you about, God Bless his manic soul, and that way, maybe you can prepare.
Nobody can afford these prices, except billionaires, and there’s a very simple way that I know that, and you should too. Feeling the pain? Financially? Worse, feeling guilty and ashamed about it? Don’t. We don’t talk about it nearly enough, but you’re not the only one. Everyone is, even if there’s a code of silence, of keep-mum-and-carry-on, about times as grim as these economically. Everybody’s feeling it. Want to know how I know?
The economy’s only real growth industry at this point — sadLOL — is “buy now, pay later.” It’s such a growth industry in fact that the economy’s best performing and wisest company, perhaps, Apple (don’t flame me, this isn’t an Apple fanboy post, just an observation) is getting into the business. Why? Because nobody can make ends meet anymore, and so a growing number of people are using “buy now, pay later” for…basics…essentials…groceries…gas…utilities. That is not good. It tells us that a shockwave is racing through the economy.
People are getting poorer, fast. That’s not my opinion. It’s not even an inference, like I’ve made it sound above. It’s a fact, an empirical statistical observation. Real incomes are falling, and they’re falling fast. We’re experiencing one of the greatest shocks in modern economic history, and it’s going to be the greatest, and I’m about to explain.
So, corporations are adjusting — or trying to. One way is buy now, pay later. I’ll come back to that. Another way is the Feeconomy. You know what else is shocking about arriving back in America? The…LOL…dirty, rotten, scam-arsed…”fees.” Later that night, we tried ordering, I don’t know, a pizza…Chinese food…doesn’t matter. The “fees” more than doubled the price of the actual food. Fair? Or scam? We’ll come back to that, too.
First: when are incomes going to rise again? The answer to that question is, take a deep breath, clutch your stomach, because I’m going to tell you the unvarnished economic truth, and it’s going to hurt.
Never. At least not until we make some sweeping changes which are nowhere, really, on the horizon, and build economies fit for this century, not a Dickensian novel set in Elon Musk’s personal Texas town.
Why aren’t incomes going to rise…ever…again…or at least until we reinvent the economy so it can deal with the great Existential Threats of climate change and mass extinction and other forms of civilizational risk? I’m going to try to tell you, as clearly as I can.
Now. It makes a lot of sense for Apple to get into the buy now, pay later business. At this point? Apple’s effectively a…giant cash pile…a bank by any other name…the world’s most secure one. See what just happened to actual banks? Think about it. Here I am, probably one of the most intensive tech users around. I literally break a computer a year, because I use it so much — I write a ton, I make music on it, make videos, etcetera. Now, amazingly, I can do all that on a single, tiny MacBook Air. It’s replaced those giant hulking Mac Pros for something as complex as making music, which uses tons and tons of power. I can sit there and just crush the CPU and it doesn’t break a sweat. Remarkable.
For Apple, and for me. Now there’s a thing called “surplus.” Remember, the only reason I have to buy a new computer every year is that I literally — and this is funny — break the damned thing because I use it so much. Usually, it’s because I type furiously as I write these posts, the keyboard gets destroyed, and I just trade it in. We’re both better off, though, me and Apple. My productivity soars, and Apple gets a few hundred bucks from me — remember, I’m doing all this on a MacBook Air, which is how far Apple’s Silicon has come.
Surplus. It’s the reason incomes rise. Have ever risen. No surplus, no rising incomes, no explosion in living standards. Think back. Way back. To the dawn of civilization. What happened? The discovery slash invention of agriculture. Suddenly, surplus. Some people could farm, producing food in an organized way, and that freed up others to…begin the project we now regard as civilization. Science, medicine, technology, finance — all these things we take for granted as a consequence of that surplus. It allowed “specialization,” as we economists say, and specialization lifts living standards and incomes, because I can devote my life to making not just me, but you and everyone else better off, too. Doesn’t matter how, really — I create a vaccine, write a novel, just teach your kids, etcetera.
But it all goes back to surplus. So let me say it again, the rule. No surplus, no rising living standards, no rising incomes. Then we’re just fighting over the usually dwindling, crumbling slices of a shrinking pie — and life, society, human interaction, becomes a thing devoted to, centered on, made of, conflict. Not anything better. Not knowledge, enlightenment, tolerance, cooperation, wisdom, creativity, truth, justice, freedom, democracy. Just…conflict, in all its guises.
Hate, brutality, ignorance, spite, scapegoating, superstition, enmity, tribalism…war. See all those spreading around the world again? Yeah. In spades. That should be a clue. Something is going very, very wrong here. Way, way deep down at the heart of our project of civilization itself. This great virtuous circle that has spun for so long — even if it’s jerked and needed to be repaired every now and then — surplus and rising income, specialization and progress, virtue and peace, is visibly breaking down.
Again, not my opinion — fact, from indicators of democracy backsliding, to Donald Trump shouting, right alongside his jailhouse “choir,” that he’d like to incinerate American democracy, to a global refugee crisis, to a bloody war in Europe without end. You can see this virtuous circle, which has spun for a very, very long time now, breaking down in serious and severe ways.
Why is that?
Well, let’s go back to the idea of surplus. What do you see that’s different about the world today? We don’t have much of a surplus anymore. In the most elemental ways. We are running out of the basics. Again, visibly. Remarkably, shudder-inducingly fast. We’re running out of water. Clean air. Food. Energy. All the stuff that’s made from all that stuff, which is…all the stuff we take for granted. Like my Small Town America Cheeseburger and laptop.
That doesn’t mean that the stuff we take for granted is going to disappear overnight. But it does mean that prices are skyrocketing. In a way that’s completely out of control.
I say that in my economist voice. In my “this is really bad, guys,” economist voice. Prices are rising so fast that they’re completely out of control, and worse, statistics aren’t capturing those rises. And one reason they’re not capturing those rises is, LOL…the ways corporations have adjusted. Like buy now, pay later. That creates the illusion that prices aren’t rising so fast, because the costs can be spread. But the truth — again, statistically — is that delinquency even in this last ditch sort of adjustment to a massive, massive price shock…is beginning to soar. A lot of buy now, pay later is going bad…because people’s backs aren’t just up against the wall, their spines are being crushed by both walls closing in: skyrocketing prices, and falling incomes. Really bad.
Now. I won’t give you tons of stats about how dire the situation is — how fast we’re running out of basics — because this isn’t a book. For a start, you can click through the links throughout this article. I want you to understand the point.
Incomes are falling because our surplus is now…disappearing. Surplus. It’s what makes civilization possible. Without it, we descend back into a rule of the most violent, brutal, greedy, insane, and the frightened, bereft, desperate masses happily following them off the nearest cliff of folly, from war to nationalism to theocracy to fascism.
Our surplus is disappearing right before our eyes. What makes our civilization possible? Well, think about, for example, the problem that our water supplies are now hitting the limit. Europe’s in an acute water crisis. France, Italy, Spain — all to be in drought again this summer, and parts already still are, never having recovered from last summer’s “extreme” yet now normal heat. But what’s made from water? What’s not? Water…makes our medicines…cools our data centers…bonds our steel and glass and cement…washes our timber and aluminum. Good luck having any of that on a planet in parma-drought.
Let’s call this hypothetical planet DroughtWorld. Now think about what happens to incomes on such a planet. Do they rise? Ever again, really? Well, now everything’s that much more expensive that was once taken for granted, because it’s all made of water. Incomes fall, immediately, for that reason. And as they do, plenty of businesses shutter, because at this new equilibrium price of everything, glass, steel, aluminum, cement, medicine, many can’t afford to keep their doors open. As they do, wages fall. Social structures get warped as a result. Stable middle class jobs disappear. People cobble together whatever livelihoods they can, through gigs and side hustles, and if they’re really lucky, maybe a “job” that pays well and lasts a few years, in the system that’s still allocating all this scarce water. Beginning to sound familiar?
I’ve often said to you that we’re at the shock front of the largest supply shock in human history. But perhaps I haven’t explained well, really, well enough, what that means. At a much more personal level. So let me try. Incomes fall, and never rise.
The greatest supply shock in human history — running out of all the basics, like the list of all the stuff above that’s made from, with, of, gulp, water, which is everything, and that’s before we get to air, energy, food. That means prices rise, and never fall, and that part, I think, many are beginning to understand. Why doesn’t food ever get cheaper? How can my goddamned Small Town Cheeseburger cost $30?
It’s funny, because once upon a time, I wrote a book, and the very first example I used was the true cost of a cheeseburger. I estimated it, way back then, at…$30. That book had to be peer reviewed — it was that formal a book. And I remember that back then? My peer reviewers, who were esteemed professors and whatnot, got nasty. About this example.
Umair’s crazy! A $30 cheeseburger? LOL — never gonna happen! And yet — it’s a little over a decade later, and we’re there.
Prices rise, and never fall. That part, your’e beginning, like many, to get, if only through painful experience. But the flipside is also true.
Incomes fall, and never rise.
Incomes fall, and never rise. Think about how scary that is for a moment, and I don’t say that for effect. Everything — and I mean everything — in our notion of modernity depends upon rising incomes. We expect the next generation to do better, so our societies cohere. We expect to earn more through our lifetimes, so we can retire. If those things don’t happen, well, Very Bad Things do. People don’t retire. They can’t fund social systems. Social contracts break. Societies fall into penury. Generations go idle. “Lost generations,” as we economists call them, become a norm. Sound familiar? It should. It’s the story of America today — and much of the world, increasingly.
Now, of course. There’s going to be That Guy. We all know him. He’s going to come along and say “Hey! Idiot! My income rose! Ha-ha! You’re wrong!” Sure, Tucker, sure. You were lucky, privileged, fortunate, or all three, and you don’t recognize it enough. Dad got you into the right college, grad school, helped you buy a house, start a hedge fund, whatever. Doesn’t matter. At a social level, though? This is now one of the Great Trends defining our age.
And it is incredibly ominous.
Let me now tie the three trends of this age together for you. One, prices rise, and never fall. You’ve lived that one, just going to the grocery store every day for the last few years, and your jaw hanging open. Eggs are how much now? Wait, what, the cheeseburger and shake is how much more? Two, the flip side: incomes fall, and never rise. Three, the driver, our surplus as a civilization, is dwindling.
Now, you can add to all this the wrinkle that many people focus on today. Inequality. It’s true, inequality’s totally out of control. What sense does it make for a small handful people to be so rich that they couldn’t spend or invest all they have in a hundred lifetimes — while we need to reinvent all our basic systems, so that there’s a surplus again, or else…
Incomes fall, and never rise, and prices rise, and never fall?
You’d be eminently correct to point that out. If you want to add a Bonus Trend, then “inequality’s so high that’s preventing us from doing anything about the first three,” is a very insightful one to choose.
It’s not a pretty picture. But you know what? You deserve to know the truth. I don’t say that lightly. We don’t have many good economists left. And mostly? You hear noise. It doesn’t tally with your lived experience. The proclamations of pundits and politicians, who say that things are always getting better.
Our economists, almost as a whole, have no idea what they’re really dealing with anymore. That’s why they can’t say, stumped, why inflation keeps rising, or just as baffled, why incomes aren’t rising in real terms, or why our societies are reacting by descending right back into fascism and authoritarianism as a result. They’re not bad people, they’re just schooled in orthodox economics — which isn’t about reality really, just equations that don’t work anymore. The truth is harder, but maybe it’ll set you free.
I don’t know if these truths will do that. But I do know that you should have them, because my friends: we have choppy seas ahead, and so far, well, we’ve still only been in the shallow waters of the Age of Extinction.
Umair
March 2023"”
“The Three Trends That’ll Define the Extinction Economy, AKA Our Present And Future”
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