Tuesday, March 23

Unsustainable Moments

Eveready Diner • Rhinebeck, NY • October, 2008

 Once upon a time the United States was the only major industrial nation not rubbled by World War. No, not wars...  War! The gap between the first and second halves of the European Psychotic Break was a couple of decades... just enough time to reload and suck the Asian Pacific into its madness. And so it came to pass that world wealth got transferred here in exchange for jobs, finished capital, and consumer goods. 

The bargain was unsustainable. As bright, educated peoples restored their tools... like factories, dams, power grids, roads, rails, airports, institutions, and competitive sanity – trade imbalances shrank and inevitably turned against America. But the 50 or 60 year capital advantage created a golden moment for US consumers got drunken on their temporary possession of so much of the world's wealth. 

Speaking of unsustainability, American union monopsonists struck equally unsustainable deals with their monopolist employer/partners to achieve average wage heights built upon the myth of eternal world pauperism. US labor shared in the flow of world wealth to its shores with no threat from cheaper labor that lacked competitive tools. 

Now they have the tools. 

Ever heard of arbitrage? It means buying cheap and selling dear. Buy stuff made for less in Romania, sell it in London where incomes, hence prices, are higher. Like that. Today financial capital dispatches tools to low wage world spots to produce goods or services for a lot less than American companies whose workers have identical tools but with legacy high wage contracts (and government mandated additional labor costs) unavailable to Romanians, Ethiopians, Peruvians, British, or of course, Chinese. 

Investment capital is the most mobile factor of production. It moves at quantum speeds through digital pipelines. Errors in predicting arbitrage advantages are spotted and overcome, by computers, at light's velocity.  And while actual production and employment follow those directions with a lag... their vast movements are inexorable. 

See the October 2008 Eveready Diner up there? It's a relic of "Mid-Century" America's momentary competitive advantage. Unlike anytime before in history, regular people... typical families... drove there and in air conditioned comfort chose from enormous menus. 

October 2008 was about a month after America came aware that its financial iceberg had calved off over a quarter of its value. Access to financial capital got squeezed in what was to become known as the Great Recession. The lag between financial loss and real economic activity was about to bring down a curtain. The Eveready Diner (which may or may not be gone) stood on quaking economic ground - a 50s lyric of an unsustainable time when thanks to Europe's Psychotic Break - even the poorest consumers in the US were better off than their counterparts anytime in the history of history. 


Andreas said...

Oh my, that's eight months since the last post and only slightly less since we last spoke. Trump is gone and the world is ... not much better :)

Hmm ... in a comment to an article in one of our slightly better newspapers (no comparison to the NYT or The Guardian), I recently mentioned that people's real problems are all on the Rich vs Poor axis, while our problems WITH people are all on a Tolerance vs Intolerance axis. At the same time, the ruling class tries to make us believe in an In-group vs Out-group problem.

"Union monopsonists" (thank you for a new word, you are an endless source of words) struck "unsustainable deals"? Nope. They would have been perfectly sustainable. They are in Europe. It was by choice of your ruling elite, that they struck down the deal. Really, you can have your cake and eat it - if you share :)

I'm pretty much in favor of capitalism. After all, I like my Mac, and as far as I can tell, no Macs have come out of Cuba, or ever will. On the other hand, unrestricted capitalism leads to monopolies or at least cartels. There definitely is middle ground.

Sure, if you see recent performances of national governments, it is hard to believe that any collective progress could be possible. On the other hand, all of our problems ar now on a supra-national scale. None are solvable on a national level. Should we just give up and perish?

Is this even an answer to your post? I have no idea. What I do have, is a still strong believe in classic social-democratic values. I think you can have your diner and we can have our diner and everybody else can have their's as well. It's just a matter of tolerance, of openness, of embracing change, ... and of making sure that nobody takes advantage.

Ted Byrne said...

Is it human nature to “take advantage”? 🤫🤪

Andreas said...

Sure it is :smile:

Interestingly enough, in the UK, pharmacies and medical practitioners are allowed to apply covid vaccines. Quite a success, I think. In Austria, only institutionalized vaccination centers do it, and they do it with an enormous overhead in buerocracy.

Why not practitioners? Well, seems like the gov fears, they would take advantage of their position, sell the shots or apply them to friends and family.

And they're right! It happens, and seemingly quite often.

In the end, the UK strategy hands-down wins. From the epidemiologists POV, it is totally irrelevant who gets the shots, it is the number that counts.

Yes, it is, and sometimes it is to the advantage of society. For instance, Capitalism produces the best iPhones, and it might take us to Mars. Sometimes it is not to our advantage, and Capitalism may well leave Earth as a barren planet :grin:

Ted said...

Reserving judgement upon its 'goodness', Is capitalism the historically most efficient machine to satiate the largest percentage of human nature's appetites?

Ted said...

There are those who abhor any mechanism to satiate human nature's appetites. One person's fantasy is the next individual's perversion... y'know? Suppose a universally accessible mechanism is devised to instantly and spontaneously make anything from nothing. Would it become instantly banned? Heh heh heh.. Will its opponents be more likely to come from the political right or left? There's a good book here.