From Finance to the Farm

Two great pieces that go great together:

1) Michael Lewis on A.I.G. and the industry machine that had to be fed.

2) James Howard Kunstler, nominally on the Goldman Sachs bonuses, but really on the mistake of expecting the downturn to “end” in the conventional sense, and for the GDP to return to rising every year.

The Lewis essay, on point as usual, sets up such a great context to appreciate the simple common sense of Kunstler’s criticisms of the stated goals of our economic stimulus and rescue plans:

Since a transformation of the US car fleet to electric vehicles is absurd, what would be an appropriate response to profound economic contraction? How about walkable communities connected by public transit? Why is that not a focus of the “new” General Motors? In 1941 the company made the transformation from cars to armaments in a matter of months; why can’t it produce the rolling stock for a renewed passenger rail system? Or trams? Is this not enough of a crisis?

Personally, I find Kunstler’s concern about Goldman Sachs’ bonuses to be wasted energy, partially because of the characteristics of the machine detailed in Lewis’ piece, but also because the US has to pump a bunch of money in the economy to soften the blow of the massive asset devaluation that is happening (i.e., to try to prevent crippling deflation that pushes everyone into default on everything). One suspects the powers-that-be would rather put the dollars into the system now than to battle to allocate them to the most useful places: sure, it would obviously be more constructive to spend money on light rail than on Goldman bonuses (which presumably won’t in turn be spent on anything useful to America), but as long as the money is added to the economy it is propping up the paper dollar values of houses, office parks and shopping malls all over the country.

On the other hand, clearly the financial air is getting thinner and thinner, and breathing will get more difficult until we make the transformation to an actually productive economy:

While this would affect the perceived “standard-of-living” as measured in things like shopping mall sales and vehicle miles driven, it would not necessarily mean diminished “quality-of-life.” It would mean different ways-of-life for a lot of people — for instance, young adults who had expected lifetime employment as corporate executives but who, instead, find themselves ten years from now working at farming. We have an awful lot to get real about.

…

We now have to bend our efforts to reorganizing American life on the most fundamental physical terms. We have to inhabit the landscape differently, move around it differently, generate food out of it differently, and make things on it again.

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