31 Dec 2011, 5:56pm
reflections:
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  • Goodbye 2011, Hello 2012…

    So we bid goodbye to 2011, a difficult year for many people, ermines included. A certain degree of mayhem on the stock market, but also a degree of mayhem for the lives of many Britons. Unemployment is rising and inflation is taking a toll on many people’s household incomes. Often already precarious in the good times, lubricated with the torrent of cheap debt, the going has been tough for a lot of people as the friction of everyday financial existence increases. Hopefully not too many gorged on the Christmas sales and our guardianistas and impecunious Daily Mail journalists learned to say no to their materialistic children from last year.

    What did we learn in 2011 – well, the drumbeat of bad news continued, we learned the Euro was pretty much shot to bits and heading in the wrong directions. We learned we are poorer than we thought we were, we learned in August that shares could go down as well as go up, as if we’d forgotten from 2008… We observed some creative solutions to the problems of inflation in the summer, unfortunately somewhat at odds with the law.

    We learned an awful lot of people in Arab states were mightily pissed off with their lot, we learned that we could bump off dictators like Gaddafi but as usual we weren’t so good at putting something better in its place (cf Afghanistan, Iraq). The trouble is the West is too economically and imperially weak to invade and hold and transform a situation, some of us (well, the US of A to be honest) can project force, but we hate the messy part that comes afterwards. Iran seems to be the next place for an oil war, and those North Korean dudes seem to be genuinely barmy despite no doubt being useful to their northern sponsors, but at least they haven’t discovered the elixir of eternal youth yet.

    So what of next year? We seem to be coming up against a bifurcation. Established economics would have it that 2012 will be a pretty rough year but that it should be a turning point. On the other hand it could also be a different kind of turning point, where we discover that capitalism is beginning to eat itself as Karl Marx foretold all those years ago, as it continues to destroy the jobs and livelihoods of the people that it needs as consumers. Like so many things, some is good, more is not always better. Or it could be time to consider surrendering to the forces of peak oil and perhaps engineer an economic system that doesn’t demand we consume more and more consumer tat and make up for the empty feeling inside with Prozac, there has to be a better way.

    This is becoming apparent as the shocking youth unemployment and rising joblessness. It is hard to say where that is going, it is a bad combination with an education system that has been debased and which seems to take as its most important job bolstering its customers’ self esteem. Sometimes it is better to know that you are stuffed than to just feel good about yourself, as knowledge leads to effective action. We have been here before, it was pretty rotten to look for a job in Thatcher’s first recession, and the 1990s one was no fun for jobseekers either.

    For me, 2012 is the year that, after three years of frugality wins me the second goal of financial independence, assuming, of course, that there is still a financial system to be independent in :) The first was reached nine months ago, when I could survive on the stored capital. This New year feels like the last leg of the journey started in February 2008, when I listened to a twerp of a line manager try to pressure me, and I decided that I needed options in future, in particular the option to call punks like that out and tell him that while he may be desperate for the money, not all of us buy our middle class lifestyle on a tower of debt, and I think my own way and dream my own dreams.

    So now I am on the final approach, and it does feel like I am gradually surrendering the potential energy of a dynamically unstable job for the lower energy but more stable position of my final aim, to be independent of working for a living.

    My hopes for 2012 are personally, to be able to stay the course until the third quarter of the year. Two and a half years ago I took a chance, to carry on and risk crashing and burning, and so far it has worked out, and a lot of luck has favoured my journey. The road is getting harder all round, however. One of the pieces of luck was to get on a London 2012 project, which will be a great swansong for my engineering career.

    More generally it is that we find out whether this financial crisis is a financial crisis or something more serious, in that the assumptions behind an industrial economy are starting to break down.

    Finally, what we desperately need is for enlightened leadership to rise to the surface. Not ‘strong l’eaders, but a political leadership that can see the wider picture and is not so craven as to endlessly tell the people what they want to hear. There are some serious challenges coming in the years and decades to come. We would all like things to carry on as they were, but sometimes we need to recognise that isn’t possible, and then to take decisive and effective action to adapt and select one of the better alternatives.

    I did this in 2008, realising that working for another 12 years until retirement would come at a significant cost to my well-being. I had the advantage of being just one person. As nations, there are a lot of areas where effective leadership is needed, In Europe, the people of the Eurozone need to decide whether they have sufficient common cause politically to make a political union that reflects the economic union. It would be good if the politicians, particularly Merkel and Sarkozy, were slapped around the face with a wet fish often enough that they got to understand that it would be really good if they asked people first, before implementing it. I am not sure that this process was done in the creation of the Euro, and repeating the undemocratic exercise makes me uneasy.

    If the people aren’t up for it, then it is time to back away and unravel the Euro, carefully. Because it seems pretty clear that without political union monetary union with always fail Europe in times of financial stress.

    Closer to home, we need to decide how we want to earn our living in the UK. We can probably rebuild the banking edifice, though we could do well to diversify. I am not sure that the time is right for us to go down the line of making things again – time and time again it disturbs me how many of the principles of logical thought and basic engineering seem to have been lost from professional life in the UK.

    If there is one things I’d like us to achieve in the year ahead, it is to find a way for our economy to give decent jobs for most people to do as Obama called out in his state of the Union speech earlier this year. At the moment we are racing headlong into a winner-takes-all world of work, where most people will end up unemployed and a few will reap most of the rewards. Though chaotic and unstructured, there are sounds of dissent as the ‘99%’ feel this without understanding. We need to apply understanding. It may be possible that having most people unemployed is the only way an efficient modern economy can work. It’s not necessarily a bad thing – the 1970’s dream of a life of leisure I was sold at school and that Keynes foresaw  doesn’t sound that bad, and heck, this is what I have been striving for this last three years. Work just isn’t all that. However, we must then change a lot of the incentives and designs of society – Martin Ford has given this a lot of thought, n particular how we deal with a world where most people are not capable of being employed usefully  in his scenario where the majority of jobs have been automated away.

    It takes brilliance to see the possibilities when all around seems lost, just as JM Keynes, standing at the depths of the Great Depression when all semed lost in 1930, wrote Economic Possibilities for our Grandchildren.

    But beware! The time for all this is not yet. For at least another hundred years we must pretend to ourselves and to every one that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight.

    I look forward, therefore, in days not so very remote, to the greatest change which has ever occurred in the material environment of life for human beings in the aggregate. But, of course, it will all happen gradually, not as a catastrophe. Indeed, it has already begun. The course of affairs will simply be that there will be ever larger and larger classes and groups of people from whom problems of economic necessity have been practically removed. The critical difference will be realised when this condition has become so general that the nature of one’s duty to one’s neighbour is changed. For it will remain reasonable to be economically purposive for others after it has ceased to be reasonable for oneself.

    The pace at which we can reach our destination of economic bliss will be governed by four things-our power to control population, our determination to avoid wars and civil dissensions, our willingness to entrust to science the direction of those matters which are properly the concern of science, and the rate of accumulation as fixed by the margin between our production and our consumption; of which the last will easily look after itself, given the first three.

    It’s hard to see how this could transpire, looking back over 8 decades, and decades in which we have very definitely failed to control the human population, or eschew wars. I hope his vison was clearer than mine, and he simply called his solution to the economic problem in a bit early :)

    Happy New Year, and may 2012 be good to you!

    55 years ago Harold Macmillan told the uk populace that they ‘had never had it so good’. 16 years later, 3 million unemployed, 20% inflation, but people were still even better off materially than in 1957.

    Today, everywhere people talk about ‘tough’ times and ‘hard’ struggles, but clearly the populace is much better off materially than 1957, 1975, 1995 and 2005.

    Counter intuitive but observably true. Look for example at the Retail Sales series over the last 10 years

    If this is hardship, its not hardship as we knew it.

    The only problem of a world where others become “economically purposeful for others” is that it either leads to a type of 19th century world where a few have great wealth and the many are “in service” to it or a giant “welfare state” where people are provided a living by a corporate welfare state. The first amounts to a kind of indentured servitude while the second to the ultimate triumph of fascism.In both cases it would amount to a sort of slavery or serfdom where individuals would live out their lives either at the whims of the wealthy and rich or at the direction of the state.

    The rationality of an economic order where the many are dependent on a few for their livelihood and vice versa, might, through rule of law,( ie. an engineered corporate welfare state ) look economically viable on paper, but it neglects the human aspiration of individual transcendence towards self realization for which an individual requires equality of opportunity and choice.

    In short,individuals aspire towards freedom. just as you aspire to be free of dependence on a “dynamically unstable job”. I suspect if you look under the reasons for this instability you will find the rationality of market capitalism in defense of wealth and property. It is not rational for capital to pursue manufacturing in the UK when Chinese workers can do the job more cheaply. This is not a bad thing from a market capitalism perspective. The decline in educational standards in the West is not happening by chance. From a market perspective government spending on education or other state investments is irrational from a market perspective. Why should we educate people when their service is more or less redundant to the market ? Why should we invest in training engineers and others when we can scoop up engineers, computer programmers, scientists and others from overseas through immigration or from relocating our manufacturing to low-wage economies where our capital reaches its maximum utility ?

    Peak oil may change all this, and we may come up with real leaderships, but in the interim the thinking remains, rightly or wrongly, on this idea of market utility.

    People’s concerns or aspirations are not of interest to business elites or their government proxies.The deck is seriously stacked against the leisured utopian visions from our youth. The world where automation and new technologies would deliver us into a golden age and, as I recall, the elites were already preparing us, as far back as the seventies, to prepare to “lower our expectations”.

    I remember as a high school Economics student trying to figure out how “automation” could be considered a “positive” when it would throw so many people out of work, which it did, even though it would help realize gains in productivity and growth over the long term. Of course, the economists were correct. The only problem is they analyzed systems, not people. Although many today are moving towards understanding human behavior as a tool in predicting short-term economic trends, it amounts to the same thing.

    As for corporate welfare states becoming more welfare and less corporate, command economies are seldom efficient especially when they are dictatorships. The only “western” examples we have of this were the fascist economies of Italy, Germany and Spain none of which were particularly efficient from an economic perspective. In the “east” and other places where they were able to export it, Marxist-Leninist regimes, while just as brutal as fascist regimes in their social engineering, were as equally inefficient, even producing massive famines, while everyone in these regimes pretended everything was fine.( The messenger did get shot !)

    So, I guess what I’m trying to say is I somewhat agree with you that it is necessary to find a way forward but history teaches us that we should be very careful what we wish for especially now hat the shit’s about to hit the fan. Happy New Year to you !

    >the 1970′s dream of a life of leisure I was sold at school and that Keynes foresaw doesn’t sound that bad, and heck, this is what I have been striving for this last three years.

    But have you? Congratulations, now that you are on the final straight. In a few months what you will have is financial independence, not leisure.

    You will be free to “choose” and I bet, in amongst those lazy days, you will choose to work at something: DIY, the farm or some other project(s) you have up your sleeve.

    It’s great to get that “Man” off your back, but other things, expecially yourself, can be as demanding (fortunately).

    3 Jan 2012, 8:44pm
    by ermine


    @Trevor You’re right in the sense of ‘better off materially’ in some ways, though I’m not sure about 2005 relative to now. However, for the last two years there has been a year on year decline due to stagnating wages and the results of QE running into inflation, plus resurce crunches increasing fuel above inflation. The decline is probably what is creating the serious unease. I don’t quite have the same length of perspective, however ;)

    @g I didn’t claim to have any of the answers, though your critique was in many ways better than the post!

    You referred both to individual’s desier for freedom and at the same time the ‘market optimisation’ as an abstract notion. The market was created by humans and ultimately should serve us. However there is always the problem of who watches the watchers in trying to impose any structure that shifts it from its internal balance point.

    Interesting point on the decline in education, I had made the assumption the decline was from a lack of spine ie human issues, the possibility of it being a feedback on the likely economic added value is new to me, but makes an interesting alternative case!

    @SG Fair point, comes from still being a wage slave I guess. I used the term work in the narrow sense of something you have to do in order to keep the wolf from the door as opposed to purposeful activity directed to a goal ;) Daytime TV doesn’t feature too greatly in my future plans as a replacement use of my time ;)

    @ermine Sorry for being verbose. It’s just that I think about this stuff a lot. Your right about the human factor. That’s why we get all these attempts at human engineering. To me the important thing is that people are given the tools and opportunities for self-realization, as when you received help to do further studies. This can create growth. I think the reason a lot of young people are disillusioned and maybe not as interested in education is that they don’t see jobs at the end of the tunnel. Another reason that the education systems are breaking down is that there is pressure from the stakeholders to get little Johnny a certificate, any kind of certificate even a meaningless one and government needs numbers to show they are getting the job done ( high percentage of students in university attendance ). Never mind that university is only one avenue for learning. Anyway, I’m rambling again… :)

    where in suffolk do you live? My husband and I talk sometimes of moving to a warmer place in the countryside in a few years time. But its a huge county….how did you decide where to choose?

    9 Jan 2012, 3:12pm
    by ermine


    I live in Ipswich, which is the county town, but then the choice was easy as I wanted to have a reasonably short commute. It’s not a bad choice, but if you’re not restricted by work then you have a wider selection.

    Your main choice is coast or country – Suffolk has fabulous and unspoilt coastline, with many opportunities for sailing, fishing and wildlife.

    The Heart of Suffolk around Eye, Stowmarket and Bury St Edmunds has lots of lovely villages and a few small towns. Go further west towards Sudbury and Newmarket and you almost enter Fenland without the starkness, and are in easy reach of Cambridge.

    Communications are reasonable, though there are no motorways in the county the A14 west and the A12 to London is good to Ipswich (A12 stops being dualled north of Woodbridge) and the train service is good though expensive, though rail from further west in Suffolk isn’t partucularly easy to get to.

    If you’re not constrained by work then you probably want to stay in the county and tour coast, mid and West Suffolk to see how you like it, the character varies a lot. Bear in mind that coastal locations can be lovely in Summer but the East wind is very brisk in winter ;) At about 10 miles inland this is softened a lot in Ipswich but coastal locations are breezy in winter!

    We’ve been disagreeing so much about the other stuff, I thought I’d drop a line to say we’re in sync on this:

    …”At the moment we are racing headlong into a winner-takes-all world of work, where most people will end up unemployed and a few will reap most of the rewards. Though chaotic and unstructured, there are sounds of dissent as the ’99%’ feel this without understanding”…

    I have an unpublished 3,000 word article on this that I need to get knocked into shape, in fact. I started writing it 6 months ago or so, and I need to get it out before it becomes consensus! ;)

     

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