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January 29, 2012

It’s Hurricane Season and They’ve Hocked The Storm Shelter

By Joseph Friedlander

One line summary:

Irresponsible governmental behavior has made us most vulnerable at the precise time a major societal crisis—and choice of futures-- is due to be faced.


30 Second version: Reckless government manipulations and spending often with a conscious attempt to ‘smooth out’ the short term economic cycles, may have adversely affected the (speculative) ‘long wave’ cycles which affect great sweeps of technological progress, exploration and society itself (as well as peace and war) leading to highly unfavorable results (A delay of beneficial new technologies exploding from 2015-25 to as late as 2071). In addition, funds needed to prevent great civilian suffering in case of national emergency have been squandered on maintaining the appearance of normality (to the tune of 12% of GDP per year added to the national debt) These are funds sufficient to fight a world war and this can’t keep up for more than a couple years at most. The President inaugurated in 2013 will help lead us out of it or we fall off the economic cliff. A possible way out is outlined.




Main Article

Dr. Bruce Cordell in his writings and the site 21stcenturywaves.com has brought to the attention of space and political enthusiasts the possible recurrence of long wave cycles in human behavior and history.



These are disturbing to many to contemplate because of the philosophical
connotations; another way of saying the long-wave paradigm or for that matter SOC (self-organized-criticality--http://en.wikipedia.org/wiki/Self-organized_criticality is not accepted in a way that the readers of Thomas Kuhn in his influential book The
Structure of Scientific Revolutions
(1962)  would be familiar with.

http://en.wikipedia.org/wiki/Paradigm_shift

In other words, if long wave studies are destined to be a science some day they have not yet arrived 100% into the accepted conventional frame of reference. Since this article must take some stance on the matter, be warned: It assumes that the cycles themselves are real, though not everything written about them.  (International politics are a phenomenon proven to be real, yet how much nonsense is written about them?)

The historian Eric Hobsbawm wrote of the theory: "That good predictions have proved possible on the basis of Kondratiev Long Waves—this is not very common in economics—has convinced many historians and even some economists that there is something in them, even if we don't know what."

Suppose however the long wave theories and SOC theory are NOT correct—in that
case someone must come up with an alternate explanation of why these historically recurring patterns do recur—and why SOC phenomenae occur in dozens of fields and in hundreds of models as well as in real life. Until that point, the synthesis in this article is one working hypothesis of mine.  Recall that we routinely run vast national legislative experiments on premises far shakier than the case for long wave cycles and SOC. So we will treat of them in this article…

Why the long-wave cycles seem to work--- loss of generational knowledge and no one left alive who retains recognition of tell-tale behaviors--- (such as bank presidents saying they have to take risks to be in the game with the other players rather than saying they'd rather be there to pick on the carcasses of those who took foolish risks...a 150 year old bank president who had SEEN the 1920s boom would have recognized the signs))


A sample long wave chart by Charles Hugh Smith at his site oftwominds.com, used with permission (Thanks, Charles!)  This chart is annotated if you have never seen the concept of this once in a lifetime cycle charted against history—



A lot of people don’t like the idea that we might not have complete freedom of navigation of possible futures, but in my opinion that is being a little foolish. Think about it: A sailor does not have complete freedom of navigation of the sea, he cannot sail at any time to any where he pleases, though to an untutored observer it appears he can: The master mariner must take into account tides, rugged spots in shallows, displacement, storms, rogue waves.  The idea that the sea of history might have similar phenomenae distresses some people.   But nearly every field of human endeavor has obstacles and skill points to master analogous to these. Why should navigating upcoming history be any different?  

I use the analogy of “Hurricane Season” to explain this to newcomers to long wave theory. I believe people have ALMOST as much freedom of action (free will, if you like) as even optimists think they do. But, not quite, and not in every area, and not at every time.

Consider the real hurricane season in the Caribbean:

 The Caribbean hurricane season as a whole lasts from June through November, with the majority of hurricanes occurring during August and September. On average around 9 tropical storms form each year, with 5 reaching hurricane strength.
According to the National Hurricane Center 385 hurricanes occurred in the Caribbean between 1494 and 1900. http://en.wikipedia.org/wiki/Caribbean_Sea#Weather

http://en.wikipedia.org/wiki/Caribbean_Sea - Weather

If you were planning a vacation or a movie shoot in the Caribbean in a world where people did not make the connection between the seasons and the storms, but regarded each storm as random--and some old weather scholar warned you that it might be advisable to take precautions-- based on the historical record-- without being able to offer a convincing explanation for why this would be so, lack of an apparent mechanism might deter quite a number of people from taking those precautions—to the cost of at least some of them.

The analogy of “Hurricane Season” then informs us that large-scale movements in human history are in play—but gives no clue as to what swath these might cut across the map.  THAT part is not predictable and depends heavily on interactions between the players (all of us).

This article concentrates on what I have termed the (Denninger modified) Cordell long wave theory.

 After reading some things that Karl Denninger of market-ticker.org has written, my (Joseph Friedlander) feeling has grown that the natural business cycle which would have led to a bust in 2000 (and briefly did) was interfered with by the Fed (among others) and that the recovery we should be experiencing now in preparation for the 2015 boom has in
fact been squandered
. This matters because if we miss the 2015 window, the
next one is in 2071.




A moment to explain that last line—it is not that there will not be ANY tech progress at all until 2071. Even during depressions, new things trickle out the tech pipeline (creative people need to create like a cow needs to give milk, and usually have the time when unemployed if scrounging can give them the components and access to the tools) and a depression is usually only a depression for ¾ the people or so, some fraction of the population does rather well and money is available from them.

However, compared to WHAT WOULD HAVE BEEN, the tech pipeline of new inventions remains relatively empty, and worse, actually deploying those inventions one by one, let alone in massive waves that can make a new Industrial Revolution is nearly impossible. As Dr. Cordell has noted, off-cycle attempts to do massive engineering projects or expensive explorations do not often take off.

And for anyone now living, it would be a tragedy simply because your standard of living would be so much lower than in the alternate, Maslow Window catching future where we terminate the depression and catch the 2015-2025 window for deploying amazing new technologies, instead of missing 60 years till 2071.


Imagine a world where the Depression had resumed after 1945 until say 1965.  It would not have been very fun for those enduring it and much of the 1965 tech we take for granted (say manned spaceflight, lasers, civilian nuclear reactors and widespread jet air travel might have been totally missing). But then the resulting spinoffs of those missing inventions would cascade into the future and the ripples would spread.  Less prosperity, maybe no unmanned space program, no civilian computers, no miniaturization of components, no Moore’s Law http://en.wikipedia.org/wiki/Moore's_law.  You might be reading this in a magazine of pulp paper, or not reading it at all, since some of the Self-Organized Criticality

http://en.wikipedia.org/wiki/Self-organized_criticality and long wave models were only discovered by aid of computers.  

A lost future is a terrible thing to waste…we can never know how many brilliant young scientists-to-be were mowed down in World War 1, or World War 2.  We can only dimly appreciate how much poorer our world is for the lost minds and lost capital engulfed by those disasters. But by analogy, we can determine to salvage what we can of our future.


Why ‘catching’ the 2015 window is important, is discussed further below.


Karl Denninger. http://market-ticker.org/akcs-www?singlepost=2197782


This is a step-function with two steps - upward when Greenspan played hell with rates after the 2000 Tech Wreck (a bubble he intentionally inflated) and then in 2007 when you played hell with short rates after the disaster in 2007 - again, a bubble you caused through intentional and willful refusal to perform your job of regulation and enforcement of your black-letter mandate under the law. (Denninger is speaking to Bernanke) (See chart there)


Joseph Friedlander:  Because the ordinary Kondratieff cycle it was prevented from taking its' natural tendency after the 2000 tech bust, and a purging of bad debt was delayed, MUCH more unsustainable debt and bad financial structure was built up, literally to unprecedented amounts. It is true, said, Dr. Cordell, that during the last 200 years, no financial panic has ever delayed or diminished any Great Explorations or MEPs associated with a Maslow Window. 


However, the recession that would have been over already is just now breaking
as a full blown Depression. (With far greater debt overhang)

Why there would be a crash, whether the theory is correct or not—massive debt overhang, and ‘regime uncertainty’ as Robert Higgs would say,  caused by the multiple unresolved issues revolving around the Washington carnival:


 Who is going to lose money, who is going to be taxed, who has so much political and economic clout that they are declared ‘too big to fail’, who is not.


Charles Hugh Smith’s overview of the issues likely to aggravate the worsening new Depression (note that I do not project everything he does, but this is a good overview of the issues of financial overhang and national inability to continue the ‘extend and pretend’ game--http://charleshughsmith.blogspot.com/2011/01/kubler-ross-model-denial-acceptance-and.html

http://charleshughsmith.blogspot.com/2011/01/kubler-ross-model-denial-acceptance-and.html

This developing Depression may not be OVER by 2015-- even 2020. Worse, war may follow immediately in its wake as it did last time around.


War on a major scale (sufficient to break down major powers or even to strain them financially) MUST be avoided to prevent interference with 'future-space-initiatives”

Cordell has written:

”The most important Wild Card of the 2015 Maslow Window is the date of the major war expected in the 2020s. If it comes in the late 2020s, human civilization may expand to the Moon and possibly even Mars. If it starts closer to 2020 — in addition to the tragic loss of life and property — human expansion into the cosmos may be postponed until near 2071, when the late 21st Century Maslow Window is expected to open.”


If Dr. Cordell's insight is correct, a so called  "Maslow Window" will open up enabling a one-time chance to reach a better future for a few years (2015-to 2025). Seizing this historical chance will enable a wonderfully bright future involving freedom enhancing space settlement. Missing it (and we are on track to miss it, make no mistake) will lead to no human expansion in space till 2071 and a probable cycle of wars based on a claustrophobic world effect (Europe, 1914 with no colonies or 'New World' should be your reference) If you want to see a possible scenario for the first of these wars look here---

http://www.oftwominds.com/blogoct10/great-game10-10.html

http://www.oftwominds.com/photos10/US-China-oil.gif



Acknowledgement: Imperialeconomics.blogspot.com Oct 2010

The first war you will notice could erupt in the 2017-21 window. That would absolutely kill the 2015 2025 chance by Dr. Cordell's reckoning  (even the
minor Vietnam war terminated the early moon landings).

But in Dr. Cordell’s view, more optimistic than mine: (see below)  One thing seems likely: the drive for prosperity in the form of a major economic boom commencing by 2015. Over the last 200+ years, this stage in the long business cycle (the “long wave”) consistently features a major economic boom that drives unprecedented, ebullient exploration and technology programs immersed in a Camelot-like zeitgeist.

(See; A Major Economic Boom by 2015? … The Lessons of Cleveland, Roosevelt, and
Obama)

http://21stcenturywaves.com/2008/10/20/economic-crisis-supports-maslow-window-forecasts/

MY principle difference with Dr. Cordell is that  no Kondratieff Wave, no  Maslow Window has EVER been messed with by government interventions like this one.



Before we go futher, best to define some terms.



What is long wave theory? 

Often called Kondratieff cycles or waves, they are lifetime length sinusoidal cycles  charted against hundred year calendars. IF you believe in them you can see many correlations that otherwise are remarkable but unexplained—others dismiss them entirely.



What is a Maslow Window?

Cordell: An ebullient, fractal (high SOC (self-organized-criticality) international environment (i.e., a Maslow Window) where almost anything is possible. About twice per century over the last 200+ years there are extraordinary pulses of great explorations (e.g., Lewis and Clark) and macro-engineering projects (e.g., Panama Canal) that resonate around the world. These “Maslow Windows” are times of extraordinary affluence-induced ebullience similar to “animal spirits” theorized to drive business cycles by British economist John Maynard Keynes in the 1930s. In response to ebullience, many in society ascend Maslow’s Hierarchy and, as their world view expands, find that great explorations and MEPs are not only intriguing, but seem momentarily irresistible. This captivating, but short-lived ebullience is triggered by major, twice-per-century economic booms over the last 200+ years that were first described by Kondratieff in the 1920s.





What is SOC (Self-Organized Criticality?

http://en.wikipedia.org/wiki/Self-organized_criticality



Dr. Bruce Cordell: The brainchild of  Danish physicist Per Bak (1948-2002) — “one of the most original people in science” — SOC is an emergent property of complex systems whereby they organize themselves into a critical state such that rapid changes, including
catastrophes, can occur. You can see the famous “Bak sandpile” conceptual model of SOC in 
Aschwanden (2010) as well as in Bak (1996),How Nature Works.

The captivating assertion of social scientist and SOC enthusiast Gregory Brunk (2002) that,

Virtually all aggregate-level, monumental events are somehow ’caused’ by the process of self-organized criticality,



Joseph Friedlander again:  Had there not been massive Fed interference with the natural business cycle, the Maslow Window that Cordell predicts would in my view, have opened on schedule. However, I believe that at least in the USA, enormous structural debt and system-inefficiencies have been built up, sufficient to interfere with the cycle.  (Very briefly, by taking away freedom of action in both public finance and private disposable funds, they drain the reservoir of wealth that makes a 1900s or 1960s exploration and tech boom easy to finance as well as depress the (money enabled) “novelty storm” catalyzed soaring spirits needed for those decisions to be taken (“The Maslow Window”)



Speaking as a 1960s era baby boomer who has waited his whole life for 'our turn' to come in space, and who will be too old in 2071 -- I really want the 2015 space rush to happen. Knowledge of the history of political behavior in supercycles —and the dangers that the USA currently faces--may yield sufficient advantage to change  things by encouraging  constructive political choices.

Dr. Cordell has written about the possibility of a 21st century “space president” — in 2012 or 2016 — who will lead the U.S. and the world into the large-scale utilization and colonization of space. http://21stcenturywaves.com/2011/04/11/jfk-the-kennedys-and-the-next-space-president/  If these are auspicious times for economic
turnaround and a new industrial revolution, (or a hope ending 20 year downturn)
then the entire future I have written about is in play for go or no go.




Some writings of mine discussing a possible, optimistic future--(or at least references to them):

http://nextbigfuture.com/2010/11/what-was-best-way-to-use-saturn-v-to.html

http://nextbigfuture.com/2011/02/heinlein-style-spaceflight-with.html

http://nextbigfuture.com/2011/01/two-world-industrial-bootup-enabling.html

http://nextbigfuture.com/2011/02/new-space-age-materials-for-new-space.html

http://nextbigfuture.com/2011/01/technomass-and-biomass.html

http://beforeitsnews.com/story/250/402/David_Leblanc_explains_why_Thorium_reactors_need_a_lot_less_fissile_nuclear_material_to_start.html

http://nextbigfuture.com/2009/02/in-praise-of-large-payloads-for-space.html

http://nextbigfuture.com/2009/02/in-praise-of-large-payloads-for-space.html

http://nextbigfuture.com/2009/02/in-praise-of-large-payloads-for-space.html

http://nextbigfuture.com/2010/06/patent-nonsense-some-problems-with.html (The
current IP mess)

http://www.centauri-dreams.org/?p=16145

http://nextbigfuture.com/2011/02/hyperwealth-and-alternative-futures-by.html (This contains a discussion of national and personal wealth and poverty)



As is  a guest post for Brian Wang’s blog  http://nextbigfuture.com/2010/12/setting-up-industrial-village-on-moon.html  I commented  there upon the kinds of transactions Jane Jacobs once noted: Transactions of decline and of ascent that can tear down the industrial
vibrancy of an area (USA) or build it up. (China.)  There I said, how Chinese quality has gone from toylike (older readers will remember when Made In Japan was a cheap-shoddy-goods joke) to masterful in 20-25 years. Much of that was achieved by talent diffusion throughout a growing, learning and cross-hiring economy. Notice that they recently unveiled something like 10 new models of small airplanes. There are more car companies in China than US companies have models of cars. You learn by doing. You forget by not doing. Transactions of ascent. Transactions of decline. Which works for a
group, a people, a nation?






Why focus on the political aspects in a tech blog?  Because tech deployment depends upon favorable economics. By my calculation, the USA has by messing (inexpertly) with the cycle messed up its economic future. Once over half the economy is directly and indirectly an artifact of government it becomes impossible to discuss economics with no reference to politics.



No economy in any supercycle in the past has had the massive percentage of government involvement that we do.  (In most Western societies around half of total GDP may be government related—in many—depending on how you define it—the proportion may reach a staggering 2/3rds.  (The mechanisms of messing with the cycle’s underpinnings  include massive interferences with systemic risk (repealing provisions of the Glass–Steagall Act of 1933 ) enabling debt systems,  and mortgage credit, subsidizing risk, subsidizing debt buildup and overhang where even the market would be afraid to go during a boom time and then government intervention to bail out risk takers who have promptly returned with their bailout bonus money to the casino of subsidies,  Fed funds windows and countless other manipulations of the economy (literally thousands of other programs and governmental incentives) which are all done as if the government KNEW what the effects of its doing would be, instead of knowing that at best they had an educated guess as to the results.



Japan also has taken a wrong turn, also letting politically favored financiers ‘extend and pretend’ taking decades to recover from what a prompt liquidation would have accomplished in years, and those countries are major developers of new technology needed for that more favorable future that is receding away from us.   If R&D money is not available because it has been spent in a bailout or lost in a financial crash it will finance no new tech during the coming Maslow Window...



(Am I the only person who mourned the fact that the government ‘stimulus package’ --if they were going to spend anyway--would have been enough to literally finance the construction of say a space solar power system to replace imported oil (Along the ideas of Criswell or Henson or Lofstrom) but instead went to maintaining the bonus system at Wall Street banks who should have paid with their bankruptcies for their reckless behavior?  That money too will not be available for the Maslow Window of 2015.)



Cordell has written, ironically about the time of the bailouts:

Socio-economic insights from the Panama/Apollo MEP experiences and macroeconomic data from the last 200 years, suggest near-future MEPs (e.g., including planetary bases, space solar power sats, interplanetary transportation systems) during the 2015 Maslow Window  will significantly dwarf Apollo by factors of from 7x to 20x — i.e., in the $ 1 T to $ 3 T ballpark (current USD). http://21stcenturywaves.com/2009/05/18/10-lessons-the-panama-canal-teaches-us-about-the-human-future-in-space/

http://21stcenturywaves.com/2009/05/18/10-lessons-the-panama-canal-teaches-us-about-the-human-future-in-space/

Ironic indeed if that money had just been spent--- on simply keeping the economic charts up. Denninger in particular has the thesis that literally if you subtract government borrowing and spending on deficit, the REAL underlying economy that actually pays net taxes has shrunk to ca. 1998 levels.

The mechanism is simply that of substituting debt for actual new productively generated income.  The pumped in spending power raises apparent prosperity, but it not merely is an illusion but a lethal one, because all that borrowing has to be paid back someday—or defaulted upon. In either case destroying future prosperity for someone.  



You cannot ‘fake’ your way to a Maslow Window—or sustained prosperity.



A link to Karl’ Denninger’s chart for the USA (this blog  is free to publish it here with attribution which I here give) http://market-ticker.org/akcs-www?get_gallerynr=962



It charts “Nominal GDP, Deficit Spending, AND REAL GDP Year On Year”  The gap
between the blue and red lines is borrowing ALL of which must be repaid or defaulted on, again sucking capital from the future Maslow Window.

A link to a similar chart for the UK. http://market-ticker.org/akcs-www?post=184056

It’s home link http://www.goldmadesimplenews.com/gold/a-look-at-the-uk%e2%80%99s-%e2%80%98real%e2%80%99-gdp-3448/

A quote from there: “So when the government borrows money and pumps it into the
economy, it can make the GDP numbers go up and make the economy appear stronger
than it actually is. In essence the government is borrowing GDP from future years to make GDP in the here-and-now go up. However, this is all false because eventually that borrowed money has to be repaid through higher taxes (with interest) and all that ‘gained’ GDP will have to be given back.”



Yet the main problem is not all the wasted money, but the fact that when that stimulus ends the depression (long disguised) will bite hard, and the depression will not be over in the baseline scenario until well into the Maslow Window of 2015-25. Indeed, if Japan is any indicator it may eat the entire Window—leaving only the tragic delay till 2071.



Whoever is inaugurated in 2013  (if even conscious of the issues) will be trying desperately to keep a more favorable future happening even when natural presets are trying to derail it to an alternate-track bad future.  But if not conscious of the issues, he will hardly have a chance.


If the (Denninger modified) Cordell long wave theory is correct,) (and once again, this is Joseph Friedlander frankly speculating, NOT the ideas of Dr. Cordell or Karl Denninger) this may be 1932-33 coming up and there is literally no telling how bad 2012-13 may get. We are in uncharted waters...



This is political “Hurricane Season”. The breakup of the long established political ice shelves of the FDR and after era. This is an era of vast potential for good or evil.  We really could use political leadership coming down on the side of good, bringing about a resurgence of the economic and personal freedoms in eclipse for almost a century in the USA.  If the debt overhang is liquidated as well, the almost automatic result would be the beginnings of the 2015-2025 boom and probable new space industries. If on the other hand the debt overhang is not liquidated, the regulatory burden and tax burden increased to make the usual players happy, then hello 2071 in terms of Man’s penetration of the Solar System-- if Cordell’s view is correct..



I view the massive interference of the Fed and other political interventions in the economic life of the country—undreamed of or at worst in the embryo stage during the last long-wave cycle (when both John Maynard Keynes and Kondratieff himself were alive and kicking.)--as potentially altering the entire cycle.  Indeed, the spread of knowledge about the nature of the cycle itself is one of the key unique features of the CURRENT cycle.



The Kondratieff cycle on which the Maslow Windows are based was only very poorly understood (indeed being discovered) until the beginning of this last cycle, by Kondratieff himself. The 56 year energy cycle that Cordell notes elsewhere was only discovered in
1989.



Foreknowledge and what I will call ‘steering’ (very briefly, humans messing with the cycle
with varying degrees of awareness) introduces interesting problems as to ‘stickiness’ of the cycle itself.



Will widespread knowledge of the Kondratieff cycle and the Maslow window affect
behavior?  Of course. How could it not?  Just as knowledge of SOC theories (whether true or false) must.



 One of the best lines (it felt intuitively true) of the 2007 movie NEXT (with
Nicholas Cage) was " Here is the thing about the future. Every time you look at, it changes, because you looked at it, and that changes everything else.”  



Movie gimmick plots aside, that describes how what happens in quantum behavior http://en.wikipedia.org/wiki/Observer_effect_(physics)

http://en.wikipedia.org/wiki/Double-slit_experiment#Quantum_version_of_experiment

can have real world effects  http://en.wikipedia.org/wiki/Butterfly_effect

And lest you think these phenomenae can only apply to invisible things ‘not in our
realm’--

http://www.nature.com/news/2010/100317/full/news.2010.130.html

http://a-place-to-stand.blogspot.com/2010/04/multiverse-contact-biggest-scientific.html (Warning, VERY speculative theory inferred from the observed facts)

David Deutsch, an Oxford physicist, appears not to even limit these real effects to one real timeline in his ‘multiverse’ writings!  This is beyond my ability to assess, but the fact that a reputable physicist has said it publicly without contradiction is astonishing. http://www.guardian.co.uk/science/2010/jun/10/david-deutsch-multiverse-fabric-reality

http://www.guardian.co.uk/science/2010/jun/10/david-deutsch-multiverse-fabric-reality

I mention all this merely to point out that there is a lot going on that we cannot give an exact accounting of in the world, and it is intellectual arrogance to pretend otherwise.  As you need not understand a mechanism to make use of it; (we need not understand the haploid and diploid numbers to have a thriving sheep flock) so it may be here.  Centuries may pass until we understand the long waves real nature; but we can predict with them today.



Irregardless of exactly why long wave cycles APPEAR to work the way they do, the point is all that economic interference by the government and favored private players has the ability to make what was ‘going to tend to be’ go away.  A predicted boom time is not inevitable (sadly); a predicted war (happily) need not come to pass.  But why pass up benefits you can glean, and why take risks you need not?



You may have a great job and a great career path ahead of you but not if you stop paying attention to it as if it was real. That example job is an entryway to success, a ‘launch window’, a Maslow Window, whatever metaphor you care to name, that ALLOWS success but does not GUARANTEE it, particularly when you stop putting in best natural efforts.

In our national life in the USA we have acted as if a make-work ‘fake job’ reliant on a subsidy or monopoly  is the same as a productive ‘real job’ that foreign customers will seek to buy the production of with their own free will and their hard cash in hand.  The two kinds of economic activity are not equivalent.   For the game to work you need to play at it as if it were real.



We have a “transaction economy” which does not create wealth in terms of needed product but transfers wealth around  because of direct or indirect government mandates for services AT A NON MARKET PRICE.  (ie if schools were better all over and  taxes were hugely lower so would be lower the  effective cost of real estate—medical care would be cheaper if allowed to import generic drugs from overseas at 1/20th the price and the emergency clinics not mandated to serve anyone who walls in the door—people might choose to self insure rather than facing a legal requirement forcing you to do business with a car insurance company...)  In all these cases, the FIRE economy relies on legal mandates (often
literally written by their lobbies and sent to lawmakers as “model legislation”) to force you to do business with them at their price.  If you could refuse, the prices would have to decline to be attractive. Ah, but you can’t refuse… full price, please…



Inflexibility in an economy is like inflexibility in a personal working style—it makes it hard to adapt to changing circumstances —education where you do not have the right to opt out of local taxes if you wish to send your kids to private school—investments where you cannot put IRA money into a friends new tech business informally but must send it through Wall Street tollbooths first--- in each case, rents are extracted and inferior (non custom) quality of service built in.  And worse, it eats up funds available for real tech and real change.



How do we reverse this? There is a huge momentum to getting an economy moving forward—or backward, terribly hard to change, and even more wrenching to attempt going from deceleration to acceleration. President Obama’s call to double exports http://www.soundmoneyproject.org/?p=3913

http://www.nlc.org/news-center/nations-cities-weekly/articles/2011/may/columnist-foot-dragging-on-exports-a-metro-focus-to-the-rescue

http://articles.cnn.com/2010-09-16/politics/obama.exports_1_export-promotion-cabinet-initiative-report-american-goods-and-services?_s=PM:POLITICS

http://articles.cnn.com/2010-09-16/politics/obama.exports_1_export-promotion-cabinet-initiative-report-american-goods-and-services?_s=PM:POLITICS

http://articles.cnn.com/2010-09-16/politics/obama.exports_1_export-promotion-cabinet-initiative-report-american-goods-and-services?_s=PM:POLITICS

was as laudable as it was pathetic—it is like the principal of a failing school calling on the students to top the district next year with no real changes in curriculums, study habits, parental support, etc. There is an entire ecosystem of support systems behind every systemic success or failure and we are doing nothing sufficient to change this—another SOC opportunity (ie incipient crisis) in the near future.



In a guest post for Brian Wang’s bloghttp://nextbigfuture.com/2010/12/setting-up-industrial-village-on-moon.html  I commented on the kinds of transactions Jane Jacobs once noted: Transactions of decline and of ascent that can tear down the industrial vibrancy of an area (USA) or build it up. (China.)  There I said, how Chinese quality has gone from toylike (older readers will remember when Made In Japan was a cheap-shoddy-goods joke) to masterful in 20-25 years. Much of that was achieved by talent diffusion throughout a growing, learning and cross-hiring economy. Notice that they recently unveiled something like 10 new models of small airplanes. There are more car companies in China than US companies have models of cars. You learn by doing. You forget by not doing. Transactions of ascent. Transactions of decline. Which works for a group, a people, a nation?





All the same, the current bad economic situation the USA is in could turn around on a dime.  Whoever is inaugurated in 2013 would have to cut millions of  tax-subsidized ‘fake jobs’ with no voluntary customer, free up tens of millions of jobs in monopoly industries to face competition  from new startups, cut regulatory, legal and other barriers to the creation of export driven ‘real jobs’. (That this would be politically difficult is an understatement--every inefficiency pays or employs someone, and is someone else’s protected fief. But the economy as a whole can no longer afford to pretend that fake work is real work and that  tax subsidized or legally mandated unproductive activity is as valuable as real production for a willing customer that meets a real need.)



Because no one will willingly import something he does not need or already makes, these export items must be based on a variety of new technologies.   In other words, we need a new industrial revolution and the industries that power it.



So massive innovation, deployment of nascent and new technologies long suppressed by present IP law--and overturning of the present rigged IP monopoly system, would be a major priority. New industrial revolutions have ended depressions in past cycles. And  we need a new industrial revolution now.  For there can be no successful Maslow Window without widespread personal prosperity.

On ebullience, Cordell has written:





http://21stcenturywaves.com/2008/06/22/10-reasons-why-china-is-good-for-space/

Here at 21stCenturyWaves.com “ebullience” is a technical term associated with twice-per-century economic booms which elevate society to the highest levels of the Maslow Hierarchy. This extraordinary confluence of affluence and ebullience creates a climate supportive of great explorations (e.g., Lewis and Clark) and stunning MEPs” (Macro-engineering projects—this site focuses on the hope of great future space projects--JF)

And indeed, Cordell has written that “ebullience” can turn on a dime.



A great quote illustrating the nature of this sudden switchability in human morale is this from Preston Sturges:

“Yesterday, you were a hobo on the breadline. Today, you got a thousand berries and a new suit. If you can keep on like you've started today, there's no tellin' where you'll be tomorrow. This is a land of great opportunity.”

"The Great McGinty," Radio play version transcript http://www.genericradio.com/show.php?id=1CLNGKGTC

http://www.genericradio.com/show.php?id=1CLNGKGTC

What then are the political recommendations all this leads to?

In my guest article at Brian Wang’s Next Big Future blog, I wrote http://nextbigfuture.com/2010/12/summary-of-dr-bruce cordells.html#more

http://nextbigfuture.com/2010/12/summary-of-dr-bruce-cordells.html
- more


http://nextbigfuture.com/2010/12/summary-of-dr-bruce-cordells.html - more

“It is likely that Obama will be replaced... since he has gone through half his term with no sign of rebooting his Presidency—‘



(For more on this possibility see for example http://charleshughsmith.blogspot.com/2011/04/obama-will-lose-in-2012.html--JF)





”It would seem, therefore,
that we really could use political leadership that would act as if it did not have till 2018 or 2025 to fix things as seems to be the style at present, but that would cut WHATEVER HAD TO BE CUT and deregulate WHATEVER HAD TO BE DEREGULATED virtually overnight to enable the tech boom to materialize by 2015 (note that a 2012 victory would –even if overwhelming-- only have its enabling legislation in place by 2013 and it would easily take 2 years for the economy to recover even if 'instantly' set free in 2013. But if so-- AND we can keep out of a major war-- we can benefit from the full potential 10 years of the Maslow Window.





The nature of the deregulations should presumably be in things like IP and
patent laws (either complete abolition of the system itself or alternatively
vastly shorter terms, self-invention defense allowed, free filing, many other
tweaks) and contest generated, open-sourced, national lab debugged and error
checked new tech building blocks (and the tools to make them) that allow memes
to spread quickly in recombinant form…
(their inventors being free to combine them and market new salable products----an example  in embryo now would be the Global Village Construction Set (GVCS) ) http://opensourceecology.org/wiki-gvcs.php
 --but imagine interchangable capital tools like these but of a later
generation--with complete freeware software suites to run them expertly--
 to enable you to build and house yourself cheaply, ($5 a square foot)
equip a home farm and workshop cheaply, and keep your expenses down while you
start a home business--possibly selling your own crafted invention  (an innovative mashup of sub-inventions previously locked down for decades under corporation favoring patent laws)



This could lead to an explosion of innovator’s communities, each family adding value, as Devin Finbarr has dreamed of (but not legally possible in many jurisdictions today)

http://intellectual-detox.com/hackertopia-a-better-city/



The end result would be reminiscent of Kevin A. Carson’s Homebrew Industrial
Revolution http://homebrewindustrialrevolution.wordpress.com/ Where a distributed ecosystem of small producers works at home with no commuting cost and costs are low and retained earnings high--massively building up family capital.  The opposite of this is the reality today, as covered in The Decapitalization of the West by  Kevin Dowd.



How unlikely is this innovator’s paradise to happen spontaneously? —Very.
 That is why so much depends on who will be the next President. My thesis
is that ‘no one in the system can fix it’.  The deals have been too artfully cut, the pies too finely sliced, with so many people per promised piece of pie that in what all consider vital times to cut some expenditures, barely 3% of the budget was actually brought into play in the recent budget negotiations—and the required modifications are on the order of 50%.....  



Not only this, but you will note concerning the title of this piece--:  It’s Hurricane Season and They’ve Hocked The Storm Shelter … what might that storm shelter be? In an financial storm absolutely unprecedented in our lifetimes?



Karl Denninger has written http://www.freerepublic.com/focus/f-news/2545738/posts

Nearly three years ago I recommended that the government fund and put aside $200 billion in actual cash to provide emergency shelter and food for up to 25% of the population for as long as 12-24 months. I was entirely serious, although I'm sure that many Congressmen and women who got my faxed letter perceived me to be absolutely insane. My recommendation was to be prepared to provide "three hots and a cot" on closed military bases or unused parts of active facilities for this purpose. These would not be "luxury accommodations" or even trailers - we're talking literally "three hots, a cot, hot water to shower with and flush toilets."
That's all…we need to figure out how to live in a nation with a forty percent
smaller GDP than we now have. Yes, 40%. That means you, I, everyone else. The
"living large" game is over. All Ponzi Schemes ultimately collapse - they do not go quietly into the night. The collapse is brutal, it's quick, it's efficient and it's devastating to anyone caught in it….




Friedlander: That is what analogous to a storm when it hits. It’s bad enough when there is a storm shelter (Think the Louisiana Superdome stadium during Katrina). The analogy is Denninger’s suggested $200 billion ‘three hots and a cot’ plan above.  But suppose the Government spends as if there will be no bond
market emergency that will freeze the ability of cash to seize up—and then it happens?  What would have been the toll of human life had the Superdome not been there? It would have been like East Pakistan in 1970. http://en.wikipedia.org/wiki/1970_Bhola_cyclone-- a great river delta choked with floating human bodies.



Yes, Denninger’s plan sounds extreme. It may well be extreme.  But if it is ever needed and not there, game over for a lot of helpless folks.

(Just as Katrina was avoidable—not the storm itself, but to pre-build the
levees to Category 5 strength.  Just like the thesis of this article—to know there are times and places we are most vulnerable—and to pre-reinforce our lives against those risk factors.



Lest you wonder on particulars--When a sudden financial crisis hits, even sound businesses will often go under from simple cash flow squeezes then--collectables will simply not be good for money, and payables must be paid
or a hotel might not get supplies and the unsupplied guests will leave (income
in a depression in other words is intermittent, expenses constant for nearly
all businesses)---and demand is so down anyway that losses of any kind (including much more frequent bad debts) become insupportable--- an old sad story. In the 1980s I read in the Chicago Public Library issues of the Chicago Economist, a now defunct publication, issues from the 1929-37 Depression years. All this is like deja vu to me, because I literally have seen the last iteration in month by month detail)--the denial, the lies, the brave talk, the refusal to cut budgets or prepare for exhaustion of reserves, the taxpayer revolts, etc etc etc)) All that happened in the last supercycle, and many indications are the current one will be worse. (Say 40% US GDP contraction vs 25%).  This in a time when Americans have largely forgotten how to farm, how to garden, how to scrounge and improvise. A starvation diet after a feast can take a fearsome toll.



I don’t see proactive preparation against these possibilities happening
systematically in Washington.  Nor on the state level with a very few
exceptions. Instead, the incumbents seem intent on squeezing through taxes what
they could not save in cuts (Ironically ensuring that more businesses fail than
need to when the real crunch comes—and all to maintain a fake ‘boom’ in government and its contractors—an unsustainable boom).



But really, if they had taken even elementary precautions against even predictable results (such as the real estate bubble and bank excesses allegedly being
controlled by ‘farsighted regulators’) we wouldn’t be in this fix would we?



Therefore I great interest in who runs for President in 2012. The extraordinary political temper of the times render possibilities literally unthinkable in many directions. Who knows what will happen? On a political note, it is worth nothing that traditional barriers to candidate entry have been falling down
because of previous Maslow Window cycles and their tech developments.  

Remember that before Obama was Obama of the late campaign he was Obama of the early campaign.when he was against the (then) invincible Clinton machine--- Mrs. Clinton was the candidate to beat, the veteran with a machine unbeatable in most eyes, every endorsement sewed up, every odd end nailed down, every raincheck, every IOU properly positioned--- Obama was a guy who had made one good speech in 2004 http://www.timesonline.co.uk/tol/comment/columnists/andrew_sullivan/article3997523.ece

Then his revolutionary use of Facebook turned things around so he became the
unstoppable "O" of the late campaign.



Having the misfortune to actually win, he could no longer merely campaign but that is another story...







My bet for this cycle is that You Tube will be as revolutionary as I have stated.  (Back in the 1970 timeframe, I visited a campaign headquarters as a boy. They had huge staff there to print and send out brochures—now handled by blogs and downloads.  What is the Internet but a free pamphlet press?  What is You Tube but a free commercial channel? What woud be interesting to see if someone could  use YouTube and Facebook together in a new and unprecedented and kind of mutually self-booting way.





This is political science fiction—so no way to know just how much of the
potential will become realized—but for example, to get the couch potato
audience, (unless they have a large screen internet access monitor near the
couch) you need traditional push media and that costs hugely—indeed is
the very cause of the ‘best politicians that money can buy’ permanent campaign
that so many complain of nowadays.  The reason no one in the system can
fix it is, in order to GET INTO THE SYSTEM, they need to have made deals they
cannot go back on. Change is locked out.



The cost of winning a national election IN THE CONVENTIONAL MANNER is what the major parties pay. Obama raised about 3/4 billion $, McCain about $ 1/3
billion.  The LP around $1 million according to this http://www.opensecrets.org/pres08/index.php A successful primary campaign alone done the conventional way costs tens of millions of dollars. Indeed, literally unthinkable things could happen, more revolutionary even than Obama himself in 2008 (and yes, I did get a wonderful shiver of history as I saw a black man ascend to the White House—but a revolution is only new once. Soon the new makes way for the newer still. Or if not soon, sooner or later.



As “Hurricane Season” theory speaks of probabilities, we must realize the practical and political realities of running for President of the USA.   The President and Vice-President once ran as a ticket but now no longer do.  You can run all you want but unless you have 45-50 state ballot access you rely on multiple miracles not one-- —write-in candidates have won but only in the most extraordinary circumstances—and NEVER for President outside of primaries. (A handful of Senators have done it) http://en.wikipedia.org/wiki/Write-in_candidate

http://en.wikipedia.org/wiki/Write-in_candidate

The ballot access is jealously guarded and neatly sewed up between the two main parties. Oklahoma for example is nearly impossible territory for someone not in
those parties. Wyoming requires on the order of 2% of registered voters to sign
petitions. And just to stop you from getting the petitions via friends and
family often they require a majority of counties in the state-- this
effectively keeps anyone without (say) $2-3 million in cash from running for
President.  This in fact is a major limiting flaw in our democratic system
because the popular impression is that you need only announce for President (or
register for free) to appear on a ballot. Not so.  No other change would
 more open the system up to change—or is more unlikely to pass the
jealously guarded system as it is. http://en.wikipedia.org/wiki/Ballot_access#Overview_of_ballot_access_in_the_U.S.

http://en.wikipedia.org/wiki/Ballot_access
- Overview_of_ballot_access_in_the_U.S.


Ross Perot in 1992

http://en.wikipedia.org/wiki/Ross_Perot_presidential_campaign,_1992

managed the feat of 50 state ballot access but at the cost of many millions of dollars. http://en.wikipedia.org/wiki/Third_party_(United_States)#Ballot_access_laws

http://en.wikipedia.org/wiki/Third_party_%28United_States%29
- Ballot_access_laws


And other parties, mentioned there, have done as well or less well.  The lowest cost estimate I have seen to manage the feat, with only paid labor,
might be a few million.  With volunteers, the chicken and the egg problem
re-emerges, how do you boot enthusiasm? There may be other innovative strategies yet; we shall see.



Another thing not commonly known is the FEC limit of $5000 in expenditures triggering constant reporting requirements. In  1996 Ralph Nader http://en.wikipedia.org/wiki/Ralph_Nader_presidential_campaign,_1996

http://en.wikipedia.org/wiki/Ralph_Nader_presidential_campaign,_1996

“refused to raise or spend more than $5,000 on his campaign, presumably to avoid meeting the threshold for Federal Elections Commission reporting requirements; the unofficial
Draft Nader committee could (and did) spend more than that, but the committee
was legally prevented from coordinating in any way with Nader himself.”



I have enormous respect for that choice of Nader’s—it said a great deal about his disdain for politics that can be bought with contributions

Some opinions are that the 2012 election could be as decisive as that of 1860. http://www.theburningplatform.com/?p=7903

http://www.theburningplatform.com/?p=7903

Recently Newt Gingrich has agreed with this opinion. There could be massive political tectonic shifts, the equivalent of the drift of continents to a new
configuration. (Note that the very magnitude of change, even if unfavorable at
first can prime the psychology of people for great positive changes to come)



That is the exciting thing about Cordell theory—great tides of history that can lead us to ebullient times when anything is possible! Not
probable—possible. What happens, the recorders of this next cycle of history will write.



One possibility is a twist on 1860—the emergence of a new party to take the
place of an old one.

There is a kind of 'launch window' for this that will have gone away by 2016. There is sort of a 'interval of maximum discontent' with the two established parties coming up.



http://en.wikipedia.org/wiki/Duverger's_law

A third party can only enter the arena if it can exploit the mistakes of a
pre-existing major party, ultimately at that party's expense.

For this brief opportunity window, the American people will KNOW that things as they are will be unsustainable. They will at least be open to listen.


We have challenges that would stagger a generation and they must be met in less
than 2 years to catch the opening of the 2015 window.


But given that the storm shelter (the emergency borrowing capability of the Government)  is hocked (we are running against our limits to borrow without drastic inflationary effects)—my hope is that some candidate——will do the things necessary soon to reboot the economy.



I would like to see America open a new Space Age and recover 1960s style prosperity and economic mobility. If you would too, vote carefully.





Thanks to everyone who made their text and pictures available for the use of this article.
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