Saturday, August 7, 2010

Jessica's Lighthouse Theory of Economics

The global economy is like an old-fashioned light house that turns around and around, shining its light now here and now there. In the late 1970s and early 1980s, the lighthouse was shining in the direction of where Japan had been standing for about 100 years for deep cultural reasons. These were the days of Japan As Number One and everyone rushed to learn the Japanese way. Right about when many were convinced that Japan was unstoppable, their economy crashed and more than 20 years later has still not recovered. Because the beam of light from the lighthouse had moved on. Now it was shining on America.
Japan had done well because their extremely conformist culture made them the nation best suited for large-scale manufacturing of fairly complex devices, for example Sony Walkmans and video recorders. But when even higher-level manufacturing began to migrate to lower cost countries, such as South Korea and Taiwan and Mexico and eastern Europe, Japan's insularity made it unsuited. Also, the new products that started to emerge at that time had to be evolved with a large amount of feedback from consumers. Engineers knew what a VCR needed to do before consumers had even heard of them. Google only learned what its product needed to do from how its consumers used it. Japanese society makes for a poor test bed because of the dominance of top-down information flow and passive consumers. What was needed was a nation with the flexibility to adjust quickly to changing conditions (for example as first PCs, then networks and cellphones became more and more powerful) and with spoiled demanding consumers. So the lighthouse was shining right where America had been standing all along. America was much more nimble than other nations because our sense of solidarity, our consciousness of We, is so much less. In other words, America became the model economy because we are much more willing to throw each other to the wolves and because of our greater loyalty to our one true religion, making money.
Imagine a tall ladder. One guy is working at the top and a second guy is holding the ladder steady. A beautiful woman walks by. Most countries have enough solidarity that the guy holding the ladder steady looks whistfully at the woman but stays at his post. America means that the guy holding
the ladder chases after the woman. So more sex and more broken necks.
And my metaphor is actually backwards because it was the folks at the top who got to play and the ones at the bottom who were hurt by it.
With the economic crash, the lighthouse has moved on again. I suspect that America's lesser solidarity and greater reverence for making money will serve us very poorly in this new age. It already is. That is the reason why our only political choices are between a rational hypocritical party of money (the Democrats) and a bat-shit insane honest party of money (the Republicans).
It always takes a little while to figure out where the beam of light from the lighthouse has moved on to. I see two possibilities. One is societies that have the right combination of solidarity and brightness to adjust to the new times cooperatively. What will be needed is the cooperation and trust so that large numbers of jobs can be eliminated and replaced smoothly because those losing their jobs can trust that they will be given the training and help needed to find new places. In America, even if a sincere attempt was made to do this, those whose jobs were under threat would assume that the promise of retraining and new jobs was just a scam. And they would be right. It probably would be. And even if the original intent was sincere, by the time the political and corporate system implemented it, it would have been turned into a scam.
Nations that are bright but lack solidarity will tear themselves apart fighting over competing solutions (ie fighting over who plunders and who is plundered). Nations that have solidarity but are not bright will stagnate in a pleasantly funky kind of way. The Arabs have been doing this for nearly 800 years and the Japanese may be headed that way. The nations most likely to hit the right balance are the Scandinavians, the Netherlands, and the German speaking nations and perhaps some of their Eastern European neighbors.
The other possibility is that the lighthouse is pointing at authoritarian hyper-capitalist states, from China at the poorest and more corrupt to Singapore at the richest and cleanest. Personally, I think that the Asian production-centered economies can not function without some place to export their surpluses. Because if you rig the rules to make it too easy to produce stuff and too hard to afford to consume it, then you will make more stuff than you can sell to your own people. And America can't buy all these exports any more and Europe won't.
in any case, you will know where the lighthouse is pointing when once again we are being told that a certain nation or nations have figured it all out. Just remember when this happens that the new model nation just happens to have already been standing there. And for all their supposed superiority, they will still be standing there after the beam of light has moved on.
In fact, the experience of how well things worked while the light was shining on them makes it even more likely that they will stay stuck in that same spot even after it goes dark, wondering what to get back to doing what they did in the glory days. Even though their problem is not that they changed but that they haven't.
By the way, the deep American reverence for making money goes back to the early 1600s and the origins of the Protestant Reformation and will not be changed easily.

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