Tuesday, July 6, 2021

The Decline and Fall of American Civilization

Victor Davis Hanson is about as pessimistic as I am about the current state of American disunion. Thus, I pay special attention to his picture of America two days after Independence Day.

He begins with some sobering thoughts about our pumped-up barely functional economy. He especially cares about the arrival of inflation, and of stagflation. One remarks that one Larry Summers, no right wing zealot he, has also warned about the arrival of crippling inflation.

In Hanson’s words:

Within the space of about 6 months in 2021, the costs of the essentials of life have skyrocketed—food, gasoline, housing, appliances, cars and trucks, and building materials. Non-ending streams of stimulus money, huge deficits, and pent-up demand so far have ensured that Americans would pay such spiking prices. And soon radical inflation may trigger 1970s stagflation and then recession, as the “why-go-to-work?” checks and consumer zeal finally cease, but the government printing machine keeps going. What good is free government money if spiraling prices eat away the entitlement? 

As for stagflation, I will quote a few words by one Nouriel Roubini, a prognosticator with an excellent track record. He wrote this for the Guardian. I will not offer too much commentary, because the analysis is beyond my expertise:

For now, loose monetary and fiscal policies will continue to fuel asset and credit bubbles, propelling a slow-motion train wreck. The warning signs are already apparent in today’s high price-to-earnings ratios, low equity risk premia, inflated housing and tech assets, and the irrational exuberance surrounding special purpose acquisition companies, the crypto sector, high-yield corporate debt, collateralised loan obligations, private equity, meme stocks, and runaway retail day trading. At some point, this boom will culminate in a Minsky moment (a sudden loss of confidence), and tighter monetary policies will trigger a bust and crash.

But in the meantime, the same loose policies that are feeding asset bubbles will continue to drive consumer price inflation, creating the conditions for stagflation whenever the next negative supply shocks arrive. Such shocks could follow from renewed protectionism; demographic ageing in advanced and emerging economies; immigration restrictions in advanced economies; the reshoring of manufacturing to high-cost regions; or the Balkanisation of global supply chains.

More broadly, the Sino-American decoupling threatens to fragment the global economy at a time when climate change and the Covid-19 pandemic are pushing national governments toward deeper self-reliance. Add to this the impact on production of increasingly frequent cyber-attacks on critical infrastructure, and the social and political backlash against inequality, and the recipe for macroeconomic disruption is complete.

Making matters worse, central banks have effectively lost their independence because they have been given little choice but to monetise massive fiscal deficits to forestall a debt crisis. With both public and private debts having soared, they are in a debt trap. As inflation rises over the next few years, central banks will face a dilemma. If they start phasing out unconventional policies and raising policy rates to fight inflation, they will risk triggering a massive debt crisis and severe recession; but if they maintain a loose monetary policy, they will risk double-digit inflation – and deep stagflation when the next negative supply shocks emerge.

Clearly, Roubini is not very optimistic about the future.

For our part we have been covering the general disintegration of the state of California. See yesterday’s post and the post from July 2.

Hanson lives in California, so he offers a more ground level assessment of the state of that state:

California is the worst run of our states. But it is also always a helpful bellwether of where we are descending. The state has plenty of oil and natural gas. There are still remnants of a once-thriving nuclear and hydroelectric industry. But power outages are now commonplace—to the point that, like Third-Worlders, we merely shrug when the lights go out as if it were a green way of reducing carbon emissions.  

Forty million people driving on roads and highways intended for 20 million people—27 percent of them not born in America—becomes a “Road-Warrior”-like wildness intended to discourage the kind of driving to which we became accustomed in the 20th century. Any trip over 200 miles cannot be calibrated by traditional “arrival times.” Ad hoc repairs on ancient roads paralyzes traffic not already slowed by accidents. Speeding and traffic violations are commonplace. Either the population ignores or does not know the law, or a paranoid law enforcement is reluctant to enforce the laws, or there are simply too few patrol cars responsible for too many drivers.  

Gas can range from $4.00 to over $5.00 a gallon; $100 fill-ups are common. To go to a California Home Depot or Lowes store is to be amazed at grades of plywood priced at nearly $90 a sheet.  

Californians are leaving in droves, but housing costs are still soaring. Californians love nice houses. But those who have them don’t like to allow anyone to build new ones for others. 

So much for transportation and travel. So much for energy management. Hanson continues to remark that the state is suffering a drought. One suspected that this has resulted from mismanagement by green zealots. Apparently, such is the case, exception made for the overclass of hyperrich tech tycoons, who deftly shield themselves from the inconveniences that their green policies foist on the lower classes:

A horrendous drought has dried up reservoirs and dropped the water tables of most aquifers. Privately, Californians know that it was madness not to build reservoirs, all canceled over 30 years ago, or to allow the California Water Project’s infrastructure to decay, or to continue to allow scarce fresh water to flow into the sea, or not to invest in new technologies of underground water savings and storage.  

But they also know that as long as the Bay Area’s activists have sufficient supplies of water (from their own early 20th century, far-seeing politicians who created the huge Hetch Hetchy transference and won first-dibs allotments from the subsequent California Water Project), they will continue to push green agendas, the disastrous consequences of which the elite avoid, given their own wealth and power.  

Remember the plan to build a high speed railroad from San Francisco to Los Angeles? OK, it’s a fading memory; it will never be built. Remember when Tom Friedman sagely noted that America’s inability to build high speed rail lines meant that America was no longer a serious country? Many people railed at Friedman, but his analysis does not differ from Hanson’s.

High-speed rail is a tragic joke. It is inert and unfinished. The ostentatious half-built overpasses stand like modern graffiti-stained versions of Stonehenge. Its only ostensible purpose seems to have been a green plan to siphon money from road repair and expansion. 

As for the crime wave engulfing San Francisco, we have already covered it. So we allow Hanson his word:

Mention San Francisco to a Californian, and the same, monotonous warnings arise: don’t go there! And if you must, don’t park there—since smashing into a car and stealing its contents are viewed as understandable redistribution rather than criminal acts. Others advise to check constantly the soles of your shoes: human and animal excrement is ubiquitous as the city’s sanitation regresses to something resembling Old Cairo or medieval London.  

And then there is forest management-- a joke-- as the forests burn:

I drive often to the central Sierra. For the last four years the talk there was “Why don’t they do something about the millions of trees that have died from drought and bug infestation?” The locals now say of the incinerated forests “Why don’t they do something about the millions of those charred black trees?” Such sincere questions assume people matter more than ideology. They don’t.  

In a state where defecation on the sidewalks apparently hurts no one, drought and fires consuming a forest are also OK—as long as it is likewise deemed a function of nature. In California, logging an acre of timber is insurrectionary; 400,000 acres going up in smoke is “stuff happens.” 

And, of course, California is not the only place suffering a crime wave. That is, a crime wave that is not called a crime wave. America’s major cities are suffering spikes in crime-- and no one in charge really cares:

The current chaos of everyday life of course follows from national policy and politics. The streets are on a reverse trajectory into the 1970s, since crime is redefined as either tolerable collateral damage, “equity,” or a collective indictment of society rather than one of individual culpability. 

When mayors claim that burning a police precinct is a mere loss of “brick and mortar,” or taking over downtown Seattle is just part of a “summer of love,” or when the architect of the “1619 Project” claims looting is not violence, then crime is no longer crime. 

So, America is self-deconstructing. No real surprise there. Hanson is quite right to see that America’s adversaries are celebrating the decline and fall of American civilization:

Our adversaries can’t quite believe their good fortune. Had they thought up ways to divide and impoverish America, to see its cities burned, and looted, to weaken its economy and currency, to erode the unity of its once-feared military, and to entrench the most effective critics of America in America—not in Beijing, Moscow, Pyongyang, or Tehran, but in corporate boardrooms, campuses, newsrooms, Hollywood, Wall Street, and the Pentagon—they could not have improved on what has happened in 2020-21, the era of our collective meltdown.


Mark Matis said...
This comment has been removed by a blog administrator.
Sam L. said...

The STUPID is STRONG in California.

Anonymous said...

The "STUPID is STRONG in _________" Posts are not just getting old, they've become dull and boring. Someone needs to buy some new material.

Anonymous said...

Hey Anonymous @July 6, 2021 at 1:36 PM:

Sam L. has been commenting here for a long time.

And he’s right.

Show some respect.

And it’d be swell to track your “dull and boring” comments, if we knew who you are.

I always sign off on mine, but I cannot login because Google wants to put me through all their zany filters.


Bilejones said...

What is this "Our Adversaries" nonsense?
Tehran, Moscow, Beijing are not my enemies and them opposing the rapacious practices of Washington does not meke them so.