Thinking About Technocracy

I’ve tried to not write of late. Tried. It isn’t easy. You’ve got be made of reasonably stern stuff if your inclination is to face the world with a keyboard during times like these.  So why not write?  For one, I’m not that informed.  Sadly, neither is anyone else.  Anyone who tells you she/he is in a position to call the cards is a liar or worse.  Second, I think there is enough commentary.  What we need now is calm analysis, policy ideas, and planning.

Eastern Europe is disintegrating.  That’s the immediate crisis.  With it goes the banking systems of Western Europe…especially Austria, England, Belgium and the Netherlands.  wipe out those banking systems and the Euro starts to collapse.  If the Euro goes South, recovery in the US becomes all the harder.  People are still generally expecting the US to lead out of this nightmare.  Hard to see it, but that is the expectation.

I have heard informally things are particularly bad for the UK if Eastern Europe burns.  It looks like it might.  Latvia, Estonia, the Ukraine, Hungary, Romania and Serbia look particularly bad.  All are volatile…all rest close to a corrupt and foreign currency rich Russia.  It’s a lot of sparks next to a pile of dynamite.

The IMF and ECB need to focus on that problem set first.  Summer is coming and the priority is food and enough energy to survive next winter.  Second, there has to be a plan for getting manufacturing off its back.  That’s going to entail more government debt…has to.  There is no other short-term way, and there isn’t a long term without a short term.

Governments are going into survival mode.  They need time for something positive to happen.  What that might be, I cannot say.  But they need time…at least 9 months…probably 15 months.   Without that much time, a series of cascading collapses continues the current run.  Time is needed to start laying out enough policy to get something going.  Time can only be bought with government debt and currencies that are worth something.  On the other side, the resource rich countries and the wealthy of the East are going to have to be debt buyers.  I don’t see another way.

If we choose market collapse in the hope of some market-driven recovery, it will end violently in ways we don’t now comprehend.  One could imagine serious civil wars in Mexico, Russia, Venezuela and in Eastern Europe…or starvations/deflations that erase a generation and allow corruption to take hold in places it is in retreat.  It’s all about time right now.  Time to stabilize through micro-reorganizations, new visions, new parties, something.

Jim Manzi points to Conor Clarke taking on the fundamental truths of economics…here.

In India…but really, everywhere.

I’ve been talking amongst friends now for over a year about the gravity of the UK’s situation.  Calculated Risk pointed to this Roubini comment saying the UK is not the next Iceland–which Jim Rogers apparently claimed it might be. I didn’t see Rogers’ comment.  He’s often a little bit on the theatrical side but I always like hearing what he has to say.

The political demands to keep Sterling are obviously profound.  Britain still sees itself as a global player of empire-level importance.  This separate stand will work against the UK in the long run I suspect.

Still the UK is adding debt at a dangerous rate and the truth is, no one, Rogers or Roubini included, can forecast where this comes out for the UK with any plausible accuracy.  Iceland was a smaller economy and much more at risk of short-term radical bank failures.  Iceland has several hundred thousand people.  The UK has tens of millions.  Still, to see ancient institutions like the Royal Bank of Scotland crash and burn is more than bit troubling.  The UK is certainly the large economy that is most distressed right now.  Spain and Germany are also struggling, but as I interpret the data, they look to be a bit more in conventional recession than the institutionally challenged UK.

In sum, I doubt both Roubini and Rogers.  I think the future is far too murky to forecast accurately just yet.  We definitely need to see an end to the decline of real estate prices in both the UK and the US (as well as Spain and Ireland, etc.) before financial stability is going to return.

Here’s Der Spiegel on the catastrophe that is German banks.

John Kemp at Reuters throws in his 2 cents.  I think Kemp is closest.

From Leonardo Energy…here.

According to ScienceDaily, the Arctic is warming at a faster pace than other portions of the Northern Hemisphere.  This of course is going to lead to more rapid sea rises and other related problems (destroyed fisheries, coral bleaching, etc.) at earlier than anticipated junctures.

Taleb is a smart guy.  He’s shattering shibboleths and holy rules right and left it seems…or at least trying to.  I’d take him seriously.  Charlie Rose seems to:  here.

Asia Times doubts the future (particularly for Europe): here.

I have a rather academy-laden book called From Higher Aims to Hired Hand:  The Social Transformation of American Business Schools and the Unfulfilled Promise of Management as a Profession.  The author is Rakesh Khurana.  While it is dry, it’s also one of the better books I’ve read in many respects, and I’ve lent it out several times.  It was printed  before the current financial debacle.  It chronicles, in short, the moral fall of the current generation at the hands of business schools and the underlying mentality that is now so pervasive…me first!  I’m sure the author would cringe at my over-simplification of his theme.  Still, I’d say it is well worth the read, particularly for those influenced by historical narratives.

What makes technocracy seem particularly naive in our current age is the incredibly dominant mentality whose rise Khurana neatly plays out in a few hundred pages.  It does seem ludicrous and naive to think anyone is going to listen. 

No, I don’t believe business schools killed us all like Macbeth killed Duncan, and I’m not whining about it, regardless.  However, I do believe that the mentality that became a feedback loop in our society–the notion that a person should loosen to the extreme any ties held to anything social beyond that which contributes to one’s own gain–has become so extreme and corrupting that anything else in its face tends to be greeted as absurd.  And that feedback loop has threatened our end. 

Among  my own colleagues and friends discussions of higher aims and stewardship are often met with cynical laughter.  It’s not that I’m stunningly high-minded.  I mean the very idea that people might contribute in some way that is selfless and constructive without seeking reward is taken to be patently risible again and again.  Even those few people who have achieved something in the current wasteland and then try to give a tiny bit back are targets of derision.  Philanthropy is cool only if it becomes a self-obsessed plaything. 

At some level and at some point the same educational melanoma that business schools implanted in our future must be excised.  How?  I have no idea.  It seems that the collapse and reform which are co-present in a social grid of collaborative communication and rapid learning–the Internet–is one possible vehicle for surgery.  Of course that threatens to make one a fringe member of the loony doomsday sects that are all to common in any age–and which have been empowered by having the Internet at their disposal. 

The difference, maybe, is that (and this is the difference always noted by the insane) the threat this time seems all too real.  We might have gone and done it to ourselves.  Finally.  This isn’t Dr. Strangelove’s ironic immediate death.  This is a slow warehouse of the sapped and primed for agonizing death that we seem to be opting for.  That a person who feels rational is even able to give voice to the consideration seems all too close a reality for comfort.  Maybe that’s my purpose here.  I’m hoping for a mechanics of evidence-based action in governance.

This from December’s Scientific American:

“Our world relies on oil for everything: fuel, plastic even food. And with prices now plummeting one might predict a return to the age of abundant, cheap fossil fuel.

Not according to the International Energy Agency, which now predicts “peak oil” as early as 2020. Peak oil is the point at which the world’s oil producers are drawing as much oil out of the ground as they will ever be able to. Paired with continued growth in demand from places like the U.S. and China, that’s a recipe for much higher oil prices.

A majority of oil executives surveyed by the consulting firm Deloitte agree. They predict an end to cheap oil within the next 25 years–and an even larger majority think it will cease to be the cheapest energy source.

But rather than searching for ways to stretch the oil we still have–like a modern Hanukkah–it makes more sense to accelerate development of clean alternatives such as electric cars or biofuels from algae–and avoid dirty ones like turning coal or tar sands to liquid fuels.

As a Saudi oil minister once said: “The Stone Age didn’t end for a lack of stones. And the Oil Age may not end for lack of oil.”

—David Biello