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Dawn In America Part Two

The American People will take Socialism but they won’t take the label  -Upton Sinclair

I believe that the American people will want the label of  “unfettered capitalism” but will not necessarily adopt the economic system.  Americans like government in small doses but they like (and mostly trust) their government.  The morality of the argument for voluntaryism, while sound, will be difficult to adopt.  Those of you, who believe that government is the problem rather than the solution, should never stop saying  “I told you so“  when Statist policies fail but you would do well to remain aware to the fact that Americans like a little bit of government. That is how we can thrive amidst chaos.

Let’s talk about how we might prepare ourselves for the next 20 years:

I don’t believe we’re in a depression nor even a recession nor do think the 1930′s were a depression.  Rather, I believe we’re in the middle of a huge economic shift like the one we experienced in the early part of the 20th century.  The economic decline of the 30s and the current economic decline was a fallout from a shift in technology.  The economic decline of the 1930s was some 25 years after the implementation of the assembly line at Ford Motor Company.  It took that long for the economy to absorb the shift from a mostly agrarian society to a manufacturing society.  It was no easy shift, either.

Critics in the 20′s and 30′s claimed that we couldn’t eat machines but crop yields increased “spectacularly” in the twentieth century.  Domestic food production was so efficient that, despite what Willie Nelson said 25 years ago, American farmers were quite prosperous.  The market rewarded those who improved our lives by moving us along roads, on top of the water, and through the air…faster and cheaper.  Americans wanted to travel because we were already well-fed.

Is it any surprise that the current economic decline happened some 25 years after IBM’s introduction of the PC?  Is this really a “failure of capitalism”, as Van Jones might have you believe, or an unexpected response to the Fed trying to prop up a an economy that was shifting away from mature industries and towards growth industries?   I don’t think we’re recessing, I think we’re progressing to a more abundant society and I think the internet is one of the technologies that will help us get there.

A business school professor introduced me to this “shift” in 1987.  I can’t remember his name for the life of me but I can hear his booming, provocative voice asking us what our parents’ professions were and what our intended professions might be.  Our answers were predictable.  Plant managers’ kids wanted to be accountants.  Coal miners’ kids wanted to be stock brokers.  Farmers’ kids wanted to be IT architects.  That professor accused all of us of being guilty of wanting to make “nothing” with our lives…

…and then he told us that it was perfectly fine. He described our generation of business school students as being on the precipice of (what he called) the fourth factor of production; information.  He described an information economy that sounded like something out of a George Orwell novel.  Bewildered, I saw this crash coming way back in 1987 when I thought “who the hell is going to buy information?”.  I was right about the crash but wrong about the reasons.  This is the fallout of a shift in the economy and, like my professor, I think that’s perfectly fine.

I still am unclear about how to really profit from this information revolution but I see entrepreneurship alive and well in that sector.  Make no mistake about it, the Government will try to find a way to control this growth.  Soon, you may hear that the internet is so essential to our nation’s commerce that we can’t afford leave its maintenance and operation solely to “for-profit” enterprises.  When that won’t work, they’ll just jail the innovators for being too successful.  Reject that tyranny lest I have to say “I told you so”.

This is the second part of The Dawn in America series.  Read the first piece here I’ll offer some more thoughts about opportunities in the future.

Related posts:
  • Dawn in America Part 3.5- Who Needs Jobs?
  • Reading the signs and portents of Obama’s America
  • Dawn In America- Part 3-Can We Educate the Masses (For Profit?)

  • 9 comments

    9 Comments so far

    1. Mike February 27th, 2010 10:16 am

      The US consistently ranks in the top 10 in the Index of Economic Freedom.

      If you want to see what socialism looks like, take a trip to France, they rank 64th. Or better yet Russia, ranked 143rd.

    2. Sean Purcell February 27th, 2010 5:33 pm

      Your second piece is definitely more optimistic than your first. I love your idea that these long term shifts – Kondratiev Waves really – show a necessary decline 20-30 years after a shift in the fundamentals of the economy. Historically this appears to have some real validation. You mention the industrial revolution but don’t we see this correlation with the agricultural revolution and even the age of enlightenment?

      My concern is the damage done by the train wreck we must experience first. I have no doubt a train wreck is coming and there is no chance for us to get off the track. It is fait accompli at this point no matter what happens in November. The devaluation of the dollar hasn’t truly begun in earnest and the damage of our unfunded debts is not recoverable. (Our home state of CA will be the precursor I’m thinking.)

      So the optimism is that on the other side of this wreck is the glory of an information based economy. Here are my two issues (in order of importance)
      1. The centralization of information is not a good thing and I would even argue that it never ends well over the long term. What makes the internet so grand is that it serves us by being the decentralization of information. But is that true? How funny did we all truly find Tom Johnson’s Google post? I know the internet may yet be the basis for the revolution so many of us desire… but I fear we may still have some real painful episodes before we come out the other side.
      2. Your assessment of today’s opinion of politicians and government in general seems extremely generous to me. Most of the polls I see reflect a tremendous lack of trust for our “leaders.” This may be a good development for the revolution of the Voluntaryists (required even), but it does not bode well for any future system involving a Federal Republic. Trust in that system is integral and once lost a long time in recovering.

      In the longest term, I too am optimistic. I think the desire for freedom is innate and I think most people are genuinely caring and industrious. But I’ve been wrong before.

    3. Don Reedy February 27th, 2010 6:56 pm

      Brian and Sean,

      You guys are simply too intelligent, and simply too street savvy, to hold much in the way of any of the optimism you espouse. Let me explain.

      Your “train wreck”, Sean, is not just a derailing, but is a catastrophic coming together of out of control bullet trains carrying the financial passports of this whole country. The wreck you describe is going to render “information” unimportant, whether it’s centralized or decentralized.

      Look, and I really want a “no shit” explanation if you can, we’ve got plenty of information right now. It’s the oldest of adages that what we know to be true, but ignore, deny or cast off is that which will doom us. We know plenty. We are inudated with facts, factoids,and even “The Factor.” None of this seems important to me any longer.

      There simply are no Brians or Seans in control of the train. Am I wrong?

      Brian, you say “I was right about the crash but wrong about the reasons.” Your old professor (let’s call him Dr. No) gave you this tidbit. “He described our generation of business school students as being on the precipice of (what he called) the fourth factor of production; information.”

      So here’s my question to you. If he was right, and “information” is really what we’ve come to as a rite of passage, then what information was he talking about? What information is important, and what information is not? Who dessminates the information? On whose ears does this information, centralized or decentralized, fall? Is there truth, veracity, purity in this information?

      Or if, as I fear, there is merely information about rights without reference to obligations……

      Help me guys. I’m not giving up the spirit of joy, the wealth that comes from knowledge, nor the wonder that comes with seeking opportunity. I merely see “information” as a red herring, a shell game, and a cloaking device rather than the fountain that the Greeks once saw it as.

    4. Mark Eibner February 27th, 2010 8:34 pm

      Damn Brian—good post.

    5. Cheryl Johnson February 28th, 2010 7:57 am

      And I would like to read a post connecting the dots between the housing cycle and the larger Kondratiev Wave….

    6. Brian Brady February 28th, 2010 10:15 am

      “The centralization of information is not a good thing and I would even argue that it never ends well over the long term.”

      I think that’s true of any factor of production. Maintaining a centralized database requires work, though. I submit that people may demand greater remuneration for the voluntary release of personal information than they do today. This creates opportunities for competitors to harvest that information in a better way than the current “centralized harvesters”. If we think of information as a commodity, no different from land,labor, or capital, than it might start making sense.

      “If he was right, and “information” is really what we’ve come to as a rite of passage, then what information was he talking about? What information is important, and what information is not? Who dessminates the information? On whose ears does this information, centralized or decentralized, fall? Is there truth, veracity, purity in this information? ”

      I’m searching for that answer with this exercise. I think what Dr No meant to say was that information, like land, labor, or capital, has value and should be considered a factor of production. I think the opportunity to create wealth lies in the way we harvest, analyze, present, and distribute that information.

      “Is there truth, veracity, purity in this information? ”

      If information is a commodity and a factor of production, than lending those three virtues to that commodity could be an excellent way to create wealth.

      “And I would like to read a post connecting the dots between the housing cycle and the larger Kondratiev Wave….”

      So would I, CJ. Race you there? Seriously, feel free to explore on your own and post.

    7. ichannel February 28th, 2010 11:30 am

      Dawn in America: Part Two…

    8. Hugh February 28th, 2010 3:26 pm

      A million dollars in 1965 could not buy you the benefits you enjoy for pennies on the Internet. Or another example, if you wanted to listen to a Beethoven symphony while walking down the street in the year 1860, it would be an expensive proposition, hiring musicians, transporting them etc. And with all the money in the world, you could not have this whenever you wanted. Now for a few hours wage you can buy an MP3 player. Dollars and cents meaning nothing by themselves.

      So, in many respects, 50 dollars today gets you more benefits than millions of dollars in the not too distant past.

    9. Cheryl Johnson February 28th, 2010 4:53 pm

      Brian, I would speculate that high points and low points in the housing cycle appear at regular(and probably predictable) stages of the larger wave … First, I think, I would need to plot a timeline of the larger wave, then superimpose the housing cycle timeline on top of it….