John Robb believes that the second Great Depression is already upon us, but is playing out in different ways, owing to globalization. He sees political instability rising as sovereign governments cannot provide for their own people, and/or protect them from power players in the global market who have no loyalty except to their own interests. Excerpt:
The legitimacy of nation states will continue to diminish due to a financial insolvency (which means it won’t be able to finance social/stability programs), successive global shocks, and tolerance of looting by a financial oligarchy. As national legitimacy weakens, people will give their loyalty to groups (gang, church, tribe, etc.) that can protect and provide for them. Many of these groups will be violent. As these groups multiply in number, open source warfare and systems disruption will spread. For the US, think in terms of what is going on in Mexico or what went on in the USSR post collapse, but bump it up a couple of orders of magnitude.
Delightful. This brought to mind something an acquaintance of mine, a sober-sided, highly-educated financial industry type, mentioned in passing recently. He’s expecting some sort of major financial collapse, and has squirreled money away in various international accounts. I was really startled to hear this, given that the source is just about the last person in my circle of friends and associates I would have guessed saw the world this way. He was completely serious, and added that he’s concerned about the political stability of the US if what he suspects is going to happen actually does happen.
Econoblogger Yves Smith has some remarks about economics and political instability in light of this column by Simon Schama, the noted historian of the French Revolution. Excerpt:
Far be it for me to make a dicey situation dicier but you can’t smell the sulphur in the air right now and not think we might be on the threshold of an age of rage. The Spanish unions have postponed a general strike; the bloody barricades and the red shirts might have been in Bangkok not Berlin; and, for the moment, the British coalition leaders sit side by side on the front bench like honeymooners canoodling on the porch; but in Europe and America there is a distinct possibility of a long hot summer of social umbrage. Historians will tell you there is often a time-lag between the onset of economic disaster and the accumulation of social fury. In act one, the shock of a crisis initially triggers fearful disorientation; the rush for political saviours; instinctive responses of self-protection, but not the organised mobilisation of outrage. Whether in 1789 or now, an incoming regime riding the storm gets a fleeting moment to try to contain calamity. If it is seen to be straining every muscle to put things right it can, for a while, generate provisional legitimacy.
Act two is trickier. Objectively, economic conditions might be improving, but perceptions are everything and a breathing space gives room for a dangerously alienated public to take stock of the brutal interruption of their rising expectations. What happened to the march of income, the acquisition of property, the truism that the next generation will live better than the last? The full impact of the overthrow of these assumptions sinks in and engenders a sense of grievance that “Someone Else” must have engineered the common misfortune. … At the very least, any emergency budget needs to take stock of this raw sense of popular victimisation and deliver a convincing story about the sharing of burdens. To do otherwise is to guarantee that a bad situation gets very ugly, very fast.
So we face a tinderbox moment:, a test of the strength of democratic institutions in a time of extreme fiscal stress.
Yves Smith, advancing Schama’s point that elites have got to bear a fair share of the burden, writes:
And many of the societies suffering these financial shocks have already suffered a great deal of erosion of their underlying support structures. Even before the crisis, in the US and other advanced economies, social bonds have eroded in a remarkably short period of time, roughly a generation and a half. Job tenures are short; employees and employers have little loyalty to each other. Ties to communities are weak. Many families have two working parents, so career and parenting demands leave little time to participate in local organizations. Advanced technology frequently offers an easier leisure outlet than trying to coordinate schedules with time (or financially) stressed friends. But marriage and families are also not the haven they once were, given high divorce rates.
She quotes a Financial Times piece on social-science research showing that wealth itself is no guarantee of the health of a nation: “Once a floor standard of living is attained, people tend to be healthier when three conditions hold: they are valued and respected by others; they feel ‘in control’ in their work and home lives; and they enjoy a dense network of social contacts.” Smith goes on to say that the social fabric was in trouble in the US before the current crisis, and the prospect of things getting worse does not bode well for us. As Smith has observed before, having a global market brought many material benefits, but at a social cost that we may now be seeing. Still, for all the interest I have in apocalyptica, it’s hard for me to imagine what a real revolution would look like in the US. You?