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l the sordid and spellbinding rackets working their
hoodoo on the financial scene have obscured a whole other dimension of the fiasco
that America finds itself in, namely the way we have arranged the logistics
of everyday life on our landscape: the tragedy of suburbia.
I call it a tragedy because it represents a sequence of
extremely unfortunate choices made by our society over several generations,
and history will not forgive the excuses we make for ourselves, nor will it
shed a tear for the tribulations we will induce for ourselves by living this
way. History may, however, draw attention to our remarkable lack of a sense
of consequence in transforming this lovely, beckoning New World continent
into a wilderness of free parking. In any case, we're stuck with what we've
done and the question naturally arises: what will we do now?
A Confused Public
When you show a photo to any random audience of
Americans of some ghastly boulevard of strip malls and big box stores, with
the many layers of incoherent signage, and ask them what's wrong with the
picture, they always say "everyplace is the same as every other place...
it's all the same!" That is their chief complaint and it is off the
mark. They don't get it, really.
There are many places and things in the built-by-humans
world that are characterized by uniformity or sameness. To the casual
observer, the ancient hill towns of Tuscany look virtually identical from 500
meters distance. Montepulciano and Pienza might be as hard to tell apart for the average
American tourist as a WalMart in Hackensack from a WalMart in Oxnard. But you will hear very few complaints
from tourists about the sameness of the design scheme in the Italian
villages: the red tile rooftops on every building, the narrow, twisting
streets, the stuccoed masonry walls, the casement
windows with their functional shutters, etc. Few American tourists return
from Paris grousing that the boulevards were monotonous and gave them a
headache. This is because the sameness observed in these foreign places is a
uniformity of excellence. The problem in America is different: not
just that it's all the same, but the same miserably low quality. The
parking lots are all equally dispiriting, whether in New Jersey or Santa
Cruz. The tract housing subdivisions are all equally inauthentic and lacking
in conviction. The big box stores are all equally pernicious. The public
realm all over the USA is uniformly degraded (or non-existent).
Often these characteristics are summed up as
"ugliness, but it's actually worse than that. The built environment is
as immersive for people as water is for fish, and the immersive
"ugliness" of most places around the USA is entropy made visible.
It indicates not simple carelessness but a vivid drive toward destruction,
decay and death: the stage-set of a literal death trip, of a society
determined to commit suicide. Far from being a mere matter of esthetics,
suburbia represents a compound economic catastrophe, ecological debacle,
political nightmare, and spiritual crisis -- for a nation of people
conditioned to spend their lives in places not worth caring about.
Suburbia is also largely behind our current state of
political paralysis because it represents a gigantic legacy of sunk costs,
investments that have transformed themselves into liabilities. The
unwillingness to acknowledge that transition makes it impossible for us to
construct a coherent consensus about what is happening and what we might do
about it. We ought to know, for instance, that we face a daunting predicament
over our oil supply. It's no longer cheap. Alas, our drive-in Utopia was
designed to run on cheap oil. Hence the clear implication is that suburbia
has rather poor prospects going forward. I would actually go further and
state categorically that it is a living arrangement with no future.
It is in the nature of sunk costs to provoke in people
a psychology of previous investment. Having sunk much of our
accumulated collective wealth (our capital) in this living arrangement
with no future, we are afraid to let go of it, or even reform it
substantially. Instead, The Fear of facing our gigantic losses prompts
a retreat into denial and wishful thinking.
The higher the price of oil goes, the more the economy
contracts, the more frightened people get -- and the more determined to seek
solace in magical rescue remedies. Thus, the recent cavalcade of nonsense and
propaganda telling the public that shale oil and "drill, baby,
drill" will soon turn America into "the next Saudi Arabia,"
that we are about to become "energy independent," that we have
"a hundred years of shale gas." These dishonest memes may be
floated by mendacious PR spin doctors in the pay of oil and gas companies,
but they wouldn't be effective if the public itself wasn't so desperate to
hear the "good news" that we can continue living exactly the way we
do. The mainstream media falls for it, too, not because they are necessarily
paid stooges of the energy companies, but because The Fear affects
them as well.
The Fear, of course, especially affects American homeowners, most of whose homes
exist in suburbia, and who have already been battered by five years of lost equity,
lost incomes, calls from collection agents, the scary visitations of re-po men, and all the other now-familiar manifestations of
everyday financial terror.
The Money Problem
Now, it is coming to be understood that there is an
additional deeper relationship between the end of cheap oil and the workings
of banking and capital.
As energy "inputs" to an industrial economy
decline, the ability to generate wealth declines too -- and contrary to
conventional "wisdom," it is not offset by
"efficiencies," high-tech or otherwise. In fact, the decline of
true capital accumulation in the USA since the 1970s was offset only by the
hypertrophic unnatural enlargement of the financial sector from about 5
percent of the economy to 40 percent today. The sector transformed its
original mission of managing and deploying accumulated wealth for purposeful
enterprise (a.k.a. investment) to sets of rackets designed to game financial
mechanisms (markets, interests rates) in order to get something for nothing.
It amounted to a sort of national economic self-vandalism.
Much of that putative "activity" was mere
churn-for-fee hanky-panky, the wash-rinse-and-repeat cycles of institutional
money managers creaming off profits from the pointless movements of money in
and out of accounts. Perhaps even more of the financial sector growth was the
"innovation" of new swindles and frauds, the biggest and most
blatant being the housing bubble, a massive "control fraud" in
which suburban houses were used to collateralize deliberately mispriced bonds
(debt obligations) on the grand scale in order for giant firms to collect
insurance on their failure, in addition to other fees and profits garnered
for manufacturing and selling the damn things.
Much of that story remains shrouded in mystery because
no prosecutions were mounted against the gigantic banks involved, there was
no effort to pursue the truth or justice, and the statute of limitations
clock is rapidly ticking down. What we can say about it is that the
rule of law obviously got lost in shuffle, and that the continued absence of
the rule of law in banking is a profound threat to civilized life.
Computerization was certainly an enabler of these monumental shenanigans, and
it produced one startling diminishing return: the inability of banks and
governments to accurately report numbers on their balance sheets -- hugely
ironic given the phenomenal math abilities of computers. We find ourselves
now in the unfortunate situation where accounting fraud has become the
basic operating system of banking and government -- not a very salutary
prospect for managing civilized human affairs -- while much of the nation's
business has been reduced to a sorry matrix of rackets.
More to the point perhaps is that the diminished
accumulation of real wealth due to decreasing inputs of the master energy
resource -- cheap oil -- has impaired the ability of interest to be repaid on
the grand scale. There was a correlation between abundant cheap oil and the
creation of abundant credit. That relationship is now broken and there are
more paper (or computer) claims against wealth than there is wealth, which is
no longer growing, to pay back the debt. Hence, the interventions of
governments and central banks to offset this ruinous new dynamic and
artificially prop up the price of assets, i.e. collateral subject to
liquidation at bargain prices by insolvent debtors.
The unintended consequences of this monkey business
beats a path straight to currency wars, inflation, loss of legitimacy,
political uproar, and knock-on effects easily more disastrous.
The breakdown of debt repayment has in turn crippled
the crucial and fundamental operations of compound interest in banking, while
the dishonest work-arounds by central banks and
governments in the form of interest rate manipulations and bailouts have
obscured the truth of what is happening: a general failure of capital
formation.
So, What To Be Done?
The bottom line is that our future will be defined as
much by capital scarcity as by energy scarcity. They synergize each other's
failures.
Politically, all this mischief has manifested as a
campaign to sustain the unsustainable, to keep all the rackets running at all
costs, including most particularly the suburban way of life. It is unlikely
that we will succeed at that -- though it does account for the desperation
running through the national zeitgeist these days. Rather, the mandates of
reality will compel us to comprehensively reform and re-order all the
activities of civilized life, and I think how this will occur can be stated
plainly and categorically.
In Part
II: The Essential Elements for A Sustainable Future we lay out the
reforms that will be most needed in restructuring our way of life to fit the
constraints of the natural world we live in. The good news is, it can be done
- and done in a way we have great odds of enjoying more than our current
blindly gluttonous modality of living.
What you can count on is that we will return to the
traditional mode of assembling human habitats, that is, integral, walkable,
urban places on the variable scale of village-town-city with work, commerce,
housing, and culture woven tightly together in the recognizable form of a
real civic organism, not a simulacrum or a cartoon of one -- places that add
up to more than the sum of their parts, places worthy of our affection that
we can call "home" without irony or regret.
Click
here to read Part II of this report (free executive summary; enrollment required for full
access).
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