Tuesday, August 02, 2011

The Apple

Industrial economies are like an apple ripening on a tree branch. The first phase is the "green" phase in which there is room for a lot of growth, and that capacity for growth is what makes so much expansion and favorable change possible. The second phase is the "peak" phase, in which society has a great deal of surplus available to take care of people and for all kinds of grand projects, and here prosperity and growth are taken for granted as luxuries become viewed as necessities. The third phase is the "ripe" phase in which the apple falls to the ground and becomes soft and brown. In this phase, resources become more scarce and expensive and need to be rationed differently. This is where you really see the rich becoming richer and the poor becoming poorer. This is where we are, and things are going to get worse, not better. The decay of the American industrial economy, not to mention the world industrial economy, is no more reversible than the decay of an apple fallen from its tree-branch.

This is why Keynesian spending doesn't work as well as it used to work. Because we're at our maximum capacity for growth, such social spending starts to encounter the principle of diminishing returns. In fact, you can pretty much count on all the usual solutions petering out in their effectiveness because the capacity for any further growth is now exhausted. And because you cannot have infinite growth on a finite planet, trying to recapture the growth phase will only yield mass-insanity such as the Tea Party.

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