Usher in a new age of frugality

The dreaded “D” word is humming in the horizon. Dow is diving , banking and manufacturing in shambles, nominal job loses hits 11.3 in the US (Feb 09 data, accounting for discouraged workers) ,… drums of rescue rumbles but to no avail. We are heading to a severe period of post bubble contraction after the spectacular economic boom marked by collective greed propelled by excessive consumption. Alas, consumption is the foundation of capitalism. US led consumption spree opens up the party of faux prosperity, meantime such culture worked to undermine the long held frugality traditions of billions in India and China.
Poor countries come to the party hoping to make strides in “development”, albeit at great cost to the environment. Notwithstanding, for the past decade, leaders and common folks alike congratulate themselves the unprecedented era of prosperity, celebrated the immense charity of lifting millions from poverty, that modernization is within grasp, opportunities abound and wealth without end…..
Now the economy takes a U-turn, material wealth evaporates without a trace…
It is interesting to sketch the chain of events leading to the present state of gloom:
1. After the Vietnam war, Nixon and Kissinger preached detente in the late 70s and early 80s; free market chant sipped through the iron curtain like mantra in prayer. Meantime, the Chinese people abandoned Mao’s tyranny, forcing the CCC to curtail the 10 year long agony of Cultural Revolution. The Soviet brand of Socialism and Mao’s absolute dictatorship in the shadow of sickle and hammer headed towards historical demise.
2. The fall of the Berlin wall dramatized the disintegration of the Soviet Bloc; at the same time China embarked on its path of “socialism with Chinese characteristics” – brutal primary capitalism. Regan claimed victory on behalf of the free world. Cold war waned. The great feast on the peace dividend commenced in the developed world. Immense human resources and untapped market in Eastern Europe and China were unveiled to the world.
3. In the 90s, technology advanced in leaps and bounds. Internet enabled information revolution was critical to the alarming uplift of productivity, featuring optimal supply chain management success. Western capital combined with low cost efficiency of the infinite worker pool behind the former iron curtain, and nationalist boundaries as the Indian sub continent brought to the Western world such fortune and abundance of goods unseen before. Natural resource exploitation multiplied in unison. America and Europe consumed while China, India, Middle East, South America and Eastern Europe relentlessly fed.
4. It was the time of “e-economy” in the information age, thought to be a second industrial revolution. In such epic moment, many who do not catch up with the technical advances are displaced, the same way farm workers were marginalized during the industrial revolution in the 19th century. Wage exploitation goes amok, outsourcing is wide spread and thorough. Consequently, wealth distribution polarized; real wage in the US stalled overtime.
5. The Clinton democrats implemented social policies aimed to eased the pain by lifting well-being level of the people with the help of the biggest equity bubble of the era. Loose monetary policy of the Fed, lax regulatory regime and free access to global financial resources all contributed. As a back drop, the rest of the world were enticed with the carrot of wealth and development, their markets plied open and overwhelmed by the unmatched strength of conglomerates under the aegis of American political will and military might. Technology enables global reach of goods and services, as well financial integration of a massive scale. The Clinton presidency claimed the most rapid and endured economic expansion during his rein. US deficit rapidly felt and the world was even worried about the unthinkable new financial order without the save haven of US government debt to reside the excessive wealth rooming the continents.
6. Man’s animal spirit exploded. Wall street wizards fanned the fire with derivatives to magnify and leverage the equity of ordinary Joe, creating virtual wealth that realizes actual, instant gratifications. The addictive binge is not only delusional but factually harmful, driving un-satiable human desire to the limit, depletion resources unnecessarily. Scientist Joe Romm lamented:
“We created a way of raising standards of living that we can’t possibly pass on to our children. We have been getting rich by depleting all our natural stocks — water, hydrocarbons, forests, rivers, fish and arable land — and not by generating renewable flows.
7. Now is the pay back time. Rescue plans are wishful thinking of the theorists, may even be politically driven maneuvers to win vote for another term. Economics is not exact science. There is no proven record of an economic theory able to advert financial calamity. Economists, like politicians ride on the trend, claim success on known trajectories. They are poor forecasters, much less crisis arbitrators. Mediocrity prevails the rank of politicians found on the present democratic voting system – nobody has the gut, nor the wisdom to go against the herd; they have been led by Alsop and now by blogs, conscious to save for another term of public office and personal benefits.

8. Turning dialectics positive, the flip side of the misery may be a pleasant surprise. Why not usher in the time of frugality in this age of decadence. It is time to go back to the basics: let us turn to a lifestyle of mere sufficiency and pay for all the debts that’s been incurred, instead of loading more on the next generations; let’s uphold justice and share benevolence, the “haves” should help out the “have-nots”. There is enough to go around. Less instant gratification and more common sense will ensure a more steady recovery, though not to the binging yesterday when we consume like no tomorrow.
(shiyaleng, mar10,09)