Sunday, January 1, 2012

Predictions for 2012

Institutional Analysis has the side benefit of being able to make pretty accurate projections.  Of course, since the basic assumptions of IA include the idea that institutions act the way they do because it is the most efficient way to promote their own economic interests, you can sum up most IA predictions by saying that things will not change much—bankers will continue to act as bankers, etc.

But even when the default setting for IA is that things won't change much, there is still an incredible amount of understanding that can be derived from this basic idea—especially at a time when the great institutions are in serious trouble and populations around the world are clamoring for change.  So the question becomes, how much change can those angry populations reasonably expect?  This is actually a very important and interesting question.

For example, Barack Obama ran on a platform of change.  People believed he meant what he said and expected that a black community organizer would go to Washington and change things.  Some of them worked very hard and gave money to get him elected.  So now they are extremely disappointed because on issue after issue, Obama not only did not change much, he has actually extended his predecessor's most hated policies.

But really, did the Obama backers have any reasonable expectation that he would govern all that differently than W. Bush?  The IA answer is, probably not.  Why?  Because the permanent institutions of government—the people who were there before he got to the White House and will be there when he leaves—have just too much power and inertia.  Moreover, the permanent government has been dealing with Presidents who they could ignore since at least the Alzheimer administration of Ronald Reagan.  RR wasn't allowed within 10 miles of an important decision and my guess is that neither is Obama.  The permanent institutions of government do not care one whit whether the President is a Republican or Democrat or by how many votes he was elected.  Obama has been clued to the power of permanent government and it is clear he wants to please them MUCH more than he wants to represent some volunteer who slept in a church basement to get him elected.  Of course, this was hardly a secret.  The fact that Obama was already in the pocket of Wall Street long before he was even considering a run for the presidency should have tipped folks off, but it didn't.

So the first prediction of 2012 is that for all the sound and fury, the elections won't mean much.  The big issues like how this country will rebuild its economy, how the financial institutions should be reformed and how debt should be restructured, how we deal with Peak Oil or climate change, etc. will be buried under an amazing pile of irrelevance like Gnoot Gingrich's sex life.  Thoughtful voters will turn away in disgust.  Correct that—everyone will be disgusted by the mental image of Gnoot having sex.

The economy will continue to stagger from one disaster to another because the powerful players have such narrowly defined interests.  The big actors consist of the creditor classes and the only thing they are really interested in is will they get their money back with interest (rents).  Anything that threatens their income stream is by definition bad—no matter how socially useful it would be.  So they will patch up their defective monetary video games with naked grabs for any wealth not nailed down—and even some that is.  The idea that the creditor classes should invest in the real economy is hopelessly beyond their ability to even imagine.

The powerless will resort to the only options they have—public protest, strikes, boycotts or whatever—and the authorities will respond with outsized and disproportionate displays of violence.  People will probably get killed in the process.  Under other historical circumstances, this could lead to revolutions but since the powerless are also agenda-less, this probably won't happen.  In all fairness, the question should be asked—if the powerful cannot come up with anything that reasonably resembles a solution to the big problems, why should the powerless?  Even so, if the powerless cannot even get something as basic as a foreclosure moratorium and mortgage restructuring done, they really are camping out in the cold for nothing.

The for-profit media will continue to avoid covering anything important and their market share will continue to slide towards zero.  The trend in "reporters" will continue in the direction of CNN's Wolf Blitzer—someone so stupid no serious person would listen to his advice on how to vacuum their carpets.  Fortunately, there are plenty of information alternatives like the Internet.  Unfortunately, all this information can only confuse those without a decent education that includes a lot of historical context.  Anyone actually see citizens of USA getting such an education?  Yeah, me neither.

The USA will still retain its "lone superpower" status but its global influence will continue to diminish as people discover that the ability to blow things up doesn't mean all that much.  In economics, the USA will NOT lead the green revolution—that train has already left the station.  And its cultural influence will continue slide as the idea that "American Culture" is an oxymoron spreads beyond the world's intellectual classes.  Somewhere it is probably possible to make a bet whether the Swedish or USA version of The Girl with the Dragon Tattoo will have the bigger box office take.  The bets are probably on the Swedish version.  Cultural dominance has become WAY more important than aircraft carriers in any scheme of empire.  And while Three Stooges fans prove that there will always be a market for stupid, the culture of empire cannot live by stupid alone.

Turns out the biggest problem is that we as a nation have forgotten how to make positive change. Sure we still know how to change—backwards.  Any fool can drag us back to the dark ages and anyone who has seen the republican clowns running for president can argue we have already arrived.  I mean, Ron Paul actually wants to put us back on the gold standard—and he's the enlightened one.  Gnoot won't let a lifetime of profoundly regressive ideas that ended in disaster dent his self-evaluation that he is an intellectual.  The rest barely communicate above the level of grunting.  But on this, the Democrats are barely better.  After all, Al Gore's Cap-and-Trade plans to combat climate change are little more than a Wall Street scheme to make a quick buck.

I mean, can anyone seriously believe that a bunch of banksters who have few skills beyond snorting lines from a hooker's thighs are going to organize the phase-out of fire.  Positive change can only happen when serious people work hard for years to perfect a solution.  On Wall street, long range planning means tomorrow's lunch.  Since such people cannot think long-term, they are not qualified to make positive change.  And as anyone who has dabbled in Institutional Analysis can tell you, any change is difficult but positive change is nearly impossible.

(See also: The most interesting events of 2011)

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