Wednesday, September 30, 2009

Ride the Lightening

In 1978 President Carter installed solar electric panels on the roof of the White House to show the nation an alternative energy source. He reinforced his energy policy by directing the DOE (Dept. of Energy) to develop alternative energy sources. President Carter’s bold action with regard to his energy policy is just one example of the leadership that marked him as one of the great presidents of the twentieth century.

Over thirty years ago we were on our way to an economy that would be driven by clean, cheep, and abundant energy. We were going to “ride the lightening” into the twenty first century. Then one of our greatest leaders failed to win his campaign for re-election. One of the first acts of President Carter’s successor was to remove the solar electric panels from the White House. President Reagan also shut down the alternative energy projects at the DOE. Our future hit a lightening rod, and America went without an energy policy for nearly thirty years.

President Obama has promised a strong energy policy, but in the mean time another hero has stepped up to the challenge. Elon Musk is the CEO of Tesla Motors, which developed an electric car possessing the power to beat all comers, including every internal combustion car.

Early in 2008 the CEO of G. M. laughed at the fledgling car company, but who’s laughing now? G. M. is as good as extinct with sixty billion dollars of debt; only surviving due to a government take-over. Tesla has moved up to a production model of their $100,000 sport car, and they are producing 20-25 per week. The next generation, a $50,000 sedan, is coming off the production line in quantities of 400 per week in 2011. They aren’t stopping there. Within three to five years a $30,000 electric car will be available in your choice of a sedan or a SUV.

Tesla Motors is the American car company of the future.

This is great news, but it is also tragic. If President Reagan had continued President Carter’s energy policy we could have entered the twenty first century “riding the lightening” of electric cars that run on free energy provided by solar electric panels.

Tuesday, September 29, 2009

Stop Socialism Now!!!

How did we magically appear at the brink of Socialism? Public health care is a “socialist plot” to destroy the values of our Great Nation! We must never allow this travesty to take root and grow.

Now that we have stopped public health care, we must turn our attention to a few other “socialist plots” that “they” have snuck past us. Remove your children from public schools so the buildings can be demolished and turned into parks or factories. Then rip out the public utilities (power, water, sewage, gas…), bulldoze the public roads and freeways, and finally disband the police and the military (who provide for public safety). We will finally be safe from the “socialist plot” when all public works have been expunged.

Wait a minute! Something seems wrong! The fundamental purpose of the government is to provide for the safety and well being of the public. The government is supposed to provide the services that people can’t provide for themselves. If the roads were provided using the “profit-for-service” model that our current medical industry uses, then the rich would have the best roads in the world, the rest of us would be lucky to have dirt tracks, and the system would cost ten times as much as it does.

The medical industry is ten times more expensive than it should be. It’s not just the insurance companies. Hospitals and other medical facilities are run as “profit-generating” businesses where executives can earn hundreds of millions of dollars in bonuses every year. The drug companies and the medical supply companies are run using this model too.

Every developed country in the world, except America, provides health care for ALL of their citizens, and not one of them costs nearly as much as our system does.

Monday, September 28, 2009

The Double-Edged Sword of the Economic Crisis

The Democrats rode a wave of voter disapproval of the Republican leadership that was fueled in no small way by the advent of the Economic Crisis in September of 2008. Ironically the Democrats are now experiencing the back edge of the sword because they have failed to end the crisis or even alleviate the suffering of those most desperately affected by it.

Part of the problem is that President Obama is taking economic advice from the same “experts” that devised the policies that resulted in our current economic crisis. Economic expertise is descriptive and subjective. This is evident in the fact that the best and brightest in the field of economics have admitted that they don’t know what to do or what is going to happen because we have never experienced economic behavior like this before.

The inability of the “experts” to provide a viable solution to the current economic crisis posses a threat to the careers of all Democrats. As we spiral down into the next Great Depression, the voters will become aware of the fact that this is no longer a recession - it is much worse. The Democrats will be blamed for the impending economic catastrophe even though thirty years of Republican leadership is actually responsible for our current economic crisis. Such is life and politics. The fledgling careers of many Democrats will be cut short by events they did not cause and had little control over.

On the other hand, if President Obama can obtain essential good advice then the economic recovery could be achieved in a most spectacular fashion. Try to imagine the political currency the president could generate by bringing the economy back from the brink of destruction. Not only would the economy become healthy and robust in a matter of months, but within a few more months, most, if not all, of the 6.5 million consumers who have lost their jobs could be back to work. All of this could be achieved rapidly, and it could be achieved without spending even one penny of the taxpayer’s money. Every other issue on President Obama’s agenda would suddenly be within easy grasp.

Achieving immediate economic recovery is one of those defining events that can propel a fledgling senator’s career to the pinnacle of political ambition. More senators have been elected to the presidency than vice-presidents. A young senator that becomes known as the champion of the economic recovery could begin to contemplate their presidential campaign.

The Economic Crisis was instrumental in the “overwhelming wave of victory” for the Democrats in 2008. Now the Democrats will face growing disapproval as the Economic Crisis takes a turn for the worst. On the other hand, solving the Economic Crisis could propel the Democrats to unprecedented heights of popularity and power.

Sunday, September 27, 2009

The Curse of Cassandra

Cassandra is a figure from Greek mythology. She was given the gift of prophecy, but Apollo later cursed her so that nobody would ever believe her prophecies. Imagine the frustration of seeing the deaths of your family and the destruction of your nation and not being able to do anything about it.

This is how my life seems to be going these days. I don’t have the gift of prophecy, but I do have access to a powerful conceptual tool that scientifically explains how cultures function. Virtually nobody believed me when I took my money out of the stock market in 1998 and counseled them to do likewise. The Complex-Systems Theory of Culture provided the basis for understanding that the stock market was unstable and that all investments were high-risk. It took another ten years before it crashed, but that is the nature of non-deterministic theories. They can tell you what is happening, what may happen, but not exactly when it will happen.

Now I am trying to explain why our current economic crisis is sliding toward a devastating economic depression. Nobody wants to believe me because looking this particular future square in the eye is just too painful. I continue to try to convince people of this horrific future because we can still avert this disaster.

It is difficult to look into the future and see a possible tragedy, but it will be even worse to look back and know you could have helped to avert the tragedy. Nobody will act to avert the catastrophe as long as the “experts” continue to tell us that the recession is over and the recovery is beginning. Remember the “good-old-days” when George W. Bush would have a press event every few weeks to claim that we had won the Iraq War? Eventually he stopped doing that because it became obvious that we had not won the war, and we were not likely to ever win it. We are experiencing the same circumstances now. Every month since April of 2009 some “expert” or group of experts have released a statement suggesting that the recovery is about to begin or has begun. Every month it becomes obvious that the recession is not over and the recovery has not begun. Eventually these people will stop releasing these foolish statements because we will stop listening. Maybe people will start listening to me when the “experts” stop trying to force recovery by the shear power of positive thinking.

I would like nothing more than if the “experts” were right (for once) and I was wrong. The problem is that my science is stronger than their positive thinking, and it tells me that we are slipping inexorably into another Great Depression. My science also tells me how we can change course and avert this catastrophe. All that is required is that people have to believe what I am saying.

Saturday, September 26, 2009

The Stock Market Casino

I’m not an investment counselor, but I am about to give you the best advise you may ever receive about investing in the stock market.

It’s like going to Las Vegas; the wise gambler never risks more of their money than they can afford to lose. The lesson that should have been learned in the economic “crash” of September 2008 is that all stocks are “high-risk” investments.

Currently the market has been trending up. This trend could last through the end of the year, but the market will “correct” again in the first or second quarter of 2010.

The Complex-Systems Theory of Culture (Gehlsen, 2009) explains economic systems as open systems that are maintained by a flow of money. A river is only a river as long as the flow of water is maintained. Economic systems only remain healthy and robust as long as an adequate flow of money is maintained. The flow of money in the American economic system continues to dwindle.

More than 6.5 million consumers have lost their jobs since the beginning of 2008. Sometime in the first two quarters of 2010 unemployment benefits should begin to run out for these people. This loss of money means that consumer spending will begin to drop, and the stock market will register another “loss of confidence” that will send it spiraling down once again.

Cultural systems are not deterministic, which means that it is impossible to predict exactly when the next “correction” will occur. For example, the government continues to extend unemployment benefits, which extends consumer spending for a while. Benefits can’t be extended indefinitely, but exactly when the extensions will end presents an insurmountable problem for predicting the next “correction”.

Our economy continues to move inexorably toward the next Great Depression, and along the way the stock market will hit another “bump”. On the other hand, it is always possible that the “experts” and the politicians will listen to me and avert the looming economic disaster.

Thursday, September 24, 2009

Where’s the Next “Tea Party”?

I never hear about a “Tea Party” until it is over. I guess this is just another sign of the irrelevance of American broadcast media. I would like to stand up and be counted as one of those people who think the government is too big, too expensive, too far in debt, too inefficient, and too ineffective. This is the message of the “Tea Parties”, and I want to say that I agree.

This tempest-in-a-teapot makes me wonder why these people weren’t out demonstrating during the eight years of the G. W. Bush administration. Bush more than doubled the national debt, over spending the budget by six trillion dollars in eight years (this makes the 1.6 trillion for ten years of health care look a bit trivial). Where did that six trillion dollars go? Apparently it was spent on tax breaks and lucrative business opportunities for the wealthy. It certainly wasn’t spent to solve any problems or provide any services. The Bush administration perpetrated two “Vietnam” style wars, and implemented policies that violated the rights and privacy of millions of American citizens (an unprecedented expansion of the government’s capacity for intrusion).

The Tea Heads have decided that now is the time to demonstrate. Now that we have a president who is heroically battling to reverse the policies that produced the bloated, bankrupt, and ineffective government that he inherited from his predecessors.

We should protest! In fact, we should organize the biggest “Tea Party” ever conceived, and we should take it to Texas to protest the man who is responsible for these problems.

Saturday, September 19, 2009

The View From the Shoulders of Giants

Why can I clearly see the impending economic depression and economists can’t? I’m not smarter, I don’t have better information, but I am using a better tool.

Imagine a world where everyone had to dig holes using just their bare hands but you processed the only shovel in existence. The shovel would allow you to dig holes at seemingly a super-human rate. In fact you’re not stronger or faster, you just have a better tool.

The tool I’m using is a powerful conceptual device called the Complex-Systems Theory of Culture (Gehlsen, 2009 - Amazon Books). This theory scientifically explains cultures and cultural behavior from the perspective of complex evolving information systems. From this perspective economic systems are fundamentally evolving information systems.

Economic systems are just one aspect of a culture, and they can now be understood scientifically. Evolving systems are open systems that are dependent on a flow. At a practical level our modern economy can be understood from the perspective of the flow of money and goods.

The foundation of the American economic system is based on the flow of money that is produced by consumer spending. The financial institutions that economists are typically focused on are not the foundation of our economic system - they are the emergent properties that are produced by the flow of money.

I can see the impending advance of the next devastating depression because I am standing on the shoulders of giants and using their tools. I stand alone, and use this powerful tool. The power of science is that all of you have access to this tool, and you can also learn to use it to see what I see.

Friday, September 18, 2009

Blowing the Next Economic Bubble

Another disastrous “economic bubble” grows unsuspected by political leaders and economic experts.

A typical “bubble” represents a condition where the economy grows to an artificially high level. The current bubble is caused by unemployment insurance holding the declining economy at an artificially high level.

The American workforce lost more than 6.5 million jobs since the beginning of 2008. Consumer spending would have declined “naturally” without the unemployment payments, and our current economy would have spiraled down to a much lower level. Unemployment funds have maintained consumer spending at an artificially high level, which keeps the economy artificially elevated.

The pressure on unemployment insurance increases each month as hundreds of thousands of additional jobs are lost from the workforce. The national debt is already a sickening burden, and the government is rapidly approaching bankruptcy.

Eventually the demand for unemployment funds will exceed the available resources, and the dispersal of checks will abruptly stop. The “unemployment bubble” will burst, and the economy will once again “correct” by plummeting into free-fall.

When this bubble bursts the “economic correction” will result in millions of additional jobs lost from the workforce with a corresponding decline in consumer spending. We can avoid this painful experience by implementing a plan for immediate economic recovery. Economic recovery can be achieved by restructuring consumer debt, as stated in an earlier post. Consumer spending would increase because less money would go to payments on existing debt each month, leaving more money for consumers to spend on goods and services. This increase in consumer spending would create a positive feedback process, which would result in economic growth and more jobs.

This bubble hasn’t been caused by reckless risk-taking, corporate mismanagement, or even unbridled greed, but it is going to be just as catastrophic. This is a good example of how aspects of a complex system that were intended to benefit the system can actually contribute to its destruction.

Thursday, September 17, 2009

Imagining the Devastation of the Approaching Depression

The approaching “Great Depression” will be far worse than the last one. Our current economy is far more bloated than the economy of the 1920s. Imagine dropping a champagne glass from the top of the Statue of Liberty. Now imagine dropping a crystal chandelier from the top of the Empire State building. The impending devastation is unimaginable.

The Great Depression lasted nearly 15 years, and then recovery was accelerated significantly by the economic stimulus provided by the spending for WWII . Our situation is more desperate because the current government is already nearly bankrupt. We can’t afford four or five years of trillion dollar deficit spending. The looming depression could easily last 20 or 30 years.

Finally, the worst of our problems is that only about 10% of our workforce is employed in manufacturing (according to the CEO of General Electric). Unemployment will increase to 50% if the economy collapses to the point where manufacturing represents 20% of the workforce. Unemployment will jump to nearly 80% if the economy shrinks to the level where manufacturing represent 50% of the workforce. Manufacturing is the only way to produce “real” wealth! Service industries only move money around (and create “bubbles”), and a sustainable economy must have a significant (probably at least 40%) manufacturing component.

Avoiding a depression is much easier than trying to fix an economy once it has collapsed. Manufacturing is the only way to build an economy. China and Japan provide good examples of the long hard road to successfully building a large strong economy. Increasing our economic base (manufacturing) is going to be a long hard task, and it will be nearly impossible from the bottom of a devastating depression.

The choice is clear! Either implement a plan to achieve immediate economic recovery so that we can rebuild our manufacturing sector within a robust economy, or try to rebuild our manufacturing capability from deep within a crippling depression.

Wednesday, September 16, 2009

The Deceptive Decent into Economic Depression

“Things don’t seem so bad.” I hear this every time I talk about the impending economic depression. Its like falling off the Empire State Building, things don’t look bad until you hit bottom. The approaching catastrophe becomes obvious once you know what to look for.

Gravity is a positive feedback mechanism that makes you fall faster and faster until you strike the ground. The hundreds of thousands of jobs lost from our workforce every month represent a positive feedback that forces the American economy to continue to diminish. It doesn’t seem bad yet, but it is obvious where we are headed.

One of the difficulties of perceiving this process is because it is a delayed feedback. The effects of lost jobs are difficult to see because consumers don’t stop spending money the day they lose their jobs. For example, nearly 2 million people lost their jobs in the first quarter of 2009. This caused a slight immediate decrease in consumer spending, but the full effect of these lost jobs will not be felt until their unemployment checks run out and their personal assets are exhausted. We can expect another significant decrease in the American economy some time in the first or second quarter of 2010.

Our economy continues to slowly collapse because every month the workforce decreases, which leads to a decrease in consumer spending. Each month more jobs are lost because the flow of money can’t sustain the workforce. The first wave of people to lose their jobs in 2008 are still spending assets and unemployment funds. The slow slide towards another Great Depression will begin to accelerate when these resources are exhausted.

Things don’t look so bad – unless you are among the 6.5 million people who have lost their jobs or the 4.0 million families who have lost their homes since the beginning of 2008.

The storm is coming! We can still turn the economy around and achieve immediate recovery, but it isn’t going to be easy and it isn’t going to be simple.

Tuesday, September 15, 2009

Riding the Economic Crisis into the Next Great Depression

The storm is coming, but this time it’s not a cyborg from the future and Sarah and John can’t save us. This storm is the result of thirty years of disastrous economic policies, which have destroyed the foundation of the American economy.

There is now a published theory of Cultural Evolution (Complex-Systems Theory of Culture - find it on Amazon Books - Gehlsen, 2009). This theory is one of the most powerful conceptual tools ever conceived, and it provides an understanding of how cultural systems function, which includes economic systems.

Our economy continues to spiral down toward the next depression because every month consumer spending is diminished by the loss of hundreds of thousands of jobs from the workforce. This recession is the worst since the end of WWII, and the coming depression is going to be far worse than that of the 1930s. This is not hyperbole, it is scientific fact.

We may already be in the first stages of a depression, and our economy is still collapsing. On the other hand, the Complex-Systems Theory of Culture can be used to formulate a plan for achieving immediate economic recovery. The problem is clear, consumer spending continues to decrease and this causes more jobs to be lost, which results in further decreases in consumer spending. The solution is simple. Increase consumer spending.

There are many ways to increase consumer spending that won’t cost the tax payers a fortune. The best way to significantly increase consumer spending is to restructure consumer debt. Consumer spending can be dramatically increased by decreasing monthly payments on debts.

The storm is coming. It may not be a perfect storm, but nobody in their right mind wants to experience the devastation of the impending depression.

Sunday, September 13, 2009

A Scientific Theory of Cultural Evolution

There is now a published theory of Cultural Evolution (Gehlsen, 2009). This statement undoubtedly needs some explanation. The word “theory” is used so loosely that it is almost meaningless. In a scientific context Theory explains the observable in terms of the underlying processes that produces it. For example, Newton’s Theory explains motion in terms of the forces that act on objects.

The Complex-Systems Theory of Culture explains human cultural behavior in terms of the complex evolving information systems that produce it. Virtually all aspects of cultural behavior can be explored and explained by this theory. Traditional anthropology is engaged in describing and interpreting cultural behavior, but it doesn’t provide an explanation of the observed behavior. Theory also provides a perspective for describing cultural behavior, but theory is a more powerful conceptual tool because it provides an underlying explanation.

Anthropologists cannot conduct experiments on cultures because that is not an ethically acceptable research methodology. They have to wait until a culture provides an adequate set of circumstances to construct and test hypotheses. The current economic crisis provides an excellent opportunity for demonstrating the power of a new theoretical perspective.

It is not my intent to disparage economists. I have ventured into their expertise because the current economic crisis provides an irresistible opportunity for demonstrating the power of the Complex-Systems Theory of Culture. This perspective diverges dramatically from the traditional models offered by economists, and this theory provides many insights to current, past, and potential future economic conditions.

All economies are fundamentally complex evolving information systems, but at a practical level our modern economy functions as an open system that is dependent on a flow of money. Modern economic systems will continue to grow as long as an adequate flow of money is sustained. Interrupt the flow of money and the economy will collapse. Our current economic crisis was precipitated by a temporary interruption in the flow of money in 2008. The American economy continues to spiral down to lower levels of activity because it is caught in a positive feedback mechanism that amplifies the original crisis.

The Complex-Systems Theory of Culture provides a glimpse into one possible future. Our current trajectory is an inexorable spiral down into another Great Depression.

Saturday, September 12, 2009

The Science of Cultural Evolution Begins

Anthropologists traditionally approached Cultural Evolution from a top-down perspective. They gathered data about observable behavior, and then they constructed descriptive models that are employed to interpret human behavior.

These models are virtually always referred to as “theory”, but a model can’t serve as a theory within a scientific context because models can’t explain how human cultural behavior functions.

Constructing a theory that explains Cultural Evolution requires an understanding of the distinction between change and evolution. Change is reversible. You can drive your car down the road, then turn around and drive back to the starting point. You’ve experienced change but not evolution. Evolution is not reversible. Once you learn a bit of knowledge you are irrevocably changed. Knowledge cannot be unlearned.

Complexity Theory (also referred to as Chaos Theory) provides a general explanation of evolving systems (see Nicolis and Prigogine, 1989). Biological and cultural systems are both complex evolving information systems.

Biological information is transmitted in discrete bundles, which is coded in our DNA. Cultural information is transmitted continuously in all directions, like a radio wave. These differences in information transmission separate these two disciplines into distinct sciences.

The science of Cultural Evolution begins now.