Saturday, May 29, 2010

Real Honest Structural Weaknesses

So, despite the talk of the turnaround, a jobless recovery does still muchly suck for the remaining unemployed. Putting aside the wishful optimism from those who really really want us all to rush out to buy more flat screens to goose the consumer economy, it would seem there are still reasons to be concerned.

  • There is still talk of tremendous weakness in the housing market. Some are talking about rising home sales, and that is good. But the counterpoint is the very large number of people who are underwater, or who have simply stopped paying their mortgages but whom the banks have not foreclosed on and evicted. The trendlines for housing prices still have not dropped to anything like long-term averages or anything like a respectable multiple of the average wage.
  • The government debt that was a worry a few years ago has not gotten better. With a focus on old Dr. Keynes getting us out of this particular economic mess, the powers that be have increased government liabilities a million-fold (well, that might be a bit hyperbolic). Those who were concerned before are apoplectic now. According to their more classical approach to economics the only ways out of this are through inflation, and/or default. Those with a more progressive economic view seem not to be as concerned. At any rate, inflation of the money supply or government default are at the very least back-burner concerns to me. Not things that I want to catch me unaware.
  • Two important industries into which I have some insight include pharma and media. Pharma's era of blockbuster drugs and double digit profits including in the face of recession is gone. They have exhausted the low-hanging fruit that got them through the 90s and into the 2000s, and some say they have exhausted the science at hand. Interesting developments are now happening at the larger, more complex molecule level of biotech. That means more complexity, more money, more risk, more niche-oriented drugs. It may be the pharmaceutical analog to drilling a mile underwater through several miles of rock with the most sophisticated tech we have.
  • Media is changing and that is obvious. Newspapers have been hammered, the music industry in no way resembles itself from BN (Before Napster). But less obvious unless you know what to look for are the elements of media that have so far fared better. TV has been dethroned by the internet and demographics. Textbooks have changed and are ever moving towards less-textly looking things - e.g. see the ones that look like fat fashion mags. Those publishers will jump on something like the ipad, which delivers that visual flash without ever having to actually make a book. One of the reasons the fashion-mag texts are gaining popularity is that the throwaway magazine paper is so cheap. And now that the Apple-crowd have moved into the ipad, the e-reader will no longer be only for disposable romances for moms on the beach (not that there was anything wrong with that in the first place). So we may get to see slow motion in publishing what we saw happen in music.
  • Economically in sum, there is still debt, consumers are still stretched, and huge chunks of our most profitable industries are still on the precipice of monumental structural changes. We've only just begun this transition to a post-industrial, post-digital economy, whatever that economy ends up looking like.
  • Nope, still haven't found a replacement for oil. Ethanol was a bust, the tar sands are expensive and an ecologic disaster, and now the gulf. Walkable communities may be the ONLY way out of this, which will provide building opportunies, but that may still be 10 or 15 years down the road. That completely depends on how long we try and muddle through doing exactly what we're doing.
  • Pollan gave us the Omnivore's Dilemma and there's an interesting truth there. The tens or hundreds of thousands of choices in the supermarket mostly come down to industrial corn and soy. Including the meat. And industrial corn and soy come down to diesel, which kicks us right back to the previous point. It would be more efficiently certainly if we could just drink the damn oil, but for now we can't.
  • Those who are concerned about industrial agriculture will point out that we've replaced a tremendous biodiversity of edible food and farming culture with million-acre swaths of mono-crops, proprietarily owned by biotech companies (sometimes the same ones at the cutting edge of pharma too) and dependent upon proprietary chemical usage - the weeds of which are now showing signs of developing resistance in the real world. So monocrop agriculture showing increasing reliance upon petroleum derivatives and now resistant weeds.
These are a few structural challenges our society is facing right now and you will note they are fairly basic. Food, Energy, and an economy that links these elements up with end-users, citizens.

"May you live in interesting times."
At the very least it's an interesting time to be a sociologist.

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