|Century of the Damned
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- By Bill Bonner
Remember 1999? What a great time to be alive! Mankind stood on the foothills of Olympus...ready to join the assembly of gods, rollicking, frolicking and generally misbehaving without regret.
The internet was gaining velocity. It was widely believed that breakthroughs in communications had 'removed the speed limits' to economic growth. Information was now readily and easily available to everyone. Any dope in Peoria could go on the internet and find out how to manufacture a bomb in his basement, or make a cheery pie in his kitchen. And the genius in Kuala Lumpur or Kabul was now liberated from the low-bred, backward, and benighted people around him; he could see what fun it would be to have a Beverly Hills zip code. And he could reach across the worldwide web and get a chisel and a steel file...to create a 'killer app' ...and free himself from his miserable circumstances.
So many people...in so many places...all yearning for home-delivered pizza and fortunes from day trading stocks -- this would lead to rates of progress never before seen by human eyes.
The evidence of this could be seen in the stock market itself, where companies promising breakthroughs in all areas - from transportation to medicine to home entertainment - were selling at prices disconnected from the verities that had ruled investing hithertofore. What price was too high for a technology that revealed the secrets of the cosmos and unleashed its hidden power?
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Progress seemed not only forthcoming, but unstoppable -- in statecraft and politics too. China took the capitalist road in 1979. Russia followed a decade later. Turkey, India, Brazil - all the big 'third world' countries were now 'developing' nations, following more or less the US capitalist/democratic model.
This model - of democracy and state-aided capitalism - looked like such a winner. Francis Fukuyama wrote his famous "End of History" essay in 1989, arguing that perfection may have been achieved. Thomas Friedman added his "The World is Flat" book in 2005, which hallucinated that all the world's economies competed on the same level ground, according to the same rules and same principles - shown them by the US, of course.
Amid this giddy euphoria came the crash of the Nasdaq.
"Well, maybe we got carried away those dot.coms," was the general response. "But now we have real heroes in the public sector who can save us."
The "Committee to Save the World," appeared on a TIME magazine cover in 1999, after purportedly saving the world from the Asian Crisis. Then, for his work in goosing up the economy following the recession of 2001, Alan Greenspan got the Congressional Medal of Freedom, America's highest civilian award. Later, in 2009, his successor, Ben Bernanke, was named TIME magazine's "Person of the Year" for adding another $10 trillion in debt to the US economy. That's how much total debt increased during his time at the helm of the Fed.
Meanwhile, in the 20th century, a relative handful of inventors, tinkers and scientists - working in relative isolation, often with little in funding -- had given the world the automobile, radio, atomic power, painless dentistry, the pill, moving pictures, antibiotics, airplanes, air-conditioning and the internet.
Now, in the 21st century, millions of scientists, entrepreneurs and engineers - all connected by the internet - are on the job. They should be able to set the world on fire. Instead, at least so far, it has been a cold shower.
Today, we will focus on the proof - that this century, for America at least, has been a flop. Tomorrow and next week we will explain why.
First, we are 15 years into the 21st century. Can you think of a single innovation that is equal to the automobile or the airplane? Or air-conditioning? We can't. All we can think of is whatsapp, Facebook and other apps that are more trouble than they are worth.
Second, the most damning evidence of a failed century comes from the realm we study every day: the economy. And here, we are much obliged to David Stockman for rehearsing the many failures of 21st century economic policy. What have 15 years, "$700 billion in TARP, $800 billion worth of fiscal stimulus, upwards of $4 trillion of QE money printing and 165 months out of 1890 months in which interest rates were cut or were held at rock bottom levels" wrought?
"The number of breadwinner jobs is still 2 million below where it was when Bill Clinton" was in the White House, he tells us, with jobs in manufacturing, construction and mining/energy down 21% so far this century.
You'd think that all these scientists and engineers would mean a big increase in productivity and wages. Nope. The rate of nonfinancial business productivity has fallen to just half the rate of 1953 to 2000.
This is a big part of the reason that real median household incomes have fallen from $57,000 in 2000 down to $53,000 today. If incomes continue to fall at that rate, the typical family will have only $25,000 of income by the end of the century.
In the 20th century, more and more people joined the workforce and earned money, with 56% of people aged 16-54 employed in 2000. Since then, people have been falling out of the labor force, with only 45% of the working age population currently employed.
Part-time work is increasing, however. The part-time economy is where people work an average of 26 hours per week and earn an average of $14 an hour, or about $20,000 a year. There were only about 34 million people tilling that hard ground in 2000. Now, there are 39 million.
The only sectors that have seen net new job creation are in the HES Complex (health, education and social services), in other words, in the parts of the non-military economy most heavily controlled and financed by government. In all other sectors, more jobs have been lost than gained.
GDP growth, jobs, productivity, incomes - all the things that matter to ordinary people have slowed, or actually fallen, in the 21st century. So far, the century is a dud. A disappointment. And a barely contained disaster.
Tune in tomorrow.
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.
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