Jim Rickards Says We're In A Depression

[MediumTex]

You're right, MT. Ironically, I think the government usually innovates best when it's in war mode. When at war, there are actual, often dire consequences to failure at all levels, and great rewards to success. These incentives spur innovation (as they do constantly in the private sector). By contrast, when the war's over, the government reverts to its usual state of waste and total non-innovation because there are practically no real consequences to its stagnation and sloth.

Within only a few years of entering WWII, government scientists had invented programmable computers. But nearly 60 years after building the interstate highway system, roads look largely the same.

It's always unsettling for a person with a libertarian bent to acknowledge that the government could facilitate innovation that the private sector couldn't facilitate on its own.  I think that the truth, though, is more complicated.

During conditions of war, I don't think that it's really that the government is generating amazing innovations, I think that the people who are placed in wartime conditions just tend to have a lot more urgency to everything that they do, including coming up with new technology, in part because it feels like their lives and society depend on it.

To consider a different setting with a similar dynamic, think about all of the crafty and clever things that prisoners do to escape from prison.  One might conclude from these displays of cleverness that prisons are good at bringing out the best in people because prisoners often display much more ingenuity as prisoners than they did before they went to prison.  The fact, of course, is that prison usually brings out the worst in people, and part of the urgency to escape is because it is such a miserable experience.

I think that the government is to the science and technology communities during wartime as the prison is to the prisoner--at first glance it may appear that one is bringing out the best in another, but the truth is more complicated, and in the prison example you certainly wouldn't expect to increase the cleverness of your whole society by simply sending everyone to prison.

[RuralEngineer]

Ha, that's a great analogy. I've never thought of it that way.

[Tortoise]

During conditions of war, I don't think that it's really that the government is generating amazing innovations, I think that the people who are placed in wartime conditions just tend to have a lot more urgency to everything that they do, including coming up with new technology, in part because it feels like their lives and society depend on it.

Quite true. My understanding is that Straussian neoconservatism contends that the populace requires unification to give the people a grand sense of common purpose, which motivates them to do great things. Without the common purpose, the society tends to fall into decadence and triviality, which ultimately leads to decline.

But unifying an entire populace--especially an ethnically and culturally diverse populace--is not easy.

Enter war. One obvious way to achieve the much sought-after unification of the people is by identifying (or fabricating, if need be) an archenemy of the entire populace and waging perpetual war on them. Very similar to 1984's Two Minutes' Hate.

This theme is explored quite often in sci-fi and horror movies, where various groups of people are bickering with each other until the aliens or zombies or Apocalypse-scale natural disaster shows up. Then the people realize that they will all have to stop bickering and start working together if they're going to survive the ordeal.

[Pointedstick]

Quite true. My understanding is that Straussian neoconservatism contends that the populace requires unification to give the people a grand sense of common purpose, which motivates them to do great things. Without the common purpose, the society tends to fall into decadence and triviality, which ultimately leads to decline.

But unifying an entire populace--especially an ethnically and culturally diverse populace--is not easy.

Enter war. One obvious way to achieve the much sought-after unification of the people is by identifying (or fabricating, if need be) an archenemy of the entire populace and waging perpetual war on them. Very similar to 1984's Two Minutes' Hate.

As much as it pains me to admit it, there's a lot of historical evidence supporting this notion, however unpleasant its implications may be.

If there's one thing I think modern liberalism never really sorted out for itself, it was the question of how to unify a diverse society around grand state projects while simultaneously encouraging the kind of diversity that leads to a disunited and fractious society. Conservatives use war, and old-school progressives were racists, so they had no racially egalitarian dreams to introduce more diversity.

Then again, maybe the welfare state was their answer.

[melveyr]

This theme is explored quite often in sci-fi and horror movies, where various groups of people are bickering with each other until the aliens or zombies or Apocalypse-scale natural disaster shows up. Then the people realize that they will all have to stop bickering and start working together if they're going to survive the ordeal.

Perhaps we should storm the capitol with fake alien spaceships and plastic laser guns to scare our politicians into resolving the fiscal cliff.

[RuralEngineer]

Perhaps we should storm the Capitol for real and replace all the morons with people who don't require a fake alien invasion to solve relatively simple budget issues.

I'm sure we could get a good deal on an industrial wood chipper.

[melveyr]

Perhaps we should storm the Capitol for real and replace all the morons with people who don't require a fake alien invasion to solve relatively simple budget issues.

I'm sure we could get a good deal on an industrial wood chipper.

Is the wood chipper the modern equivalent of the French revolution's guillotine?

[RuralEngineer]

The modern revolution recognizes the value of composting garbage.

Waste not, want not.

[murphy_p_t]

don't we get the gov't we deserve?

aren't these politicians just a reflection of the American people?

[Pointedstick]

don't we get the gov't we deserve?

aren't these politicians just a reflection of the American people?

Pretty much, but it's a two-way street in that the government we have in many ways determines what kind of people we'll be through all of its programs, transfer payments, and regulations.

[murphy_p_t]

don't we get the gov't we deserve?

aren't these politicians just a reflection of the American people?

Pretty much, but it's a two-way street in that the government we have in many ways determines what kind of people we'll be through all of its programs, transfer payments, and regulations.

agreed. also the mass media, hollywood...

[RuralEngineer]

I tend to think our government is not completely representative of the general population. Our political system does a great job at condensing the douchebag traits. I mean being a total asshat is a requirement to win a primary these days.

I agree with PS on the governmental effect on the population as well. My grandfather raised 7 children on a single paycheck as a sheet metal worker with an 8th grade education. He did it without any government assistance and was proud of it. Those days seem to be well behind us.

[edsanville]

You're right, MT. Ironically, I think the government usually innovates best when it's in war mode. When at war, there are actual, often dire consequences to failure at all levels, and great rewards to success. These incentives spur innovation (as they do constantly in the private sector). By contrast, when the war's over, the government reverts to its usual state of waste and total non-innovation because there are practically no real consequences to its stagnation and sloth.

Within only a few years of entering WWII, government scientists had invented programmable computers. But nearly 60 years after building the interstate highway system, roads look largely the same.

It's always unsettling for a person with a libertarian bent to acknowledge that the government could facilitate innovation that the private sector couldn't facilitate on its own.  I think that the truth, though, is more complicated.

During conditions of war, I don't think that it's really that the government is generating amazing innovations, I think that the people who are placed in wartime conditions just tend to have a lot more urgency to everything that they do, including coming up with new technology, in part because it feels like their lives and society depend on it.

To consider a different setting with a similar dynamic, think about all of the crafty and clever things that prisoners do to escape from prison.  One might conclude from these displays of cleverness that prisons are good at bringing out the best in people because prisoners often display much more ingenuity as prisoners than they did before they went to prison.  The fact, of course, is that prison usually brings out the worst in people, and part of the urgency to escape is because it is such a miserable experience.

I think that the government is to the science and technology communities during wartime as the prison is to the prisoner--at first glance it may appear that one is bringing out the best in another, but the truth is more complicated, and in the prison example you certainly wouldn't expect to increase the cleverness of your whole society by simply sending everyone to prison.

This is a great point.

Looking a little deeper, do you think the nature of the enemy changes the direction of innovation? 

World War II was a war between powerful, rich, technologically advanced nation states.  Naturally, the innovation was directed toward the fundamental science and technology necessary to deal with the onslaught of the opposition, (blowing up tanks, detecting aircraft with radar, building bombs that will demolish cities, etc.).  Maybe we were just lucky that those types of innovations mostly had excellent civilian applications that improved our quality of life after the war, (computers, nuclear power, MRI machines, etc.).

Now that we're fighting a long, asymmetric "war on terror,"  what will we innovate toward?  Better, universal tracking and surveillance of human beings, both domestic and foreign?  The ability to vaporize a target from a drone aircraft, or even orbit, using satellite maps?  I'm not sure I like where the terror-war-induced innovation is heading these days.

[craigr]

The great technology that came out of Japan was after WWII ended. So the idea that one needs war to have technological innovation is not so concrete.

Plus looking at war in terms of low unemployment is not correct either. IMO. It's easy to have low unemployment when your most unemployed segment (likely young able-bodied men back then) were being "hired" to go overseas and be shot at and/or killed. So while it may be a good way to get the unemployed off the books, it's not an effective long-term solution.

I'd hate to think what new innovations could have been created if all those people on both sides were allowed to live instead of being shot, blown up, sent to concentration camps or burned to death in carpet bombings. Were there any Einsteins among them? Any Marconis? Any Henry Fords? Thomas Edisons?

FWIW. I think FDRs central command economic polices of the mid-1930s did a lot to lengthen the depression. There were controls on production, prices, distribution, etc. It was the closest America ever came to pure communism. Very close in fact that if not dismantled by the Supreme Court it could have gotten much worse. Research into the National Industrial Recovery Act will reveal much.