Charles Hugh Smith at Of Two Minds reads from his crystal ball about the upcoming year:
Survival+ Trends for 2010
December 17, 2009
Survival+ Trends for 2010 (December 17, 2009)
Here are a few key trends which will gather momentum in 2010--trends drawn from the Survival+ analysis.
My purpose in writing Survival+ was to provide a coherent account (i.e. an integrated understanding) of the powerful trends which are working beneath the superficial surface of our economy and culture.
Survival+ explains why the status quo is doomed, and illuminates the mechanisms which doom it. It also describes "the way out"--we must each put our energy into constructing a parallel, transparent, self-organized, re-localized system which is entirely legal and entirely independent of the failing, doomed status quo which is stripmining the productive to enrich the public and private Elites (file under "Fall of the Empire, Roman and other").
Here are a few of the trends described in Survival+ which I anticipate will be gathering momentum in 2010.
1. Millions of productive citizens will opt out, voluntarily or involuntarily. Millions of small business owners will get tired of paying taxes so thousands of Federal bureaucrats can "earn" $170,000 a year (and pile up benefits the private sector can only dream about) and make sure Goldman Sachs employees (the "doing God's work" CEO is only worth $250 million, poor guy) can divvy up $16 billion in ill-gotten gains.
While they aren't wealthy, many small business owners are comfortable because they scrimped and saved and sacrificed. So when they close their business because it's no longer worth the hassle, the guff, the taxes, the bureaucratic fees and paperwork, then they will survive. The closure of the business will deprive their employees of jobs and the local stripmining machinery (local government) of tax revenues--revenues which cannot be replaced.
Given the dominance of the financial sector, agribusiness, pharmaceuticals and a hundred other concentrations of capital and political power (cartels), then the individual citizen has literally no choice but to opt out.
Those who have worked like crazy to net $170,000 will no longer be willing to work that hard so they can pay absurdly high tax rates to support bureaucrats raking in $170,000 a year for going to pre-meetings (or whatever) and public-employee retirees double-dipping (drawing $100K+ pensions and bennies and getting rehired immediately on contract to do the same job they just left.)
No, thank you, we really don't need to work this hard to support you. We are tired of being serfs. The more you try to tax "the rich," the more "rich" people will opt out.
Many will be opted out involuntarily. Those who believed the fantasy that sacrificing their lives to make partner or get that corner office will suffer great disillusionment when they are axed without a qualm. They "won't be fooled again." Take your 60-hour a week career, Corporate America, and shove it where the sun doesn't shine.
Others will be opted out by the structural implosion of the industries they worked in for decades. Just today I saw a man about my age (mid-50s) gathering recycling on our street. I'd seen him sorting through the bins before, so I asked him if he was collecting glass or plastic. Since he was not using a cart, he said, "no glass, just plastic" so I went to get our neighbors' bins of recycling for him.
Whenever I see a guy or gal collecting recyclables, I think how little separates us.
In chatting with the gent, I learned that he'd been a carpenter for 25 years, never without work until last year. He was expecting an extension on his unemployment shortly which would enable him to move out of the homeless shelter. He still had his work truck, stored at a friend's house.
I don't know if construction will ever come back to the point that all the hundreds of thousands of people who made a living in the industry will be employed again. I think not; bubbles don't reinflate.
The same can be said of millions of people laid off from retail and a hundred other industries. The jobs aren't coming back, regardless of what propaganda is issued by Washington. (Note to Obama White House: start issuing indictments, not more worthless propaganda.)
2. Millions of households will get by on one salary where they once had two. As the status quo devolves, jobs are starting to disappear even from the so-called "invulnerable" industries like government and healthcare.
3. Internecine Conflict Between Protected Fiefdoms will intensify. As Federal and local government tax revenues continue plummeting, "tax the rich" schemes will proliferate and promptly backfire. The truly wealthy--the 1/10 of 1% who own some 2/3 of the productive assets of the nation--will buy exemptions or loopholes from their corrupt and venal Congressperson for a mere $100,000 or so. (Even a million is cheap when you're saving $100 million.)
That leaves the working "rich," those professionals and business owners who have a choice. They can always opt out and just shut down, move to another state or country or cut their business or hours down to subsistence level.
The more "raise taxes" schemes which are passed into law, the faster tax revenues will drop. Most lower income households pay no tax at all except the 7% FICA/Social Security tax. The "rich" pay almost all the income taxes, and as they opt out tax revenues have nowhere to go but down.
Stunned that their revenue-enhancement plans have backfired, the various protected fiefdoms (fire departments, cop shops, city hall, school districts, transit districts, universities, "Defense" a.k.a. Global Empire, brought to you by Military-Industrial Complex, Inc., with special guest, Blackwater Associates, Sickcare/Medicare/Medicaid, and so on) will start jockeying to be first in line for the dwindling tax swag.
Fire departments will start mailing out flyers pleading for extra property taxes lest they have to close a station or three (anything other than take a pay cut or slash their lavish pension/medical bennies) and Police chiefs will exit their chauffeured vehicles a block from the "town meeting" (so they can appear to walk in with appropriate humility) where they will plead for "more cops on the street." (Never mind the PD retirees drawing $100K per year in cash and bennies.)
The revolving door between "Defense" corporations and the Pentagon will spin even faster as lobbyists sprout like evil weeds, hawking new costly ways to "fight" GWOT (global war on terrorism). "Either pay us now or the nation will be at risk." Yeah, right. Like a $300 million fighter jet has anything to do with GWOT, or "Homeland Security" has anything to do with, well, homeland security.
Go ahead and nail another "terrorist leader" in the Yemeni wastelands with a high-tech drone missile; did anyone look at the demographics of the region, which is exploding with literally millions of young men devoid of goals and gainful employment? Are high-tech weaponry toys anything other than profit machines for Protected Fiefdoms? Go ask the captains and commanders on the ground before you answer; don't take the word of some overpaid pundit/PR hack/government factotum.
Sadly for the Protected Fiefdoms, there simply won't be enough money to fund all their fat jobs, fat pensions, fat benefits, fat expense accounts, fat contracts, etc. (The Chinese have simply stopped buying more U.S. Treasuries, by the way; the "pusher" is getting tired of providing endless credit to the junkie, who will soon be experiencing the dread tremors of agonizing withdrawal from credit dependency.)
That's when the Internecine Conflict begins in earnest. Dark mutterings will turn into angry rants; everything is sacrosanct and must be funded "at all costs": subway and bus service, education, cops, fire department, carbon credits (more on that new Wall Street scam next week), and of course, sickcare--and above it all, the high keening whine that "we were promised this forever and ever," "it's in the contract."
Check the streetwise reply: "You can't get blood from a turnip."
The snake can eat its tail for awhile, but at some point the transit agency will rebel at the cost of sickcare "insurance," and so on; each Protected Fiefdom will be sharpening their knives for other Protected Fiefdoms. Politicos, bought and paid for many times over, will find it impossible to reconcile all the demands placed on the fast-dwindling tax swag under their control.
Like tribes unused to cooperation, no fiefdom will consider negotiating a 25% cut in pay, benefits and pensions for all the fiefdoms; each will seek to eviscerate the budgets of other fiefdoms to protect their own share of the swag. All will fail and the entire government will slip into insolvency. Greed, avarice and blindess have consequences...
Read the rest.