Bubbles or nothing [u]

Even mainstream, orthodox economists are beginning to describe “secular stagnation” as the new normal. The relative halcyon days mentioned in these posts, the roughly three decades following the end of WWII, are now viewed as an anomaly, perhaps never to be repeated.

real gdp and 1992 to 2007 trend

As the above chart illustrates, the economy suffered a sharp, significant decline in 2008. Moreover, it has yet to recover. That gap represents millions of people losing work, working less, and certainly bringing home smaller paychecks.

real per capita income from 2000

How to reverse the trend and fill the gap? Regrettably, those same economists believe that it would take another speculative bubble. Forget about sustained economic growth lifting the Rest of Us along with the plutocrats. It’s bubbles or nothing. The good news, if you wish, is that the economic system inevitably produces bubbles; it’s the nature of the beast.

Should you spend time reading Marx and his devotees, the solution will be simply to replace capitalism. This has always struck me as fanciful in the extreme. Yet, even if we could imagine capitalism’s own demise, as Marx himself concluded was both inherent in the system and inevitable, what then? Workers’ councils? Public ownership of the means of production?

If there is one obvious facet of the modern, technological world, it is that we’re busy with our own lives, whether they be filled with struggle or surfeit. As Oscar Wilde suggested, socialism involves too many evening meetings.

We are mostly content, by nature or default, to leave the business of governance to others, whether corporate overlords or elected representatives. While we reserve the right to rail against each, we rarely act to alter the status quo.

I can hardly fault this attitude. The enormity of the project easily overwhelms our ability and enthusiasm.

I have found that one must pick an infinitesimally small slice of the world, engage it wholly, and hope that the tiny enterprise does more good than harm.

Hardly the stuff of revolution, to be sure. It’s mostly about personal sanity.

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UPDATE (November 23, 2015):

The first chart should have read billions of dollars rather than millions.