Where cognitive dissonance is progress
Cognitive dissonance is where one holds two competing thoughts in the mind at the same time. The idea that the economics of our system of living is forcing us to contract does not correlate with the popular political notion of getting America growing again. Would cognitive dissonance be an incremental improvement over the blind ignorance our political establishment seems to have of our current situation?
I finished two books last week. The first was The Icarus Syndrome: A History of American Hubris by Peter Beinart, which talked about how America’s view of foreign interventions has evolved from Wilson through George W. Bush. The second was Endgame: The end of the debt supercycle and how it changes everything, by John Mauldin. Endgame is a sobering, but far from apocalyptic, look at what comes next for a global economy unwinding from a massive accumulation of debt.
It was the overlap of these two fascinating books that got me thinking about the politics of what someone like James Kunstler calls The Long Emergency, what Richard Florida called The Great Reset and what I would probably categorize as an end to the Suburban Growth Ponzi Scheme in America.
Politics weighed heavily in Beinart's and Mauldin’s books, but not the petty kind that you see on cable or the horse race kind associated with straw poll results. I do a weekly radio segment on Minnesota politics (Thursdays at 7:20 AM on Northern Community Radio, 91.7 KAXE) and I have little patience or interest in that side of it. What fascinates me are the policy decisions; how those deep and enduring choices are made, intentionally or not, by the people in a position to make them.
Beinart revealed that, throughout history, American leaders often understood the problems but faced the supreme obstacle of bringing the American people along with them. Whether it was the idealism of Wilson, the level-headedness of Eisenhower, the savvy of Kennedy or the ability to connect of Reagan, the Icarus Syndrome portrayed leaders that were looking beyond the public mood to a place where America would be better, if they could only lead us there.
Of course, the story or Icarus is of a boy that, empowered with wings, flies so high his wings melt and he is sent crashing back to earth. With Beinart, for Wilson there is Truman. For Kennedy there is Nixon. For Reagan there is G.W. Bush. The latter each take the vision and prudence of the former and, freed from the burden of public opposition (which was eroded by the former's success in more limited ventures) they advance to new "heights" only to come crashing back to reality (ie. Korea, Vietnam, Iraq).
So here's my thought problem: Do America's leaders today know and understand the problems we face but, because it involves so many difficult choices, basically avoid talking about it directly to us (Wilson, Kennedy, Reagan) but instead are working behind the scenes to slowly move us in the right direction?
If I am given thirty seconds to summarize where our economy is at, here is how I do it: Following World War II, we turned our massive economic capabilities into building suburban America, a great experiment in creating prosperity. We were successful for a time, at least for some, and it made us the envy of the world. As our model started to break down in the mid-1970's, we turned to debt and financial gimmickry to keep it afloat. We've just about run out of our ability to do that, with households, companies and governments all massively over-indebted. When this ends, we will need to deal squarely with the mess we have made; our loss of productive capacity, our consumption-based economy, our reliance on the automobile and oil, the unproductive places we've built, our social fragility... Our current economic problems are not just a transient condition or some part of a natural business cycle. They are the beginning of a great unwinding that will result in the physical contraction or transformation of our very cities and towns.
I think much of this is -- or should be -- apparent to our leadership. The rhetoric they use suggests that we are in the throes of one of humanity's epic struggles, that the very future of America's Republic is at stake. The term "structural change" has been in common usage for some time now. They have to see this stuff, don't they?
I'm starting to believe that they don't.
Let's take President Barack Obama first. I was absolutely stunned to read the recent NY Times piece on the internal debate at the White House over how to approach the economy. The strategies they are hashing over are the epitome of fiddling while Rome burns. From the article:
Mr. Obama’s senior adviser, David Plouffe, and his chief of staff, William M. Daley, want him to maintain a pragmatic strategy of appealing to independent voters by advocating ideas that can pass Congress, even if they may not have much economic impact. These include free trade agreements and improved patent protections for inventors.
But others, including Gene Sperling, Mr. Obama’s chief economic adviser, say public anger over the debt ceiling debate has weakened Republicans and created an opening for bigger ideas like tax incentives for businesses that hire more workers, according to Congressional Democrats who share that view. Democrats are also pushing the White House to help homeowners facing foreclosure.
The entire article is like this. Free trade agreements? Tax incentives? It does not sound to me like anyone grasps that there is a bigger issue here, that there is more going on than just a pesky economic slowdown. The President even indicated that he had reversed the recession, that we were on the path to recovery, until some "bad luck" in Japan, Europe and Asia set things back.
The other side of the aisle is no better. GOP front runner (and fellow Minnesotan) Michele Bachmann actually suggested that, if she were elected, not only would the economy be fixed in three months but we would be back to $2 per gallon gas. The Tea Party may have put their finger on the biggest problem of our time -- the unsustainable level of indebtedness -- but in all other facets their proponents are in denial of reality. There is no serious narrative here about changes to the suburban experiment.
The record of Rick Perry does little to bring comfort either. The publication Chron.com is doing a four part series on infrastructure investments in Perry's Texas. It is clear that Texas is in the second phase of the three-phase Suburban Ponzi Scheme -- the phase where debt is used to extend the illusion of prosperity -- with Perry himself not only in denial, but advocating for even more.
As governor, Perry advocated the controversial Trans-Texas Corridor, an ambitious transportation scheme that relied on foreign investment and tolls for financing. It was abandoned after the outcry from property owners whose land would have been claimed by eminent domain.
Since then, the state has relied heavily on issuance of bonds to build highways. For the first time in history, the Texas Legislature this year appropriated more cash to pay for debt service than to pay for actually building new roads: $850 million per year versus $575 million.
Lawmakers also approved the use of $3 billion approved by voters in 2007 for road construction, but the Texas Department of Transportation estimates the state must pay $65 million in annual financing costs for every $1 billion it borrows through the sale of bonds.
The state began borrowing money in 2003 to pay for roads and will owe $17.3 billion by the end of next year, contributing to the rapid escalation of total state debt, from $13.4 billion in 2001 to $37.8 billion today.
The money will cover just a fraction of the transportation needs identified by planning experts. The Texas Transportation Institute two years ago placed the state's highway construction needs through 2030 at $488 billion.
Even here in Minnesota, we have this weird political cabal to support the Old Economy Project that Refuses to Die (also known as the $700 million St. Croix Bridge in Stillwater). The bridge is three times the cost of the 35W replacement and will carry only a tenth of the traffic. It requires a waiver from Federal Wild and Scenic Rivers protection. The constituency here is a small town on the far edge of the Twin Cities Metropolitan Region and some property owners in the neighboring state of Wisconsin. For Minnesota's politicians left and right, there are numerous reasonable grounds to oppose this project, or even just shrug shoulders and say, "wish we could, but we can't." Instead, Republican representatives Bachmann and Cravaack have joined with Democratic Senators Klobuchar and Franken and Democrat Governor Dayton to support the entire project. A last minute face-saving "out" for the Governor was even rejected.
If there is any understanding anywhere in government that the suburban experiment is ending, why would we be pushing so hard to spend so much on its last gasp?
Mauldin's assessment of the debt supercycle relies less on politics and personalities than Beinart's work in the Icarus Syndrome. He used the "kick the can" metaphor frequently, but even he limits his analysis to the financial statistics, overlooking the impact of energy, population growth and other finite resource-based issues. The future he paints is filled with the pain of a difficult transition. I, for one, would be happy if our politicians could just acknowledge that much.
Could it really be that our political establishment is so blissfully unaware of what is really going on that cognitive dissonance -- having two competing ideas in ones head -- would be an improvement?
- The Icarus Syndrome: A History of American Hubris by Peter Beinart
- The Long Emergency by James Kunstler
- The Great Reset by Richard Florida
- The ridiculous Old Economy Project that won't die (November 29, 2010)
Charles Marohn is a Professional Engineer licensed in the State of Minnesota and a member of the American Institute of Certified Planners. He is president of Strong Towns, a non-partisan, non-profit organization that advocates for changes in development patterns and a complete understanding of the full costs of methods of growth. Strong Towns is seeking tax-deductable, $25 donations from 100 readers to create a video version of its Curbside Chat presentation.