They say you can’t have your cake and eat it too. Yet, that’s precisely what we’re trying to do when we base political and societal decisions only on financial considerations and outcomes.
In 2007, just one year before the economic collapse of 2008, Nassim Nicholas Taleb famously wrote a book called “The Black Swan.” The title refers to the fact that for hundreds of years, people in Europe “knew” that swans were always white. White and swans were synonymous. Until one day they saw a flock of black swans …and everything changed. The title is a metaphor for our inability to account for unforeseeable events: what Taleb called, “The impact of the highly improbable.”
Nassim’s fundamental thesis is that the future cannot be predicted because, in reality, it can only be based on past experience. And because of this, we always think that in the future everything will somehow just work out because it always has.
Until it doesn’t.
In the first part of this series, I wrote about what psychologists might call the “toxic co-dependency” that currently exists between public credit and equity markets, central bankers, and the financial health of government, public agencies, pension obligations, and the associated risks to middle-class taxpayers in an economy driven primarily by personal consumption.
In the second installment, I wrote about the increasingly precarious relationship between state-mandated, unsustainable growth, the resultant public and private indebtedness, and the risks of future financial burdens on us all.
Together, these two articles paint a picture of the financial morass we find ourselves heading into, the very same moment in history when we need massive amounts of capital to address an increasingly long list of socio-economic problems and inequities.
Equal access to healthcare, education, and jobs training are on that list. Any system that fails in those areas ends up paying many times the costs in lost productivity, crime, social support services, and much more. The need to reform government agencies and services and bring them into the 21st century, technologically, so they function more effectively is another major challenge. The grossly inefficient (and often illegal) use of taxpayer dollars by local, regional, state and the federal government, and the legacy of entitlements and pension/benefit largess they are adding, daily, only compound our problems.
And, of course, we need to address the mounting failures in providing basic public services, which go hand in hand with rebuilding our infrastructure: our roads, bridges, tunnels, power grids, water systems, sewage and waste treatment systems, railways, waterways, docks and ports, airports, and a long list of other fundamental systems, without which our society cannot continue to function.
Overall, our endgame is not looking good for the average and even above average earners, much less the poor and disadvantaged. This is exacerbated by unsustainable growth and the way we measure “success” or “failure,” using antiquated financial metrics, such as Gross Domestic Product.
For the rest of the article, click here.
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