Land of the cargo cult, home of the brave

Eric Garland Greatest Hits, Political Trends 21 Comments

The 2012 election taught me was that many Americans belong to a cargo cult.

Huh? A what?

During World War II in the Southwest Pacific, the Americans and Japanese made first contact with native peoples who had had no contact whatsoever with the industrialized world. These peoples in New Guinea and Micronesia marveled at the otherworldly power of airplanes, radios, clothing and weaponry for the first time. When the war concluded the strange aliens left, taking their “cargo” with them. Man, did the islanders miss all that cool technology and food and clothing! They did not understand why the Gods blessed their people with such a magical experience, only to yank it away so quickly. To attempt to get their blessed  “cargo” back, they tried to make things right with their deities, whom they had obviously ticked off. After all, the Gods don’t give you great stuff and take it away without some kind of personal failing. Was it something we said?

The locals formed religious cults which began praticing rituals to prompt the return of the magical goods. They went as far as constructing “radios” out of palm bark and coconuts to spur the return of airplanes. That’s what those guys did to get cargo, right? Then they tried building their own planes out of local materials. Hmm, no good. The medicine men of the tribes also tried to use Christian crosses as magical totems; those must have had something to do with the whole “manufactured goods” thing, right? Those guys were always wearing those cross things; must have had something to do with it. Nail some crosses up and see if we get the magic metal birds full of cargo back!

But alas, the toys were never to return. The arrival of material abundance was incredibly significant to these people, but in the end, they never quite understood what caused it, why it disappeared, or how to get it back.

“My fellow Americans, my opponent is against hangars made from palm leaves!”

If you observed the political debate in the United States this year, there were coconut radios everywhere. This is a country that knows it just lost something, and it is quite dyspeptic about the matter – but people still can’t make out exactly what happened. Moreover, the country’s current answers for how to get “it” back – or whom to blame for its disappearance – have almost nothing to do with what produced the success in the first place.

Economy slow? People must be lazy!

Pervasive unemployment? There are too many taxes even though tax rates are at record lows!

Erosion of the middle class? Further impoverishment of the working man? Exploding income inequality with the 1% taking 93% of the gains from the “recovery?” People, uh, just need to get a job and stop being jealous! Or something.

Young people not buying cars and houses? It can’t be because with saddled them with billions in debt for college – they must just have different values and stuff! Get flipping condos, you hippies!

If America is to form a coherent plan for the future, it needs to separate the difference between the cargo cult and reality. We need to understand what caused America’s success, what changed, and how are people are misinterpreting about what to next. Then we can fix things.

First, let’s look at the arrival of the shiny metal birds of success.

What was America’s great competitive advantage in the 20th century?

In the cargo cult you don’t know why you’re not receiving goodies anymore – but more importantly, you do not even understand the system that created the goodies in the first place. The islanders could not imagine an airplane factory in Tokyo or California, couldn’t fathom liquid fuels and combustion engines, couldn’t envision complex supply chains. Today’s Americans grew up in a period of historic economic expansion – and cannot fathom just what underpinned that prosperity.

Let’s examine the situation in America following World War II. First off, we won, and the Axis powers of Germany and Japan lost. In 1946, America awoke to the realization that:

1. America had ramped up to a historical level of industrial productivity, putting out battleships and bombers and rifles and Jeeps and artillery pieces at an amazing rate.

2. Everybody else who was an economic competitor just blew up their entire infrastructure and killed millions of men in their prime.

America had far and away the world’s largest and most intact industrial infrastructure. All it had to do was convert its machine tools from making fighter planes out of aluminum and battleships from to making washing machines out of aluminum and automobiles from steel. And of course, it had a whole generation of young people excited to be alive and get down to the excellent peacetime hobby of makin’ babies. This was a boom in the making, in the economic and baby sense.

America was also at a zenith of cultural power – one that would grow rapidly. America had Hollywood and pop music and mass media pouring out onto the rest of the world, the sights and sounds of modernity, prosperity and peace. Moreover, its international reputation was burnished by the fact that it rehabilitated its enemies from the war, breaking the cycle of damaging war reparations and eventual revenge. And especially compared to the spreading disease of totalitarian communism behind the Iron Curtain, America was being made the headquarters of the Free World.

So, to sum up, America had, in contrast to its global competitors who were busy rebuilding their war-torn infrastructure:

  • massive industrial power without rival anywhere on Earth
  • burgeoning consumer economy, the only of its kind
  • cultural dominance
  • high moral standing
  • rapid scientific and technological advancements
  • a coming demographic boom (babies)

Wait, anything else? Oh yeah, HUGE factor:

  •  Cheap, easily available petroleum that we produced and refined all on American soil

These were the strategic factors that gave America a tremendous headstart on the rest of the world in the race toward an advanced consumer economy. And in addition to structural advantages, the U.S. government made excellent policy choices:

  • significant investment in infrastructure
  • massive investment in science and technology
  • massive investment in education – GI Bill, student loans, national laboratories, etc

Good stuff, right? These strategic factors plus a general hard-working and innovative characteristic of a diverse people led America to grow economically at a historically unprecedented rate. This is what we refer to as the Good Old Days, scrubbing from memory the Watts Riots, Kent State, most of the 1970s, and our nights at Studio 54. But in terms of goods and services sold, GDP on the rise, and increasing standards of living, this is the America people want to get “back to.”

What is causing trouble in paradise?

You never really get to hear about the underpinnings of our economic activity on the news. Forget the availability of potable water in the West, what about shares of Zynga? And forget what the spot price of West Texas Intermediate is today – do you think Kim Kardashian’s butt is too big, or does its relative firmness herald a new era of big butts? And how is the Dow Jones doing today?

So let’s just update a few of those factors that made America economically dominant to see how things are doing:

  • massive industrial power without rival anywhere on Earth

The rest of the world has made incredible strides in this area, with several nations rising out of agrarian subsistence economies to become major competitors in heavy machinery, automobiles, aircraft, fine chemicals, and other sectors – Japan, Korea, China, India and Brazil being the most important competitors who have lowered cost and expanded competition. And it goes without saying that America has helped this along by outsourcing so much manufacturing to these countries.

  • burgeoning consumer economy, the only of its kind

Households spent record amounts supported by: having one income, to two incomes, to two incomes and some credit credit cards, to two incomes, credit cards, and a house we treat like its own line of credit – and now all of the above, plus record indebtedness. America cannot expand its consumer spending any further. It will retrench for the foreseeable future. And now there are millions of Middle Class consumers all over the world to whom one can sell jeans, watches, consumer electronics and champagne. ALSO: we are still recovering from an enormously obvious, stupid housing bubble that has mangled one of the key sectors for all of consumption.

  • demographics boom

America is no longer receiving a lift from the Boom generation, and in fact as that millions of them turn 65 every year, their spending patterns evolving dramatically toward downsizing and economizing. This is not the driver of economic growth. And their kids are buried under a trillion dollars of student loan debt.

  • cheap, available petroleum

DING DING DING. America has been a net importer for years. Increasing demand and flattening supply has led to the cost of energy inputs rising slowly but surely for years. The Good Old Days were built with cheaper and much more stable supply of petroleum. The implications of this cannot be overstated. 

 

 

 

 

 

 

 

 

 

Quick question: how often do you see strategic issues like this in the national dialogue – especially the political dialogue we just had for what felt like an interminable period? 

Strategic thinking in the cargo cult

One of the persistent themes of the election that we just had in the United States was just how wrong things feel. Especially where the presidential election was concerned, this was expressed over and over. If you were in Obama camp, perhaps you know that things are not good in America, and surely we must stay the current course, that recovery is happening but you just can’t feel it, as Bill Clinton (one of America’s best feelers) said at the Democratic National Convention.

If you were a Republican, the theme was usually apocalyptic, that Obama’s policies were the sole reason behind this malaise – and that things are getting worse because of his policies. That and he’s a Marxist Kenyan Anti-Colonialist Elitist Black Power Islamist Satanist. So HE IS AT FAULT FOR EVERYTHING!!!!

Collectively, we got the following potential strategies from our leaders this past campaign season from Democrats:

  • Do the same stuff, more competently.
  • Expand some regulations to incrementally alter the playing field.

From the Republicans we got:

  • Privatize social security
  • Shut down Planned Parenthood!
  • Cut taxes on the wealthy!
  • Overturn that horrible Obamacare thingee which is like Russian Communism, but worse!!!!11
  • Stop the march of the Marxists, that’s what!

QUESTION: How much of what we just heard has a lick to do with our real problems? How much of what we just heard was an actual discussion about the state of the nation? How much of this has to do with the real source of America’s past success, and how much was just a bunch of coconut radios?

Did we talk about the effect of the millions of Baby Boomers hitting retirement age?

Did anybody come clean on how much health insurance is going to explode with or without Obamacare?

Are we planning to deal with rising and erratic oil prices by building public transit, changing city design, or mandating fuel efficiency?

Are we bringing any of those manufacturing jobs back?

Is the price of college supposed to just go up forever?

Will we get around to upgrading America’s crumbling bridges, railways, and electrical grid?

Are we living in the real world, or are we running around making a cargo cult, angry that the Gods haven’t given us our toys back, but unable to perceive what would actually restore the nation? 

The islanders did the best with what they had – zero experience of modern industrial society and a mentality suited to Stone Age living.

We should know better. Generations before us understood what made lasting prosperity. And we’re choosing a cargo cult on purpose.

  • Big A

    Don’t forget Eric…the top tax rate during that glorious time was 91%.
    I continue to forward your page to scores of folks.
    Glad you are getting good feedback…are you repared to go BIG? Hope so…
    Perhaps we could form a 3rd party called the Common Sense Party

    • Big A – that top tax rate thing is one of the key reasons I think of the Cargo Cult. People are obsessed about top tax rates, even when we were considerably more economically viable when there were major estate taxes and the like. And we of course get to hear about how Reagan saved the economy, fine. But returning to the tax rates of Reagan? Unthinkable!!!! But it’s all about tax rates. Somehow.

      This is why we need to disconnect all of that nonsense and focus in on something real.

    • LogicalChemist

      Then explain why Kennedy cut those tax rates and the top earning people started paying even more taxes. Over the years, the “progressive” income tax rates have been cut repeatedly, mostly, and the “rich” have been paying more and more of the tax receipts. And, until recently when the Alternative Minimum Tax started to hit the middle class(!!), everyone from the lowest quintile to highest level have had large increases in income.

      some background: http://www.american.com/archive/2007/november-december-magazine-contents/guess-who-really-pays-the-taxes

      • I read your posts and reactions & I don’t agree or disagree with *everything* you say. You seem like an intelligent person. Why is it, though, that you give us “some background” from what amounts to a conservative propaganda mill? I mean, if I were to reply to your post, but instead of saying what I’m saying here, say something like:

        Oh, but the economy expanded under Reagan’s higher tax policies on the wealthiest Americans! Explain that!

        Some background: hxxp://zzz.TheSnazzyProgressive.corn

        Would you be likely to go to The Snazzy Progressive and read their long article about how the Liberal approach to economic theory is superior? Would you, at the end of reading said article, drop your computer off your lap in shock and exclaim “Well, paint me red and call me a fire-engine! I’ve decided that I’m a liberal now!”

        …and even if you did, would that REALLY help things?

        Seriously. This goes for everyone: Just because YOU only read “conservative” news, only watch FOX, and only listen to “conservative talk radio” all day doesn’t mean anyone is going to be swayed by your argument when it’s sourced to an article at “The Blaze.” You just look silly doing that, as if you still haven’t realized that there is such a thing as confirmation bias or that at the very least you have no clue what it is. Vicey-versa for liberals – although I see such behavior a LOT less frequently from them. I blame this idea that seems to be prevalent among conservatives that *everyone* just…agrees…with the idea that only conservative “news” sources are “reliable” i.e. not part of or controlled by “the conspiracy.” If you, supposedly Logical Chemist, have a logical explanation as to why you’re sourcing your argument to the online publication of a think tank that advertises itself as being conservative, have an explanation that is better than the one I have tried to divine here – I would be very interested to read it, & I thank you in advance…

        • LogicalChemist

          Kennedy, Reagan, et.al. first cut tax rates, usually with a cross my heart and hope to die promise from the democratiic congress to cut spending(which never happened). I lived through it, that it was backed up by an article on a conservative site doesn’t make me wrong. Bad economic policy is still bad policy.

          Cutting taxes caused the economy to start growing. A growing economy can support more taxes, which were proposed by the decmocratic congress and not fought by Mr. Reagan.

          Contrast that to the current mess we’re in. Congress has not passed, and the President has not proposed a budget in 5 years. Running the economy on qutopilot with fairly large percentage increases built into the process has resulted in increasing spending as a % of GDP to the highest rate in history. As a result Obama has presided over the longest, slowest economic recovery in history. FDR did better with the Great Depression.

          The only reason we aren’t suffering the incredible stagflation we had under President Carter is because most of the rest of the world is doing the same thing. So the USA looks like a safe place to put money compared to Greece, Spain, or England. But at some point soon China will have its alternative policies in place and inflation will take off while we are still in an economic growth swamp.

  • Oh I am so in favor of a common sense party – I also am sharing your “down to earth wisdom” with like minded friends and hopefully a few converts to the “right” side – —
    common sense.

  • wmmoye

    The gods must be crazy.

  • Eric Titus

    Great post, but I wonder if the model of the 1950s is the right one for the US going forward. There’s really nothing we can do about the demographic trends, which are one of the main contributors to rising healthcare costs, and we couldn’t be both the largest and most efficient industrial power in the world forever. One thing that we could aspire to, though, is a return to lower income inequality and a more democratic system.

    I do think that democrats do talk about these issues (I am less certain that republicans do). The ACA does try to bring down the cost of insurance. Obama has encouraged investment in green technology and higher fuel efficiency. The US has actually had a fairly good record of adding manufacturing jobs during this recovery. And the stimulus and other programs have put money into infrastructure. While most of the increases in tuition have occurred due to state budget cuts, Obama actually have a fairly good record on loans and college affordability. Certainly the democrats could be doing more, but I wouldn’t accuse them of ignoring the issue.

    • LogicalChemist

      Green technology seems to mean windmills(killing endangered birds and bats) and solar cells. Neither one is economic because they require a KWh for KWh investment in electric generating plants to back them up. The subsidies spent windmills and solar should have gone to advanced, non-polluting, fail safe nuclear reactors(LFTR).

      Instead, you all paid me to invest in some solar panels so now my electricity bill is virtually zero, and with another tax, renewable energy credits, I’m getting an equal amount back in cash. With the double payment the effective rate of return on my money is something like 12%. Thanks folks for the nice bonus on something I would have done anyway.

      As far as fuel economy, figure that every 100 lbs you cut the weight of a car increases the chances of dying in crash by about 5%. An unintended consequence. Just like the notorious Cash for Clunkers program has priced the poorest folks from being able to buy a cheap old used car. There aren’t any cheap ones because they all were junked a few years ago. And don’t say ride the bus. Most places bus service stops around midnight so the poorly paid clean up crews and other menial night jobs can’t get home. Besides, there are only two Metro transit systems that are marginally close to breaking even on fuel economy- New York City and Portland Or. Virtually every other city with mass transit uses more fuel than driving a car because they have to provide 24 hr. services. So, except for a couple hours in the morning and around dinner, they run with mostly empty seats. A bus with a driver and two passengers gets lousy fuel economy per passenger. The only light on that horizon is shale gas. Buses are good candidates for running on cheap natural gas because they have fixed routes and destinations and can pay for the special fuelling requirements.

  • Logicalinks

    It certainly would be nice to see your name on a third-party ticket in 2016!! I voted Libertarian this year, not only because I liked some of what Gary Johnson said, but as you said, we desperately need a viable third-party to break up this horrible polarizing gridlock.

    Keep fanning the flames!!

  • Who stole my cheese? Sniff and Scurry would be proud

  • @EricT – ACA attempts to reduce pricing on the provider reimbursement side, but if you ever tried asking a doc to join a government program the answer is no primarily due to the doc P&L. Consider every insurance company that “upgrades” their backend processing for claims. Think of the brokers in the middle that take for brokering a corporate healthcare plan. State DOI and DMHC that differ on the same word (spouse, domestic partner) forcing essentially 50 different online storefronts. Yes, all things related to profits, expense, and who has a hand taking a slice along the way. When you take complicated things and try to distill into simple chunks you get heaping piles of stuff. I guess that is one way to break the log jam

  • Big A

    I went back and re-read your thoughts. There is no loyalty to country anymore. …the disconnect is palpable. It isn’t just the tax rate that has changed…it is the sense of Country, of patriotic duty… that we are all in this together. President Kennedy confronted American steel companies over increasing
    the price of steel. Within days, the CEOs folded to JFK’s public confrontation.

    Times have changed dramatically when the tax rates
    for millionaires was 90% compared to now under Eisenhower. During the depression, Rockefeller built Rockefeller Center with the sole intention of assisting the country by giving people jobs. Where is that loyalty today? Where were those who had the power to make a difference? Stashing their hot money in tax free shelters in other countries. Busting unions. Slashing health insurance. Turning a blind eye to the middle class that made them wealthy.

    • I see it less as a matter of loyalty/patriotism, than a lack of a sense of Civic Responsibility. We hear time and time again that a company has a “responsibility to its shareholders.” That’s the problem right there. If I understand things correctly, we have made it *legally difficult* for companies to do things like raising wages or lowering prices if they can’t show that these changes will result in increased profits.

  • Big A

    Looking at the bigger picture…seems to me that unless and until a greater % of individuals start doing the right thing for the right reason, even, as they say in the Military, “when no one is looking”, we will continue to be hamstrung by those who bend over backwards to skirt rules and regs. One can hardly blame those at the bottom of the ladder for scamming the system, when those on the rungs above them get away with it on a routine basis.

  • SGH

    Yes. You’ve written here what I’ve been trying to articulate but don’t have the numbers knowledge to do. Please keep going.

    • Thanks. I keep trying to quit this line of work and it never sticks.

  • Chris M

    You managed to must more sense and logic into one blog post article than all our presidential candidates combined could muster in an entire year’s period. If only more people in the US had your sensibilities we might be able to have a reasonable conversation about moving the ball forward.

    • Politicians think you are all children and couldn’t handle the truth.

      Marketers sell you products via fantasies.

      This is the reason for the difference in our content.

  • SeveredVayne

    Agreed, but reluctantly. It’s not the population as a whole who makes these changes and decisions, it’s a select few who tend to use media to press their thinking on matters of policy. Though, it doesn’t help one bit that a majority of the country can’t comprehend the material set forth, let alone consider how to fix such matters without governance. Strangely, it feels the deterioration of education is systematic to enable just such low regulations on the policy makers. A man from Canada made a good point about public policy discussions and advertising; if Nike were to advertise the way policy makers announce events that allow the public to be involved, it would be a half inch, by half inch black and white print in the classified section of the local paper. Nike would go broke from lack of selling shoes in this matter, the same as the public has been white washed on the inner working of a government, purposely made too complicated and bureaucratic.

  • The assertion that Democrats were ignoring the issue is simply wrong.

    The Obama campaign stated quite clearly they were working hard to increase domestic energy production in all fields, not just green energy.

    One of the most stressed planks in the campaign was Obama’s insistence on increasing education and R&D funding.

    Finally, there is one social factor which was not mentioned:

    WWII resulted in the militarization of the vast majority of capable young men. The motto of the marines is “semper fidelis” and the armed forces trains both its leaders and its enlisted men that “nobody gets left behind” and “you succeed when your team succeeds”. Officers fought in the trenches with enlisted men and valued their contribution.

    This translated into a private economy built on the concept of mutual responsibility. The corporate executives of that day had a morality which today would get them shackled to lower management.

    I believe mandatory military service, especially with a training regimen tasked with the dual purpose of building and maintaining our national infrastructure, along with a tax code designed to compel corporate execs to tie themselves to their company’s fortune through stock options, would do wonders for this country.