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.