This chapter is an overview of the American economy and how it could be improved by practicing Course principles.
America has long been viewed as the best possible place to live. The perception is we have large houses, washing machines and dryers, a television in every room, and two cars in every garage. It’s not often you see the other side of this lifestyle. For starters the freeways in our cities become parking lots during rush hour. There is also another America no one sees. The following article from The Daily Reckoning by Bill Bonner perfectly illustrates this point. I have reproduced it in its entirety.
Even The Rats Have Left-by Bill Bonner
Contrarian instincts, like crowd-following ones, are no guarantee of success. The contrarian insight is merely the realization that people are swayed by emotion as much as by logic—and that they frequently become either too bearish or too bullish. Prices eventually tend to regress to the mean, so you can make money by buying what is unusually cheap and selling what is dear—assuming they return to more normal levels.
But sometimes the trends that lie beneath cycles of despair and euphoria are extremely long. In many of America’s East Coast cities, for example, real estate prices peaked out, in real terms, early in the 20thcentury. Since then, almost every investment—even at very low prices—has been a losing one. I have to give my speech in a few minutes. So I only have time to tell you about my train trip from Baltimore to New York. As the hippies used to say, it was a trip.
The trains pull out of Baltimore’s station. You pass through the black slums of East Baltimore…and then the white slums—peering over fences and into backyards onto scenes of such dilapidation and depravity that you believe yourself transported—either in space or in time.
Either you are visiting some Third World hellhole, such as Lagos, Nigeria, or a 19th century Dickinson one. Whichever direction you look, right or left, it is the wrong side of the track. Mattresses lying on the ground in backyards, rusted out cars and factories, boarded up or broken out windows—garbage everywhere…in piles, in ditches, even in the trees. The scenes are hard to reconcile with the vision of a New Era—and everyone getting rich. These people certainly are not rich. They are not even poor. They would have to work for years and save their money to reach poverty.
Caen, Dresden, Hiroshima—many European and Asian cities were bombed to smithereens just a half century ago. And yet every one of them is a model of prosperity compared to these East Coast dumps. In fact, they probably looked better even in 1946 than East Baltimore does today.
In 1983, I bought a beautiful house in a “bombed out” section of Baltimore for $27,000. I spent several times that amount fixing it up. Seventeen years later I felt glad to be able to sell it for less than I had spent on it.
But at least that house—built for wealthy Jewish merchants in the late 19th century—was attractive to look at. Most of the places you see from the train seem to have been put up by people completely ignorant of the architectural improvements of the last three millennia. Glasgow’s industrial slums are attractive in comparison.
In fact, it is hard to find anything that is not appealing in comparison. Few areas of the world are so misbegotten, forlorn and unmitigatedly depressing.
It is hard to turn your eyes away. The scenes are so preposterously abject—so unrelentingly ugly, trashy and revolting—it is like watching MTV…you are almost hypnotized by the sublime wretchedness of it all. There are hospital waste dumps that are more attractive and healthier places to live. In fact, some of the buildings are in such a condition that you can’t tell if they are dwellings—or just heaps of discarded building materials. And some of the neighborhoods are so bleak and forbidding even the rats must have decamped.
If you believe there is an explosion of wealth creation going on in America, I invite you to take the train and open your eyes. Whatever explosions are occurring, no shock waves of wealth have reached this corridor. No houses—visible from anywhere along the route—are being bid up to ridiculous levels. I would bet that not a single one has sold above the offer price in the last 50 years.
Not all the houses are abandoned—or even in bad repair. Some are well maintained. With their aluminum siding, formstone and Depression-era designs, however, one wonders why anyone would bother to keep them up. It would be better to walk away and call in a bomb strike. They were a disgrace the day they were built. Today they are an embarrassment. They are houses that bombs and termites would improve.
I did not see a single building I would want to live in. I say that not out of snobbery, but simply the instinct for self-preservation. These places look lethal—if not to the body, certainly to the spirit.
Even nature seems to have turned malignant. The typical bucolic scene along the NJ tracks is misshapen catalpa trees with plastic bags hanging from the branches. Somehow, the catalpa tree seems to have mutated so it grows in concrete. And the plastic bags are ubiquitous. Many of the commercial buildings still in service seem to use them to decorate the razor wire they run along the roofs—putting a blue or white plastic bag at intervals of every three feet or so.
The most attractive thing I saw along the entire trip—through Wilmington, Philadelphia, Trenton and Newark—was a huge pile of smoking metal—a place that looked like it had been hit by a squadron of bombers about 3 hours before. At least the rubbish had been burned.
Bill Bonner
From a Course perspective I can only say that’s one person’s viewpoint, seen through the eyes of perception. Yet it’s equally unrealistic to say these people live in palatial estates. Also the east coast cities are not the only parts of the United States that could stand improvement. When I was in Kansas City Missouri I would often drive down streets that looked like city dumps because there was so much uncollected trash curbside. Many of what used to be idyllic farming communities in the Midwest are now home to the methamphetamine makers and gang members that have been driven out of the cities by law enforcement. And of course everyone knows about our poverty in Appalachia and certain parts of the Deep South.
In analyzing this one could make a case that we are becoming a third world country. But in reality we can no more do that than we could say our country is becoming wealthy because the people in Beverly Hills are wealthy.
How does Course apply to this, you might ask. It applies in this manner. As I’ve said we are separate bodies and egos and one Spirit. The separate bodies and egos are what make part of the United States exclusive suburbs other parts uninhabitable slums. But although we don’t realize it we are all joined and interdependent in the physical world too.
As an example suppose it was your ambition to be King of a country. You are one of the wealthiest people in the world, but as much as you would like to be King of the United States you can’t, because you can’t purchase that title. So you find the sorriest third world hellhole and set up shop as King. You purchase a large lot in the worst slum and build a castle with every modern convenience. You are surrounded by starving masses, the streets are unpaved, raw sewage runs in the gutters, and in general the quality of life, if it could be called that, is the lowest imaginable. But you are King, and have every ego booster that goes along with that title.
That was absurd. No one would do something like that. You’re right. No one would do something like that all at once, but a whole nation of people would do something like that so gradually you wouldn’t even notice it happening.
That’s what’s happening in the United States. For example if you live in Beverly Hills you can drive to Hollenbeck, which is about a half an hour away. There you would see a community that resembles a third world country, hear the sounds of gunfire, and risk getting shot or carjacked. If you live in Beverly Hills and read this I know what you’re going to say. “But I’m not like those people, I’m better than they are. I’m educated, I have a good job, and besides no one gave me anything. I worked hard for what I have. And besides the best thing you can do for the poor is to not be one of them.”
That’s all true to a certain degree, but here’s what we have to remember. We do not have to come to the ghetto; the ghetto eventually comes to us. Here’s our choice. Either the United States can work to expand the quality of life of the exclusive suburbs, or the lack of quality of life in our depressed areas will overrun us. It’s easier to expand Appalachia and Watts than it is to expand Beverly Hills, but which one would you rather live in?
No one person or leader can do this. It will require the effort of our greatest minds and everyone else we can enlist in a national effort. First of all the political process and the leaders we have now can’t do it. Our current political process is hopelessly outdated and our current leaders are not our best or our brightest. Everyone has to contribute as best they can in their own way. As an example perhaps the people in one of the worst depressed areas could organize to clean up their neighborhood and people in wealthy neighborhoods could supply trucks and tools. That’s just one example, and I’m sure we could think of many others. We need to eventually think this way about the whole world, but we have to start with the United States first, and get our house in order.
In rethinking our economic policies we need to strive for a sustainable economy instead of a growing one. The results of a growing economy are what you see in California, an endless view of oversized tract homes sitting empty in Riverside County as a result of the real estate bust here. A sustainable economy would have built modest size houses people could afford, and they would have been built and purchased as needed. A sustainable economy would not encourage a high birth rate and high immigration with the idea these people will be future consumers. That’s absurd. The trash a growing economy creates has to go somewhere, and our landfills are full. Recycling is a joke. For instance everything comes in aluminum cans now. They have to be crushed and melted down and that’s time consuming and expensive. Years ago soda came in glass bottles, and it was easily recyclable.
I will close this chapter with an idea I have for improving our outdated monetary system and a letter I sent to all of our State Senators about it.
Our monetary system used to consist of gold and silver coins. Later we added paper money, backed by gold and silver. Now our currency is backed by neither of these commodities. This is a natural progression in the updating of the monetary system, and contrary to what many conservative economists think going back to the gold standard would not improve our current economic situation. In fact it would lead to a severe contraction of our economy with unimaginable consequences.
What we have now is a monetary system where the government prints the money, sets the rate for the credit issued, and tells us what our national debt is. If they need more money to fight the Iraq war they just declare that our national debt is whatever is needed. Although the government would like to cut our social programs to pay for this war they can’t, because that would lead to unimaginable consequences. That’s an overview of our monetary system. Here’s my letter to our Senators with my idea for an updated medium of exchange.
Dear Senator ---------;
This is just a very general letter. First of all you are probably wondering why a CA. resident is writing to you. I have undertaken a project of writing to all of the United States Senators about an idea I have to solve not only our current CA. economic crisis but our national one as well. I have no idea when this project will be completed. I plan to go down the list of all fifty states and just write the state Senators one state at a time. Hopefully, somewhere along the line my ideas will attract some attention, unless everyone just dismisses me as a complete total nutcase, which I have to admit is a possibility. That is because this idea is new and totally different.
The state of CA. has a very serious impending budget crisis. But it’s not just the state of CA.; we have a national one too. Collectively both the state of CA. and the United States of America are billions and trillions of dollars in debt with no solution in sight. I can’t begin to imagine what that amount of money must look like or how we are going to generate the amount it would take to get out of debt.
Since no one seems to have any realistic solutions to offer I will offer you mine. I think we are at a crossroads and have two choices as to how to deal with this matter. First of all we are a totally cashless society for all practical purposes. That’s the way I operate. Let’s think about what I do for a minute. I do need cash sometimes for small purchases so once in a while I go to the ATM machine and get $400. Other than that the PBGC transfers $536 into my checking account every month. American Airlines transfers another $509. The IAM transfers $157. My tenants deposit their rent into my account. Social Security deposits my disability directly into my account. I charge 90% of my purchases. When this bill comes I pay by check. This means I need very little cash. Only gamblers and drug dealers need large amounts of cash. The drug lords in Mexico have houses full of $100 dollar bills, rooms of them stacked to the ceiling. If you want to get technical about it that’s money we don’t have here in America. If we had those one hundred dollar bills the drug cartels have in their possession we wouldn’t have this problem. But we don’t, so the government in it’s infinite wisdom wants to do something about the deficit and that something is a drastic cut in social services.
Now let’s examine the two choices we have. The first one is the government can eliminate all non-defense expenditures. Here’s what would happen. Once the government eliminated social services and people realized they weren’t going to survive we would have one thousand years of a new dark age descend upon us. We would no longer have electricity and drinking water. Lawless mobs would roam the streets. Private armies would keep rich people safe. There would be death and destruction that you couldn’t imagine. Blood would run ankle deep through the gutters into the sewers. The survivors would learn to eat rats and cockroaches to survive. This is the world we could have.
But we have another choice. We could be a cashless society now. Think about it once again. What actually backs the monetary system we have? It’s not gold or silver because gold and silver are no longer legal tender. The government tells us how much money we have and the amount of our debt. All that really backs our currency and keeps us functioning as a society is the collective will of the people to produce goods and services and to tolerate the periodic economic disruptions created by our outdated monetary system. That’s so important that I’m going to repeat it once again. All that really backs our currency and keeps us functioning as a society is the collective will of the people to produce goods and services and to tolerate the periodic economic disruptions created by our outdated monetary system.
Here’s choice number two. We could issue a national credit card to all Americans, operate as a cashless society, and produce goods and services as if the government and the monetary system never existed. That might sound totally ridiculous but think about it. Wouldn’t that be preferable to choice number one?
In summation we have one of these two choices to make. We can choose to descend into one thousand years of a new dark age or we can step into a modern enlightened society, unencumbered by an antiquated monetary system, a remnant of those dark ages we have labored so long and hard to rise above.
Sincerely
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