Podcast
The Transition to a Post-Friction Economy
by Charles Hugh Smith, contributing editor
Tuesday, November 1, 2011
Executive Summary
- Entrenched interests keep our markets from being free
- We’re living in a fool’s paradise (but for how much longer?)
- The forced choices headed our way
- What the post-friction economy will look like
- 2012-2105: The Era of Transformation begins
Part I – How Much of the US Economy Is Friction
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II – The Transition to a Post-Friction Economy
In Part I, we pursued the idea that much of the US economy is, in essence, unproductive friction that is overcome with vast borrowing — itself a form of friction — and the importing of fossil fuels. We also noted that the Central State/cartel “capitalism” partnership has greatly expanded the unproductive, uncompetitive “friction” segments of the economy and has limited consumer “choice” to purposely-selected menus designed to appear like a “free market” while benefiting State fiefdoms and private-sector cartels.
Entrenched Interests Keep Our Markets From Being Free
Looking at the sources and costs of friction gives us some insight into issues that are often seen as political — for example, the costs and benefits of borrowing trillions of dollars into existence every year and the costs/benefits of State regulation. Once we recognize how rising systemic friction will eventually freeze the system, then we also recognize that the path we’re on is unsustainable, and the political “rightness” or “wrongness” of increasing debt to fund the forces of friction becomes irrelevant.
The same can be said of State regulation. Given that one of the purposes of government is to protect the nation’s “commons” — air, water, public lands, and other shared resources — then some regulation is necessary to limit exploitation and predation of the commons by either private parties or the State itself.
But we have confused productive regulation with regulation that achieves little beyond diverting funds to unproductive segments of the economy. There are hundreds, if not thousands of examples in every sector from criminal justice to farm subsidies to health care.
How about the enormous expense of the “war on drugs” and the resulting prison complex and criminal justice system? Are the benefits being reaped — marginal, or even counterproductive, in many analyses — worth the expense? Those employed in these systems naturally feel the benefits far exceed the costs. But self-interest is simply not an accurate measure of friction; ultimately, only a free market of free citizens can make that assessment.
The Transition to a Post-Friction Economy
PREVIEW by charleshughsmithThe Transition to a Post-Friction Economy
by Charles Hugh Smith, contributing editor
Tuesday, November 1, 2011
Executive Summary
- Entrenched interests keep our markets from being free
- We’re living in a fool’s paradise (but for how much longer?)
- The forced choices headed our way
- What the post-friction economy will look like
- 2012-2105: The Era of Transformation begins
Part I – How Much of the US Economy Is Friction
If you have not yet read Part I, available free to all readers, please click here to read it first.
Part II – The Transition to a Post-Friction Economy
In Part I, we pursued the idea that much of the US economy is, in essence, unproductive friction that is overcome with vast borrowing — itself a form of friction — and the importing of fossil fuels. We also noted that the Central State/cartel “capitalism” partnership has greatly expanded the unproductive, uncompetitive “friction” segments of the economy and has limited consumer “choice” to purposely-selected menus designed to appear like a “free market” while benefiting State fiefdoms and private-sector cartels.
Entrenched Interests Keep Our Markets From Being Free
Looking at the sources and costs of friction gives us some insight into issues that are often seen as political — for example, the costs and benefits of borrowing trillions of dollars into existence every year and the costs/benefits of State regulation. Once we recognize how rising systemic friction will eventually freeze the system, then we also recognize that the path we’re on is unsustainable, and the political “rightness” or “wrongness” of increasing debt to fund the forces of friction becomes irrelevant.
The same can be said of State regulation. Given that one of the purposes of government is to protect the nation’s “commons” — air, water, public lands, and other shared resources — then some regulation is necessary to limit exploitation and predation of the commons by either private parties or the State itself.
But we have confused productive regulation with regulation that achieves little beyond diverting funds to unproductive segments of the economy. There are hundreds, if not thousands of examples in every sector from criminal justice to farm subsidies to health care.
How about the enormous expense of the “war on drugs” and the resulting prison complex and criminal justice system? Are the benefits being reaped — marginal, or even counterproductive, in many analyses — worth the expense? Those employed in these systems naturally feel the benefits far exceed the costs. But self-interest is simply not an accurate measure of friction; ultimately, only a free market of free citizens can make that assessment.
While owner of AlpineAire Foods in the early 1990’s, I conducted significant research and study into the excellent and very effective technology of oxygen absorbers. Developed in Japan, oxygen absorbers insure a very low residual oxygen level in appropriate storage containers. Through this research and the development at AlpineAire foods, I brought the large scale use of oxygen absorbers into the emergency food and outdoor recreational foods industries.
Today we are going to be discussing worm composting and vermiculture. Using worms to eat your waste organic matter from the kitchen can be a very convenient method of making black gold. Not only do these red wigglers produce a richer soil amendment than traditional compost (higher in nitrogen, phosphorous, and potash), they make it faster than their microbial compost pile counterparts. Worm composting has a number of additional advantages over traditional composting, some of which include:
Friction is the resistance between moving parts that cause a bicycle in motion to come to a stop once you stop pedaling. If you flatten the bike’s tires, increasing the resistance between the rubber and the road, that increase in friction causes the bike to slow far more quickly than a bicycle with inflated tires. Increase the friction enough, and you can barely push the bike forward.
The market rally in response to the European bailout of Greece seems a bit premature, if not overdone.