How did we get there? Most fundamentally, a paralyzing period of stagflation meant double-digit interest rates and no economic growth.
However, it was also fed by an energy crisis; the first signs of Islamic fundamentalism’s assent; and a lengthy political hangover that followed a scandal in the White House.
But as they say, it’s darkest before the dawn, and in a flash, the malaise was gone.
To be sure, the next 30 years brought with it booms, bubbles and bursts, but the general sense, and one’s expectation, was for a better tomorrow.
Today, however, I’d argue that our present no longer sits at such a simple, logical place where tomorrow is necessarily better than today.
Simply put, our society is undergoing a “great reset” where for many the future is a very scary place.
Understanding The Great Reset
Systemically speaking, these are confusing times. The recession is technically over, and you can tangibly see that fact from an economic growth perspective.
Yet, two-and-a-half years later, one has to ask, “Where are the jobs, and equally worrying, where are the drivers of job growth?”
Now I don’t have to tell you that a jobless recovery is an unacceptable indicator of systemic success when you consider the sheer size of the unemployed, not to mention, the under-employed.
Similarly, is there any question that a certain chunk of society is getting dis-proportionally squeezed by the system on numerous fronts?
Case in point, over the past couple of years I have heard a troubling number of stories from people that I know well. More often than not, these are highly educated, historically successful people that have gone from flush to crushed, simply because their geographic region or industry has lost its footing, or because they’ve hit a certain age where they are no longer desired as a named employee.
1099 is the new W-2
The uncomfortable truth, in fact, is that everyone is now an entrepreneur, whether they like it or not. 1099 is the new W-2, which says something when you see how even basic services like insurance become exponentially more expensive when written as an individual policy vs. a company policy.
What type of hit does that represent to our national health, both metaphorically speaking and literally, in the pocketbook?
Homeless children: do we really care?
Along these lines, I was drawn to tears watching a recent CBS “60 Minutes” report about the growing ranks of homeless children, and what that life is like for all parties involved.
It is gripping stuff in that it raises tough questions about what kind of society we want to build, and how much we feel pain when others needlessly suffer.
This all seems so abstract until you ponder its effect in broader terms. Case in point, in the book “Outliers” Malcolm Gladwell brilliantly shows how those coming of age during the depression never fully recovered; yet those coming of age in the boom times of a Post-WWII America flourished, making this a generational imperative.
Tough questions, weak answers
This is the Great Reset, and an entire generation’s outlook for a better tomorrow lies in the balance with it.
Remember the audacity of hope? It’s been replaced with cynical, political pragmatism where big corporations necessarily get stronger on the premise that trickle down and laissez-faire are universal absolute truths.
Equally troubling, there’s a sense of there being a protected class — seen in many forms across taxation, lobbying, generally accepted conflicts of interest, and low-touch regulation and enforcement.
Consider that it is no longer assumed to be fundamental that there be basic codicils protecting individuals from intentional harm, predatory behavior and malfeasance (read Matt Taibbi’s damning “The People vs. Goldman Sachs” for more fodder on this topic).
Nor do the penalties meet the crime when this class crosses the line. Why not commit the crime if you don’t fear doing any time?
As a result, the rest of us are getting the shaft. Health Insurance is more expensive and offensively priced than ever. It feels almost evil that we went through the Obama Care discussion, only to “win” universal coverage that results in insurance providers simply upping their premiums 40% or more, in some cases pushing 2-3 rate increases in a single year!
Want to really mess with people’s minds? Threaten the availability of their health care coverage, both for themselves and their families.
On a lighter note, at least we aren’t suffering from inflation in this recovery. Yes, I am being ironic.
So what’s changed this go around?
I remember when I started my first career in real estate back in 1988, and the savings and loan crisis was in full force (it was a much smaller version of our current banking imbroglio).
Then, three things came about in its aftermath:
- Real structural change.
- A functioning marketplace for getting rid of non-performing assets.
- Readily identifiable perpetrators went to jail.
Not this time. Not only did the perpetrators not go to jail or even lose their jobs, but they got raises and got to keep their bonuses. This, even though the “profits” were disproportionately derived from a guaranteed arbitrage gifted by the U.S. government.
Even worse, most would agree that the reforms to the system were largely cosmetic, with the clean up of toxic assets occurring behind the public curtain with even more financial engineering.
Netting it out, we went through the worst financial crisis since the depression, and the only one who went to jail was Bernie Madoff — the guy who stole from the rich! That should tell you something.
Looked at holistically, it raises some troubling questions:
- Is “Too Big to Fail” just a black hole that sucks our economy dry? You can certainly see the ripple effect at the level of state and local governments.
- Does it matter if we have a middle class? Do we really care? Are our national priorities right?
- What happens to all of the places in America that don’t find real industry on the other side of The Great Reset?
- What if it turns out that the Google Economy is a better destroyer of wealth and jobs than a creator of the same? Apocryphal, sure, but it’s a fair question, given the number of industries that have been wiped out over the past decade.
- Do we miss the video store, record store, book store, consumer electronics, newspaper, yellow pages and whatever intangibles they brought? What do we lose as a society when any brick and mortar business whose product or service can be digitized or improved by logistics (ease and convenience of access), or sold less expensively online simply goes away?
- Is this the end of serious politics (real solutions, real compromise), and is the wall between government and private industry gone forever? Check out “Inside Job” and “Food, Inc.” to see how two different industries have been re-shaped by this dynamic.
- In the bigger picture, can we “afford” cheap Walmart goods, or does the race to the bottom actually destabilize our way of life by destroying domestic industries and permanently funneling those jobs overseas?
- Would the Earth stop spinning if the Amazon sales tax exemption was lifted, putting local retail on closer footing with Amazon? Wouldn’t this seem to lead to more local sales?
- What “upside surprises” might occur from a prolonged period of creative destruction in terms of our consumption patterns, happiness index and/or new industry growth?
Some of this raises uncomfortable truths about the values of a society, how that society holds its leaders accountable, whether opportunity is expanding or contracting, and whether the value that our economic base is creating is sustainable or illusory.
Similarly, it begs the question: what is the proper role of government? For example, is it possible that in the same way that the government provided the funding that led to the Internet and, before that, our national highway infrastructure, that our leaders could seed new types of infrastructure investment in transportation, energy, health and education?
A sobering thought. Take a moment and watch this chunk of Eisenhower’s farewell speech where he warns about the rise of the military industrial complex, and the threat that it represents to society and our way of life (while acknowledging it’s essential inevitable).
Now, replace “military industrial” with “Wall Street” and “mega corporations” and ask yourself if history is repeating. It’s kind of disturbing.
Like any diagnosis, the patient (and its guardians) has a say in the treatment. But ignoring the fact that The Great Reset is upon us in the hopes of not upsetting the apple cart of a strong stock market (the Skinner Box of our age) is akin to letting cancer metastasize to avoid the pain that treatment might bring.