Tuesday, December 19, 2017

The Crisis of the 2020s



China's population pyramid. The crisis of the 2020s will be triggered in part by the end of cheap imports from China and the return of inflation.


New Year's 2021. Little seems to have changed over the past three years. Technologically, there are more smart devices to entertain you or to help you with your work. Economically, things are supposed to be better, but that's not your impression. Politically? Not much either. Most of eastern and central Europe has gone nationalist, but they always were, weren't they? There's Italy, where Berlusconi governs with two nationalist parties, but isn't that a rerun of what he finagled two decades earlier? Finally, North Africa is in the news, but no one seems to know what's going on there.

Yet something is afoot. A friend makes a remark he never would have before. He of all people! At the health club you try to follow the news on TV, but it seems harder to follow than usual. You're thinking of traveling abroad, but it's more complicated, supposedly because of the terrorist threat ...

***************************************************

The Crisis of the 2020s will not be readily apparent when the decade begins. Nationalist parties will be in power over most of Europe, but the Western European "core"—the United Kingdom, France, and Germany—will still be postnational. Yet even there nationalist parties will have made inroads at the regional and municipal levels. These electoral successes will be self-reinforcing, with one leading to another, especially in regions that are culturally and linguistically similar.

But this nationalist consensus will have to reckon with an opposing consensus that is already in place and likewise self-reinforcing. This postnational consensus took shape in the 1940s, when elites throughout the West blamed nationalism for the Second World War and the preceding depression. It grew stronger in the 1950s and 1960s with competition by the two superpowers for the hearts and minds of emerging nations in Asia and Africa. The Cold War had the perverse effect of making the United States and the Soviet Union mirror images of each other, each trying to preach its own universal gospel to the unconverted. 

This elite consensus entered a new phase with the end of the postwar boom in the 1970s and a slowdown in economic growth throughout the West. This slowdown has been attributed to several causes:

- The postwar boom was driven by low prices for raw materials, especially oil. In the 1970s oil prices spiked, as did prices for other key commodities.

- The postwar boom was also driven by population growth—the baby boom. Young adults spent more on housing, children's clothes, educational supplies, and other family-related purchases. They also became more willing to invest in the future, both personally and collectively, since they were literally investing in their children. During the 1960s fertility rates declined dramatically, and by the 1970s declines in school enrolment and household spending had become noticeable. 

- A backlog of technological innovation had piled up during the Great Depression and the Second World War. By the 1970s this backlog was largely gone.

- Thrift and saving had become ingrained during the depression and the war. By the 1970s the culture had shifted toward greater acceptance of living beyond one's means.

These causes should be viewed with some caution, since the slowdown happened across very different political and cultural contexts in North America, Western Europe, and Japan. It also happened in the Soviet Union and Eastern Europe. Slow growth may simply be the historic norm, and economies return to this norm as they mature. In any case, policy makers are less interested in causes than they are in solutions, and to find solutions to slow growth they have consciously or unconsciously turned to postnational thinking for inspiration. 

A slowly growing economy isn't necessarily bad for the average person. Because population growth has likewise slowed throughout the West, economic growth, however sluggish, translates into more wealth per capita. Because companies can no longer count on a growing market, they have to compete much more with each other for market share, thus improving the quality of the goods and services they offer. They also have to compete for a limited supply of labor, thus bidding up wages and raising productivity through automation and robotization. Japan has taken that path, and it isn't doing so badly despite the doom and gloom one hears. Labor scarcity means that 74% of Japanese aged 15 to 65 have a paid job—well above the OECD average of 67%. Only 1.2% of Japan's labor force has been without work for a year or longer—below the OECD average of 2%. Also, Japanese life expectancy at birth is 84 years—well above the OECD average of 80 years.

Slow growth may not be bad news for the average person, but it is for the rentier class—those whose income comes not from work but from dividends, interest, and speculation. When economic growth falls to 2 or 3% a year, this becomes their return on investment. It's not enough to live on, at least not in the style they're used to.

The rentier class has thus pushed Western governments to make the economy grow faster than it normally would. Since the 1970s, growth has been spurred through financial stimuli of one sort or another: tax cuts, deficit spending, lower interest rates, and monetary expansion. This is still a popular response, but the shortcomings are now well-known. The immediate one is inflation—in the 1970s inflation rose to double digits throughout the West. It has since been contained by a mix of money supply management and globalization, i.e., outsourcing jobs to low-wage countries and insourcing low-wage labor for jobs that cannot be outsourced (agriculture, construction, services). In the U.S., massive low-wage immigration began with the Reagan amnesty of 1986, although this outcome was emphatically denied at the time. Upward pressure on wages has further slackened with the decline in unionization, itself largely a result of globalization, particularly the loss of jobs in manufacturing and the shift to less easily unionized jobs in services. Finally, immigration itself has been seen as a way to stimulate the economy through increased aggregate demand, particularly for real estate and construction.

While these stimulus measures help to spur growth over the short term, the outcome seems more dubious over the long term. Today, interest rates are at record low levels throughout the West, and immigration is running at record high levels—in the U.S., legal immigration alone is over three times what it was in the 1960s. Yet year-to-year economic growth is much lower: 1.6 to 2.5% in the 2010s versus 2.3 to 6.5% in the 1960s.

The economy seems to habituate to these stimulus measures. We thus have the apparent paradox of more and more stimulus producing less and less growth. This paradox has three causes:

- People take further growth for granted, particularly in their willingness to go into debt. Growth becomes a Ponzi scheme.

- Uninterrupted growth leads to accumulation of inefficiency. Without periodic recessions to remove wasteful companies and work practices, the economy becomes less productive.

- Sources of immigration have shifted to cultures that are less oriented to the market economy and to the values that make it possible. Historically, most economic growth has been within two culture areas: Europe, especially northwest Europe, and East Asia. These cultures are characterized by high levels of trust, high future orientation, and low willingness to use violence for personal disputes (Clark 2007; Clark 2009; Frost 2015; Frost 2017; Frost & Harpending 2015). Most immigrants to the West no longer come from either culture area. As a result, trust is declining, fear of violence is increasing, and more resources are being earmarked for external behavioral controls (police, private security), which are replacing the internal behavioral controls that used to be enough. Transactions now have to be double-checked for evidence of fraud, theft, or counterfeiting, with the result that economic activity costs more and in some cases is no longer worth doing.

For the near future, Western policy makers will continue to follow the postnational consensus, not so much because they believe in it but rather because they are immersed in it and have little exposure to alternate views. This echo chamber will, in fact, cause the prevailing consensus to become more radical over time. One example is the recent call from Canada's council of economic advisers for a sharp rise in immigration:

The 14-member council was assembled by Finance Minister Bill Morneau to provide "bold" advice on how best to guide Canada's struggling economy out of its slow-growth rut. 

One of their first recommendations, released last week, called for a gradual increase in permanent immigration to 450,000 people a year by 2021 — with a focus on top business talent and international students. That would be a 50-per-cent hike from the current level of about 300,000.

The council members — along with many others, including Economic Development Minister Navdeep Bains — argue that opening Canada's doors to more newcomers is a crucial ingredient for expanding growth in the future. (Blatchford 2016)

This is the backdrop for the Crisis of the 2020s. On the one hand, the postnational consensus will continue to radicalize in the core countries of the Western world. On the other hand, a very different consensus will dominate most of central and eastern Europe, with inroads being made into France and Germany. These opposing consensuses will diverge more and more, if only because mutual antagonism will make dialogue impossible.

The crisis itself may be triggered by one or more factors:

- Inflation will return after a four decade absence. China's supply of cheap labor is drying up, and alternate sources, such as Africa, will prove unsuitable. Prices for certain commodities, especially food, may also rise. This will be pivotal because globalism has gone unchallenged among the elites largely because it has delivered on its promise of inflation-free growth.

- There will be a growing realization that the new migrants to Europe have a different work ethic. They will end up being tax consumers rather than, as hoped, tax payers. Forget about them paying for your pension and health care.

- The French presidential election of 2022 will be much closer than the one in 2017, the result being a narrow defeat or a narrow victory for the Front national. Either way, the country will become ungovernable. A similar situation may or may not develop in Germany after the 2021 federal election.

- NATO may try to intervene in one or more countries in eastern or central Europe.

The actual trigger will matter less than the instability of the world-system. This instability will cause even minor conflicts to escalate, either within the Western European core or, perhaps, in response to a failed intervention in Eastern Europe.

Such escalation will be demanded by those who support the postnational consensus, yet it will work to their detriment. A world-system is stable only if, as Wallerstein (1974) argued, it meets three conditions:

- Military strength is concentrated in core societies

- Ideological commitment to the system is pervasive, i.e., "the staff or cadres of the system (and I leave this term deliberately vague) feel that their own well-being is wrapped up in the survival of the system as such and the competence of its leaders. It is this staff which not only propagates the myths; it is they who believe them."

- Peripheral societies are unable to unite against core societies.

Conflict, especially armed conflict, will destroy the illusion that the postnational consensus is a consensus and thus the only sensible way of viewing reality. Uncertainty and disenchantment will spread even among "sensible" people. Furthermore, if military strength no longer remains concentrated in the core, being used, for example, to intervene in the periphery, there may not be enough people in uniform anymore to defend the entire world-system. Defeat in one country may lead to a chain reaction where one country after another defects to the other side.

References

Blatchford, A. (2016). Finance Minister's key advisers want 100M Canadians by 2100, Thestar.com October 23

Clark, G. (2009).The Domestication of Man: The Social Implications of Darwin, ArtefaCToS, 2, 64-80

Clark, G. (2007). A Farewell to Alms. A Brief Economic History of the World, Princeton University Press, Princeton and Oxford.

Frost, P. (2017). The Hajnal line and gene-culture coevolution in northwest Europe, Advances in Anthropology, 7, 154-174.

Frost, P. (2015). Two Paths, The Unz Review, January 24

Frost, P. and H. Harpending. (2015). Western Europe, state formation, and genetic pacification, Evolutionary Psychology, 13, 230-243.

Wallerstein, I. (1974). The rise and future demise of the world capitalist system: concepts for comparative analysis, Comparative Studies in Society and History, 16(4), 387-415.

15 comments:

Luke Lea said...

Interesting essay, as usual, especially the first half. I take issue with one minor point however, namely that "East Asian" culture is "characterized by high levels of trust." This is simply not true from everything I have read.

Anonymous said...

There are high levels of trust in East Asian countries, it's just that the social expectations and behavioral norms and patterns that are trusted differ from those of the West. A common example is the role of contracts in business. Contracts and the sanctity of contractual obligations are central to the conduct of business in the West. One doesn't have to trust anything about one's counterparty except that he is a rational actor who is properly incentivized to uphold his contractual obligations by the legal system and by reputational risks. This is why lawyers are prominent in the conduct of business and are employed to make sure obligations are minimized and maximized and defended against. This is based on the adversarial system of law. Ultimately what is trusted is a third party or parties to pass judgments and enforce them.

By contrast, contracts in East Asian countries are more of a ritual or formality that signifies the beginning or opening of a relationship, and relationships in East Asian contexts have certain expectations and obligations. The trust is in the relationships and the behavioral norms and patterns they entail.

sykes.1 said...

Independently of the international situation, Peter Turchin (the UConn economic historian of social upheaval) notes that intra-elite strife in the US is at its highest level since the eve of the Civil War. He predicts widespread political violence in the US beginning sometime in the 2020's, so we seem to be in for a perfect storm. It might be noted that in the 60's American political strife was paralleled by political strife in Europe; 1968 was the culminative year everywhere.

PS. "NATO may try to intervene in one or more countries in eastern or central Europe." Central Europe would be Poland and other NATO countries. Do you actually mean you think NATO will interfere militarily in the internal affairs of its member states. They would have nationalist governments in opposition to the EU's dicta, but an attempt to overthrow them seems unlikely in the extreme.

An intervention in Ukraine would be intolerable to Russia, and it would lead to a general European war. No doubt China will take the opportunity to straighten out the Taiwanese.

Peter Frost said...

Luke and Anon,

High-trust societies have developed independently in Northwest Europe and East Asia, so the underlying behavioral and psychological mechanisms are different. The former are "guilt societies," where correct behavior is maintained by internal restraints (guilt) whenever one breaks a moral rule. The latter are "shame societies" where correct behavior is maintained by external restraints (shaming by others or simply a feeling of shame when one realizes that others are aware of one's wrongdoing).

Sykes,

In both the U.S. and Western Europe, the situation is alarming because groups like the Antifa openly practice violence and go unpunished. They have in fact become a form of extrajudicial police who do the sort of thing that death squads do in other countries.

Czechoslovakia was a member state of the Warsaw Pact. That didn't prevent other member states from invading in 1968.

akarlin said...

Excellent essay. A few notes:

1. Average manufacturing wages in China are now higher than in Mexico, which implies the inflationary period might be close at hand (if the theory that the Chinese "reserve army of labor" suppressed global inflation during the 2000s is correct).

2. Not S.S. Africa, but could India take up China's slack? They are growing pretty fast now as well, though manufacturing remains a tiny fraction of China's.

3. On East Asians: They don't do asocial punishment any more than Core Europeans do (unlike South and East Europeans, Arabs). They are also about as future time oriented as the Anglos, which one assumes is unlikely to arise in a very low-trust environment.

sykes.1 said...

Dear Peter,

Comparing the USSR and Warsaw Pact to the EU/NATO is somewhat disturbing, to say the least. Is the West really capable of the kinds of atrocities (Hungary and Czechoslovakia, eg) that the USSR routinely committed? 1984, indeed.

Yours,

Bob

Sean said...

Low growth would halt displacement immigration, be good for Global Warming, take the wind out China's sails, and fit with controls on certain research. As currently constituted the personnel of the Western elite cannot openly accept the genetic facts of life in relation to other regions, but they desire to import "top business talent and international students", which seems to be an implicit acknowledgment that the Indian upper- middle class (for instance) exceed the Western average for genetic reasons.

The great achievement of the postwar world has that been borders are no longer being changed by war, but countries are being transformed by demographic osmosis. I am afraid that only armed conflict will halt the inundation. I'm sure Russia will get the blame for it. China's penetration of Eastern Europe is the wild card in all this.

jeppo said...

Nationalist parties will be in power over most of Europe, but the Western European "core"—the United Kingdom, France, and Germany—will still be postnational.

Brexit strengthens the position of the East Euro nationalists within the EU, but they'll still be outnumbered 3-1 by the West Euro globalists.

To truly change the balance of power in Europe the nationalists will have to turn some nearby West Euro nations (Austria, Finland, Greece, Cyprus), and expand the EU into the Western Balkans, Ukraine-Belarus-Moldova, and eventually even Russia.

The centre of gravity in a Lisbon-to-Vladivostok EU would shift from Brussels to Prague, the likely new capital city. Imagine a nationalistic, Prague-centric EU dictating terms to its recalcitrant western provinces like Germany and Sweden: NO MORE MIGRANTS.

On a smaller scale I could see something like this happening in Canada. If the nationalist CAQ party wins the next Quebec election and reduces immigration by 20%, like they've promised, they will come into direct conflict with a federal government fanatically committed to ratcheting up immigration levels.

The only real resistance to mass immigration in Canada is in Quebec, outside Montreal. This relatively new conservative nationalist movement is based in the Quebec City area, unquestionably the alt-right capital of Canada.

If these patriotic insurgents take power in Quebec they will at least start the conversation about immigration levels in the rest of Canada, and hopefully inspire some "conservative" politicians elsewhere to hop on the anti-immigration bandwagon.





calculus said...

Interesting ideas about a core of 'pro-globalist' countries using their military power to repress, or at least counter, the anti-globalist aspirations of their peripheral vassal countries.
Although you omit to mention that the idea of a global western block is the childbrain of the Jewish mind. For example Jacque Attali, jewish adviser of former French presidents of all political sides from Mitterand to Francois Hollande, envisioned in one of his books, a global 'West' with capital Jerusalem. Again I insist : Attali specifically mentioned Jerusalem as the capital of a Global Government and Attali is not exactly a right wing conspiracy theorist.

By the way, the repressive, globalist and pro-zionist core has already been used. Against Greece specifically. Million of people were demonstrating in the streets for 10 years, this is far above, in magnitude, any forces that the French revolution or even the American revolution put in the streets. Yet the Greek revolution has been successfully repressed from the outside. 'Outside' here was Europe and more specifically Germany. How ? simply through subsidies and loans supposedly directed to help the Greek economy (hahaha) but that were in truth directed to pay the Greek police to fight the insurgencies. It worked. Greece was completely and totally bankrupted and had no money for the basic cares of its own citizen, such as hospitals and food for the poors, which normally means that left on its own, Greece should NOT have been capable to pay its own police force.
This is the definition of a successful Revolution : when the people are in the streets and there is no Police force to repress them, it's game over for the state.

This doesn't work anymore in a global west where a State Repressive force is technically outsourced, at least financially, to the globalist center, whatever you call it Europe, Germany or New York/Jerusalem.
Conclusion : True Revolutions (which exclude the Orange and Arab springs) cannot succeed anymore at the scale of a single Nation, they must be global to succeed.

I worry more about the societal collapse of all the ideological framework that hold the western society together. We saw the speed of such collapse with the feminist-driven anti male movement. But everything else is collapsing. For example, the Christian religion has become a pro-globalist, pro-immigration, farce and you would be surprised by the strength of the old ancestral philosophies that everybody thought were dead.
In 50 years from now, most of the ethnic Whites should back to their ancestral beliefs and Christianity could very well face a period of repression similar to the first and second centuries (...when what goes around comes around). But since ethnic Whites won't be a majority in 50 years in the West, probably some sort of Gnostic Atheism should be religion number 1 (especially among mixed race), followed by Islam as religion number 2 (for dumb and dumber), followed by the Ancestral Indo-European such as Wotanism as number 3 (for the Whites) and Christians will be back in the Circus...but not as spectators.

calculus said...

...all these trends :
Societal, such as genderisms, consumerisms, technologisms for example : could the advent of sex dolls for celibates neuter an otherwise out of control male populace ?
political, such as globalisms, nationalisms, mystical such as Zionism
Religious
Demographic
and so on, are similar to a neural network of interactions and this is way too complicated for a single human mind to encompass.
But Artificial intelligence could do it. For a example a recent Google AI learnt Chess, and reached the level of Master, in a matter of only a few hours.
I have no doubt that a self learning program can elaborate a very good computer simulation of the entire society, based on trillions of probabilistic Bayesian interactions, and in fact, I am convinced that everyone of us here can be efficiently integrated, as 'players', in this simulation based on our internet use, credit card use and other inferences.
And when you can predict you can also influence. So what appeared to us as an 'a posteriori' event could very well be the output of such Bayesian simulation, that predicted for example how far you can go (go = starve, repress, or kill) the Greek population and still stay in control.
it takes big computers OK, but google and the deep state already have models for the evolution of our societies.

Peter Frost said...

Anatoly,
I don't see how India could take up China's slack. As you point out, this would require a massive expansion of that country's manufacturing sector. In addition, India's labor force is starting to shrink in those population groups that have been the most productive and innovative. An extreme example is that of the Parsis, whose fertility rate is 0.80 and who are decreasing in absolute numbers. Fertility rates are also well below replacement in the southern states, which are home to India's IT industry.

I suspect that trust varies within East Asia, Japan being the highest-trust society, but that's only my impression. In general, East Asians score high on empathy, but it seems to be mostly cognitive empathy rather than affective empathy.

Sykes,

Unfortunately, yes. I remember a passage in Dr. Zhivago where a character talks about murder as something that, before the revolution, seemed to happen only in books or plays. It wasn't something that was openly advocated and practiced. What bothers me today, here in the West, is that the stigma against political violence has greatly weakened. Once that stigma is gone, we will see not only more acts of political violence but also more political assassinations. And this loss of stigma is not limited to the antifa. It's also the case in political and military circles. The U.S. State Department is openly interfering in the upcoming election in Hungary. And Hungary is a NATO ally!

Jeppo,

Austria is already in the nationalist camp. On the basis of cultural similarity, I would expect to see a similar political shift in countries like Switzerland, Slovenia, Croatia, and adjacent lands in Germany. The 2018 Italian election will also produce interesting results.

What you say about Quebec is true. On the one hand, English Canada is becoming the ground zero for postnationalism. On the other, French Canada is returning to nationalism. There are also cultural spillover effects from France.

Calculus,

I disagree with your analysis. The postnational class, and by this I include not only politicians but also much of the business community, is largely non-Jewish. Yes, Jews are overrepresented, but the same can be said for most areas of political, economic, and intellectual life. There are strong economic incentives for globalism and postnationalism, and these incentives appeal to businessmen regardless of their ethnicity.

As for sex dolls, their main impact will be to cause many men, especially men over 45 to withdraw from the mate market. We will return to the situation that prevailed before the 1980s, when there were more single women than single men in all age brackets. Declining male mortality and liberalization of divorce laws have created an abnormal situation (at least in the West) where large numbers of men cannot find mates.

mirai-e said...

I think this irrational fear of the antifa needs to be questioned. I strongly suspect that this fear and denunciation is seen more often in those past middle age partly due to the fact that people tend to grow more conservative as they grow older and that they tend to get their news from conventional sources and are therefore only exposed to a particular pov. Antifa occupy a very important role as the opposition to the violent prone alt-right/neocon crowd, which is who deserves the condemnation.

2017 - Dr. Cornel West speaks out about his own experiences with antifascists in Charlottesville.

>https://www.facebook.com/democracynow/videos/10155598308598279/

">We were there to get arrested. We couldn’t get arrested because the police had pulled back, and was just allowing fellow citizens to go at each other. And with all the consequences that would follow there from.

The next day for example, of the 20 of us were standing, many of them clergy, we would have been crushed like cockroaches if it were not for the anarchists and antifascists.

The antifascists. And the crucial were the anarchists, because they saved our lives actually. We would have been completely crushed and I’ll never forget that."

some more writing worth your consideration:
>https://thoughtlessarse.tumblr.com/tagged/antifa

German_reader said...

"I think this irrational fear of the antifa needs to be questioned."

You have no idea what you are talking about, in Europe Antifa regularly beat up people, torch the cars of political opponents, vandalize their homes etc. Just a few weeks ago there was a case in Spain, which had some Antifas beat a man to death because he wore braces with the national colors on them. But then someone who writes of the "alt-right/neocon crowd" (the alt-right hates Neoconservatives, regarding them basically as just ethnocentric Jews and their gentile tools) doesn't seem to have much of a clue about anything anyway.

Peter Frost said...

Mira-e,

You raise a valid point. Older people seem to be overrepresented among victims of Antifa violence. Isn't this a case of cowards going after soft targets?

mirai-e said...

@German_reader

>You have no idea what you are talking about, in Europe Antifa regularly beat up people, torch the cars of political opponents, vandalize their homes etc.

This is just hearsay if you don't have some solid, verifiable evidence.

>But then someone who writes of the "alt-right/neocon crowd" (the alt-right hates Neoconservatives, regarding them basically as just ethnocentric Jews and their gentile tools) doesn't seem to have much of a clue about anything anyway.

I mean, when you only have a viewpoint based on no real proof except prejudice to push w/o any evidence resorting to ad hominems is to be expected.


@Peter Frost

You disappoint me. Refusal to consider opposing evidence isn't going to help you gain a well rounded understanding of the subject.