Unless society makes a serious correction, we are heading for another great depression.
Personally, I blame Gorbachev. That's right, Gorby. You remember him, right? Perestroika, glasnost the perpetual wine stain on his forehead?
But let me tell you why. Our problems today are simply a result of capitalism run amok.
Why is capitalism now out of control? We have practiced "capitalism" since forever. We should be good at it by now.
But then along came communism, capitalism's enemy. As a result, the two economic models were forced into artificial, opposing ideologies. Then communism fell, and the false, ideological construct that capitalism had become was vindicated. Communism was shown to be laughable, therefore its opposite became gospel.
The problem is, capitalism had now become, like the Incredible Hulk, an absurd, angry, green version of itself.
But here's what the war between capitalism and communism obscures. There are two sets of opposing forces in any economy. The first is freedom and control. The second is capital and labor.
In each case, a good, healthy economy balances both sides of the equation.
However, because communism and its brutal manifestation in the world became the bad guys, notions that some control is a good thing in an economy or that the interests of labor must be respected have come to be seen as unworthy of serious people.
The belief that Capitalism or Free Marketism is Right and Communism is Wrong have led us into all sorts of irrational behaviors as a nation. The result of them all is this:
The average American has stopped saving savings rates having reached their lowest levels since the Great Depression. At the same time, average Americans now carry an unprecedented debt-load. The average American's real income has actually fallen slightly since 2000. The average American is in fact no better off than he was in the 1970s.
Meanwhile, the richest segment of the population now earns more than $8 million a year. The multiple from the lowest wage-earners to the highest wage-earners has gone from a few hundred a couple decades ago to several thousand now.
Overall, the economy is adding fewer jobs than there are workers joining the work force each month. And the jobs that are being added are of the burger-flipping and Wal-Mart greeter variety. And the GDP is falsely inflated.
Excuse me? A study last summer revealed that American products marketed under American brands are still being reported as growth by American companies, even though those products are no longer being produced in the United States, and should not, therefore, be considered part of the GDP.
The trade deficit is bad. The federal deficit is bad. The dollar is weak and it is increasingly held outside the U.S.
Yet we think the economy is doing well because the stock market is just going up, up, up. That's because our economy is overvaluing capital. Saving doesn't make you nearly as much money as investing. In fact, financial services is one of the few booming industries left. Here's how much our society values it: the top 20 financial managers receive an average annual income of more than $600 million.
This can actually be good for the average Americans. Privileging investment means more capital is available to build new or expand existing companies and more jobs and better jobs will be created. So you want the balance tipped, it's true. But because it's more than tipped, and because now that investment is fleeing the country and creating jobs outside the U.S. the investment isn't doing much for Americans.
So what's it all mean? No one really knows. Many will tell you it means we're heading for a great depression. It's also conceivable, though not likely, that in a global economy, America will be the capital market to the world, but it's doubtful.
Of course, the key thing to do when making predictions is to keep the timeline vague. Everything happens eventually, so if your timeline is vague enough (and you make enough predictions) you can take credit for predicting pretty much everything.