Wearther Report: The Economy – The Jobless, The Debt, & Modern Complexity

THE ECONOMY–THE JOBLESS: “Americans receiving jobless benefits hits record” says the title of this Yahoo!. Finance (finance.yahoo.com) article of 1/29/09.

“The Labor Department reported that the number of Americans continuing to claim unemployment insurance for the week ending Jan. 17 was a seasonally adjusted 4.78 million, the highest on records dating back to 1967.” The 4.78 million number “…doesn’t include about 1.7 million people receiving benefits under an extended unemployment compensation program…. That means the total number of recipients is actually closer to 6.5 million people.”

THE ECONOMY–DEBT : The Daily Reckoning (dailyreckoning.com) of 1/29/09 provides us with this brief summation of U.S. debt size, public and private, by Martin Wolf at the Financial Times in a Bill Bonner article entitled “Dr. Gono or: How I Learned to Stop Worrying and Love Inflation”.

Mr. Wolf says, “Let us start with some facts. The ratio of U.S. public and private debt to gross domestic product reached 358% in the 3rd quarter of 2008. This was much the highest in U.S. history. The previous peak of 300% was reached in 1933, during the Great Depression.”

MODERN COMPLEXITY: “Dealing With Modern Complexity” by Byron King (Mr. King is an attorney graduated from University of Pittsburg, a cum laude graduate of Harvard University and Editor of “Understanding Investments” & “Energy & Scarcity Investor”) is the article and author appearing in The Daily Reckoning (dailyreckoning.com) of 1/29/09.

From the Byron King article we take three paragraphs that appear uniquely appropriate to our (America’s) time and condition: “Societies develop layers of complexity to solve problems. The thing to keep in mind, however, is the historical fact that every complex civilization that has ever lived on this world has collapsed. Bar none. All societies have come to an end. Cultural anthropologist Joseph Tainter documented this in 1988 in his astonishing book “The Collapse of Complex Societies”.

That is, as societies become more complex, the cost of meeting new challenges increases. Eventually, every society arrives at a point at which devoting extra resources to meeting new challenges produces diminishing returns. Then negative returns. The shock might be internal (resource exhaustion, for example) or external (foreign war, for another example). And the shock triggers collapse. When collapse occurs, it almost always occurs rapidly. Things fall apart and quickly decay to a much lower state of complexity. Societies become less complex by collapsing into smaller, much less complex subgroups.

The Western world – certainly, the U.S. – has spent the past century engaged in an arms race of social complexity. And from where we now stand, there’s no gentle “build-down.” The more people who understand that, the better.”

Note: Here PrudentHome is reminded of a centuries old admonition, “simplify, simplify”.

HOME FOOD PRODUCTION: In light of the above article, and some other thoughts, we’re going to present our article next week.

Until next week then, keep your eyes on the horizon