Impending Collapse: Our System Is on the Cusp of Failure
knopp.substack.com
knopp.substack.com
The US still has one fundamental superpower that the doomsday economists always fail to account for. The US can take immigrants from nearly anywhere in the world and within a generation, their children will become 100% culturally American.
There's no other country in the world that brings people into our culture the way Americans do. Is it perfect? Absolutely not.
Hyper partisanship and the culture war are tearing the very fabric of America apart.
For example, there are some on the left that very seriously want to label all Republican voters as far-right extremists, which is itself a very extreme position to take.
I've known people who straight up left the party after voting red their entire lives because of Trump. They, sincerely, believe in smaller government and less spending, both things the party has totally abandoned even ignoring Trumps horrific actions.
They're, for the most part, liberal in other aspects to varying degrees (abortion, drugs, whatever. Lots of "I may not like all of it but if that's the way it is i'll live with it"), but are tired of being told they're equivalent to the KKK because they're not sure how they feel about gender pronouns.
Focusing on questions that'll never have clear answers has been one of the best things to split apart power for reasonable and critical change. The little discussion that occurs seems to be around nebulous goals rather than concrete examples like housing, food, science.
And honestly, I've got little sympathy for them if they really are drawing an equivalence between being called names, and a party who is on a path to re-nominate a candidate who conspicuously violated national security and spread conspiracy theories about the election. (The indictment is quite clear that he was told they were false.) They just don't seem even faintly on par, and it's frankly dishonest to suggest that the name-calling is Democratic policy.
Even most of what they supposedly believe about "small government" is partisan lies. The Republican party hasn't even pretended to make a significant cut in government spending. They just point at a few culture-war elements that amount to a rounding error, and then balk at actually authorizing debt for the massive programs their own budget calls for.
Right now those people have a choice of at least trying to make a difference -- either within the Republican party by insisting on the nomination of non-insane candidates, or by trying to transform the Democratic party. They'll find a lot more moderate Democrats who believe very similarly, and who are much closer to the levers of power than the most extreme elements who are the only ones that make Fox News. But right now it sounds like the people you refer to are heavily invested in partisan propaganda, even if they're not willing to actually vote for it.
Democrats have some policy positions that are troubling for a lot of voters. Gun control is a big one. Much of rural America will vote against Democrats every time just on that one issue alone. Also, defunding the police is unpopular with many voters. There are also many who have moral concerns about gender transition surgeries for minors or allowing biological males to compete in women's sports.
Also, the quality of Democrat candidates for 2016 and 2020 was very low.
I don't particularly care if you voted for Biden only because he wasn't Trump. That seems like kind of the absolute bare minimum level of agreement -- one that tens of millions of Americans fell below. With it, we can at least pretend to hold a national conversation about policy issues you're discussing. Without it, the entire proposition of democracy appears to fall apart.
What crime was Trump convicted of?
https://en.wikipedia.org/wiki/Personal_and_business_legal_af...
and accused of many more, additionally, indicted for over a dozen more.
His foundation was convicted of stealing from a cancer charity, his fake university defrauded students: "Donald Trump was found to have defrauded students, and was forced to pay $25 million in restitution." At this point, if you ask such a question, you are exposing yourself as either ignorant, a blind supporter, or a sea lion. This is not acceptable behavior and you should know it, just like Trump's behavior. Especially the highly documented criminal behavior related to Jan 6th and stealing classified documents, hiding them from investigators, lying about it, etc. At this point if you are not aware of this.....it appears that you have decided to be for whatever reasons you chose. It is time to reevaluate how/what you believe in.
Now if it's the politicians driving people to be more extreme, or a more extreme population being reflected in politics, I don't know.
The US is fascinating, because unlike other countries with extreme wealth inequality it has an admirably free press and speech. There are few things that gets you in serious trouble – it’s almost all carrot-regulated. To get a lot of influence you have to play by the “rules”. A simpler way of saying this is of course that media is just aggressive for-profit ventures. Thus censorship is mostly deemed unnecessary (except during Covid when the stick came out for a while).
What do you think America does with its immigrants that is so special?
Our immigrants have no legal and very few practical limitations once they become legal citizens. The only exception I can think of is that you can only be President if you were born on US soil.
Our immigrants can, have, and continue to become highly successful. The cultural difference is that we acknowledge that nearly all of us are descended from immigrants.
Honest question, what makes you say that?
This is true in nearly every developed country. It would be puzzling if it weren’t. In the eyes of the law a citizen is a citizen, regardless of birth, in most of the developed world. The US is not unique in this way.
> Would your country allow an American to become a full citizen as easily as America does?
Yes, actually, although I will concede that the path to citizenship varies VERY substantially from place to place. I don’t think it’s true to say that the US is especially outstanding in how easy it is to gain citizenship.
For a long time, the US has slurped up the top talent of the world, as well as cheap labor to support domestic industries like agriculture. Ironic that American “excellence” is about poaching excellence from elsewhere? Perhaps. Nobody wants to admit it, since it would mean “real Americans” don’t get special treatment for being born in the US and A. But all industries benefit, and politicians know this.
In Europe for instance, immigration has failed largely at talent acquisition. It has succeeded partially at the humanitarian goals, but at a large cost. In my experience, EU immigration policy has been more about safety than opportunity. It’s hard for low skilled immigrants to break into strongly regulated labor markets like in Western Europe, and at no fault of their own are instead supported by welfare systems. I don’t know if it’s a net-negative in absolute cost, but certainly in opportunity cost. It’s also raised a lot of anti-immigration sentiment.
That said, I think increasing inequality is transforming immigration also in America. The opportunity for poor (both immigrants and “native”) to move upwards with “hard work and dedication” is diminishing quickly. I think the current generation of immigrants won’t get such a big quality-of-life improvements as they used to.
And speaking of that - your fathers were so keen on that point that they had to intern Japanese Americans up to 3rd generation (stealing their property), segregate blacks etc. etc.
Ok, now factor in all the millenials and gen z living at home while working. Or other under-housed invididuals.
It reminds me of the yearly "Jeff Bezos made 4 billions today" because Amazon had a good day or the (very Canadian) "Average Canadian is 100k in debt" (because they factor in mortgages). It's sensationalistic journalism that completely avoid any type of critical thinking because it's much easier to ignore all the rational explanations in the pursuit of clicks.
With real estate, there is inherently time in which it lays empty between tenants moving in and out or being sold. When a place like California has over a million of vacant homes, that still makes for a vacancy rate below the "natural vacancy rate"!
The other big category of vacant housing is in places that are depopulating due to lack of jobs. We could be giving decaying homes in the Rust Belt, but they'd be more of a liability to the new owner than anything else.
Has the future ever looked this bright?
unless you believe the AI will destroy us
But it comes at the cost of destruction of the natural environment that supports us. Some of that is unavoidable in order to have progress. Much of it is just wasteful, stupid practices driven by selfishness & pursuit of short-term profit.
I hope humanity can cut that waste & move towards long-term thinking. Where personal interests are more or less inseparable from the interests of society as a whole. Improve society, the natural environment, and you (& all your loved ones) profit.
but it's sucking for vast majority of the population.
That's what the article is about.
You did see the graph right? The disconnect between wages and productivity growth in 1972?
On Rome, the issue of Rome wasn't that Romans were poor, far from it. The source of the Roman Emperor's power was by feeding Egyption wheat to the Romans.[0] If the author is looking for a cause to the fall of Rome, one explaination is that the people chose to exchange thier freedom for government subsidized food. They pretended that the Princeps ("first among the equals") had thier intrests in mind, while the system slowly eroded an collapsed over the course of 500 years. Over that time, the traditional Roman ethic of responsibilty, the one that made them reject Monarchy, was replaced by neglect and indifference. This said, boiling down the fall of the Roman Empire to one dimension is foolish anyway.
He has some interesting thoughts, and it's worth exploring his end of the spectrum but... I'd read in the same way you'd read "What if the Confederacy had won the Civil War".
It's a linear projection of the future ignoring basically all technological advances, market responses, or ability to work around logistical barriers. The world is just not that dramatic, and people mostly muddle through.
(yes, I read the book).
I think he under estimates the arrival of solutions based on economic pressure. He sights platinum as an example of extremely limited resources. I think if supplies are cut off new solutions will be found, and new mines. It’s just the best current mines are priced low enough further exploration isn’t sensible. Same with silicon production.
Oil production in the us is a good example of this. We slowef producing oil because costs were too high, and exploration wasn’t worthwhile. When costs caught up, new techniques were developed, and new fields were discovered.
Very much disagree. He talked about Roman Empire's (and late Republic) massive inequality, but he forgot about Athens, where Western notions of democracy were born and strangled by kings and republics (then Emperors). We have had peasants republics in Dark Age Europe (Frisia, San Marino, even Venezia and Genoa and a dozen elective city-states).
In Asia, my tribe has had majestic maharajas that spun the entire region, who then retreated to their mountain refuges to rule as sacral kings, only to lose power to bottoms-up tribal and village councils that revolted into theocracy only to be subsumed into the colonial state.
Politics is downstream of culture and economics, not the cause of the latter.
- Someone owns the workplace. No citizen owns the nation.
- If you don't like a workplace, you can switch to another, or start your own. You mostly can't do that with a nation.
- There's nothing preventing people from starting workplaces with a "democratic model" (and there are a few around). They just don't seem to work very well.
The future he talks about might be one where workplaces don’t have an owner either.
https://www.linkedin.com/in/nathanknopp
Accountant, developer for a few years, now bills himself as a “staff writer” on his own Substack.
I browsed the titles of his Substack. At one point he offhandedly asserts that Gloria Steinem was a CIA spook who had a role in undoing the New Deal. He asserts that the thesis of his blog is that we have become entrapped in debt by suppressing the truth of hallucinogens. To support his thesis he touches on everything from “the eternal feminine” to early Christianity to the Knights Templar to Karl Marx.
ChatGPT, please write something with the cultural theorizing of Jordan Peterson, the hallucinogen/conspiracy interests of Joe Rogan, and the debt/collapsarian virality of Zero Hedge.
The ignorant right refuse to be educated and keep making decisions based on ignorance, fear and nonsense, decisions that can't be sustained and are at odds with the direction most of the country needs to go.
Something has to happen since friction keeps building, it has to erupt at some point.
And calling out ignorance as ignorance isn't dehumanizing anyone.
> The less employers pay out in wages, the fewer consumers there will be for their products. This fundamental contradiction means there is a ticking countdown clock built into the capitalist system of production.
Yeah, because the people who lose their jobs to technology just sit there and never recover? No, luddite, new work is discovered. Technology boosts productivity.
> Top tax brackets were taxed at 95% during this period, which many Americans identify as a Golden Age.
WW2 had to be paid for. Let's avoid that again. There was a long period when we had little to no Federal income tax.
> The monetization of this debt, euphemistically referred to as “Quantitative Easing”, has been going on ever since
No it has stopped.
I love that the premise of this essay is in 100BC Rome had wealth inequality and it collapsed 500 years later. Yeah, imminent.
> The passage of old systems into the dustbin of history is a normal part of the millennia-long trend of gradual improvement that characterizes the human story. It’s inevitable.
LOL. I'm happy I didn't have a sip of tea in my mouth as it would be all over my screen right now.
> The central idea behind this System Failure newsletter is that we could have the kind of revolution were there is dancing in the streets and the cafes are open all night.
Yeah, so romantic. You mean the kind where millions of people suffer.
This essay, I can't believe it, was written but a human adult. This would be C level work in a Sophomore high school class. This person really needs to read a lot more philosophy and history and maybe layoff the Marx as clairvoyant thing. Especially when his main thing was shown empirically to be completely wrong.
Low interest rates correlate pretty directly with housing market booms.
Bitcoin was created in response to the reasons cited in this article.
...as Wikileaks revealed, in 2008 the incoming Obama administration submitted his cabinet positions to Citigroup for approval.
...according to the United Way, there are currently 28 vacant housing for every homeless person in America.
That sentence isn't exactly warranted from the evidence. Citigroup submitted recommendations that happened to line up with reality, and they were sent to the Obama campaign, not the other way around.
In fact, with the Bush arcitect of the plan as the Obama secretary of treasury...
Seriously? Rome had that many people? Cut the bull
Due to compound interest, our financial system requires exponential growth.
Exponential growth isnt possible in a finite world. Thats the fundamental contradiction woven into the fabric of our society.
Perfectly effective capitalists may be able to stave off government intervention till they own everything but at that point growth will basically cease.
Great breakthrough sound impossible till we make them. Yet, we have antibiotics, eradicated polio, invented the phone, the airplane and the internet and maybe soon the superconductor.
That the world and its resources are finite is irrelevant. You probably mean "finite economy". Resources and work done upon them may be the basis of cost, but the economy is not so tightly coupled to resources because cost is not equal to price. Price is whatever the market accepts.
If we have a finite economy you're not wrong about this, but you're omitting a few corollaries.
1) A finite economy implies a zero-sum game.
2) "Exponential growth" is only exponential for a window of time. Nothing lasts forever.
3) Bankruptcy exists. It's the safety valve that releases the pressure of compound interest.
So, for there to be exponential winners there must also be one or more losers. This allows for the growth you're skeptical of. You see this all the time on the stock market. "Growth" is most often money being moved around. Assume the trivial case where there's one "loser" and one "winner". If the loser is worth a lot more, a tiny drop in its value can be a massive win for the winner. If it keeps accelerating for a while it will look like "exponential growth" for the winner.
As for bankruptcy, that loss is someone's gain. The value can be recovered and growth at any rate can still occur. Just because the loser couldn't keep up with their debt doesn't mean their assets aren't enough to pay it back plus interest with different people driving.
Anyway, the total value of the world economy is not really finite. It doesn't go up just because of inflation, but also from new value being added. New value can be due to efficiency gains on work, not just the discovery of new resources. The rate at which new value is created is unpredictable though.
Whew ok final nail here: before modern capitalism, economic systems of the past definitely had these same properties and successfully operated in scarce environments before the industrial revolution. Shuffling money around to keep things afloat is not a new idea. It might be the oldest idea we've got and all modern economic systems have this in common. What you quoted from the article is not a strong argument against capitalism. It's an argument for anarchy.
what if the exponent of exponential growth gradually approaches zero. technically it is still exponential. that possibility is often ignored. Japan for example has been able to sustain itself by gradually transitioning from red-hot growth in the 70s-80s to near zero growth.
Exponential growth in use of material resources isn't.
But exponential growth in wealth is, because a given quantity of wealth does not require a fixed amount of material resources to achieve. Efficiency improvements can continue to drive that quantity down.
The real strongest argument is one that the article does not even make (because it considers productivity gains to be a problem instead of a benefit): the huge productivity gains associated with technology improvment, drastically reducing the number of humans required to produce a given quantity of goods or services, should result in huge decreases in the price of the goods and services where the gains are made. For example, food production in the US today takes about 1 in 20 people; a century ago it was more like 19 in 20. That huge gain in efficiency should have resulted in a huge decrease in the price of food.
Why did this not happen? Because of governments manipulating the money supply. The effect of this is to transfer wealth to the financial system (banks and other financial institutions) from everyone else. A key way this shows up is that prices stay the same or even increase, even though productivity improves greatly. That is the fundamental problem woven into the fabric of our society: so many aspects of our economy are now dependent on government manipulation of the money supply that there is no easy way to stop doing it. But we have to stop doing it if we want ordinary people to gain the benefits of increased productivity.
Anyone who has strong conviction otherwise of collapse can put up money right now and bet on such as outcome, such as with put options on the S&P 500 , or puts on the dollar , or shorting the S&P 500 and going 'long' foreign markets. Many have, and it put it bluntly, has ended badly.
Aren't America's dysfunctional politics evidence against the idea that "[American] society is robust enough"? Politics and society are not distinct entities in a democracy.
If other countries aren't positively affected by the positive picture you describe of the US (looks like they are negatively impacted), then why should they be negatively affected when, if, the US does indeed collapse? Shouldn't it be the opposite? They'll become positively impacted?
I think they are better equipped and better prepared in the events of a possible collapse of the US, or perhaps the USD
You describe a situation without taking into account nor caring about the events, then you draw a conclusion, that's unfair an disingenuous, COVID alone should have been an eye opener for the less pessimistic
Covid agrees with my thesis. the US pulled ahead of the rest of the world during and after Covid, in terms of GDP, stock market recovery, unemployment, etc. Other countries fared worse economically, had worse restrictions that lasted longer. China has still not recovered.
It's easy to print money, the latency is probably very high, for how long can the US keep faking its metrics, with the USD loosing its global reserve status.. waking up will be difficult
Are you still talking about the Covid response? Not much actually changed since 2019 with the BRICS. Oops - I should say not much positive changed for the BRICS since 2019. Russia, though, got itself into a war that is causing massive economic damage.
So this looks like you're just throwing out a bunch of arguments, hoping something will stick in a reader's mind, but without much concern for reality.
No, that's what you tried to do, all I did was to remind you of the events that led to today Monday August 7, 2023
When I find some article a little opinion-heavy, I look for something that quantify what's being said.