"Our Economy: At The Jagged Edge"
by John Wilder
"Systems work within certain limits. Let’s take...the Earth. The Earth is absolutely filled with life. It’s nearly everywhere, and in abundance, unless a particular bit of life has secrets about the Clintons. Let’s just look at a single variable of the system that supports life: temperature.
All things being equal, if the Earth was as hot as Venus is, the zone where life (if it was based on the need for water, of course) would be pretty small. Likewise, Mars would have a smaller envelope – it’s too cold – and water would be frozen most of the time. Sure, life is technically possible in both locations, but it will never thrive like it has for a huge chunk of the Earth’s history. And that’s just one variable impacting a complex system.
There are many ways to configure an economy. Most of the ones that work really well are decentralized for most things. No one tells a farmer in Nebraska what or when to plant. The farmer chooses, based on what he thinks he can sell. No one tells PEZ® to make a Yosemite Sam™ PEZ© dispenser. But why wouldn’t they make a Yosemite Sam® PEZ® dispenser? Duh.
Most of the time, this system is pretty closely coupled. The world doesn’t have years of surplus of, say, food just sitting around – with billions of people, I know someone would eat the Ding Dongs® and Pop Tarts™ first and then there wouldn’t be any for me. I mean, it certainly looks like Nic Cage could make an infinite amount of movies since the word, “no” isn’t in his vocabulary, but even he has limits to his Nic Cage-ness.
I think we’re close to the limits of the system that’s given us prosperity as we know it. Yup, that’s a sobering thought. Here are a few data points: This one hit me fairly hard (from Vox Day’s place – there’s more at the LINK):
"I own a small trucking company, and this is what the fuel crisis is doing to our country… Today I filled up my truck to deliver products that help keep our country fed. When I filled up my truck, it cost me $1,149.50. This is ONE truck, for ONE day of fuel. I own three. So for one day of operation, it’s costing me $3,448.50. (Yes, we use a full tank of fuel every single day, sometimes more than 1 tank per day).
My trucks generally run 5-6 days a week, so we’ll just estimate on the low side and say five. That’s $17,242.50. Last week was over $20k for ONE week, that I have to pay out of my pocket to try and keep not only my children fed, but those of my employees, and our country.
Mark my words, we are on a downhill slide to the worst recession our country has ever seen. Trucking companies are going under left and right. (Literally hundreds weekly.) If you’re not aware, what you’re wearing, what you’re eating, what you’re living in, what you’re driving, what you’re reading this on, was delivered by a truck."
That’s sobering. All the beer comes on trucks, so it could be literally sobering. What else have we seen?
• Baby Formula Shortages
• Rising Violence, Well, Everywhere
• Short Tempers
• Shortages of Basic Repair Parts For Vehicles
These have some consequences. Big ones. People are pulling back on frills, in a hurry. A very good restaurant in Modern Mayberry just shut down. Forever. The owners threw in the towel. Rising prices led to fewer customers...customers feeling pinched can always cook their own food at home as a quick way to save a few bucks. I opened my browser (which thinks I live hundreds of miles away from Modern Mayberry) and saw the same exact story a few hundred miles away on the same day our local hangout closed – another, distant, beloved local restaurant shutting down in a town I've never been to.
Why are dining customers feeling the pinch? Let’s just talk a single variable: fuel. By my calculations, the rising cost of fuel is draining $2.3 billion dollars a day, every day from the economy. That’s not quite a trillion dollars a year, but fuel is priced into everything. Divide the rough annual cost of just the increase and I came up with almost $2,800. Per person. Multiplied by a family of four, and that’s about $11,000 a year per family. If the average family makes $69,000 a year, just the increase in fuel prices is about 16% of their annual income. Sure, lots of that isn’t direct to the family, but it gets priced into every single thing they buy.
That’s stark, especially because it’s only a single variable. Increased interest rates will be hitting soon, along with all of the financial pressures that will bring. And, of course, there will be more things as this crisis cascades.
Here’s another data point. I pulled into McDonald’s® and asked for a McSausage McMuffin with McEgg®. Don’t judge me! They’re tasty! “Sorry, we’re all out. We do have sausage biscuits left.” “Okay. I’ll take one.” Not my favorite, but, whatever. “Okay, that’ll be $6.50.” It was just as they put up their lunch menu, so I hadn’t seen the price. Six fifty? For a sausage patty, some not great scrambled eggs, a slice of cheese, and a biscuit? And it wasn’t what I wanted in the first place? I noped out of that. First time I’ve canceled a drive-through order that I can recall, but I didn’t need the sandwich $6.50 worth. I drove out of the line and off on my way. Good thing it wasn’t an Amish McDonald’s® - I hear they don’t have outlets.
Our economic systems are certainly out of balance. Badly. We’re at the edge of a cliff, and I have the feeling that things will soon be changing, and quickly. Be prepared for a change in temperature."
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