The flash mobs in America or the Blackberry mobs in London have one thing in common. It isn’t race, though they tend to predominantly be minorities. It’s identity.
The counterculture has not changed dramatically since the 70’s, but it has tossed aside any appearance of idealism. The new counterculture draws in two groups, disaffected upper middle class white youth and lower class black youth. Their goals are purely materialistic, looted iPods and government subsidies for housing, education and anything else they can think of.
These are the children of the welfare state with little in common except a rejection of the commercial way of life. Neither the entitled white university brat or the posturing ghetto teenager has any interest in working. The businesses they smash are an alien thing to them. Small businessmen do not go about smashing stores. The people who do think of commodities as something they trick or intimidate others into giving to them. And that covers everyone from municipal unions to thugs driving around BMW’s.
Rand’s looters take on a more literal meaning in Tottenham. Smashing store windows and grabbing what’s inside is only the protest for more government handouts taken directly to the businesses who fund it without the bother of a government middle man.
This lawless materialism is the essence of the welfare state. “Loot as much as you can, or someone else will.” If you don’t grab government benefits or sneakers in store windows, someone else will. The rich are grabbing, the pols are grabbing– time to queue up and loot your share. Communism made this way of thinking so commonplace that all of Russia became one black market. And we are not far behind.
What kind of people behave this way? Those who have come to think of wealth as an infinite pile from which everyone grabs as much as they can. This is where the ethos of the socialist left and hip-hop comes together. Obama gleefully spending millions on himself and trillions on national giveaways for his donors and supporters is the most obnoxious fusion of this phenomenon.
Technological savvy melded with barbaric behavior, the 21st century mobile devotee turned raider is a wake up call in more ways than one. These are not mere race riots, they are the self-organization of the end of our civilization.
The classic raid has come to the cities of West, its hallmarks are not frustration but careful planning, followed by a violent rush. The raids may have a profit motive, but often they are there only to terrify. Mostly there is no larger political agenda, only the emergence of an old way of life that most people think died with the Vikings.
The law banished the raider back into the dim pages of history, but law depended on a civilization which is now collapsing. Police officers alone won’t be enough to stem the ride. Law enforcement depends on the fear of the average person to step out of line and break the law. The lone criminal pits himself against the well-oiled machine of the police and the federal authorities. But when gangs defy the authorities, then it’s the beginning of a civil war.
An understated civil war is already raging in Europe, between Muslim and African immigrants and the society they have penetrated. The conflict has made a mockery of the social controls of Europe. Put surveillance cameras on every street, and we’ll don masks and turn out in numbers. Run your DNA banks and see how much luck you have when entire streets are burning. Outlaw knives and we’ll bring our Molotov cocktails.
The United States managed to offer enough economic growth in the last two decades that riots were mostly limited to angry white college students protesting for some radical cause. But the economic engine is off and the flash mob is here. Black unemployment is at an all time high and teenagers with thousands of dollars, but without the steadying effect of full time employment are getting their kicks.
The situation is worse in the UK, where middle class brats and African youth are equally furious at Cameron’s cuts, and eager for the looting to resume. The shooting of a criminal is a common signal to riot, but not out of outrage, but opportunity. Political outrage always transmutes into loot. The looters are not bothering to wait until some commission suggests directing more money to social programs. Their looting is more direct and more immediate. For a gratification as instant as the tech that they use to organize their banditry.
Divestment is the common denominator. Neither the middle-class white or lower-class black rioter is invested in his society. The white rioter is a globalist, the black rioter is an outsider. Neither are invested in the city and country they are busy trashing.
The traditional raider saw himself as part of an outside group. The modern raider has global identities that are at odds with the country he lives in. He may see himself as a citizen of the world, a member of the Muslim Ummah, as black or a Marxist or any number of other wider identities. And these identities are more primal than being an Englishman or an American. When he joins a raiding party, it is as a member of one of those groups looting a society whose welfare is of no interest to him.
Civilization depends on a consensus. The fundamental base of that consensus is that the civilization is a worthwhile thing which must endure. We follow the law not only because the law is right, but even when it is wrong, because law is the safeguard of civilization. But why should people who do not value the civilization follow the law?
The left’s motives for rebelling are different than those of minority looters. But the end result is similar enough. A disregard for the civilization becomes a disregard for its laws. And that leaves self-interest as the only hedge against anarchy. But what interest do people who do not work for a living have in preserving the businesses of others? None at all. As far as they are concerned, smash a store, it will collect the insurance, and reopen, or another will open up in its place. And even if it doesn’t, then so what? It’s not “our businesses” anyway.
Small business is the backbone of human freedom. The small businessman is able to negotiate commercial arrangements with individuals and groups outside the dominance of larger authority. But small business is on the decline. The corner store is likely to be run by outsiders, in Detroit as in London. And around it are chain stores, franchised or not, that are primary targets of looters. Loot them enough and all that’s left is a hopelessly unrecoverable ghetto.
The bigger the institutions get, the more they are cut off from the street, and the more fragmented the society becomes. Nations become giants unable to see or fend off the gnomes hammering at their feet. And their corrective solutions inevitably lean toward more social gigantism. Violence rewarded often enough becomes a habitual tool of politics until the looter matters more than the ballot box. When the authorities show that they will reward violence with social benefits, the welfare state will grow fangs.
That process was aborted in the United States, but it is still commonplace in Europe, which has not learned the American lesson that the worst way to respond to riots is with bribery. America put an end to the riot by cutting welfare benefits and bulking up police forces. The modern NYPD and LAPD may be ugly creatures, at times downright vicious, but they are far more useful than their metropolitan police counterparts. And the black entrepreneur is a far more common figure today than the rioter.
Of course the underlying problem cannot be solved with better police forces or economic growth, only temporarily suppressed. The underlying tensions are cultural, ideological, racial and religious. The university student taught that his civilization is an illegitimate construct employed for the benefit of a few that deserves to be torn down will retain the same mindset whether he is looting an electronics shop or teaching at a school. And that mindset is contagious.
The commercial tribalism of the rapper who conflates casual violence and criminality with honor follows a pattern of glorifying crime that predates and postdates race, its ubiquity dating back centuries, from the highwayman to the 1920’s bank robber, and is almost as socially disruptive and even more contagious.
The return of the raider as an instant message enabled gang is a phenomenon at odds with progress. It is a warning that darker times are returning, that while everyone may pack phones that have more processing power in one inch than a room of computers did 30 years ago, the march of progress is moving backward. Civilization isn’t over yet, but it is badly endangered. It has become an undefined thing held in largely in contempt. It is a structure that everyone takes for granted, but few respect.
It has been a long time since Vikings raided English shores, but the new Vikings don’t need to take boats to get there. The barbarians in our civilization are already among us. They are already here.
The Black riots continue into their fourth day.
American Renaissance provides a collection of links to related stories:
In the meantime, a Black “journalist” goes on television to justify the actions of his kinsmen.
Coming soon to a diverse area near you!
Of course, if White countries are so intolerable, they could always go back to Africa, right?
Welcome to the Age of Instability (August 11, 2011)
The phony fixes have failed, and the dam of toxic sludge and debt is leaking; instability will be the New Normal until the dam finally bursts and the financial Status Quo is swept away.
If you liked the past two weeks, you’re going to love the next two years: welcome to the age of instability. As I explained yesterday, the quasi-religious belief in the stock market as a secure store of wealth has faded, and for good reason: The Junkie in the Pool and False Idols: Faith in Wall Street and The Fed Has Has Eroded (August 10, 2011).
In a nutshell, the Federal Reserve and Federal government’s extend-and-pretend, mark-to-fantasy, paper over bad private debt with trillions in public bad debt “fixes” of the broken economy have failed, completely, utterly, miserably. Rather than drain the cesspool of impaired debt, risky bets gone bad and rampant abuse of the rule of law, the Fed and the Central State have poured trillions of dollars more bad debt into the fetid pool of sewage and sludge, which is now full to bursting.
For a deeper explanation of why instability is now the norm, and destabilization is now inevitable, I turn to my new book An Unconventional Guide to Investing in Troubled Times for this excerpt.
As Nassim Taleb of “black swan” fame has explained, it is misleading to say the last few grains of sand on the debt pile, for example, subprime mortgages in the housing bubble, are responsible for the entire sand pile collapsing: the masking of risk was systemic, and thus the sand pile was doomed to collapse regardless of the nature of the final few grains of sand.
Similarly, it won’t really matter what the final trillion dollars of Federal debt was borrowed for; the default/collapse of the government debt pile is inevitable.
In betting the farm to prop up a façade of financial stability, the Federal Reserve and the Federal government have doomed the entire system to collapse. Taleb explained why in the June 2011 issue of Foreign Affairs: “Complex systems that have artificially suppressed volatility become extremely fragile, while at the same time exhibiting no visible risks.” That describes the global economy in 2007, just before the financial meltdown of 2008 “surprised” conventional economists and Wall Street apologists.
As Taleb has explained, the very act of suppressing fluctuations renders systems extremely prone to large-scale disruptions that are viewed as low-probability events, the infamous “black swans.” The key to understanding this rising likelihood of supposedly improbable disruptions is to understand the difference between linear and complex systems. Linear systems lend themselves to causal chains (A causes B which causes C) or probability (the odds of drawing two aces in a game of Blackjack) that can be calibrated with a high degree of accuracy.
Complex systems such as financial markets exhibit fractal or chaotic characteristics that lead to an unpredictability that is prone to disruption by seemingly small events. When volatility and risk (in political terms, dissent) are suppressed by central authorities, the variations that inform an open market (“variation is information”) are lost.
The misrepresentation (and thus the mispricing) of risk and the suppression of everything which doesn’t pander to the Status Quo is a defect not of individuals or specific institutions but of the entire system, including the Federal Reserve, the Treasury and the regulatory “alphabet soup” agencies (SEC, FDIC, etc.).
The misguided attempts to engineer a false stability by suppressing “undesirable” volatility have created an intrinsically fragile system that is doomed to crises of ever greater dimension even as the periods of calm between crises shrink from years to months. Recall that risk is like water in a closed system: it can never be squeezed into nothingness. The more pressure that builds up, the more inevitable it is that the risk will burst out in some part of the financial system that was viewed as “safe” and “stable,” for example, home mortgages.
This is how financial events that are widely viewed by conventional economists and government officials as “impossible” can occur with increasing frequency.
One model for this type of apparent stability that is disrupted by unpredictable spikes of volatility is stick/slip destabilization. In “sticky” systems—for example, those with major forces creating credit and regulations to maintain the Status Quo–pressure builds up within the system that is invisible to those looking at an apparently stable surface. But at some impossible-to-predict moment, the built-up pressure within completely disrupts the system, and it “slips” into a new and unpredictable configuration.
The rules of the investment/speculation “game” will be changed without warning as authorities attempt to stabilize an increasingly chaotic financial system. Their attempts to force a superficial stability will only make the next round of instability more severe and less controllable.
The Grand Partnership of the Central State and the Financial Plutocracy (parasitic globalized cartel crony-Capitalism writ large) has suppressed this natural implosion of speculative debt by printing and distributing trillions of dollars in “free” money so over-indebted borrowers and speculators can continue to “extend and pretend,” that is, continue the illusion that they are solvent.
As a special bonus to these financial Power Elites, this limitless pool of “free money” enabled them to ramp up their favorite pastime, leveraged financial speculations based on fraud, collusion and misrepresentation of risk. As any profits will be theirs to keep while any losses will be backstopped by the Central State and its taxpayers, it’s a return to the risk-free days at the races for the financial Oligarchy.
But massive doses of free money unleash two destructive forces on the economy: as the free money flows into speculative bets on tangible resources, it reinflates asset bubbles and fuels rising costs.
As a result, the system is now facing the same old problems–asset bubbles held aloft by “free money,” massive government intervention, systemic financial fraud–and a new problem: price inflation for the resources that sustain the real economy.
The Central State/Financial Elites are thus faced with an impossible choice: if they let the speculative free money flow, then their populations become impoverished as the prices of tangible goods such as food and energy skyrocket. Recall that the masses aren’t provided with billions of dollars at zero interest; that privilege is reserved for the financial Elites who fund the campaigns of the Central State’s political class.
The Classical Capitalist answer to this vast financial overshoot is simple: once the unlimited free money and moral hazard guarantees stop, interest rates will rise as risk is repriced and the market “discovers” the cost of borrowing scarce capital (savings). Once interest rates rise, then the ballooning debt can no longer be serviced. Borrowers big and small go bankrupt, their assets are sold at auction on the open market, and their unpaid debts are absorbed as losses by their creditors.
This renunciation of debt triggers a domino effect as credit becomes increasingly expensive and other overleveraged borrowers and insolvent creditors are toppled into bankruptcy.
In other words, the Status Quo is now addicted to unlimited flows of free credit issued by central banks. If the flow continues, then inflation will destabilize it; if it’s cut off, then rising interest payments will destabilize it. No matter what policy path is taken, the result is the same: instability and destabilization.
This is why a systemic financial meltdown is now inevitable.
Nobody knows how this devolution will play out, but we do know that those who are open to the possibility will do better than those who discount or dismiss the inevitable reckoning as “impossible.”
PODCAST ALERT: Steve over at Two Beers With Steve kindly interviewed me last week, and here’s the podcast of the discussion on investing and much more. Thank you, Steve, for the chance to talk about my new book and the future of investing.
If you have some doubts about Wall Street’s permanently Bullish “guidance,” you might be interested in my new book An Unconventional Guide to Investing in Troubled Times, now available in Kindle ebook format. You can read the ebook on any computer, smart phone, iPad, etc. Click here for links to Kindle apps and Chapter One.
Readers forum: DailyJava.net.
My new book An Unconventional Guide to Investing in Troubled Times is available in Kindle ebook format. You can read the ebook now on any computer, smart phone, iPad, etc. Click here for more info about Kindle apps and the book.
Order Survival+: Structuring Prosperity for Yourself and the Nation (free bits) (Mobi ebook) (Kindle) or Survival+ The Primer (Kindle) or Weblogs & New Media: Marketing in Crisis (free bits) (Kindle) or from your local bookseller.
Of Two Minds Kindle edition: Of Two Minds blog-Kindle
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–Walt Howard, commenting about CHS on another blog.