College Grads: It’s a Different Economy @ Of Two Minds Charles Hugh Smith aptly summarizes and describes the structure of the post-2008 USA economy, a description that by extension and with some tweaks can be applied to most western economes. An economy in which processes in the making since the end of WW2, if not sooner, are finally rising to the fore. It is not pretty. One could perhaps add a couple of points, but perhaps one would not dare. Let’s hope that his half-optimistic concluding remarks are right. I am not so sure. CHS:
1. Getting a college degree, even in the STEM (science, technology, engineering and math) subjects, no longer guarantees a job.
2. Those millions of Baby Boomers clinging to their jobs can’t afford to retire, partly as a result of Federal Reserve bubble-blowing and zero-interest rates.
3. Many of those Boomers clinging to jobs are doing so to support you.
4. We now have a bifurcated economy: we have what’s left of the open-market economy and we have the cartel-state economy of various rentier arrangements. Arentier arrangement is one in which the input costs can keep rising due to political power/protection while the output declines.
Our economy is now dominated by rentier arrangements. This is one of the core reasons it is stagnating, the other being a parasitic, corrupt financial sector that depends on phantom collateral and accounting trickery for its survival.
Rentier arrangements include the financial sector (hated by the public but politically sacrosanct), the National Security State (you can never have enough people spying on the world, including Americans), healthcare (costs triple while the availability of care and the health of the populace decline) and education (college tuition rises 600% when adjusted for inflation but a third of the graduates learned essentially nothing).
Protected from the discipline of the market, these quasi-monopolies vacuum up an ever-increasing share of the national income while their output/yield declines. Where $200 million bought four top-line fighter aircraft a decade ago, now it buys one; we have reached the point where we can’t afford our own fighter aircraft. And many in the military conclude the $200 million-each F-35 Lightning (by some estimates of full program costs, $300 million each) is an underpowered, bug-ridden dog, less capable than competitors and the aircraft it replaces at four time the cost, the F-18 E/F Super Hornet.
For decades, those entering the rentier cartels were assured of lifetime security.Get a job in healthcare or education or the defense/national security sectors, and you had it made. But these bloated rentier arrangements are bankrupting the nation.
Lacking any limit on their cost inputs, these sectors have expanded at rates far exceeding the growth rate of the economy that supports them. Healthcare once absorbed roughly 5% of the economy; now it is consuming 18% and is on track to consume 20%. Healthcare alone will bankrupt the Federal government and the economy.
5. The private-sector economy is bifurcated as well.
6. The older generations will have to adjust to demographic and financial realities.
7. There are two sets of laws now: one for the Elites and the state, and one for the rest of us.
8. We are a free-lance nation.
There are opportunities, but they require a deep understanding of risk and security. A livelihood with day-to-day low-level insecurity and volatility is actually far more stable and secure than the cartel-state one that claims to be guaranteed.
The burdens of Fed manipulation and the cartel-state rentier arrangements will come home to roost between 2015-2017. Those who are willing to seek livelihoods in the non-cartel economy will likely have more security and satisfaction than those who believed that joining a rentier arrangement was a secure career.
There is a price to joining a parasitic rentier arrangement, a loss of integrity, agency and independence. Complicity in an unsustainable neofeudal society has a cost.