Writing in The American Interest, Martin Walker says that one good thing about this depression (as he calls it) is that it stands to break us of the bad habits that got us into this fix. The link is here, but you can't read the entire article unless you subscribe to the magazine, which you should, because it's consistently first-rate.
To sum up, Walker points out that in the course of a single generation, Americans went from being relatively thrifty to being complete spendthrifts. We got used to living way beyond our means, and now we're paying the price. It's more than just credit-card and home debt, though, as he points out in this excerpt:
Indeed, the opportunity before us to make an historic shift in our carbon dependency would help the transition away from an economy based on consumption (and much of it on disposable items) to one based on sustainability. It would also be an economy considerably less centralized, with much less dependence on massive power-generation plants for electricity or huge refineries for retail petroleum products. Such trends might be characterized as "green", but in another age they might well have been seen as conservative or even reactionary. [Emphasis mine -- RD] Small might have been beautiful, but it was seldom seen as efficient in the carbon-heavy industrial era. The big factory and the big power plant and the big car assembly line were three emblems of the age of the giant state with its big industrial workforce and megabanks that could generate the huge investments required. A shift away from such behemoths of state, finance and industry could have interesting political as well as social effects.
Decentralization. Small is beautiful. Green. Might this Lesser Depression usher in the Crunchy Con moment?
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That should be Wendell Berry, of course. (I need to go back to bed.)
Speculative thoughts re. Japanese crunchiness:
0. Well, that'd be one way to (partly?) solve the problem of global excess capacity. Of course, given my druthers, I'd prefer it happened to China rather than Japan, but oh well....
1. Re. autarchy: Insufficient data re. the feasibility of Japan becoming truly self-sufficient WRT food. Energy independence seems plausible given nuclear + seawater uranium. Not sure about other resource needs, however. Presumably these would decrease considerably with the obliteration of J's export industries, but unless they go completely agrarian (which would mean both impoverishment & military impotence), they'd need some resources for their vastly-shrunken-but-still-existent industries. Given Japan's (AFAIK) paucity of resources, this would appear to imply some imports on their part (and presumably some export IOT pay for said imports...).
2. A crunchy Japan may require continued US underwriting of Japanese security. Absent that, they'd at least need a sizeable army (perhaps reserve-based, as with Israel), and a navy sufficient to defend the sea lanes over which their resource imports flowed. So they'd have to keep some shipbuilding & some armaments production; given the small share of US industry devoted to arms production of all kinds, this would not appear incompatible with Japanese crunchiness. Far more problematic, however, would be a situation (ala WWII) wherein their resource suppliers were either unwilling or unable to continue supplying such resources. In that case, the military buildup might have to be much larger....
[Note: Japan isn't my area of expertise, so corrections would of course be welcome.]
A bad habit you didn't mention, and one that I've been harping on for some while, is the bad habit of business to stop looking beyond next quarter's stock prices, which is arguably the entire cause of meltdown.
We've actually had this problem for decades, where companies make incredibly stupid decisions because it will provide a tiny upward blip in stock prices for two months.
They used to care about slow and steady growth, now they just merge with everyone. They used to care about having competent people, now they just go with the cheapest. They used to care about reputations for quality, now they just run flashy commercials. They used to care about revenue, now they just care about next month's stock price.
I'm not idealizing them. They used to do all those things for selfish reasons, which is how the free market works. It was the best way for the company to make money. Have a good brand with a quality product, slowly take market share from competitors because of that, and rule the world, mwhahahaha.
However, at some point it stopped being about the company making money, and instead being about the CEO making bonuses, which were tied to stock prices, which resulted in sheer randomness as long as stocks went up next month. Lay X workers off, see a Y point increase in stock shares...and a total lost of knowledgeable workers that's going to cost the company at least Y*total stock issued*10 or so, but that only matters to people who care about revenue, not stockholders.
Stock prices, of course, are completely unconnected to the actual business functioning of a business, especially since a lot of places stopped paying any sort of meaningful dividend.
I have no idea how or why this happened, as it clearly wasn't in the best interests of the owners of the companies, but it did.
Call it a 'failure of our implementation of the free market': If 'ownership' of companies becomes valuable on its own, if companies are valued in some manner besides 'How much revenue they make', they will stop operating towards 'the most revenue' and the entire system will crash and burn as it sorta depends on that assumption.
Although it didn't actually do so until the banks started operating that way too, in the mid 00s.
MI -
I'll respond to your thoughtful response later this afternoon in the new topic opened up by Rod on this subject.
"Americans went from being relatively thrifty to being complete spendthrifts"
I just want to say there are still thrifty people around -
and (if I may be more politically incorrect) most Americans fell for the lie of advertisers - they used "the lust of the eyes, lust of the flesh, and the pride of life."
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