James Howard Kunstler: The World's Greatest Misallocation Of Resources
James Howard Kunstler returns to the podcast this week, observing that despite the baton being handed to a new American president, the massive predicaments we face as a society remain the same. And it seems the incoming administration is just as in denial of them as the old.
Kunstler adds fresh critique to his now decades-old warning that we are sleepwalking our way deep into the Long Emergency. The longer we delude ourselves and waste our energies in pursuit of reviving the failed "endless growth" model, the farther our journey back to a sustainable way of living will be when our current system collapses:
I don’t think there is any sense that they really know where we’re headed, what our destination is, and what the imperatives are and what the future is actually telling us that we need to do. Don’t forget that the so-called psychology of previous investment is a very powerful force in American life and it’s prompting us to do everything we can to maintain the investments we’ve already made. Those investments are the ones I have already mentioned: the freeways, the suburban housing developments, the strip malls.
A lot of the hope pinned on Trump is based on the idea that he’s assembling this team of mega-competent capitalist movers and shakers who know how to make deals -- the Wilbur Rosses and Rex Tillersons of the world -- and that they are going to conjure up a tremendous surge of economic activity that will be majorly fruitful going forward in the future and produce a tremendous amount of new wealth. Of course the stock market has been pricing that in. But if you really drill down and look what’s going on there, especially the infrastructure plans, the idea that we’re going to revive American manufacturing -- and especially the idea that we’re going to rebuild the happy motoring infrastructure so that we can have 50 more years of that -- that, it seems to me, would amount to once again repeating the greatest misallocation of resources in the history of the world.
The last thing that America needs to do is to desperately try to maintain its suburban matrix. There are many other things we can do and ought to do, including reviving main street communities. One of the things we have to think about is reviving the small towns and small cities in American because those are the places of the greatest disinvestment over the last 30 years and we’re going to need them very badly as the global economy withers. It’s not going to disappear; there’s still going to be trade between nations, I believe, outside of some kind of major set of kinetic war conflicts, but we’re going to see the economy of North America turn inward and become more focused on what we can do here. One of the things that that suggests is that we’re going to have to do more with some of the assets and virtues that we have, mainly our inland waterway system because that’s going to also have to take the place of the trucking industry, which is going to be failing over the next 20 years.
Click the play button below to listen to Chris' interview with Jim Kunstler (51m:56s).
Chris Martenson: Hello everyone, and welcome to the first Peak Prosperity podcast of 2017. It is January 18th and I am your host, Chris Martenson. My goodness, but we are recording this just a couple of days before the inauguration of Donald Trump. Now, while many in the US and perhaps elsewhere are focusing on that as some sort of watershed event, those of us with a wider view simply see that is another symptom of a much larger set of dysfunctions. So, what’s in store for 2017? It’s certainly off to a very promising start if you’re a fan of groaning cornices and swelling predicaments as I know I am.
No, listen, today I’m really happy to welcome back to the program my good friend, James Howard Kunstler. Jim is a well-known author and social critic whose is extremely influential to myself, both the peak oil and sustainable living movements. His best-known works include The Long Emergency which, if you haven’t read it you really should, in which he argues that declining oil production will someday result in the reversal of modern industrialized society and compel Americans, among many others, to return to smaller scale, localized, semi-agrarian communities. Building on that theme, he wrote World Made by Hand and its sequels, The Witch of Hebron and The Harrows of Spring which use fiction to entertainingly transport us into what that future narrative might look and feel like. That is a world with a lot less of everything, including less net energy. He also wrote Too Much Magic: Wishful Thinking, Technology and the Fate of the Nation and of course, he continues to write regularly at his excellent weekly blog, found every Monday morning over at Kunstler.com. Jim, I’m really happy to have you back on today.
Jim Kunstler: Well, it’s a pleasure to be here among the members of the Northeastern head cold society.
Chris Martenson: I certainly…we will both have that wonderful tone. So we’ll see what we can do about this today. So, listen, perhaps swelling predicaments raise some unfortunate imagery in my listener’s minds here but many may resist that the actual foundation of that assertion because the Dow Jones, it’s hovering around the magic 20,000 number. Certainly, all is well with the world, the stocks are doing well, right Jim? What are your views here about the Dow Jones and other stock indexes and your predictions for 2017?
Jim Kunstler: Well, my view about the stock situation is that I actually put some skin in the game in the week between Christmas and New Year’s and shorted the S&P, because I think what we’re going to see is, at first, sometime in the first quarter of the new year, about a 20% dump in the markets and then, I imagine, we’re going to see a bit of a retracement upward and I think we’ll see a larger dump in the fall of 2017. So, I’m sitting there waiting. The S&P is a much larger index of stocks and I’m hoping that it goes down. I’m betting that it goes down. I got skin in the game.
Chris Martenson: Certainly, the central banks have been fighting any retracements tooth and nail. They come out with words and I’m pretty sure deeds. Well, we know the deeds that they’ve done in the case of Bank of Japan, Swiss National Bank, just taking printed money and dumping it into stock markets to keep them elevated. They seem to be pretty committed to that course of action, so you think they fail in some way?
Jim Kunstler: I think that the central banks are losing control of what they are able to do. I think that they are too many moving parts out there in this hyper overly complex financial world that are starting to shake loose, and that there’s not a whole lot that the central banks are able to do about it anymore. They’re really just reduced to lying about the statistics.
Chris Martenson: They’ve been doing that a long time and, for myself, the Fed lost all legitimacy years ago. Is this the year that more people join me in holding that view?
Jim Kunstler: Well, I think that there are certainly a lot more people out there who are rightfully nervous about their wealth preservation, let alone being able to make a buck in financial speculation. But of course I think you and I would try to promote the idea that making a living by speculating in finance is exactly where our society does not need to be. We need to go to the place where we start to think about making a living doing practical things to help our families and neighbors and our communities. That’s one of the interesting facets, I think, of the Trump revolution, if it is a revolution. By the way, I didn’t vote for the guy and I didn’t vote for his main opponent, Hillary Clinton. People want to know who I voted for. Well, I wrote in David Stockman for what it’s worth.
Chris Martenson: Okay.
Jim Kunstler: Just so you know, but a lot of the hope in quotes that have been pinned on Trump are based on the idea that, first of all, he’s assembling this team of mega-competent capitalist movers and shakers who know how to make deals. You know, the Wilber Rosses and Rex Tillersons of the world and that they are going to conjure up a tremendous surge of economic activity that will be majorly fruitful going forward in the future and produce a tremendous amount of new wealth. Of course, that’s…the stock market has been pricing that in, right? But if you really drill down and look what’s going on there, especially the infrastructure ideas, the idea that we’re going to revive American manufacturing and especially the idea that we’re going to rebuild the happy motoring infrastructure so that we can have 50 more years of that. That, it seems to me, would amount to once again repeating the greatest misallocation of resources in the history of the world.
The last thing that America needs to do is to desperately try to maintain its suburban matrix. There are many other things we can do and ought to do including reviving main street communities. One of the things we have to think about is reviving the small towns and small cities in America, because those are the places of the greatest disinvestment over the last 30 years and we’re going to need them very badly as the global economy withers. It’s not going to disappear. There’s still going to be trade between nations, I believe, outside of some kind of major set of kinetic war conflicts, but we’re going to see the economy of North America turn inward and become more focused on what we can do here. One of the things that that suggests is that we’re going to have to do more with some of the assets and virtues that we have, mainly our inland waterway system, because that’s going to also have to take the place of the trucking industry which is going to be failing over the next 20 years.
Chris Martenson: Failing because?
Jim Kunstler: Pardon me?
Chris Martenson: Failing because?
Jim Kunstler: I think because of the problems we’re going to have with petroleum, largely.
Chris Martenson: Mm-hmm.
Jim Kunstler: There really isn’t a substitute for that for moving trucks. We’re not going to electrify the trucking system. It would have been a good idea and it probably still is a good idea for us to invest in the rail system. The freight system is sort of running, although the system is much less rich than it used to be at its height. It doesn’t reach as many places. There aren’t as many small lines and capillary systems out there, but we really need to revive the American railroad system. The trouble is that nobody has been interested in it. The voting public hasn’t been interested in it, and their representatives haven’t been interested in it. Somebody’s got to be interested in it for that to happen. If it doesn’t happen, of course, we’re going to have trouble both moving people and goods around this very large continental nation.
The inland waterway system is important because it has an effect on the settlements and cities and towns along it and many of them are the great cities of the American midwest which are in the greatest disrepair. Places like St. Louis and Kansas City and Louisville and…the list is very long. These places need to be revived and they will be revived organically, but it would help if there was some sort of official recognition that they need all the help that they can get from the authorities and right now they’re really not getting it. Some of these places do have very robust suburban asteroid belts, but those are exactly the places that are going to be failing in the years ahead. We’ve got to get the cities themselves back together. They’re not going to be the cities they were in 1950, but they’re going to be important again.
Chris Martenson: This requires a level of vision that has multiple components on it; mainly understanding where we really are, this resource story, and really where we are in terms of infrastructure, all this and that. Have you gotten any sense yet from Trump’s all-star capitalist cabinet that they actually really understand the nature of this predicament, or is this just let’s build a few bridges and make some more happy motorways and we’re going to get back to the 50’s again? Is that the vision, or do you think there’s a sense a new vision actually could emerge here?
Jim Kunstler: I think it can emerge, but I would definitely go with column B. I don’t think there is any sense that they really know where we’re headed, what our destination is and what the imperatives are, and what the future is actually telling us that we need to do. Don’t forget that the so-called “psychology of previous investment” is a very powerful force in American life and it’s prompting us to do everything we can to maintain the investments we’ve already made. Those investments are the ones I have already mentioned: the freeways, the suburban housing developments, the strip malls. For example, one of the most important economic things that could or should happen in the United States is the revival of small business in our towns, on our main streets. Of course, that whole project is hampered by the tremendous inertia of the presence of big box shopping and everything that it entails, including the siphoning out of all local wealth outside of the towns where these places are located. Donald Trump or the secretary of commerce is not going to send a directive down saying all Walmarts must close within 60 days. That’s not going to happen, but we can see how it will happen organically.
For one thing, the customers for the big box stores are going so broke that they literally can’t afford to buy stuff anymore. Also, there’s the whole question of the complex matrix of trade arrangements and relations that allow us to move huge amounts of goods 12,000 miles from Guangzhou, China to the Wal-Mart in Philadelphia and we can see how those systems might be imperiled very easily. All it takes is a little bit of ill feeling between the major trading partners, and all of a sudden you’ve got a serious economic problem. Between the customers going broke and the… Also, this is the third thing of course, which is the financial model for doing big box shopping, which requires things like a kind of corporate cannibalism for the different stores to start eating each other up. For example, in my little town, which is a kind of decrepit factory village…a New England factory village of 2,500 people with five factories that no longer exist, although their ruins are still there. We have three major chain auto parts stores. They are now building a fourth. Completely unnecessary. All it’s going to do is kill the business in the other ones. This is the kind of behavior that has been embedded in that model of doing business. At the same time, what we’re going to see this year is a tremendous number of hard copy stores, brick and mortar stores, going down and being closed.
The picture there is interesting. Things are happening; things are moving, but I don’t think that we have really taken this thinking out to see where it’s leading. The best outcome would be that we could revise small businesses in our downtowns and rebuild our towns and the people who live there. Remember when you have a small business owner in your town, for one thing, they own two properties in town. They own the building that their business is in and they own their home. They maintain them and they make them look okay so that, for one thing, your town doesn’t look like it’s falling apart. They have to generally hire people, employ people who they know or at least people who live in the community. That has certain constraints on the relations between them. They can’t mistreat them as badly as the chain stores treat their people. They also support the institutions in town. They support the cultural institutions, they support the little league. That was how the model used to work and, in our rush to get what we call bargain shopping, we kicked all that stuff into the dumpster and it’s not there anymore. What’s also not there is the community support. A tremendous amount of stuff is lost that we don’t even reckon into the equation.
Chris Martenson: I want to talk about some of these headwinds to small businesses then, Jim because these are the enterprises that really give us the resilience we need and as you mentioned all of those fine features that come from having small, locally owned businesses. There’s this old joke about how if you have a committee of people, say at a University, and they’re trying to make a couple of decisions. One is for a ten million dollar capital expansion to the observatory and the other is what kind of coffee they’re going to serve at the next meetings, you’re going to get about five minutes of discussion on the ten million dollar thing and probably three hours on which coffee, because humans are not scaled for the complexity of really big decisions. What you’re talking about are highly complex things to deal with. So, let me tell you about my experience as a small business owner, proprietor, here in the state of Massachusetts. To have an LLC in this state, I have to pay $500 in a yearly filing fee to the state for some reason just to have it. Two, the minimum tax they’re going to charge me for having that business is an excise tax of $457. That’s the smallest…you know you must either pay the larger of these two numbers: what you actually owe in taxes or this excise tax. Then, of course, you have to file returns that go with that so, assuming you can’t handle the complexity of 57,000 pages of tax code and don’t want to make a mistake, you’ve got another $400 for a CPA to come in.
You start adding these things up and you discover you’re about $2,000 in the hole just to have a business, but now we have to also entertain the idea of going to local permitting, we’ve got zoning boards and we’ve got a lot of very interested people who are really concerned about, in my case, the idea that I might be typing things on a computer from home. So, zoning variances are required because I dare to type stuff at home that will then be somehow sent across the web; all of this. This is repeated everywhere and you find that the headwinds just from a regulatory standpoint to do business in America, they constantly get a little stiffer each year.
Secondarily, we discover that because Janet Yellen and Ben Bernanke decided to ram interest rates down to zero to help their cartel owned, big bank buddies, what they’ve done is taken about a trillion dollars in interest income that normally would have gone to parents and grandparents who, data shows, used to use that money to funnel it into the next generation coming behind them to start small and medium businesses. Add it all up and we see collapsing formation of small and medium size businesses. Business formation is way down in this country and nobody seems to know what to do about it, because all they know how to do is argue over which coffee we’re going to have next. They can’t quite figure out the larger issues going on here. So, the big stores win because they have the clout, the inertia to be able to sort of ride over all of these little roadblocks that have been put in place. I don’t see anything on the horizon that’s going to reverse that. We’ve had really…these are self-inflicted wounds and nobody seems to know what to do about them and everybody sort of shrugs and says, “Well, what am I going to do? I’m just the person in town administering the rules, what can I do?” Are you seeing that same experience where you live?
Jim Kunstler: Yes, although I think in the historical sense I think we’re a little bit further down the line. Fifteen, twenty years ago, after I wrote my book about the fiasco of suburbia, which is called The Geography of Nowhere, I was invited to attend a lot of meetings in towns where the Walmarts were being permitted and approved. Naturally, a lot of people were frightened about this, because they thought that it would destroy local business which, of course, it did. There was a political…the Walmarts were able to organize the local discussions so that the local people got behind the Walmart and the battle cry was “We want bargain shopping.”
Chris Martenson: Yeah.
Jim Kunstler: In fact, in one really amusing incident, the Walmart had an approval application in Lake Placid and they sent out all this literature to the local people. The name of the organization that they formed was kind of a false front organization. It was called Lake Placid Citizens for Walmart. The return address on the literature they sent out was Lake Placid Citizens for Walmart, Bentonville, Arkansas. So, you know the people have already been played and that’s happening 20 years ago.
Chris Martenson: Yeah.
Jim Kunstler: But they are certainly demoralized by the consequences of that, and that is one of the reasons that I think the inertia that you described, the inability to generate a meaningful public discussion that actually leads to some action, that’s why that doesn’t happen. There’s also the other problem with the fact that the central banks have shoveled all this money into the large primary dealer banks and then the primary dealer banks shovel all of that into treasury bonds or the equity markets or back into the Fed just to park it there. None of this money ends up being lent out to small business people; people who want a loan to open a restaurant or a store that does something special. So, people can’t get the capital. I think what we’re going to find is that societies are emergent and self-organizing by nature. That is, that they will respond to the circumstances that are presented, and they will self-organize, but it may be very difficult and one of the starting points will be that we just don’t really have the capital.
Also, because of the shenanigans going on in banking generally, things like the fobbing off of all mortgage loans to other entities so that the local banks really…they’re really not in the business of managing capital anymore. They’re just middlemen for dispensing it elsewhere. They don’t really have the ability to deploy saved capital to the local community. That might change if, for example, the Department of Justice under Trump decides to actually start enforcing the financial regulations and laws. That might make a big difference if a few bankers go to jail for the things that they’re doing and banking, generally, has to behave differently. I think we’ll see this especially in the upcoming couple of years, as to what happens with the securitized automobile loans that have taken the place of the securitized mortgages that caused so much damage in 2008, because those securitized car loans are now sitting there like a time bomb waiting to blow up the banking industry. Anyway, there are a lot of components there for communities to get themselves back together. There’s restarting a discussion after a long period of being demoralized, and responding organically to circumstances that are happening like the withering of global trade relations that enable Walmart, and the ability to get capital so we’ll see what happens.
Jim Kunstler: By the way, I did not address the problems with over-regulation and taxing and fees and licenses and things that you raised, which would have to be part of an intelligent, local discussion about what we’re doing to hurt ourselves.
Chris Martenson: Jim, I belong to a dwindling tribe of people known as people who think energy matters still and in your recent, excellent 2017 forecast, which we are linking to below at the website here, you said that the USA ran out of growth capacity around the turn of the millennium, because we ran out of affordable energy to run our techno-industrial economy. I concur. I want to take a moment here to see if we can get everybody on the same page, because quite a few people have been lulled by endless stories of surplus oil, and now think that oil has somehow slipped back to a substance which we can safely ignore for all our planning purposes. If we ever need more, American ingenuity will deliver it cheaply and on time. Let’s talk about oil in particular here. Am I right to still have this front and center on my particular burner collection?
Jim Kunstler: Oh, it’s terribly important. The peak oil story never actually went away. It just became deceptively complex. Unfortunately, the American public has been misled and they just misunderstand the problem. They see the price of gasoline at the pumps at $2.50 a gallon and they think oh, that’s swell. They read the propaganda in the news about shale oil and they think oh, that’s great, we’re going to be energy independent. It’s very deceptive. Naturally, they believe we don’t have a problem with oil. The problem with oil can be stated very simply: there may be quite a bit of oil out there in the earth, but we don’t have the financial mojo to get it out of the ground anymore. It’s too expensive. It costs too much. The reason that the industrial economy in the United States was so successful in the 20th century was that the ratio of the energy return on investment was so high. It was…in the 1930’s it was something like 100 barrels of oil in return for every barrel of oil energy that you put into the enterprise. So you got 100 barrels of oil back for every barrel equivalent of energy you put in. That’s a huge benefit. It represents a tremendous amount of work that you can do and things that you can get done. Now that’s changed and the energy return for investment in things like shale oil are more like five to one. For every five barrels of oil you get out of the ground you have to put the equivalent of one barrel of energy into it. I think for tar sands it’s even lower.
I think that there’s a general equation or set of equations that you can use to maybe more easily understand this. One is that you need a ratio of at least thirty to one to have all of the things that we currently enjoy including reliable electric grid, a trucking system that delivers food to the supermarkets every three days, tourism, theme parks, commuting by car, big box stores. All of those things we take for granted as being necessary components of our standard of living, you can’t have them all at a less than thirty to one ratio. You start going below that and you start having to get rid of things. As it’s played out, the most interesting thing is the one thing that we really got rid of, was what? The middle class. We didn’t do it on purpose but that’s how things played out organically by a self-organizing economy. This economy said to itself well, we can’t really have all these people enjoying all these things at a less than thirty to one ratio of energy return on investment so we’ll just get rid of something. So, what we got rid of was the middle class.
Chris Martenson: You’ll enjoy this, then. From Zero Hedge this morning here’s the headline: Live from Davos: Ray Dalio, Christine Lagarde and Larry Summers Discuss How To Fix The “Middle Class Crisis” and my snarky comment on my website was that I thought that was the equivalent of a panel of a panel of teenage boys from a prep academy giving an advice on managing the pains of childbirth.
Jim Kunstler: Yeah.
Chris Martenson: Really, you’re going to fix the middle class by talking to three of the most disconnected people you could possibly imagine? The middle class is getting hollowed out for reasons, complex reasons that can’t possibly be understood by those who are so insulated from everything that’s truly transpiring in this world, I think.
Jim Kunstler: Maybe if we give everybody in Michigan a Tesla and a platinum American Express card, that will fix the middle class. Then they can be like the people at Davos.
Chris Martenson: Alright, so now we’re getting at the heart of it. I totally agree on the oil thing. This is something I’m going to be writing a lot about this year. In particular, was the massive destruction in investment that happened in the oil industry in 2015 and 2016. That has a two or three year lag on it. Eventually, we run into supply problems and in the future people are going wow, now we have a supply thing we have to talk about and not in a good way. Of course, there will be price spikes that will accompany that which will slam into the biggest wall of debt the world has ever accumulated, not including unfunded liabilities which is a whole other topic. Put it all together, clearly a predicament. People aren’t looking at it and yet. At the end of 2016, I was treated to my least favorite parade of articles ever which I have to deal with at the end of every year. It’s this glut of articles noting that Portugal and Costa Rica each supplied 100% of their electricity, although they incorrectly always say “power,” for these brief periods of time from renewables so ergo goes the thinking our alt-energy future is just a matter of choice at this point, right? As soon as I began to introduce numbers and reality into the common threads of these articles I was promptly downvoted, accused of simply not understanding the importance of being positive…
Jim Kunstler: Right.
Chris Martenson: Look, if Costa Rica is…look, they’re getting energy from the water pipes in Portland. Somebody actually posted on my Facebook wall, they said, “Maybe Flint, Michigan should look into this.” I was like, maybe you should understand what geocline maps look like. It’s flat in Flint, Michigan. The level of disconnect in this techno-fantasy idea is that because something got solved somewhere, it’s just a matter of willpower for that to be everywhere and the level of thinking or lack of thinking, lack of reality that is invested in this thinking…well, you know, you wrote Too Much Magic. So, what are your thoughts here on these articles that are telling us our alt-energy future is nigh, it’s upon us?
Jim Kunstler: Well, Arthur Clark made the interesting observation that in our time, a lot of the features of technology are indistinguishable from magic. That, along with what we might call the religion of progress, the idea that’s developed during and because of the 200 years of techno-industrial development, the idea that progress follows an inevitable upward arc, have produced a society of people who are immersed in technological wishful thinking. They see all this magic out there, they see the solar cells and the Tesla cars and the giant wind rotors and these things are awesome and they think, well, if we just put some more of them out there, we’ll be okay. They don’t take any of the details into account like the amount of rare earths it takes to construct a wind turbine the size of Godzilla, or the fact that the sun doesn’t shine all the time, or the fact that electric cars actually do need a power source other than the battery to charge the battery, and that actually comes from dirty fossil fuels.
The wishful thinking out there is enormous and my guess is it will take a series of whacks upside the head with a metaphorical two by four for the public to start becoming more realistic about this. I’ve been convinced since I started writing books about this whole bag of problems that it really will take a series of shocks for Americans to change their focus and wake up and look around them and see what they can do locally and see what is really real. It really doesn’t help that…it’s been kind of a tragic development that we’ve developed so many media interventions and mediations that the collective mind is now so confused between what they see on their little screens and what is actually going on out there in reality. That’s only kind of hyped up the wishful thinking and made it more difficult for us to have a coherent conversation about what’s happening and what we’re going to do about it.
Chris Martenson: I’m very sympathetic. I understand these predicaments that you and I are describing are hard to think about, and for people who don’t have a realistic response to that or haven’t yet really internalized the emotional impact of really thinking through what we’ve done as a species here, is extraordinary. My disconnect of the week last week was the EPA took another whiff on neonicotinoids, this pesticide that exactly coincides with the complete decline and collapse of insect populations, just massive. They said, oh we couldn’t really find any connection here. Europe found a connection right away, everybody that’s looked at it found one but the EPA is like we can’t really see anything. That was the same week that a bumble bee was placed on the endangered species list. You lose your bumble bees, you’re pretty well scroomed in this story. They perform so many services for us and I don’t even want to try to calculate this in numerical terms or dollar terms, because that’s just continuing the tragedy of thinking, but that’s the sort of world we’re living in, where we can’t even connect basic dots.
I’ve got to tell you, Jim, from my perspective, having the web of life shred noticeably around us, in my own brief lifetime from a geologic perspective, absolute shredding, causes deep discomfort. So, people don’t know what to do with that. They don’t look at it and I think this is where we get to political trends because I think that just turns into angst in people who don’t really know where the burr under the saddle is coming from, haven’t really processed it, but they get scared. I think a trend that comes up from that is the populist uprisings that we’re seeing across the world. What are your predictions here for 2017? Do we see these populist uprisings continue to gather steam or do they lose momentum here?
Jim Kunstler: First of all, I think you did mention a very interesting…you inserted a very interesting word, which is emotional. There is a tremendous emotional component to this whole set of problems and they actually go two ways. One way is that you see the wreckage around you and the ecosystem of the planet and it makes you despair. Then there’s the other reaction, which is that it draws you into a kind of wishful thinking mania. It’s kind of a bipolar emotional effect. That ends up producing all kind of cognitive dissonance, a cognitive cloud of bad thinking that expresses itself in…for example, the kind of mania and hysteria that we’ve been seeing on campus for the last two years, that’s actually wrecking the intellectual life of our country.
What do I see happening? Well, for one thing, it’s perfectly obvious to a lot of people. This is not an original thought, the distress is spreading all over the civilized world and we’re seeing it being expressed especially in Europe. We’ve had Brexit; we’ve had the Brexit vote anyway. We’ve had the Trump electoral shock, we’re probably going to have several shocks in Europe, this spring we have the election in France and who knows what’s going to happen there. Ms. Le Pen might win the election in which case the European project is going to be in jeopardy. We have the election in the Netherlands, where Mr. Geert Wilders is also a nationalist and a rightist and an anti-immigrationist and he’s liable to win that election. Theresa May is now talking about accelerating the Brexit itself to just get it over with. What I find most interesting, though, Chris, is something we’ve been both talking about on our various blogs and podcasts is the hysteria around Russia.
Chris Martenson: Oh, absolutely.
Jim Kunstler: And the idea that the amazing transformation in the progressive Democrat wing of the spectrum of our politics. By the way, I still remain a registered Democrat. I have been since the McGovern election of ’72 but I’m pretty disaffected from my own Party and alienated. We see this amazing transition of the democrats into virtual McCarthyites, seeing a Russian under every bed. One of the features of the hysteria that I just don’t get at all, and I don’t understand how they put this over, is the idea that Russia covets the Baltic states and the ugly…it’s former Soviet possessions, as though the Russians need a whole new bunch of economic dependents to pay for. It’s insane. There’s no evidence that the Russians want to take over Estonia, Lithuania and Latvia. I doubt that they want to take responsibility for the Ukraine, because Ukraine is a failed state. It’s a basketcase. It would be a black hole for Russia to have to pound all their capital into.
Chris Martenson: Even more to the point on that one, on Ukraine. Putin made a ton of sense to me way back when this was all happening in 2014 and 2015 and he said “look, we’ve lived this story before when the ultra-nationalists rise in Ukraine, this is a very bad thing and this is on our doorstep and we have a real interest in making sure that these Nazi thugs do not rise again.” This is where I know my media cannot be trusted. They now see a Nazi under every bed in this country, through small imagined things and there are entire platoons operating under warlords in Ukraine with Waffen-SS insignia proudly displayed on their badges. When did the New York Times ever pass over a story talking about the rise of militarized soldiers with Nazi insignias on them? When have they ever taken a pass on that story? Well, when John McCain and Victoria Nuland in the deep state of the United States says “these are the people we’re supporting” That’s when they give a pass to that story. It’s just astonishing to me that Putin is making a lot of sense. He’s like, no, we don’t like this brand of nationalism on our doorstep. We have an interest here and we’re making it sound like he committed some huge foul by the people of Crimea freely voting to rejoin Russia rather be associated with the people who have said they want to kill them. That we can’t even process that level of simple information is an astonishing turn of events to me, here. It feels…we’ve slipped somewhere.
Jim Kunstler: I’m always proud of saying that I’m allergic to conspiracy ideas, but it’s very hard to escape the thought that the military and intelligence component of the deep state really wants to keep bad relations between the US and Russia. They just don’t want us to…they want a conflict. It’s hard to imagine that they wanted simply to support the companies that make bombs and planes and other stuff. I just don’t see what they see. I look at Crimea. I see a peninsula in the Black Sea that has belonged to Russia for as long as America has been a nation, except for a short span of time when Nikita Khrushchev gave it away to the Soviet Socialist Republic of Ukraine, which was part of the Soviet Union, by the way, which at that time was Russia. The Crimea has only been a part of some other entity, Ukraine, for a very short period of time. It’s Russia’s only warm water port and, historically, has been and it’s full of Russian-speaking people who identify themselves as Russian. The idea that Russia has criminally annexed Ukraine, along with the fact that they voted to do it…the public voted. How the media puts that story over, I don’t know except maybe large numbers of the supposedly thinking classes have absolutely lost their ability to process reality.
Chris Martenson: Well, you have these…you have people shaking their left fist saying Hillary won the popular vote and that means something, so they think that when people vote…yeah, they’re offended. The popular vote should count for something more than it did in this case, and then they shake their right hand and say well, Russia annexed Crimea. That has to be the very definition of holding two competing thoughts in your head and holding them both to be true.
Jim Kunstler: That’s very interesting. It’s funny, because nobody has actually made that point besides you.
Chris Martenson: Well, it just popped into my head.
Jim Kunstler: It’s an interesting contradiction. We have all these contradictions going on among the thinking classes, as far as how our relations with the other countries in the world are going to be, and I’m very troubled about… One of the reasons I still persist in thinking of myself as a Democrat is because when I was a young person and the Vietnam War was going on, it was hard not to think that the Democratic Party was the party of the intelligent people and the republican party was the party of the dumb people. At least, that was the meme back 40 years ago, but it’s very troubling to see people in academia, people in high positions in Washington, people in the media and show business, being unable to use their minds. It probably says something very troubling about our culture itself, that this is a culture that has really lost its ability to understand where it is at this moment in history. That happens sometimes. I think that you can imagine a sine/cosine waveform that has peaks and troughs and that there are sometimes on this waveform where the self-awareness of a society is very low and sometimes when it’s higher. We’re at one of those points where are self-awareness collectively is tragically low. I don’t know how we get out of this. Probably, as I said, a series of shocks and my guess is that they will be economic shocks. The reason I titled my 2017 forecast “The Wheels Come Off” is because I think that this is going to be a year when we are going to see a lot of economic and financial shocks. That may start unclogging and unclouging the forebrains of America.
Chris Martenson: Well, let’s hope so. Now, final question here: Trump is running on this whole Make America Great Again, there’s a sense that there’s a possibility here for a resurgent big burst of American economic growth and all of that. In your 2017 forecast, you said that Trump can’t pull a Reagan, so maybe it’s not morning in America. What did you mean by that?
Jim Kunstler: That was really kind of a reaction just to the statistical situation. When Reagan was elected the stock market was actually rather low. And it had nowhere to go but up. When Reagan was elected the national debt was pretty modest and he was able to borrow and spend a lot of money. Considering the fact that he used the term borrow and spend pejoratively against the Democrats back then, that’s exactly what he did and he had a lot of fo room to do it. He ran up the national debt by two and a half trillion, which was a lot. I think he…did he double it or more than double it? I think it was less than a trillion when he came in. Interest rates were extraordinarily high when Reagan took office. They were up in the 15%-20% range, because of Paul Volcker, the then federal reserve chairman’s campaign to fight this stagflation that was going on where we had mortgage rates up at 18% and car loans at 18%. People couldn’t buy stuff. Reagan had a lot of room to maneuver.
It’s exactly the opposite for Trump. Trump has now inherited a national debt that Barack Obama doubled from ten trillion to, now it’s going to be twenty trillion whith Trump is in the first quarter. The stock market is at never before seen extraordinary highs and interest rates are about as low as they’ve ever been historically so he really doesn’t have that kind of room to maneuver and I think it's going to be a tough slog for him to do any of the things he wants to do. I also have some doubt in my mind that he’s even going to be there that long. I know that this is a little off the reservation, but I’m wondering a little bit whether there will be an attempt to just remove him from office within the first sixty days. I know that that’s an awful and sad thought, not because Trump is such a wonderful person, but because we really don’t want to see our political system that badly disrupted. The way certain parties are acting in America, especially the intelligence matrix out there, kind of makes you wonder about what the internal tensions are in our society right now, and how terrible and close to breaking they may be.
Chris Martenson: Certainly, this is as divisive as I can remember it, although I would like to…most people may be unaware of this but when G. W. Bush was elected, on inauguration day there’s a…he was selected by the Supreme Court with that bizarre decision, ever since I have referred to them as the subprime court. They have no standing in my life anymore as a useful body, but at any rate, part of the tradition is to get out of the motorcade and walk the final quarter mile or something. So the president-elect is supposed to get out and walk and do this big walk to the coronation, as it were, on inauguration day. Bush couldn’t do that. Got out of his vehicle, eggs were thrown, snowballs were thrown, they whisked him back in, the first president that I could find in memory who did not take that walk. People were pretty divided then. Obviously, things didn’t go so great for the country in the years after that. So, there is that level of divisiveness.
We know that people are planning to disrupt the inauguration and you know there are people planning for how they can get this guy out of office. Whether they have any traction or not, whether they can pull it off or not, but that energy is there and to me, again, the deeper tragedy in this is that we’re spending our time focusing our rage and anger and energy and activism at the symptoms, rather than really beginning to address the underlying causes. As a quick example, you and I have been talking about it, my personal view is that the democratic National Committee needs to spend time examining how it failed itself not understanding whether they can pin the blame for the Podesta hacks on Russia. It’s just a classic, diversionary, I refuse to look at my own stuff and so I’m going to blame somebody. That outward projection is not helpful, not needed, divisive, diversionary and ultimately, I think, self-destructive. Every so often the drunk has to square up with his habit.
Jim Kunstler: I think they probably haven’t hit bottom yet.
Chris Martenson: That’s the unfortunate conclusion I come to. Thanks for putting it that way. With that, we’re out of time. I could talk to you forever on these subjects. Jim, thank you so much for your time today, always one of my favorite guests, as well as that of our listeners. So, please tell those listeners about your website, books, any upcoming events where they can follow you more closely.
Jim Kunstler: Well, thanks very much for having me on the podcast. My website is www.kunstler.com. I write a weekly blog. I may be going twice weekly as the Trumptopian revolution unwinds. I may be doing it Mondays and Thursdays now, instead of just Mondays. So look for that maybe in the month ahead. My most recent book was The Harrows of Spring which was the fourth and final installment of the quartet of World Made By Hand novels which are about life in the post-economic collapse in American future. I’m getting ready to publish another novel; more about that on my website in the months to come. Thanks for having me on, Christ. It’s always a pleasure to have a meeting of the Northeastern US head cold club.
Chris Martenson: Absolutely and may our numbers grow. No, I’m just joking. Alright Jim, thank you so much and we’ll do this again soon, I hope.
Jim Kunstler: Okay. Bye, Chris.