CAN WE PULL THROUGH THIS?

YOU DO NOT NEED ME TO TELL YOU to know that the economy is in the pits. The BIG QUESTION we are all asking is, CAN WE PULL THROUGH THIS MESS? Please bear with me as I attempt to work through to some understanding of our current dilemmas. I hope you will jump right in with comments.

A wonder to me is that, having lived almost 72 years, I have experienced, and appear to be about to experience, the two ends of a remarkable period in human history. To touch briefly on some points made in an earlier blog, I was born at the end of the Great Depression. My parents lived through it on a small farm in South Australia.

Swaggies, the equivalent of the US 'hobo', often came by looking for a meal in exchange for work. Our farm, like all the others in the area, had no electric power; we lit kerosene lamps at night and cooked on a wood stove. We had a telephone, linked to a switch board by a 'party' line. Originally, my father used horses for plowing, seeding, harvesting, hay cutting, and the like; in my memory he had come to use a tractor to accomplish these activities. In the evening, after milking the cows by hand, he used a hand driven separator to separate the cream from the milk. Selling butter from this cream in the town market provided weekly cash, otherwise we depended on money from harvests. In the nearby town, less than ninety miles from the capital city, few people had permanent jobs. My parents depended on casual labor to run the farm at peak times, like the harvest.

When the Second World War broke out, the demand for laborers swiftly peaked as factories were turned to support the war effort. Many men enrolled in the military services and the rest were in high demand. When I was about four, my father could no longer operate the farm due to the scarcity of labor; he rejoined the Army and we moved into the nearby town, leaving the farm to be operated by a larger neighboring farmer. This town was Clare now the center of a wonderful wine growing area. I think we had about 3,000 living in the town and its surrounding countryside.

During the war years, everything was short in supply and rationed. Recycling materials was a peak effort that involved everyone, especially children who received badges for good effort at finding and delivering scarce materials (like tooth paste tubes, for example). No one knew it but the Great Depression was ending. We were so intent on winning the war that we did not notice a fundamental change had overtaken the economy. Australia was following America into a heavily industrialized society. Increasingly, the cities grew and manufacturing proliferated; wealth was about to steadily increase.

Nowadays, I am beginning to read articles about the collapse of manufacturing here in the US. A recent headline in the New York Times proclaimed, "Job Losses Hint at Vast Remaking of Economy".

So you see, I am feeling that, having grown up in an expanding industrialization, in my latter years, it is all winding down.

Will we pull through it? On all sides, we are being assured that this will not be like the Great Depression. However, there are some uncanny resemblances, such as the likely demise of the motor manufacturers (did you know they went to the wall in the early 1930s and had to be rescued by, yes, a 'bail out'?). I think there are a couple of concepts we do likely do not understand and a never likely to. One is 'the economy'; Business Dictionary provides two definitions (you can follow the links):

1. Activities related to the production and distribution of goods and services in a particular geographic region, and
   
2. The correct and effective use of available resources

Economists attempt to understand the economy; while not to be dismissed, this strikes me as pretentious since economics is, at best, an unproven 'science'. As for the rest of us, who can say? One thing is undoubted, the exchange of goods is based on the relative abundance of underlying resources. As certain resources become depleted and thus more expensive, we search for cheaper alternatives. This is how coal replaced wood and coke and how oil replaced coal in more recent times. I witnessed the latter transition as the diesel-electric locomotives of my teen years replaced the steam engines of my childhood and, similarly, diesel buses replaced street cars in the city.

The other mystery is 'money'. Who knows really what money is? The supply of money far exceeds the bank notes in our wallets and pockets or all the gold in the world. So what is it, really? Don't look to this blog to explain money as I am sure I will never know. However, the sharply reduced supply of money seems to be at the core of our present troubles. The current economic 'fix' favored by politicians is to throw money at 'the problem'. Americans have long believed that money can fix almost anything, if not buy happiness. But where does all the money come from? At base, we are borrowing from future generations so they will not have to live in the effects of our failure to fix our current problems. But what will they be able to do if we are not successful?

Presently it seems to me that money is useful in directing resources to their proper use. At the base of all societies is the use of available resources. Analysis of the collapse of societies (see Jared Diamond's book,"Collapse") suggests that this occurs when a particular society out-reaches or uses up completely its resource base. Our critical resource is oil and to oil I will return in my next posting.

Hang in there...this is more important than "pulling through". It is about pulling through to "WHAT"; about what is next.