It’s pretty much common knowledge by now that appearing on the cover of a magazine is something akin to the pride that goeth before the fall. This makes perfect sense. People and organizations are newsworthy as they reach the pinnacle of their powers, and once the pinnacle is reached, there is no other way to go than down. For example, the last thing a college or pro football (of the American, oblong variety) team or player ever hopes is to get their team or themselves on the cover of Sports Illustrated, particularly just before a big game. It is so commonly associated with a subsequent decline in fortunes, or a loss in the big game, until the phenomenon has come to be informally known as the Sports Illustrated Curse.
I have been reading The Economist magazine (although it calls itself a newspaper) for the last six or so months. I have had subscriptions off and on over the years, but had ditched all my periodicals for the internet a few years back, particularly getting rid of the outrageously expensive Wall Street Journal that I had religiously read for over two decades. Why pay for information that can be had for free? But my wife bought for me a subscription to The Economist last Christmas, and I have enjoyed reading it again, just as I always did before. Though headquartered in London, the magazine has a global perspective, no doubt as a result of its birth during the salad days of an Empire upon which the sun never set. I find the magazine’s perspective on the US particularly engaging, as it is far more objective and profoundly less jingoistic than the average US newspaper. It can be a bit condescending at times. I imagine that the writers would refer to the US as the “colonies” or something, if they thought they could get away with doing so. But the sometimes condescending tone is small beer to the refreshing perspective, a bit like a modern-day de Tocqueville, it offers.
Perhaps the very fact of the magazine’s original publication, coming as it did at the pinnacle of British power and influence, presaged the Empire’s decline. In any event, it seems possible there is developing something of a curse to appearing on the cover of The Economist.
Here’s the July 14, 2012 cover:
Just yesterday, consumer spending in the US was revealed to have declined for the third month in a row, the first time since 2008 such a thing has happened. One of my more popular metrics for ascertaining economic vitality is money velocity, and it has been steadily declining, while the supply of money is steadily climbing, as the following charts from FRED clearly indicate, the first is of the supply of M2.
This next is the velocity of that same money, velocity being how many times each dollar changes hands over a given period. If it could be imagined that “animal spirits” is quantifiable, I think money velocity would come closest to capturing it.
Notice how money velocity has declined in every recession save one since 1960? Although it’s clear that money velocity alone can’t predict a recession–it has declined during expansions as well as contractions–declining velocity almost always accompanies a recession. In the last two recessions, velocity started declining just before the contractions officially began. I wonder, in two years would this chart be shaded gray from about the second half of 2012?
The picture of Uncle Sam on the cover perhaps reveals something profound about the fortunes of the American economy. The nipple tassels surely reflect how vapid and shallow is social discourse these days, with form nearly always trumping function in a never-ending consumerist scramble to find some superficial innovation spurring social strivers to purchase a product, whether it’s free range, organic pickles or pretty touch screens. The tassels are all you need to know as to why Apple Computer, a maker of status-enhancing electronic gadgetry, is more valuable than Exxon, the world’s largest non-government producer of a fundamentally necessary commodity. That the good uncle is apparently old, but buff, speaks to US economic performance relying on a fading, but for now, robust cohort of baby boomers. Alas, even buff old guys eventually die, and frankly, it simply isn’t clear from where economic growth might arise when they do. Immigration is already leveling off and American females simply don’t care to have many children, only barely enough to replace the population. Economic growth requires population growth, and as buff as he is, it may be that Uncle Sam has lost his virility to the steroids getting such well-defined musculature required.
And then, there’s the July 7, 2012 issue:
I’ve already posted on the “discovery” of the Higgs boson (scroll down two entries), suffice here to reiterate and briefly summarize: Theoretical physics has reached its logical end. It is now more akin to mysticism than science, having not made a useful and worthwhile discovery since the neutron in 1932. Its only discoveries of late (the last half century or so) are baffling, irresolute conundrums. Its reigning theory of the very large and fast (General Relativity) so poorly understands gravity–the very thing it is trying to explain–that it now requires 96% of the universe to be undetectable to human perception. Its reigning theory of the very small (Quantum Theory) can’t account for gravity.
Scientists may or may not have proved a boson they imagined should exist did, in fact, exist. But the existence or not of the Higgs boson doesn’t matter in the least. Whether or not the particle is proved to exist, we still don’t understand how the force that shapes planets, stars and galaxies affects the very small, yet we still do generally know how very small things work, and can profitably apply our knowledge in useful and meaningful ways. Quantum Theory and General Relativity are nigh well useless for offering any insights as to the true essence of reality, but each do have some practical value, if mostly gleaned from discoveries made long ago. Physics without practical value is philosophy at best, mysticism at worst. We’ve ridden the twin conundrums, Quantum Theory and General Relativity, past the limits of their practical application and into the realm of the philosophical or mystical, and neither are very good philosophical, or even mystical, explanations of reality. Time to think of something else.
The June 28, 2012 issue:
I did not read the 14-page special report on London. London is not terribly interesting to me. It has lately become a favored hang-out for international ne’er-do-wells, including a healthy contingent of Russian/Ukrainian mafia, or businessmen, it’s not clear there’s much difference. Why is that something for which London should be proud? It’s not surprising gangsters would find London so inviting. London is where the idea that government existed to serve capitalists–not the common good–first gained purchase. The Russian (and Ukrainian) state exists to serve the Russian capitalist, whose relationship to the state is really more like a mafia don’s relationship to his good fellows, sending them out to protect markets and turf. Or perhaps, the state is the mafia don and the capitalists are the good fellows. Either way, it amounts to rule by extortion and intimidation, something that London showed the world is the proper means to managing empire back in its day. Why it would wish to be associated with such thuggery today is beyond me.
London fancies itself a phoenix, rising from the ashes of a forlorn empire, to rule the world again through directing its flows of money. But it stumbled badly when, just after the issue with this cover came out, it was revealed that London bankers had been manipulating to their advantage the London InterBank Offered Rate (LIBOR). LIBOR is something like the dollar in its importance to international pricing, credit and trade. If London is, as the article claims, precariously perched on the precipice of brilliance, surely the LIBOR scandal will inch it towards the edge.
The one thing sticks in my craw when reading The Economist is surely an attribute developed among its writers during the Industrial Revolution and the spread of the Empire. The writers are so eagerly optimistic, profoundly believing there is such a thing as human progress and all that is required to achieve it is proper governance and technological development. Actual history suggests otherwise. The British Empire rose and then fell. The progressive, linear view of history has been responsible for great and multitudinous tragedies, justifying everything from slavery to environmental exploitation to racism to war.
London may fancy itself the capital of the world again, if so, America is its muscle. London today is a paper tiger that would crumple if it had to enforce its contracts in the same manner as it did in its heyday. And America is getting a bit wobbly (see above). Give The Economist credit. The seminal aspect of London’s brilliance is its precariousness.