I’ve spent the last month painting and re-roofing the house and enjoying the slow emergence of spring in the rockies as the aspen grove turned a vibrant green. I’ve also been watching the bear market rally in stocks as less bad news leads investors to believe that the fed can induce another debt bubble of false prosperity and growth. So as the rain falls and temperatures hover in the low 40’s, I’m inspired to comment on the symbolism of the GM bankruptcy. Amid all the chatter about “Government Motors” I was struck by Dan Neil’s (the L.A. Times) view of the larger lesson within our nation’s largest bankruptcy.
“This is the lesson of GM’s bankruptcy, and it has little to do with market share and miles per gallon. It’s a rebuff of the notion of exceptionalism.
Any organization that fails to sufficiently safeguard its means of self-correction and reform, that forsakes long-term investment for short-term gain, that piles up debt year after year, will eventually fail, no matter how grand its history, or noble its purpose. If you don’t feel a tingle of national mortality in all of this, you’re not paying attention.”
Neil doesn’t go beyond the “tingle of national mortality”, but it is no secret that the U.S. is technically bankrupt and avoids default only because of our reserve currency status and foreign purchases of our growing debt. But the inevitable decline of the American empire only begins to describe Neil’s “rebuff of exceptionalism”.
American hubris, our excessive pride in our specialness or “exceptionalism” was born in ernest as we exited victorious from WWII. With the rest of the world’s industrial capacity lying in ruin, GM and corporate america dominated the world industrial stage and American quickly transformed its vast war economy and productive capacity into a consumer economy that would eventually lead us onto a treadmill of crushing debt. Post war retail analyst Victor Le Beau best describes the reasoning that would lead to America’s 5% of the world population consuming 30% of the world’s resources.
“Our enormously productive [war] economy…demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption…. We need things consumed, burned up, replaced and discarded at an ever-accelerating rate.”
Such reasoning rested on the post war belief that American ingenuity and the miracle of science and technology would overcome any limits and endless growth would lead us to a utopian future. In his forward to William Catton’s “Overshoot”, Stewart Udall posits the exact date that America’s post war euphoria jumped the Happy Day’s shark.
“It is easy to fix the exact date when our euphoria reached a zenith. It was the July week in 1969 when the astronauts walked on the moon. We celebrated this triumph with a mixture of awe and self-congratulation. President Nixon proclaimed that it was “the greatest week since the creation of the earth.” A NASA official opined that the feat demonstrated we were “masters of the universe.” This proves that we can do what ever we decide to do, Americans concluded from this climax event.”
However the 70’s would mark the first cracks in our shinning edifice of hubris. Domestic oil production would peak in 1970 and OPEC would give us the first taste of our dangerous dependency on oil. Honda and Toyota quality and fuel efficiency would begin to threaten the supremacy of GM. Reacting to the costs of our failed adventure in Vietnam, Nixon would take us off the gold standard and set the stage for massive deficit spending. Real incomes would begin to decline, saving and thrift would lose favor and combine with debt and two income families in an attempt to keep the consumer economy alive and growing. Our post war euphoria would be replaced with the lament, “If we can put a man on the moon, why can’t we ….”
President Carter attempted to raise the issue of limits and lead us in direction of conservation and renewable energy, but Fed Chairman Paul Volcker’s war on Nixon’s policy induced inflation set the stage for Reagan’s promise of a return to post war euphoria. Reagan delivered with a “deficits don’t matter” war on the evil empire and launched a 20-year bull market built on a phantom foundation of deregulation, easy credit, and a mountain of government and private debt. As W added more to the national debt than all previous presidents combined, our national house of cards collapsed in a pool of financial sector greed and overreach.
As GM attempts to pull itself from the ashes of bankruptcy and politicians around the world promise the oxymoron of “sustainable” growth, nearly 7-billion humans are still mostly blind to the reality of ecological limits and harsh retribution of overshoot and collapse. This is the ultimate hubris—the hubris of human exceptionalism.
“The whole human enterprise is a machine without brakes, for there are no indications that the world’s political leaders will deal with the realities until catastrophes occur. The rich countries are using resources with extravagant disregard for the next generation; and poor countries appear to incapable of acting to curb the population increases that are erasing their hope for a better future. In such a world, declarations and manifestos which ignore the imperatives of the limits of growth are empty exercises. All the available evidence says we have already passed a point of no return, and tragic human convulsions are at hand.” – Stewart Udall, Charles Conconi, and David Osterhout, The Energy Balloon