Through A Glass, Darkly

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At The Verge, Josh Dzieza pinpoints the verité nature of contemporary life that has made Black Mirror so unsettling:

The bewildering escalation of events is a key part of Black Mirror, and it's a phenomenon this year was rich in — that how did we get here? Is this real life? feeling that so many of 2014's events had. Did some kids upset about critiques of their games really just threaten women from their homes and turn the internet into a hellscape? Did a dumb bro-comedy really become a matter of national security? Did the president just commend Seth Rogen?

This is the paranoia at the heart of Black Mirror: we’re building systems the full repercussions of which we don’t yet understand, and the idea of opting out of them is a myth. It’s the suspicion that even as technology is making life better and better — and I believe it is — it’s exposing us to dangers we won’t understand until it’s too late to do anything about them.

At times this year has felt like a Black Mirror clarifying moment, which is to say, it felt like the future, but in an ominous way. Everything is connected now, which turns out to mean that pretty much everything is getting hacked. Anyone can talk to anyone now, which means everyone risks getting harassed by trolls. Our news is increasingly curated by algorithms whose biases and blind spots we’re just beginning to understand. Oh, and also those algorithms can inadvertently inflict pain, and they’re kept relatively clean by an army of foreign laborers traumatized daily by the worst humanity has to offer. Of course, I’m still saving everything to the cloud, still on every social network and signing up for new ones, still not really sure where my data is going.

Story: I can't stop comparing everything to Black Mirror 

My two cents.

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Some random thoughts on a Sunday evening, following an interesting discussion I just had. The premise was that the U.S. today looks like Japan in the early 1990’s, and that within the next five years the U.S. will be the #3 economy in the world, and just barely maintaining parity with India at #4.

This sentence I think sums up the argument.

The problem is that America has less and less fundamental value to offer the global economy, and this is getting worse, not better.

Let’s unpack this idea a little bit.

The United States is the #1 country for GDP in the world with a rough number of $14 trillion.

Next up is China at about $7-10 trillion, followed by Japan at around $4 trillion.

India is number four at around $3 trillion GDP.

As a sidebar – this brings up the question of how to count the EU. You can make an argument that it should be compared as a whole to the U.S. economy, though I don’t share that point of view — for example it seems like similar logic could argue for including Canada in the U.S. figure based on close economic ties and border policies, even if the common monetary policy of the EU is the strongest argument.

Either way, the entire EU comes in at about $14-15 trillion, just a hair higher than the US.

And let’s face it, the EU is not a country.

So for India to catch up to the U.S. we’d have to be looking at a five year trend that involves either India growing at an annualized rate of 50% or more a year and/or the U.S. declining at an annualized rate of 50% a year or more.

For reference the worst year of the great depression, 1932, saw a negative growth in GDP of about 13% annualized. And also for reference after 10+ years of stagnation Japan is still wealthy and the third largest GDP country in the world despite its tiny size.

In fairness China is much closer behind, but again, their staggering rate of growth (and it is remarkable, and hard to see as sustainable) is still in the 11-12% annual range. Even starting with an extreme premise it’s very hard to see how the current rankings will change in the near term.

But as of today we have heavy, major problems in debt markets, currency markets, job market, and commodities markets, and various other lurking mayhem in the US economy.

It’s also true that the economy has been spectacularily mismanaged for 7 years now. One could argue that any looming recession is a byproduct of spending several trillion dollars in national resources on a war that has led to higher gas prices and even more “crowding out” effects in debt markets. Also relevant is a regulatory policy infested with moral hazard issues, and a fiscal policy that seem guaranteed to put pressure on the currency and price level. I could go on.

But business cycle contractions are normal. One thing that’s normal about them is every time they happen people go nuts like it’s the first time it has ever happened. Much like people thought somehow the rules of real estate had been revoked when they decided to flip houses.

The rules always apply on the way up. But also on the way down. The media tends to gravitate towards the apocalyptic changing of civilization paradigm shifts, but much like it was smart thinking to be bullish but cautious during the bubble, it’s equally rash to over react now on the bear side. Same as it ever was.

A new administration, some unraveling of the insanity in securitized debt markets, and it might just start to feel good around here again. In the 1930’s people starved, in the streets. Banks failed and wiped out entire communities.

We’re still around. It’s fun to play mental Mad Max but it’s more fun to be an optimist. With every panic lies opportunity.