Mother Pelican
A Journal of Solidarity and Sustainability

Vol. 9, No. 9, September 2013
Luis T. Gutiérrez, Editor
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An Abundance of Bad Decisions

Charles Hugh Smith

This article was originally published in Of Two Minds, 13 June 2013


Fostering illusions of prosperity only further cripples our ability to make the necessary difficult decisions.

Have you ever noticed that the decisions made in times of abundance are generally bad? Bad might be too weak a word; catastrophically bad might be more accurate. This causal connection between abundance and flawed decision-making was one of the many stimulating ideas that came up during an afternoon with Aengus Anderson, host of the excellent audio program series The Conversation.

This dynamic has two sources:

1. There is no pressure in eras of abundance to make difficult choices. Since everything is going so swimmingly, "more of the same" is what everyone wants. After all, why risk upsetting the gravy train?

2. This pressure to maintain the Status Quo whittles down the options even being discussed to politically safe pseudo-reforms. Any ideas that are outside the more of the SAME box are dismissed or marginalized. (SAME: Socially acceptable middling effort--a telling acronym I found in the work of Michael O. Church.)

As a result of this paring away of all bold, daring ideas and solutions, the Status Quo toolbox is devoid of authentic solutions when the bad decisions finally catch up and the era of abundance devolves into scarcity.

This reliance on more of the SAME pseudo-reforms to address emerging crises leads to a policy of doing more of what has failed spectacularly and Going Through the Motions of reform to placate critics.

This dearth of concepts and policies that actually address the unfolding crises creates the phase-shift escalation of crisis and failed reform depicted in this chart:


Both the Power Elites and the general populace have been crippled by abundance: since no one has been forced to make difficult decisions for so long, the leadership and the public have both lost the ability and will to make demanding analyses and choices.

Since there are no tools left in the policy tool box and no ability to fashion new tools, the Status Quo figuratively tries to pound down nails with a screwdriver. Of course they fail, and fail spectacularly; they don't have the right tools. All they have is socially and politically acceptable pseudo-reforms and simulacra big ideas.

Examples of pseudo-reforms and simulacra big ideas include trillion-dollar boondoggles such as ObamaCare, the $1 trillion student loan "solution" to higher education costs and the F-35 fighter aircraft program.

All of these are simply increasingly costly more of the SAME.

This is not a political dynamic: it is a human-nature dynamic. When do we spend more than is prudent on big-ticket consumables? When we feel the glow of abundance (what the Federal Reserve calls the wealth effect). When do we join the herd gambling on housing or stocks? When everyone's winning and abundance is flowing everywhere. When do we over-promise future commitments? When there appears to be no end to ever-rising abundance.

This dynamic of over-promising future commitments and squandering money is a key reason the expansive central state is doomed to crisis and failure.


When do we buckle down and open our minds to solutions and alternatives that we didn't need to even consider in eras of abundance? When things get dicey and scarce. When do we start looking at expenses? Certainly not when money is easy to borrow.

There is one last sobering dynamic we need to ponder. For the past five years of suppressed crisis, central states around the world have chosen to create an artificial sense of abundance by printing or borrowing trillions of dollars of fiat money and flooding their economies with this false abundance.

This false abundance has led to a continuation of bad decision-making, as it has nurtured a magical-thinking faith that the era of abundance can be conjured up with monetary tricks. This is the essential feature of cargo cults, the magical-thinking belief in the return of abundance without having to chart a new path of authentic reforms.

The Federal Reserve's Cargo Cult Magic

Creating the monetary illusion of abundance is not the same as authentic abundance. Fostering illusions of prosperity only further cripples our ability to make the necessary difficult decisions.

That Which Is Incapable of Reforming Itself Disappears

Charles Hugh Smith

This article was originally published in Of Two Minds, 13 August 2013


When organizations are incapable of reforming themselves, breakdown is the only possible endpoint.

Every failing organization, from empires to school districts, responds to its embarrassingly visible failure by proclaiming one reform after another. To take but a few from a long list, China is "reforming" its hopelessly corrupt, debt-based central-planning economy, President Obama is "reforming" the Global Surveillance State (into a presumably kinder, gentler machine gun hand?), The European Union is "reforming" its banking sector and the overly complex U.S. Sickcare system is being reformed with 2,300 pages of additional complexity under the Orwellian title of Affordable Care Act (ACA), a.k.a. ObamaCare.

The one dynamic that matters is of course left unsaid: the inability of the Status Quo to reform itself, i.e. undertake fundamental, systemic reforms. This inability has many facets but only one root: political sclerosis caused by entrenched, vested interests seeking to protect their perquisites and power.

This is as true of local school districts as it is of entire states.

Here is my scale-invariant summary of the Status Quo:

1. An economy that is controlled by the government is one in which political power, not the market, controls the distribution of national income. Politics is the arena in which the national income is distributed. The primary contestants are entrenched, vested interests seeking to protect their perquisites and power.

2. A government in which political power is for sale to the highest bidder puts the wealthy at an extreme advantage, as they have the means to buy political power to conserve and expand their share of the national income.

3. In order to do the bidding of the financial Elite, the political Elite redistributes enough national income to the bottom 50% and retirees to buy their silence/complicity.

4. A nation in which political power is for sale is one in which the rule of law is bent to serve those with power.

That the relentless advocacy of one’s own interests magically creates a common good is the core of our secular faith; what if this is false? This is not just the secular faith in America, but in China; "to get rich is glorious" implicitly embodies a "trickle down" economic view in which Chinese millionaires whose sons own multiple $250,000 autos are good for China because that extreme concentration of wealth will supposedly trickle down to everyone lower in the food chain.

Orwell called this "some are more equal than others": in other words, beneath the glossy PR veneer of trickle-down economics, the super-wealthy are entitled to their wealth by the natural order of inequality. Never mind the system is rigged in their favor; they "deserve it" in the same way that feudal lords "deserved" their estates.

In Nature the ability to reform is called adaptation. Organisms and species that are unable to adapt when selective pressure is applied vanish from the Earth. Humans and human organizations are no different; individuals and organizations that are unable to respond to selective pressure with real self-reform/transformation will also fail and disappear.

The political and financial Status Quo is incapable of true reform, because real reform threatens the perquisites and power of entrenched vested interests, what I call fiefdoms.

The other dynamic I have described is the Rising Wedge Model of Breakdown: entrenched interests within organizations only know how to expand, and this leads to ever-higher minimum levels of funding and headcount. Reform is rendered impossible because the organization breaks down once funding dips below the lofty minimum.


If we combine these three dynamics--the relentless, single-minded advocacy of self-interest in rigging the system; a multiplicity of political "third rails," i.e. constituencies and fiefdoms that are politically untouchable, and the Rising Wedge Model of Breakdown, we understand why the Status Quo is incapable of reforming itself.

That leaves breakdown as the only possible endpoint.

Though the Status Quo still has enough resources to put off the eventual breakdown and collapse for a while longer, I expect an initial crisis to emerge in 2014-2015 that is resolved by the usual politically expedient half-measures. The sigh of relief that "everything's been fixed" may last two to three years to 2017-18, and then the ultimate crisis will gather force until it is beyond half-measures, likely in the 2021-22 timeline.


Charles Hugh Smith is the author of several books, including Survival+: Structuring Prosperity for Yourself and the Nation, CreateSpace, 2009. For more information about his Of Two Minds blog and related work, click here.

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