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February
16
2017

While Elites Played Empire, America Fell Apart
Charles Hugh Smith

Dear Imperial America: the lifestyle you ordered is permanently out of stock.

Our extraordinary misallocation of national treasure and political power has set a banquet of consequences that few are willing to face, much less address head-on. If we had to sum up this vast misallocation, we might start by characterizing it as the result of a multitude of elites playing Empire with money borrowed from future generations

We can start the list of extraordinary misallocations of national treasure with the Neocon's endless wars of choice. Ten years ago, estimates of the total cost of the Iraq misadventure were $3 trillion: Cost of Iraq War: $3 Trillion; Cost of Solar Plants to Power all 105 million U.S Households: $500 Billion (April 10, 2008)

(Yes, I know solar energy is not "the solution" due to intermittency, lack of storage, fossil fuels are needed to build and maintain the solar infrastructure, etc.--but the point is: would we be better off if we'd invested 20% of the money squandered on the Iraq misadventure on alternative energy, even with all its limitations?)

But this does not exhaust the list of extraordinary misallocations of treasure. Universities have found the funds to build grand edifices on campus (never mind the trillion dollars in student loan debt that funded the delusions of grandeur) while much of the rest of our educational infrastructure crumbles as deferred maintenance takes its inevitable toll.

Public transit systems such as the San Francisco Bay Area's BART always find the funds to pay for hefty raises and gold-plated benefits for employees and managers, meanwhile the system's core has crumbled due to--you guessed it--hundreds of millions of dollars in long-deferred maintenance.

While employee wages, benefits and pensions dominate local government outlays, maintenance is funded by selling bonds, which cost twice as much over the long run due to interest and other costs.

Where cities and counties once funded school maintenance and filling potholes out of tax receipts, now many locales demand taxpayers approve tens of millions of dollars in new bonds to pay for these basic infrastructure maintenance projects.

It has reached the point that even maintaining city parks requires borrowing millions.

Political elites have found that promising the impossible--lower taxes and increased benefits/entitlements--keeps them in power, and as long as the credit spigot of new government borrowing is wide open, there are no limits on how many more trillions of dollars in future interest payments can be promised to win re-election today.

The fact that this sets a toxic banquet of consequences for future taxpayers and beneficiaries--no worries, some future politico will have to sit down at that banquet:

Political and financial elites have lined their own pockets and insured the continuity of their own power by deferring boring, unsexy, you-get-no-votes-for-this maintenance. Want to be "popular" and win re-election? Ram through sexy new projects such as "affordable" housing (i.e. costly housing subsidized by taxpayers), extensions in mass transit lines, fancy new stadiums and student-services buildings--and pay for it all with borrowed money and by slashing boring, unsexy maintenance work.

The drama of the Oroville Dam is tied directly to the deferral of rountine maintenance: What You Need To Know About The Oroville Dam Crisis (interview with a civil engineering expert and Chris Martenson)

While we must ask cui bono (to whose benefit?) of scare-mongering estimates of deferred maintenance (one person's "required infrastructure" could be another person's pork-barrel project awarded as payback for political contributions), many of us can see a crumbling empire of deferred maintenance with our own eyes.

I can personally attest to city streets that were potholed 20 years ago that finally got repaved--but only after taxpayers agreed to pay double by borrowing millions for routine street maintenance that was previously paid out of tax revenues.

I see spalling concrete (concrete falling off due to rusting rebar) at major international airports, university buildings that are flooded due to poor drainage that should have been addressed decades ago, water mains that burst, sewer lines that are decades past their replacement date--the list is truly endless.

Dear Imperial America: the lifestyle you ordered is permanently out of stock.The banquet of consequences has already been served, and will only become more distasteful the longer we put off facing our skyrocketing debt, runaway elites and delusions of grandeur head-on.

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Check out both of my new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print). For more, please visit the OTM essentials website.

At readers' request, I've prepared a biography. I am not confident this is the right length or has the desired information; the whole project veers uncomfortably close to PR. On the other hand, who wants to read a boring bio? I am reminded of the "Peanuts" comic character Lucy, who once issued this terse biographical summary: "A man was born, he lived, he died." All undoubtedly true, but somewhat lacking in narrative.

I was raised in southern California as a rootless cosmopolitan: born in Santa Monica, and then towed by an upwardly mobile family to Van Nuys, Tarzana, Los Feliz and San Marino, where the penultimate conclusion of upward mobility, divorce and a shattered family, sent us to Big Bear Lake in the San Bernadino mountains.

The next iteration of family took us to the island of Lanai in Hawaii, where I was honored to join the outstanding basketball team (as benchwarmer), and where we rode the only Matchless 350 cc motorcycle on the island, and most likely in the state, through the red-dirt pineapple fields to the splendidly isolated rocky coastline. In 1969-70, this was the old planation Hawaii, where we picked pine in summer beneath a sweltering sun.

We next moved to Honolulu, where I graduated from Punahou School and earned a degree in Comparative Philosophy (i.e. East and West) at the University of Hawaii-Manoa. The family moved back to California and I stayed on, working my way through college apprenticing in the building/remodeling trades.

I was quite active in the American Friends Service Committee (Quakers) and the People's Party of Hawaii in this era (1970s).

I next moved to the Big Island of Hawaii, where my partner and I built over fifty custom homes and a 43-unit subdivision, as well as several commercial projects.

Nearly going broke was all well and good, but I was driven to pursue my dream-career as a writer, so we moved to the San Francisco Bay Area in 1987 where I worked in non-profit education while writing free-lance journalism articles on housing, design and urban planning.

Within a few years I returned to self-employment, a genteel poverty interrupted by an 18-month gig re-organizing the back office of a quantitative stock market analyst. I learned how to lose money in the market with efficiency and aplomb, lessons I continue to practice when the temptation to battle the Monster Id strikes.

Somewhere in here my first novel was published by The Permanent Press, but alas it fell still-born from the press--a now monotonous result of writing fiction. (Seven novels and I still can't stop myself.)

I started the Of Two Minds blog in May 2005 as a side project of self-expression, and in an unpredictable twist of evolutionary incaution, that project has ballooned into a website with about 3,500 pages that has drawn almost 20 million page views.

The site's primary asset may well be the extensive global network of friends and correspondents I draw upon for intelligence and analysis.

The blog is #7 in CNBC's top alternative financial sites, and is republished on numerous popular sites such as Zero Hedge, Financial Sense, and David Stockman’s Contra Corner. I am frequently interviewed by alternative media personalities such as Max Keiser, and am a contributing writer on peakprosperity.com.

charleshughsmith.blogspot.com