Survival__ Structuring Prosperity for Yourself and the Nation - Charles George Smith [98]
Simulacra are elusive by nature; much like quarks, they cannot be isolated but must be identified by their reflections or influences on other moving parts of a system.
13. Stability Trap. In a Stability Trap, brittleness and fragility are masked by apparent system stability. Examples include the global supply chain (apparently robust but actually quite vulnerable), the electrical power grid in the U.S. and many other systems.
One excellent overview of system vulnerabilities and brittleness can be found in the book The Upside of Down: Catastrophe, Creativity, and the Renewal of Civilization.
With the actual fragility thus masked, few feel the motivation to formulate a "Plan B" alternative should the system break down or be disrupted.
In some stability traps, the energy required to keep the system stable/in equilibrium increases, slowly but surely, to the point that the input costs exceed the output's worth. Those receiving the output do not notice the rising costs until the system breaks down, surprising everyone but those tasked with its maintenance.
14. Risk-Accountability Trap. In this trap, risk is disconnected from accountability. Thus investment bank employees are rewarded not for being accountable for the potential losses of the derivatives they originate and sell but for the profits generated.
Once someone can assume risks and avoid any responsibility or accountability for the consequences of creating those risks, then risk in the system grows exponentially to the point of collapse. Thus if I can purchase a house with no money down and extract 120% of the purchase price with no possible consequences to me other than walking away, then I can create that risk (of a mortgage which will default) with virtually no accountability.
15. Bull Market Trap. A bull trap is series of higher highs that lures investors back into the market, only to be followed by a resumption of a long-term market decline. A bull trap is baited by the classic investor emotions of hope, greed, and complacency, which of which lead investors to enter the market despite all fundamental warning signs to the contrary.
The optimistic bias of economists was revealed in a recent study of the consensus forecasts of economists made in advance of 60 recessions around the world in the 1990s. It showed that economists failed 97% of the time to predict the coming recession a year in advance. Many of the economists failed to foresee recessions that occurred as soon as two months later. Fully one-third of U.S. economists failed to recognize a recession that had already been underway at least nine months.
16. Stagnation Trap. As noted in Chapter One, a pernicious positive feedback loop is at work as the Plutocracy and State continually increase their share of the national income: their power and influence increase proportionately, which then enables even more wealth acquisition and ever greater influence.
The primary consequence of this widening gap between the ever-poorer middle class taxpayers and the ever wealthier State and Plutocracy is a structural divergence between the interests of the Plutocracy and the State and those of the middle class. This widening structural imbalance of power and share of the national wealth creates a deep cynicism and profound political disunity which is reflected in the blocking of any structural solution by the State and Plutocracy.
Since the structural problem is State and Plutocracy over-reach, any real solution will necessarily reduce their shares of the national income and limit their joint powers. Loathe to accept even the smallest reduction in their income and power, both the Plutocracy and the State (including those dependent on its various fiefdoms) resist all structural change with every force at their command.
The inevitable consequence is a profound structural stagnation in which real reform is betrayed in the name of compromise, the same simulacrum "solutions" which leave the powers and income of the