Dying by Your Assumptions

If economists are right, if what this financial meltdown represents is not just a recession/ managed depression (or whatever you want to call it), but a complete value and expectation reset for modern society, exactly what are the assumptions of most Americans about the future? Are we expecting a “recovery” that will slowly bring us back to where we were?

Ask yourself what you think life will be like in the future. You can ask political questions. Like: As the Kurds announce that they are creating their own constitution and claiming oil and gas producing sections of Iraq, was our assumption that Iraq can function as a unified nation just an unrealistic wish? Do we assume that Pakistan will figure out how to keep their 60-70 nuclear weapons free from Islamist militants or that we will bring Afghanistan to heel? Will there be another massive 9/11-like attack on our soil anytime soon?

Or you can ask economic questions (they are nearer and dearer to each of us at this moment, I suspect). Like: Will the dollar hyper-inflate based on excessive borrowings such that foreign travel, muscle cars and chi chi imports will only be accorded to the mega-rich? Or is that an irrational concern? We are watching as the remaining Wall Street firms are slathering once again in high levels of bonuses and perks, pulling away from TARP restrictions where they apply and if they can. Our “too big to fail” structures seems to be lumbering along, still freezing credit and still hardly serving to restabilize the economy as we has hoped.

We have horrifically high unemployment; even the Obama administration predicted the basic unemployment rate wouldn’t top 8%, then 8.5%, but we are heading to 10%+. Exactly what new jobs will open up in the near term to absorb all that excess capacity? What will be people actually do to make a living? Will they earn anywhere close to what was paid in the past? Are those jobs even sustainable in a world of rising global educational standards (as ours fall), capital and value shifts away from the U.S. and towards Asia and an economy hanging on by a stimulus package that carries an expiration date?

We have watched as professional schools (graduate business, law and medical schools) have tripled their costs relative to the cost of living, imposed crushing debt-loads on their students upon graduation, only to find their grads littered in the trash-heaps of unemployment. Can well-paid professors in esteemed institutions continue to dole out expensive educations that cannot generate enough money to repay the tuition burden? We still don’t turn out enough engineers, but West Los Angeles has more lawyers than Japan. As state budgets sequentially fail to balance – some are particularly out of whack like California’s – we are sacrificing education as an expendable discretionary cost.

Folks who work in big companies or are supported by powerful unions, have great benefits and terrific pensions, might want to take a long careful look at companies that just a few years ago were are the top of the food chain, but have failed. The reconfigured General Motors is a new company; it has shed the collective bargaining agreements and benefits packages of old, laid-off thousands of management employees who have been with the company for decades, terminated thousands of car dealerships, shuttered factories everywhere, dropped entire brands of cars, etc. Where is your company in this mix? If you’re still working. Where will your employer be in four years? How complacent can anyone afford to be in a world of hyper-accelerating change? Four years ago, analysts hailed GM as solid as a rock, the largest car manufacturer on earth.

I was reading in July 10^th Washington Post that the F-22 fighter jet is costing way more to operate than the military expected – $44,000 per hour to be exact – because maintenance was so high. I was just thinking that every hour of operation of these marvelous machines is about the cost of another U.S. job. We live in a hostile world with lots of nasty people wishing us ill. But how do we meet the expectation that we can actually afford to keep building a military response at these atmospheric costs? Do we just assume that we will?

The problem with this “reset” notion is that America was built on her expectations – and those crazy enough to pursue these dreams. There were a lot fewer rules then and capital was easier to get. I’d like to think that while we die on our assumptions, if your expectations are “right-minded,” our hope for a brighter future relies on new, realistic expectations. But when assumptions about the future look more like complacency, we need to be on red alert. This is definitely not a drill! The one sure thing is that the future will look nothing like the past.

I’m Peter Dekom, and I approve this message.