What economic collapse is like

Just the other day I was wishing on this weblog that someone would take on the job of spinning out the implications of no more oil to a level where it touched on day-to-day life in this country. I laughed today as I ran across just what I was looking for, or at least a good start at it, in a long article by Dmitry Orlov, the same fellow who put together that slide show I pointed to about economic collapse in the Soviet Union.

It continues to surprise me how clear-thinking and practical Orlov is about a situation that confuses me greatly. His article is very detailed and down to earth, including accounts of his experiences in the former USSR just after the collapse. I recommend that those who want to know more about one very possible future read Orlov’s three-part article very carefully.

Part I
Part II
Part III

There were a few passages I especially liked. On the possibility that American ingenuity will bail us out:

For the last few generations, native-born Americans have preferred disciplines such as law, communications, and business administration, while immigrants and foreigners tended to choose the sciences and engineering. All their lives the natives were told to expect prosperity without end, and so they felt safe in joining professions that are mere embroidery on the fabric of an affluent society.

This process became known as “brain drain” — America’s extraction of talent from foreign lands, to its advantage, and to their detriment. This flow of brain power is likely to reverse direction, leaving the U.S. even less capable of finding ways to cope with its economic predicament. This may mean that, even in areas where there will be ample scope for innovation and development, such as restoration of rail service, or renewable energy, America may find itself without the necessary talent to make it happen.

On where suddenly unemployed people will go:

A spontaneous soft landing is unlikely in the U.S., where a large company can decide to shut its doors by executive decision, laying off personnel and auctioning off capital equipment and inventory. Since in many cases the equipment is leased and the inventory is just-in-time and therefore very thin, a business can be made to evaporate virtually overnight. Since many executives may decide to cut their losses all at once, seeing the same economic projections and interpreting them similarly, the effect on communities can be utterly devastating.

Most people in the U.S. cannot survive very long without an income. This may sound curious to some people — how can anyone, anywhere survive without an income? Well, in post-collapse Russia, if you didn’t pay rent or utilities — because no-one else was paying them either — and if you grew or gathered a bit of your own food, and you had some friends and relatives to help you out, then an income was not a prerequisite for survival. Most people got by, somehow.

But most people in the U.S., once their savings are depleted, would in due course be forced to live in their car, or in some secluded stretch of woods, in a tent, or under a tarp. There is currently no mechanism by which landlords can be made not to evict deadbeat tenants, or banks be prevailed upon not to foreclose on nonperforming loans. A wholesale reintroduction of rent control seems politically unlikely. Once enough residential and commercial real estate becomes vacant, and law enforcement becomes lax or nonexistent, squatting becomes a real possibility. Squatters usually find it hard to get mail and other services, but this is a very minor issue. More importantly, they can be easily dislodged again and again.

On being able to deal with little or nothing to do:

A lot of people, more and more during the “stagnation” period of the 1980’s, felt nothing but contempt for the system, did what little they had to do to get by (night watchman and furnace stoker were favorite jobs among the highly educated) and got all their pleasure from their friends, from their reading, or from nature.

This sort of disposition may seem like a cop-out, but when there is a collapse on the horizon, it works as psychological insurance: instead of going through the agonizing process of losing and rediscovering one’s identity in a post-collapse environment, one could simply sit back and watch events unfold. If you are currently “a mover and a shaker,” of things or people or whatever, then collapse will surely come as a shock to you, and it will take you a long time, perhaps forever, to find more things to move and to shake to your satisfaction. However, if your current occupation is as a keen observer of grass and trees, then, post-collapse, you could take on something else that’s useful, such as dismantling useless things.

The ability to stop and smell the roses — to let it all go, to refuse to harbor regrets or nurture grievances, to confine one’s serious attention only to that which is immediately necessary, and not to worry too much about the rest — is perhaps the one most critical to post-collapse survival. The most psychologically devastated are usually the middle-aged breadwinners, who, once they are no longer gainfully employed, feel completely lost. Detachment and indifference can be most healing, provided they do not become morbid. It is good to take your sentimental nostalgia for what once was, is, and will soon no longer be, up front, and get it over with.

On why Cumberland Books will probably have to stop selling books that diagnose society’s ills, and may eventually become entirely irrelevant:

In the Soviet Union, there was something called samizdat, or self-publishing: with the help of manual typewriters and carbon paper, Russian dissidents managed to circulate enough material to neutralize the effects of enforced normalcy. In contemporary United States, we have web sites and bloggers: different technology, same difference. These are writings for which enforced normalcy is no longer the norm; the norm is the truth – or at least someone’s earnest approximation of it.

So what has become of these Soviet mavericks, some of whom foretold the coming collapse with some accuracy? To be brief, they faded from view. Both tragically and ironically, those who become experts in explaining the faults of the system and in predicting the course of its demise are very much part of the system. When the system disappears, so does their area of expertise, and their audience. People stop intellectualizing their predicament and start trying to escape it – through drink or drugs or creativity or cunning – but they have no time for pondering the larger context.

On the need for security, and the sources of it:

There is a continuum of sorts between those who can provide security and mere thugs. Those who can provide security also tend to know how to either employ or otherwise dispose of mere thugs. Thus, from the point of view of an uneducated security consumer, it is very important to work with an organization rather than with individuals. The need for security is huge: with a large number of desperate people about, anything that is not watched will be stolen. The scope of security-related activities is also huge: from sleepless grannies who sit in watch over the cucumber patch to bicycle parking lot attendants to house-sitters, and all the way to armed convoys and snipers on rooftops.

As the government, with its policing and law enforcement functions, atrophies, private, improvised security measures cover the security
gap it leaves behind. In Russia, there was a period of years during which the police was basically not functioning: they had no equipment, no budget, and their salaries were not sufficient for survival. Murders went unsolved, muggings and burglaries were not even investigated. The police could only survive through graft. There was a substantial amount of melding between the police and organized crime. As the economy came back, it all got sorted out, to some extent. Where there is no reason to expect the economy to ever come back, one must learn how to make strange new friends, and keep them, for life.

On the virtues of political apathy, and the dangers of its opposite:

An equally useful quality in a crisis is apathy. The Russian people are exceptionally patient: even in the worst of post-collapse times, they did not riot, and there were no significant protests. They coped as best they could. The safest group of people to be with in a crisis is one that does not share strong ideological convictions, is not easily swayed by argument, and does not possess an overdeveloped, exclusive sense of identity.

Clueless busybodies who feel that “we must do something” and can be spun around by any half-wit demagogue are bad enough, but the most dangerous group, and one to watch out for and run from, is a group of political activists resolved to organize and promote some program or other. Even if the program is benign, and even if it is beneficial, the politicized approach to solving it might not be. As the saying goes, revolutions eat their children. Then they turn on everyone else. The life of a refugee is a form of survival; staying and fighting an organized mob generally isn’t.

On stockpiling:

The idea of stockpiling is not altogether bad, though. Stockpiling food is, of course, a rotten idea, literally. But certain manufactured items are certainly worth considering. Suppose you have a retirement account, or some mutual funds. And suppose you feel reasonably certain that by the time you are scheduled to retire it won’t be enough to buy a cup of coffee. And suppose you realize that you can currently buy a lot of good stuff that has a long shelf life and will be needed, and valuable, far into the future. And suppose, further, that you have a small amount of storage space: a few hundred square feet. Now, what are you going to do? Sit by and watch your savings evaporate? Or take the tax hit and invest in things that are not composed of vapor?

Once the cash machines are out of cash, the stock ticker stops ticking, and the retail chain breaks down, people will still have basic needs. There will be flea markets and private barter arrangements to serve these needs, using whatever local token of exchange is available; bundles of $100 bills, bits of gold chain, packs of cigarettes, or what have you. It’s not a bad idea to own a few of everything you will need, but you should invest in things you will be able to trade for things you will need. Think of consumer necessities that require high technology and have a long shelf life. Here are some suggestions to get you started: drugs (over-the-counter and prescription); razor blades; condoms. Rechargeable batteries (and solar chargers) are sure to become a prized item (Ni-MH are the less toxic ones). Toiletries, such as good soap, will be luxury items. Fill some shipping containers, nitrogen-pack them so that nothing rusts or rots, and store them somewhere.

Good soap? Budding soapmakers, start stockpiling lye!

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