Okay, in light of the economic apocalypse, I just can’t resist quoting a couple of paragraphs from the final chapter of my book, Slackonomics.
In these two graphs, I am writing about the economist Joseph Schumpeter, who used the phrase “creative destruction” to describe the process by which capitalism renews itself, often through violent convulsions that cause quite a bit of pain. He was originally describing the industrial revolution, but I am repurposing the phrase by calling it creative destruction 2.0 to describe the global/technological revolution:
This is truly a new era of creative destruction, not only altering everyday life for Generation X—from how we work, where we live, how we play, when we marry and have children, to our attitudes about love, humor, friendship, happiness, and personal fulfillment—but the world as we know it. Powerful forces have been unleashed in our lifetime, and to assume that it’s all going to work out, that creative destruction will continuously renew the economy via radical transformation from within, could turn out to be the ultimate in naivete.
Schumpeter argued strenuously in favor of capitalism at a time when socialism and communism were considered viable options (“the capitalist process, not by coincidence but by virtue of its mechanism, progressively raises the standard of life of the masses.”) But he was also well aware of its shortcomings. Not only do people and industries get hurt in the churn, they become “free to make a mess of their lives” with enough “individualist rope” to hang themselves. What’s more, capitalism sets up a tension “between two interests in society, the interest in present enjoyment, and the interest in the nation’s economic future.” Schumpeter actually predicted that capitalism couldn’t survive because governments would eventually quash creativity, an understandable conclusion when communism was a serious consideration. What Schumpeter didn’t count on, however, is that capitalism can overwhelm democracy, and in the current age of creative destruction 2.0, it’s working far too well.
Fucking A.
We have entered a whole new era of creative destruction, folks. Here are a couple of paragraphs from an article in today’s Times:
The Bush administration on Saturday formally proposed to Congress what could become the largest financial bailout in United States history, requesting virtually unfettered authority for the Treasury to buy up to $700 billion in mortgage-related assets from financial institutions based in the United States. …
A $700 billion expenditure on distressed mortgage-related assets would be roughly what the country has spent in direct costs on the Iraq war and more than the Pentagon’s total yearly budget appropriation. It represents more than $2,000 for every man, woman and child in the United States.
And from the Economist:
Ten short days saw the nationalisation, failure or rescue of what was once the world’s biggest insurer, with assets of $1 trillion, two of the world’s biggest investment banks, with combined assets of another $1.5 trillion, and two giants of America’s mortgage markets, with assets of $1.8 trillion. The government of the world’s leading capitalist nation has been sucked deep into the maelstrom of its most capitalist industry. And it looks overwhelmed.
I’ve now read the Times, WSJ, the Economist and the Financial Times, and still I simply cannot get my head around what is happening. I suspect there’s a lot of people who are IN CHARGE of financial institutions and government agencies who can’t, either.
As I argue in my book Slackonomics, it could very well be up to Generation X to bring the economy back from the brink. I guess that was overly optimistic. In fact, it is going to be up to us to rebuild the economy from the ground up.
The 10th Anniversary edition of the surprise bestseller, The Not So Big House, will be published in the coming weeks. The book struck a nerve with Generation X, which embraced its emphasis of quality over quantity, Dwell-magazine practicality over McMansion bling. But I doubt Sarah Susanka (the architect and author) could have guessed just how far Gen X would take this trend.
In yesterday’s Home section of The New York Times is a story about the tiny house trend, featuring Michael Janzen. He is the epitome of an Xer who has learned how to deal with being whiplashed by the economy. In his twenties he lived in a space about the size of a two-car garage. At the age of 40, after getting married and making money as a Web designer for a bank, he has an in-ground pool, maid service, a yard landscaped with Japanese black pine bonsai trees, notes the Times. But Janzen has spent the summer building an 80-square-foot house out of free stuff he found on Craigslist. Why?
According to Mr. Janzen, he came to the realization that “I don’t want this life — the life of someone who’s working too hard to pay a large mortgage to live in this house.” The catalyst, he said, was watching the value of his home plummet with the rest of the real estate market, while the time and money required to maintain the property only increased. “The energy cost is enormous,” he said, “and the bigger your property gets, the more there is to do.”
That is Slackonomics, folks, pure and simple. Check out the article and audio slideshow below.
Salon has a new series of essays (two so far) called Pinched, and the first one was written by Heather Havrilesky, whose pioneering work for suck.com I featured in my book Slackonomics. Her essay is titled, “Perspire to Retire,” with the subtitle, “I was all fired up to save for the future. Then I found out I was a day late and about, um, $90,000 short.”
It is, of course, smart, witty and oh-so-Gen-Xerish. Here is just a blurb:
Toying with retirement calculators was so exquisitely painful (and such a profound waste of time) that by the next day, I had upped the stakes with college savings calculators. How much should we be saving each year to send my 12-year-old stepson and 2-year-old daughter to public, in-state universities? One thousand dollars a month, of course. (Private schools would mean saving 2K a month.) Now let’s see, let’s throw that 12K-a-year minimum in with the 93K a year we’re supposed to be saving for retirement, and what do we have? One hundred five thousand dollars a year in savings. Now tell me, who has an extra 100 G’s lying around each year, aside from some of your more enterprising rappers?
But here’s a contrarian view on the whole savings issues, as reported in The New York Times:
[Some contrarian] economists answer that people would get more out of their money by using it when they are younger. “There is risk in saving too much,” Mr. Kotlikoff said. “You could end up squandering your youth rather than your money.”
Mr. Scholz said he and his co-authors of a study, “Are Americans Saving ‘Optimally’ for Retirement?” found oversaving across all economic and education levels and most ethnic or racial groups as well. …Those who were not saving enough were usually missing their target by only a small amount.
- Perspire to Retire [Salon]
Salon has an interesting take on the movie The Rocker with Rainn Wilson.
Can Generation X grow old gracefully? Now that nearly half the generation that gave us grunge has turned 40, the question of whether slackerdom can mix with maturity looms. Adulthood implies many of the things this aging bunch has tried to reject, or at least question: marriage, parenthood, responsibility, authority. … Fishman, aka “Fish,” typifies Gen X’s Peter Pan-ish unwillingness to play by the established rules of growing up. In 2006, he’s a 40-ish loser doing telemarketing for a Cleveland insurance company. He is unmarried, unkempt and unemployed. He loses his apartment and has to move in with his sister.
This touches on precisely what I address in the latter half of my book, Slackonomics. Sandeep Kaushik, whose personal story is in Chapter 12, calls it “Delayed Onset Adulthood Syndrome.” Here is one quote from his story:
I thought me and my friends, we were really special. We were touched by the gods. We were so clever and talented. In this effortless way, we were going to live the life without having to lift a finger. We were going to hang out on the porch, drink beer, and be incredibly successful. I was sure of it. It was a given. There was no thought about how to map this out. I just assumed, being who we were, having whatever skills or talents we had would take us there. I didn’t realize smart people are actually a dime a dozen. A lot of people have talents. But do you know how to develop a career? Do you know how to make your way in the world?
While Fishman goes into a 20 year tailspin, Sandeep’s struggle lasted about 10 years, which he pulls himself out of in a more typical if less dramatic way than becoming a rock star: Sandeep embraces a profession he enjoys even if it doesn’t lead to a lot of fame and fortune, and as a result, grows up a bit and finds it’s not so bad being married, having kids and owning a house in Seattle:
I always thought of myself as having one foot in adulthood and one foot in adolescence. I never thought I would end up so conventional, but I like what I do. I completely love Seattle. I go out drinking too much, but that’s just because there’s always someone to get a drink with. I’ve always been a restless sort, but I’m probably going to be here for the rest of my life and it doesn’t seem that bad.
A Gen X Rock ‘n’ Roll Fantasy? [Salon]