The Americans are filled with such an implicit and absolute confidence in their Union and in their future success that any remark other than laudatory is unacceptable to the majority of them. We have had many opportunities of hearing public speakers in America cast doubts upon the very existence of God and of Providence, question the historic nature or veracity of the whole fabric of Christianity; but never has it been our fortune to catch the slightest whisper of doubt, the slightest want of faith, in the chief God of America–unlimited belief in the future of America.
Emil Reich, Success among the Nations, (1904)
We are in uncharted territory. Although there are similarities of issues and response, we are not Japan, and this is not a repeat of the Great Depression, nor does the maelstrom we are being drawn into closely match any socioeconomic, political or global crisis anyone has ever experienced. It is a truly transformative era–a period of “punctuated equilibrium”, whose societal adaptations will be far more dramatic than most expect. America and the world will end this painful process only when there is a new “ism” to replace the major ideologies of the past two centuries. What it is has yet to be categorized, but there is a very good chance that it will represent an evolutionary plane that will modify, yet keep intact, humankind’s sense of the directionality of the arrow of time, called progress. The bad news is that it is a very dangerous path upon which we will all be treading. The results, I still believe, will be ultimately worthy of our tribulations, if not for us then for our children.
I believe that the one untried “ism” that will give a rebirth to a new American civilization will be a truly radical libertarianism, for despite the rhetoric of all the existing ideologies, even during the supposed “free market” period in America in the 1800’s, the State has always played a dominant role. If you study the legal progression of corporate law in America and England as well, the role of the State in caving into the demands of the powerful monied interests was absolutely critical to the abilities of the empowered, as well as the speculators, to build the railroads and consolidate the giant industrial conglomerates that ended up dominating the landscape by the end of the century. If you asked any mid-century capitalist if corporations would be given the legal status of “people”, and the protections of a potentially everlasting, permanent, bureaucratic lifespan they would never have believed you. By the dawn of the 20th century it would clearly have been. Free markets can only be free when the State, if it is exists at all, is there only to serve to protect the commons and is totally subject to the unalienable rights of free citizens.
According to a report from the investment bank Morgan Stanley, the average age of industrial equipment is now almost 10.5 years old. That’s the oldest it has been since 1938 — at the very height of the Great Depression.
This is a byproduct of the fact that since 2007, nonresidential capital expenditure — in other words, spending on equipment, nonresidential buildings like factories, and intellectual property — has fallen short of the long-term trend by 15 percent per year. That means businesses have pumped into the economy $400 billion less than they should have every year. That’s $1.6 trillion over the past four years, and it’s affecting every sector. Spending has been down 14 percent on buildings, 16 percent on equipment, and 6 percent on intellectual property.
How come? Well, it’s not for a lack of cash.
American firms are sitting on a record hoard of $1.8 trillion in cash, but as Reuters’ Jamie McGeever points out, firms have been more likely to spend on rehiring workers, funding mergers and acquisitions, and buying back their own shares than investing in equipment or factories.