Wednesday, July 15, 2009
Langendorf Bread? "Extra energy for you too". Back then the bleached flour was the thing to do before steroids became popular. Flavor was not an issue. I fondly remember that marketing jingle, it was a bakery that supplied bread all up and down the west coast in the postwar go-go decades.
Speaking of growth, California has grown to the world's eighth largest economy by expansionist policies built into its very economic and political fiber, which translates into a powerhouse punch in Washington (our pumped-up Governator - Langendorf, right? - being the latest to ride this beast). Every policy was predicated on population growth to feed profits across entire industries, particularly development and consumer products. There was no end in sight to the polices that encouraged the boom. Except the end has been here for over four years now, while housing and development policies continue to push product, and port development expands to feed the consumer supply chain.
The Los Angeles Times has documented the probable political impact of the outmigration from California in the last four years, a House seat. In order for California to influence public policy and obtain Federal dollars, it has consistently grown its business and development base, which brings in the bodies to justify the policies. The article refers to PPIC, a research institute that provides information and recommendations to governments and regional bodies throughout California.
The Public Policy Institute of California provides research, position papers and surveys in order to substantiate public policy positions in California. Its sponsors are a mix of developers, builders, land use orgs, the MTA, private foundations, universities and utility companies.It's a technically nonpartisan group, but the research is always pointed towards substantiating policies that push development.
It's sort of a chicken-and-egg problem, since forcing growth through development (jobs and housing) attracts population, which feeds the whole cycle no matter where you start. This leads to the inevitable exhaustion of resources and space, which then finally triggers a collapse, as we've seen, in housing and soon to be in commercial development because of the "bubbles" this process creates due to the profits it generates for the developers and industry. This kind of explosive growth now has a serious downside for the entire global economy, since bubbles destabilize what should be an orderly process of development with its checks and balances, producing horrific negative impacts in the near future through a global banking system that leveraged hot air (ground zero of overvaluation is California) for profit.
The Federal bailouts (whoops, did WE do THAT?) resulting from these bubbles have hit historic proportions, per the RGE Monitor, and will leave a legacy of debt for generations that will come due at the same time that the environmental collapse hits. The serious consequences of leaving out human capital and environmental capital in narrow analytics and short-sighted policies are now quite evident, and so our models will now necessarily shift to Natural Capital models that the rest of the world is fighting to establish (see sidebar: Web of Green).
Thomas Friedman points out that those who bear these bailout costs are the public, while a few individuals are enriched. Guilded Age at its finest, human nature at its worst. Connect the dots: Goldman Sachs made $3.44 billion in profit this past quarter, while the U.S deficit topped $1 trillion for the first time in the nation's history and appeared to be headed toward doubling that figure before the budget year is out. Since most of the increase in the federal deficit is due to bailing out the banks and salvaging the greater economy they helped destroy, why is the top investment bank doing so well? Paul Krugman also points out the consequences of propping up entities like Goldman Sachs.
Posted by LPB at 9:13 AM