This article is wrong, right?
August 23, 2012 2:09 PM   Subscribe

This article about the economy has me scared. How much of it is (possibly) right?

I'm no expert on the economy, but I know that any angle can be finessed to go just about any way when in the right hands. I researched a little bit on this Laurence Kotlikoff fellow, and he seems to not be regarded as a nutjob or a Chicken Little type. Ditto with the Richard Duncan that is quoted. But again, I'm no expert.

How much, if any, of that article is accurate and possibly realistic?
posted by jbickers to Law & Government (23 answers total) 1 user marked this as a favorite
What The Experts Say: The team has released their investigation to the public and for a limited time you can view a private airing of it online. Learn the steps you can take to prepare your wealth, investments and way of life for this looming catastrophe. Click here to learn how some of the foremost experts in the world recommend you position yourself for the uncertain time ahead. And receive a free copy Chris Martenson's ground breaking book.

Nope. This is hand-wavy alarmism. Not to say that the times aren't troubled, but this fellow is ginning up traffic to buy his book.

Also, there's a repeated "pensions, Social Security and Medicare are unfundable" message here, which is pretty standard rightist dog-whistle.
posted by Frowner at 2:14 PM on August 23, 2012 [10 favorites]

Take a look around at the rest of the site and realize that the main thing they push is fear, and premium content promising to assuage that fear.
posted by laconic skeuomorph at 2:18 PM on August 23, 2012 [1 favorite]

It's quite clearly intending to sell you something, as evidenced by the fact that there's a "LEARN HOW TO PROTECT YOURSELF!!!!" link at the end of the article, which then leads to a 75-minute infomercial, complete with "WAIT! ARE YOU SURE YOU WANT TO LEAVE THIS PAGE?! WE HAVE SOMETHING SPECIAL FOR YOU!" pop-up window if you try to leave the infomercial page. If that doesn't suggest that you take everything in the preceding article with a grain of the book, I guess?
posted by infinitywaltz at 2:18 PM on August 23, 2012

Response by poster: Yeah, I get all that and understand ... but the credentials of the people being quoted seem to suggest that some of it is true and real (hence my point about "anything can be finessed"). They're not the ones selling a book. So the question is, which parts of this are real and which are the book-selling hype?
posted by jbickers at 2:21 PM on August 23, 2012

Ooops, posted too soon.

I've been reading the links round-ups at Naked Capitalism for a couple of years. The woman financial person who pulls them together seems to know what she's talking about and to rely on a good mix of sources, from mainstream (WSJ, etc) to expert to mere blogger.

Now sure, none of the news on Naked Capitalism is precisely cheering, but the general trend is toward ordinary bad stuff - recession, neoliberalism, declining safety net. Things that are no fun but that can presumably be survived and possibly even reversed via political struggle.

As far as your original article goes, think about this: the guy says that 61% of Americans anticipate some kind of grave disaster....and 15% think that they're ready to survive it. What exactly does that even mean? In a casual way, I "anticipate" disaster too - but I have no illusions about my survival skills if there's a global famine or something. I'll just die along with everyone else. When someone starts talking about the ruthless 15% who are ready to fight the zombies or whatever, I start thinking that they are using very manipulative language and scare tactics.
posted by Frowner at 2:21 PM on August 23, 2012 [2 favorites]

There's an explicit argument for "The collapse of civilization." That's a very different outcome from, say, "A second Great Depression," since the first one left civilization very intact. And in the event of an actual civilizational collapse, "wealth and investments" cannot be protected; basically everything other than food, guns, gasoline, and farming equipment becomes largely useless. Certainly fractional ownership in first-world-economy-dependent corporations is wiped out entirely.

In other words, they want to sell you on how to protect something from a scenario in which it cannot possibly be protected at all.

Therefore, they're probably full of shit.
posted by Tomorrowful at 2:23 PM on August 23, 2012 [5 favorites]

Things that could cause civilization to go into a death spiral: current levels of agricultural productivity rapidly dropping off before we've had a chance to reduce the population and stabilize growth; various climate change-related ecological changes happening much more rapidly than even the most pessimistic of current predictions - as in, several orders of magnitude.
Things that could not cause civilization to go into a death spiral: The US federal government continuing to run a budget deficit

If you don't know enough about things to figure this out on your own, it will probably be better for your mental health in the long wrong just to avoid any kind of "news" media.

but the credentials of the people being quoted

Argument from authority is a fallacy.
posted by The Master and Margarita Mix at 2:24 PM on August 23, 2012 [2 favorites]

Upon response, I'll throw in argument from authority.
posted by laconic skeuomorph at 2:24 PM on August 23, 2012

It's all book selling hype. I bumped forward in the infomercial a couple times, and found them talking about peak oil at one point. It's a doomsday press.
posted by fatbird at 2:25 PM on August 23, 2012 [1 favorite]

Best answer: At any given time, there is always someone predicting a death spiral in every civilization. To varying degrees, these people have been right. However, even after the fact, it's very difficult to agree on what caused the collapse of a civilization, and even to what degree it collapsed. Did Europe enter a dark age after the fall of Rome? Did climate change destroy the Central American empires? What happened to the large civilization of the Amazon area? Why did China lose so much of its lead in the last few centuries? People study this stuff for their whole lives and can't come up with any definitive answers that everyone agrees on and this is for cases where it's already happened. So for thousands of years, since the dawn of civilization, someone has been predicting every civilization's collapse, and so far, no one has gotten it right (timing *and* reasons needed for full credit), that we know of.

So basically, when anyone tells you "here's why civilization is collapsing, I've got it all figured out." there are two possibilities:
1) They are wrong.
2) They are the smartest person who has ever lived in the history of humanity by several orders of magnitude.

There is something about The Humans that makes us strongly millennial. It's like our defining quality: we came down from the trees, realized that each of us would die, and then decided "'s happening right now, to everyone." If I was one of those biology dudes I'd petition to have us renamed homo millenialus or something. Some of our oldest surviving bits of culture predict the imminent End of Days. I say this as someone who basically wakes up every day convinced civilization is collapsing, I have to remind myself this is just like how everyone believes the current generation of kids is spoiled and lazy, etc.

Now, on the specific issues of this article, which to be fair I only skimmed, let me point out that America's debts are denominated in a currency America controls the printing press for. All sorts of bad things can happen to America due to its debt load, or other economic issues, but the debt load is fundamentally not capable of crushing the country entirely. We'd just print more money, which is basically like stealing from the debt holders and the holders of any dollar-denominated assets. A dollar is a promise that someone down the line will give you a dollar's worth of economic output. By inflating the dollar, we'd be taking from the holders of dollars the ability to trade their current deferred consumption for future consumption, but we would not be removing the productive base of the economy at all: factories would still manufacture stuff, crops would still grow in the fields, actors would still be in movies.
posted by jeb at 2:25 PM on August 23, 2012 [4 favorites]

Since the recession, noted economists including Laurence Kotlikoff, a former member of President Reagan's Council of Economic Advisers, have come to similar conclusions.

So some guy who maybe had some influence (but not enough to actually work for Reagan) twenty-five years ago is being quoted? He probably wants to somehow sound relevant, and the only way to do that is to shout about an extreme position.
posted by KokuRyu at 2:29 PM on August 23, 2012

This is clearly alarmism. Alarmism has been peddled by respectable people before, and indeed they have sometimes been right. But to assess a particular alarmist argument, you can't just do a simple check on the authors to see if they are cranks -- people who are not cranks say huge volumes of mutually contradictory stuff. If you believed everyone who's not a crank, you'd believe almost everything, and also the opposite of that. (If you want to hear even more plausible tales of doom from non-cranks, check out James Hansen or Bill McKibben.)

The article in particular doesn't really make strong arguments for its conclusions -- I agree with other posters that it works by purveying a mood of doom, which probably drives the business model of the site and the experts cited.

There is plenty to worry about in this wide world, US fiscal crises included. It makes sense to diversify your assets against various risks, perhaps including these ones. But I don't think the smart money says the US is about to plunge into a "death spiral" that will end our civilization.
posted by grobstein at 2:29 PM on August 23, 2012

Look, if you want to know how seriously to take Money Morning's claims that the economy is entering a "death spiral" that could "wipe out civilization," I refer you to Money Morning's "About Us" page, which simultaneously asserts that "we're in the midst of the greatest investing boom in almost 60 years. And rest assured - this boom is not about to end anytime soon.... And Money Morning is here to help investors profit handsomely on this seismic shift in the global economy." I mean, it seems quite plain they are willing to publish literally anything that will sell a few investment newsletters.
posted by Joey Buttafoucault at 2:34 PM on August 23, 2012 [4 favorites]

Worrying about a death spiral collapse of the world economy is like worrying about a major meteor strike or Mega-Volcanoes. If it happens in your lifetime, you'll be screwed and there's nothing you can do about it. I mean, maybe if you spend all of your available time and money building some sort of mega bombshelter and then huddling in it like chicken little for the rest of your life waiting for dooms day.. then, you'll survive in a post-apocolyptic wasteland I guess.
But if it doesn't happen, you will have wasted your entire life on some sort of death-trip fantasy.

So, stick your head in the sand. It's the only sane way to live.
posted by j03 at 2:34 PM on August 23, 2012 [3 favorites]

Best answer: I researched a little bit on this Laurence Kotlikoff fellow

Kotlikoff is quite reputable, but note he did not personally endorse and is probably not even aware of this bit of panic-mongering. He has indeed performed calculation that show long-term unfunded liabilities of $200 trillion+ over this century, but you have to put that in context. Total U.S. economic product over the rest of the century will certainly be in the $1.5 - 2 quadrillion range (1500 - 2000 trillion) even if we get stuck with very low or zero real growth for decades, which would be an extended depression-type outcome that no one expects.
posted by zipadee at 2:34 PM on August 23, 2012

unfunded entitlements like Social Security

Those four included words immediately tell me this article has nothing of value to say. My usual go-to person on these matters is Dean Baker, here's a succinct paragraph to quote:

...these projections show that the program can pay all benefits for the next 35 years with no changes whatsoever. They also show it can pay more than 75 percent of benefits indefinitely. A tax increase that is less than 5 percent of projected wage growth over the next three decades would make allow it to pay all benefits into the indefinite future.

If you'd prefer a different debunker, there are many.
posted by gimonca at 2:39 PM on August 23, 2012 [1 favorite]

One more thing - following up on zipadee's point - read this for an analysis of the CBO's long-term fiscal estimates, which are the basis of that "$211 trillion fiscal gap" thing.
posted by Joey Buttafoucault at 2:42 PM on August 23, 2012

My rule of thumb is to ignore every single thing that purports to predict the future.
posted by rhizome at 3:12 PM on August 23, 2012 [2 favorites]

Google Richard Duncan and Blackhorse Asset Management--"worked with" does not mean "leading" it means worked for and while there is nothing necessarily bad about being based in Singapore (Black Horse)
posted by rmhsinc at 3:52 PM on August 23, 2012

Oops--posted accidentally--What is interesting is that Blackhorse is a "long only fund" which ( I believe ) does not actively trade/manage short term risk. Also, Duncan's stint at the world bank was for two years, Finally, I do not see any statement of funds under management etc at Blackhorse. All in All, invest prudently, the sky will not fall, there may well be hard times but the world will go on.
posted by rmhsinc at 3:58 PM on August 23, 2012

They're right that life is a pyramid scheme of sorts, except that your "recruits" are your own children. They're right that it has to come to an end some time, but they're probably full of shit about how, when, and what you should do to protect yourself.

My money's on increasing concentration of power in the hands of a technological elite, and eventual genocide of the majority of the human race by robotic telepresence weaponry some time before 2040. I suggest buying a lot of iRobot stock. At least that way you'll know you won the financial game as merciless drones operated by some group of humans you don't belong starve you to death by interdicting all the arable land you could cultivate. </mucking around>
posted by Coventry at 4:16 PM on August 23, 2012

Er, "some group of humans you don't belong to"
posted by Coventry at 4:17 PM on August 23, 2012

Find out his religion.

I wish that Congress didn't have people like this in it (my state but not my district thank god).

If I believed this stuff -- and I read enough science fiction to come up with twenty plausible apocalypses -- I'd be huddling in fear in my house in the midst of enough hoarded bins of beans, bottled water, and toilet paper to last through the thirtieth century. Can't face the apocalypse without toilet paper.
posted by bad grammar at 6:00 PM on August 23, 2012

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