of two minds-Charles Hugh Smith: The Structure of Collapse: 2016-2019

The Structure of Collapse: 2016-2019

Leaders face a no-win dilemma: any change of course will crash the system, but maintaining the current course will also crash the system.

The end-state of unsustainable systems is collapse. Though collapse may appear to be sudden and chaotic, we can discern key structures that guide the processes of collapse.

Though the subject is complex enough to justify an entire shelf of books, these six dynamics are sufficient to illuminate the inevitable collapse of the status quo.

1. Doing more of what has failed spectacularly. The leaders of the status quo inevitably keep doing more of what worked in the past, even when it no longer works. Indeed, the failure only increases the leadership’s push to new extremes of what has failed spectacularly. At some point, this single-minded pursuit of failed policies speeds the system’s collapse.

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of two minds-Charles Hugh Smith: It's Time to Ditch 4 Years of Costly College for Directed Apprenticeships

It's Time to Ditch 4 Years of Costly College for Directed Apprenticeships

Short, intense directed apprenticeships that teach students how to learn on their own to mastery are the future of higher education.

So it turns out sitting in a chair for four years doesn't deliver mastery in anything but the acquisition of staggering student-loan debt. Practical (i.e. useful) mastery requires not just hours of practice but directed deep learning via doing of the sort you only get in an apprenticeship.

The failure of our model of largely passive learning and rote practice is explained by Daniel Coyle in his book The Talent Code (sent to me by Ron G.), which upends the notion that talent is a genetic gift. It isn't--in his words, it's grown by deep practice, the ignition of motivation and master coaching.

Using these techniques, student reach levels of accomplishment in months that surpass those of students who spent years in hyper-costly conventional education programs. The potential to radically improve our higher education system while reducing the cost of that education by 90% is the topic of my books Get a Job, Build a Real Career and Defy a Bewildering Economy and The Nearly Free University and the Emerging Economy: The Revolution in Higher Education.

Let's start by admitting our system of higher education is unsustainable and broken: a complete failure by any reasonable, objective standard. Tuition has soared $1,100% while the output of the system (the economic/educational value of a college degree) has declined precipitously.

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of two minds - Charles Hugh Smith: The Source of Failure: We Optimize What We Measure

The Source of Failure: We Optimize What We Measure

Rather than measure consumption and metrics that incentivize debt, what if we measure well-being and opportunities offered in our communities?

The problems we face cannot be fixed with policy tweaks and minor reforms.Yet policy tweaks and minor reforms are all we can manage when the pie is shrinking and every vested interest is fighting to maintain their share of the pie.

Our failure stems from a much deeper problem: we optimize what we measure. If we measure the wrong things, and focus on measuring process rather than outcome, we end up with precisely what we have now: a set of perverse incentives that encourage self-destructive behaviors and policies.

The process of selecting which data is measured and recorded carries implicit assumptions with far-reaching consequences. If we measure "growth" in terms of GDP but not well-being, we lock in perverse incentives to boost 'growth" even at the cost of what really matters, i.e. well-being.

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of two minds-Charles Hugh Smith: The Anger of the Unprivileged Is Rising Globally

The Anger of the Unprivileged Is Rising Globally

Privilege serves the same purpose--benefiting the few at the expense of the many--regardless of the system's ideological labels.

The righteous disgust with the status quo that spawned the broad-based campaigns of Bernie Sanders and Donald Trump is not unique to the U.S.Globally, those disenfranchised by the status quo--the unprivileged, or in Peggy Noonan's phrase, the unprotected-- are starting to express their discontent in the streets, in social media and in elections.

Why are people around the world angry? It's obvious to everyone in the unprivileged classes and a mystery to the "we're doing just fine here, what's your problem?" privileged classes: The system is rigged to benefit the protected few and marginalize the unprotected many.

The problems are not just political; they are structural. As I outline in my new book, Why Our Status Quo Failed and Is Beyond Reform, there are two structural engines of disorder at the heart of the system:

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of two minds - Charles Hugh Smith: We're in the Eye of a Global Financial Hurricane

We're in the Eye of a Global Financial Hurricane

The only "growth" we're experiencing are the financial cancers of systemic risk and financialization's soaring wealth/income inequality.

The Keynesian gods have failed, and as a result we're in the eye of a global financial hurricane.

The Keynesian god of growth has failed.

The Keynesian god of borrowing from the future to fund today's consumption has failed.

The Keynesian god of monetary stimulus / financialization has failed.

Every major central bank and state worships these Keynesian idols:

1. Growth. (Never mind the cost or what kind of growth--all growth is good, even the financial equivalent of aggressive cancer).

2. Borrowing from the future to fund today's keg party, worthless college diploma, particle board bookcase, stock buy-back, etc. (oops, I mean "investment")--a.k.a.deficit spending which is a polite way of saying this unsavory truth: stealing from our children and grandchildren to fund our lifestyles today.

3. Monetary stimulus / financialization. If private investment sags (because there are few attractive investments at today's nosebleed valuations and few attractive investments in a global economy burdened with massive over-production and over-capacity), drop interest rates to zero (or below zero) to "stimulate" new borrowing... for whatever: global carry trades, bat guano derivatives, etc.

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Charles Hugh Smith: Is the World Getting Crazier, But We No Longer Notice? - Of Two Minds

Is the World Getting Crazier, But We No Longer Notice?

The banquet of consequences is about to be served.

If we step back and look at what's happened since the Global Financial Crisis of 2008-09, it's easy to see that the global leadership has chosen to do more of what's failed spectacularly.

Since the Global Financial Meltdown, central bankers and planners have pursued policies designed to boost global stock markets to create a wealth effect in which people will be psychologically inclined to borrow and spend more because their stock market/IRA portfolios are rising. This supposedly encourages them to spend this "paper wealth."

But the policy runs aground on two realities: 1) only the top 5% of the households own enough stocks to make a difference to their wealth (and their perception of wealth, i.e. the wealth effect), and 2) the wealth effect only occurs in "good times" when people feel the economy is healthy and their prospects are improving.

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