James Howard Kunstler: Racketeering Is Ruining Us

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If you don't understand what's causing a particular problem, then it's pretty difficult to come up with an effective solution.

Author, commentator and longtime friend-of-the-site James Howard Kunstler returns to our podcast this week to discuss the importance of accurate diagnosis -- in this case, of the scourge he sees as accelerating America's downslide into economic and social decline: Racketeering.

More associated with the organized crime bosses of a century ago, it's not a word used often these days. But that doesn't diminish in any way its relevance to and impact on our lives today:

The disorders in politics that we're seeing now are really expressions of the larger disorders in our economic life and our financial life. That just happens to be the avenue that the expression is coming out of. Another point I'd like to make is that the reason that people are against Hillary or dumping on Hillary or don't like her, is because she's a poster child for racketeering. I encourage people who are talking about our circumstances and people who are interested in the news and election, to use the word racketeering to describe what's going on in this country. You really need the right vocabulary to understand exactly what's going on.

Racketeering is just pervasive in all of our activities. Not just in politics but in things even like medicine and education. Obviously the college loan scheme is an example of racketeering. Anybody who has to go to an emergency room with a child whose broken their finger or something, is going to end up with a bill for $20,000. You know why? Because of medical racketeering. And so, these are really efforts to money-grub by any means necessary, often in ways that are unethical and probably illegal. Let's use that word racketeering to describe our national situation.

And let's remember by the way, the activities of the central banks is just another form of racketeering. Using debt issuance and attempting to control interest rates in order to conceal our inability to generate the kind of real wealth that we need to continue as a techno-industrial society.

Societies have a really hard time understanding what they're doing, articulating the problems that they face and coming up with a coherent consensus about what's happening, and coming up with a coherent consensus about what to do about it. Combine that with another quandary, the relationships between energy and the dead racket for concealing real capital formation. I like to reduce it to one particular formula that is pretty easy for people to understand. It's a classic quandary: that oil priced at over $75 a barrel in today's dollars tends to crush economies, and oil priced under $75 a barrel in today's dollars tends to crush oil companies. There is no real sweet spot between those two places. We're ratcheting between them and each one of them entails a lot of destruction. That's a terrible quandary that we're in and it's being expressed in banking and finance...and the people in charge of those things don’t really know what else to do except continue the deformation of institutions and instruments.

Click the play button below to listen to Chris' interview with James Howard Kunstler (58m:21s).

This is a companion discussion topic for the original entry at https://peakprosperity.com/james-howard-kunstler-racketeering-is-ruining-us/

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I remember seeing a promo video about bringing water to the desert in the 1950. The desert will reclaim the land someday?   

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I remember seeing a promo video about bringing water to the desert in the 1950. The desert will reclaim the land someday?   

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All consistent growth is exponential in that it must have a doubling time. Until it becomes exponential decay.
Exponential industrial, financial and economic growth has forced The Machine to extract womenfolk from their homes to fill cubicals .  To do this it has allowed mens' wages to deflate so that women are forced by economic circumstances  to leave their children. It has made a virtue out of a vice. Women are told that they can All break the Glass Ceiling. (OK men, enough ribaldry.That wasn't a joke.)

This has had the inevitable consequence of  producing young adults that are overly sensitive and emotionally fragile, useless to The Machine. Hence the Machine looks to other lands for labour or to automation.

Producing  healthy children is a sacred duty of womenfolk. If they don't then society becomes extinct.

In an existential crisis, such as all out war, removing women from their primary function can be justified. That we have chosen to do that is evidence that we unconsciously know that we are are (or rather, were) in just such a crisis.

But there will be consequence to depriving children of their mothers. There always is.

The crisis is over. We lost.

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I remember reading that LA had around 2000 people before water importation became necessary. The rest of its population is unsustainable.

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Here here! JHK's comment re the human habitat in suburbia is right on. I live in one of the nation's hottest residential real estate markets and there is such a dearth of local parks it is pathetic!

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I resonated with JHKs reluctance to look at what we are doing to the oceans, not because I'm not a scientist, but because I have a sense that there is no action humanity would be willing to take that could start to mitigate the situation.  Why stare at the problem if there is no solution.  I resonate and yet I cannot ignore the issue.

Regarding Pokemon Go, I can't see an up side to the game.  The people I have seen playing the game are not outside in any real sense.  They are still interacting almost entirely with their phone.  When my wife and I are walking or bike riding in a park, we not infrequently have to take the initiative to avoid colliding with these unaware people. 

The final thing that hit home was the mention of a visit across the Atlantic to a country with "normal" size people.  My daughters are both nurses in Texas.  At separate times they have both described to me special lift equipment that they have to use to assist a not insignificant portion of their patients to get out of bed.  Obviously, this is not shocking to me.  A fair percentage of people in Central Wisconsin, including youngsters, are so large they have great difficulty getting around.

I liked the discussion of turning the television off for a few months, though I can't imagine many people even considering doing it.  If you turn the TV off, you loose the distraction that facilitates hiding from what is going on all around you.  That can be scary.

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LesPhelps,
You mention two interesting points:

TV: I divorced from the TV back in 2000 when I divorced from my first wife: the TV was in her share. And because I did not have enough money to by a new one, I spent a few months without TV and I realized I didn't need one at all. Today, We have a TV, but no mean to receive the crap that is fed to the world (No dish, no cable, no antenna). Just a BD reader where we insert a selected disk from time to time.

Fat people: We just came back from a visit to France where people are less heavier than here in North America (For now, as the trend is up almost everywhere in the world). Industrial food, there, is similar to what we have here but French people cook more at home. They find industrial pre-cooked meals expensive. This is also a cultural trait. We spent almost all our time in the country. Paris was for the last few days. They still have bi-weekly markets where they can buy local production (veggies, fruits, meat, dairy, bread). This trip was to me a return in the past. When I was young (I am not saying I am old - the sun is much much older than me!) I recall there were no industrial food as we see today (apart from a few cans of beans or chicks). Everything had to be bough fresh and cooked at home.

Of course, diet is not the only factor in human super size…

About racketeering, it's almost everywhere. I saw this post in LinkedIn a few days ago: Cheeky racketeering (of course, the manager provided a perch…)

This post alone, is not very scary. The worst part are the comments: Almost 9/10 people who commented found it "smart", "bright", etc…

SaaS (Software as a Service) is also a form of racketeering as customers becomes captive. This is the phone company business model.

Microsoft pricing model uses the "Top Psychological Accepted Price" model. Germans pay more for their software because they accept it. Other countries have lower prices because they are not as easy as Germans. Etc…

By the way, Quebec justice authorized an action class lawsuit against all Canadian phone providers because of excessive roaming fees (up to 30$CAD/MB). Will see how it will end. Two years ago the mayor of Quebec city came back from a trip to find a 11,000$CAD invoice for roaming fees. With his strong character, he made a lot of noise. wink

 

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It has become the "skimming and scamming" economy, where the new business model is to force a captive audience to pay over and over again.  Monsanto's glyphosate tolerant seeds for example.  You must buy a new order of seeds every year and pay the attending "technology fee".  If you keep seeds and plant them the next year Monsanto will come after you with a legal vengeance.  I suspect Monsanto has access to the USDA crop reports most every farmer has to file to get crop insurance.  This would allow them to compare reported acreage with the amount of new seed purchased and tell them exactly who was saving seed and replanting it. The problem is Monsanto has bought up almost all of the competition in the seed industry so you almost have to buy from them-or try to find comparable non glyphosate tolerant seed.  The problem being that non- tolerant seed is being left behind in the genetic traits development and research area.
Used to be that new, and most times better seeds were developed by university research departments and they were labeled "Public Varieties". This seed could be saved and planted the next season. This is almost non-existent today.

Part of the theory of Supply and Demand is that there by many willing sellers and equal access to information about the marketplace.  Both of which no longer exist, thus unbalanced power to the seller.

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I'm glad you brought that up Hotrod.
Maybe it is too much of a luxury these days, but I wish that people would begin to look at their actions from a moral perspective. Or at least ask themselves if they are victimizing their customers and end users.

What did they say in the '60s?: If you're not part of the solution you're part of the problem.

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Just after we moved to Virginia, I went to a small locally owned pharmacy to fill a prescription for 30 Ambien (sleeping pills).  I was new to my job and my prescription insurance coverage had not kicked in.  They explained that without insurance it would be $58 for 30 tablets.  But, if I would be willing to wait until my insurance kicked in in a few weeks, the price would come down to only $30.
I asked if I could talk to the manager.  It turns out the person at the front was the manager and owner.  After some talk about where we had moved from and how we liked living here, it turns out we were neighbors and our dogs had met in the park a couple of times.   She offered me the Ambien at cost.

She charged $5.  I was shocked.  "Can you really afford to give it to us that cheaply?"    She replied: "Sure. Generic Ambien costs us practically nothing.  The $5 is just for the labeling and paperwork."

 

 

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Just a comment regarding the occupy wall streeters being anti corruption rather than anti bank. I would hope that they would be anti bank. Has there ever been a non corrupt banking system? The sole purpose of the banking system is to milk the population. I have never agreed with the need for credit to get things done, the only reason we "need" credit is because we're debt serfs and in order to get "money" to do something we have to go begging to our usurious masters who have convinced us they are doing us a favour. 
I say, get rid of the banks, all of them. I'm totally anti bank. The hard part is how do you explain this to people without alienating them when people think banks are good because they "give" us money? And the same empire that controls the banks controls the media, and the racketeering political system? The entire system is a sham and needs to be dismantled through a bloody revolution. Why beat around the bush, let's say what needs to be said. 

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Careful what you wish for Mark.  I'm counting on the system in place, including the banks, collapsing of their own unsustainability and, hopefully, the awakening of "the people".  An unsuccessful bloody revolution will, at this point, possibly only result in the elimination of excess "trouble-makers".  At the American Revolution, both sides had muskets.  The people are "outgunned" now.  Hard to gain tactical advantage when we're all GPS-connected and video-ed at every turn.  Ghandi had a successful method as well…Aloha, Steve.

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Mark_BC said;

I have never agreed with the need for credit to get things done
Finite money systems with strong scarcity integrity, like Gold and/or Bitcoin, can always accommodate any size of economy, or any level of good growth, because the value of the money can shift up via deflation.  Bitcoin by design is divisible by 8 orders of magnitude, such that today, 0.1 Bitcoin is worth $57.  Given that 1.0 Bitcoin was nearly worthless (in dollar terms) just a few years ago.. one can see this deflationary, pro-saver effect in action.  The theoretical max. of 21M Bitcoins will always be enough to service the economy.. but the benefits of this deflationary process would go to everyday Bitcoin holders, and especially to savers.  Banks, and bankers, would lose all of their power in such a scenario.  
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. Henry Ford Read more at: http://www.brainyquote.com/quotes/quotes/h/henryford136294.html
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. Henry Ford Read more at: http://www.brainyquote.com/quotes/quotes/h/henryford136294.html
“The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The process by which banks create money is so simple the mind is repelled. With something so important, a deeper mystery seems only decent.” John Kenneth Galbraith (1908- ), former professor of economics at Harvard, writing in ‘Money: Whence it came, where it went’ (1975).
It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. Henry Ford Read more at: http://www.brainyquote.com/quotes/quotes/h/henryford136294.html
Why this doesn't happen is well explained by Mark_BC.  We live in a world of -isms that serve to divide us and distract us.. when in reality it's this debt-based money system that lies at the root of almost all of our problems.  Our blindness to this is our biggest weakness.          
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You don't need to be a carpenter (or skilled tradesman or even particularly physically fit) to build an inexpensive and beautiful house with natural, local materials.

The banks would have a lot less power and we would use a lot less materials and a lot less energy for heating and cooling, if building your own house became a popular thing to do. 

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The free market has made it pretty clear that people want to outsource guarding their money (in whatever form its in), as well as making it easy to transfer between people without (once again) having to provide security for that operation themselves.
I'm guessing that you aren't really saying everyone must use only gold and silver and that there are no banknotes, no digital payments, no place to store your money, etc.

Given that, I'm curious as to which services that banks currently provide you find societally beneficial, and which "services" you find predatory and should be eliminated.

 

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Yes, there are definitely ways that things can be done (usually they're the way that things USED to be done) that can work around the banks, the credit system, and even money to a large degree.  The problem then becomes legal codes – like the building code – that have been set up to literally outlaw all of those things.
I don't know about where you live, but where I live you MUST have a centralized heating system, you cannot rely only on, say, passive solar and a woodstove, or a Jean Pain system.  You MUST have a septic system if you do not have connection to sewer service.  You MUST have running water.  Without these things – all of which cost beaucoup bucs – you cannot get a certificate of occupancy.  That's the case even if you have alternative systems that you plan to use as primary ones – you STILL have to have them.

It's all about empowering the professions over the layman, and more importantly, maintaining "real estate values" and the connected tax assessments.

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One of the traps that I see many very thoughtful people falling into is the assumption that money is something that is needed on a widespread basis.  The historical truth, however, is that money was something that was typically rather rare, and that the overwhelming majority of exchanges were conducted outside of hard currency.  When I was studying early America while pursuing degrees in history, one of the things I was struck by was how often the term "mutually-shared obligations" kept popping up in descriptions of how people lived, especially prior to the Civil War.  This was also a prime theme in the writings of the late Joe Bageant, where he described the post-WWII Appalachia he grew up in as a place where "the prime currency was the calorie, not the dollar."
Of course, one of the prerequisites for stepping outside the monetary system is TRUST, and that is certainly in short supply in a society where most of us commute away from home for work and return to houses in which we shut ourselves in, barely interacting with our neighbors.  You have to have deeper relationships with people to operate in a system designed around paying it forward instead of settling every transaction at the moment of transference.  You also have to be willing to live a life that is much more focused on real necessities as opposed to conveniences and luxuries that we have mistakenly come to view as necessities.  But if you're really serious about a life without being a slave to banks, that's what you have to do.  And judging by the way that the banks and "progress" has crushed under foot every alternative system out there, I'm not even sure that's enough.

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Dirty games: higher prices, stock shortages, unfair contracts, … you name it.
Our societies are ageing and increasingly sick and the modern medical system is addicted to drugs (Which by the way, most of the time address only symptoms, not the deep causes)

Last year in Quebec we got a situation that would normally trigger strong reactions, but it went very soft. Here are the facts:

Health Canada closed a drug distributor for a few weeks in order to comply with some standards. Unfortunately for some hospitals in Quebec, this was their only distributor for one drug used in cancer treatment. They had to look for this drug elsewhere in the meantime. The usual price was around 40$CAD per dose. The new price from the only other distributor, was 4000$CAD (Not a typo! Three trailing zeros). Other hospitals were not allowed to share their stock with the hospitals in need because of bizarre contracts terms. All hospitals in Quebec belong to the same organization, so why they cannot share drugs? Even politicians did not step in.

At the end, the new distributor (temporary) did a favor: he lowered the price to 1000$CAD per dose. Politicians were satisfied by this "happy" ending.

Everyone was upset and frustrated by the weak reaction of the politicians and the health ministry. In a normal country, the government or hospitals would say "Go to hell!" and share their stocks until their usual distributor reopens.

Sometimes I think that courage and balls are so precious that Nature did not waste them… and unfortunately less and less people deserves them.

We can come with endless examples and nothing will change. Something must happen to go back to more normal ethics…

 

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Buried within the Machine are the seeds of it's own destruction (hat tip environment and EROEI). Most are completely dependent on the Machine for their basic survival - pull that rug out and it' a done deal. It is hard (for me) to envision a transition to a equilibrium state with Nature without a large reduction in population.

I suspect that longevity of the Machine going forward is a function of decay rate. A slow decay rate is ideal from a systems stability perspective (assuming no large magnitude black swans). Faster elevates risk. Unless, perhaps, you go really fast. I would expect the continuation of slow burn as long as possible…and then a large step function. Possibly natural, but potentially a planned and executed one.

As an Owner why would you want to bother with 7 billion very upset, unwashed souls? Perhaps if you transitioned quickly enough, you might be able to maintain some key elements of the Machine. At least on paper or in your mind. It's only business after all.