Tuesday, November 13, 2012

American Thermidor Revisited

There has been an American Thermidor:

   There has been an American Thermidor, a counter-revolution, one which is based on the way money and energy relate to one another. The key is not only oil, nor only money, nor only corporate concentration, but how each of these pushes the other along a cycle. Each one maintains the others in place. To understand how, it is important to look at the deficits that America faces.
In the wake of Barack Obama winning a second term in the White House, there is a tide, in part manufactured, in part real, that the cycle of Republican government has been broken by demographics and by personality of the President. While there are things that could be farther from the truth, this isn't particularly close to the truth. There were two theories of Obama, one that he is a progressive giant, the other that he is a liberal Reaganite. With his first order of business being a "Grand Bargain" to slash spending for a small increase in taxes on the wealthy, which theory predicts better?

A summary of the theory: increases in resources prices and static wages lead Americans to use their homes as a casino table, and use tax cuts to offset the lost income. This creates a spiral: the rich demand being richer to stay ahead of the resource barons in other countries, and this means less revenue, which means less ability to change the economy, which means that growth uses more resources, particularly oil. And it starts again. The article praise Rubin in the act of burying him: having cut the Gordian knot of spending by rolling debt to short term, he created a moment where we could have shifted the economy from physical goods to soft goods, from oil based growth, to other kinds. It was Clinton, not Bush, who failed to shift the economy, and Bush exploited that.

Obama has continued the destructive pattern: he started with a "Middle Class Tax Cut," continued with a "Payroll Tax Cut," he has done what he could to prop up housing prices, and privatize everything, shoving wealth upwards. He saved the rich, first.

Why does he do this? One road to a post-Thermidor America is to shift from the sprawlconomy, to a different kind of economy. The other is to extract resources here. The Reagan play is to bail out the rich, check, slow down the economy by austerity, coming soon, and then wait for new extraction to come on-line and bail everything out. The difference between Reagan and George W. Bush is that while Reagan wanted, not a peaceful, but a peacesque route through business, Bush's new extraction was Iraq, and required a war. An actual ground war. This horrified many Reaganites who, burned by Vietnam, wanted a peaceful, though conservative solution.

Bush swapped out waiting for bombing and invading. This is why Webb became a Democrat, and Jude a funder of anti-war causes.

Obama has gone back to the Reaganite architecture: tax cut driven bail out, slow the economy fiscally, while relying on monetary policy to keep enough people afloat, and then go back to waiting.

Oil? You're soaking in it.


  1. What's different is that we are now an net oil exporter and on track to become the number one oil producing country (larger than Saudi Arabia).

    True, there are world wide oil price levels set by global demand driven by China. But US refineries are not paying the global price, which is why eastern refineries which had shuttered can now reopen.

    It's tempting to say, "this changes everything." But how?

  2. wow, ask and ye shall receive! feel free to disregard my comment on your last post, this addresses everything.

  3. "What's different is that we are now an net oil exporter and on track to become the number one oil producing country."

    Imports: 337,840
    Exports: 3,017

    Not even close to net exporter.

    Consumption: 18,690,000 bbl/day
    Production: 9,056,000 bbl/day

    Not even close to petroleum neutral.

    What it means is fracking. Frack. Frack. Frack. Also, it isn't just the raw total, but the LCA. The LCA of American crude is going down, as measured by the sustainability price (sans carbon)

  4. As reported by Bloomberg, US production could rise to 11.1M Bbl/day by 2020 to surpass Saudi production, but based on our consumption it really doesn't look like much of a change. Will help the balance of payments a bit, and it's possible that with Canadian production North America could be energy independent for a brief time, but we will suck up that surplus like a sponge and grow the suburbs a little more till we hit the ceiling again. No way we see the sort of 1.50/gallon gas prices that some idiots are spouting.

  5. BHO talks a big game about renewable energy, but his actions are the opposite: he's propping up the extraction industry in the U.S. I was just out in central Wyoming for elk season - back in an area called "Nowood" (there's not a lot of trees there - open country) and I was stunned by the increase in oil and gas extraction. It felt like rush hour around 6am on the highway driving to our area as we shared the road with scores of well service trucks, rig welders and the like. There's a tiny 'town' called Lost Cabin - they had built a quasi apartment building there with like 10 units for the oil workers. It's not like North Dakota...yet, but it's getting there. Call it what it is: The Obama boom. -BTW, everyone out there hates Obama, natch, but they're raking in money and tax revenue from the drillers.

  6. There is indeed a resource extraction boom going on.