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The Future Is Smaller - That's The Only Way This Works

Tyler Durden's picture




 

Submitted by Simon Black of Sovereign Man blog,

Leopold Kohr was a rather obscure Austrian economist from the early 20th century who spent the better part of his career railing against the ‘cult of bigness’.

Kohr’s fundamental premise was simple: Big doesn’t work. Big corporations. Big governments. Big countries. There are just too many problems from size.

Think about ancient Rome. As the empire expanded, Rome’s imperial government had to create layers and layers of bureaucracies. Municipal levels, provincial levels, regional levels, etc.

They had to maintain a massive standing army to secure their constantly-growing borders. Tax collection was a nightmare. Infrastructure constantly needed expansion and maintenance.

It was all so costly, and absolutely required that Rome run an unwieldy, behemoth government.

History tells us that large governments almost invariably lead to waste, corruption, and overextension of power. It’s the large governments that rattle the sabers and constantly threaten warfare.

It’s large governments that maintain police states, that spy on their citizens, and commandeer nearly every personal choice imaginable with regulatory agencies that tell us how to educate our children and what we can/cannot put in our own bodies.

As Kohr theorized, bigness often leads to tyranny.

Moreover, it all ends up costing far more than a nation can afford… which is why big governments historically rack up even bigger debts.

Most of today’s big, established ‘rich’ countries are in exactly the same boat that Kohn predicted: heavily in debt. Militant. Aggressive. Tyrannical.

If you look at the more financially successful nations today, i.e. those with solvent governments who do not indebt future generations to drop bombs by remote control drones, they’re nearly all small.

Hong Kong has some of the lowest tax rates in the world. And yet the local government is awash with so much cash that they frequently send tax refunds back to local residents.

Singapore is in a similar position; the city-state has zero net debt, a strong defense force, incredibly low tax rates… yet they still manage to funnel excess tax revenues back into the economy, often as tax breaks or business incentives.

Here in Andorra is another example.

The personal income tax hasn’t even been implemented yet, but it technically only goes as high as 10%. Local property taxes are a joke– a friend was telling me she pays 70 euros a year to the local municipality.

Corporate income tax tops out at 10%. There are no estate or inheritance taxes. No wealth tax. No capital gains tax.

Yet this place remains one of the most civilized counties on the planet, and is tremendously affordable to boot.

(It doesn’t hurt that Andorra is gorgeous– postcard perfect. And it gets about 300 days of sunshine per year with some of the best skiing a human being could possibly ask for.)

Smallness is one of the key reasons why these places thrive.

The Andorran government would never be able to afford some massive police state or wage wars in foreign lands. They can’t afford bureaucratic regulatory agencies or obscene surveillance programs.

And the place is way too small for politicians to be able to hide. If the Prime Minister does something stupid, he’ll have 20 neighbors standing in his front yard the next morning taking him to task for his incompetence.

Large countries lack this sense of community and accountability. Everything gets lost in the bureaucracy and size.

It’s this very size now that is causing many of the largest economies in the world to collapse under their own weight.

In fact, all over Europe we’re seeing independence movements, from Scotland to Catalonia. There’s even been serious discussion raised about breaking California apart into six separate states.

This seems radical to most people. But when you look at the evidence objectively, smaller is about the only way an organized state can really work.

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Wed, 07/23/2014 - 13:10 | 4993691 hedgeless_horseman
hedgeless_horseman's picture

 

 

Leopold Kohr was a rather obscure Austrian economist from the early 20th century who spent the better part of his career railing against the ‘cult of bigness’.

Obscure indeed.  It sounds like Simon read Dmitry Orlov's The Five Stages of Collapse

Good book. 

Wed, 07/23/2014 - 13:10 | 4993735 Newsboy
Newsboy's picture

It takes more and more resources to support higher levels of organization.

As resource availability falls off, the higher levels collapse down to what is stable and supportable, which is usually a lot smaller and more local.

Wed, 07/23/2014 - 13:13 | 4993758 AnAnonymous
AnAnonymous's picture

That is a very bold claim to make and a very long time before checking.

Concentration of wealth has a long way to go and ensure that various layers are as numerous or even more numerous.

Wed, 07/23/2014 - 13:23 | 4993814 Davalicious
Davalicious's picture

"Kohr’s fundamental premise was simple: Big doesn’t work. Big corporations. Big governments. Big countries. There are just too many problems from size."

We spent the last couple of hundred years with Jews in control of our money, media and politics. This is the first order of business.

 

Wed, 07/23/2014 - 13:34 | 4993885 toady
toady's picture

Damn Joooooooooooos!

Wed, 07/23/2014 - 15:28 | 4994543 Pool Shark
Pool Shark's picture

 

 

"It’s the large governments that rattle the sabers and constantly threaten warfare."

Try telling that to:

Kim Jong Un

Idi Amin

Ayatollah Ruhollah Khomeini

Yasser Arafat

Nicolae Ceausescu

etc...

 

Wed, 07/23/2014 - 16:19 | 4994806 cougar_w
cougar_w's picture

Good point.

The comment would have been true of the 1800's and early 1900's. Not so much so now. But the recent changes in who causes wars was noticed several decades ago when the US Strategic Command (IIRC) predicted there would be significant changes in warfare in the coming decades as conflicts became regional, smaller in scale and shorter in duration, and more likely insurgent-based. And they were right.

Not that it mattered, notice. Seems we're still fighting the Cold War.

Mon, 08/04/2014 - 14:05 | 5044763 zaqqazaq
zaqqazaq's picture

You make a weak case. Check the facts.

Idi Amin was more of a bloody, corrupt dictator and less of a constant threat to other countries. He was a peon on the international chessboard and many of his actions can be traced back to superpowers (he was a tool used by the BIG powers of the day and therefore he is actually a good example pro Kohr theory).

Khomeini was a dictator as well and Iran is not quite a small state. History can explain some of his actions. You have to understand that many forces are at play concomitantly. Kohr "effect" is not a theory that explains everything. Is just a high altitude perspective, a high level model.

Arafat was basically in a defense stance. I am not sure why he is on your list.

Ceausescu was a dictator and he never threaten the peace with other nations. He was a disaster for Romania but his external policy was one of peace. Even the disastrous effect that his dictatorship had on Romanian people was not of his making. He was imposed by a supranational huge structure (Warsaw treaty and Communism regime imposed by USSR).

Kim Jong Un might be the only one that fits your thesis but he is a special case given the Korean war and the atomic bomb. Any rule has exceptions. He might be the exception.

IMO Kohr theory is validated by historical facts and especially by the present events.

 

 

 

Wed, 07/23/2014 - 16:10 | 4994762 cougar_w
cougar_w's picture

Thermodynamics does not restrict localized, temporary concentrations of energy within a whole system -- and the same observation applies to money, since money is energy. However in the absence of energy inputs the entire system will tend toward greater disorder as a whole.

When we talk about "wealth disparities" emerging within economic systems during collapse that is another way of saying the same thing. When we note that wages are stagnant unless you are a CEO in which case wages are up 1000% -- even as unemployment is off the charts -- that is another way of saying the same thing.

So we are already in the death spiral of low-energy entropic collapse. The movement of money within the whole system is a function of artificial measures, which themselves devour money and energy both, driving everything else even faster toward increasing entropic levels and overall decreasing energy and monetary resources.

Note that in the first sentence I used the word "temporary". If it helps, you can look at violent revolution and wealth confiscation and redistribution as handmaidens accompanying the heat death of the global economy. Because in the end, entropy wins. It's just how the universe operates.

Wed, 07/23/2014 - 13:29 | 4993860 chunga
chunga's picture

I've been lobbying Tyler to give Orlov a contributor account. Dmitry is game but Tyler doesn't respond. 

Wed, 07/23/2014 - 13:48 | 4993971 Citxmech
Citxmech's picture

I, for one, would LOVE to see Dimitry post here.

Wed, 07/23/2014 - 13:48 | 4993972 Mad Max
Mad Max's picture

ZH has changed over time.  Orlov is a contributor at TBP and probably other places.

Wed, 07/23/2014 - 14:02 | 4994059 chunga
chunga's picture

I thought "Reinventing Collapse" was terrific.

Wed, 07/23/2014 - 14:11 | 4994103 Citxmech
Citxmech's picture

Dimitry is one of those rare authors who can articulate his actual experiences effectively, putting a human face on what the big picture will actually look and feel like from the ground giving us all some much needed perspective.  Some others in the same vein are FerFAL and Selco.  

Wed, 07/23/2014 - 13:48 | 4993974 PTR
PTR's picture

Good book. 

FANTASTIC book.

Fixed your post.  =)

Wed, 07/23/2014 - 13:56 | 4994033 Duffy
Duffy's picture

hedgeless - very good stuff...

 

also check out John Michael Greer, different but...related.  I'm not sure if there's anything like a consensus, just as a for example, not to litigate it, on peak oil, but he's worth reading  (I'm one of those good folks who figure the Saudis aren't spending $ to drill off shore because they're still finding easy paydirt - but sure, maybe the earth makes it constantly and everything's fne...sigh}

 

~~~

The End of Employment

Nothing is easier, as the Long Descent begins to pick up speed around us, than giving in to despair—and nothing is more pointless. Those of us who are alive today are faced with the hugely demanding task of coping with the consequences of industrial civilization’s decline and fall, and saving as many as possible of the best achievements of the last few centuries so that they can cushion the descent and enrich the human societies of the far future.  That won’t be easy; so?  The same challenge has been faced many times before, and quite often it’s been faced with relative success.

The circumstances of the present case are in some ways more difficult than past equivalents, to be sure, but the tools and the knowledge base available to cope with them are almost incomparably greater. All in all, factoring in the greater challenges and the greater resources, it’s probably fair to suggest that the challenge of our time is about on a par with other eras of decline and fall.  The only question that still remains to be settled is how many of the people who are awake to the imminence of crisis will rise to the challenge, and how many will fail to do so.

The suicide of peak oil writer Mike Ruppert two days ago puts a bit of additional emphasis on that last point. I never met Ruppert, though we corresponded back in the days when his “From The Wilderness” website was one of the few places on the internet that paid any attention at all to peak oil, and I don’t claim to know what personal demons drove him to put a bullet through his brain. Over the last eight years, though, as the project of this blog has brought me into contact with more and more people who are grappling with the predicament of our time, I’ve met a great many people whose plans for dealing with a postpeak world amount to much the same thing.  Some of them are quite forthright about it, which at least has the virtue of honesty.  Rather more of them conceal the starkness of that choice behind a variety of convenient evasions, the insistence that we’re all going to die soon anyway being far and away the most popular of these just now.

....  ....  http://www.resilience.org/stories/2014-04-16/the-end-of-employment

 

Wed, 07/23/2014 - 15:10 | 4994443 Raging Debate
Raging Debate's picture

Hedgless - Didn't read the book but know about Orlov. Brilliant man. Engineer, scientists. An interesting correlation between people with mood disorders such as Edison, Einstein and Orlov. A little off topic but perhaps useful for readers:

I did research that I haven't seen published yet.
I found many have/had digestive disorders also. If your not absorbing minerals or metabolizing them you'll lack chemicals to the brain (pyschiatry operates on correlations NOT causation, they suck).

I you lack certain chemicals, the body will release adreniline in it's stead which increases beta brain waves. The downside is irritability or other mood disorders. Half of the best actors and musicians are bi-polar. I recommend seeing an MD first before pyschiatry to identify causation and get immediate relief from panic attacks or major depression.

I have an anxiety disorder caused by Diverticulitis. Knowing the cause allowed me to supplement, be on low dose meds but still amp out a bit when solving complex problems. A strong probiotic and B3 with a few eating habit changes made a big difference in only needed light meds and avoiding zombification.

Wed, 07/23/2014 - 15:11 | 4994451 doctor10
doctor10's picture

The task of the present American generation is the dismantling of fascist corporatocracy that the American Republic has evolved into.

The 21st century America has become a liability to the world, while the 19th century America was the world's greatest asset

Wed, 07/23/2014 - 13:03 | 4993699 q99x2
q99x2's picture

They probably have a small shoe size too.

Wed, 07/23/2014 - 13:06 | 4993709 fonzannoon
fonzannoon's picture

The future is definitely smaller

http://www.cbsnews.com/news/inside-the-tiny-house-movement-how-one-woman...

""The thing that was most missing in that American dream was a sense of being relaxed in my life," she said."

"These days, Williams said her utilities cost about $8 a month.

"Tiny houses are really cute, they're like puppies or ducklings? They're like the small version of the large thing," she said."

Wed, 07/23/2014 - 13:22 | 4993727 lordylord
lordylord's picture

Big governments are great at stealing and murdering which is their intended purpose.  Let's not complicate things.

Wed, 07/23/2014 - 13:24 | 4993821 JohnG
JohnG's picture

 

 

Looks like a closet, not sure if even my wifes vast shoe collection would fit in there....

http://www.phespirit.info/montypython/four_yorkshiremen.htm

 

Wed, 07/23/2014 - 13:06 | 4993714 buzzsaw99
buzzsaw99's picture

The NSA head has tiny hands. That should count for something.

Wed, 07/23/2014 - 13:07 | 4993718 FecundaGoat
FecundaGoat's picture

I've got my wife convinced that smaller is better....This must be true!!

Wed, 07/23/2014 - 13:11 | 4993724 NOTaREALmerican
NOTaREALmerican's picture

The problem with economists is too many of them have morality OCD.    Big DOES work.   It works because the most fit members of society win MORE.    Consolidating power always allows the bullshit creators to get a BIGGER percentage of the loot from the organization made BIGGER.

Human behavior makes no sense if you listen to the economist with morality OCD.  

Wed, 07/23/2014 - 13:17 | 4993788 CH1
CH1's picture

Big ALWAYS collapses in the end... after it bleeds millions dry.

Terribly sad that people still obey these thugs.

Wed, 07/23/2014 - 13:22 | 4993813 NOTaREALmerican
NOTaREALmerican's picture

Yeah,  I'm not saying BIG is best long-term.  BIG is only best for short-term thinking chimpanzee like humans.

Re:  Terribly sad that people still obey these thugs.

The "thugs" are simply the BEST at creating bullshit.   The human brain is designed to create/process stories.   Conflicting realities are possible when the brain creates or believes bullshit reconciling the realities.      They don't stand a chance when confronted with skilled bullshit creator; the bullshit goes right into their brain and they are rendered inoperative.    Most humans are just easily manipulated near-automatons.

Wed, 07/23/2014 - 13:33 | 4993884 A Nanny Moose
A Nanny Moose's picture

We may be lucky, if being bled dry ends up being the worst of our problems. I hope I am 100% wrong.

Wed, 07/23/2014 - 13:09 | 4993728 freeasabee1
freeasabee1's picture

its all horse shit, burn everything

Wed, 07/23/2014 - 13:09 | 4993729 1stepcloser
1stepcloser's picture

Thats what I've been telling my wife about my junk for years

Wed, 07/23/2014 - 13:11 | 4993744 AnAnonymous
AnAnonymous's picture

Hong Kong and Singapore not running a police state... It takes an 'american' to spur that sort of stuff.

Singapore, the place that is having troubles with chewing gums?

Wed, 07/23/2014 - 13:19 | 4993799 cougar_w
cougar_w's picture

Singapore is probably the world's most highly structured police state. It is so successful at this, you don't even notice.

Wed, 07/23/2014 - 14:35 | 4994242 Thought Processor
Thought Processor's picture

 

 

True.  Plus it's tiny with extrordinary levels of wealth due to an early plan to attract capital and those that may want to come with it.

 

It may seem free with regard to capitalism, other than that it's a very restrictive country.

Wed, 07/23/2014 - 13:32 | 4993870 HastaLaVictoria...
HastaLaVictoriaSiempre's picture

It's easier to control spending and rein in corruption in a one-party system; HK and Singapore are "enlightened" dictatorships. The all-powerful leaders just happen to be great administrators. They also have much less to administer in terms of territory and population. It's impossible to compare those to the US or European countries.

 

Wed, 07/23/2014 - 13:11 | 4993745 SheepDog-One
SheepDog-One's picture

The 'no shit,Sherlock' article of the day.

Wed, 07/23/2014 - 13:18 | 4993792 ZerOhead
ZerOhead's picture

And unfortunately you can't get to there from here.

The debt will simply not go away on it's own and neither will the police state.

Wed, 07/23/2014 - 13:14 | 4993760 GAILLARD1
GAILLARD1's picture

Nothing but the truth,

Everyone takes care of his business, once in charge you don't manage your money... Then you care less... From here to worse. But what's the most disgusting it is that the human solidarity disapears... Big is hell, small is family, community, warmth, understanding...  NWO then a total nonsense

 

 

Wed, 07/23/2014 - 13:17 | 4993790 NOTaREALmerican
NOTaREALmerican's picture

Re:  NWO then a total nonsense

Except for the top 10%, and their DNA bling, who are winning the game.   Life is a survivor game.   The most fit don't play by any rules other than:  whatever it takes.   Apparently,  people like to say: winning isn't everything, it's the ONLY thing.   But, only SOME people actually believe it.  

Wed, 07/23/2014 - 13:27 | 4993846 GAILLARD1
GAILLARD1's picture

Life is a survivor game.. 

 

Read Kropotkine, check around you. Without mutual aid... no humanity.. No life. Your point is SM* to me

You are a real american... I'm not

 

 

* super moron 

Wed, 07/23/2014 - 13:33 | 4993865 NOTaREALmerican
NOTaREALmerican's picture

Re:  check around you. Without mutual aid... no humanity

Define humanity.

THEN, check around yourself.   Are the smartest-n-savvies people, the MOST fit members of society, human?  

Your point is CL* to me.

 

* Child like. 

Wed, 07/23/2014 - 13:43 | 4993949 AnAnonymous
AnAnonymous's picture

Humanity:people endowed with human rights; If you have no rights, that is because you are not a human being.

Signed: an American.

Wed, 07/23/2014 - 13:15 | 4993761 pathetic looser
pathetic looser's picture

size matters !

Wed, 07/23/2014 - 13:18 | 4993789 cougar_w
cougar_w's picture

Smaller isn't only better -- it's the law.

You can only have large and complex organizations when you have large energy inputs. The laws of thermodynamics require that as energy inputs decrease overall entropy increases. In systems, entropy is expressed as disorder. Without continuous high inputs of organized energy your highly organized complex system becomes increasingly dis-ordered until it breaks into small units of reduced connectivity, in alignment with the overall energy level of the entire system of parts.

At the lowest energy input levels, you have no "organized system" at all.

Humans have been burning through a very organized and highly available energy resource for better than 300 years, but the future is not structured that way. We will head back down the energy pathway into increasingly dis-ordered systems as a simple consequence of the laws of thermodynamics. People can bitch about that all they want, and formulate all the conspiracy theories they like, but there are some things you cannot change and the invariant laws of the universe are such a set.

Wed, 07/23/2014 - 13:57 | 4994038 Citxmech
Citxmech's picture

So sayeth Dr. Tainter.  You are in very good company Coug. 

Very important message/concept here that can't be overstated.

Wed, 07/23/2014 - 15:12 | 4994459 BuddyEffed
BuddyEffed's picture

To underscore Cougs point, 

From Tullet Prebon : http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf

"One of the problems with economics is that it's practioners preach a concentration on money, whereas money is the language rather than the substance of the real economy.  Ultimately, the economy is - and always has been - a surplus energy equation, governed by the laws of thermodynamics, not those of the market."

"and the critical supply of surplus energy has been in seemingly - inexorable decline for at least three decades" 

"all goods and services on which money can be spent are the products of energy inputs either past, present, or future."

"The appreciation of the true nature of money as a tokenisation of energy also enables us to put debt into it's proper context"

"it becomes apparent that debt really amounts to a claim on future energy"

"exogenous energy inputs (overwhelmingly dominated by fossil fuels) now provides the vast majority of the energy used in the ecomony.

Wed, 07/23/2014 - 15:45 | 4994641 cougar_w
cougar_w's picture

I find it curious that nobody -- I mean, nobody -- gets this relationship. They can talk about money all day and have a dozen theories about it and how to create it and how to move it around and how to make it grow, like it's some kind of magical thing like a unicorn or some shit, but can't tell you where money comes from. And yet the 300 year run-up to the creation of the middle-class and the entire industrial revolution -- as well as almost the entire fiat banking system -- was born and came to a zenith during the age of fossil fuels.

It's not even rocket science. It's just common sense. You don't get anything for nothing, not even money.

Wed, 07/23/2014 - 16:45 | 4994925 Citxmech
Citxmech's picture

I agree completely.  Either money is a place-holder for something in the real world (stuff , work, or the promise of stuff or work) or it is just a meaningless scam.

As available energy fails to grow  exponentially money has two choices:  It will either deflate (assuming it's linked to reality) or inflate.  Of course, the fact that we have debt-based fractional reserve fiat tells you all you need to know about what the ultimate fate will be assuming no perpetual growth.

(Can people really be this God damned short-sighted?)

Wed, 07/23/2014 - 17:28 | 4995141 cougar_w
cougar_w's picture

" tells you all you need to know about what the ultimate fate will be"

I think I know where that line is headed, but would you care to elaborate? I'm curious to hear your take on that, it really is the chasm just ahead of us.

Wed, 07/23/2014 - 19:30 | 4995652 Citxmech
Citxmech's picture

Sure.  Because the all-mighty fiat petro-dollar is debt-based - the only way for the system to continue is for there to be enough growth in the money supply to service the debt.  That's why the Fed has a "target" rate of inflation.  As soon as growth in the money supply fails to keep up - deflation kicks in - and the system slides toward default.  Of course, they will try to prolong the inevitable (again, assuming that energy supplies constrain real growth) by running the printers.  So, either we will end up with deflation leading to eventual hyper-inflation, a deflationary collapse, or some other combination of systemic cluster fuck whereby the economy ceases to function.

One of my big questions now is whether the house of cards will collapse under the current Yuan, Euro, Ruble, USD system at once, if one will rise over the USD, or if we'll get to some kind of temporary alternative basket currency, like the SDR.  Won't make too much difference though - Thermodynamics and the rules of entropy will win the day.

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