Radical Self-Reliance in the New Economy

What if the economy isn?t turning the corner? What if the ?Great Recession? wasn?t a recession at all, but the early stage of a longer term economic devolution?

I consider this as more than a reasonable possibility. As much as we might cling to the notion of ?business as usual?, the history books tell us that long term cycles are periodically broken by the onset of a new eras. The fall of the Roman Empire was one such turn; the onset of the Industrial Revolution was another. Closer to our own time and place were the Civil War and the Great Depression. All of these events changed not only the rules of the game, but also the way the majority of people lived. And they were hardly isolated incidents.

I?ve read Survival+, Structuring Prosperity for Yourself and the Nation, and strongly recommend the book to anyone who has a sense that things aren’t what they seem to be. The book was written by author and website host Charles Hugh Smith, who spells out the ?Great Transformation? that we may well have entered already. The evidence to support his claim isn?t hard to find.

Making the case for the Great Transformation

Charles outlines a substantial range of stresses in the economy which are already underway and thus beyond our collective ability to reverse, including:

  • A contracting middle class. The socio-economic backbone of the economy is under pressure from an ever increasing cost of living, shrinking job opportunities.
  • The end of cheap energy. The economy has been built on cheap energy, but new sources are increasingly coming at higher cost?deep sea oil drilling and tar sands conversion being prominent examples.
  • Unsustainable levels of credit. People, businesses and governments have been increasing debt levels to cope with income stagnation, and debt levels are rising to unsustainable levels. Student loan debt is only the most recent example of yet another credit bubble.
  • The United States is a high cost economy. We are increasingly unable to compete successfully with lower cost countries in an expanding global market.
  • A media culture which feeds a state of permanent adolescence and denial.
  • Unrelenting healthcare costs, growing at 2-3 times the rate of economic growth on average.
  • An aging population with its attendant pension and healthcare costs.
  • A badly overextended public sector. At all levels, government is swamped with public demands to spend money it doesn?t have to solve every societal or economic ill.
  • An increasingly unfathomable web of complexity at all levels of the economic system: ?the unspoken idea that things are too complex to modify in any meaningful way?.
  • A population largely disengaged from the political process and the true issues by diversion into ?low level conflict and anxiety by the media?

The list reads like doom-and-gloom, but most of these problems are growing faster than the general economy, a trend which even an optimist must admit cannot be sustained.

Structuring Radical Self-Reliance and a New Form of Prosperity

Charles contends that our problems have grown so enormous that ?the system will not reform itself? and that change will be forced on us by circumstances rather than engineered into existence by popular choice.

In Part Two of the book he outlines what we need to do as individuals in order to live prosperous lives and to lead the nation into a world with a very different set of parameters than what we?ve known in the past.

He makes reference to what he calls The Remnant, the very small percentage of the population who see the changes coming and who adjust strategy and tactics consistent with the new reality. It is that small group?no more than 4% of the population?who will emerge and lead a reluctant population into world which has great potential to be better than any we?ve known to date.

He recommends ?radical self-reliance??accepting the end of the Savior State and taking personal responsibility for your own health, livelihood, education, energy, food, retirement and pursuit of happiness?, suggesting the following:

  1. Turn off your TV (and it?s myriad influences) and start experiencing real life
  2. Develop multiple income sources; have a back up skill, trade or income source
  3. Diversify, counterbalance and be flexible and opportunistic with investments (?when gasoline is cheap, buy a futures contract?) ? no single investment vehicle will work in all environments
  4. There is no security, always have a Plan B
  5. Democracy requires active engagement; participate beyond voting by serving on committees and contacting representatives at the local level where our actions can make a real difference
  6. Adopt a radical savings strategy?live beneath your means, develop independent income sources and save as much as 50% of your income
  7. Lead a ?low cost/low debt lifestyle? which will afford the ability to be flexible and mobile as circumstances require
  8. Cultivate close ties with community and network sources for both business and social interaction

His concept of ?hybrid work? has immediate value. It?s described as ??one finger in the wage economy, one in growing food (no matter how little), another in creative pursuits, another in (for example) trading childcare for eldercare, another in hedging/investing to preserve purchasing power, another in helping to develop locally owned distributed energy as either a technical innovator?investor or provider of labor (local enterprise)??

These tactics would work well in any economy, but would certainly have greater relevance in an economy marked by rolling recessions or worse.

Not a Doomsday or Survivalist Scenario

Critics may argue that this is just another doomsday book, looking to sensationalize the nations problems for personal profit, but the degree to which Charles makes the case that a transformation of major proportions is indeed underway is hard to dismiss.

Others may confuse the word ?Survival? in the title as synonymous with survivalist, which is categorically untrue. He devotes a significant amount of ink to explaining why any survivalist strategy is an empty venture. On page 62 he addresses the survivalist cults with the following?

?Another enduring myth of the American culture is ?living off the land?.? Many of my correspondents who hunt and fish report that when discussions of financial hardship arise, many of their acquaintances say they will simply bag some deer and go fishing to feed their families. Sadly, what was possible in the remote, largely un-populated America of the distant past is not possible for a nation of dwindling wilderness and 300 million mouths to feed.?

His emphasis on the need for reliance on family, community and networks runs completely counter to the ?go it alone? credo of the survivalist movement.

Smith spends a great deal of the book making the case for the Great Transformation. And well he should?with the recent rise in the stock market, the media and much of the population have already relegated the Great Recession to a serious but typical cyclical downturn from which we have emerged stronger and richer than ever. The case against this viewpoint cannot be accomplished in a few words.

This is the view of the economy that I have. The last recession was unlike any we?ve seen in a human lifetime. It was not caused by an energy shortage, terrorist act or a spike in interest rates, but by the sudden slowing of an economy running into a wall of structural stresses. There is no evidence that those stresses have been corrected in any material way.

The current celebration over the dramatic rise in stocks since 2009 and in reaction to various metrics showing firming in certain areas of the economy may be causing people to slip back into their more comfortable and familiar pre-recessionary practices, and I think this book sounds an alarm to look deeper and more critically at where we are and where we’re heading based on the trends.

What?s your take? Is the Great Recession over, or is it actually a part of a longer term trend, like the Great Transformation? And if so, how should we be preparing for it?

17 Responses to Radical Self-Reliance in the New Economy

  1. With the exception of #5, political involvement, we’ve been living the Structuring Prosperity strategies outlined for the past 3 years. Our quest is to be radically self reliant. The results, and eye opening nature of this life, have changed us forever.

    Hedge your bets. Give yourself a time limit that you will live as a radically self reliant person/family. If longer term economic devolution isn’t really happening, then the worst case is that you and your family will emerge with a unbelievably strong economic base.

  2. Interesting point. I think his thoughts on self-reliance are on track. The recession has caused folks to do their own thing or at least think about self-employment more. I am betting a new wave of small businesses are going to arise from this recession.

  3. Sailboat Family – the term radically self-reliant sounds revolutionary, but that’s only because society wide we’ve become dependent on the notion that “they” should do something about this or that problem. When we realize that “they” is us, we’re back into reality. We may not be able to change the big picture, but millions of individuals behaving more responsibly will produce immediate benefits to the individuals, and eventually, to the whole nation. I think that’s the basic point of the book.

    Ken – I’m in full agreement on self employment. Millions of jobs have been disappearing even before the recession, due to globalization and technology advances alone. We will probably need to go back to being a “nation of shop keepers” once again, as opposed to relying on a big company to give us a job.

  4. Sounds like an interesting book. I like all his ideas. I think investing into relationships, developing multiple income sources, learning to be content, living below your means and getting involved in the community for the betterment of the city is really sound advice.

  5. Jason – Excellent point. We tend to invest a lot of time looking for “the formula” to success in life, as though it’s some exotic, yet-to-be-discovered program that will magically transform our lives over night. In reality, it’s more basic than that, but basic isn’t always as exciting. Yet there really is no other way.

  6. I’ve been agreeing with this all along, especially for the U.S. – and especially the part about Americans weaning themselves off mass media. The media presence in the U.S. is so claustrophobic that not having a TV is practically a big political statement. Personally, it’s hard to imagine any conversation more vapid than what is going on with Conan or Leno. It’s even worse than the whole TV football sideshow. Wake up to the real world – and know that there are many worlds with different logics and economies outside the U.S., too (ie., capitalism can work in many different ways) – many will prosper and most are diversifying trade away from the U.S. because everyone can see the elephant in the room.

  7. Money Energy – “it?s hard to imagine any conversation more vapid than what is going on with Conan or Leno”–get the book (!), the author discusses this topic at length. He believes that people are being diverted away from reality by the media, and by entertainment based news passing as critical editorial.

    Personally, I think our fixation with being entertained 24/7 is affecting our grip on reality and our ability to discern the truth. Turning off the TV is no small step back to the real world.

  8. @Kevin – exactly. Which is why I’m not up to date on whatever is the latest Leno/Conan news:) I don’t own a TV and I encourage everyone to NOT watch these programs – it’s awful enough that they’ve got them blaring out even at the gym – it would be nice not to have all the distractions everywhere all the time. Noise, ads, radios – people just have to have their own iPod just to get away and soon everyone’s floating in their own bubbles.

  9. Many will prosper and most are diversifying trade away from the U.S. because everyone can see the elephant in the room.the trade is important one also.

  10. The recession is not over, but I don’t think it will be as doomsday as people say it will. With that being said, the fundamentals you mentioned are awesome suggestions for self-reliance and preservation of personal freedom.

    We do need more engaged local communities and government and less federal legislation and control.

    Why don’t we drill more in North Dakota. There is more oil there than in Saudi Arabia 3x over.

  11. Dustin – I’ve heard about the oil in North Dakota. I’m no energy expert, but from what I’ve read it isn’t nearly as accessible as the oil in Saudi Arabia. Apparently drilling must be done through thick rock and at extreme angles.

    One of the points Charles Smith makes in the book and on his blog is that what we’re experiencing is the end of EASY oil, more than and end of oil in general. There may be plenty of oil in the ground–somewhere–but that somewhere is getting more difficult and expensive to access.

  12. The “great recession” will become a “great depression” if the bush tax cuts aren’t extended. With small and large businesses getting a massive tax increase and the “rich” taxpayers who pay 90% of the taxes to the government taxed heavier, we will enter a depression, wait and see.

    The only good news is that the dollar is so deflated that it will be worth more when we come out of the recession with greater buying power.

    I only mention North Dakota because a guy I know has mineral rights there and they are beginning to drill on his land, yes the have to fracture the rock with water pressure but the technology has gotten so much cheaper to allow for drilling to be reasonable. Natural resources are available and plentiful.

  13. Dustin – My own feeling is that we’re already well into a major transformation, one that won’t be named until years after the fact.

    Globalization and technology are rendering many jobs and industries obsolete. What isn’t clear is how the masses will find employment/income in the wake of this change. There don’t seem to be any major growth industries in existence or on the horizon to fill the economy with living wage jobs.

    This is why I wrote a post on Survival+; I think the time has come for us to face up to a new reality. We like to believe that life will be like it always has, but at various times in history, circumstances took major turns and changed life as it was known. I think we’re in just such a moment now.

  14. The economy won’t have recovered until the workforce participation rate is radically elevated from the current figures. You can’t rely on unemployment figures because they are creatively manipulated so that they are usually outright lies. I’m at the point of not believing anything that comes out of this administration’s mouth.

  15. Hi Kathy – You’re one of the few people who are aware of the workforce participation rate, as well as how low it is, and how important it is. Everyone looks at that carefully scrubbed unemployment rate, and declares that all is well with the world. But it ignores the tens of millions of people who have dropped out of the workforce. Meanwhile, everyone I know who’s looking for a job is reporting difficulty (usually much lower pay levels than what they’re now making and fierce competition), which is more consistent with the low workforce participation rate than it is with the rosy unemployment figure.

    This article from CBS News reported in September of 2014 the workforce participation rate at 62.8% was the lowest in over 36 years (going all the way back to 1978), and counts more than 92 million people. There’s a massive disconnect somewhere. I think that millions of people in their 20s and 50s/60s have dropped out of the job hunt and have found a way to survive “off the radar” so to speak.

  16. What people don’t umderstand is we are actually returning to a normal way of living! The industrial revolution changed the way that people and societies existed for centuries.

    We lived in small villages and communities for the most part. Many times your business was below or in front of your house. You actually knew the other people you did business with, went to church with them and sometimes even married them!

    Many people never traveled more than 50 milesform their birthplace in their whole life. Now it’s normal to go that far just to have dinner served by people who care less about you than you care about them.

    I have made an effort to simplify and downsize. Moved in with my daughter to help with babysitting and the garden. Haven’t owned a car for 10 years and couldn’t go back if I wanted. Got rid of most of the stuff I owned, but kept the hand tools!

    We are gonna return to those times I believe whether we like it or not. I’m getting too old to really make much of a difference but maybe I can show my grandsons a better way.

  17. You’re preaching to the choir with me Ric! I’ve believed for a while that society and the economy are now unraveling from the Industrial Revolution, and returning to the more normal patterns of existence in history. The economic dislocations we’re seeing are mostly due to the status quo trying desperately to hold onto their power and prestige. But as the industrial order continues to break down, we’re likely to see a return to the past. I think we’ll be seeing a rise in small business (21st century cottage industry based largely on the internet), fewer full-time jobs, a crash in tax revenues and government services, household consolidations (like you moving in with your daughter), fewer cars per household, and less consumerism in general.

    On the positive side, I think we’re going to see the return in the primacy of the family unit, the community, and even the church, as society increasingly goes local. We’re also likely to see greater self-reliance, greater economic self-reliance, safer neighborhoods and more time to just live life.

    And I don’t know if this would be seen as a positive or a negative, I think that full-blown retirement is likely to go away. It will be replaced by slowing down and semi-retiring more than anything else. In a more self-reliant world, there’ll be more work to do, and less desire to “check out”.

    Just my thoughts, and it looks like you’re already there in a lot of ways.

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