The Death Spiral

I.

The Death Spiral: aviators’ nemesis. Many a flyboy has bitten terra firma due to the dynamics of positive feedback, where more control input, intended to halt the earthward helix, results in more spin, not less. What are needed are counter-intuitive control inputs. Also evident is that some aircraft designs are peculiarly prone to such life-terminating nonlinearities.

The US Navy’s Grumman-built F-14 Tomcat fighter plane was prone to a similar problem, known as a flat spin. Initiated by an engine flameout that translated unbalanced thrust into unintended yaw, once in such a spin the control surfaces operated less efficiently due to lack of proper airflow. Numerous pilots lost their lives, until techniques were developed, and implemented throughout the fleet, to counteract the aircraft’s tendency to obey Newton’s Third Law.

II.

I was pondering the phenomenon of the Death Spiral, self-propagating through the effects of positive feedback, as I was reading the news of massive layoffs across the entire economy. The pundits are prolific in their examination of “where the bottom might lie,” meanwhile massive government debt-spending is multiplied, as “bail-out” packages are implemented, causing the printing of more paper currency and increasing short-term debt loans, principally from Asia, which further devalues US currency and massively increases federal debt. The Death Spiral.

As the economy collapses, businesses utilize classic management techniques of workforce reduction, resulting in massive unemployment. The unemployed are therefore no longer able to continue their lifestyle of consumer spending, thus retail revenue plummets, further impacting the industries that market their products and services to the masses. The Death Spiral.

The so-called “safety net,” intended to provide a base level of sustenance to those in economic peril, is as mythological as is the notion of the “popular vote” in federal elections. Our constitution, that archaic parchment of moldering quaintness, demands an Electoral College method of Presidential election. Hence, there is no “popular vote,” nor an official federal tabulation of such a statistic. Similarly, the notion of a social safety net is as intangible as are the jobs that the needy require, and the solvency of the Social Security fund that they expect. The right to pursue happiness has been denied us.

What appears to be certain to this observer is that the Global Economic Death Spiral will continue, despite the best efforts of governments to “pull us out” of impending doom, because conventional control inputs serve to merely propagate the effect. Positive feedback.

III.

As has been noted, some aircraft are more sensitive than others to this Death Spiral Effect; so too are global economies. The question before us is that of the viability of Global Capitalism as a sustainable economic model. It is no mere coincidence that the rise of Global Capitalism, and its consequent effect upon both socialism and democracy, occurred simultaneously with the policy and regulatory relaxations that brought about the banking crisis. A layman’s observation of these effects would conclude that the two are inseparable; merely two sides of the same historic trend.

Just as Global Capitalism fundamentally compromised classic models of socialism – witness the People’s Republic of China being the single largest supply-side provider to the world’s consumer economy – so too did classic principles of democracy suffer under the onslaught of corporate entities which, emboldened by the privilege of legal personhood but absent the responsibility of citizenship, embarked upon campaigns to alter government labor, tax and regulatory policies in favor of a corporate oligarchy. The result is that, as we stand on the precipice of unimaginable economic uncertainty, the citizenry lack the basic privilege of bankruptcy laws that protect corporate entities, the de facto supra-citizen. In this era of unprecedented levels of corporate bailouts we expect the individual citizen will be the one doing the bailing; meanwhile the leaky boat continues to founder. And we, in steerage, lack the privilege afforded those who have already been assigned a lifeboat.

IV.

What are needed are non-intuitive control inputs. Sever the cycle of positive feedback. Corporations, the employers to the citizenry, need to take the holistic view. There are not many Walmarts in Bangladesh or Chad or The Congo. And for good reason: just as a rising tide floats all boats, neither can a vessel stay afloat in a muddy quagmire. Having taken the helm of the global ship, corporations have yet to see their responsibility as that of leadership. History will prove that the corporate entity has now displaced government as de facto leader of the global economy, yet their vision appears to remain in the past. They will not survive, and neither will our prosperity, unless they see their responsibility as that of ensuring adequate employment. Employment yields affluence, which drives economic growth, which feeds the Corporate State. Yet the responsibility of the corporation does not end there. The ecological infrastructure is also critical for the long-term sustenance of the Global Corporate State; hence renewed vision will be required, driven not by outside government-led or populist-centered environmentalism, but by mere self-interest. A collapsing global environment is bad for business.

Governments are in denial, for they are under the antiquated misconception that the State, as a tangible representation of the theory of civil government, remains in power and control, and that corporations are mere agencies of the “private sector.” They have missed the baton pass, for the demise of the Soviet Union did not happen in an historic vacuum. Both the centralized model of socialism and the individualized, distributed model of self-government called democracy have been fundamentally compromised. Their era is passed, has gone. The global corporate oligarchy now reigns; yet they remain fundamentally in total denial to their collective responsibility.

V.

As we go forward, we will require a hybridization of classic government policy with corporate competitiveness, in order for the Global Economic Death Spiral to be halted. Business, in its traditional model, is intrinsically ill-suited for the responsibility of civil government; so too is government, in its traditional model, ill-suited for ensuring the economic prosperity of the masses; especially when governments no longer hold the reigns of power within the global economy. An election has happened, the reigns of power have been passed, and most have missed the event completely. I’m not referring to the recent US Presidential election, but instead to a fundamental alteration in the way that economies are regulated. The perpetrators of this revolution, motivated by the baser instincts of greed, have failed to see the consequences, and responsibility, of their success. The top-hatted capitalists continue to fiddle while Rome burns.