The Mandibles: Nobody can agree on what caused the collapse

Continuing my posts about Lionel Shriver’s The Mandibles: A Family, 2029-2047…

One of the things that seems realistic in this novel is that Americans don’t change their views on economics or politics based on new facts. When the economy collapses, therefore, each American explains it according to his or her previously held political or economic viewpoint.

Here are some excerpts:

At Barnard, having written her honors thesis on “Class, 1945–Present” had seemed daring, because Americans flattered themselves as beyond class. But that was before the fabled economic downturn that fatally coincided with her college graduation. After which, Americans talked about nothing but class.

Checking the rice, she [liberal mom] tried to remember what her weirdo son had claimed about the recrudescence of malnutrition in Africa and on the subcontinent, after both regions had made such strides. It was an outrage that the poor simply couldn’t afford to eat, she’d bemoaned to the boy [conservative teenager], when the planet had plenty of food. He’d responded obtusely, “No, it doesn’t.” He proceeded to recapitulate his great-grandfather’s tortured explanation—something like, “It only seems like there’s plenty of food. If you gave the poor more money, then the price would rise even higher, and then they still couldn’t afford it.” Which didn’t make the slightest sense. Around Willing, she should monitor her grandfather’s propaganda more closely. The old man was liberal by creed, but she’d never met anyone with money who didn’t have conservative instincts. One such instinct was to make the morally obvious (if fiscally inconvenient) seem terribly complicated. Like, rice is too costly, then give people the money to buy it. Duh.

[Keynesian economics professor talking with his therapist wife] “Sorry. I did get into an argument, with that boomerpoop Vandermire. Because, okay, the bond auction today, it’s—unfortunate. At the moment, foreign demand for US debt is low—but there are completely unrelated reasons for backing off US debt instruments in a variety of different countries that just happen to be coinciding. Here, the market is hopping; investors can find higher yields in the Dow than in dumpy Treasury securities. Interest rates aren’t likely to stay anywhere near 8.2 percent and this is probably a one-time spike. Jesus, in the 1980s, Treasury bond interest careened to over 15 percent. Bonds paid over 8 percent as recently as 1991—” “That’s not very recent.” “My point is, there’s no reason to get hysterical!” “Then don’t say that hysterically.” “Well, Vandermire is ecstatic. He loves the attention, and he’s on a high of having been supposedly right all along. ‘Unsustainable! The national debt is unsustainable!’ If I heard him say the word unsustainable one more time this afternoon I’d have punched him in the nose. The functional definition of unsustainable is that-which-is-not-sustained. If you can’t keep something up, you don’t. After all that noise twenty years ago about the deficit, the melodramatic shutdowns of government over raising the debt ceiling, and what’s happened? Nothing. At 180 percent of GDP—which Japan proved was entirely doable—the debt has been sustained. It is therefore, ipso facto, sustainable.” The trouble with being a professor is that when you pontificate for a living it’s hard to cut the crap once you get back home. Avery was used to it, though she didn’t find Lowell’s rants quite as enchanting as when they first got married.

“The Fed chief was emphatic. Krugman said the limits were for a few days, max.” [Paul Krugman is running the Fed and puts in capital controls]

[teenage son talking to liberal mom] “The government will have lots of money. But it won’t be worth anything. Which is the same as having no money.” One of her few concerns about her only child was that he inclined toward smugness. “All right. What. Since I’ve heard we need regular inflation, like at least 2 or 3 percent, my whole life.” “I know you have. You’ve been brainwashed.” He sounded so cheerful. “We could easily get along with a small, steady, predictable rate of deflation. Inflation is a tax. Money for the government. A tax that people don’t see as a tax. That’s the best kind, for politicians. But inflation isn’t inevitable. Starting in 1300, the British pound pretty much maintained its value for six hundred years. And that was during the Empire, when English people practically ruled the world.” … “Prices aren’t going up,” Willing said authoritatively. Florence snorted. “Could have fooled me!” “They have fooled you.” Willing’s stride had developed a swagger. “It’s the mistake people always make. They think things are getting more expensive. Actually, everything costs the same. Prices aren’t going up; the currency is going down.”

“They’re in a corner. They can’t borrow. They could raise taxes. But the rich already pay high taxes. And now their investments are gone. The rich aren’t rich. So the only people left to tax are people like you and Esteban. Who can’t buy cabbage. Blood from a stone, as Great Grand Man put it. What else is there to do? Photocopy the money.”

“Never forget where information comes from, puppet. I wouldn’t accept everything your great-grandfather says as gospel. He’s liberal on social issues, but wealth always pulls people to the right—because they can’t help wanting to keep it. Everyone has an agenda.”

The patriarch is the main source of family conservatism.

“Carter. I will let you in on what isn’t a secret to any housewife who’s bought a cucumber. The American dollar is worthless now not because of the rate spike, and not because of crashing on the international currency exchange, and not because of the bancor. It is worthless now because it was worthless before.” “That’s melodramatic.” “Not melodramatic—dramatic. In the hundred years following the establishment of the Federal Reserve in 1913, the dollar lost 95 percent of its value—when one of the purposes of the Fed was to safeguard the integrity of the currency. Great job, boys! Ever wonder why no one talks about millionaires anymore—why no one but a billionaire rates as rich? Because a man who had about ten grand in 1913 would be a millionaire a century later. Hell, everyone’s a millionaire these days, every halfway solvent member of the middle class. And the majority of that currency decay is historically recent. Why, the dollar lost half its value in the mere four years between 1977 and 1981.”

The academics are the ones who really go at it. Here are the boring Keynesian professor and his exciting Thomas Piketty-like colleague at a dinner party:

“Morally, your money does belong to everybody,” Ryan said. “The creation of capital requires the whole apparatus of the state to protect property rights, including intellectual property. Private enterprise is dependent on the nation as a whole for an educated workforce, transportation networks, and social order. No country, no fortune.”

“I’ll grant you this much.” Tom was making an almighty effort to remain affable, for which Avery was grateful. “’Kay, for the last several years inflation has bounced between 3 and 4 percent. I realize that to experts like you folks, I’ll sound dumb as a coal shovel. But the figure I tripped across the other day came as a shock to me: with 3 percent inflation, the dollar halves in value every twenty-three years. That’s from Fed money printing. So when I don’t control what ‘my’ money is worth, maybe it isn’t really mine in the first place. At best, it’s a loan. Which Krugman can zap into ashes while it’s still in my pocket, like a superhero.”

“Better everyone is somewhat less well off than we keep tolerating the grotesque economic disparities of the last thirty years,” Lin Yu said. “As Americans, we can return to first principles. This is a chance at reboot and rebirth. A chance for transformation and redemption. An opportunity to eschew corruption, and cronyism, and inequity, and division, and re-create this country from the ground up. To be the United States again, to live in a united state. To restore this nation to the egalitarian utopia the founding fathers envisioned. We should all be proud to be participating in this watershed.”“Better everyone is somewhat less well off than we keep tolerating the grotesque economic disparities of the last thirty years,” Lin Yu said. “As Americans, we can return to first principles. This is a chance at reboot and rebirth. A chance for transformation and redemption. An opportunity to eschew corruption, and cronyism, and inequity, and division, and re-create this country from the ground up. To be the United States again, to live in a united state. To restore this nation to the egalitarian utopia the founding fathers envisioned. We should all be proud to be participating in this watershed.”

Eventually the professor debates with the teenagers:

“The national debt was bound to come to a head eventually,” Nollie held forth on her third glass of wine. “It was just hard to predict when. And prophets too ahead of their time are always ridiculed. Take population. In my teens, the species was allegedly reproducing itself into extinction. Last time I checked, the human race was still here. Now we’re closing on nine billion—a tripling in seventy years. But what if the ‘overpopulation’ hysterics were right, just too soon? Same with debt. Twenty years ago, doom-and-gloomers were foaming at the mouth about excessive borrowing. Nothing happened then, either—until a year ago, when everything happened. Familiar with complexity theory? It helps to explain why everything can be fine for a long time and then go to hell all at once.”

Avery had tried to tolerate her husband’s self-importance about “his work,” some vital economic analysis without which the world would fall apart. The world having already fallen apart, her tolerance had morphed to contempt. In retrospect, it seemed pretty rich for her whole family to have none too subtly dismissed her PhysHead practice as quackery, when Lowell’s whole field had been exposed as far dodgier hocus-pocus; at the worst, Avery’s cures merely overpromised, while Lowell’s gang of charlatans had wreaked nationwide havoc.

“I wouldn’t write off the United States just yet!” Lowell said. “See the Dow is climbing back up, Goog? What’d I tell you!” “It’s only going up in dollars,” Willing said from the coffee table. “What else is it supposed to go up in?” Goog jeered. “In a hyperinflationary economy—” “Whoa, hold on there, Willing,” Lowell said. “Hyperinflation is a technical term. In my field, Philip Cagan’s definition is broadly accepted: at least 50 percent per month. We’re nowhere near that. In the 1920s, German inflation was 30,000 percent, and Serbian inflation was 300 million percent. In Hungary, after the Second World War? It was 1.3 times ten to the sixteenth—literally beyond your imagination. No comparison.” “Sorry,” Avery mumbled to her sister. “I think Lowell misses teaching.” “In a high inflation economy, then,” Willing corrected, and it was difficult to tell who was more patronizing to whom, “all assets seem to appreciate, including stock. But the gains are false. In bancors, the market continues to drop.”

“It’s the usual GOP austerity blunder,” Lowell said. “Because this is a time to pump up government expenditure. Invest in infrastructure, like a second New Deal. Reinvigorate America’s industrial base, and reduce the need for imports.” It occurred to Avery that her husband needed to get out more. His familiar economics platitudes failed to connect with the rampaging crowds on the Mall, the encampments on the Potomac, the numerous cars on the interstate on the trip to New York with mattresses and bundles of clothing lashed on top, like a modern-day Grapes of Wrath. She had the same sensation listening to press conferences from the White House. The administration went through the motions of being the American government, and saying the things that American officials say, but the exercise had an air of imitation—the studied intensity of tots who cook pies with mud.

The aunt from France and the teenager try to sum it all up:

“To have that much power and let it go?” Nollie said. “That is pretty stupid.” “It always goes,” Willing said. “Whether or not you let it.” “Having that much money and letting it go, then,” Nollie revised. “Having that much money and still spending more than you’ve got. I call that stupid.”

Characters adapt to changed circumstances, but no matter how severe the adaptations Shriver doesn’t show them changing their politics.

More: Read The Mandibles.