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The Dimensions of Reality

In his June 4th blog, entitled Welcome to the Wormhole, James Howard Kunstler commented, “The world is waiting to re-learn an old lesson: that untruth and reality exist in an adversarial relationship.” He goes on to comment on the various misrepresentations, outright scams, and fanciful ruminations that are leading various publics toward a belief that magical reform and a transcendent ideology will right the global ship. Meanwhile, two weeks ago and before the June 17th Greek party election, Kiplinger predicted that Greece will leave the euro zone by July or August and member governments will rush to shore up ailing economies by cutting interest rates and issuing euro-backed bonds. With Antonis Samaras’ conservative New Democracy party at the helm, this may not happen. Whether this becomes another shell game that is akin to check kiting remains to be seen. The real question is whether there is enough vitality, commitment, and buying power among the strongest euro zone members to weather the storm. And, that storm is approaching gale force in Ireland, Spain, Portugal and Italy. Even China’s pace is slowing as it calibrates to new social, environmental, economic and political realities.

The competing facets of this very complex game are escalating and will affect every U.S. community as the plot unfolds. The reality is clear and has been stated in this space in prior commentaries. This is a decade of transformation and re-centering. It was predicted and predictable. Whether one relies on studies of business cycles, biologic/ ecosystem cycles, cultural and social evolution, or the not-so-sweet science of economics, the plot always turns. So, be prepared for the reality of reduced European vitality, softer commodity prices, reduced demand for U.S. exports, and more social unrest as multiple societies struggle to make sense of foolish choices, lost assets, deeper debt, and more strident calls for austerity.

On June 3, The Guardian ran a story by Decca Aitkenhead that cited Nobel Laureate Paul Krugman’s recent comment that, “Debt is one person’s liability, but another person’s asset.” This comment was made as he shared thoughts on why debt was not always bad…and perhaps a better choice than manic austerity.  Dr. Krugman goes on to say that comparing a household budget to a national economy is ‘seductive’ because it is easy to understand, but is wholly inadequate in a macro-economic context. If everyone pays off debt and reduces spending, as austerity supporters encourage, what happens to economic vitality? Someone has to start spending to fuel the economic engine. Corporations are sitting on billions in cash, citizens are paying down debt, banks are recovering as much as they can and lending little, and all sectors are slow to spend. Reality is revealed in the data. The U.S. continues its path forward, experiencing slow growth estimated at around 2% for 2012. Inflation remains low, unemployment is creeping down on a predicted five to eight year downward spiral, and personal debt is at a two-decade low. Americans are still spending, albeit at lower, more conservative levels, new business enterprises and technologies are emerging, and the U.S. economy shows signs of achieving a new, more sustainable center.

As overseas prices and costs escalate, more business and manufacturing will return to the U.S., which provides a capable workforce and proximity to consumers. Of course, that assumes that Congress will figure out that existing tax rates will stifle or drive away, rather than attract business. In any case, Europe must re-center, which will not happen without pain, sacrifice and resistance from spoiled citizens. While this will impact the U.S., it will also provide new opportunities to strengthen this country’s capacity to fund/ support new growth. Again, domestic and global citizens must accept the reality that recovery from this recession will take close to 10 full years and requires new thinking, better habits and wiser policies. Even optimists are prepared for a calculated struggle until at least 2014 or 2015. Keep in mind that, as this summer unfolds, Europe will grapple with multiple demons of its own making. Same with South America, Russia, Tunisia, Egypt, India and much of Asia, where there will also be unrest and serial upheaval.

The larger question is about America. This country has the power, resources, capacity and capability to emerge even stronger than before. But will it make the tough choices?  Will both political and non-political leaders emerge who are not motivated by greed, ego and power? What will move this nation’s true leaders to action and will it be soon enough? True leadership begins at home, in every family, every business, and in every community. The compound question is, what is each community doing and will it be enough before it is too late?

With over three decades working in and with federal, state and local government, John Luthy understands public agencies.  Known for his real world, straight talking style, he is a leading futurist specializing in city, county, state, and federal long-range thinking and planning. John is the author of Operations Planning: A Guide for Public Officials and Managers in Troubled Times, and The Strategic Planning Guide, both published by the International City/ County Management Association (ICMA). His new book, Planning the Future – A Guide to Strategic Thinking and Planning for Elected Officials, Public Administrators and Community Leaders, was released in October 2010. An innovative and dynamic presenter, John is frequently asked to speak and consult on how to prepare public organizations and communities for emerging challenges (public futures at http://www.futurescorp.com).

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