The first post described an anatomy of decade: a moment of realization, a consensus decision, the following of the arc, and then a moment where some of the decisions are seen as so wildly successful as to be unquestionable, and others are abandoned as having completely lost the faith of those who prop them up. It is at this moment of both abandonment and wild abandon, that the long part of the decade ends, and the short decade begins.

We have reached, almost but not quite, the moment where the long decade is going to be generally recognized as over. That moment will be some precipating event which will synchronize large numbers of people and tell them that it is both time to rush headlong in before it is too late, or to sell sell sell. Or both. Right now we have a president whose approval number wouldn't win a batting title. There is a melt down in the credit markets, and as my fashion oriented friends tell me a sea change in the cloths that women are being told to wear: out is outsized, in is a high waisted romantic era look with ruffles and waves. The automobile market is about to hit a shake out. These are important indicators of decade, and they intertwine with political style as much as any other factor. People who don't pay attention to the style of homes people build, the cars and clothes they buy, and their political aspirations, are simply not paying attention.

However to understand what is coming, it is first necessary to look at the moment where the decade was confirmed, and what it meant.

The Modern Liberal Theory

The pinnacle moment of the stupid decade was 2004. It was a point where the intellectual bankruptcy of the decade was beginning to become obvious - and simultaneously, the battle lines hardened. Unlike other moments of confirmation, this was not a broad one, but instead a very weak one: George W. Bush's reëlection was the weakest of a two party President in this century. Wilson remember rode in on a three party election, as did Clinton. Cleveland had a similarly rocky electoral history: he won the popular vote, which meant little in that day and age given the differing standards of voting, but lost his first reëlection bid, and won the White House back four years later. Looking back on American electoral history, George W. Bush is the weakest two term President from the Presidential Party - Cleveland remember, was the lone Democrat elected between 1856 and 1912 - in American history. He is also, in all likelihood, going to be remembered as the worst two term President in American history. If he had been any worse, or the election held even a bit later, we would not be having this discussion, but instead talking about what President Kerry would be doing with his new Democratic Congress.

2004 was also the stylistic sea change. Consider the sinking of West Wing in it lurch to the right, and the fading of the sharkskin blaring blue of Fox News. The simple reality is that even as America was very happy with inflated home values, they were very unhappy with Republican leadership. This is an important point. Americans don't really like capitalism, instead, they prefer an economic system based on rent. This is because capitalism rewards the smart, and rent rewards people who are first. Americans are good at being pioneers, they are much more equivocal about being smart. You can't know if you are smart, but you can know if you are first.

This rift, of a country unhappy with it executive and legislative class, but happy with the land prices and the suburban culture, is what produced the collapse of "Bushism." Bush has been accused of not being a Reaganite, or not being the heir to Reagan, by many people who are angry with him on the right and in the right of center. This is, and is not, the case. To understand this, it is necessary to look at the generational forces which have come into play in this decade, and look a fresh at what was being done.

The modern liberal era rests on a series of principles. Principle One is that money pools up, and creates rent inflation, taxing this rent inflation does not reduce real productivity. This was observed by Adam Smith and David Hume in the late 1700's. The modern liberal thesis combines this observation with a solution to the city problem, namely rural people pouring into cities in search of work during economic downturns and becoming urban super poor - and a solution to the problem that the general market economy can be at equilibrium, and not at full productivity. The solution is to tax the inflationary pools, and redistribute the money both outward geographically, and vertically through the economic system within cities. Cities are kept at their optimal population density, where the costs of maintaining them are balanced against the wins form having high productivity, very liquid labor and land markets, and ease of movement of the supply chain. This point is roughly 10,000 people per square mile, with variations depending on the urban layout and the industries. In 1940, all American large cities were of this model. This can be called "The New Deal Principle," enunciated repeatedly by FDR, and given shape by Keynes and Kenneth Arrow in the form of macroëconomics and General Equilibrium.

Principle Two is that the total national effort should be monetized as much as possible, so that it may be directed at great national projects, most particularly winning global conflicts. The Great Depression, the Second World War, the Cold War, and the War against Poverty being the four largest ones to date. This principle states that the government must command a large share of the economy for defense of the national system, and, and this is key, it must counter-balance its own distortions with opposite expenditures. The government distorts the economy by running the arms business, and must counter-balance this by funding other forms of social and political activity. Academia counter balances the military, peaceful pursuits balance the militarization of internal combustion and nuclear energy.

Principle Three is a derivative of the first two. The first principle says that buying power should be democratized, principle two says that participation should be universalized through buying power. Both of these rest on a "Principle Zero", which is the principle that the national government must have the authority to create a unified national monetary and transportation system. This is more or less the result of the Civil War, and the conclusions drawn in the aftermath: there must be one currency, and one system of movement of goods and services in the form of postal system, telegraph system and railroad system. Principle Three says that effective participation in the mechanized and universal economy, from which the manpower to fight a war, and the labor to support a universalized system is drawn, must also be made universal.

The liberal coalition broke apart on three points. First was the misuse of the military instrument by LBJ, in no small part because he wanted to keep the conservative wing of the coalition in place. That is, military Keynesianism is the preferred form of socialism for the exurban white American. He's all in favor of national socialism for white people like himself, so long as it is for manly pursuits like killing things, or for agriculture and mining. "Socialism for me, servitude for you." is a winning slogan almost everywhere, and the great danger of any liberal or social democratic system. This observation is really made in embryo by Madison: that as soon as the majority votes itself a subsidy, democracy is finished. Liberalism answered this objection by pointing out that taxing inflation and creating universal participation and economies of scale is a "win-win", producing higher levels of production which benefit all, and only taking away the powers of monopoly, collusion and social engineering by the elites, which capitalism specifically must bar them from having anyway. Let me spell this out: if you read Adam Smith, he will state explicitly that the winners of the market cannot be allowed to collude, create monopolies, or own the educational and cultural system. It is lethal to capitalism to have the rich rich enough to buy the market. Hence the modern liberal, which is the only true kind of liberal after the introduction of internal combustion and universal monetary systems, states "we will tax the ability to destroy the free market".

These principles can be summarized as "nationalism", "optimalism", "universalism" and "egalitarianism". The modern liberal argues that each principle is a duality in tension, one cannot have the benefit from the principle, without paying the costs, and one cannot accept one of the principles without being led through an inevitable social and historical logic, to all four. If you want a national economy, then you must want Pareto optimality, if you want Pareto optimality then you must want universal participation, if you want universal participation, then you must accept that almost everyone must have access to the full spectrum of transportation, education, communication, production and rights. For everyone, as FDR stated emphatically, everywhere in the world.

Let me use a common world in a way which is not common, but which is correct, because it is the logical name for what is going on. That word is "neo-conservative". Almost all conservatives are neo-conservatives. That is the old gold standard, laissez-faire capitalism and military imperialism conservatives are gone and dead. Neo-Conservative should not be used to apply to a narrow Anglo-American political movement of the late 20th and early 21st centuries, but to the entire counter-movement against modern liberalism. This is simply because there are no true conservatives seeking a real restoration of the old world of 1856 or even 1900.

Instead the neo-conservative coalition, for most of its existence, argued against the fundamental thesis of modern liberalism. The neo-conservative coalition was built of people who didn't want to overturn modern liberalism in reality, but instead unbundle it. "Liberal prosperity for me, conservative austerity for you."

The two building blocks of this coalition where corporate monopolists, who like the government's ability to bail them out, and agrarians who like roads, ag subsidies, military bases in the middle of nowhere and universal postal and telephone service, but who hate urbanized areas, particularly the urban poor who they see as lazy. It does not occur to them that the urban poor are paid to sit in reserve, just as they are paid not to farm.

However beginning with Nixon, the argument was made to suburbanites that they could unbundle cities from the equation: that cities were drains on the economy, and suburbs the real economic engine. This made sense to suburbanites, because they saw themselves as better off than being in the cities, and they made their money by turning exurbia into suburbia with McDonald's franchises, housing developments, malls and research labs. The coalition swept to power and won a series of landslides.

Neo-conservatism, as unbundled modern liberalism, looked set to win power forever. First because it had an easy access to political tropes. Any failure of any program of modern liberalism, however small, could be used to make the "one cockroach" argument: if you see one cockroach, there are thousands you don't see. Second, because the very mass industrial system which required bodies of surplus labor and consumption was breaking down. You didn't need to pay American urban poor to wait for the economic booms or wars where they were needed, because there were huge numbers of urban poor around the world waiting to step into those roles. Third, it allows neo-conservatives, and still allows neo-conservatives, to buy parts of the Democratic Party when needed on particular issues. Since the neo-conservative argument is that liberalism can be unbundled, it can then go to voting blocs and say "your liberalism and socialism are safe, it is only their liberalism and socialism we are going to cut."

This, combined with appeals to economic luddites, aka "libertarians" who wanted to repeal the civil war too, was the neo-conservative coalition: people who wanted the benefits of liberalism for themselves, and were willing to dump the costs in the form of high borrowing on the future. That being the constituency of modern liberalism which doesn't vote.

As a practical matter, modern liberalism offered Americans a rather simple deal: develop America's marginal rural land into suburbia and form new cities, in return, create a monetary base capable of measuring the value of the modern industrial system. The super-dense modern city based on walking and rail transportation, was replaced by the post-modern city, based on cars. The population density of this new city is roughly a third to a fifth of the industrial city. That is 2000 to 3000 people per square mile, and it is sprawled outwards. The advantage that this city has is that as long as there is a steady stream of oil and money for infrastructure pouring in, it is both emergent, and scaleable. That is, people can figure out how to build a suburb without too much prompting, and they can keep building endless copies of it as long as people are willing and able to drive farther and farther to core jobs, or create non-core jobs, that is malls and such, where they are. The colonization is core jobs looking for more land, then non-core jobs to service them. This produces ignition in that it funds disorganized labor in the form of home construction and real estate. By 1980, the rising new cities were all of this model, and many of America's 10 most populous cities were. Not one new high density city was created in the US during this time period.

This can be described as "the sprawlconomy".

However when this conception was put in place in embryo, the US was the swing producer of oil. When American oil production peaked, it removed both the control of the monetary system, and control of the energy system. The liberal conception of everyone can have a car and a good job, rests on their being both the oil for that car, and the monetary freedom to loan him or her the money to buy it. Both went away in 1967-1972.

The neo-conservative arc from 1969 forward was more or less "who can we safely kick out?" The President became the "First Minister of Oil", with the job of securing both oil, and monetary agreement from the winners of the oil game for the continued supremacy of the dollar. This looks a bit like liberalism, in that it requires a vast national effort to have a huge military to supply a "Pax Americana" that is paid for by having cheap money loaned back to us. in return however, the basic principle of capitalism, that no one be rich enough to buy the market, must be thrown out the window. In essence Reagan and Thatcher put capitalism up for sale to the highest bidder, and then funneled money to the very wealthy of the West so they could bid against the oilarchies for control. This can be described as "the house of Gusher", the belief that the ability to find new oil sources would stay ahead of global demand.

This brings us to George W. Bush, and the collapse of the neo-conservative coalition in the thousands.

The Fall of the House of Gusher

As I've noted, if you aren't paying attention to fashion, you aren't paying attention. The coming of the car changed fashions, particularly women's fashions. The bustle doesn't work in the car. The fashion statement of the early 1990's, with its rush to blue and blare for men, and it's suitedness for women, tells the political story as well as anything else. The cars with their blocky fronts and 1930's esque heaviness do as well.

They say what Bushism is and what the radical neo-conservatives believed, and it was a basic break with the neo-conservative coalition as "unbundled liberalism" believed. Bushism is the argument that there can exist a neo-conservative system which as indivisible as the modern liberal system was. That is, the war without end creates a neo-conservative economy that cannot be dismantled by future political coalitions, and that a hard plurality can govern in this mode. Basically, instead of a broad majority voting to cut out sizable minorities, a bare plurality can rent enough defectors to create lock step bare majority in Congress and enough to hold the presidency, under the aegis of a war that will shatter any attempt to form a governing majority that will not continue to fund the creation of neo-conservative social majorities.

This assertion: that radical evangelicalism is enough to supply the military needs, that globalism obviates the need for supporting surplus labor here at home, and that monopoly corporatism can employ enough of the intellectual labor to prevent an intellectual revolt to create an unalterable multi-generation arc, is the basis for Karl Rove's political maneuvers, Murdoch's media maneuvers, and the Bush-Delay-Frist governing triumvirate. The failure of this assertion stylistically happened before it failed politically. Before people knew they were rejecting Bush as neo-conservative FDR to Reagan's neo-conservative Woodrow Wilson, they had rejected the way of being in their cloths and houses, but not in their cars.

The houses point is particularly telling. A war without end implies a sufficient degree of austerity to maintain financial autonomy. This point dominates Churchill's thinking through the early parts of the Second World War, and FDR's thinking in the run up to the Second World War, balancing the need for armaments, against the drain on the public treasury with its need to borrow. The failure of Americans to accept austerity meant that Bush was, in the end, proposing imperialism: that the war without end would pillage enough profit from the rest of the globe to pay for its own consumption.

The economic facts were the reverse, in order to bribe enough other countries to stay with the global war on terror being coöpted by Iraq, the United States pursued a monetary and trade policy which created most of the benefits overseas. The last 7 years have been the biggest boom globally in recorded history, and the worst economic expansion for the American middle class in the modern era. Let me spell that out: globally more of the growth and consumption of oil has gone to the offshoring economies, than to the core economies. The reason Bushism failed as a political ideology, is that it did not deliver wages sufficient for people to pay for the increases in housing and other rents that it delivered.

From there it is a simple Democratic Pricing Theory matrix to understand why both the plurality for Bush was so hard core: they were getting the wage increases, why the swing was so lukewarm on stopping him even though they hated him: they did not get wages, but their houses were booming in value, and why the opposition to Bush mushroomed from a small anti-war core of about 10% of the US population, to a group that is as large as, if not larger than, his hard core supporters. Let me repeat that because it is important: Bush gave away the short term profits of suburbia of a war boom in the hopes of getting a future, and permanent, reactionary social and economic system, in order to get all the short term profits for a relatively small slice of the developed world, and agreement from the rest of the world to make the play. And people rejected this before they really even knew what it was they were being offered. The reason for the rift is that on paper they were doing very well, even as their jobs produced both less free cash flow in their ordinary lives, and less interest in what they were doing.

The game then, of not paying people enough to support paper housing values, had to be accomplished by the old trick of getting people to borrow at higher real rates of interest. That is, the sub-prime market and importing brain power. This provided the stream of borrowers needed to keep housing prices up, even as it eroded both free cash flow for consumption, and pressured upper middle class professional wages.

It is the collapse of this market last year which turned the dynamics of three party politics in America: from one third Bushite, plus one third hoping to cash out and retire, for an overwhelming political coalition that could vote 2/3 for throwing the old constitution out the window to get the power to run a war without end, to a 1/3 anti-Bush, 1/3 house anxiety coalition, with 1/3 hard core Bushite. The collapse of the Delay congress was, in effect, driven not by Southern conservative Democrats coming home, but by a revolt of the liberal Reaganites. Suburbia is suing the Republican Party for divorce, because Bush has not delivered the vast flowing boom of oil that he promised.

Contrast this with the neo-classical neo-conservatism of Clinton. The Clinton era policy was to squeeze the price of oil down, eventually forcing producers of oil to sell at whatever price: oil bottomed at 11 dollars a barrel. Bush's willingness to pay whatever the price of oil in the present was to get access to oil future, predicated both on the non-existence of global warming, and the non-existence of a peak in light oil production, is the domino effect that is producing a collapse in confidence, not just in his gamble in Iraq, but in the housing and credit market. People loaned money on the belief that a massive spurting boom of oil would flow from Iraq by now, creating a Clinton/LBJ esque boom. That oil is not arriving, and hence that money is not arriving, and hence the loans are not going to be paid off. The bet was that globalism would keep prices and wages in line long enough to make the play. However, globalization is no longer producing increasing deflation, Shanghai has reached world prices, and China is going to have to make massive infrastructure improvements to put their deep cities online. While the wage gains are there, it is a very different proposition to ship things by boat and rail down rivers for hundreds of miles, than to just load them on a ship.

This is the fall of the house of Gusher: the failure of oil, the end of the corporate monopolist wins of off shoring supply chains, and the physical limits of the petroleum economy. The decade is turning not because of chronic problems however, we are not about to get a progressive majority, but because of acute problems. America is set to elect a neo-Reaganite Hillary Rodham Clinton to the Presidency, rather than her progressive opponents.

The hyper thousands then, will be the attempt, and failure, of the neo-Reaganites to make work a world economy which Bushism and monolithic neo-conservatism have broken. But stylistically, and culturally, the neo-Reagan moment will be writ large. The conflict in American politics will be the last gasps of the Bushite coalition, such as the FISA vote, and a growing conflict between the center right, and the center left and left, over whether it is possible to put humpty dumpty together again. Hillary Clinton represents those who say "yes, we can have a smaller war without end, and screw over smaller numbers of Americans and still keep going." the Progressive argument is that one cannot have an unbundled solution to global problems.

Next: Hillary Reagan Clinton: Avatar of the hyper-Thousands

The First In the Series