Investments Gone Bad, 21st Century Cargo Cults

March 25th, 2012
in GEAB reposting

Editor’s Note: This article is republished with permission of LEAP/E2020. See end of article for credits.

- from Political Anticipation Magazine (MAP) issue #5

by Luc Brunet (translation: Ian Shaw)

A pure product of societies in which the elite are unaware that cultural processes precede success, Cargo Cult, which consists of investing in an infrastructure with which a prosperous society is equipped by hoping that this investment produces the same effects for oneself, was one of the engines for local authority toxic loans. The expression was popularized during the Second World War, when it was represented by false infrastructures created by unsophisticated islanders and intended to attract cargo boats. In 2012 Cargo Cult will tend to spread at country level.

In September 2011, around DEXIA’s difficulties, non-GEAB readers discovered with amazement that thousands of local authorities were exposed to toxic loans[1]. In December, a French parliamentary report[2] put the disaster at 19 billion Euros, nearly double the Cour des Comptes (Court of Auditors) estimate of six months earlier. In France for example, local authorities represent 70% of public investment[3], that’s to say 51.7 billion Euros in 2010 (- 2.1% compared to 2009).

Follow up:

Source: Dexia

The local authorities developed an addiction to spending[4] and, like households victims more or less aware of subprime, they easily found a dealer to supply them[5]. The causes are fairly obvious: proliferation of elected officials not always having the technical and even less the financial skills, with little or no training, sometimes run by their staff which had come to dominate the scene, and engaged in a visibility competition between the city, the conglomeration and the department which it wanted to show that it built or led more and better than the other, in an ultimately somewhat feudal relationship. Italy has envisaged a 3 billion Euro drop in subsidies to local authorities, Sweden and the United Kingdom[6] (whose local authorities had in addition been exposed to the Icelandic financial institutions’ bankruptcies[7]) is also engaged in a painful weaning, with the purpose of gaining financial stability which strongly risks being lost in autonomy.

Source: Dexia

Undoubtedly it would be erroneous to discredit elected local officials or even the banks, because here it’s the demonstration of a very deep and very simple basic trend which has to do with the desire to emulate and the Cargo Cult. The latter was clearly evident in the Pacific region during the Second World War when inhabitants of the islands there, observing a correlation between a radio call and the arrival of a cargo of material, or between the existence of a landing strip and the arrival of aircraft, was reflected by creating a cult making sham radios and imitation landing strips, thus hoping that their existence would attract the desired cargo.

It’s a widespread phenomenon as, for example, in computing when we copy elements which we don’t understand into our own program, hoping that it will produce the same effects as in the original program.

A characteristic example is that of Flint, Michigan.  The sudden closing of the General Motors factories saw Michael Moore’s hometown lose 25,000 inhabitants and reduced to poverty, the population practically halving between 1960 and 2010. It is obviously a distillation here: the crisis causes the spirits (i.e. talent) to evaporate which takes off towards other, more prosperous places whilst the problems and poverty are concentrated in the town formerly blessed by its industrial godfather. Whilst the blessing became a kiss of death since, in their prosperity, its elected officials didn’t think about or see the basic globalization trends however obvious.

At this point in time the Six Flags AutoWorld concept arrived. This theme park, supposed to be “the rebirth of the great city of Flint” according to the governor of Michigan, James J. Blanchard, opened in 1984. One year and 80 million Dollars later, the park closed and was finally demolished in 1997[8].

Although paradoxical, debt addiction coincides with financial problems and perhaps unconsciously corresponds with the gambler’s instinct to “change his ways”[9].   What is more serious however is, on the one hand, the collective hallucination which tolerates the Cargo Cult phenomenon, but also the complete lack of a countervailing power to this thought which has become unique, even magic. The Cargo Cult always makes the situation worse.

The reason is as simple as its diabolical: the Cargo Cult priests spent to buy structures similar to those which they saw elsewhere in the hope of attracting fortune to their tribe. Unfortunately, at the same time, the “spirits” which had stayed with the tribe fled or kept silent in the face of the crowd’s pressure waiting for a miracle. Then the elite who were totally unaware that complex cultural processes which they didn’t understand were hiding behind the apparent result, bought themselves an imitation airport or radio and so wasted, to no good purpose, their last resources.

It would be unjust to think that this phenomenon relates only to backward peoples. In 1974, Richard Feynman denounced the Cargo Cult during his Caltech commencement speech[10].

Confronted with competition from the population, local authorities organize agendas and workshops (brainstorming sessions) to try and understand the reasons for their handicaps compared to the others, usually resulting in a list of claims preceded by “It’s necessary”: to have research, young people, executives, a homosexual community, a skating rink, a swimming pool, the TGV, a festival, a costly sports team, a gym… All this may be true but in fact it amounts to confusing results with the steps needed to get them.

As no one understands the cultural processes which have led to a community succeeding, it’s easy to believe than drinking the same coffee as George Clooney will bring you the same success. Nothing new in that: advertising and its 700 billion dollars annual worldwide budget have taken care of that since the beginning of the consumer society.

Roads leading to distribution centres or industrial parks which were never built, empty offices, infrastructure duplication (swimming pools, high-tech parks, garden nurseries…) just a few metres from each other; the Cargo Cult has been expensive for us: It has to be seen, even if it serves no useful purpose. Unfortunately, the real action of creating cultural and social processes is generally not seen as clearly as a brand new beautiful building.

The process follows three stages and back: crisis, escape or rejection of the rational, a brainstorming ritual then the Cargo Cult and investment, which finally leads to an aggravation of the crisis.

In fact, clusters of competitiveness work much better if they have only come to label a pre-existent cultural system. When they have been created in an emergency, hydroponically, by the ritual will to reproduce, their effects raise hopes, not a strategy.

The Cargo Cult is a way for local authorities, taken in the broad sense, not to ask the real question: Is it that each one of them can, in exactly the same way, reach the same destiny in the knowledge society?

2012: Are the Indians fleeing from America?

The Western World is, contrary to received ideas, a society whose engine is inequality. The beauty contest for the “best” population was the rage and it has been, throughout the 20th century, in favour of the United States. One of the major reasons for the strange Dollar resilience and the Euro’s curious weakness has been the irrational bet on the United States’ great attractiveness for expertise. Since the creation of the G20, there are at least four “New kids in town”, the BRICs. If one of the pointers of a Cargo Cult type spiral is the brain drain, then, even if it’s not yet at full speed, the West and particularly the United States are running a serious risk of losing a share of its Asian elite. The proliferation of studies, in particular by Indian academic institutions, is revealing for its topicality.

If many computer specialists in the United States are Indian, sometimes ill at ease there[11], and a growing number is now drawn to returning[12][13][14] to a democratic India now in the process of resolving its corruption problems, the first two phases of this process have already begun.

The ritual step of brainstorming remains, aiming at studying Swiss, Chinese or others’ conditions of success, so that the most illogical spending ideas can be launched.

2012 : the Cargo Cult spreads to the States

The 2012 electoral campaigns will be revealing. If a few spirits still remain to say that the setting up, expensive and unsettling, of actions aiming at restoring the cultural processes leading to the creation of tangible wealth, i.e. saleable to others, then the West will have lived one of its umpteenth civilizational rebounds. If we observe unreasonable investments from a thermodynamic point of view, in decorative but ineffective energy infrastructure, or even in fake pageantry projects aiming at reinforcing lost attractiveness, it will be necessary to drink the bitter juice of the crisis to the dregs.

Thus, the French temptation to copy successful German measures, without French leaders really understanding why, but hoping for the same benefits, can be regarded as an expression of the Cargo Cult. In fact, it’s to ignore cultural processes employed in Germany for decades and which have led to a culture of common negotiation and representative trade unions.

In a crisis, it’s always necessary to prove the utility of actions, not the publicity aspect which they could have. In 2012, it will undoubtedly be necessary, in countries where elections will take place, to ask the question of why investments. Candidates proposing tempting but expensive gadgets will have to be questioned by the journalists on their analysis.

The latest news from Flint, in November 2011, was that the Governor confirmed the emergency state of the town’s finances15. Contrary to what the Cargo Cult priests would have one believe, rain dances don’t work, give it some thought.


1. “In France 5,500 local authorities are affected by toxic loans”, 21.09.11, Le Monde/AFP

2. Rapport C Bartolone, JP Georges, 06.12.11, Assemblée Nationale

3. “Local authorities have reduced their investment”, Cyrille Lachèvre, 22.11.10, Le Figaro Economie

4. Dexia press release, 31.01.08, Dexia

5. “Local authorities are addicted to spending”, Jean-Thomas Lesueur, 15.10.11, Le Figaro Economie

6. “Local Authority investments”, 11.06.09, p.66.1, House of Commons

7. “Les collectivités locales et la crise financière”, T. Paulais, 12.09, Cities Alliance

8.“Autoworld flop”, D.V. Graham, Flint Journal

9. idem 7

10. “Cargo cult science”, R.P. Feynman, 1974, Engineering and Science

11. “Vague de morts violentes chez les informaticiens indiens aux Etats-Unis “, 23.02.09, 01net

12. “Le retour des “informaticiens indiens”. Perspectives migratoires sur le secteur indien des TIC”, A. Varrel, 2009, RefDoc

13. “Survey of Indian Computer Professionals/Students in USAabout Taking up Employment in India” , P. Jalote, Indraprastha Institute of Information Technology

14. “Indian Graduates in U.S. are Ready to Return to India” , J.Chadwick, 07.03.07, Rutgers

15. “Governor Confirms Flint Financial Emergency”, 29.11.11,

Other GEAB Reports

Editor’s Note: This article is from Political Anticipation Magazine (MAP) Issue #5 which is published by the European Laboratory of Political Anticipation (LEAP) with the collaboration of NewropMag. Econintersect republishes these articles as it represents views from a European perspective. To download the entire Political Anticipation Magazine (MAP) issue #5 - click here.

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