Some of you may have noticed amid all the hubub that the price of oil has dropped about $12.00 per barrel over the past couple of weeks. And though this may be good news for American motorists, the reasons for this price decline are decidedly bad news for a lot of people, whether they are motorists or not. What happens in Greece, as well as the other Club Med nations, matters very much for the U.S. It goes without saying that there is no good outcome to Greece's debt workout. The damage has already been done and the questions remaining are: who suffers more or less and, what reverberations will be felt around the world as a result of the measures taken. The scariest might be the deflation of Club Med economies that is ongoing and soon to be accelerating because of the austerity measures (cuts in government spending) that will shrink economic activity. This will likely make the debt concerns even worse by shrinking the economies ability to service that debt.
The fall in the price of oil is basically the markets opinion on the future of the global economy. Oil is falling for two reasons. The first is because the demand forecast has dropped due to worsening economic conditions. The other reason is that the dollar, which most oil contracts globally are traded in dollars, has strengthened against the Euro. But the stronger dollar, despite the benefit of cheaper oil, has a downside that American policy has been trying to avoid for the last decade. This downside is the worsening trade deficit, which should be getting more press time as the Euro drops in value against the dollar. The trade deficit is the undereported twin sister of the national debt. It is the trade deficit with China and others, notably Saudi Arabia, which helps the U.S. fund it's debt. This is likely to continue and does not bode well for anybody. The falling price of oil (copper, too) is saying that America's trading partners are going to demand much less oil in the coming months, and it also means they will be demanding fewer American-made goods as well.
The only thing governments fear more than inflation is deflation. Deflation means the economy gets smaller. Technically it means that money is destroyed. Ok, that's not technical, but that's what it means. Deflation is what American federal economic policy has been fighting against since October of 2008. It is why the inflation worry is fairly remote for the time being. This worry-free approach is being vindicated as the price of oil and copper falls sharply and overall prices fall in Greece, Spain, Portugal, and Ireland. It is the effect of a massive drop in government supports for those economies. What happens next is anybody's guess, but deflation in these countries likely means further crises are bound to happen in those economies most closely linked to them. And all countries economies are linked in one way or another.
I can't say for sure what the best response is to this crisis. It seems likely that there will be mistakes made over the coming weeks because governments are in a panic and mistakes are made in that situation. But the aim of all these machinations is to essentially keep a failed system going for a little while longer. Until something happens. Maybe they think it will eventually get to rights again if they just provide enough monetary loving care. But I think Europe should be planning for a decline in economic activity and policy should be to soften the landing and make contraction fair to all parties. This cannot happen in a vacuum. It requires an unusual burden sharing by those who are less effected for the sake of those who are more effected. Europe has the opportunity to lead the world in this. If the European governments realize that the fundamental crisis of economics as currently practiced is the growth imperative, then policies can be shaped to find a lower order of economic activity and minimize the social disharmonies that often accompany declining national fortunes.
Hard choices await the people of Greece and of Europe generally. What reducing economic activity ultimately means is asking people to give up something they already feel they deserve to have. It also means asking people who don't have to give up wanting to have certain things, a certain lifestyle that they see others have and want for themselves. So called developing countries will be countries-never-to-develop, at least along the lines of Europe and the U.S. In the meantime, the Europeans, and eventually, Americans, will be rearranging their lives to deal with their return, after many centuries, to living within the natural limits of the Earth's energy supply.
I have hope and am rooting for Europe because it probably represents the best hope for the rich countries in terms of recognizing the energy and climate predicaments we face and acting on them. Certainly it is better understood there than in the U.S. Having said that, it is perhaps a faint hope. People are people and they tend to act when crises of the kind like climate change and energy descent are upon them instead of off a few years into the future. But maybe Europe will clear a path for Americans to follow after the smug and haughty certainty of America's superiority has been wittled away by events.
Sunday, May 16, 2010
Sunday, May 9, 2010
The High Cost of Growth or, Two Tales of Diminishing Returns on Complexity
One of the weirdest and most consequential weeks in a long time has come to pass and it leaves me wondering what the heck it all means for the future. It's hard to even know which story is the most significant in terms of the immediate or long term consequences. Of course, not everything happened this week but were extensions of what happened the week before. The effects of these happenings are sure to last well into the future and cause other problems down the road.
The market, for starters, seems to have judged debt overburden a real problem. The threat of sovereign default by Greece unraveling a series of other sovereign defaults was enough to drain the entire years worth of gains in the S & P and the Dow Jones, not to mention stock markets in Asia and the rest of Europe. Now, after a weekend of scrambling, the European Central Bank has declared a TARP-like bailout fund for all the troubled PIIGS's worth a whopping $928 billion. I imagine that should cover it. The stock market futures are already eating up the news and indices look to start off the day very well. Now it is incumbent on the economies of Europe and the world to grow enough to make good on all the debt that has been transfered to the ECB. The prospect for that might look good in the coming year but further out the debt, among other looming concerns, will likely make economic growth a more difficult than it was before.
An equally grave and solemn tragedy is that of the blowout of the Deepwater Horizon oil rig in the Gulf of Mexico. Nobody can say for sure how much oil is leaking out of the ocean floor but it could easily be understated. The risk of the tube breaking off the wellhead could increase the output by as much as ten to twentyfold, thus foreclosing any chance of avoiding what can only be considered a catastrophe of the first order. The oil floating on the waves would be sure to enter the gulfstream and coat the coastlines of several states. I can only imagine what would happen to Florida if huge stretches of beachfront property is soaked in hydrocarbonic sludge. Perhaps even Rush Limbaugh will call for an end to offshore drilling once his slice of Florida beach smells so bad that he won't even visit and he can't find a buyer. Though it's early, it might not be too early to consider that there could be a whole lot of internal migrants from the Gulf coast states to other parts of the country to try their fortunes elsewhere.
The market, for starters, seems to have judged debt overburden a real problem. The threat of sovereign default by Greece unraveling a series of other sovereign defaults was enough to drain the entire years worth of gains in the S & P and the Dow Jones, not to mention stock markets in Asia and the rest of Europe. Now, after a weekend of scrambling, the European Central Bank has declared a TARP-like bailout fund for all the troubled PIIGS's worth a whopping $928 billion. I imagine that should cover it. The stock market futures are already eating up the news and indices look to start off the day very well. Now it is incumbent on the economies of Europe and the world to grow enough to make good on all the debt that has been transfered to the ECB. The prospect for that might look good in the coming year but further out the debt, among other looming concerns, will likely make economic growth a more difficult than it was before.
An equally grave and solemn tragedy is that of the blowout of the Deepwater Horizon oil rig in the Gulf of Mexico. Nobody can say for sure how much oil is leaking out of the ocean floor but it could easily be understated. The risk of the tube breaking off the wellhead could increase the output by as much as ten to twentyfold, thus foreclosing any chance of avoiding what can only be considered a catastrophe of the first order. The oil floating on the waves would be sure to enter the gulfstream and coat the coastlines of several states. I can only imagine what would happen to Florida if huge stretches of beachfront property is soaked in hydrocarbonic sludge. Perhaps even Rush Limbaugh will call for an end to offshore drilling once his slice of Florida beach smells so bad that he won't even visit and he can't find a buyer. Though it's early, it might not be too early to consider that there could be a whole lot of internal migrants from the Gulf coast states to other parts of the country to try their fortunes elsewhere.
What these ongoing stories have in common is that they are both consequences of the drive to maintain the growth machine of the global economy. Time will tell what BP was thinking when it drilled so deep underwater without taking special precautions, but saving a few million dollars on a state of the art drilling rig which now rests in peace at the bottom of the Gulf of Mexico looks really, really irresponsible. My guess is that the finance guys made the final decision and not the engineers. But it underscores a lesson that the diminishing returns on the oil based economy that we will be learning over and over again in the coming years. Dmitri Orlov makes an insightful comparison on his blog Club Orlov between Chernobyl and the Deepwater Horizon disaster. This isn't simply an accident. It is, as the Soviets called Chernobyl, a "technogenic catastrophe". The origin of the catastrophe is in the technology used for the extraction of oil from the ground. The more complex the technology, and the larger the scale, for the complexity is dependent on the scale of operations supporting it, the greater the scale of the catastrophe whenever one occurs.
The European situation exhibits the same predicament of complexity. This time it was the financial instruments used to deal with the planet-sized debt required to keep the global economy chugging along at 3% growth per year. The current European troubles are really just a new chapter of the continuing economic crisis that began in earnest with the credit meltdown of 2008 that started in U.S. banks. The cost of this to the Europeans may be too much, and the debt issued may never be paid back. Economists would say this is why we need to keep growth going because the consequences are too horrific to contemplate. But the chapter on growth just might have ended with this bailout in real terms. What the economists don't appreciate is that an energy crisis, and the ensuing resource scarcity that will follow, will make those debts unpayable because the instruments used to make the debt possible are sure to blow up again.
There's plenty that can still be done to salvage our economy but it involves much that is unpalatable to many people and especially to corporations. It will be apparent once the decline rate of oil extraction falls every year by 3-5%, causing a like fall in economic output. So imagine every year being like 2008-9, when everything hemorrhaged value and people lost their jobs by the hundreds of thousands. Our project should be to make this less painful by building the kind of society we can afford indefinitely according to the natural wealth provided by the planet, identify the simple and effective tools that can be employed, and rid ourselves of the manic need to continually acquire more and more useless crap just so we can maintain growth of the money system.
The European situation exhibits the same predicament of complexity. This time it was the financial instruments used to deal with the planet-sized debt required to keep the global economy chugging along at 3% growth per year. The current European troubles are really just a new chapter of the continuing economic crisis that began in earnest with the credit meltdown of 2008 that started in U.S. banks. The cost of this to the Europeans may be too much, and the debt issued may never be paid back. Economists would say this is why we need to keep growth going because the consequences are too horrific to contemplate. But the chapter on growth just might have ended with this bailout in real terms. What the economists don't appreciate is that an energy crisis, and the ensuing resource scarcity that will follow, will make those debts unpayable because the instruments used to make the debt possible are sure to blow up again.
There's plenty that can still be done to salvage our economy but it involves much that is unpalatable to many people and especially to corporations. It will be apparent once the decline rate of oil extraction falls every year by 3-5%, causing a like fall in economic output. So imagine every year being like 2008-9, when everything hemorrhaged value and people lost their jobs by the hundreds of thousands. Our project should be to make this less painful by building the kind of society we can afford indefinitely according to the natural wealth provided by the planet, identify the simple and effective tools that can be employed, and rid ourselves of the manic need to continually acquire more and more useless crap just so we can maintain growth of the money system.
Sunday, April 11, 2010
The Ecological Footprint and You
What the ecological perspective on the human habitation of the planet has to offer people is a box outside of which they cannot think. Nature as box may seem like an unnecessarily rigid confinement of it's apparent boundlessness and the adaptibility of it's creatures, but whenever that question of it's limits is broached, it is with the place of human life as a part of nature which we are truly concerned. Nature will continue with or without us, to be sure. The question of nature's boundlessness, however true, does not mean it is always useful to think about it in that way. There are completely natural habitats humans could never hope to survive in, let alone flourish, so the question of infinite human adaptibility has to be put to rest.
The human struggle to overcome the crueler aspects of nature and the large measure of success achieved lends a lot of historical credibility to the view that humans have been liberated from the animalistic constraints imposed by ecology. But what may be true in a relative sense is not necessarily true in an absolute sense. The hard part is knowing how to measure the limits of our achievements and to determine what is possible and what is impossible. This is where ecological concepts, principles, and laws are very useful to judge the human place in the natural world.
One broad and useful way to measure human's ultimate limit is the ecological footprint, an idea which sprang from the concept of carrying capacity used in ecology to understand an ecosystem's population limit. The ecological footprint puts the weight of human needs against the regenerative capacity of nature. It is specific to humans and is used to determine the sustainibility of a given level of economic activity. As a way to illustrate in a hopefully not simplistic way, if you use X number of trees to build a house and it takes Y number of years to regrow the trees, then Z number of houses can be built in some number of years sustainably. This can be applied to aquaculture, agriculture, energy use, and anything else that cycles through the human economy. All of this can be scaled up to the planetary level to give a grand total of how many humans can live at what economic level indefinitely within some margin of error.
Barring problems in methodology, it is a work in progress after all, the notion that it is possible to measure the impact of human civilization on the natural world, and to measure both the utmost human habitation and a desirable human habitation on the entire planet is entirely logical. There is not much that is mysterious about how people live or what people use to live and where they get it from. It really comes down to getting good data, which isn't always easy. The good news is the ecological footprint, like it's offspring the carbon footprint, can be used to guide public policy and personal behavior. The bad news is what it tells us about the human situation.
According to at least one version of the footprint (the main one), humanity surpassed the carrying capacity of the Earth sometime around 1980. As of 2006, as it says in the wikipedia article, humanity was living at 20% beyond carrying capacity. This means that humans are in overshoot of their global ecological support system. Currently human civilization needs 1.4 Earths to sustain it's current way of life. Barring an intragalactic raw materials trade opening up soon, the amount of basic natural stuff for human use will soon become scarce. And if there is any doubt about the legitimacy of the ecological footprint concept, I would point to two clear examples of resource overuse. Soil erosion is happening nearly everywhere there is agriculture. The recent flooding in Iowa showed that millions of tons of topsoil can be lost in a single thunderstorm. But soil erosion is happening at slower but still relentless rates all the time. The midwestern U.S. farm belt has lost half of it's natural topsoil since European settelment. Topsoil is still eroding faster than it is replenished in most places. Obviously, this state of affairs cannot continue for much longer. The other easily researched example of ecological overshoot is the overfishing of oceans. Several areas of the world's oceans have been overfished so much that the fish populations cannot recover by themselves. North Sea and Newfoundland fishing has seen the disappearance of makeral and Atlantic cod for commercial use and may be gone for good. Many other species are threatened with the same fate.
There are countless other indicators of human overshoot that are clear to anyone who studies the problem. Behind these examples lies a very potent and apparent fact: Humanity cannot sustain itself as it currently inhabits the Earth. The question is how far can we continue and what it means for us as we surpass the limits of natural bounty. It is possible for populations to continue to grow beyond the carrying capacity of an ecosystem for a while. What happens after that ecosystem is effectively tapped out is what should worry everyone.
The human struggle to overcome the crueler aspects of nature and the large measure of success achieved lends a lot of historical credibility to the view that humans have been liberated from the animalistic constraints imposed by ecology. But what may be true in a relative sense is not necessarily true in an absolute sense. The hard part is knowing how to measure the limits of our achievements and to determine what is possible and what is impossible. This is where ecological concepts, principles, and laws are very useful to judge the human place in the natural world.
One broad and useful way to measure human's ultimate limit is the ecological footprint, an idea which sprang from the concept of carrying capacity used in ecology to understand an ecosystem's population limit. The ecological footprint puts the weight of human needs against the regenerative capacity of nature. It is specific to humans and is used to determine the sustainibility of a given level of economic activity. As a way to illustrate in a hopefully not simplistic way, if you use X number of trees to build a house and it takes Y number of years to regrow the trees, then Z number of houses can be built in some number of years sustainably. This can be applied to aquaculture, agriculture, energy use, and anything else that cycles through the human economy. All of this can be scaled up to the planetary level to give a grand total of how many humans can live at what economic level indefinitely within some margin of error.
Barring problems in methodology, it is a work in progress after all, the notion that it is possible to measure the impact of human civilization on the natural world, and to measure both the utmost human habitation and a desirable human habitation on the entire planet is entirely logical. There is not much that is mysterious about how people live or what people use to live and where they get it from. It really comes down to getting good data, which isn't always easy. The good news is the ecological footprint, like it's offspring the carbon footprint, can be used to guide public policy and personal behavior. The bad news is what it tells us about the human situation.
According to at least one version of the footprint (the main one), humanity surpassed the carrying capacity of the Earth sometime around 1980. As of 2006, as it says in the wikipedia article, humanity was living at 20% beyond carrying capacity. This means that humans are in overshoot of their global ecological support system. Currently human civilization needs 1.4 Earths to sustain it's current way of life. Barring an intragalactic raw materials trade opening up soon, the amount of basic natural stuff for human use will soon become scarce. And if there is any doubt about the legitimacy of the ecological footprint concept, I would point to two clear examples of resource overuse. Soil erosion is happening nearly everywhere there is agriculture. The recent flooding in Iowa showed that millions of tons of topsoil can be lost in a single thunderstorm. But soil erosion is happening at slower but still relentless rates all the time. The midwestern U.S. farm belt has lost half of it's natural topsoil since European settelment. Topsoil is still eroding faster than it is replenished in most places. Obviously, this state of affairs cannot continue for much longer. The other easily researched example of ecological overshoot is the overfishing of oceans. Several areas of the world's oceans have been overfished so much that the fish populations cannot recover by themselves. North Sea and Newfoundland fishing has seen the disappearance of makeral and Atlantic cod for commercial use and may be gone for good. Many other species are threatened with the same fate.
There are countless other indicators of human overshoot that are clear to anyone who studies the problem. Behind these examples lies a very potent and apparent fact: Humanity cannot sustain itself as it currently inhabits the Earth. The question is how far can we continue and what it means for us as we surpass the limits of natural bounty. It is possible for populations to continue to grow beyond the carrying capacity of an ecosystem for a while. What happens after that ecosystem is effectively tapped out is what should worry everyone.
Sunday, April 4, 2010
Non-Negotiable Nature
Everything I post on this blog is informed primarily, maybe even exclusively, by the recognition that humans are animals and subject to the laws of nature. Call it a first principle. To be clear, I don't consider this the same as promoting a scientific understanding above, below, or equivalent to a religious experience with life and existence, but I would assert that a faith or a spirituality that is not informed by a scientific version of the Truth is inadequate for the times we live in. With that in mind, I think it is useful and valid to interpret the place of science and the various effects it has had on the history of the western world, whether good or bad, as the ultimate Faustian bargain(myth is an excellent way to understand existence as well). But is science as a means to humans to understand nature really the same as the Faustian drive for power and riches? There is certainly power to be had through the understanding of the workings of nature, but can the knowledge of something be responsible for the acts that knowledge enables? Mmm, maybe.
This may seem like a roundabout way to talk about a new economics for a resource-constrained world, but I believe that the magnitude of what needs to be considered should match the magnitude of the condition you find yourself in. In periods of dramatic change, one struggle you might find yourself in is between the way you thought the world worked and how the way you thought served to cause the changing circumstances. Examining your underlying assumptions is critical to achieving some new understanding that will be of use further down the road. To put some flesh on all of this, the changing circumstance is the steady depletion of economically extractable resources, especially the Ur-resource of crude oil. The underlying assumption is that the domination of nature by humans can continue without serious or fatal repercussions.
The domination of nature finds it's fullest expression in industrial civilization and the consumption driven economy it enables. The exploitation of the natural world for human use was given an enormous shot in the arm in the form of fossil fuels coupled with the advent of science and the technologies that the scientific method made possible. To bring back Faust for a bit, fossil fuels, playing the role of Mephistopheles, provided the power for humanity to use to dominate nature in ways it could not have otherwise done. The deal between Faust and the devil was for the devil to be the servant of Faust for a limited time in exchange for his eternal soul. During this time, the devil would give Faust everything he wished for; power, money, riches. Of course, Faust wound up in hell because he was unable to quit the bargain before the term expired.
The discovery and use of fossil fuels has produced a tricky predicament for humanity. We have come to believe during the course of the last 300 years that humans have liberated themselves from the hardships of past generations through their own cleverness. But the power we used to accomplish this is completely natural. No technology has created any fossil fuel energy but has instead just drawn it down from the Earth's natural endowment. Like the devil's bargain, the supply of hydrocarbons is limited in quantity and, therefore, in time. The cruel lesson in all of this is that, despite our cleverness, we cannot escape the natural bases of our lives. Yet we've behaved as though we had escaped the confines of the natural world and had created a world entirely seperate from it. The first principle of any economic system, or any society, of the future has to be as I stated it above because we in fact have not defeated or escaped nature by any stretch, not even in the industrial heyday.
The basis for any future society, then, has to be in accordance with ecological conditions. This essentially means it will be based on the flows of energy through the systems we rely on and human economic needs will be balanced with the needs of the natural systems that support us. All this seems obvious enough but when you consider that, sans any fossil fuels, the eventuality we all should be preparing for, the only energy source you are left with is the sun (fossil fuel is just old sunlight anyway). Of course, the sun produces wind, waves, photosynthesis, and heat. All our technology will have to be designed to make the most of these sources of energy. It will not be concentrated energy in the way fossil fuel energy is concentrated so the ability to power things we are accustomed to powering will likely not be there for us. This means industrial level production will not be possible over the long haul.
One concept used in ecology, and other fields like engineering, is the energy returned on energy invested(EROEI). Expressed as a ratio, it is one determiner of whether or not something is worth doing. A good way to think about it is through the example of a predator, like a lion, expending it's effort in catching food. It is worth it for a lion to go after bigger game like a gazelle or something, but not so much to go after rabbits. In fact, the lion would not be able to survive if it went after rabbits because, even if were able to catch one, it would have spent more energy getting the rabbit than the rabbit has to offer. At the very least, it would be barely worth it and the lion would have to either evolve to live off of rabbit meat or go extinct.
Humans ultimately face ecological limits to the economic systems they rely upon. It is like Faust choosing to give up earthly riches and return to the staid life of a normal person. It will be like the lion forced to hunt rabbits. Closer to home, it will be like a suburban mom downscaling her SUV for a moped. This could be achieved (except for the lion, perhaps), but requires something largely unprecedented. But, when the human situation is viewed from the perspective of science, and is viewed in a long enough time scale, then the stark reality becomes evident and the choices disappear. A particular future, one that believes humans will populate other planet, or one even in which we escape simple human labor, will not be occurring. Rather, it will likely be one in which we work the land, own less and travel less. In short, a future of smaller scale. Machines will be smaller and simpler and more costly to make. Things we use will be made to last a long time. Refitting the human presence on Earth to match these quite measurable physical constraints is the project for everyone.
Next week I will talk more on EROEI and other ecological concepts that will be the basis for future systems.
This may seem like a roundabout way to talk about a new economics for a resource-constrained world, but I believe that the magnitude of what needs to be considered should match the magnitude of the condition you find yourself in. In periods of dramatic change, one struggle you might find yourself in is between the way you thought the world worked and how the way you thought served to cause the changing circumstances. Examining your underlying assumptions is critical to achieving some new understanding that will be of use further down the road. To put some flesh on all of this, the changing circumstance is the steady depletion of economically extractable resources, especially the Ur-resource of crude oil. The underlying assumption is that the domination of nature by humans can continue without serious or fatal repercussions.
The domination of nature finds it's fullest expression in industrial civilization and the consumption driven economy it enables. The exploitation of the natural world for human use was given an enormous shot in the arm in the form of fossil fuels coupled with the advent of science and the technologies that the scientific method made possible. To bring back Faust for a bit, fossil fuels, playing the role of Mephistopheles, provided the power for humanity to use to dominate nature in ways it could not have otherwise done. The deal between Faust and the devil was for the devil to be the servant of Faust for a limited time in exchange for his eternal soul. During this time, the devil would give Faust everything he wished for; power, money, riches. Of course, Faust wound up in hell because he was unable to quit the bargain before the term expired.
The discovery and use of fossil fuels has produced a tricky predicament for humanity. We have come to believe during the course of the last 300 years that humans have liberated themselves from the hardships of past generations through their own cleverness. But the power we used to accomplish this is completely natural. No technology has created any fossil fuel energy but has instead just drawn it down from the Earth's natural endowment. Like the devil's bargain, the supply of hydrocarbons is limited in quantity and, therefore, in time. The cruel lesson in all of this is that, despite our cleverness, we cannot escape the natural bases of our lives. Yet we've behaved as though we had escaped the confines of the natural world and had created a world entirely seperate from it. The first principle of any economic system, or any society, of the future has to be as I stated it above because we in fact have not defeated or escaped nature by any stretch, not even in the industrial heyday.
The basis for any future society, then, has to be in accordance with ecological conditions. This essentially means it will be based on the flows of energy through the systems we rely on and human economic needs will be balanced with the needs of the natural systems that support us. All this seems obvious enough but when you consider that, sans any fossil fuels, the eventuality we all should be preparing for, the only energy source you are left with is the sun (fossil fuel is just old sunlight anyway). Of course, the sun produces wind, waves, photosynthesis, and heat. All our technology will have to be designed to make the most of these sources of energy. It will not be concentrated energy in the way fossil fuel energy is concentrated so the ability to power things we are accustomed to powering will likely not be there for us. This means industrial level production will not be possible over the long haul.
One concept used in ecology, and other fields like engineering, is the energy returned on energy invested(EROEI). Expressed as a ratio, it is one determiner of whether or not something is worth doing. A good way to think about it is through the example of a predator, like a lion, expending it's effort in catching food. It is worth it for a lion to go after bigger game like a gazelle or something, but not so much to go after rabbits. In fact, the lion would not be able to survive if it went after rabbits because, even if were able to catch one, it would have spent more energy getting the rabbit than the rabbit has to offer. At the very least, it would be barely worth it and the lion would have to either evolve to live off of rabbit meat or go extinct.
Humans ultimately face ecological limits to the economic systems they rely upon. It is like Faust choosing to give up earthly riches and return to the staid life of a normal person. It will be like the lion forced to hunt rabbits. Closer to home, it will be like a suburban mom downscaling her SUV for a moped. This could be achieved (except for the lion, perhaps), but requires something largely unprecedented. But, when the human situation is viewed from the perspective of science, and is viewed in a long enough time scale, then the stark reality becomes evident and the choices disappear. A particular future, one that believes humans will populate other planet, or one even in which we escape simple human labor, will not be occurring. Rather, it will likely be one in which we work the land, own less and travel less. In short, a future of smaller scale. Machines will be smaller and simpler and more costly to make. Things we use will be made to last a long time. Refitting the human presence on Earth to match these quite measurable physical constraints is the project for everyone.
Next week I will talk more on EROEI and other ecological concepts that will be the basis for future systems.
Sunday, March 28, 2010
When the Obvious Goes Unnoticed
What the market meltdown of October of 2008 and the subsequent resuscitation by the governments of the world have given the global citizenry is a whole lot of unease and doubt about the viability of the global economy. To be sure, the amount of unease and doubt among people varies quite a bit, but many fewer of them now see a future that could be called bright or prosperous. The numbers are well known enough and truly staggering. You don't have to look much further than the rates of unemployment and foreclosure to understand how bad things are for people. On top of this, wealth people once believed they had and now do not makes the unease, doubt, fear, anxiety and what have you thoroughly understandable. The lingering question is how deep does this go. People generally gather, or are open to the possibility, that this is a systemic crisis. But how big of a system are we talking about? What is the fluff economy and what has real value? What can be counted on to bring us our former prosperity? The questions can be iterated in many different ways.
Predictably, the people's confidence in the expertocracy is at an all time low. And it's no wonder that this is be the case given the near total failure of economists and other observers to predict the biggest meltdown since the Second World War. The question has to be asked: What are they looking at when they look at the economy? What is the value of economic models if they fail to see such an enormous crisis right before it happens?
A conclusion one might draw from all of this is that the system is even bigger than economists realize. One possible outcome from the continuation of the market difficulties is the need to scrap the way the economists understand their craft. Fortunately for us, there are plenty of different ways to look at the economy, from an academic or a practitioner's perspective, other than the reigning theoretical contraption of Neo-classical economics. The system, it turns out, is much bigger than the neo-classical economists ever dreamed, and someday soon we'll have to quickly and carefully move to some other modus operandi regarding our economic behavior.
The problems with neo-classical economics have been well-documented by critics from many different points of view but I'll just take a few of the foundational ones to illustrate what's being talked about. The neo-classical model holds that people are three things; they are rational, are utility maximizers, and have good information. This may seem absurd on the face of it but it serves as a theoretical basis for trained economists everywhere. That we are well-informed rational utility maximizers can be proven false, in my mind anyway, by one example. The great Beanie Baby Bubble (BBB) of whenever put to rest any questions about what people can become given the right circumstances. What it showed is that whimsy, fueled by too much extra money, informed by bad taste, and oblivious to quality is also an economic force. Now, this example convinces me that economics needs a serious rethink, but others may need more. This subject will be be touched on again. There's plenty more.
An even deeper problem with neo-classical economics comes from the fact that it completely ignores natural resources or natural systems except as commodities to be bought or sold. The thinking goes that resources are unlimited and that nature is a endless garbage dump. This, too, is absurd on the face of it, yet there it is. There are historical reasons for this that go back to the early days of the economic philosophies of the 19th century and it involves the scientific understanding of nature at the time and, though that understanding has certainly changed, economics has not tried to ground itself in natural science since. The thrust of the new economic thinking reconciles this and begins with energy as the lifeforce of all economies, as it is with all systems, natural or otherwise.
People losing there houses to foreclosure or their jobs to a bad economy may not find much consolation in this, or give a rip either way, but it is at least an attempt to get an idea of the magnitude of the system that is failing and point out that this failure is one whose roots can conceivably be traced back to centuries long gone. In a time when many people are compelled to think in quite short time frames, it is incumbent on others to think in longer ones. It is important also for people to appreciate how high-falutin' theories hatched in the brains of pasty academics and dead thinkers indeed have powerful impacts on the lives of anyone who lives in a civilization.
Next time I'll go into some of these new economic ideas and, for as exciting as they are, also go into why someone who sees the consumer society as the pinnacle of human achievement will likely be way less excited.
Predictably, the people's confidence in the expertocracy is at an all time low. And it's no wonder that this is be the case given the near total failure of economists and other observers to predict the biggest meltdown since the Second World War. The question has to be asked: What are they looking at when they look at the economy? What is the value of economic models if they fail to see such an enormous crisis right before it happens?
A conclusion one might draw from all of this is that the system is even bigger than economists realize. One possible outcome from the continuation of the market difficulties is the need to scrap the way the economists understand their craft. Fortunately for us, there are plenty of different ways to look at the economy, from an academic or a practitioner's perspective, other than the reigning theoretical contraption of Neo-classical economics. The system, it turns out, is much bigger than the neo-classical economists ever dreamed, and someday soon we'll have to quickly and carefully move to some other modus operandi regarding our economic behavior.
The problems with neo-classical economics have been well-documented by critics from many different points of view but I'll just take a few of the foundational ones to illustrate what's being talked about. The neo-classical model holds that people are three things; they are rational, are utility maximizers, and have good information. This may seem absurd on the face of it but it serves as a theoretical basis for trained economists everywhere. That we are well-informed rational utility maximizers can be proven false, in my mind anyway, by one example. The great Beanie Baby Bubble (BBB) of whenever put to rest any questions about what people can become given the right circumstances. What it showed is that whimsy, fueled by too much extra money, informed by bad taste, and oblivious to quality is also an economic force. Now, this example convinces me that economics needs a serious rethink, but others may need more. This subject will be be touched on again. There's plenty more.
An even deeper problem with neo-classical economics comes from the fact that it completely ignores natural resources or natural systems except as commodities to be bought or sold. The thinking goes that resources are unlimited and that nature is a endless garbage dump. This, too, is absurd on the face of it, yet there it is. There are historical reasons for this that go back to the early days of the economic philosophies of the 19th century and it involves the scientific understanding of nature at the time and, though that understanding has certainly changed, economics has not tried to ground itself in natural science since. The thrust of the new economic thinking reconciles this and begins with energy as the lifeforce of all economies, as it is with all systems, natural or otherwise.
People losing there houses to foreclosure or their jobs to a bad economy may not find much consolation in this, or give a rip either way, but it is at least an attempt to get an idea of the magnitude of the system that is failing and point out that this failure is one whose roots can conceivably be traced back to centuries long gone. In a time when many people are compelled to think in quite short time frames, it is incumbent on others to think in longer ones. It is important also for people to appreciate how high-falutin' theories hatched in the brains of pasty academics and dead thinkers indeed have powerful impacts on the lives of anyone who lives in a civilization.
Next time I'll go into some of these new economic ideas and, for as exciting as they are, also go into why someone who sees the consumer society as the pinnacle of human achievement will likely be way less excited.
Sunday, March 21, 2010
Followership-An Appeal
Not only does the US have a tremendous problem with it's leadership, it has maybe an even bigger problem with it's followership. At the present moment, the followership is disatisfied with it's leadership, and the relationship is a little bit strained. Not that I'm letting the leadership side off the hook but let's just put it aside for now and focus on the issues with the much larger group of followers and why it seems unable to make reasonable or coherent demands of it's leaders.
A follower is a citizen. It is one of the governed. In a democracy, citizenship comes with a set of responsibilties which those followers living under a different sort of arrangement, like a totalitarian single party dictatorship, are not burdened with. Democracy, you could say, is a relationship between the governors and the governed that requires a certain amount of work to be done on both sides in order for it to function properly. The relationship in a democracy is more mature than in a non-democratic system and citizens of a democracy not only have to be able to emotionally handle the relationship, but stay intellectually fit to be alert to what's going on. This demands the use of reason, a capacity and the patience to deliberate, the willingness to learn about the world, and truthfulness. That is what the country was founded on, after all.
The purpose of this blog primarily is to address the question of what is going on. That the followers largely don't know is painfully evident in the demands many of them make. It seems odd to me that voters would hold politicians accountable for rising gas prices, for example, yet tell that same government to stay out of the operations of the free market. Then they demand a lower gas tax even though that very same tax money is used to subsidize the oil industry so that it will fund exploration for new oil. In a similar vain, it is common for people to complain about how everything in America is made in China yet will line up at Walmart on the morning of Black Friday to buy all the stuff made in China. These are two tiny examples of the contradictory behavior of a lot of Americans. Hopefully they are representative enough for you to get my point.
More alarming than simple incoherence is that many people in this country are angry, for one reason or another, about the direction the country is headed. I wouldn't try to tell an angry person that it is wrong to feel angry about the situation in America, but it's important to keep in mind that people often direct their anger at the wrong things or are angry for the wrong reasons. There's a lot of that going on these days. If you couple anger and incoherence in the same person then you have someone who is ripe for exploitation by another who sees opportunity in all the anger going around. The Tea Party movement is made up exclusively of people like this.
As difficult as it is to comprehend someone who is incoherent, it is not difficult to see how that person, scaled up to a movement, can undermine useful collective measures to change course when this particular collective rejects collective action as a first priciple. The black hole of Tea Party ideology is that the very individualistic program they wish to foist onto the body politic most favors the corporate power that is ripping them off via the government they seek to tear down. Rather than regulate this corporate power, they would rather blame those among us who use, and abuse, welfare. Likewise, they would blame unions which demand living wages from the corporations for the exportation of manufacturing jobs instead of looking more systemically at the decades-long downward trend of manufacturing in America and other advanced economies.
These decades-long political disputes miss something altogether larger and more fundamental. The U.S. decades-long decline is due to things we cannot stop no matter how hard we we may wish we could. The underlying reasons we are losing ground, by many measures, can be traced to the simultaneous need for growth and the impossibility to grow. I'm not simply referring to economic growth, but growth of the whole enterprise. What I am positing is that, even if we'd done everything "right" since the 1970's, when the downturn arguably began, we would still be faced with decline, economic or otherwise, for reasons that may or may not be widely known or acknowledged. The effects of our decline are apparent enough as things are right now, but we've managed to conceal an underlying fatal flaw in the systems that have been erected and expanded since that time as a part of the drive for economic growth. The flaw is diminishing returns, a flaw we can't do much about if the system demands growth for survival. At some point the economy will start to eat itself, like a body without food will eat itself.
In one sense, I agree with the Tea Party movement and with conservatives generally. Things are getting unwieldy and too big to mange. So the Tea Party movement and conservatives are, in their own pre-conscious way, perceiving the diminishing returns of complexity. I appreciate that a movement based on decomplexification of the American system is hardly good fodder for bumper sticker manufacturers, but a general realization of this point, of complexity as the illness and economic malaise as merely a symptom, then a more thoughtful discussion on where we go from here might ensue. To extend the metaphor a bit further and apply it too another related issue, the debt is a symptom, not a cause of our decline. The conservative mania over the public debt misses the deeper roots of our predicament. Growth is the end we cannot achieve but our system depends on growth for it's very survival. That is why we borrow. If we did not borrow, we would descend wildly into a depression.
The link above has a chart that tells the story of the U.S. predicament with it's debt. But the blogger holds some of the myths about growth and economic freedom that will purportedly attain that growth. But, the chart says a lot about the longer trend and some of the commentary I am sympathetic to. But anyone who is willing to take back the power ceded to the banks has to be equally willing to accept the reduction of our financial well-being that will go along with it. The necessity of taking down and shrinking the financial industry is so that it does not take the taxpayer down with it. Eventually, the "money" will have to be written off. This means deflation. And even if the nation manages to avoid the worst of it it will mean the end of growth. Stagflation may be the best we can hope for. With food and energy prices likely to rise and stay high, high enough at least to kill growth, we could be even faced with an inflationary depression, something probably not deemed possible by economists at the moment.
The acceptance of this outcome could lead to a different set of prescriptions based on more modest expectations and a fuller sense of historical actuality. We are a superpower losing it's grip on the status quo. This is a historical process that will last several decades into the future. We should be wondering about a reasonable place for us to bottom out in a way that does not tear the fabric of society apart.
A follower is a citizen. It is one of the governed. In a democracy, citizenship comes with a set of responsibilties which those followers living under a different sort of arrangement, like a totalitarian single party dictatorship, are not burdened with. Democracy, you could say, is a relationship between the governors and the governed that requires a certain amount of work to be done on both sides in order for it to function properly. The relationship in a democracy is more mature than in a non-democratic system and citizens of a democracy not only have to be able to emotionally handle the relationship, but stay intellectually fit to be alert to what's going on. This demands the use of reason, a capacity and the patience to deliberate, the willingness to learn about the world, and truthfulness. That is what the country was founded on, after all.
The purpose of this blog primarily is to address the question of what is going on. That the followers largely don't know is painfully evident in the demands many of them make. It seems odd to me that voters would hold politicians accountable for rising gas prices, for example, yet tell that same government to stay out of the operations of the free market. Then they demand a lower gas tax even though that very same tax money is used to subsidize the oil industry so that it will fund exploration for new oil. In a similar vain, it is common for people to complain about how everything in America is made in China yet will line up at Walmart on the morning of Black Friday to buy all the stuff made in China. These are two tiny examples of the contradictory behavior of a lot of Americans. Hopefully they are representative enough for you to get my point.
More alarming than simple incoherence is that many people in this country are angry, for one reason or another, about the direction the country is headed. I wouldn't try to tell an angry person that it is wrong to feel angry about the situation in America, but it's important to keep in mind that people often direct their anger at the wrong things or are angry for the wrong reasons. There's a lot of that going on these days. If you couple anger and incoherence in the same person then you have someone who is ripe for exploitation by another who sees opportunity in all the anger going around. The Tea Party movement is made up exclusively of people like this.
As difficult as it is to comprehend someone who is incoherent, it is not difficult to see how that person, scaled up to a movement, can undermine useful collective measures to change course when this particular collective rejects collective action as a first priciple. The black hole of Tea Party ideology is that the very individualistic program they wish to foist onto the body politic most favors the corporate power that is ripping them off via the government they seek to tear down. Rather than regulate this corporate power, they would rather blame those among us who use, and abuse, welfare. Likewise, they would blame unions which demand living wages from the corporations for the exportation of manufacturing jobs instead of looking more systemically at the decades-long downward trend of manufacturing in America and other advanced economies.
These decades-long political disputes miss something altogether larger and more fundamental. The U.S. decades-long decline is due to things we cannot stop no matter how hard we we may wish we could. The underlying reasons we are losing ground, by many measures, can be traced to the simultaneous need for growth and the impossibility to grow. I'm not simply referring to economic growth, but growth of the whole enterprise. What I am positing is that, even if we'd done everything "right" since the 1970's, when the downturn arguably began, we would still be faced with decline, economic or otherwise, for reasons that may or may not be widely known or acknowledged. The effects of our decline are apparent enough as things are right now, but we've managed to conceal an underlying fatal flaw in the systems that have been erected and expanded since that time as a part of the drive for economic growth. The flaw is diminishing returns, a flaw we can't do much about if the system demands growth for survival. At some point the economy will start to eat itself, like a body without food will eat itself.
In one sense, I agree with the Tea Party movement and with conservatives generally. Things are getting unwieldy and too big to mange. So the Tea Party movement and conservatives are, in their own pre-conscious way, perceiving the diminishing returns of complexity. I appreciate that a movement based on decomplexification of the American system is hardly good fodder for bumper sticker manufacturers, but a general realization of this point, of complexity as the illness and economic malaise as merely a symptom, then a more thoughtful discussion on where we go from here might ensue. To extend the metaphor a bit further and apply it too another related issue, the debt is a symptom, not a cause of our decline. The conservative mania over the public debt misses the deeper roots of our predicament. Growth is the end we cannot achieve but our system depends on growth for it's very survival. That is why we borrow. If we did not borrow, we would descend wildly into a depression.
The link above has a chart that tells the story of the U.S. predicament with it's debt. But the blogger holds some of the myths about growth and economic freedom that will purportedly attain that growth. But, the chart says a lot about the longer trend and some of the commentary I am sympathetic to. But anyone who is willing to take back the power ceded to the banks has to be equally willing to accept the reduction of our financial well-being that will go along with it. The necessity of taking down and shrinking the financial industry is so that it does not take the taxpayer down with it. Eventually, the "money" will have to be written off. This means deflation. And even if the nation manages to avoid the worst of it it will mean the end of growth. Stagflation may be the best we can hope for. With food and energy prices likely to rise and stay high, high enough at least to kill growth, we could be even faced with an inflationary depression, something probably not deemed possible by economists at the moment.
The acceptance of this outcome could lead to a different set of prescriptions based on more modest expectations and a fuller sense of historical actuality. We are a superpower losing it's grip on the status quo. This is a historical process that will last several decades into the future. We should be wondering about a reasonable place for us to bottom out in a way that does not tear the fabric of society apart.
Sunday, February 28, 2010
My Summer Wish List
Given the widespread and stubborn refusal by most Americans to accept the eventualities of climate change disaster and the more immediate peaking of global oil production, I have found myself wishing for clear signals from nature and the market that would bolster the arguments of myself and others who appreciate the implications of such things. My wish springs from the frustration I feel as I observe the national "discussion" and my desire for it to transcend the "discussion's" most moronic elements to something more urgent. Seeing as the people who make the "discussion" especially moronic are the very same people who seem to base their opinions about these two subjects on whether or not they personally experience hot or cold weather or high gas prices I have come to hope for events that will force the issue and change the "discussion". My modest summer wish list therefore is based on what I believe is needed to jar my thicker headed compatriots enough to get them to realize that which is a clearly demonstrated reality.
The first wish I have is that this summer will be so hot that multiple high temperature records across the continental United States are smashed to pieces. It should be hot enough to make most anyone very uncomfortable but not so hot to cause anyone to die. Many Americans alive today need to feel very uncomfortable; to feel hot, sweaty, and perturbed, coupled with a sense of dread as the unpleasantness of the heat seems to have no end. All Americans should feel as northerners do in January who long for the end of winter and respite from the cold. Autumn should be embraced the way spring is embraced after winter.
My second and final wish is for gasoline prices to pole vault $3.00 a gallon and perhaps land somewhere in the $3.30-50 range in early summer then stay there. You're likely to hear many voiced and/or muttered expletives referring to the excretory functions, the sexual organs or sexual activity, or using the lords name in vain, which means you should cover your children's ears when getting gasoline this summer if this wish of mine comes to pass.
These two wishes in fact have pretty good chances of coming true. Oblivious to the heat waves that struck the southern hemisphere during it's summer, the northern hemisphere saw some cold but generally unremarkable winter temperatures, over a thirty year average, due to the Arctic Oscillation having entered it's negative phase. The Arctic Oscillation is a normal occurrence that effects weather patterns in the northern hemisphere so should not be seen as evidence of global warming. However, arctic temperatures were anywhere from 9-13 degrees F above normal this winter, which is a lot, and should be seen as evidence of global warming. The result of all of this is that the northern hemisphere really got screwed out of a globally warmed winter because of the Arctic Oscillation and were left wondering about the reality of global warming.
As for the coming summer, the main driver of temperature will be El Nino. The Pacific Ocean entered the El Nino phase last fall and will probably make this summer very hot and wet. As of last November (I haven't looked recently) surface temperature readings in the Pacific were some of the highest ever recorded. The worrisome part about this is that the bigger and more destructive storms over the continent that accompany El Nino years will probably be a constant news feature. Not to make this a farmer's almanac or anything, I'd say that folks living in the middle of the continent and in the deep South should make sure the tornado shelter is ready to roll.
The price of gas is likely to go up because of the actions of refiners. Whether the price of oil goes up or not, the refiners are in serious need of profit. The $70-80 a barrel range for the price of oil doesn't seem to support the $2.50 or so per gallon gasoline that most Americans have been paying for the past several months. Or the $2.72 I saw earlier today. Another reason is that there is a gasoline glut in the market because demand in the U.S. has fallen so much. So refiners seem to be in a strange supply-demand situation. There is too much gas on the market, forcing prices down, but the price of oil is high. It should be interesting to see how people interpret this. Will they call the speculators before congress to explain themselves? Will they clamor for new refining capacity? Or will they see it as a new normal that Americans will have to adapt to? The lesson I would like for them to get is this: If Americans want to drill for more oil they will pay more for gas, and if they want cheap gas they will have to use less. That sums up the predicament we find ourselves in.
This summer, then, whenever you hear someone swearing through his teeth about high gas prices, turn to him or her and say "Hey, if you want cheap gas, then you gotta stop usin' it". It might help if you say it in your best Jeff Spicoli imitation to add insult to injury. Likewise, when temperatures have reached unbearable levels, track down you're favorite global warming denier and ask "how's that global cooling treating you?"
The first wish I have is that this summer will be so hot that multiple high temperature records across the continental United States are smashed to pieces. It should be hot enough to make most anyone very uncomfortable but not so hot to cause anyone to die. Many Americans alive today need to feel very uncomfortable; to feel hot, sweaty, and perturbed, coupled with a sense of dread as the unpleasantness of the heat seems to have no end. All Americans should feel as northerners do in January who long for the end of winter and respite from the cold. Autumn should be embraced the way spring is embraced after winter.
My second and final wish is for gasoline prices to pole vault $3.00 a gallon and perhaps land somewhere in the $3.30-50 range in early summer then stay there. You're likely to hear many voiced and/or muttered expletives referring to the excretory functions, the sexual organs or sexual activity, or using the lords name in vain, which means you should cover your children's ears when getting gasoline this summer if this wish of mine comes to pass.
These two wishes in fact have pretty good chances of coming true. Oblivious to the heat waves that struck the southern hemisphere during it's summer, the northern hemisphere saw some cold but generally unremarkable winter temperatures, over a thirty year average, due to the Arctic Oscillation having entered it's negative phase. The Arctic Oscillation is a normal occurrence that effects weather patterns in the northern hemisphere so should not be seen as evidence of global warming. However, arctic temperatures were anywhere from 9-13 degrees F above normal this winter, which is a lot, and should be seen as evidence of global warming. The result of all of this is that the northern hemisphere really got screwed out of a globally warmed winter because of the Arctic Oscillation and were left wondering about the reality of global warming.
As for the coming summer, the main driver of temperature will be El Nino. The Pacific Ocean entered the El Nino phase last fall and will probably make this summer very hot and wet. As of last November (I haven't looked recently) surface temperature readings in the Pacific were some of the highest ever recorded. The worrisome part about this is that the bigger and more destructive storms over the continent that accompany El Nino years will probably be a constant news feature. Not to make this a farmer's almanac or anything, I'd say that folks living in the middle of the continent and in the deep South should make sure the tornado shelter is ready to roll.
The price of gas is likely to go up because of the actions of refiners. Whether the price of oil goes up or not, the refiners are in serious need of profit. The $70-80 a barrel range for the price of oil doesn't seem to support the $2.50 or so per gallon gasoline that most Americans have been paying for the past several months. Or the $2.72 I saw earlier today. Another reason is that there is a gasoline glut in the market because demand in the U.S. has fallen so much. So refiners seem to be in a strange supply-demand situation. There is too much gas on the market, forcing prices down, but the price of oil is high. It should be interesting to see how people interpret this. Will they call the speculators before congress to explain themselves? Will they clamor for new refining capacity? Or will they see it as a new normal that Americans will have to adapt to? The lesson I would like for them to get is this: If Americans want to drill for more oil they will pay more for gas, and if they want cheap gas they will have to use less. That sums up the predicament we find ourselves in.
This summer, then, whenever you hear someone swearing through his teeth about high gas prices, turn to him or her and say "Hey, if you want cheap gas, then you gotta stop usin' it". It might help if you say it in your best Jeff Spicoli imitation to add insult to injury. Likewise, when temperatures have reached unbearable levels, track down you're favorite global warming denier and ask "how's that global cooling treating you?"
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