PLANNING THE POST-GROWTH SOCIETY
This article explores an issue that is always at or near the centre of where the economy is going. Worldwide, the long years of growing prosperity are over, and this change fundamentally invalidates many things that government, business and the public have always taken for granted.
The reason why growth is over, of course, is that we no longer have access to cheap energy. Where geographical expansion and economies of scale once drove down the cost of accessing energy, the driving factor now is depletion, which is pushing costs upward, and is doing so in an exponential way.
Though no abrupt plunge in global prosperity is on the cards, there is scant comfort in that. Prosperity in most Western developed economies has already passed its peak. Our economic and financial systems are extremely vulnerable, because they are predicated on perpetual growth.
Thus far, and in spite of all the accumulating evidence, we haven’t recognised that growth in prosperity is over. Rather, we’ve tried to delude ourselves, by using cheap and easy debt, and latterly ultra-cheap money as well, to pretend that perpetual growth remains alive and well. In themselves, these expedients are harmful in ways that can be managed. Efficiency is being undermined by keeping sub-viable entities afloat, and a major crash in asset values has become an inevitably. Neither of these problems is existential in itself.
But changes are happening, too, in ways that are fundamental. A system dependent on ever-growing consumption and ever-increasing profitability is becoming invalidated. The very concept of debt is becoming untenable, because the process depends on growth in borrowers’ income, something which is no longer happening.
These effects have profound political and social as well as economic and financial implications. As growth unwinds, so does tolerance of inequality – that’s why “populists” have enjoyed an ascendancy, and why trends are moving strongly in favour of the collectivist Left.
The dangers of complacency
If you’re a regular visitor to this site, you’ll know that world prosperity, as measured by the Surplus Energy Economics Data System (SEEDS), is projected broadly flat out to 2030. To put some numbers on this, global average prosperity per person is estimated at $11,050 in 2016, and is expected to be very little changed in 2030, at $11,360 (in 2016 PPP dollars).
There are a lot of reasons, however, not to be lured into any form of complacency by this flat trajectory. First, our economic system isn’t geared to stable-state, but is predicated on perpetual expansion – and that’s a huge problem, now that the conditions which favoured growth in the past are breaking down. Though we can be pretty sure that the era of meaningful growth in prosperity has ended, we cannot know how much collateral damage will result from the challenge of trying to adapt to that change.
Second, the projected global figure for 2030 disguises a wide regional divergence of experience. China, for example, is on the positive side of the equation. Prosperity may not be growing at anything like the rate depicted by GDP per capita, but Chinese citizens are continuing to become better off. For 2016, prosperity is estimated at 30,800 RMB per person – roughly double the equivalent number for 2003 – and the SEEDS projection for 2030 is 42,225 RMB, an improvement of 37%. Improvement is likely, too, in India.
But prosperity in the developed West, already in decline, is set to deteriorate steadily. Comparing 2030 with 2016, prosperity is likely to be 7% lower in the United States, for example, and 10% lower in Britain. These projected declines are in addition to the deterioration that has already happened – prosperity has already peaked in the US, Canada, Australia and most European countries.
Third, and even in countries where prosperity trends are positive, current economic policies suggest that both debt and deficiencies in pension provision will go on growing a lot more rapidly than prosperity.
Worldwide, we’re subsidising an illusory present by cannibalising an already-uncertain future. We’re doing this by creating debt that we can’t repay, and by making ourselves pension promises that we can’t honour. So acute is this problem that our chances of getting to 2030 without some kind of financial crash are becoming almost vanishingly small.
Finally, any ‘business as usual’ scenario suggests that we’re not going to succeed in tackling climate change. This is an issue that we examined recently. Basically, each unit of net energy that we use is requiring access to more gross energy, because the energy consumed in the process of accessing energy (ECoE) is rising. This effect is cancelling out our efforts to use surplus (net-of-cost) energy more frugally.
The exponential nature of the rise in ECoEs is loading the equation ever more strongly against us. This is why “sustainable development” is a myth, founded not on fact but on wishful thinking.
The lure of denial
These considerations present us with a conundrum. With prosperity declining, do we, like Pollyanna, try to ignore it, whistling a happy tune until we collide with harsh reality? Or do we recognise where things are heading, and plan accordingly?
There are some big complications in this conundrum. Most seriously, if we continue with the myth of perpetual growth, we’re not only making things worse, but we may be throwing away our capability to adapt.
You can liken this to an ocean liner, where passengers are beginning to suspect that the ship has sprung a leak. The captain, wishing to avoid panic, might justifiably put on a brave face, reassuring the passengers that everything is fine. But he’d be going too far if he underlined this assurance by burning the lifeboats.
The push for electric vehicles threatens to become a classic instance of burning the lifeboats. Here’s why.
We know that supplies of petroleum are tightening, that the trend in costs is against us, and that burning oil in cars isn’t a good idea in climate terms. Faced with this, the powers-that-be could do one of two things. They could start to wean us off cars, by changing work and habitation patterns, and investing in public transport. Alternatively, they can promise us electric vehicles, conveniently ignoring the fact that we don’t, and won’t, have enough electricity generating capacity to make this plan viable, and that we’d certainly need to burn in power stations at least as much oil as we’d take out of fuel tanks. At the moment, every indication is that they’re going to opt for the easy answer – not the right one.
This is just one example, amongst many, of our tendency to avoid unpalatable issues until they are forced upon us. The classic instance of this, perhaps, is the attitude of the democracies during the 1930s, who must have known that appeasement was worse than a cop-out, because it enabled Germany, Italy and Japan to build up their armed forces, becoming a bigger threat with every passing month. Hitler came to power in 1933, and could probably have been squashed like a bug at any time up to 1936. By 1938, though, German rearmament reduced us to buying ourselves time.
Burying one’s head in the sand is actually a very much older phenomenon than that. The English happily paid Danegeld without, it seems, realising that each such bribe made the invaders stronger. It’s quite possible that the French court could have defused the risk of revolution by granting the masses a better deal well before 1789. The Tsars compounded this mistake when they started a reform process and then slammed it into reverse. History never repeats itself, but human beings do repeat the same mistakes, and then repeat their surprise at how things turn out.
Needed – vision and planning
The aim here is simple. There is an overwhelming case for preparation. With this established, readers can then discuss what might constitute a sensible plan, and try to work out how any plan at all is going to be formulated in a context of ignorance, denial and wishful thinking.
Let’s start with a basic premise. For more than a millennium, the population of the earth has increased, a process that has become exponential since we first tapped fossil fuels. The population exponential has been paralleled by trends in food and water supply, and in economic activity and complexity.
The “master exponential” driving all the others has been energy consumption. Basic physics dictates the primacy of energy in this mix. If we hadn’t grown our access to energy, we couldn’t have expanded our foods supplies, our population, our economic activity or the complexity of our societies.
For much of the era since 1760, energy has got cheaper. The petroleum industry, for instance, didn’t limit itself to Pennsylvania, but spread its reach across the globe, most notably finding huge oil resources in the Middle East. The same broadening process benefited coal and natural gas. As the energy industries expanded, they harnessed huge economies of scale. A third positive factor, in addition to reach and scale, was technology.
Since a high-point in the post-1945 decades, however, the trend of energy costs has crossed a climacteric. Reach ceased to help, and economies of scale reached a plateau. The new driver became depletion, an entirely logical consequence of using the most profitable resources first, and leaving less profitable ones for later. The role of technology changed, from boosting gains to mitigating decline. The extent to which technology can mitigate the cost of depletion is limited by the envelope of physics.
Only in science fiction, or in wishful thinking, can we get a quart of energy out of a pint pot.
The cost uptrend (and by ‘cost’, of course, is meant the energy consumed in accessing energy) hasn’t stopped growth in aggregate access to primary energy – yet. So far, we’ve been able to offset worsening cost ratios by using more energy. This said, cost is likely to make it harder to grow total supplies in the future. Fundamentally, as the energy consumed in the energy supply process rises, the amount of value that we get from each unit of energy diminishes, just as we hit limits to our ability to use greater volume to offset reduced value.
In petroleum, at least, we are now scraping the bottom of the barrel. If there were lots of gigantic, technically-easy fields still to be developed, we simply wouldn’t be bothering with shales, or crudes so heavy that they have to be mined rather than pumped. It’s become difficult to find a price that is high enough for producers without being too high for customers. Cost, rather than scarcity of reserves, is the factor that’s going to cause “peak oil”.
Renewable energies, though desirable, don’t offer an instant escape, not least because we have to use legacy fossil fuel energy to build wind turbines, solar panels and the infrastructure that renewables require. We once believed that nuclear energy would be “too cheap to meter”, and would free us from dependency on oil, gas and coal. We’re in danger of repeating that complacency with renewables. We need to assume that energy will get costlier, just as growing the absolute quantities available to us is getting tougher.
Growth – the bar keeps rising
As the cost of energy rises, economic growth gets harder. We’ve come up against this constraint since about 2000, and our response to it, thus far, has been gravely mistaken, almost to the point of childish petulance. We seem incapable of thinking or planning in any terms that aren’t predicated on perpetual growth. We resort to self-delusion instead.
First, we thought that we could create growth by making debt ever cheaper, and ever easier to obtain. Even after 2008, we seem to have learned nothing from this exercise in credit adventurism.
Since the global financial crisis (GFC), we’ve added monetary adventurism to the mix. In the process, we’ve crushed returns on investment, crippling our ability to provide pensions. We’ve accepted the bizarre idea that we can run a “capitalist” economic system without returns on capital. We’ve also accepted value dilution, increasingly resorting to selling each other services that are priced locally, that add little value, and that, in reality, are residuals of the borrowed money that we’ve been pouring into the economy.
We seem oblivious of the obvious, which is that money, having no intrinsic worth, commands value only as a claim on the output of a real economy driven by energy. When someone hands in his hat and coat at a reception, he receives a receipt which enables him to reclaim them later. But the receipt itself won’t keep him warm and dry. For that, he needs to exchange the receipt for the hat and coat. Money is analogous to that receipt.
The first imperative, then, is recognition that the economy is an energy system, not a financial one, in which money plays a proxy role as a claim on output. In this sense, money is like a map of the territory, whereas energy is the territory itself – and geographical features can’t be changed by altering lines on a map.
It’s fair to assume that the reality of this relationship will gain recognition in due course, the only question being how many mistakes and how much damage has to happen before we get there. No amount of orthodoxy can defy this reality, just as no amount of orthodoxy could turn flat earth theories into the truth.
With the energy dynamic recognised, we’ll need to come to terms with the fact that growth cannot continue indefinitely. Rather, growth has been a chapter, made possible by the bounty of fossil fuels, and that bounty is losing its largesse as the relationship between energy value and the cost of access tilts against us.
In one sense, it’s almost a good thing that this is happening. If we suddenly discovered vast oil reserves on the scale of another Saudi Arabia, we would probably use them to destroy the environment.
Undercutting the rationale – consumption, profit and debt
With growth in prosperity no longer guaranteed, a lot of other assumptions lose their validity. One of the first will be the nexus of consumerism and corporate profit, where we assume that consumption by the public must always increase, and, over time, profits must always grow.
We’ll find ourselves in a situation where consumption doesn’t keep growing, and will decrease in per capita terms at a pace which at least matches the rate at which population numbers are growing. In this situation, expecting suppliers to keep on expanding, and carry on increasing their profits, becomes unreasonable. Businesses which insist on trying to maintain profits growth in this context will probably have to resort to cheating, both exploiting consumers and falsifying information. It may well be that this process has already started.
Meanwhile, the invalidation of the growth assumption will have profound implications for debt, and may indeed make the whole concept unworkable. If borrowing and lending ceased to be a viable activity, the consequences would be profound.
To understand this, we need to recognise that debt only works when prosperity is growing. For A to borrow from B today, and at a future date repay both capital and interest, A’s income must have increased over that period. Without that growth, debt cannot be repaid.
There are two routes to the repayment of capital and the payment of interest, and both depend on growth. First, if A has put borrowed capital to work, the return on that investment both pays the interest, and also, hopefully, leaves A with a profit. Alternatively, if A has spent the borrowed money on consumption, A’s income has to increase by at least enough to for him to repay the debt, and pay interest on it.
In an ex-growth situation, both routes break down. Invested debt isn’t going to yield a sufficient return, because purchases by consumers have ceased to expand. A’s income, on the other hand, won’t have increased, because prosperity has stopped growing.
This scenario – in which repayment of debt becomes impossible – isn’t a future prediction, but a current reality, and a reality that is already in plain sight.
We need to be clear that the slashing of rates to almost zero happened because earning enough on capital to be able to pay real rates of interest has become impossible.
Businesses which aren’t growing cannot – ever – pay off their debts, and neither can individuals whose prosperity is deteriorating.
Critically, prosperity, which drives both profits and incomes, is declining. This is evident, not just in real wages (which, in many developed economies, haven’t grown since 2008), but also in the adverse relationship between nominal incomes and the cost of essentials.
To reiterate, if borrowers’ incomes don’t grow, they cannot pay off their debts, and are likely to go under because they cannot carry indefinitely the burden of compounding interest.
The politics of inequality
Financial exercises in denial (including escalating debt, ultra-cheap money and the impairment of pension provision) have already created a stark division between “haves” and “have-nots”. Essentially, the “haves” are those who already owned assets before the value of those assets was driven upwards by monetary policy. The “have-nots” are almost everyone else, especially the young.
Critically, the cessation of growing prosperity creates a fundamental change in attitudes towards inequality. Someone whose own prosperity is increasing is likely to be pretty tolerant towards a richer neighbour. Put prosperity into reverse, though, and that tolerance evaporates.
Again, this isn’t forecast, but fact. It’s one of the reasons why “populist” politicians are doing so well, and it also lays the foundations for a return to ascendancy by the collectivist Left. For this to happen, left-of-centre parties need to purge themselves of the centrists whose logic ceased to function when prosperity stopped growing.
The need to do this isn’t exactly rocket-science, and it’s already happening. We know that Hillary Clinton failed to see off Donald Trump, but we can’t know whether Bernie Sanders might have succeeded. We cannot know whether Labour under Jeremy Corbyn can win power in Britain, but we can be pretty sure that a Labour party led by a returning Tony Blair, or by someone else with the same “New” Labour policies, could not.
This stacks up to the return of division. The reason for this is that it’s becoming impossible for parties of opposition to accept big chunks of the incumbency’s economic agenda. As ordinary people become poorer, and as their ability to carry their debt burdens diminishes, the focus on inequality will intensify. The “politics of envy” will become “the politics of indignation”. Questions will start to be asked about how much money any one individual actually needs. The deterioration in the ability of the state to provide public services will intensify the politics of division.
To be clear about this, collectivism won’t solve our fundamental economic problems, and neither will a system which mutates Adam Smith’s free and fair competition into something akin to the law of the jungle. Deregulated capitalism is failing now, just as emphatically as Marxist collectivism failed in the past.
A logical conclusion, then, is that we need a new form of politics, just as much as we need a new understanding of economics, new models for business and a new role for finance. Co-operative systems might succeed where corporatism – both the state-controlled and the privately-owned variants – have failed.
All of these new ideas need to be grounded in reality, not in wishful thinking, denial or ideological myopia. But reality becomes a hard sell when it challenges preconceived notions – and no such notion is more rooted in our psyche than perpetual growth.
Most profound; leaves me with a great deal of thinking to do regarding the advice I offer my clients; thank you.
Thank you. My feeling is that there are some pretty stark winners and losers in this process, though I’ve not gone far into which is which.
Tim another illuminating post. I’m just on my way to Dusseldorf where I lived for a while bit will give your ideas plenty of thought over the weekend.
Please forgive me if any response I give over the weekend is a bit rose tinted but I will be indulging in the excellent Dussel beer.
Understood, have fun with the bier……
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“trends are moving strongly in favour of the collectivist Left”
Hmm, that’s not what i smell. We’ll see if collectivism still works when there’s less to share. Another thing, there’s ‘tangibles’ and there’s fake money, currency, fiatskies, whatever; our financial system with its debt overload. First thing that goes to the graveyard is the ‘thing’ that depends on growth, and that is a debt based financial system. Governments and central banks have several emergency scenario’s on their shelves. They cooperate too to make sure there won’t be a mismatch that hurts both countries or regions. They know we have to maintain infrastructure. The day all banks will be closed for a week and a new paradigm is introduced is getting closer and closer. Stages of collapse. For each stage one can make preparations. There’s no warranty.
Thanks for sharing your knowledge and insights doc. You anticipate on this blog in an excellent way, reading comments, understanding directions and viewpoints without pushing an agenda.
I think I should make clear that I’m not advocating collectivism, or suggesting it will work. I’m pretty certain it won’t. My political leanings are conservative and pro-market.
Rather, I’m trying to forecast where things may go next.
I’m all in favour of a market economy based on free and fair competition, integrity, and the regulation necessary to prevent excessive concentration and other abuses. Essentially, then, I agree with Adam Smith’s prescription. Unfortunately, the elites have taken us a long way from “inclusive capitalism” into something that I’ve called “junglenomics”. They’ve dragged the name of “capitalism” through the mud. With prosperity declining, I see no way back from there.
Meanwhile, I don’t see how “populists” – really, ant-establishment insurgents – can succeed. Mr Trump can’t make middle class Americans more prosperous. “Leave” can get Britain to vote against EU membership, but I don’t see them forming a government.
So, what remains? The heirs of Blair in Britain, Hillary in America and their equivalents in other countries can’t win an election. I doubt if they could win a raffle.
What remains is the colectivist Left.
I prefer regional collectivism, cooperation. Monetary permaculture. On a larger scale collectivism leads to another slave plantation. But ok.
Maybe we need global collectivism to overcome degrowth. Problem with that is the powerbase that won’t let go after the dust has settled. We don’t have influence on that, or too little. In a degrowth environment, as soon as it is loud and clear for the masses, things get rough. Rough as hell. That is not managable, only through harsh measures. We’ll see. On a personal level, i try to make some preparations. Small scale. Everyone should do that, maybe you can even support your neighbors with it and establish a small community.
As we speak, hardcore ‘capitalists’ try to maintain the core and cut off the energy consuming perifery; Venezuela, Mexico, Cyprus, southern Europe, Brazil, Ukraine. War in the middle east to secure oil deliveries. On purpose? Without growth their powerbase collapses.
And for un-denial:
Rob Mielcarski’s blog, reader and poster on this blog. Worth a read.
I see a need for a succinct statement of what Surplus Energy Economics is, and what it tells us.
I’m aiming to produce a guide, downloadable here as a PDF, which people can discuss and share.
It will summarise much as this article does, but will be supplemented with charts, data and more detail on some specific issues.
I think most here know what it is. Some more cold hard facts could support a view away from doom porn to a more serious discussion by the masses about the future.
Not that this blog is about doom p.
I communicate very direct, the Dutch way, sounds a rude maybe but isn’t meant to.
Bravo Tim, an excellent, well written summation of our predicament that even my wife appreciated. One factor that I would add to your list of consequences is the resurgence of the migration crisis for Europe and soon for the US. It’s hard for me to admit that we may actually need Trump’s Wall and soon. Mexico became a net energy importer last year, Venezuela is on the ropes, Brazil has called out the troops to maintain order in Rio. Africa is in crisis with bleak prospects for Egypt and there are many more that I have missed. India needs to grow at least at high single digits to keep its population appeased. Is that even possible for this net energy importer?
Thank you. This article comes from my planned Guide To Surplus Energy Economics.
Migration was one of the issues I couldn’t include without the article becoming too long. The migration debate is long on fanaticism and ideology, and short on rationality. Unfortunately, it’s likely to get more difficult with prosperity deteriorating, because this may increase hostility towards immigration.
Hello Dr Tim. If or when you address the topic of migration you might find this UN publication on world population of use:
The End of the Oil Age is Imminent!
Recently, the HSBC oil report stated that 80% of conventional oil fields were declining at a rate of 5-7% per year. This means that there will be an oil shortage of ~30 million barrels per day by 2030 and ~40 million barrels per day by 2040.
What is mentioned far less often is that annual oil discoveries have lagged annual production since the 1980s.
Now, this problem has nothing to do with the recent decline in the oil price, which started in 2014. This has been an on-going problem for the past 30 years. Now, the IEA is predicting oil shortages by ~2020 due to declining exploration.
Here, the IEA blames this problem on the low oil price. But, this problem started in the 1980s. The problem is geological: we are running out of conventional cheap oil. Shale and tar sands are not the answer, either. Those resources are far too expensive, compared to conventional oil, because the global economy is based on cheap conventional oil. Expensive oil is not a replacement for cheap oil.
Based upon the HSBC report and the IEA, the End of Oil Age will start around ~2020: there will be a dramatic economic depression due to exhaustion of cheap oil. This will cause a global economic collapse.
Agree entirely (though I don’t think the HSBC report said all that much that was really new). I agree, too, about 2020.
Mastermind this report is worthy of your list. I have just finished reading the 28 page report courtesy of a Finite Worlder and I can highly recommend it to all.
Click to access 1708.03150.pdf
Thanks for another enlightening post.
However, I admit that I don’t see the conundrum you pose because I think “head in the sands” is the only option. The whole of the political structure in Western democracies is built upon lies and obfuscation and, as I see it, the revelation of truth will simply be met initially by denial, then anger and then scapegoating which is another form of denial. Your message clashes with everything we see in the MSM.
The only way to achieve the sensible path (your second alternative) as I see it would be to adopt the “boiling frog” strategy which would mean the very gradual heating of the water as opposed to throwing the frog in boiling water. The problem with this is that the MSM would have to change direction en masse and would have to agree with the diagnosis, neither of which is likely.
I agree that the danger is that, under these circumstances, the message of the Left becomes seductive (free this and free that) for people who are looking for a comfort blanket. My view is like yours, somewhat akin to the German idea of the social market economy that held sway in the 1950s based on strong free enterprise with social amelioration. However to my mind the strongest argument for the free market is that it is tied in with the idea of individual freedom and independence; the notion of progress is related to the ability to dissent and freedom and independence are integral to this idea.
Regrettably, I have felt for some time that the most likely course is a crash and picking up the pieces, far, far from ideal or sensible bu most likely.
The first problem with “head in the sand” is wasted opportunities. I’ll give you one example. We’re poised to spend vast sums on conversion to EVs, a programme which I regard as futile and wasteful. Instead, we could use these resources much more wisely. Regenerate cities, making them nicer places to live and work in. Invest in public transport. Deter the kind of “sprawl” which makes car use imperative (for instance, don’t licence any more out-of-town retail developments). Extract more value from our existing vehicle fleet, whilst demanding greater efficiencies from new vehicles. Start changing housing and working pattens to prompt a migration away from cars and suburbia.
The link between freedom and capitalism is problematic. Freedom really relies on preventing concentration of power. Smith’s concept of the market economy enhances freedom, because it prevents excessive market concentration. Once we accept the market economy as unfettered “junglenomics”, however, with the concentration of power unchecked, and we start to create private sector overloards every bit as bad as Soviet commissars.
The other problem, it seems to me, is that crash suggests chaos, which in turn suggests a power vacuum likely to be seized by fantatic hard-liners, whether from the Left or from the Right.
Finally, I don’t think that certain countries can survive the next crash. .
Regarding wasted opportunities, I feel that your ideas about using resources more wisely, regenerating cities, public transport etc. was indeed part of the environmental movement of old. I used to be a member of the local green party and was promoting these kind of things. But at some point it changed, maybe the big turning point was back around when the Tesla automobile hit the streets and environmentalism went from “using less stuff” to “buying new stuff”.
I am afraid that the growth paradigm is so ingrained in the world of business and politics (and most humans really), that we will use what resources we have until we cannot, and then we will fight other nations for theirs. I don’t think we are able to evolve away from the maximum power principle.
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It is widely known that the quantity and quality of sleep across the world is declining. Those with full time jobs are working longer, and those with part time jobs are working multiple jobs. In addition, The Attention Merchants have capitalized on the World Wide Web to generate addictive behavior on social media late at night, exposing people to sleep depressing blue light.
What happens when people are sleep deprived (less than 8 hours per night)? Matthew Walker is the head of the Sleep Lab at the U of California at Berkeley, and has written the book Why We Sleep. I heartily recommend the whole book, but I will focus on one particular segment on page 146 and immediately following: Emotional Irrationality.
“Analysis of the brain scans revealed the largest effects I have measured in my research to date. A structure located in the left and right sides of the brain, called the amygdala–a key hot spot for triggering strong emotions such as anger and rage, and linked to the fight-or-flight response–showed well over a 60 percent amplification in emotional reactivity in the participants who were sleep-deprived. In contrast, the brain scans of those individuals who were given a full night’s sleep evinced a controlled, modest degree of reactivity in the amygdala….We produce unmetered inappropriate emotional reactions, and are unable to place events into a broader or considered context.
After a full night of sleep, the prefrontal cortex … was strongly coupled to the amygdala, regulating this deep emotional brain center with inhibitory control. With a full night of plentiful sleep, we have a balanced mix between our emotional gas pedal (amygdala) and brake (prefrontal cortex). Without sleep, however, the strong coupling between these two brain regions is lost. We cannot rein in our atavistic impulses.
We discovered that different deep emotional centers in the brain just above and behind the amygdala, called the striatum—associated with impulsivity and reward and bathed by the chemical dopamine–had become hyperactive in sleep-deprived individuals in response to the rewarding, pleasurable experiences. As with the amygdala, the heightened sensitivity of these hedonic regions was linked to a loss of rational control from the prefrontal cortex.
Insufficient sleep does not, therefore, push the brain into a negative mood state and hold it there. Rather, the under-slept brain swings excessively to both extremes of emotional valence, positive and negatives.”
Is this not a plausible contributing factor to the increasingly irrational behavior of the body politic?
In my opinion, we’re just apes without space for our brains. We try to expand but there’s just not enough room.
Excellent article with relevant, cogent comments.
I have never read a more concise explanation of our current situation. TAE’s Nichole Foss and you sound very much alike. “Here are the problems for which there are no solutions that we will choose.”
I believe a reduction of population will happen no matter what. Disease will clean up what ever is left after the inevitable wars. What we choose for leaders, money, and energy systems will not matter.
“Are humans smarter than yeast?”
Thanks. I read recently a piece which I’ll paraphrase here which you might find interesting.
Travellers through space encounter a lovely-looking green and blue planet which looks as though it would repay further investigation. As they get closer they start hearing an irritating, tinny buzzing sound. Closer still they note that parts of the planet’s surface look leprous and diseased. The atmosphere of the planet smells very bad. They then note that the buzzing and smell seem to come from tiny primitive organisms that are also the cause of the surface damage. They make a note that this planet will support sentient life – but they’ll need to send a team of pest eradicators in first.
Yes, dr morgan and ms foss arrive at many similar or identical conclusions. But ms foss unequivocally predicts that our centralized national governments won’t do anything to adapt and in fact will become more coercive or tyrannical in continuing to try to prop up the status quo. Her recommendation is to work within a small community to build resilience and adapt to change because that is really the only avenue available. Her assessment appears to be based on her reading of history, and not just declining wnergy availability. Dr morgan appears to still have hope that national governments will act intelligently.
“Dr morgan appears to still have hope that national governments will act intelligently.”
I don’t think so. I do think governments know managed degrowth is impossible. That explains their actions.
I think it’s fairer to say that I hope for – rather than expect – intelligent responses from national governments. Nobody watching, say, Washington or London would dare expect rational planning. Watching, perhaps, Reykjavik or Oslo gives one a bit more cause for optimism.
This issue is something that needs to be explored here, but it relates to the ownership of economic assets. The state ownership model failed with the USSR, and private corporate ownership is failing now. Logically, we need a new model, which I hope might be a co-operative system, rather than a return to collectivism. Government at any time seems to me to reflect the ownership structure, so is likely to change with it.
The drift towards tyrannical rule seems indisputable logic, and appears to be taking place now, especially in diminishing tolerance of contrarian opinions.
I wonder if your ideas on co operatives echo some aspects of the writings of Nichole Foss.
The traditional hunter gatherer grouping was estimated by anthropologists to have a maximum size of 150; at this size you would have a combination of self sufficiency and the group knowing all the members. As David Graeber said in his book on debt, in these societies exchange was based on extending credit to individuals you knew rather than barter or money; “running up a tab” was the preferred way.
The problem with this is that it may simply be unrealistic in that in order to run anything like a modern society (and I’m thinking of one with a lot fewer toys than we have now, a lot fewer) we would have to have groups of a much larger size than 150 in which case just how practical is the idea of a co operative or self sufficiency; it may be but I have difficulty in seeing it?
As Graeber says once you start to deal with outsiders you introduce the concept of money and things become much more impersonal and this gradually breaks down the hunter gatherer model.
Anarchism to most people connotes chaos and violence and the absence of order. However, it is a positive philosophy which does not include government as we know it but is based on the free co operation of people. The problem with this, if this is anything like what you suggest, is that it may simply be impractical beyond the very small scale.
Please see Albert Bates’ blog post today:
The gist of it is that biomass can generate a significant amount of energy and products if we cleverly design ‘carbon cascades’. Albert, of course, is a big fan of biochar, which serves many purposes and finally as a carbon sequestration vehicle.
If we put together David Johnson’s biological farming methods for increasing the production of biomass, the Slovak’s program of rehydration, and the carbon cascades proposed by Albert and other, then there is no technological reason why some reasonable number of people cannot enjoy a reasonable standard of living.
I would guess that we wouldn’t be able to afford the ‘once and done’ lifestyle of Americans and many others in the OECD countries, but we should be better off than the bottom 3 or 4 billion.
I have not commented for a while, I almost did on a recent blog in which you said that Electic Cars were no panacea, which of course they are not.
I know that that blog and this are looking for discussion and in this spirit offer this VPRO documentary which is in Dutch, subtitles are available in English.
I came across another interesting proposal for money creation the other day.
View at Medium.com
These questions of Circular Economy, Materials Passports, re-defining prosperity, Status questions, Distributive and re-distributive political economy all feedback into a question of *Whoś Reality’ are we seeking to cater for in our political Economy.
That is a fundamental question Who’s Reality?
Your perspective is grounded in abstracting reality to a balance sheet view albeit a balance sheet based on SEEDS energy metrics. My own perspectives are drawn from technological perspectives and these Cornucopian views of Cornucopian possibilities derived from circular manufacturing concepts lead me to be optimistic as a possibilist technologically speaking. The obstacles are and will remain political and geopolitical and here the Pigou Dalton principle regarding status and managing expectations becomes paramount.
I would be very interested to hear what you think of Thomas Rau’s ideas I find them compelling.
Best Wishes and A belated happy new year.
Hi – a more optimistic article about electric cars from the Guardian.
Thanks, and the smart charging point is both valid and pretty obvious. But it still doesn’t address the total quantity of electricity required by conversion to EVs. Globally, demand for electricity is likely to be 41% higher in 2030 than 2016 even if we exclude EV conversion, but 71% higher including it. Of course, we can burn in power stations the oil currently used in vehicles, but this simply relocates oil use, rather than reducing it. Oil supply is likely to be constrained well before 2030.
Your stated the need for new ideas. Ignoring all the horrible possible outcomes. We can expect a low energy future much like our low energy past with perhaps a great supply of mechanical “parts”. A lot of amazing things were accomplished with a much smaller energy input. One such website that investigates these old ways and makes detailed articles is Low Tech Magazine.
Biological Farming’ Rehydrading; Biomass and Carbon Cascades….
One of the arguments about renewables is that we MUST level out the production of electricity over the 24 hour period, during which, roughly half the time, no sun i shining. Before you buy into that story, I strongly urge you to read the book Why We Sleep, by Matthew Walker, head of the Sleep Lab at Berkeley. Walker makes a meticulously documented case that humans cannot be sapient and healthy and alert unless we sleep the way Nature intended us to do it. Sleeping pills, for example, do not provide the psychoactive elements of real sleep. Those psychoactive elements involve the cementing of things learned during the day, and the integration of those new learnings into everything that we have previously learned. Adults need to sleep from 10 pm to 6 am. They need to have recurring episodes of deep sleep and REM sleep. If, for example, the adult goes to bed at midnight, and wakes up to an alarm clock at 6am, then at a minimum the REM sleep will be cut short and the adults creativity will be negatively impacted. There is a great deal more essential information in the book, which I won’t try to cover here.
But I will list, without much explanation, the reasons why modern people are sleep deprived. These reasons are discussed in Chapter 11:
*longer commute times
*sleep procrastination due to television and night time digital distractions
*modern light bulbs, with LEDs being the worst along with backlit electronic devices
*central heating and air conditioning
Most of these things are related to our desire to live, and worship of, a 24/7 lifestyle. If electricity were turned off at night, as I believe it is in North Korea, then our health would improve because our sleep would improve. Studies show that the expression of over 700 genes changes in unfavorable directions when we are sleep deprived. Walker states that he used to think that diet and exercise were the pillars of health, but now he think that sleep is the bedrock which provides the basis for sound diet and healthy exercise. Sleep deprived people eat more calories and the excess calories are disproportionately junk food. And sleep deprived people don’t feel like exercising.
Before we spend trillions trying to maintain infrastructure which is harmful to us, we should think very clearly about the options….which will be hard to do because our sleep deprivation disconnects our rational pre-frontal cortex from our more primitive amygdala.
6 am? How decadent.
On a point of admin, I have noticed it is no longer possible to read comments more than 2 months old. This seems a great pity there was a wealth of great information and analysis there particularly when Dr Morgan elaborated on the points drawn out. Could this be rectified ?
I’m on holiday this week but I’ll look into this when I’m back at work. I’ve noticed a number of recent changes (not made by me) to how the site works.
The only setting I’ve changed (several months ago) was to limit the period after publication in which new comments can be added – otherwise, people could add comments to something written months or years ago. Ideally, I wanted to let comments on each article run until the next one is published, so comments are only possible on the latest article. But this isn’t possible, it seems.
Tim thank you for your reply yo my link from the Guardian but I meant to add it referred to the UK. It was all about smart charging – quote
‘The UK energy system will be able to cope with the extra demand caused by the uptake of millions of electric cars, provided drivers shift their charging to off-peak times, according to new research.’
Anyway enjoy your holiday – it hovered around minus five when I was in Germany for the weekend. At those sort of temperatures I would imagine most would be happier with an ICE
Thanks Doc appreciated . Enjoy your well earned break!
Thank you again Dr. Tim for your very insightful analysis.
SEEDS shows us all quite clearly the path that we are on, admittedly without a timetable, but the direction is defined.
The fact that “Growth” has ceased, and has now been running in reverse for at least 10yrs has not been accepted by the greater population, ( never mind by our politicians whose necks would be on the line if the plebs ever found out ! )
There will be no controlled shrinkage, there will be no managed reduction from a growing Economy to a shrinking Economy. We simply do not have any politicians of the right calibre to do something like that. Even good philosophers are in short supply these days.
We have said here many times before, that the quality of politician in the UK borders on the abysmal !
I burst out laughing when I read the words “government” and ” acting intelligently” in the same sentence in one of the comments above ! I know that we would like that to be a true possiblity, but it’s not going to happen ! The two are mutually exclusive these days.
It is simply one knee-jerk reaction after another. There is no bigger plan, there is no joined up thinking, it’s just reaction to reaction to each days headlines. Look at their Bungling Brexit negotiations !
I cannot see a further 5yrs of declining prosperity taking place in the UK without some form of violent backlash. Innevitably this will be the result of some financial hicc-up as the Powers That Be, lose control of the Economy in some way which they did not perceive possible.
My money, ( if I were a betting man ) is still on some kind of Sterling collapse on the world markets. The world will one day be convinced that the UK cannot service its debt let alone repay it. The Financial Economy will one day collide with the Real economy as you have quite clearly pointed out on so many occassions.
After that, it is Game Over !
Nothing is going to put Humpty-Dumpty together again.
The confidence trick that has been getting pulled over our eyes for the past 10yrs will be revealed for what it is, and there will be no going back.
Human nature being what it is, will ensure that the outcome of this decline is going to be catastrophic.
To the average SoapOpera watching Netflix addict this will be a bolt out of the blue, they never seen it coming. Just like some Snapchatting Facebook texting teenager who steps out onto the road into the path of a 40 tonne truck – they don’t see it coming, because they are not looking.
There will be no response to this, it will be mindless reaction.
This is going to get very ugly indeed, and a surveillance police state lies ahead of us, the only question here is whether or not we have a major war before we get to that stage.
It is probably just as well that you did not encroach on the subject of Immigration in this article, because that is where I see the powder keg exploding, so that deserves a chapter in its own right. As our prosperity falls to a painful level, it will be so easy to blame the incomers. People will reflect on their past prosperity which predates their present day Multi-cultural society, and the innevitable conclussions will rightly or wrongly be drawn.
I fear you may be right about immigration getting the blame, as there is a tendency to seek scapegoats when things go wrong. But there is absolutely no case for blaming Britain’s woes on immigrants. This is a home-grown mess, helped by extremely poor political leadership.
My hunch, politically, is that Corbyn will win. Opinion polls won’t pick this up, because a lot of his bedrock supporters are the kind of people who respond to polling. I read an article the other day, written by a government minister, which talked utter nonsense on economic matters – if that is any indication, the current administration doesn’t understand what’s happening. Though I think Corbyn will win, the reality is that governments lose elections rather than oppositions winning them.
I agree, too, about Sterling. The current account (trade plus income flows) is negative to the tune of about £100bn annually. Up to now, that’s been counteracted by inward flows of capital. Much of that has been debt, or asset purchases. So the practice has been one of living beyond one’s means, and making ends meet by selling assets and taking on more debt. The best indicators to watch are the current account and the investment account. My feeling is that the current account remains pretty much where it was, but the inflow of capital is dwindling.
The other issue is financial risk. Total financial system assets are just over 1000% of GDP. No other country of any size has anywhere near that much exposure. The UK dodged a bullet in 2008, but might not be so fortunate next time.
I do agree with you Dr. Tim that Mr Corbyn will be your next Prime Minister.
I must confess that I do like the man, but I really do not see what good he and his Labour party can do. Much of his politics is outdated and no longer applicable to our present day situation. The UK is on a path from which there is no return. Economic decline, followed by collapse, followed by social unrest, followed by authoritarian rule. Nobody can change that now.
I am just back from Germany where I was discussing Energy Economics with my countrymen. I felt like John the baptist. Nobody would take my arguments seriously, and despite my best efforts, I could not get the distinction between, and the consequences of, “peak oil” and “peak cheap oil” over to them. On top of that they also have absolute faith in renewable energy sources; and that it will be a simple process of switching over from carbon fuels to wind and solar, and that life will go on as before. The “Energiewende” has been implemented and it has been a full success. Oh my ! get me a brick wall so I can bang my head off it !
OK, the German economy is booming, nobody believes in a recession here, and there is still widespread faith in the banking system despite zero interest rates.
I tell them that Germany is in a Bubble but they fail to see that.
However, what is foremost in many German minds today is immigration.
There is still widespread and strong but underlying resentment against Merkel and her policies.
Although I must say there is also a very vocal support for immigration from the celery munching lgbt antinuclear femi lobby too, and this viewpoint is supported by the media there, it is not a viewpoint held by many people that I have actually spoken to. The question I do ask though is how long can this underlying resentment be contained ? Will it eventually blow over and will the 1 million new arrivals be accepted alongside the ~4 million Turks ?
During good times when everybody has a job and has beer in the fridge they have things under control, but as soon as some hardship comes upon them, then I see also a major backlash coming here too.
Immigration is a difficult subject to discuss because Political Correctness effectively prohibits it. However, just because you cannot talk about it, that does not make the subject matter go away. If anything it only hardens positions and leads to extremism.
Immigration is an issue which is not confined to the UK alone, it is an issue which affects the whole of Europe. When the gloves come off, and they are coming off, this will need to be tackled at a pan-Europen level.
The German situation is a strange one. It is almost the only major developed economy which hasn’t been faking growth by spending borrowed money.
Why is this? To be sure, the German economy has been managed better than, say, the UK, which admittedly isn’t saying much. The structure of the economy is better, with strong corporates founded on an impressive mittlestadt of smaller and medium suppliers. Germany competes on quality rather than price, knowing that Germans cannot be wage-competitive with emerging economies, and that demand would be weak if they did.
Even so, these explanations are not sufficient in themselves. Rather, Germany is a huge beneficiary of the euro. Without it, Germany would have a strong DM, making German exports far more expensive, in all markets, but especially in the Euro Area.
This is a huge advantage, but one that they might pay for down the line, if weaker EA economies crash.
The huge benefits of the euro to Germany makes their apparent lack of generosity towards Greece, for example, look pretty bad.
As elsewhere, the German media reflects the views of the establishment, and there seems to be rather more censorship than is desirable. Mrs M’s immigration policy looked politically inept, though it may have been well intended. Even in Germany, though, the success of “populists” is about a lot more than immigration.
Some of your gloomier forecasts do look likely – in Germany, as elsewhere, we must hope that the elites shed a bit of their arrogance and start listening to popular discontent. Reform is always preferable to conflict.
Tim, a general point, if I may. The dire state of the British political class is not a new phenomenon, but I think the difference between past eras and today is one of degree – denial and delusion has now engulfed the entire political class. In previous eras there was usually someone in the theatre of national politics who could see the crucially important issues, grasp there significance and articulate an intellectually robust argument about what to do. Today one looks across the political spectrum in vain to find anyone remotely capable of grasping the truly dire state of the economy. I have attempted to engage in dialogue with my Member of Parliament, who is an honourable and sincere man, but met first with denial and now disregard. It’s very dispiriting, to say the least. The heart sinks.
Thanks. As I see it, there are two sides to this, the local and the pan-Western.
I’ve often used the analogy of the French monarchy just before 1789, isolated in Versailles in irgnorance or denial over what was happening. That’s where Western elites are now. At the end of the 1980s, collectivism failed. Since 2008, the corporatist variant of the capitalist system has been failing in much the same way. This helps explain Trump, “Brexit”, the defeat of all established parties in France, and so on.
I like to think that the squeeze on surplus energy explains worsening prosperity, which in turn helps explain growing popular discontent.
In Britain, the signs seem unmistakable. Fifteen million people are struggling to make ends meet. There is widespread support for nationalisation, even amongst Tory voters. Division is rife, notably involving young people, priced out of housing by greedy elders and inept policies, saddled with big student debt and denied the skilled jobs that have been offshored. Westminster and Whitehall, just like Davos, seem to be turning into Versailles.
Logically, Jeremy Corbyn wins the next election. I don’t think that will save the economy, but then current policies aren’t doing that either. We’ve witnessed a lot of anger over “Brexit”, and something similar is likely if Mr Corbyn wins.
Edmunds Burkes speech in Parliament on *These Present Discontents*
The people have no interest in disorder. When they do wrong, it is their error, and not their crime. But with the governing part of the State it is far otherwise. They certainly may act ill by design, as well as by mistake. “Les révolutions qui arrivent dans les grands états ne sont point un effect du hasard, ni du caprice des peuples. Rien ne révolte les grands d’un royaume comme un Gouvernoment foible et dérangé. Pour la populace, ce n’est jamais par envie d’attaquer qu’elle se soulève, mais par impatience de souffrir.” .1..*
These are the words of a great man, of a Minister of State, and a zealous assertor of Monarchy. They are applied to the system of favouritism which was adopted by Henry the Third of France, and to the dreadful consequences it produced. What he says of revolutions is equally true of all great disturbances. If this presumption in favour of the subjects against the trustees of power be not the more probable, I am sure it is the more comfortable speculation, because it is more easy to change an Administration than to reform a people.
“Thy favourites grow not up by fortune’s sport,
Or from the crimes or follies of a Court;
On the firm basis of desert they rise,
From long-tried faith, and friendship’s holy ties.”
(Maximilien de Béthune, 1st Duke of Sully, Marquis of Rosny and Nogent, Count of Muret and Villebon, Viscount of Meaux (13 December 1560 – 22 December 1641) was a nobleman, soldier, statesman, and faithful right-hand man who assisted king Henry IV of France in the rule of France. Historians emphasize Sully’s role in building a strong centralized administrative system in France using coercion and highly effective new administrative techniques. His policies were not original, and most were reversed. Historians have also studied his neo-Stoicism and his ideas about virtue, prudence, and discipline.).1..*
This discussion on Tim Murphys Blog is an interesting component to this same question I have linked back to this discussion there in my comment there,
We are dealing with a Paradigm Shift which is simply not something imaginable to the Philosophical, Religous, Political and Societal structures and institutions out present Political Economy is based upon. It is a very dangerous time for vested interests, particularly as Vested interests, have become institutionalised ( Watch the Big Short for something of the extent of how true this is).
The Title of this piece is ‘The Need for new Ideas’
I would like to suggest C S Pierces seminal essay *How to make our ideas clear*
´´if it were easy to set standards for judging judgment that would be honoured across the opinion spectrum and not glibly dismissed as another sneaky effort to seize the high ground for a favourite cause, someone would have patented the process long ago.´´
Tetlock, Philip E. (2005), Expert Political Judgment: How Good Is It? How Can We Know?
There’s one point I need to clear up, which is that I’m not, remotely, a supporter of collectivism – if I’m anything (in UK political terms) I’m a Conservative, and I’ve had reports published by CPS and articles on CapX. Forecasting something doesn’t mean it’s what I want. A weather forecaster has to predict extreme cold without liking it! I predicted both Trump and “Brexit”, but that’s forecasting – not alignment.
In an earlier piece here I discussed paradigm breakdown, and that’s what’s happening. Those in office, for the most part, just don’t seem to get it.
If I’m right that prosperity is deteriorating, then politically that’s a game-changer. If someone is angry at a self-serving elite, he or she does not vote for a Clinton, but might vote for a Sanders or a Trump. The Left is perceived, by its natural supporters, as having sold out. With the Left thus exclude, voters opt for “populists”.
Parties of the Left have woken up to this, which is why Jeremy Corbyn is doing pretty well. If Labour got rid of Corbyn and chose, say, Tony Blair instead, they would have zero chance of winning. As I see it, the Conservatives are currently handing JC the key to No. 10 on a platter.
More often it’s governments that lose elections rather than oppositions who win them. The British “right” (in which I include Blair) has been, and is, committing political suicide, though I’m not quite sure why.
Bank rescues – the then-govt should have made absolutely certain that rescuing banks didn’t involve rescuing bankers. Classic own goal and PR disaster.
QE – was always going to inflate asset values, so should have been accompanied by higher rates of capital gains tax and, perhaps, inheritance tax as well, to recoup much of the gains for taxpayers.
Help to buy – idiotic on any level.
Care for the elderly – Mrs May was right about this, but seems to have been over-ruled by her party. Why should someone with a house worth, say, £1m expect the state to pay for all their care in old age?
Pensions – any company with a pension deficit could be debarred from paying dividends or bonuses, could be prevented from paying salaries over £100,000, and could not be sold or taken over unless cleared by the pension regulator – until the deficit is cleared. (Pensions are a looming disaster area).
Gig economy – I don’t understand why ministers speak up for the likes of Uber and Air B’nB. Rather, regulation of private hire taxis and hotels should apply in all circumstances.
Post-retirement ‘consultancies’ and the ‘lecture circuit’ – we could cap earnings of former ministers and civil servants at, say, £300,000.
I get the impression that the current administration is run by idiots. More importantly, I think the voters think the system is rigged to favour “the 1%”.
Tim – thank you. That’s a very good summary.
I am unsure whether Corbyn will gain the keys to Number 10. A lot can and will happen between now and the next general election, not least the possible re-emergnce of a (new) centrist party.
My gripe with the British political class generally, and the mainstream media, is that they’re not being straight with people.
I do not know whether this is an act of omission, i.e. they genuinely are unaware of the situation, or commission – they know the reality of the situation, but dare not admit it. If the former then they do not deserve to hold office; if the latter – er – they do not deserve to hold office. The problem is compounded by a mainstream media that is proving to be the watchdog that dare not bark. The failings are of truly epic proportion.
In the first two decades of this century the United Kingdom has experienced ‘The Great Delusion’ 2000-2007, ‘The Great Financial Crash’ 2007-2009, which has been followed by ‘The Great Unravelling’ 2009-onwards, and we’re now in the midst of ‘The Great Disgruntlement’.
The situation is tragic and sad on many levels, but one of the saddest elements to my mind is that by refusing to acknowledge our circumstances the nation has not had the sort of discussion that may have led to policies that would have placed the country in a far better position than it is today. I guess my points chime with your piece ‘Planning the post-growth society’.
Since The Great Financial Crash trend GDP growth – using official figures – has roughly halved, while growth in household disposable income as a five-year rolling average has been on a downward trajectory since around the year 2000.
Your analysis using SEEDS suggests that GDP has suffered an outright contraction of some considerable magnitude in real terms.
I have to say that I consider the ambivalence of policy makers to the current account deficit and the overseas income account to be a grave error of judgment.
Sushil Wadwhani, when a member of the Bank of England’s Monetary Policy Committee, said: ‘Current account deficits don’t matter – until they suddenly do.’ I think that sooner or later the United Kingdom could – nay, will – experience a ‘suddenly do’ moment.
One of the many excellent posters to your site mentioned the words of Ayn Rand: ‘You can avoid reality, but not the consequences of reality.’ The statement captures our plight rather well, I feel. I am sorry to end with a cliché, but James Callaghan’s quote ‘And the sky turned black with the flapping wings of chickens coming home to roost’ seems exceedingly apposite.
Apart from a Sterling crash, what should be giving ministers sleepless nights is the possibility of a re-run of the GFC. Britain just about “dodged a bullet” in 2008. I very much doubt if it could dodge another one.
More importantly, I think the voters think the system is rigged to favour “the 1%”.
The Voters are correct the system is rigged to do exactly that our political economy is rigged to appease the shrinking bourgeoisie and ensure the interests of the Oligarchy.
With respect to Collectivism, I agree with you. That said Cooperative and mutualism is another kettle of fish altogether.
Heres Kropotkin explaining Proudhon’s much-misunderstood statement that Property is theft.
Full text of “Peter Kropotkin entry on ‘anarchism’ from the Encyclopaedia Britannica (eleventh ed.)”This is for me the nub of the matter something I have in common with Joseph Prouhdon, explained by Peter Kropotkin in the Encyclopedia Britannica thus.
”Now Proudhon advocated a society without government, and
used the word Anarchy to describe it. Proudhon repudiated,
as is known, all schemes of Communism, according to which
mankind would be driven into communistic monasteries or
barracks, as also all the schemes of state or state-aided Socialism
which were advocated by Louis Blanc and the Collectivists. When
he proclaimed in his first memoir on property that ” Property
is theft,” he meant only property in its present, Roman-law,
sense of ” right of use and abuse ” ; in property-rights, on the other
hand, understood in the limited sense of possession, he saw the
best protection against the encroachments of the state. At the
same time he did not want violently to dispossess the present
owners of land, dwelling-houses, mines, factories and so on. He
preferred to attain the same end by rendering capital incapable
of earning interest; and this he proposed to obtain by means of
a national bank, based on the mutual confidence of all those who
are engaged in production, who would agree to exchange among
themselves their produces at cost-value, by means of labour
cheques representing the hours of labour required to produce
every given commodity. Under such a system, which Proudhon
described as ” Mutuellisme,” all the exchanges of services would be
strictly equivalent. Besides, such a bank would be enabled to
lend money without interest, levying only something like 1 %,
or even less, for covering the cost of administration. Every one
being thus enabled to borrow the money that would be required
to buy a house, nobody would agree to pay any more a yearly
rent for the use of it. A general ” social liquidation ” would
thus be rendered easy, without violent expropriation. The same
applied to mines, railways, factories and so on. ”
There is a key scene in the film the Big Short where https://getyarn.io/yarn-clip/2778b958-183c-413a-92c6-a3d882da1da0#HygNGqUHuG.copy
that was funny! -I guess you just don’t
realize how clueless the system really is!
Yes, there’s some shady shit going down!
But trust me, it’s fueled by stupidity!
Look at yourselves!
You know you passed yourselves off
as cynical people but…
You still have some faith
in the system don’t you?
well, except for Vinnie!
Who gives a shit?
Either we’re right, or we’re wrong
in a giant, giant way!
And if we’re wrong then we gotta find
someone to help us get out of this trade
I’m not feeling remotely
confident that we’re right
and, and… if we’re wrong
who’s gonna tell us? Who understands
this stuff? It makes no sense!
Read more: https://www.springfieldspringfield.co.uk/movie_script.php?movie=the-big-short
The idea of a sharing circular economy does not belong to a political ideology what it does speak to though is efficient use of resources we are taught that Price Discovery and markets lead to efficient distribution and allocation of resources, that I think is a myth and one that is exposed when one understands the role of Interest (usury) in debt based money.
I am unsure why you feel the need to clarify that you are no collectivist Tim, I for one would never have laboured under that impression I do though think you cling so some sort of hopes that the current system has some redeaming features, on that we differ .
Mutual Aid a factor in evolution one of Kropotkin’s classics well worth a read as is Conquest of Bread.
My own novel The conquest of Dough is a pun on Kropotkin’s classic
This Riffkind Talk is well worth watching.
We Need New Ideas
….and communication between the Pre-frontal Cortex and the Amygdala (the rational and the lizard) is a prerequisite
….which requires that adults experience 8 hours of sleep (from 10pm to 6am) to avoid a physical disconnect in the brain
….and the sleep must contain appropriate parts deep sleep and REM sleep
….which requires the absence of alcohol and caffeine
….and which requires also the gradual buildup of Melatonin in the brain after sundown
…which implies that exposure to blue light electronics must be avoided as bed-time approaches
….and which also requires considerable physical movement during the day, but NO visits to the gym after work
*Two-thirds of adults throughout all developed nations fail to obtain the recommended eight hours of nightly sleep.
Necessary and Sufficient
….Education plus communication between the Pre-frontal Cortex and the Amygdala is NECESSARY, but not SUFFICIENT for many of our predicaments.
….It is also true that being able to sleep adequately is dependent on a complex system. Working three jobs trying to make ends meet will severely inhibit one’s ability to sleep adequately. Which will make it much more difficult to take those actions which one knows are necessary, because of the disconnect between the PFC and the amygdala. Addiction to social media will have a similar effect. Ditto for alcohol or caffeine addiction.
….Sleep deprivation can be seen as a common human manifestation of the general condition of stress. Wild animals are gaining weight decade over decade, probably because the expansion of humans is depriving them of the ecosystem they depend on and creating stress. Possibly interfering with their sleep.
The Silence of the Lambs
….Few peddlers of solutions bother to mention sleep. Instead we are regaled with the ‘cure de jour’, ignoring the necessary condition of a well-connected PFC and amygdala before people can put the advice (even assuming it is good advice) into practice in their jumbled lives.
*Jordan Peterson’s best selling 12 Rules for Life goes into considerable detail in terms of psychological factors. I don’t believe he ever mentions sleep. He is implicitly asking us to consider psychological failings separate and apart from the physical facts of separation of the PFC and the amygdala.
*A well-meaning obese man is currently running (in the US) a documentary about The Black Plague of the 21st Century…diabetes. Which currently impacts half the population…the same percentage as the Black Plague. There are tearful scenes of diabetics confessing that they know what they need to do, but are helpless to change behavior. No mention of the disconnect between the PFC and the amygdala….no mention of the experimental evidence linking sleep deprivation and poor blood sugar control.
*Dr. Ben Lynch has written a book about genetic expression: Dirty Genes. Lynch boils the problem down to 7 malfunctioning genes (without denying that there are other genes which are also non-negligible factors in health and disease). The attempt is to work backward from symptoms (or genetic tests) to determine which genes are not expressing in a health supportive manner. Ignoring the fact that Lynch does not address the issue of genes in the gut microbe (and I’m not claiming that he is unaware of them, far from it.) But when gene expression is measured for those who are getting plenty of sleep, and are then sleep deprived for 2 weeks, 711 genes have their expression negatively affected. I suggest that one of the first orders of business in medicine must be to restore sleep and normalize gene expression…before beginning to attack any remaining problem genes.
*Every intelligent observer of the US political scene is appalled at the inability of our political institutions to deal with the real problems. No mention of the fact that two thirds of the voters are sleep deprived, and unable to connect their PFC and their amygdala.
…New ideas are hatched during REM sleep. In deep sleep we abstract and shift daily memories into long term storage. During REM sleep we both make sense of what we have learned during the day, and we reformulate our existing system of meaning-making to account for the new information. We also juggle what we know to arrive at novel solutions to our current problems. When school children are required to catch the school bus by arising at 5am, society is forcibly depriving them of REM sleep. And so we get the plethora of college professors bemoaning the demands by entering freshmen to have everything reduced to multiple choice questions…sometimes resulting in professors resigning in disgust.
…If Dr. Morgan is remotely right about the challenges we face, both deep and REM sleep are a necessary (but not sufficient) condition for dealing with the challenges….from the individual to the family to the local to the national to the global.
*Many thoughtful medical people ruefully observe that they are giving you the same advice your mother gave you. (I would say that it is probably the advice from your great-grandmother.)
*The bloat in medical costs in the ‘advanced’ countries is largely a result of the way modernity has shaped our lives…coupled with the way that corporations and their behavioral scientists have been able to take advantage of human weaknesses to make money.
*Far from being a systemic threat, the collapse of the industrial paradigm may be the only hope.
*One of Jordan Peterson’s excellent ideas is the Taoist conception of the good life as walking the find line between chaos and unhealthy rigidity. The only hope any of us individually or as a society have for walking that fine line is a healthy connection between the PFC and the amygdala. And the necessary condition for that is good sleep.
For an excellent book on the broad subject of sleep, see Why We Sleep by Matthew Walker. He is the director of the Sleep Lab at the U of California.
Please keep making extremely valid and pertinent points. Often, I simply don’t know enough to reply intelligently!
There is a rare condition whereby some people never sleep at all. One writer (Lawrence Block) has written a series whose central character is a sufferer from this.
I assume you’ve seen the film “What the bleep”?
Tim. Thanks for a great article. Just been revisiting Life After Growth and some other titles in related issues.
I’ve been developing personal strategies for different scenarios over many years, which is why I have taken interest in your work for many years. The aim is to maintain prosperity, or at least manage it’s erosion.
My conclusions always come back to investing in personal health, family, the household, and building relationships within the local community, as a strategy that works out well across all potential outcomes. Keeping family together, living together, and sharing the burdens.
It seems such a strategy is aligned with your “necessary actions” in Life After Growth. Effectively increasing housing density by more people in a single house. An potentially increasing prosperity (e.g. My kids will reach working age in a few years – quid’s in!)
Attempting to implement such a strategy also makes me feel like I can actually do something, take some positive action within my sphere of influence and in the absence of strategy and implementation in local and national government.
Maybe our new ideas need to be old ideas? (or at least inspired by them)
Your plan makes perfect sense.
I would add that we need to free ourselves from certain misleading or outright malign ideas. The idea that the state can or should fix everything is a bad idea. So is the idea that what we own determines who we are, or measures our worth or our happiness. Ideas extolling greed are malign. I’m waiting for scandals at least as big as we’ve seen with banking and diesel test-rigging. The consumerist-corporatist model cannot end too soon, in my opinion.
It seems to me that evidence of the end of prosperity is mounting up. The number of people struggling to make ends meet (in Britain alone, 15 million). The struggles of certain entire industry sectors (out-sourcing, retailing, automotive, restaurants – it’s a growing list). The deterioration in ethics as businesses try to grow profits in an environment of diminishing customer prosperity. The destruction of the ability to provide for pensions. Anger in society. The rising cost of household essentials, from energy and water to travel and other costs. Difficulties in financing everything from healthcare to defence. Obviously, “populism” in politics.
There’s an intriguing vacuum in ideas. Socialist collectivism has already failed (the USSR in the 1980s). Financialised corporatist capitalism is failing before our eyes. So, what next? Co-operative systems? Personal/family self-reliance? As you say, some of the new ideas might in fact be old ones revived.
The text of this article is going to form the basis of a new report explaining SEE and its current findings.
The report will be a downloadable PDF, the idea being that it can be forwarded to anyone interested in finding out more.
The text, slightly altered, will be Part One. In Part Two, there will be separate sections, often with charts and/or tables, on subjects like ECoE, prosperity, pensions, debt, renewables & EV, and the environment.
This is quite a big project but should be completed in about a week from now.
Pingback: The need for new ideas | Ideas about the Future
I am especially looking forward to your assessment of renewables.
Thanks. It will be along the same lines as an earlier article here:
#118: Good idea, bad idea
For those who like to look and listen
Matthew Walker’s Twitter account currently has, at the top of the page, a very short cartoon describing what happens when one does not get enough sleep. The cartoon was a project with Business Insider.
Scroll down a little and you will a longer dissertation at the Googleplex.
PS British expats hungry to hear the correct pronunciation of English may enjoy hearing him.
Is anyone having the conversation or know where a good conversation is about the best things to do to prepare? whether it’s growing your own food, off grid power system, stacking precious metals, etc? I am interested in what others are doing and what is the best way to use the time and resources while we have them. Thanks!
The difficulty with this is that any planning is very dependent on your own circumstances so is a personal exercise.
The specifics will depend on what scenarios you are considering, which country you live in, how you make your living, your age, and if you have dependents:
Personally, I am aiming for resilience rather than wealth. I’ve concluded over a few years that there are a few things people can do:
1. Try and be debt free. More to avoid the psychological burden and worry it imposes than anything else.
2. Try and live within your means – saving at least 10% of your income. Loads of good advice on this: I would recommend Your Money Or Your Life by Alvin Hall. That really helped me develop good habits and become a good saver.
3. Try to aim to save six months living costs in a liquid storage mechanism that allows you to access it easily – to help in case of an emergency, a unexpected repair, or utility bill, to help someone, or to draw down to top up your income during a essentials cost price spike. Replenish it when it is depleted. Any level of savings beyond this become tricky and I can only advise that you speak to a financial advisor who has a good appreciation of the issues Tim discusses – I have yet to find myself in this position.
4. Try to invest in your health and fitness to minimise the risk of getting sick, and also in case you have to take on manual work to maintain an income. Switching from a desk based job to say a warehouse operative can really hit you hard if you are not fit. I recommend simple bodyweight exercises at home, brisk walking/cycling to and from work, and eating by the UK NHS guidelines online.
5. Try to invest time to learn new skills and gain new experiences. Increasing your options for work, and also because this is good for your mental health.
6. Read Tim’s work ;). Not for answers, but to remain informed and to help manage your expectations for the future.
7. Lastly – Try to encourage and support others in your household and social circle to do the same.
Not very exciting is it?
If you’re not a farmer, don’t try to be – there are smarter ways to help. Support local organic farmers through purchasing their goods and politically by voting for parties that support their interests. Maybe encourage and support younger people to consider a working life in organic agriculture by allowing them to stay at home into adulthood so the current low-earning potential of a apprentice farmhand/agriculture student isn’t such a burden. (i.e. Use your current resources and influence to help make future organic farmers.)
Tim I read through any excellent posts containing some very good ideas including – of course your own. However as I see you’ve agreed that there will be a global economic collapse in 2020 there won’t be nearly enough time to put any of the remedies into action even if they were accepted by Governments.
So what should we do – sit at home sipping port and smoke a Hamlet cigar or walk up and down Oxford street with a placard saying the end of the World is nigh.
But seriously you and others are putting a lot of hard work into the subject of the World’s economies but seemingly to no further end than to prepare us for the inevitable. It’s a bit like being on the Titanic and quietly discussing an improved design after she’s been struck.
Donald, if I may throw my Tuppenceworth in with you here.
Unfortunately, none of us here are in charge.
In the UK we are being run by a bunch of Nincompoops.
Layered on top of that we have a Media which spreads lies and propaganda inbetween bouts of soap-opera, royal babies and Football.
The general population does not discuss what is being discussed here.
Yes, we are going to Hell in a handcart, but none of us have the power to prevent it. We are the few Dinosaurs who looked up into the sky and saw the asteroid hurtling towards us. The rest did not know what hit them. At least we will know.
Can we stop it ?
No we can’t.
Walking down Oxford St. with your Plakart will not awaken the masses from their slumber either. They really do not want to know.
The glass of port and the Hamlet cigar, is probably the better option here.
We can only do the best that we can as individuals to protect ourselves and our loved ones from what is now inevitable.
Even our best attempts to protect ourselves may be futile, but at least being fore-warned to the impending disaster will give us a good chance of coming up with some kind of plan to mitigate its devastating effect.
There will be a new world emerging from this, we may or may not be part of it.
I’m not quite as gloomy about this as perhaps you are, and we need to distinguish between the real economy of goods and services and the financial economy of money and credit.
My starting point is that, in most Western countries, rising ECoEs mean that prosperity is now declining, and has been for quite a long time. I don’t see how a financial crash can be avoided, with all that goes with that, including bankruptcies and defaults. I agree there is likely to be a great deal of anger. I also agree that governments are not going to recognise any of this until they have to.
But that still leaves us choices. For example, if we gave up EVs as a bad idea, we could start investing, instead, in denser (but better) housing and improved public transport. We could make cities nicer places to live when suburban patterns, commuting and so on lose their viability. We could avoid collectivism if the elites were to start making real sacrifices to help ordinary people, thereby showing leadership.
It’s interesting to reflect on Britain in 1940. Thanks to previous mistakes, the situation was very nearly disastrous – but not quite. New leadership was found, and the public accepted hardship, which continued into post-war austerity. So much housing stock had been lost, which isn’t the case now – my father’s older sister began her married life in a Nissen hut, not great, but she coped. Half of my grandparents’ street was bombed flat – but they managed. The point is that they, and millions of others, didn’t just give up, but made the best of it.
Tim it was only your agreement with ‘MASTERMIND’ that made me feel pessimistic yesterday evening. As a whole I’m optimistic that we’ll pull through as most people are altruistic and like to be seen helping people.
I’ve just read through the post by Josh Floyd. I need to read it again (probably several times) but my first impressions are that we can’t have our cake – regarding climate change – and eat it.
Like you he understands the need for change within our society.
Thank you Dr. Tim. I fully understand what you are saying.
My “gloom” – although I do not see it as such, arises primarily from the fact that all the nice things that you say we “could do”, will in fact not get done.
My assessment is not based on economics, it is based on human nature. Ever since Margaret Thatcher said, “there is no such thing as Society”, the UK has morphed into a collective of selfish individuals. The community spirit which you elicit from the War Years is long gone, that level of social cohession and sense of common cause or purpose is dead.
When the coming financial chaos hits us all, there will be no pulling together on the same rope, ( unless of course that rope is thrown over a lamp post and there is a banker’s neck on the other end of it. )
Today’s society is fragmented along the lines ethneticity, religion, sexual preference, etc. The feminists are not going to set up canteens to make cups of tea for hard working men. There is no unity any more.
In many ways it is not just our economy which has hit the buffers, it is our society.
There are a lot of misunderstandings about 1940. Black marketeering was rife. The rationing system gave shopkeepers power which some of them exploited mercilessly. British warships had to be repaired or refitted in America because yards in the UK were on strike. Sailors getting into lifeboats often found that the emergency rations had been stolen by dockyard maties (who earned maybe 5x merchant seaman rates and 10x Royal Navy pay). The class system was alive and well in the Army and the RAF – you could only be a flying officer if you’d been privately educated. And so on.
The point is that this wasn’t a different and vastly more virtuous population. But adversity can bring out the best in people, just as comfort can bring out the worst. It can also give us better leaders, and expose bad ones. 1940 brought Churchill to the fore, just as 1956 discredited Eden.
‘Heart of Oak’ by Tristan Jones is a fascinating insight into what life was really like in wartime Britain.
I agree with Johan.
I tried to imagine a politician say “in the future we will have less of everything, except pollution, so we must do the best of the situation, start cutting back today to soften the fall.”
Unity in society? 🙂
Well a politician’s job will be just to sell us a less prosperous future. Remember though that wealth doesn’t necessarily have to mean goods for consumption. Who ever manages to convince of this will get into power.
Democracy is dividing the voters into two almost-halfs and then selling the larger half EVs and Mars vacations on the smaller halfs expense.
Maybe we will pull together if things go bad, but first we will try EVs and luxury housing.
I was one who always looked forward to an exciting technological future – well in many it’s arrived but sadly coinciding with an energy crisis.
This link is interesting (it’s form one of my posts above). It’s certainly helped me feel more optimistic in terms of the fact that intelligent people are aware of the need for change but there are still formidable hurdles to overcome in terms of switching to renewables
One of the key points of the analysis is how the energy needed for the switch will have to come at the expense of the overall economy and that it won’t be a smooth transition i.e the energy increase from renewables exactly matching the energy reduction from fossil fuels.
One of the biggest dangers it highlights is the cost of the switch being so great that Governments give up by taking a short term view of a richer economy (by directing all energy from fossil fuels for our consumption) for a few years instead of investing fossil fuel energy for a sustainable future
The switch that you describe, towards current consumption, is already well under way.
A key point about interest rates (for example) is that they are signals. Historically, these signals come either from the market or the monetary authorities, with market signals being more nuanced, and more objective, thus preferable.
For instance, if a state was considered a risky borrower, its interest rate (the yield on its bonds) was high, put there by the market. A high rate makes the government’s problem worse, because it has to pay more interest. This makes the borrowing government’s position more, not less, precarious. So high rates do NOT – as is so often argued – somehow compensate lenders for the higher risk. Rather, they make that risk greater.
So what high rates REALLY do is signal, to the borrower, the need to make changes in how its affairs are managed. The signal here are “must do better”, and “must borrow less”.
Cost of capital works in much the same way. If a business is successful, its cost of raising either debt or equity capital is low. Its return on capital is probably a lot higher than its cost of capital. This boosts profits. So expansion is profitable. The signal is “you are doing a good job – please raise more capital and do more of what you are doing”.
Since 2008, with ZIRP and QE, central banks have taken over rate-setting from the market. Now, at-risk governments and businesses can borrow cheaply, in defiance of market norms. Poor companies can get cheap capital. The market is over-ruled.
So, what are the signals from ultra-low rates? “Borrow as much as you like” is one. “Don’t save” is another. So monetary policy is deterring saving, and encouraging borrowing.
Economic output is used, broadly speaking, for just two things – consumption, and saving/investment. Current monetary policy is thus favouring consumption and deterring saving and investment.
What this in turn means is that the economy can no longer support both consumption AND saving. So monetary policy is being used to tell people to consume more, and save less.
And there’s your switchover.
Yes I know Tim – whereas I was just focusing on the extra energy needed for conversion to sustainable generation it is quite clear that we’re burning up that energy now basically to enjoy what will be a short lived consumption orgy (for some).
I have still not received a reply from Chris Grayling (via my MP) regarding your post on the folly of EV’s. What usually happens when I’ve posed a difficult question to my MP (who then sends it onto the relevant department) is that I get a few letters saying my question is being chased – then after a few months those letters cease.
A good example of this is when I read your book ‘Life After Growth’ and wrote a letter regarding my concerns about EROEI .
The Treasury initially claimed (again through my MP) that they did not know what the acronym stood for. After explaining I then endured a long wait – punctuated by letters saying my questions was being chased – until all the letters stopped and I gave up.
I think your analogy with 1940 misses out a vital point; we had an external enemy that we had to defeat and, in these circumstances, people are willing to make sacrifices which they would not in other cases. I think the situation we would be in in the case of a financial crash is much more likely to be seen for what it is: the result of a dysfunctional economic and social structure where anger and scapegoating would be widespread; folk would not be pulling together; they’d be too busy blaming each other; the situation is much more toxic.
As Winston Churchill said (I paraphrase): I’m an optimist; its the only sensible thing to be – and he was right. But of course we are not talking about being optimistic we are talking about what works in a crisis.
You’re right, of course, that Britain had an external enemy in 1940, and – if things went well – there were “sunlit uplands” to look forward to, and a conceivable “happy ending”.
Today, the enemy is within – I don’t mean “within the country”, but “within US”. We’ve become accustomed to the idea that happiness is determined by what we have, so dwindling prosperity is something that people are unable to handle in a positive way. Societies which have excessive status-fixation have an especially big problem with this.
So we need a change of mentality, and – in that sense – the comparison with 1940 holds good. We need to unearth and promote the good. For example, we may have less gadgets, but we can have more cohesive families, communities and society. There’s already enormous nostalgia for a simpler and more cohesive past. I’m sure that, with prosperity dwindling, the current gap between rich and poor will cease to be sustainable, and greater equality might make societies more cohesive. In British terms, there are new roles for both major parties. Labour could play on the tradition of working class solidarity, and Conservatives could emphasise traditional values.
Disraeli once said that “we’re all in the gutter, but some of us are looking at the stars”.
Thank you Johan – I’ll buy some Hamlet cigars tomorrow before there’s a run on them. I’m sure you’ll remember the iconic 70’s and 80’s adverts.
Actually on the subject of walking up and down Oxford street with a placard there used to be an old gentleman – called Stanley Green – whose placard advising less lust from less protein from meat – fish etc has now become really relevant especially if you look at lust in the wider context of our consumption habits.
Here’s a link to young Stanley in his heyday. I actually saw him several times.
Hi Dr. Tim,
Thanks fot the great work.
If you have plans to write about the transition to renewable energy I suggest you take a look at a blog named Beyond this Brief Anomaly – A systemic inquiry into energy and society by Josh Floyd. He has done a very interesting modeling and simulation of the energy transition using System Dynamics.
Thank you – I will take a look at that.
Here’s another good link about the problems of any energy transition
Sorry I should have said that me link was by Anthony James and Josh Floyd which neatly brings out the salient points of the longer analysis by Josh alone.
Focusing on EV’s seems in danger of being a little overweighted/ overstated, in my opinion. Transport is a significant user of oil that is true but is by no means where the main economic dependency for transport let alone industry lies. Further increased efficiencies in both Commercial and consumer vehicles will be forthcoming and shared usage models will meet a large part of consumer demand for private light trransport.
The greatest challenge it seems to me is and remains the Petro Dollar. It is interesting that much analysis in these questions starts with the idea that measures are required vis CO2 emissions to keep within the climate accords 2degreescelcius of warming.
I have argued for a long time that the drivers of a switch away from Oil is simply that Oil will run out at some point and that secondary to that environmental health questions are immediately backed up by real evidence and Climate Models are not required to make a case to remit air quality damage.
World oil consumption,
Something by way of introduction to the petrodollar
I would argue that the geopolitical problem of dealing with US exorbitant privilege ( De Gaulle’s Phrase) we already see the Pipe Line wars in the middle east and Silk road and Myanmar intrigue seeking to hobble those challenging Dollar hegemony.
This Silk Road Documentary is well worth watching by the way.
https://www.youtube.com/watch?v=H1WsbQQNsV0 Documentary on Gussing Austria and its self sufficiency model
Very interesting – thank you
Hi Tim, You highlight above the necessity of debt to fuel growth, the velocity of money notwithstanding it seems reasonable to expect greater economic activity to require more money as money is by definition debt in the FIAT model I am concerned that your SEEDS whilst based upon energy inputs is still confused by the shortcomings of debt based money as a variable measuring finite resources?
”The problem of analysing political choices against the metric of a Monetary measure is the Money as a Thing is most certainly a Variable and as any good technologist, scientist or metrologist will tell you a unit of measurement has to be clearly defined and fixed.
The dollar. He notes that it is a variable. Why anyone should attempt, on this earth, to use a
variable as a measuring rod is so utterly absurd that he dismisses any serious
consideration of its use in his study of what should be done.
He also considers ‘price’ and ‘value’ and the fine- spun theories of philosophers and
economists who have attempted to surround these terms with the semblance of meaning.
These terms, like the monetary unit, may have had meaning to men in the past but they
mean nothing whatsoever to the modern technologist. The standard of measurement is
not relevant to the things measured; and the measuring rod and the things, measured as if
they were stable, are all variables.”
Sectoral Balance is a concept introduced by Wynee Godley referenced by Steve Keen extensively in his work on Minsky and is also a main pillar of Modern Monetary Theory (MMT)
I would be interested how readers here fare on this positive money quiz which I digitalised in quiz maker:
Very interesting graphic on energy sources and also research on materials needed for New energy technologies. Lots of doom and gloom above to which I say ‘We have nothing to fear but fear itself”
Nothing is terrible except fear itself.
– Sir Francis Bacon
or Roosevelt if you prefer.
So, first of all, let me assert my firm belief that the only thing we have to fear is…fear itself — nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and of vigor has met with that understanding and support of the people themselves which is essential to victory. And I am convinced that you will again give that support to leadership in these critical days.
Or Captain Kirk in the year 2266 – You know the greatest danger facing us is… ourselves, and irrational fear of the unknown. There’s no such thing as ‘the unknown,’ only things temporarily hidden, temporarily not understood
I didn’t mean to imply that growth requires debt. Rather, I was saying that debt requires growth – without growth, repaying debt becomes impossible.
There’s no reason why debt shouldn’t grow at roughly the same rate as output. But I’ve just run some world economy numbers for two periods, and here are the results:
Average growth in GDP pa – 3.8%
Average borrowing pa – 8.5% of GDP
Average growth in GDP pa – 2.8%
Average borrowing pa – 9.7% of GDP
For 2008-16, GDP increased by $24tn and debt by $84tn. On top of this, we’ve been destroying pension provision – my estimate is that pension provision is deficient by $124tn, of which $91tn has arisen since 2008.
Yes, fiat money is loaned into existence (and repaid out of existence). But that’s not a problem if both expand at the same rate. Clearly that’s not where we now are.
Obviously, velocity is critical. If all marks printed by Weimar had been stuffed under the mattress, rather than spent, inflation wouldn’t have taken off.
So the effective money supply is Q x V. After 2008, V slumped. We’ve been countering that by increasing Q. But, if V takes off whilst Q is still as big as it now is, inflation takes off.
Could that happen? Well, in asset markets, it already has. At retail level, the likeliest trigger is oil prices. Remember that crude prices rose from $19 in 2001 to a peak of $147 in 2008 – and that, really, is what crashed the system.
Eric Dollard the History and theory of Electricity.
Dollards talk here at over 3 hours does bear watching, for no technologists, I think Dollard is a great teacher.
Other new ideas or Heterodox ideas also require airing in the fields of Economics but also Physics.
On Physics Claes Johnsons excellent E-Book is well worth reading.
Dr Faustus of Modern Physics.
Claes is Swedens leading Applied Mathematician.
Moving towards an energy based metric for Value Distribution systems away from a scarcity/debt based economic model of Capitalism and Usury is assisted with a little insight into dissenting views on Big Bang and Singularity conceptions of Quantum Mechanics.
Ideology does go to the root of Scientism attitudes towards Freewill or determinism. Deterministic World Views Favour Big Bang,
”One of the key points of the analysis is how the energy needed for the switch will have to come at the expense of the overall economy and that it won’t be a smooth transition i.e the energy increase from renewables exactly matching the energy reduction from fossil fuels.”
I am not convinced that this is true. At least not if we recognise that using a finite resource to create a regenerative or renewable resource is not a mutually exclusive exercise.
The idea of self-regenerating solar panel plant is something of the model I have in mind.
Another separate question is how we do the accounting? if it is done with existing debt based money counters that impose a purely artificial boundary condition the idea that we run out of numbers to count things ever is the level of absurdity current economic models institutionalise.
or why Economists are always wrong.
Never fear, there is a word for that! The word is “catallactics,” which derives from the Greek verb καταλλάσσω, which means not only “to exchange” but also “to reconcile” in the sense of admission to a community, or changing from enemy to friend. The word in itself speaks of the profound connection that is possible from the act of mutually beneficial exchange, and changes the inflection entirely from the coercive management of human cattle for the benefit of a unitary plan (“economics”) to the creation of a community based on exchange and friendship (“catallactics”).
Other conceptual failings in the dismal science include notions of evolution not even found in Darwinian theories.
There was a fashion in the 90’s for what was called Joined-up thinking in politics, another of the endless spin doctoring mumbo jumbo the Competing elites model of democracy throws up sadly.
Joined up Thinking with respect to a portfolio of solutions applied to problems previously solved utilising centralised models.is the change of attitude we require.
Centralised efficiency versus decentralised robutness.
These are ideas Bernard Leitaer examines in this talk.
Quantifying sustainability: Resilience, efficiency and the
return of information theory
Click to access ulanowicz.pdf
Hi I love that Sarah desert project – I’m sure Tesla would have solved the efficient transmission of electricity generated problem.
I guess one of the problems – assuming that every adult in the World hadn’t got round to shaking hands and hugging one another – is that producing 50% of the World’s energy in one place would make it open to attack – terrorist or otherwise.
But if we ever do learn to love one another then it’s a great idea.
”Economic output is used, broadly speaking, for just two things – consumption, and saving/investment. Current monetary policy is thus favouring consumption and deterring saving and investment.
What this in turn means is that the economy can no longer support both consumption AND saving. So monetary policy is being used to tell people to consume more, and save less.
And there’s your switchover.”
It’s a long time getting past the conventional wisdom’s of monetary policy and open market operations, all of which are stories spun by Economists which everyone else sniggers at.
Who hasn’t experienced the following? Just the other day
it happened to me! Just like any other weekend, I went
to the supermarket to replenish my empty pantry and as
always, I made the mandatory stop at the fresh produce
section, where I placed some tomatoes in one of those
little plastic bags that you tear from a dispenser. As
always, I went to one of those electronic scales full of
those colourful figures that represent the different
produce: I put the bag on the scale and pushed the key
with the little tomato on it. And oh my God, the
following message appeared on the screen! “Error: This
scale has run out of grams. Please excuse the
inconvenience”. What a pain and just at the worst
moment! But then again, we all know that given the
times, grams are scarce…
However and after enquiring, I was relieved as I learnt
that had I weighed my tomatoes on that scale, I would
have had to leave almost a whole tomato as compensation
for the use of the grams. But then again, if grams are
scarce, it is only natural that we pay for them, right?
What? You say that nothing like this has ever happened
to you? I don’t believe you. You say it’s absurd? Come
on now, it happens everyday. Think for just a moment,
maybe not in the supermarket and of course not
weighing tomatoes, but what if we substitute terms?
What if instead, it was somewhere else that you go to
“weigh” other things, like your house, your work and
other general belongings? Yes I know, that these things .
The truth will set you free but first it will piss you off?
Gauvin’s work is set out at this web site
The above extract about running out of Grammes is from his free to download book.
Click to access The%20Money%20PSYOP%20gift%20copy.pdf
For Seeds to Succeed Tim I think you need to incorporate the ideas behind Gauvins
”Passive BIBO Currency is concerned with providing a stable measure of the value attributed to goods and services being transacted. Each transaction generates its own units that are resolved against existing balances such that when all providers of goods and services have redeemed all equivalent value in future transactions of goods and services, then all balances return to zero. By applying formal stability and control theory, BIBO Currency resolves the lack of logical congruency in defining money as both an object of value that varies according to its relative scarcity as well as a unit of measure of that same value. This is summarised in the Stable Currency Unit Theorem.”
These are highly technical points but conventional Economic theories particularly monetary mythology will undermine the efficacy of the concept in my opinion.
Your comment about SEEDS is highly pertinent, as I’m putting together the guide. Basically it will be this article plus a section of notes on specific topics.
One of the problems with economics is that there’s a big gap in accounting compared to how companies do it.
A company reports three main statements:
– Income (or “profit and loss”) – FLOW over a period (a year or quarter)
– Balance sheet (or “statement of assets and liabilities”) – STOCK (at a single date)
– Cash flow (or “sources and uses of funds”) – this is the LINK between the above.
As a stock analyst, I always looked at this one first.
Then look at economic accounts:
– GDP – FLOW
– National statements of debt etc – STOCK
– but where is the link? Its absence makes our understanding far weaker than it needs to be for effective interpretation.
“I guess one of the problems – assuming that every adult in the World hadn’t got round to shaking hands and hugging one another – is that producing 50% of the World’s energy in one place would make it open to attack – terrorist or otherwise.”
Resource wars? whoever would have thought of such a thing?
Solar Breeders are not restricted to this example, Don.
It’s really important to pay close attention to the energy professionals and their scepticism, Euan Means blog is very good I have stitched together several discussions with links on this Blog post here.
I didn’t word my reply effectively. I should have put the same type of energy production in one place for 50% of the population although you could of course argue that the huge Sadi oil fields represent exactly the same thing.
Thank you for the links I’ll need some time to read through them.
Hi Donald, You made a valid point and I agree with you. This internet way of communicating brilliant as it is doesn’t afford the sort of nuanced joshing or ironic eye twinkling that in person discussion afford, lets hope Tim and Seeds will lead to some sort of SEEDS convention in due course and the goodwill being generated here in our online endeavours can see us sharing a few jokes and perhaps a glass or two of our favourite poisons.
Hi sounds very good to me. If 2020 is the crunch year then we have time (well a little)
Since I read Tim’s book and then started reading this blog site my perception of the World has changed. I do feel more worried than I used to but this is a good thing as I am now making more sensible financial decisions.
I’ve mentioned this before on one of my posts – but when I was very young and had relatively little money (I lived in a bedsit with initially no fridge and a greedy coin operated electricity meter) in many ways I was happier than I am now.
It took my 3 years of hards savings to get a deposit for my flat (in the early 1980’s young people could afford to raise a deposit as we were only just emerging from a recession so property prices were low). When I could afford my first colour television my heart swelled with joy and I used to love going on cheap railway based travel across Europe staying in Youth hostels. A car was out of the question.
Now of course young people have cars – mobile phones – fantastic computers – jet off on exotic holidays BUT (as a downside) no prospect of owning their own home for years.
I think the point is that we can get used to less and make more use of the assets we already own instead of rushing to upgrade every few years. A commentator on the CapX website said the the demise of Toys R us was a good thing (poor staff) as it represented ‘destructive creation’ so would be replaced by something better. But soon there might not be enough surplus energy for destructive creation so again we will have to make do.
Hi Donald, My perceptions have changed markedly since I moved to Sweden and started studying monetary history and Philosophy. How far my perceptions have changed are actually set out in my own words in a discussion I had back in 2009 shortly before leaving the Uk.
Hi I like your idea of taking all money out of private banks (from your blog) which could bring back some financial sanity.
Before market deregulation borrowing money was a very difficult task. You often had to meet the actual bank manager face to face and so be assessed for you credit worthiness.
I would like to see public owned banks be more prudent and the private risk takers reigned in. Unfortunately in the US this is exactly what Trump isn’t supporting. Incidentally Trump seems to be in a meltdown and it only needs someone to throw some water over him and he will disappear into a cloud of steam.
Also in regards to America I hope you have seen the film -‘Enron – The Smartest guys in the room’ I went to see it with a friend who has a degree in mathematics. He sat there with a dropped jaw all through the film. I found it fascinating because it so highlighted financial greed and the lack of care for ordinary people – especially those who may have died because of the plug being deliberately pulled to put the price of electricity up artificially.
New Ideas and Information
Carlo Rovelli, the Italian physicist who wrote Seven Brief Lessons in Physics, has now published Reality is Not What It Seems.
In chapter 12 he deals with Information.
“I would like…to speak about information: a specter that is haunting theoretical physics, arousing enthusiasm and confusion.”
“Many scientists suspect today that the concept of ‘information’ may turn out to be a key for new advances in physics.”
How Do We Process Information?
*symbiotic relationship between our sensory organs and our short term memory.
*Deep sleep which allows us to move the essentials of an experience from short term to long term memory.
*REM sleep which allows us to model what we have experienced and fit it into everything else we have previously learned. To analyze the totality and come up with novel solutions to complex problems.
*We are particularly likely to process information in terms of ‘Scarcity’
Scarcity: Why Having Too Little Means So Much
For example, if we detect the lack of respect for us by our social peers, it takes a toll on us in many ways. If we are starving or don’t have enough clean water to drink, it takes a toll in very direct ways on our body. As a rule, we need to feel ‘plenty’ to create new responses….safe and sated.
*As a related concept, our bodies process information from our food, our bodily functions, from toxins, and from circadian cycles to govern gene expression. Poor gene expression results in disease.
How Do We Weigh Information to Decide Consciously on a Course of Action?
*The Prefrontal Cortex and the Amygdala exchange information. Is it wise? Will it feel good?
*Sleep deprivation impairs the connection, which tends to put the Amygdala in control.
What is the Likely Future of Information Processing in Humans
*The ‘end of cheap fossil fuels’ scenario:
*We return to the world of ‘craefts’ (some similarities to ‘crafts’. See
Craeft: An Inquiry into the Origins and True Meaning of Traditional Crafts, by Alexander Langlands.
(Craeft is an Anglo-Saxon word, which has lost much of its meaning in modern English, ‘craft’) If you can pick up the book for browsing in your local bookstore, I suggest taking a look at haymaking, hedgerow construction (which is a multigenerational undertaking), and the construction of stone walls (similarly multigenerational). Every farmer made hay, but hedgerows and walls were frequently done by professionals. The results were that the ability of a piece of land to produce food and fiber for humans was increased, without the destruction of resources which is attendant on industrial agriculture. The amount of knowledge (information) required was stupendous. 99.9 percent of us today would have no idea what to do without machinery and wires. Bill McKibben wrote about this decades ago in The Age of Missing Information.
The end of cheap fossil fuels also implies worse outcomes in terms of infant mortality, but also a reduction in chronic diseases for those who survive to adulthood. Probably infanticide. Perhaps slavery. More craeft….by the Bronze Age in Britain, fine workmanship was common.
*The ‘Singularity’ happens or Fusion finally is tamed AND humans learn to use their newfound powers in ways that are not destructive.
*A Fast Crash probably leaves us all dead. There simply aren’t enough people existing in a functioning society to make the traditional craefts work. Langlands notes that the time horizon was centuries. A hedgerow was expected to function for centuries, as was a stone wall. There was an initial investment with a good return, but that return happened over time frames we can no longer imagine, and would be unthinkable in a Fast Crash.
*A Slow Crash implies that it makes sense to figure out how to apply the craeft mindset to everything we do. Using the minimum resources in the most efficient ways to meet human needs, while not destroying the environment. Also, critically, paying attention to the local economy so that those who master skills which minimize the use of fossil fuels can actually make a living.
I have no idea what the Singularity or Unlimited Fusion imply. Other than being skeptical that humans would use either wisely.
I agree, fascinating stuff. We just have to hope that (a) a slow crash is possible, and (b) we start preparing in time.
REM sleep reminds me of an exam answer from a student at an English university:
“When in REM sleep, a patient’s eyelashes flutter, and his balls oscillate from side to side”
(That’s a true story, by the way – I got it first-hand)
I can not reply in order with the comments so here is the comment this reply refers to.
on March 3, 2018 at 6:30 pm said:
I didn’t mean to imply that growth requires debt. Rather, I was saying that debt requires growth – without growth, repaying debt becomes impossible.
I think you are missing the core point. Of course, Growth or a recession are not possible without Debt as all Money is Debt 97% of it at any rate.
Repaying debt as the interest portion of the debt is not created when money is loaned into existence is the problem the process only works in one direction when it reverses the wheels come off. That though is not the central thesis of SEEDS and Energy Based metrics of economic activity.
WHere I find your analysis jarring is where you clearly identify the importance of inputs but then obscure that clarity of insight by using mainstream economic theory which is frankly pretty much all bogus voodoo.
I think Seeds is brilliant and I also have found some of your other publications very insightful and helpful, I am not suggesting throwing the baby out with the bathwater but the problems you innumerate such as pension underprovision and Debt levels are actually just man-made metrics resources are the be all and end all and the existing monetary system is simply no longer fit for purpose, that’s hard to accept I know , it does happen though to be true
That relationship has nothing to do with economic potential, the monetary system is a man-made political choice not a law of nature.
This interview of Prof Richard Werner nails the money stuff and disadvantages of our Financialised stage of capitalism.
Matthew Walker begins his talk at the Googleplex by stating that ‘if you don’t get 8 hours of good sleep at night, your balls gets smaller, your testosterone declines, your muscles get flabby, and your erection is limp.’
He doesn’t have much use for the Alpha Males who pride themselves on their lack of sleep.
Thank you – that explains everything – I’ve no need to see my Doctor now.
Walker is very careful to inform people that he is a PhD, not an MD, and thus at considerable legal risk if he gives a medical opinion. So he gives the usual disclaimer. I only pass along what I heard, and am considerably less qualified to render any medical opinions than even Walker.
I’ll stick to sleeping tablets then