#158. An air of unreality

DE-GROWTH AND DENIAL IN THE UNITED KINGDOM

Now that a general election has become the latest twist in the saga of “Brexit” – Britain’s ‘on-off-maybe’ withdrawal from the European Union – it seems appropriate to review the situation and outlook for the United Kingdom from a Surplus Energy Economics perspective.

The aim here is to set out an appraisal of the British economy, concentrating on performance and prospects.

No attempt is made, though, to suggest future policy directions, since the likelihood of a wholesale awakening to the realities of de-growth seems remote.

Before we start, I hope I can take it that the ‘energy, not money’ interpretation of economics is familiar to readers (though, given the accelerating pace of change in the world economy, it might be desirable to publish an updated introduction to this in the near future).

The understanding that the economy is an energy system, and not a financial one, can provide insights denied to those wedded to the ‘conventional’ interpretation which states that the economy can be understood, and managed, in monetary terms alone. It is becoming clearer, almost by the day, that this simply is not true.

Long-standing visitors won’t need reminding, either, that, beyond believing that everyone should respect the democratic decision, I’m avowedly neutral on whether British voters made the ‘right’ or the ‘wrong’ choice in the 2016 “Brexit” referendum.

There can be no doubt, though, that “Brexit” has been a huge distraction – indeed, it’s “the excuse that keeps on giving” – and has induced something very close to complete paralysis of the decision-making process.

Policy paralysis is particularly unfortunate in the economic sphere, where “Brexit” has prevented debate over a deteriorating economy and a rising level of financial risk. Even on the basis of official data, Britain’s financial assets ratio – a measure of exposure to the financial system – stands at more than 1300% of GDP. This compares with 480% in the United States, and is a dangerous place to be as a GFC II sequel to the 2008 global financial crisis (GFC) becomes ever more probable.

The place to start is with the economic situation as interpreted by SEEDS (the Surplus Energy Economics Data System) which, for Britain as for any other economy, lays bare the realities behind the published statistics.

Growth, output and debt – coming clean

If you were to believe official figures, British economic output increased by 11% between 2008 and 2018, adding £212bn (at 2018 values) to recorded GDP. This in itself is far from impressive and, since population numbers increased by 7% over that decade, left GDP per capita just 3.6% ahead.

Even these uninspiring figures flatter to deceive. Over a decade in which GDP has increased by £212bn, debt has risen by £890bn, meaning that each £1 of recorded “growth” has been accompanied by £4.18 in net new borrowing.

This, to be sure, is an improvement over the 2000-08 period, which witnessed a reckless, credit-driven bubble in which debt increased by £5.63 for each £1 of “growth”. But the UK economy remains excessively dependent on continuing increases in debt.

The numbers are summarised in fig. 1, which shows how far annual growth has been exceeded by net borrowing, particularly in the period of policy insanity which preceded 2008.

Fig. 1

#158 UK 01

As a result of a continuing addiction to cheap and easy credit, most (83%) of the recorded growth in British GDP since 2008 has been a function of the simple spending of borrowed money.

SEEDS calculations show that, if net new borrowing ceased as of now, trend growth would fall to between 0.1% and 0.4%, well adrift of the 0.6% rate at which population numbers are increasing.

If the United Kingdom hadn’t joined in the pan-Western (and, latterly, pan-global) debt binge in the first place, output last year would have been £1.63 trillion, 22% below the recorded £2.08tn.

Where underlying realities are concerned, SEEDS indicates that, rather than ‘output of £2.08tn, growing at 1.4% annually’, Britain has underlying, ‘clean’ GDP (C-GDP) of £1.63tn, growing by between 0.1% and (at best) 0.4% – and this is even before we turn to the critically-important energy situation. Comparisons between recorded GDP and the credit-adjusted equivalent are set out in fig. 2.

Fig. 2

#158 UK 02

Like so many others, the British economy shows all the hallmarks of “activity” created artificially by the injection of credit – high value-adding activities (like manufacturing) have stagnated at best, displaced by “growth” coming mostly from minimally value-adding sectors which are characterised by low wages and worsening insecurity of employment.

Replacing, say, £1bn of hard-priced manufacturing output with £1bn of residually-priced manicures and fast food deliveries isn’t progressive, least of all if this change has been financed with rising debt, most obviously in the household sector.

The mistaken idea, held as tenaciously in London as it is in the Élysée, that lowering wages somehow makes an economy ‘more competitive’, ignores one rather obvious fact – if low labour costs were an economic positive, Ghana would be more prosperous than Germany, and Swaziland richer than Switzerland.

The energy dimension

Because all economic activity is a function of energy, the cost of energy supply is a vital determinant of prosperity. This cost is calibrated here as ECoE – the Energy Cost of Energy – which measures, within any given quantity of energy accessed and put to use, how much of that energy is consumed in the access process.

For reference, SEEDS indicates that, for complex developed economies, prior growth in prosperity goes into reverse at ECoEs between 3.5% and 5.5%. In Britain, prosperity has been shrinking since trend ECoE hit 4.2% back in 2003. The subsequent rise in trend ECoE – to 9.5% last year – has tightened the screw relentlessly.

This goes a long way towards explaining why the average British person is 10.8% (£2,673) worse off than he or she was back in 2003 (as well as being nearly £27,000, or 49%, deeper in debt).

These calculations also do a lot to explain both popular discontent and the “productivity puzzle” which so baffles the authorities.

At 9.5%, Britain’s trend ECoE is significantly worse than the global average (7.9%) (fig. 3). This competitive disadvantage is of comparatively recent origin since, back in 2003, Britain’s ECoE (of 4.2%) was rather lower than the global average (4.6%). Whereas world trend ECoE has risen by 3.3 percentage points (+71%) since then, the British equivalent has more than doubled (+127%), increasing by 5.3 percentage points.

Fig. 3

#158 UK 03

Part of this relative slippage is due to a shrinkage in domestic energy supply – output of primary energy has declined by 56%, to 119 million tonnes of oil-equivalent last year from 272 mmtoe in 1999. Most of this decrease results from declines in output from the mature oil and gas production operations in the North Sea, though output from coal and nuclear has fallen as well. Against a 162 mmtoe decrease in fossil fuels production, supply from renewables has grown by just 23 mmtoe.

Over the same period, energy consumption, too, has fallen, by 15% or 33 mmtoe. Though often claimed as a sign of improved energy efficiency, this decline is indicative, rather, both of deteriorating prosperity and of the offshoring of energy-intensive (but important) industrial activities.

Perhaps because of complacency induced by the past largesse of North Sea oil and gas, British energy policy has seldom seemed particularly astute. Right back in the 1980s, ‘quick-buck’ thinking permitted both the export of gas and its use in the generation of cheap electricity, both of which were short-term expedients which made excessive demands on a resource which was never huge. Latterly, the authorities dithered for more than a decade over the future of nuclear before making the wrong technology choice for the wrong reasons. The current commitment to renewables, though commendable in principle, does not seem to be well-thought-out, and is likely to impose excessive costs on industry and households alike.

Whatever the local causes, ECoE is projected to rise from 10.0% this year to 12.0% by 2025 and 13.8% by 2030. These numbers indicate irreversible de-growth in the economy, and are markedly worse than those faced by significant competitors – by 2025, when British ECoE is projected to hit 12%, that of the United States is likely to be 10.8%, with France at 8.9%, resource-deficient Japan at 12.5%, and the world average at 9.6%.

Prosperity

When adverse trends in ECoE are set against essentially stagnant output as measured by C-GDP, the aggregate prosperity of the United Kingdom is actually slightly lower now (at £1.47tn) than it was back in 2003 (£1.48tn).

Over that same period, though, the population has increased by 11.4%, from 59.6 million to 66.4 million. Taken together, these figures explain why the average person is 10.8% worse off now (£22,191) than he or she was fifteen years ago (at 2018 values, £24,832).

Rises in taxes have exacerbated this deterioration, with a £2,673 fall in prosperity compounded by a £2,240 (24%) increase in taxation per person. Accordingly, discretionary (‘left in your pocket’) prosperity is £4,913 (32%) lower now (£10,432) than it was in 2003 (£15,345). This isn’t as bad as what has happened in France (-40% over the same period), but the French experience is extreme, and Britain is not far behind in the league-table of impaired prosperity.

Where pre-tax prosperity is concerned, British citizens have suffered more than most over an extended period (see fig. 4). The outlook is for further erosion of prosperity, making the average person 15% worse off by 2024 than he or she was in 2003.

This continuing deterioration in prosperity poses a huge policy problem for decision-makers and opinion-influencers, few (if any) of whom even understand what is really happening to the economy.

Fig. 4

#158 UK 04

Risk and response

If you were to put the foregoing points either to decision-makers or to practitioners of ‘conventional’ economics, the probable reactions would be denial and disbelief.

Additionally, you’d probably be told that the national balance sheet shows net assets at an all-time high of £10.4tn, which sounds impressive – until you realise that 83% of this (£8.6tn) consists of land and buildings, whose nominal values have been inflated by ultra-low interest rates, and which cannot be monetised because the only people to whom they could ever be sold are the same people to whom they already belong.

In fact, corroboration of the cautionary conclusions of the SEEDS analysis of the United Kingdom is particularly easy to find. In recent years, the British economy has been characterised by real and worsening hardship, evident in homelessness, the millions ‘just about managing’, highly elevated levels of household debt, rising recourse to food banks and a dearth of well-paid job opportunities and affordable accommodation for the young. High-profile corporate failures in the retailing and leisure sectors attest to the severe downwards pressure on consumers’ discretionary prosperity.

When calibration is switched from credit-inflated GDP to underlying prosperity, the true extent of financial risk becomes apparent. The debt ratio rises from 263% of GDP to 370% of prosperity, and even this excludes off-balance-sheet “quasi-debts” such as unfunded public sector pension commitments. Worse still, financial exposure – measured as the ratio of financial assets to income – rises from an already-dangerous 1300% of GDP to a frightening 1870% on a prosperity basis.

The sharp fall in prosperity has created significant acquiescence risk, meaning that public support for economic and financial policy initiatives can no longer be taken for granted. The decrease in discretionary prosperity over the past ten years hasn’t been as severe in Britain as in France (-29.3%), but, at -20.9% the United Kingdom ranks third out of the 30 countries modelled by SEEDS, just behind second-ranked Denmark (-23.4%), just ahead of the Netherlands (-20.7%) and Australia (-20.6%), and a long way ahead of Canada (-16.6%), Japan (-14.1%), Italy (-13.6%) and the United States (-12.9%).

This does not mean that Britain faces the imminent arrival of an equivalent of the French gilets jaunes movement, but it does help to explain both the result of the “Brexit” vote and the steadily worsening public disenchantment with the elites. It also means that any attempt to repeat the 2008 banking rescues would be likely to meet with huge popular opposition.

These considerations are set to recast the political agenda entirely, with economic and welfare issues coming to the fore, and non-economic subjects falling ever further down the public’s order of priorities. In the coming years it’s likely that popular demands for redistribution will increase to the point where any party not adopting this agenda will find scant electoral support.

Meanwhile, and despite growing. political pressure for the imposition of much higher taxes on the wealthiest, it should be assumed that the tax base will start to shrink. Tax may account for ‘only’ 37.6% of British GDP, but it already takes a 53% bite out of the prosperity of the average person, up from 44% back in 2008. Any promises based on “tax and spend” are losing credibility, which might be one reason why both major parties are now promoting policies predicated, not on higher taxation, but on sizeable increases in government debt.

The reality, though, is likely to be a growing need for the prioritising of public services, emphasising those services deemed to be essential whilst withdrawing from activities of lesser importance.

The big question from here is whether the elites recognise deteriorating prosperity and act on its implications, or try to ‘tough it out’ and wait for an economic ‘recovery’ that isn’t going to happen.

There are ways of managing a society in economic de-growth, but the first imperatives – a recognition that this is what’s happening, and a preparedness for debate on the issue – still seem as far away as ever.

 

 

383 thoughts on “#158. An air of unreality

  1. @Steven Kurtz
    The Maximum Power Principle CAN operate within culturally imposed boundaries in humans. As a simple example, humans do drive on the right side of the road (except for the English). And most people pay some attention to school crossings. People have also learned not to smoke in public buildings. Professional race cars usually operate within rules which limit measurements such as engine displacement.

    Getting the Maximum Power out of one’s garden using black earths with effective microbes and intelligent diversification with a little season extension is an entirely laudable goal. But poisoning the Gulf by covering Iowa with synthetic nitrogen fertilizer should be beyond the pale for a civilized society.

    Don Stewart

    • Straw man response, Don.

      MPP is about seeking and using energy. There are billions of humans who are INvoluntarily Simplistic, and they do all possible to increase their energy/matter throughput. The 4-5 billion in the fat middle of the Bell Curve are struggling to maintain their throughput. And the small tail of the Curve- wealthy elites- are doing all to maintain their relative advantage. There are rare exceptions of voluntary simplicity and small religious/cooperative communities, but 99% aren’t that.

      I’m not advocating businesses usual. I advocate 1 child families getting rewarded, with more kids paying higher taxes. I advocate removing tax exempt status for religions, many of whom are fostering competitive breeding. I advocate against patriarchy, for women’s total control of their breeding, and for free contraception.

      Terra Pretta, biochar, etc are fine for the tiny % that use it. However it is not relevant in addressing mammoth human overshoot. Treating symptoms while population is still growing by 80+ million annually keeps more alive to suffer when TSHTF.

    • Steven Kurtz
      I never made survival of everyone alive today or in 10 years the issue. I assume a lot of people are going to die. I am concerned about people learning the skills needed to survive in the post-fiat crash with much less fossil fuel energy. Gardening with home-made black earth seems like a worthwhile project to me…and now we know how to do it effectively.

      Whether the machine and downstream businesses can get traction in anything other than Eco-villages in the north and subsistence communities in the south…I don’t know. I believe small farms can benefit today from black earth farming principles…particularly if nutrient density marketing gains traction. The astonishing replacement of meat in fast food burgers has been a wake-up call.

      At any rate, socially imposed limitations ARE a channelizing factor in terms of MPP. Who knows what the social climate will be following Dr. Morgan’s Fiat Death and Energy Decline? It might be something like 1933 in the US, or wartime Britain. The social climate may be much more egalitarian…or it could be war-lords.

      It is a mistake to assume that the society won’t change in response to upheaval in the environment.

      Don Stewart

    • Societies will change, bigtime in my opinion. Changing conditions bring rapid responses. Feedback loops are always operative.

      I practiced no-till (mulch based) organic gardening for a decade in New Hampshire in the 90s. It is hard work for 6 months, then too cold unless you have heated greenhouses!

    • The difference between the dark earth approach and the mulched no-till approach is that 99 percent of the carbon in the mulch goes back into the air as carbon dioxide. The dark earth approach puts about half the carbon into the soil in very long term storage and also increases the ability of the soil to support life in general (e.g., microbes and soil food web critters) which increases food production and also makes the soil more fertile as the critters go about their business of eating each other and gives the plants a very high Brix which makes them unpalatable to most pests.
      It is a mistake to try to describe the black earth approach as ‘just typical organic’.

      Don Stewart

  2. @Steven Kurtz
    Think about the CoolLab and carbon intensity. Today, we get the GDP from a given quantity of carbon in fossil fuels according to the empirical formulas developed by Tim Garrett in Utah. Will those equations hold after fiat money explodes and energy declines? Would a CoolLab generate more real output per unit of carbon than the current generation of fossil fuel burning machines, or less real output. Since the CoolLab emits a lot less carbon as waste heat, I would argue that it will be more efficient in terms of producing real output. That is the Maximum Power Principle in operation… assuming a constrained supply of available power. But does it require more human involvement? Of course. But it is necessary if we want to get the outputs which we can no longer generate with fossil fuels.

    Don Stewart

    • I tried 2 search engines and can’t find CoolLab. You are correct that any throughput counts!

    • CoolLab is Bates and Drapers name for the machine. As in ‘cool the Earth’, opposite of ‘hotter and hotter’. For pictures of the machine one would have to search in Albert’s blog. I don’t have time to do that right now.
      Don. Stewart

  3. Steven, with respect, Don stated that the MPP can operate within cultural boundaries, you appear to dismiss the remark, but then proceed to indicate you advocate for top-to-bottom imposed legal restrictions and incentives (macro-social engineering) to ameliorate, modify or redirect the operation of MPP by controlling population, so if MPP can be constrained by societal-imposed norms of the sort you recommend, I don’t see how you think Don is making a straw-man argument. If MPP can be controlled and directed in a life-sustaining manner by societal structures of the sort you recommend, I do not understand why Don’s recommendations cannot also be useful and accomplish constraining MPP within bounds of long-term, earthly sustainability. In short, I need more of an explanation of your viewpoint.

    Scientifically and philosophically, one has to be careful with concepts like MPP. MPP is a statement synthesizing human observations. it is common for people to take these human statements, which really are generalized statements describing an aspect of observations, and then start saying it is a “law” or a “cause,” governing how things must and will go. It is really an elaborate way of saying things must be or go a certain way, because that is the way we have observed them going, while attaching, wholly without support, the concept of “causal necessity” to it. David Hume very usefully debunked this kind of thinking and our ideas of “causation,” in On Human Nature.

    Consider how a similar observation turned “law” now operates in evolutionary biology — the manner in which some biologists use the supposed Darwinian concept of “fitness.” Instead of investigating, one begins by working backwards. Such and such feature of such and such animal or plant must have evolved because of its fitness for a particular purpose, and then hypothesizes explanations of what this “fitness” could be. It easily becomes a clever form of tautological, circular self-justifying reasoning, not real science, and not real philosophy.

    As an other example, it is not unlike the neocon concept of markets, where “markets” are not only the way things are, but the thing that is causing the markets to be what they are. In other words, it is both noun and verb, state of being and the cause of its own being. I.e., it is a self-referential scam, a non-explanation explanation, highly useful for pulling the wool over people’s eyes by telling them that the reason that they are paid what they are paid for their services is because the “market” determines that that is its value. A pseudo-scientific explanation of a supposed invisible, impersonal force hides the reality of human choice and exploitation, and blames the victim.

    • While I grasp your points, MPP is about the predispositions of life forms. Increasing energy throughput is not known to have exceptions in non-human species as far as I know. In humans, I view voluntary simplicity and suicide as exceptions. If you know of others, please share them!

      As to shrinking the numbers of our species, the impetus as I see things is to reduce future suffering of all species including Homo rapacious-superstitious. I’d welcome the emergence of a sterility virus effective only on superstitious humans!

      Lastly, hierarchy exists in social mammals, maybe not universally, but predominantly. The socio-economic structures in societies are mainly the result of biology in my view. I view free will as minimally vastly overrated, and possibly an illusion. The blame game of attacking “isms” solves nothing. Socialism hasn’t become the predominant system for humans. Why? Because it isn’t the outcome from our dominant biological drivers.

      You are entitled to disagree, but I wager for charity on *outcomes* at longbetsDOTorg Appealing to authority (Hume) is something I could discuss academically, but not on this blog.

  4. Some interesting disputes at PeakOilBarrel

    SRS Rocco attacks US shale as a Ponzi scheme. Learned rebuttals. Then Rocco posts this for Exxon-Mobil:

    Q1-Q3 2019 U.S. Upstream Earnings = $468 million
    Q1-Q3 2019 U.S. Upstream CAPEX = $8.8 billion
    Q1-Q3 2019 U.S. Average Production = 639,000 bopd

    Q1-Q3 2019 Non-U.S. Upstream Earnings = $7.8 billion
    Q1-Q3 2019 Non-U.S. Upstream CAPEX = $8.6 billion
    Q1-Q3 2019 Non-U.S. Average Production = 1,730,000 bopd

    Clearly, anyone with a functioning BRAINSTEM should see that ExxonMobil’s U.S. Upstream Sector is a complete disaster. And, without ExxonMobil’s ability to rob Peter (Non-U.S.) to pay Paul (U.S.), Shale in the U.S. wouldn’t be a viable commercial project.

    Furthermore, ExxonMobil had to borrow $7 billion of debt in August mostly to pay Dividends. Total Free Cash flow minus Dividends for Q1-Q3 2019 was a negative $5.2 billion.

    It surely does seem to me that US shale, which has accounted for the bulk of the global increase in oil production since 2005, is in real trouble. Exxon-Mobil is now the largest player in the Permian Basin, which is providing the bulk of the growth and the overwhelming growth potential in the US.

    I suggest that we need to take very seriously Dr. Morgan’s warning that fossil fuels are leaving us, whether we want to leave them or not.

    Don Stewart

    • Thanks. I have known of Bates for some years, but never ran across this machine. As with “renewables,” there is embedded energy and mined minerals in the infrastructure. This is likely less in CoolLab ovens. At some point, the oven will need to be rebuilt or renovated.

      Operation generates heat and gasses, but from a first read it seems much is utilized in co-generation. It sounds like it is valuable in the right situations.

      Feedstocks that are diverted from natural decay on the ground would seem to reduce energy available to insects, microbes, fungi, etc. Re the mulch used in no-till, if left on the ground (leaves, grass and weed clippings, the same gasses and minerals are released as when used as mulch to retard moisture loss and weed competition.

      This is not the main focus of this blog, so I’ll stop on this topic.

    • Recognizing that this blog is NOT devoted to such topics. One short comment to perhaps bring clairity:
      *Dark earth gardening is separable from the other topics. It was done thousands of years ago by Amazonian Indians. We can now do it better than they did. Technology helps, but is not essential.
      *Bokashi treatment of food waste was part of the Amazonian system. We now know how to do it better. Again, technology helps but is not essential. With some technology (such as buckets and Effective microorganisms) we can recycle into the soil a very high percentage of food waste. (Human manure is still MIA…but for how long?)
      *The Amazonians produced biochar, but apparently did not have the physics knowledge we have. We know how to dig holes in the ground which burn wood in a reduced oxygen environment. If we can burn the wood in a Cool Lab, so much the better….because we can burn more and also capture the heat to produce all sorts of products.

      All examples of the search for Maximum Power. But it will be necessary to have limits (e.g., Edo Japan and forest restrictions) to avoid eating our seed corn.
      Don Stewart

  5. Off topic and wordy, but maybe informative and provocative

    The word ‘post carbon’ is bandied around a lot. But it is missing the point. The point is that only a few atoms can provide the energy required to sustain a complex ecosystem. One of them MIGHT be uranium, but it hasn’t been very useful in the past and its prospects for the future are uncertain. The other atom is carbon…and we commonly describe life on Earth as ‘carbon based’.

    It has to be regarded as science fiction to propose anything other than a carbon based society. Which tells us that, in a world where prodigious concentrations of carbon are no longer abundant (e.g., depletion of fossil fuels), we will need to get all the benefit we can out of every carbon atom we can control. And, in order to persist on the planet, our human race needs to use those carbon atoms in circular patterns rather than simply burn them as rapidly as possible.

    A short digression into non-carbon energetics. Windmills and falling water have historically been important. Passive solar heating is still important…keeping Earth in the Goldilocks zone which permits humans to survive. Many indigenous people live in passive solar houses. Movement is important in indigenous cultures…summer camps and winter quarters. Radiation is important: sleeping outside so that one’s body radiates to frozen outer space to cool oneself in the summer. Building a root cellar to keep your beets and potatoes cool. All of these will become increasingly important as fossil carbon declines.

    Carbon reigns supreme in terms of process heat and fertile soil for growing food. Since humans think profligate behavior makes perfect sense for themselves as individuals, and since humans are the ‘clever ape’, then it becomes necessary for survival that humans develop societies which establish boundaries on permissible behavior. For example, in Edo Japan, recovering from the forest devastation of the Middle Ages, it became a capital crime to cut down a living large tree without a permit. Which meant people had to scavenge fuel wood which would otherwise have slowly degraded and gone back into the air as carbon dioxide. The Amazonians discovered that burying food waste along with fire residue in the ground yielded fertile black earth. One can imagine children being admonished if they threw food away in the forest.

    On the biology front, biochar is a sort of charcoal which is not like the charcoal briquets you buy in the supermarket. It contains countless small spaces for microbes to flourish and the electrical properties which grab onto and hold beneficial compounds such as phosphates and magnesium and also retain water in the soil.

    The Cool Lab combines process heat and a downstream array of businesses which can use the process heat to make useful stuff…with end products of asphalt which can be used for paving and biochar which can be used to multiply biological activity in the soil and which can be a useful addition to many products from toothpaste to concrete.

    One of my neighbors has just published a wonderful book…Gardening With Grains. She has a large suburban lot, and grows grains both as ornamentals and also to provide a modest supply of calories and barley for her home-made beer. In accordance with what Westerners have thought for the last couple of thousand years, she ‘turns in’ the straw…thinking that she is adding organic matter (e.g., carbon) to the soil. I don’t think she knows that the carbon she is adding will rapidly return to the atmosphere as CO2. In a perfect world, her neighborhood would have either a Cool Lab or a dedicated pyrolysis stove for making biochar out of the straw. Then she would be adding immensely more valuable carbon to the soil.

    In summary, the end of fossil fuels requires a very different way of thinking and working and governance and financing. We can either throw up our hands and admit defeat and prepare to die…or else get busy on all the work that needs to be done.

    Don Stewart

    • Couple of Points
      *Art Berman quotes statistics to the effect that the bulk of the ‘productivity improvements’ and ‘cutting the breakeven point’ in the US shale business has been due to the squeeze on the service companies. When drilling begins to increase, then the service companies raise their prices, and the supposed improvements disappear.
      *Berman thinks that low prices will bring on a return of capital to the tight oil companies. He is looking at it like Gordon…what is the potential price for those with assets. If the assets are undervalued, then there is potential fro large gains.

      However, it seems to me that what is missing is Dr. Morgan’s perspective on ECoE. If shale has not been able to produce free cash flow at 100 dollars or at 40 dollars, and if the productivity improvements are mostly a mirage, and if the quality of the remaining shale acreage is declining, then ECoE will deter actual investment. We could get a big increase in stock prices and in price per barrel, but not spark a big increase in production. Good for investors but not good for prosperity.

      One other factoid is that, if one looks at reserves, something like 80 percent are owned by governments. Which may explain the renewed interest by the US government in running what are effectively colonies. See Pompeo’s speech a day or two ago telling the world that Latin America will be operated for the benefit of the US…and China needs to stay out. The US will manipulate governance in Latin America to insure that only ‘legitimate’ governments survive. Little Cuba will not be allowed to pollute politics in gigantic Brazil. By sending doctors to work in Brazilian slums??? (one of Bolsonaro’s first acts was to get rid of the Cuban doctors).

      Don Stewart

    • I got this link from the founder of the website peakoilbarrel; Ron Patterson. In his opinion it contains a lot of reality. To him, US shale is what keeps the system going, the rest is in decline. He also knows that shale is between a rock and a hard place; we won’t make it to 2025. His website contains a boatload of knowledge from posters. Rather technical though. His monthly Opec reports are very good, including charts from shale, Opec vs non-Opec etc.

      Shale is just another shadow bailout of the system. Everything goes through fiat currencies before we can see it. A bridge over troubled water. But it is crumbling. Years ago i started counting the crocodiles beneath me, but i’ve lost count.

    • Well at least some people are ready to make money out of other people’s misery.

      If the expected large price hikes don’t give the hurry up to transition nothing will.

  6. Multiple Factor Models
    Here is an interesting new study appearing in Science:
    https://phys.org/news/2019-11-multiple-factors-climate-affect-soil.html

    The gist of the study is that when one is dealing with a dozen different factors which can affect the outcome, single factor studies are not very helpful. This goes directly against the received wisdom in much of science practice. For example, Dr. Dean Ornish showed that patients who ate whole plant foods, exercised, did stress reduction practices, and had social support solved some serious medical issues. One critique blamed Ornish for failing to separate out each factor. This study shows just how misguided the critique was.

    I suggest that when we are dealing with something complex, such as climate change or the collapse of currencies or how a society might adapt to higher ECoE, then the sum of the factors is what is important. And that may be very hard to estimate. But in all likelihood, the factors will reinforce each other. Such reinforcement is the norm in nutritional studies…a blueberry is better for you than the sum of the chemicals which comprise it. Likewise, the effects of climate change will be worse than the individual impacts.

    That said, the title is misleading, because many of the factors they studied are not directly related to climate change, such as fertilizers and pesticides. The bad headline doesn’t detract from the usefulness of the study.

    Don Stewart

  7. Tim,

    Do you have a view on how the following factors are affecting C-GDP?

    – Increasing number of retired.
    – Increasing retirement rate.

    Is it possible that these factors (trends) are significantly contributing to the current stagnation in UK C-GDP?

    I am more than convinced by your arguments on how increasing ECoE will ultimately limit C-GDP growth. But is it the most significant factor at the present time?

    • I can answer your questions in Chapter 12 – The End of Growth in my book ‘The Financial Jigsaw’ due for publishing in Q1 2020. You are welcome to a free pdf copy of my final manuscript by application to: peter@underco.co.uk

      My book conforms to all Tim’s propositions and he has graciously allowed me to copy part of his work into my Epilogue.

    • For starters, the new, all-singing-and-dancing version of SEEDS gives the following numbers for 2018, with 2008 in brackets, all in £000s per capita:

      C-GDP: £24.69 (£25.79)
      ECoE: 9.5% (5.8%)
      Prosperity: £22.34 (£24.30) (-8.1%)

      Looking out to 2028, prosperity per capita is projected at £20,630 (-7.6%).

      Tax has made things feel worse, with discretionary (‘in your pocket’) prosperity 22% lower now (£10,577) than in 2008 (£13,632). This is the hardship that people feel, but that politicians and their advisers neither know about nor understand.

      The messages – very unwelcome – would thus be:

      ‘Boris – the wealthiest will need to pay more tax’

      ‘Jeremy – forget ramping up public spending’

      I’m not wholly – stress, ‘wholly’ – persuaded by the demographic argument.

      Individuals play two roles in the economy.

      One of these is physical labour, affected by ageing but a tiny part of the economy.

      Our main contribution is in directing energy from extraneous sources (FFs, RE, nuclear, etc). Age has less bearing on this than on physical labour.

    • “Individuals play two roles in the economy.

      One of these is physical labour, affected by ageing but a tiny part of the economy.”

      What is the other role Tim?

      I assume it is consumption?

      In our town (Kendal, Cumbria, UK) we are experiencing the “retail apocalypse” that is discussed elsewhere.

      Evidently working people have less disposable income to spend on consumption, aa you describe. But I was also considering that Kendal/Cumbria has a relatively old population compare to other counties.

      My understanding is that generally people’s spending patterns change as they approach and enter retirement. Generally consuming less and conserving more. Also they have made the majority of their last ‘big ticket’ purchases, such as houses, furniture, appliances, and cars. Only purchasing again if necessary. (Please challenge this premise if your understanding is different)

      Accepting the premise above, is it then possible that across developed nations we’ll be getting a ‘double-whammy’ of consumption/demand destruction due to decreasing prosperity (due to ECoE), and more people moving into a less consumptive phase of their lives (retirement)?

      Maybe we’re ‘ahead of the curve’ here in Cumbria, much like the Japanese?

    • What I meant was that the human role in generating economic output divides into…..

      – physical labour

      – directing the application of energy from extraneous sources

      ……with the former accounting for a tiny proportion of the total.

      Consumption is the flip-side of these processes.

      On the topic of demand destruction, a former Indian finance minister has opined that India is going through “the death of demand“. That’s a strong way of putting it, but makes sense.

      The new version of SEEDS provides regional comparisons, which I mention because the results are striking, and, I believe, extremely significant.

      The West – the SEEDS ‘AE-16’ group of advanced economies – has experienced deteriorating prosperity since the mid-2000s. You can see the results of this wherever you look.

      What’s new is that the ‘EM-14’ group – which includes China, India, Brazil and 11 other EM countries – is now on the cusp of deterioration in prosperity.

      This, as I see it, is the moment at which denial over de-growth ceases to be tenable.

    • I personally would look at it this way.

      In a resource scarce future society older people consuming less – out of choice – will mean more for the younger generations.

  8. As Bil Gates says we need to apply some math on this renewables obsession:

    36. Storing the energy equivalent of one barrel of oil, which weighs 300 pounds, requires 20,000 pounds of Tesla batteries ($200,000 worth).

    37. Carrying the energy equivalent of the aviation fuel used by an aircraft flying to Asia would require $60 million worth of Tesla-type batteries weighing five times more than that aircraft.

    38. It takes the energy equivalent of 100 barrels of oil to fabricate a quantity of batteries that can store the energy equivalent of a single barrel of oil.

    39. A battery-centric grid and car world means mining gigatons more of the earth to access lithium, copper, nickel, graphite, rare earths, cobalt, etc.—and using millions of tons of oil and coal both in mining and to fabricate metals and concrete.

    https://fee.org/articles/41-inconvenient-truths-on-the-new-energy-economy/#disqus_thread

    • Houston, we have a Political Problem.

      We could reduce our demand for high energy stuff, for example little or no flying, significantly less transport, less ‘out of season’ food, hot tubs, etc etc

      Not a solution but it takes us along the right road

    • There is progress being made on solid state batteries which do not use precious metals and could have up to five times the energy density.

      But a total solution but not all doom and gloom

    • In general, human progress is associated with using more and more concentrated sources of energy. That started millions of years ago, when hominids figured out how to obtain a very dense (compared to other options of the time) source of energy, meat, which made it possible to fuel the massive expansion of their central nervous system.
      Power density is the key to progress, and the only logical step forward is nuclear energy. That includes much of transportation: nuclear-powered trains and ships, at a minimum (the latter already exist, of course), and perhaps aircraft. For personal, small-scale transportation batteries might work (or maybe not).
      Nuclear energy is percieved as very dangerous because it is; and it is dangerous precisely because it’s so powerful (where “power” is defined as “energy divided by time”). Humans will probably kill themselves eventually using it… Well, in the long run, we’re all dead anyway, so why care?

    • ‘since 1990, global energy efficiency improved 33 percent, the economy grew 80 percent’..is that in GDP terms or output of real goods and services ??

    • If I understand the story that came out of the Dancing Rabbit ecovillage, then there may be hope. But only if we approach the problem first as a behavioral challenge, then as a technology/policy challenge. Of course, this is the opposite of what we usually do.

      Their response involved a behavioral change first, then a technology change. They claim to have reduced their energy requirements by 80% by first making a series of individual, family and community behavioral changes. Then, supplying the remaining demand from off-the-shelf solar, wind and bio-fuel/bio-mass systems.

      http://www.dancingrabbit.org/about-dancing-rabbit-ecovillage/eco-living/cutting-our-carbon-footprint/

  9. Catabolic Capitalism; Exxon short of cash?; Mark Gordon interview
    See this essay for capitalism in a time of catabolism:
    https://www.counterpunch.org/2018/11/01/catabolism-capitalisms-frightening-future/

    The point of the essay is that we are entering a phase of retrenchment, during which capitalism will operate to wring the last dollar out of the public. This phase will not be at all like, for example, Microsoft and the personal computer or Apple and the smart phone. The Mark Gordon interview had aspects of catabolism, in its focus on share price potential increases. But Gordon also assumes that shale production (and oil in general) are dependent on existing capital flowing in their direction. Thus, increasing profits in the oil business will serve to attract capital and optimally distribute society’s scarce resources.

    If Exxon was short of capital, why was it able to borrow so much money for stock buy-backs and to pay dividends? The fact is that near zero interest capital is readily available to Exxon. If the sub-salt formations in the deep Atlantic off Brazil were interesting to Exxon, they would have no problem getting the capital. MMT actually does work for corporations…at least for now,

    Repo men are probably salivating at the increasing rate of delinquent auto loans.

    The point is that how one sees the future depends on whether one starts from a broad definition of prosperity or the view that there may still be opportunities for the billionaires to become trillionaires.

    Don Stewart

  10. Why does MMT work for a corporation?
    Suppose Exxon-Mobil has some assets which can be used to guarantee debt…such as conventional oil reservoirs or even acreage in the Permian Basin, and oil refineries and chemical plants. Then a bank, due to the largesse of the Federal Reserve, can create money out of thin air and loan it to Exxon. If Exxon flourishes, the bank gets fees and interest and the principal is repaid. If Exxon invests the money in a failed sub-salt venture in Brazil, the bank can foreclose on the assets and is still made whole.

    Now consider a fly-by-night oil driller of the kind that made history during the early years of the shale boom. They raised much more expensive money in the sub-investment grade bond market and by selling direct to consumers with promises of high yields…sustained by Ponzi economics. When these companies went broke, nobody made any money except for scavengers and financial firms collecting fees. The assets were worth about 20 cents on the dollar (80 percent capital destruction).

    If MMT is practiced on a mass scale, there is nothing much to be seized in case of default. The main asset of households is their house…which can only be sold to other households.

    Don Stewart

    • Naturally, property will be seized: with the once owners finding themselves as tenants, with no security and few rights.

      The question is: seized by whom?

  11. Dr. Allen Williams on Agriculture
    This talk was delivered in November at the Carolina Farm Stewardship Association meeting. You can listen to as much or as little as you like. After a rather lame joke, he begins to talk about the catastrophe that struck from Iowa down to the Gulf last year, affecting everything from farmers to Gulf Coast resorts. He talks about the near-simultaneous occurrence of floods and dust storms in the Midwest. And he talks about the conclusion which I referenced above in the Science article…Nature does not deal in singular, linear causation. He apologizes for his time in Academia when he performed such studies and taught students badly.

    If you can spare the time, get to the picture of the single sunflower with its 3 honey bees in the midst of acres of agricultural devastation in California. He proposes special recognition for that brave sunflower and those desperate bees.

    Can facts and new science turn it around? Will the COP25 recognize the role of agriculture in putting carbon back into the soil? Will the governor of Mississippi realize that bigger levees are not the answer? Will farmers stop ‘recreational plowing”? Will the miles and miles of corn and bean monocrops be replaced by the diversified system he describes? Will all the ‘green revolution’ people shut up about synthetic nitrogen and starvation?

    Let’s hope (and pray, if you are so inclined) that sanity will prevail.

    Don Stewart

    • It is the struggle of intelligence against societal, financial and economic inertia, the capture of governments by powerful interests opposed to nay innovation which might detract from their profits (we might call this ‘habitual stupidity and vested interests’): which is likely to win?

  12. The concept of the economy as an energy system rather than a financial one may seem obvious to us here, but it is apparently completely lacking in the political debate in most western democracies.

    The discussion around entitlements based on past taxation is most illuminating for me.

    Most people seem to have zero interest in whether the entitlements, promised to them by the politicians of the past , accrued through past taxation but paid for from current resources, can be delivered.

    In a resource and energy restricted future, with the environmental and demographic problems and costs that will exist, how voters and politicians will respond will be interesting!

    I’m always surprised by the way that things that in reality we have no control over that will happen in the future or things that have already happened in the past are described as unacceptable or non negotiable. I suspect that the future that we have promised ourselves and are entitled to is similarly non negotiable and we will only elect politicians who promise to deliver it.

    • Ladydog,
      Dr. Tim’s has titled this article as “De-growth and denial in the UK”
      I consider your comment above to be very thought provoking in this context, because it alludes to he one factor in the whole equation that cannot be defined.
      Namely, “Human Nature”.
      Exactly how are people going to react to the government turning out its trouser pockets and showing to the world that it is broke.
      Being broke means that you cannot pay what you have committed to pay, and as you explain above, pensions come out of the current tax intake. Regardless of how unacceptable this may be to some people, if the money is not there, then it cannot be paid. Reality takes over.
      Regardless of which party does take control of the Chimpanzees Tea-Party in Westminster, if the government cannot raise money from abroad, then it cannot pay what it has promised to pay.
      What we are talking about are real people not getting their due entitlement. What we are talking about is a crash in spending; no consumer spending and the economy will grind to a virtual standstill. Gone will be the shopping trips to the mall, the FR/EZ flights to Spain, the online spending at Amazon, and there will be no need for an army of white van delivery men.
      I really do think that the bulk of the UK population have absolutely no idea whatsoever, about what is about to hit them, and just how hard they are going to be hit.
      We are going to get a very deep and multi-year prolonged economic Depression.
      Yes, to a greater degree it will be the people’s own fault for electing politicians who promised them the most, without actually asking those politicians how all the free goodies were going to be paid for. They didn’t really care about that, all they wanted was free stuff.
      The Mad House that the UK has become is actually just getting what it deserves.
      The great pity, is that a great many good, hard-working, conscientious people will be made to suffer along with them, . . . but that is just the way of the world.

    • If the US Fed can print $s electronically out of nothing, then so can The Bank of England and other CBs. I envision a competitive devaluation attempt by some countries to stimulate exports, but the top dog of the major currencies the past few years has the most to fall, and that is the $US.

    • Property funds are notoriously illiquid therefore any major selling of these funds are very likely to see trading being suspended. Without knowing exactly the composition of these funds I would strongly suspect that this is made up of mainly commercial property. Having said all that, something is clearly wrong in the UK property markets – this is not the first property fund to suspend trading. Which is rather worrying for anyone living in the UK as Sterling is appears to be a Mortgage backed currency, not a gold backed one..

    • Yes a good description of sterling.

      Clearly the investors are spooked because retail shops are failing one after the other.

      Perhaps in slow energy future all retail shops will have become homes (the Government has already commented on this possibility) and everyone will get their food and goods by electric delivery vans.

    • Re:
      “Yes a good description of sterling.”

      If you recall, I opined that (in October) when Sterling/$ was under 1.23, that it was way oversold and that everyone was on the same side of the boat. It is now 1.31. It is likely to stay above 1.25 for at least the next few months in my opinion.

    • It helps, I think, that the political situation in the UK is actually rather promising.

      The re-emergence of a political “Left” under Mr Corbyn means that there’s now a creative tension which gives Britain the chance to revert to the ‘mixed economy’ model, which avoids extremes and seeks to get the best out of both the private and the public sectors. Both main parties have a lot of ideas which are good, albeit with a lot of other ideas that range from the unwise to the completely bonkers. Boris, if he wins, will have freed himself of most of those MPs by whom Mrs May was thwarted. The main immediate risk is a ‘hung Parliament’.

      Of course, nobody yet recognizes the reality of de-growth, which makes a nonsense out of many party plans. But this is much the same in other countries. The Euro Area economy is moribund, and relies on a perpetual diet of QE and ZIRP/NIRP from the ECB.

      It’s becoming clearer that the Fed’s #1 priority is the prevention of a market crash, and that could involve pumping huge amounts of new money into the system (and it still won’t work, in my opinion).

      The ball that nobody seems to be watching is the EM economies. India, like China, seems to be in big trouble, and prosperity per person, as measured by SEEDS, has started topping out in a number of other EMs, including Brazil.

  13. With regard to pensions, the problem is generally that the amenities, benefits and institutions which are solely -in their current scope and scale – the fruit of oil-wealth and greatly enhanced energy flows in favoured regions, have come to be regarded as normal background of life, not the historical anomaly which they really are.

    Our whole way of life, and expectations, are an anomaly. One really has to be quite historically sophisticated to appreciate this fact, and most are not.

    Moreover, pensions, and so on, are also seen as the result of political struggles, as ‘social conquests’ to use the common phrase on the Left (see it now on the banners of the striking workers in France). And this is, of course, partly true.

    Humans are naturally at home with moral, religious, and social narratives, not abstract physics.

    But the physics of our situation is about to hit them right in the face, without warning almost….

    • To have any chance at all, we have to redesign our systems AND our assumptions.

      This cannot happen until the real nature of the economy is understood, and our state of denial ends.

      The latter may not be too far off now. If I’m right about things turning down sharply in the EM countries – a downturn now underway, being the emphatic indications from SEEDS – then the global myth of “growth” will be discredited.

      I’d suggest thinking about what this end/discrediting of mythical “growth” means.

      For instance, what happens to stocks priced by the market on the basis of future ‘growth’? And the debt that, it is assumed, can be repaid by borrowers because their incomes ‘are growing?’

      Taking growth out of the equation is like removing the ace of spades from the bottom of a house of cards.

      This is one of the reasons why I’m concentrating on the EMs.

  14. Personally, instead of being lost in gloom and apprehension, I am enjoying to the fullest extent possible every day that this all still hangs together.

    Since 2008 we -as powerless individuals in a vast system in decline – have had the most wonderful reprieve.

    The only thing to regret would be not to have used it well.

    • I largely agree with you, Xabier. Sustainable hedonism is rational. But I don’t waste anything, and don’t go to excess. Providing security for son and grandsons is still #1.

    • Well, this system allows me to go and sit in the old woods here to observe and think, without having to hunt or do anything purposeful – my idea of rational hedonism!

  15. I suspect that if the realisation that of ‘The end of growth has arrived’ gains wide currency, then most voters would probably conclude redistribution to be the natural solution, when the consequences will be much more far-reaching than that. Politics is going to get very lively….

    • I would think that the need to redistribute will be keep very quiet by the Conservatives until (as they hope) they’re elected.

      Donald

    • The latest Keiser Report has the ever perceptive Ross Ashcroft on as the second half guest. https://www.rt.com/shows/keiser-report/474983-us-debt-growth-discussing/
      One of the interesting nuggets that came out of this was the continuing decline in trust in authority and in institutions – Ross points out the BBC and that their core demographic is now the greying, retiring generation whilst the younger generation have shunned them. This is a symptom that does not auger well and is consistent with an economic system that has long since passed its growth limits.
      Another thing that Ross and Max discussed was the “Japanification” of Europe and the US. Whilst I would be the first to say that there are some serious anomalies – immigration policy being the biggest and most significant factor – the similarities are striking. Japan is now planning another massive round of QE – while the Fed is doing QE infinity bailing out the Repo market.
      The Millennials and Gen Z are laden with the debt burden that earlier generations did not have. No wonder they have become so disenfranchised and yearn for more redistribution through Socialist policies..

    • I think that this will be the last election the Conservatives in their present form will win.

      They’re lucky that the full effects of the lack of surplus energy have not fully come into effect (although as we know much has been hidden through debt)

      If the Conservatives manage to hang onto power until the 2024 election then they’ll have to have some sort of wealth redistribution policy otherwise they will be out.

  16. Re: “Over a decade in which GDP has increased by £212bn, debt has risen by £890bn, meaning that each £1 of recorded “growth” has been accompanied by £4.18 in net new borrowing.”

    This statement is deceiving because GDP is ongoing while debt is cumulative. This is like comparing income to liabilities — useful, but not a direct comparison.

    An apples-to-apples comparison would put cumulative increase in GDP against debt. A back-of-the-envelope calculation would be something like this: Assume the incremental GDP increase is linear between its level a decade ago until the most recent year. So over ten years, the increments are £21.2bn, £42.4bn, £63.6bn, …, £212bn. (Actual figures may be available, but this is just a back-of-the-envelope calculation.) Add them all up and to comes to £1100bn in round figures. Essentially, we’re integrating GDP over time to get cumulative GDP increase.

    Still not a great outcome — we only got about £1.23 for every £1.00 borrowed, but at least it’s positive.

    • This is a tricky question, and has been raised before. My way of seeing this took a great deal of working out. There are a number of things to consider, including these.

      First, rising debt pushes up asset prices.

      Say someone is a trader, broker, real estate agent, or anyone involved in trading assets (and this covers a much bigger chunk of the economy than is generally recognised). Debt-driven increases in, say, house prices push up his/her commission income, even if no increase in activity (or percentage charges) occurs. FIRE – finance, real estate and insurance – are just some of the affected sectors. In the US, FIRE alone accounts for c30% of all growth since 2008.

      If prices (and debt) neither increase nor decrease in the following year, the income remains at its elevated level, and would only fall if prices, and debt, were reduced. In this way, income gains in years when debt rises are locked in to subsequent years – these gains continue to be enjoyed, even if debt rises no further.

      A lot of other sectors are included as well in this ‘asset affected revenue’ category, even before we consider ‘the wealth effect’, where high asset prices encourage consumption. If debt was paid down, and asset prices fell, this added income would disappear, even if, again, activity didn’t change.

      Second, treating growth as an ‘in period’ number but debt as an end-period number doesn’t work. It would only do so if incremental GDP was ‘banked’ – so it could be used to repay prior year debt increments – or if each year’s additional borrowing was paid off in the following year. In other words, incremental net borrowing and incremental growth are linked.

      So borrowing boosts activity in ways that only remain inflated if no debt reduction is undertaken, and rise further if incremental borrowing continues.

      My approach asks two questions:

      What would happen to GDP growth if debt was frozen, i.e. no incremental borrowing took place?

      What would happen to GDP itself if debt was paid down to a prior level? If the UK, say, had paid down enough debt in 2019 – or between 2019 and 2029, if you prefer – to reduce debt to its level in 2009, the effect on GDP would be huge.

  17. Rethinking Systems
    I hope this is at least a new verse to an old song. But getting back to the fundamentals of food, water, climate control or lack thereof, finding the sweet spots for a good life, and avoiding a violent and dystopian future are likely to loom large. The disappearance of fiat money and all that entails is likely inevitable, but as everyone who participates in markets has learned, the Central Banks can print much more than we ever thought possible.

    Now to get one question, which is much on the minds of the British, out of the way. Redistribution is perhaps palliative but doesn’t solve the problems of rising ECoE. For a discussion of that I recommend Chris Smaje’s blog promoting small farms in Britain and elsewhere:
    https://smallfarmfuture.org.uk/2019/12/ciao-mao/
    “Which-of-these-darned-idiots-do-I-have-to-vote-for-this-time?”
    “The only reason I mention this flummery is because it strikes me that the exact opposite thesis is probably more worthy of attention: unless we adopt agrarian labour intensification, the chances of a resurgent Maoism are amplified.”

    And for a coherent set of practices which are adaptive to the current system, but also look forward to a less fuel intensive system in the future, Kara Stiff:

    https://www.low-carbonlife.org/home/what-survives-a-drought

    Kara hits a lot of the right notes in terms of a husband who earns the money and a low-consumption household managed by Kara. The current post addresses the challenges posed by drought (and climate change seems to be increasing floods and droughts, very cold and very hot, pollinator disruption as trees freeze in November and December, bloom in January, and freeze again in March…when the pollinators are not here in January and do appear in March when the buds are frozen). As you may have noticed if you listened to any of Dr. Allen’s talk, few people in agriculture doubt that climate change is disrupting the agricultural cycle.

    Kara also has a nice post recently on the value of increasing one’s personal comfort zone by taming the thermostat.

    So what is missing from the two blogs I mention above. While I haven’t studied them encyclopedically, I think both should put more emphasis on getting carbon into the soil. Droughts are made much worse if one has low carbon content in the soil. And the traditional mechanism of ‘turning in’ plant waste with a plow or equivalent is NOT the way to increase soil carbon. For the home gardener, I (again) recommend Caroline Pfutzner’s recently translated book. Terra Preta: Making Super-Fertile Black Earth for Garden and Farm.

    In terms of the sweet spots for a good life, Kara seems to hit many of the right notes. And I agree with Smaje that our best bet for avoiding Maoism is a resurgence in small farms and family gardens.

    Don Stewart

    • But another Mao will just shoot all the small farmers and gardeners.

      The best way to avoid him (or her) would be a timely murder or abortion.

      If only we could eliminate the psychopaths once their tendencies became evident Stone Age communitiies exile or kill them.

    • Re “[U]nless we adopt agrarian labour intensification, the chances of a resurgent Maoism are amplified.”

      This is absolutely not going to happen in a competitive system such as capitalism until and unless fuel for mechanized agricultural implements becomes extraordinarily expensive. Current accounting suggests that it takes approximately 11 calories of fossil fuels to put one calorie of food on the plate (in the USA), and even at this ridiculous ratio, it is still far less expensive to produce food in this manner than it is to intensify the human labor component. There is room for a modest number of small farms, but they will be selling mainly to an upscale clientele who can afford and are willing to pay the higher prices that such (possibly superior) food commands, but it’s not going to feed New York City.

      And at such time as fuel supplies are such that small farms once again become economical, New York City is going to have a lot fewer residents.

    • @Helix
      Forecasting the future is very difficult. There are many moving parts. Let me just suggest one moving part which is not considered in your dismissal. The 3 farmer partnership of which Dr. Williams is a member advises a farmer in Minnesota…there is a reference earlier in his talk. The BRIX reading in the pasture grass on that farm is now greater than 20. Which means that the cows are eating far more nutritious food than the average American. So we can, as a first approximation, find that our cheap food is primarily responsible for the 19 percent of our GDP we spend on health care.

      The point is NOT that fossil fuels are useless. If I wanted to terrace a field to hold rainwater better, I would definitely appreciate some fossil fuels and an excavator. But it does tell us that fossil fuels have also fostered enormously wasteful industries. As rising ECoE bites, there will be pressure to eliminate the wasteful.

      Don Stewart
      PS I’m not speaking for Chris Smaje. Above is my own opinion.

    • I’ve just placed a chart on the Resources page (because they can’t be inserted into comments), sourced from my book and showing population numbers versus energy consumption.

      The link is utterly beyond dispute. Essentially all land capable of producing food was under cultivation by 1960, so all subsequent increases in food supply and population numbers are the product of energy use.

      Everything says that we cannot feed NYC, or any other big city, from small scale farming. One might subsist this way in rural areas – but only if city dwellers are prepared to stay put and starve.

      We really need to start making some big decisions. Neither ‘capitalism’ nor collectivism has ever been put to the test in a degrowth context.

      Capitalism can’t even sustain US shale operations much longer, and communism couldn’t even feed Russia. Neither billionaires nor bureaucrats have the answers. As prosperity deteriorates, the past rise in complexity goes into reverse – ‘we’ll need farmers but not farming consultants, cobblers but not shoe company managers’, so to speak

      The striking thing is how little discussion there is around things like this. My concentration – almost a hobby-horse, I admit – is that prosperity is now turning down in the EM economies. That’s it for World “growth”. You can see this very clearly in, for instance, China and India. Most of the World economic ‘recovery’ since 2008 has been a debt-funded illusion.

      We really need to start finding collective (but not collectivist) answers, pulling together.

    • @Dr. Morgan
      I think it is more accurate to say that we can no longer afford two characteristics of our current land use patterns:
      *Growing crops to specifically feed animals which we then eat. An extremely high percentage (over 90) of the corn (maize) crop is fed to animals or else turned into ethanol to add to gasoline. I believe it is about 50 percent for ethanol. Since ethanol is either a negative energy source or else barely an energy source depending on the study, the federal corn program is an exercise in insanity. Animals do need to be incorporated in regenerative agriculture, but feed lots with animals eating grains is both unhealthy and unsustainable.
      *Lawns and golf courses. There is more land in lawns than in corn. The amount devoted to golf courses is very large, but I have forgotten the exact numbers. Both lawns and golf courses are a primary source of pollution (both air quality and water quality). Some studies have shown that CO2 pollution from lawns, in suburban areas, exceeds the automotive emissions in CO2 during the growing season.

      Some young people have started farming businesses in suburbs by assembling up to a dozen lawns that they turn into food producing mini-farms. But, as you can imagine, the whole society works against them.

      In the US and Canada and Russia, three of the principal food producing countries, an enormous amount of land which COULD be used for growing food is NOT used for growing food. The bottleneck may more likely be transportation and perhaps refrigeration and food preparation than the raw ability to grow food. In terms of calories used to produce calories, the numbers are something like 3 calories spent on the farm to produce 1 calorie, and 8 calories tacked on in processing, distribution, and preparation. But growing potatoes in the back yard and using a solar cooker could extend our ability to feed people enormously. These facts are behind David Holmgren’s RetroSuburbia program.

      I agree that feeding the Mega-Cities is a big problem. More likely because of the transportation and subsequent storage problems than because there isn’t enough land to grow the food. I believe Chris Smaje perceives that problem about the same way I perceive it…which leads him to re-ruralization. Some careful studies have shown that Britain can (with a small margin) feed itself. But the production cannot result in food in London using the current methods. And the world cannot produce enough food to convert the predominately carbohydrate consumption in the less-rich countries into a meat heavy diet using grain-fed animals in feedlots. In other words, we cannot afford the inevitable losses involved in feeding human edible grains to animals. UN studies usually assume ‘development’ in the poorer countries with the accompanying big increase in meat consumption…which is a non-starter.

      Don Stewart

    • Don is the Federal corn program the one that started in the 1970s to bring down good prices by stuffing everything with corn syrup

    • ewaf88
      I admit that the corn syrup program was not on my radar at the time. Whether it was driven by corporations, the land grant colleges, or the federal government isn’t clear to me.
      Don Stewart

    • Hi here is a section from a documentary series called -The Men who made us fat –

      Earl Butz, the American Secretary of Agriculture in the 1970s, who encouraged US farmers to grow huge quantities of corn. The surplus was turned into high-fructose corn syrup (HFCS), which started to be used as a cheap sweetener in foodstuffs, from cakes to soft drinks. By 1984, both CocaCola and Pepsi had replaced sugar with HFCS in their drinks.

      The problem with the spread of corn syrup is that we now know that fructose can suppress leptin, the hormone that carries the “stop now, you’re full” message to the brain. The result? A whole group of people who just don’t know when to stop eating. (Or, Americans, as we call them.)

    • In the interests of fairness, obesity is by no means a solely American phenomenon. It’s more a product of Western economic systems, in another context known as ‘affluenza’.

    • I cannot deny affluenza because this afternoon I bought but one but two packets of liquorice Allsorts and have already consumed both.

      If we’re coming to the end of Western civilization I want to die happy.

      Sadly we here in the UK were affected by corn syrup because it entered many foodstuffs we consume.

    • The tripling in global population since 1945 (doubling since 1975) has strained natural systems beyond capacity. Sterile soils, declining aquifers, increased salinity, chemical dependency, are being abetted by FFs and technologies which increase *current* yields. At some point weak links will break the ag system, and dieback is likely. Enjoy life, as we only go around once. BTW, our son and his wife are like most in comfortable, healthy situations with kids: incapable of looking at likely future problems. They are highly intelligent, but emotionally incapable of addressing gloom for their progeny. Music lessons, sports activities, decent academics, university saving accounts, travel, retirement…are their universe.

    • Cooperation is difficult with 7 billion opinions in a spoiled society.

      Is it before or after the crash?

  18. More Rethinking Systems
    See Allen Williams’ talk, from 45 minutes to 55 minutes

    He is describing a complete System Change. Earlier in the talk he notes that biology demands disruption…doing the same thing over and over leads to degeneration…every athlete knows that. Then he goes to some length to describe what disruption looks like in agriculture (it isn’t plowing, as a rule). But at the 45 minute mark he begins to talk about developing Intuition. He refers to studies showing that animals and plants exhibit very high levels of intelligence. Where does that intelligence come from? It ain’t from exercising their frontal lobes! It has come from paying attention and developing an intuition. Grazing animals will eat 30-60 different foods every day if offered a diverse pasture, and what they choose to eat will be dictated by the state of their body. Plants have similar mechanisms, such as trading carbon to fungi for what they need.

    Then take a look at the results achieved by the Orphanage in the 1930s. Then Allen describes how different is the ‘food’ offered by the Industrial System. And concludes that young people have a wonderful opportunity in front of them.

    So why the hell would anyone want to preserve the status quo? (I’ll leave on that resounding cry, rather than stick around for all the Yes, But voices that afflict me as well as you.) At any rate, a good conclusion to a Keynote talk.

    Don Stewart

    • Stimulating as ever.

      I would say the young have the experience of living in a violently declining system which strains to maintain itself – in the face of certain decay and defeat – ahead of them.

      As it’s coming rather rapidly, we do too!

      It will be simply horrendous, we shouldn’t kid ourselves.

      Hasn’t the learned prof observed that most human beings actually like routine, and doing the same thing over and over again, so long as it delivers the food, sex, and general stimulation they desire? Mass tourism also supplies these things in abundance.

      The desire for predictability of satisfaction lies behind the increasing interest among the young in Socialism – the cure for all the uncertainties and inadequacies of Capitalism, as they see it.

      It also lies behind nostalgia for State Communism and the life of the old Soviet Bloc: ‘We could afford an apartment, clothes, food and had an annual holiday’ as the old-timers like to say.

      There was even ‘career progression’…… hilarious, isn’t it?

      Jared Diamond mentions a primitive tribesman answering ‘Why did you move to the Mission?’ with ‘Fewer flies, more food’.

  19. Turfgrass in US
    https://scienceline.org/2011/07/lawns-vs-crops-in-the-continental-u-s/

    Homes, golf courses and parks may grow more acres of turf grass than U.S. farmers devote to corn, wheat and fruit trees — combined….Turf grass might be the U.S.’s largest irrigated “crop,”

    Joel Salatin, the Virginia rebel farmer, said ‘I will believe there is a shortage of land when they plow up the golf courses’.

    The ‘land issue’ is about the central banks driving up prices, plus the huge gap between the rich and the poor, which permits rich people to keep an awful lot of acreage for hunting.

    Don Stewart

    • A well-kept lawn originated with the great houses of the aristocracy of Europe, within walled gardens. Expensive to create and maintain, they occupied a very modest area.

      Anything more than that is utterly wasteful when productive beds and orchards might grow there instead; let alone the chemicals and machines needed to preserve that perfect appearance.

      However, I have some sympathy with zoning, as it is horrible to see what some people do to their gardens when they don’t keep up a lawn – just junk and squalor. But that could be legislated for: either lawn or neat raised vegetable beds, etc.

  20. A little off topic, but is frequently discussed here. How the world, and the US in particular, got into the health debacle:

    But…but….but….It all seemed like a good idea at the time…look at all the GDP and billionaires it created!
    Don Stewart
    PS. The GrowBaby initiative I have mentioned has demonstrated the ability to stop the chain reaction. They are achieving a high percentage of babies with the ideal birth weight.

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