THE SURPLUS ENERGY ECONOMY – CONTEXT AND CHOICE
One of the things that used to puzzle me, as a very small boy, was why the day after Christmas was called “Boxing Day”.
Did people in the classic “Dickensian Christmas” – in the era evoked by traditional festive icons like snow, holly and robins – really set aside a day for pugilism? It seemed even less likely that a day of fist-fighting contests formed any part of the first Christmas.
All became clear, of course, when it was explained to the very young me that this was the day on which Christmas “boxes” (gifts) were exchanged. In those times, people drew a distinction between the Christian celebration, on 25th December, and the giving and receiving of presents, on the following day.
This distinction is even more pronounced here in Spain, where the exchange of gifts is deferred to the “Night of the Kings”, two weeks after Christmas itself. The festive season is thus more protracted here than in, say, Britain or America, but it’s also markedly less frenetic, and culminates, in most towns and cities, with a thoroughly enjoyable Night of the Kings carnival.
Depending on where you are and how you look at it, the Christmas holidays end, and something like “normality” resumes, at some point between the 2nd and the 7th of January. My view is that the word “normal”, whose definition has, in economic and broader terms, already been stretched a very long way indeed, might soon lose any realistic meaning. A situation in which the Fed is in the process of injecting at least $1 trillion of newly-created money into the system typifies the extent to which abnormality has already become the norm.
In these circumstances, my immediate aim is to produce a guide, comprehensive but succinct, to the surplus energy interpretation of the economy.
This will cover the energy basis of all economic activity, the critical role played by ECoE (the Energy Cost of Energy), and the true nature of money and credit as an aggregate claim on the output of the ‘real’ (energy) economy.
It will move on to discuss how SEEDS models, interprets and anticipates economic trends, and to set out an overview of where we are in energy-interpreted terms. It might also – if space permits – touch on what this tells us about the false dichotomy between environmental challenges and the customarily-misstated concept of “growth”.
What I aim to do here is to close out the year with some observations about where we are as we head into the 2020s.
The best place to start is with the deterioration in prosperity, and the simultaneous increase in debt, that have already destroyed the credibility of any ‘business as usual’ narrative in the Advanced Economies (AEs).
Starting with Japan back in 1997, and finally reaching Germany in 2018, the prosperity of the average Western person has hit a peak and turned downwards, not in a temporary way, but as part of a secular process which conventional economics cannot recognise, much less explain.
This process is now spreading to the emerging market (EM) economies, most of which can expect to see prior growth in prosperity per person go into reverse within the next three years. The signs of deceleration are already becoming apparent in big EM countries such as China and India.
Thus far, global average prosperity has been on a long plateau, with continuing progress in the EM economies largely offsetting deterioration in the West. Once decline starts in the EM group, though, the pace at which the average person Worldwide becomes poorer can be expected to accelerate.
If deteriorating prosperity is the first point worthy of emphasis, the second is that a relentlessly increasing Energy Cost of Energy (ECoE) is the fundamental cause of this impoverishment process. ECoE reflects that fact that, within any given quantity of energy accessed for use, a proportion is always consumed in the access process.
ECoE is a direct deduction from the aggregate quantity of energy available, which means that surplus (ex-ECoE) energy is the source of all economic activity other than the supply of energy itself.
In other words, prosperity is a function of surplus energy.
In the past, widening geographic reach, economies of scale and technological advance drove ECoEs downwards, to a low-point (of between 1% and 2%) in the immediate post-1945 decades. The subsequent rise in trend ECoEs has been driven by the fact that, with the benefits of reach and scale exhausted, depletion has now become the primary driver of ECoEs in the mature fossil fuels industries which continue to provide four-fifths of global energy supply. The role of technology has been re-cast as a process which can do no more than blunt the rate at which ECoEs are rising.
By 2000, when World trend ECoE had reached 4.5%, Advanced Economies were already starting to face an insurmountable obstacle to further growth. Prosperity turned down in Japan from 1997 (when ECoE there was 4.4%), and has been declining in America since 2000 (4.5%).
SEEDS studies demonstrate that prosperity in advanced Western countries turns down once ECoE enters a band between 3.5% and 5%. EM economies, by virtue of their lesser complexity, are less ECoE-sensitive, with prosperity going into reverse once ECoEs enter a range between 8% and 10%. Ominously, ECoE has now reached 8.2% in China, 10.0% in India and 8.1% in the EM countries as a group.
The key point about rising ECoEs is that there is nothing we can do about it. This in turn means that global prosperity has entered de-growth. The idea that we can somehow “decouple” economic activity from the use of energy is utter wishful thinking – not surprisingly, because the economy, after all, is an energy system.
This presents us with a clear choice between obfuscation and denial, on the one hand, and acceptance and accommodation, on the other. Our present position is one of ‘denial by default’, in that the decision-making process continues to be based on the false paradigm that ‘the economy is money’, and that energy is “just another input”.
This leads us to the third salient point, which is financial unsustainability.
Properly understood, money functions as a claim on the output of the ‘real’, energy-driven economy. Creating more monetary claims, without a corresponding increase in the goods and services against which these claims can be exercised, creates a gap which, in SEEDS terminology, is called “excess claims”.
Since these “excess” claims cannot, by definition, be honoured, then they must be destroyed. There are various ways in which this “claims destruction” can happen, but these mechanisms can loosely be divided into “hard” default (the repudiation of claims) or “soft” default (where claims are met, but in greatly devalued money).
These processes mean that “value destruction” has become an inevitability. This may involve waves of asset market crashes and defaults, or the creation (through reckless monetary behaviour) of hyperinflation.
The likelihood is that it’s going to involve a combination of both.
These issues take us to the fourth critical point, which is the threat to the environment. Let’s be clear that this threat extends far beyond the issue of climate change, into many other areas, which range from pollution and ecological damage to the dwindling availability of essentials such as water and food.
Conversion to renewable energy (RE) isn’t the solution to these problems, if by “solution” we mean “an alternative which can sustain our current level of prosperity”. RE, despite its many merits, isn’t going to replace the surplus energy that we’ve derived hitherto from fossil fuels. RE might well be part of the solution, but only if we take on board the inevitability of degrowth.
This brings me to my final point, which is choice. For well over two centuries we’ve been accustomed to an energy context which has been so favourable that it has given us the ability both to improve personal prosperity and to extend those benefits across a rapidly increasing population.
With this favourable context fading into the past, we have to find answers to questions that we’ve never had to ask ourselves until now.
The faculty of choice requires knowledge of the options, and this we cannot have whilst we persist in the delusion that “the economy is a financial system”. It isn’t, it never has been, and it never can be – but our ignorance about this fundamental point has been one of the many luxuries afforded to us by the largesse of fossil fuels.
This seems pretty depressing fare to put before readers at the start of the festive season. The compensating thought has to be that the connection between prosperity and happiness has always been a falsehood.
A lack of sufficiency can, and does, cause misery – but an excess of it has never been a guarantee of contentment.
In the coming days, Christians will recall with renewed force that Jesus was born in a humble stable. He went on to throw the money-changers out of the Temple, and to instruct people to lay up their treasure, not on Earth, but in Heaven. I hope it will be taken in the right spirit if I add that He never earned an MBA, or ran a hedge fund.
The single most important challenge that we face isn’t deteriorating prosperity, or the looming probability of a financial catastrophe. Rather, the great challenge is that of how to jettison the false notion that material wealth and happiness are coterminous.
‘Value’ may indeed be heading for mass destruction.
But values are indestructible.
Just been reading the original GND from 2007. Interested to hear your thoughts on it 12 years later.
Click to access a-green-new-deal.pdf
PS. Obviously also considering the differences between the original and the current versions – not least the crack down on financial institutions which has gone entirely missing.
What we’ve been witnessing is the opening of a huge gap between the ‘real’ economy and the financial system, with the latter going it’s own way, irrespective of what’s happening in the former.
Whilst I never try to predict the “when?” of this, a financial crash of some sort is already hard-wired into the system. It’ll be interesting to see what happens when the authorities, who represent all of us, are asked to mount another rescue of the financial system…….
Excellent overview, Tim. I’ve shared it widely. All the best for 2020.
Thanks Steve, and seasons greetings to you and yours.
Wonderful stuff, as ever.
Your excellent points made me wonder . . . has anybody ever applied your thinking to the fall of the Roman Empire?
Take a look at Charles Hugh Smith’s blog Of two minds – he has done quite a bit in the last couple of months about this
Work has indeed been done linking the fall of the Western Roman Empire to this sort of logic.
Charles Hugh Smith is excellent, in so many areas.
My urge to contact the Samaritans after reading your excellent blog has been tempered a little 🙂 merry xmas Doc
Thanks Mark – and a Very Merry Christmas to you.
Jenny Tung; Macarthur Genius; Hardship and Social Status
Bear with me for a moment. I believe this is directly relevant to all of us contemplating the gradual or rapid end of a fossil fuel and debt powered society.
Jenny Tung is an Assistant Professor at Duke University. She has been awarded a Macarthur for her work demonstrating the physical impact of adverse traumatic events and also adverse social status. While some have claimed that poor people are poor because of bad practices, and die young because they deserve it, Tung has shown that the causation flows in the opposite direction, with about 80 percent predictability. In a nutshell, she studies the changes in gene expression between those at the top and those at the bottom. The digital genes are the same, but the analog epigenetics derived expression is quite different. For example, the immune system of the bottom tier will both fail to protect them from environmental challenges, and it also causes chronic inflammation which is at the root of almost all chronic diseases.
A common refrain, here as well as elsewhere, is that a homeless person in modern London has access to technology that the Sun King in France never had access to. Tung’s studies show us why that explanation doesn’t really explain much of anything.
Now I will give my guess about the relevance of this research to our project here: adjusting to a world with less available energy and less available debt. Following gradients is the normal pattern in much of Nature, from rivers flowing down channels to single celled critters following gradients toward sources of food to humans obeying the Maximum Power Principle. At the present time, we could characterize society in the industrial world as following gradients involving accessing more Power (especially fossil fuels) and marginal money (e.g., adding debt). If both those traits are now dysfunctional, then we would expect human health to suffer in exactly the same way as Tung’s animals and human subjects.
The solution is to find an ‘adjacent, accessible’ gradient to follow. We are supposed to be ‘sapient’, so we need to get the sapience out of the attic and tune it up. Giving up and claiming that ‘there is no alternative’ is a common practice. To me, it is not good enough.
That said, my appreciation for Dr. Morgan’s work in the past year, and my anticipation of more to come in 2020.
Much to think about, Don, and thanks for sharing your thoughts and the breadth of your knowledge with us.
Another great post – a happy Yuletide to one and all!
With regards to Japan – well with impeccable timing to this post they have announced yet another stimulus said to be $939 billion to boost the economy. A key point was that was mentioned is Japan’s public debt which is more than double the size of its $5 trillion economy. Abenomics has failed to do what it said it would do on the tin. The declining ECoE has clearly not registered with Shinzo Abe or any of his advisors. Herein lies the problem for Western Civilisation – they are all beholden to economic dogma that are now no longer fit for purpose
The BoJ has been hoovering up JGBs ever since the GFC, and now owns more than half of all JGBs in issue. My calculations suggest that BoJ issuance far exceeds the annual fiscal deficit, so it’s monetizing past debt as well as ‘printing’ current shortfalls between tax income and spending.
This makes the JGB market odd, and aguably not really a market at all. On one side is a big buyer, the BoJ, and on the other is investors, selling to the BoJ.
The powers that be, work on the security of their energy flows. They are in the know. Those same powers cannot afford this anymore, because their influence on the ECoE is limited, as we know. Their focus now is on the flow of fiat currencies; how to maintain trust and business as usual.
As an example: from 450 different banks in the EU, with their own transaction apps, to Apple pay, Google pay. So they can reduce complexity and push 2 buttons instead of 450.
‘We should have implemented carbon based currencies’
They know doc, they know. They took the wrong turn, are way too deep into the desert and can’t go back, because they are almost out of gas!
Extend & pretend. Watch the payment systems, and especially, their efforts to get us there.
Monetary adventurism in our backyard. Like a neighbors cat shitting in your flower bed.
I would like to add, when there’s enough to share, but it is unequal, we become socialists. When there is continuous growth, unequal sharing is not the hottest issue. When there’s not enough to share, and the cook loses his knife, the monkeys come into town. Until then, we have to deal with the capitalists.
Here’s the difference between ‘ists’ and ‘ism’. Stock vs flow. A beautiful spasm.
As average prosperity deteriorates, inequality – and other economic issues – will rise ever higher on the public’s list of priorities.
So you think we have hit “peak Germany”?
This could have serious implications not just for Germany itself, but for the whole EU, as Germany is supposed to be the main economic power supporting the Euro and EU.
Peak Germany will have complications in Target2 imbalance and will be solved by dear ms Lagarde, our new slumlord.
German prosperity has continued to increase, albeit very gradually, whilst prosperity in every other Advanced Economy on SEEDS has long been in pronounced decline.
A big factor here has been the benefit to Germany of the Euro system. Germany has been the only country in which 1 unit of reported growth has throughout been accompanied by less than 1 unit of net borrowing. That might have to be restated, though, if Germany cannot collect on its Target2 credits.
Germany is owed close to 1 trillion EUR by Target2, essentially owed by Italy and Spain in roughly equal proportions.Your guess is as good as mine as to whether Germany can ever collect.
The German economic downturn might mean that the country is nearing the end of the advantage derived from the Euro.
The Euro system is flawed, for many reasons, not least because it tries to combine a single currency with a multiplicity of sovereign budgets, and lacks the “automatic stabilisers” present in currency areas in which fiscal and monetary policy are under the same roof.
The ending of prosperity growth in Germany could indeed be a game-changer – though the same is even more the case with the impending cresting and reversal of prior prosperity growth in China and India.
My back of the napkin math: If fossil fuel (87% of energy) production could be maintained at current levels, average energy production per person globally still decreases by ~1% per year if annual population growth is ~83 million persons.
SEEDS is a bit more than the back of the napkin. I wonder if SEEDS can suggest, broadly, if in 10 years we are going to be 10% or 20% or 30% etc. less prosperous than we are today?
(I ask this understanding that many linear trends on energy, economy, and environment, etc. are likely to be broken sometime in the 2020s.)
I may have asked a similar question before, apologies if so. I probably should not ask such a question right before the holidays.
I must start by saying that the deterioration in prosperity isn’t likely to be linear – there are many ‘compounding factors’, just two of which are: dis-economies of scale, and: utilization rates falling below viability levels.
With these caveats, SEEDS puts average prosperity worldwide 8.4% lower ten years from now (2029), and 18% lower after twenty years (2039).
Just wondering how you calculated your ECoE and where the data came from. Thanks.
Looks like I won’t be getting an answer to my query. Too bad. I assume your ECoE is the cost of energy vs the total GDP of a country. A non-trivial exercise to put that together. The BP statistical review does list historical prices by fuel for a few countries along with consumption data but it would seem there would have to be a lot of assumptions along the way to make a comprehensive table for all countries. If you have a spreadsheet you could share along with the methodology used to put it together that would be great. Or even point me to your sources and I’ll do it myself. I always like to check the math.
ECoE is simple in theory, but complicated in practice, which is why a question like this is hard/impossible to answer in reply to a blog comment.
I should emphasise two things.
First, cost is by no means the same as price, so a country’s annual spend on energy isn’t the same as its ECoE. Prices, after all, oscillate for reasons largely or even wholly unrelated to cost. If some political event, say, shut down all Saudi output, oil prices might soar, but ECoE wouldn’t change.
Second, I use “trend” ECoE – the factors that move ECoE over time are all long-term, so it’s an evolving picture.
All of this has been discussed here before, and it will be revisited in the forthcoming Brief Guide to how it works.
Thanks. This is my first visit to your blog. Could you point me to a blog post where you address the calculation of ECoE? If it is like EROI, it is susceptible to boundaries etc.
Its an excellent question and also one which Tim has addressed up to a point here before.
on June 28, 2018 at 8:21 am said:
I think we can start with the observation that what conventional economics should measure – but doesn’t – is prosperity. The article explains how SEEDS calculates it.
There are two points I’d make now. First, prosperity determines material satisfaction, not least because it reduces stress and worry, so this has political repercussions, and goes a long way to explain why the “unpopulists” are losing out.
Second, prosperity decides how able people are to carry financial burdens, most obviously debt, but ‘social burdens’ too, such as health, education, care for the elderly and defence.
From this, it follows that any school of economics which cannot measure prosperity effectively is of very little use. I think that recognition of this is now dawning on the ‘customers’ of economics – including government, businesses and finance.
What I’m looking at now is the remarkable predicament of China. Countries like the US and the UK typically add to debt at rates of between 5% and 6% of GDP annually – not satisfactory, of course, and far higher than growth, so not a sustainable model. But China, albeit with growth in the range 6% to 7%, borrows more than 30% of GDP each year. That is totally unsustainable – and has been happening for ten years.
on March 7, 2018 at 2:39 pm said:
With ECoE by fuel group, you need to remember that the energy used in contructing renewables equipment comes overwhelmingly from fossil fuels. Therefore, even as technology and economies of scale are lowering the ECoEs of renewables, the ECoE of their input costs will be rising. I am very far from convinced that we could – for example – extract or process copper or steel without using fossil fuel energy.
I look at every information source that I can, trying to avoid anything that looks like lobbying. Taking PV just as an example, there are some arguments that it will never cover its energy costs, and others saying it’ll almost “too cheap to meter”.
As you may know, I’m convinced that big commercial and official organisations are going to need to build something like SEEDS as conventional models become ever less useful. I’m not going to hand them the information to do that. So that’s why I publish ECoEs by fuel groups, but not by fuel types – it gives readers what they need, but doesn’t enable someone to build something like SEEDS.
@David Hughes on December 20, 2019 at 11:13 pm said:
Just wondering how you calculated your ECoE and where the data came from. Thanks.
We do Christmas on Christmas Eve in Sweden. Christmas Day is a Chillax day as is Boxing Day. This is kind of appropriate today and here in many ways.
Thanks so much Tim for a wonderful summary of our present dilemma. I have been following this website for some years and find their market assessments realistic. The recent one confirms your SEEDs results which you may find interesting:
A very happy Christmas and prosperous New Year to you and yours and to all the valuable commentators here; the collective wisdom is priceless.
Thanks Peter – may I wish you and yours the very merriest of Christmases.
I’ve been reading your essays for some time & wanted to say thank you.
I’ve passed this one onto friends and family as I feel it’s one that folk who have never been exposed to energy issues and what it means to the functioning of this society and also, most importantly why it’s collapsing, can see in words that bring the starkness of our situation to them.
Thank you again & best wishes for the season to you and your family.
Thanks Brendon. I’m glad that you find this blog so helpful. My plan is to publish a lengthier summary of the surplus energy interpretation during January.
Meanwhile, have a truly great Christmas.
George Mobus; Stewart following dead end
George writes his winter solstice epistle in Question Everything blog. In brief, it is all going to collapse and there is no escape…no adjacent, accessible path will be found. He has been working with both Western and Russian scientists, and finds the Russians more open to the probability of collapse.
We’ll see, I suppose. I was visiting (by email) with a friend who is living very close to the bone in repurposed agricultural structures and growing most of her own food and capturing her drinking water from the roof. She contrasted her way of looking at the future with Elon Musk’s way of looking at that same future. While the collapse of the fossil fuel and debt economy would force her to change some of her ways, she wouldn’t starve or die from lack of water. I try to convince her she needs a husband because she isn’t getting any younger…but she says men are a luxury she can’t afford…or was it a dead weight she doesn’t choose to carry??? My aged memory is fallible.
At any rate, she and David Holmgren in his Retro Suburbia plus the Whole Food Plant Based Diet fraternity for the purpose of preserving health are my New Year’s nominees for those on the track of an ‘adjacent, accessible’ path out of the swamp.
I’ve really enjoyed reading your posts this year – and looking forward to your observations in the year to come.
I find thought of de-growth absolutely fascinating – something we’ve never really had to face before. It is going to be interesting to see how the powers that be try to mitigate this de-growth. I think it is a forlorn task to be honest.
Thanks Gordon, you are very welcome.
I’m sure that management of de-growth will be a recurring topic here in 2020. For the authorities to manage it, of course, they need first to recognise and understand it, of which there is scant evidence so far. ….
Do you have any views on the amount of US treasuries the Fed has been ‘hoovering’ up this Autumn? I have heard all this extra ‘liquidity’ is necessary because Deutsche Bank has started to wobble again or its a Japanese agricultural bank that is trouble
On the amount itself, I’m shocked by it. $1tn in just over three months is an enormous number.
Useful reference-points here are the Federal deficit, aggregate govt external financing (deficit + expired debt), and GDP. By any of those benchmarks, the current run-rate, if annualized, is more than disturbing.
As for the reason for it, my feeling is that the Fed is trying to anticipate or ‘front-run’ a problem, rather than, as in the past, responding or ‘playing catch-up’ to a problem once it’s happened. I don’t (we can’t) know about DB, or a Japanese bank, but my hunch is that this is systemic rather than specific.
I’m persuaded by the interpretation that Fed priority #1 has become the prevention of a stock market collapse. So, why would they fear that now?
Well, it’s becoming apparent that economic problems in China and (especially) India are even worse than I’ve been saying here for some time. We’ve discussed Germany here already, and the whole EA economy bar Germany is already moribund.
I could add others – Japan, Brazil etc – but the point is that the economy is turning down very rapidly. That leaves the financial system – predicated as it is on “growth” – looking hugely exposed. Yet stock markets are inflated to vertigo-inducing levels…….
Thanks Tim for a very sound assessment. IMHO, I agree it is systemic and the Fed are facing some difficult issues trying to prevent a 2008-type collapse. Trump knows this and that his re-election is dependent on the S&P 500 et al – he has lashed his future to the mast of the economy but in my view he and the Fed will fail this time, regardless of how much they ‘print’.
I am following current events like a hawk and getting very good feedback from my readers in USA. I think that we should be cautious in our plans at present because we are facing a unique situation the outcome of which is yet to be predicted – more information (especially inside information) is required.
I do know that the stock markets are not as rosy as they first appear. The smart money has been leaving for some time now and the elites and central banks are moving into hard assets, especially PMs and land. We need to ‘follow the money’ as events unfold. Staying on watch.
This is all prophesied in Revelations 13 and the coming together of the Anglo/American empire – the two-horned goat – following the rise to power of Boris recently; in my view he is a Churchillian leader – cometh the time, cometh the man.
Let me just add something from a SEEDS perspective.
We’ve spent two decades using ever cheaper and ever more abundant credit to simulate ‘business as usual’ in GDP, whereas aggregate prosperity, as SEEDS measures it, is barely growing at all, and is now a very long way below recorded GDP.
The widening divergence between these two lines constitutes financial intervention, and this effect is a cumulative one.
The true role of money and credit is that these are ‘claims’ on the real output of the economy. So claims (the aggregate of money and credit) far exceed the things against which these claims can be exercised.
The accumulated aggregate is called, by SEEDS, “excess claims”. This cumulative number is enormous, and acts as an over-hang to the system.
The only possible resolutions to this are (a) asset price collapses and a domino-effect wave of defaults, or (b) very high inflation over a very sustained period.
The Fed, et al, want neither, but ‘neither’ isn’t on the menu, because “excess claims” won’t just go away, and continue to balloon. This leaves Central Banks with the only alternative, which is to play for time.
Geoffrey Chia on Peak Oil and Economic Collapse
This was published about a month ago. I probably read his article a few years ago on Bardi’s blog, but had forgotten about it. In a nutshell, in this article, after spending some time lambasting nitwits, he tries to explain why low oil prices have not stimulated a genuine economic recovery. His answer (oversimplified by me) is that the previous GFC destroyed demand from the middle class. Supply and demand curves still work, so reduced demand equals lower price.
If we consider ShadowStat’s inflation numbers as real, and the hedrnically adjusted and massaged official numbers as fiction, then look at the destruction aimed at the middle class:
*hollowing out of the bonds backing pensions
*hollowing out of stocks backing pensions as companies purchase their own shares using borrowed money
*failure of social security payments to match the real cost of inflation
*the continued retail apocalypse…which cannot be explained away by Amazon
*failure of wages to rise anywhere near the level of real inflation
When I look at that list, it gives me some confidence that Chia is providing a plausible explanation. Falling interest rates may have prevented total collapse, but they have not created organic growth. He looks to falling EROI for conventional oil as the underlying factor.
Many thanks Don, great article and exactly as Tim describes in his book – the chart is exactly the same! i wonder where they got it?
From Charles Hugh Smith’s Patreon Page
“You probably won’t be surprised that the Alienation Index has hit a new high of 69, a remarkable reversal from the low in 1966 of 29.”
The article points out how social media have played a significant role. I agree that social media are culpable, but there have also been larger changes in society, also. In 1966 many corporations still regarded ‘Human Resources’ as resources that needed to be cultivated.
For whatever reasons, the sharp rise in alienation in the US will make it much harder to put together any coherent social response to the present and coming challenges.
Call me old fashioned, but I prefer the term ‘personnel’, probably because it starts ‘person’.
I suspect that the era of neoliberal orthodoxy has done nothing to improve how employees, in general, are treated by employers.
With prosperity deteriorating, companies generally need to raise their game in their treatment both of employees and of customers. I’m optimistic that this need will gain recognition as the credibility of the “flat-earth economics” of “perpetual growth” erodes.
One of my daughters, who is 50 and has her own business with no employees, and has her office in her house, and thus a zero commute….and I were talking yesterday. She was talking about some severe weather recently and how traffic was hopelessly snarled and I remarked that she has been very smart about avoiding commuting. She has also commented that she absolutely avoids dealing with the red tape of a secretary for the office. She does have a professional bookkeeper.
She just got her notice of the annual increase in health insurance…ONLY 60 dollars more per month this year. But health insurance is a killer, and now that she is turning 50 it will get more crushing until she turns 65 and goes onto Medicare. It doesn’t matter how healthy she is,,,,she gets to pay for all those 50 year olds who have 3 chronic diseases. She remarked that quite a few of the people in her profession are taking jobs just in order to get employee health insurance.
She also has to pay social security taxes…and she is convinced that governments are bankrupt and she will never be able to collect anything in her old age. We talked a little about her investments in the stock market. She keeps expecting a crash, but the balloon stays in the air. I told her your theory that the Fed will sacrifice the last Plunge Protection Team member to defend the S&P 500. She agreed…so she sits uneasily with her money in an index fund.
Does she qualify as ‘alienated’? Not from life…she thoroughly enjoys herself. But I have to say that she is even more negative than I am about the state of our political and social and economic life. I read her the list of ‘alienation’ statements in the Harris survey, and she responded ‘yes to all’.
I hope you are right about things getting better. But I don’t see it in the US. I worry about my children and grandchildren. And I worry a lot about the epigenetic changes playing out in the little ones still in the womb.
I’ve been reading the blog for some time now, as I find it a very clear and concise way of understanding the economics around us.
One small question, any thoughts about Argentina and the outcome of it’s current currency crises? Thanks for sharing your work, and the best wishes for 2020!
Thank you and, as I think it’s your first comment, welcome. I’m glad you find the blog helpful.
Argentina (2.27) is one of the 30 countries covered by the SEEDS model, so I have the data and have a reasonable, albeit top-down understanding.
FX events are driven by a combination of fundamentals and sentiment. Where Argentina is concerned, “fundamentals” really means inflation, and “sentiment” largely means politics.
The best data that I have puts broad-basis inflation (GDP deflator) at 40.7% for 2018 and a provisional 52.6% for 2019, and projected to fall to 16% by 2024. These are horrendous numbers and, though I’ve not checked, I assume consumer inflation is at least as bad, and probably worse. For all countries, I run parallel assessments in USD, both market-converted and PPP, the latter usually the more useful (what markets think about a currency isn’t “fact”).
Inflation this high necessarily drives devaluation. The average dollar rate I have for 2019 is 48.5, projected to reach 146.4 by 2024. These are market rates, with PPP at 23.9 in 2019 and 78.0 in 2024. The currency is thus expected to lose 67-69% of its value by 2024.
A critical issue here is how much of the country’s total (public + private) debt is in foreign currencies. The aggregate debt numbers that I have imply that this proportion is very high. This, to me, looks like a recipe for default, even though total debt isn’t particularly high.
This means that I can see where the FX markets are coming from on this.
What makes this worse is the context, with other economies in South America now in big trouble. We’re starting to see divestment from the continent by overseas businesses.
Finally, SEEDS shows that real prosperity per capita in Argentina peaked in 2011, has since declined by 10%, and is deteriorating by c2.7% annually. Falling tax collection is offsetting this somewhat. The picture in the medium-term is pretty grim, I’m afraid.
A funny comment I saw at the entrance of the Mercedes Benz museum in Stuttgart.
“I believe in the horse. The automobile is only a passing phenomenon.”
– Germany’s Emporer Wilhelm II in 1905.
Well, the Hohenzollerns turned out to be “a pasing phenomnon”, too…..
Don’t mock, it’s too soon to tell.
‘Value’ may indeed be heading for mass destruction. But values are indestructible.
What an excellent line on which to end a supremely lucid article.
Values have been very much in my thoughts for some time now and, in particular, what has happened to them in the last 40 years. Humans instinctively share a set of values, which have evolved to reconcile our self-interest and the mutual co-operation which has enabled our technological advances, or ever-increasing energy use if you prefer. There is quite a lot to be said about evolutionary psychology, but the short version is that our species has a spectrum of behaviours ranging from extreme altruism to extreme selfishness, with two thirds or so in the middle recognising the need to work together on a tit-for-tat basis. The most powerful enforcement mechanism of co-operation has been religion, which works by telling stories of good and bad behaviour. In one way or another, the religions of today all embody the golden rule, that we should treat others as we would wish to be treated. To my mind that is *the* indestructible value.
Then along comes a different kind of value, shareholder value, at a point in time where people are doubting the literal truth of religion, whilst failing to appreciate its underlying social purpose. I’m exaggerating for argument, but many of us have come to believe Gordon Gekko’s assertion that greed is good. The smart people in the advanced economies have focused on value capture rather than creating it, and used their captured value to promote a politics that allows them to keep it. Great for them, but not for society as a whole. The dissonance between the behaviour of the financial capitalists and the erosion of prosperity you describe, Tim, is obviously at the root of today’s political upheavals. I cannot see a peaceful way through this without an explicit reassertion of the golden rule and a shaming of the financial capitalists. As you say, God never ran a hedge fund.
Values may be indestructible, but they need protecting and promoting to be effective.
Thank you, James, you are very kind.
My view is that, as prosperity deteriorates, so does the viability of luxuries. By ‘luxuries’, though, I don’t just mean iFads etc, but assumptions and attitudes, including the ones we have now about inequality and motivation.
Society either persists with a super-wealthy minority and an increasingly impoverished (and desperate) majority, or it re-adjusts. Much of the theoretical wealth of the wealthiest is simply that – theoretical – so would, in any case, be reduced very sharply by a market crash and a wave of defaults.
That’s part of what the Fed (et al) are determined to try to prevent – “good luck with that one”, so to speak, and Knut (Canute) could give them useful advice about this.
My feeling is that we need a redesign, based indeed on values rather than value. I expect our real economic predicament to become increasingly undeniable, which should help us face up to the need for rethinking all our assumptions.
Re the 40 years, an Australian, Kevin Casey, recently used the same number in a critique of misplaced concerns. Here’s the first 25%:
Why climate change is an irrelevance, economic growth is a myth and sustainability is forty years too late.
As someone who has been exploring the world’s most isolated wilderness regions for nearly half a century, I have some insight into the state of the planet and the human race’s current environmental befuddlement. I’ve watched the condition of the earth plummet before my eyes within my own lifespan, to the extent that I no longer recognize it as the beautiful, diverse supporter of all life it once was.
So let me start by addressing a few key points of confusion that seem to affect both keen activists and head-in-the-sand deniers in equal measure:
Climate change is not the biggest threat to the world’s environment – we are. The world’s rivers and seas aren’t choked with floating piles of rubbish, toxic chemicals and plastic waste because of climate change. They’re that way because we have 7.7 billion people crammed onto a planet that’s dying under the pressure of our greedy, selfish abuse. Two decades from now, the earth’s oceans are on target to contain more plastic in them (by weight) than fish. Climate change didn’t do that. Way too many people did that.
Climate change hasn’t covered the world with concrete or replaced healthy ecosystems with canal estates and shopping malls – we and our ever-increasing numbers are the culprit. Climate change is only one of many symptoms of an out-of-control disease – human overpopulation. The irreversible environmental damage stemming from having too many people on a finite planet is already painfully evident. Our bloated population is diminishing our children’s futures in ways that have very little to do with the planet’s temperature.
Thanks, a good article, and yes, how many of us there are, and how we choose to live, are ‘the big ones’ (though I happen to think that climate change, and ecological issues, are worth concentrating on, in their own terms).
My aims are a lot more modest. What I (and we) do here is discuss and analyze the economy as an energy system, with energy connecting the economic to the environmental. If one buys the line about “perpetual growth” (on a finite planet….) one can, perhaps, take a Pollyanna attitude to these huge issues. But a realistic understanding of the economy as an energy system takes away this comfort-blanket mentality.
So far, we as a species have behaved like arrogant, spoiled brats let loose in a chocolate factory. The attitude once described as “me! me! me! My needs! My feelings!” is illustrative of this. The extent of denial is breathtaking.
As it happens, I’ve just scrolled through a long list of recent BBC articles about India, and found not one article about the economy. Do people really think that things like social unrest happen in a vacuum, unconnected to material conditions, and uninfluenced by hardship?
Is Food a Problem?
A few observations from me.
*The best small farmers and gardeners use the products of the industrial economy judiciously. Examples are the shade cloth and other materials which modify the climate and ecology to favor food production, the undoubted use of vehicles, very likely electricity in the house, etc. Such practices are incompatible with the notion of ‘plunge to the Stone Age’, but are consistent with increasing ECoE impelling ‘more effective use of energy’.
*Intensive production per acre using a lot of human labor can produce vastly more than gigantic farms almost devoid of human labor but using enormous amounts of fuels and embedded energy and capital such as combines and tractors. If this one acre farm has a tractor, it is probably a ‘walk behind’.
*Consequently, statistics derived from 2019 BAU and projected into the future are probably misleading at best. The best we can do is to make some informed guess about the state of the energy industries and industrial system over the next few decades and then look at ‘best practices’ given those informed guesses. In all probability, what you see today in Iowa will not survive…but what you see on this half-hectare will probably multiply. Either Retro-Suburbia or Re-Ruralization.
*My own guess is that Retro-Suburbia will be more attractive to most people, since it makes the most effective use of what already exists and let’s lots of people get started today. Survivalists seeking to avoid the zombies may prefer rural seclusion.
I can certainly wish you all a Merry Christmas, but it seems that wishing you a Prosperous New Year seems unduly optimistic
I think we can wish everyone a Merry Christmas and a Happy New Year!
Thanks Tim for your end of year contribution to our debate.
May I start by wishing you and others here, the complements of the season.
As you know about fifty years ago, an international team of researchers was commissioned by the Club of Rome to build a computer simulation of exponential economic and population growth on a finite planet. The lead author of that, Dennis Meadows recently gave an interview in which he reflect on that study all these year later.
I have been thinking about that interview and on your articles of the last year or so. Before making my contribution to our debate here I want to quote from the Meadows interview to frame my words,
Dennis Meadows, “There is no longer any scientific uncertainty about the fact that climate change is progressing. It’s cost, at least in some measure, and probably large measure, by human activity, and that it is moving the weather regime into more disruptive and negative areas. And it’s, of course, not only hot temperatures that are causing problems. Sea level rise combined with more intense periods of rainfall and wind are causing flooding problems or drought problem on occasion. The agricultural systems are starting to be disrupted.”
“So, yes, we are absolutely seeing these things now and in many ways. The people who deny that this is happening I think, by and large, actually are not ignorant of it. It’s just that they don’t care or that they find it politically extremely inconvenient to deal with the consequences. So rather than try to figure out how to solve the problem, you just deny it.”
He then goes on to discuss what effect people like you or him setting out the facts on climate change or diminishing surplus energy and prosperity energy will have in terms of our behaviours or meaningful efforts to address these type of issues, “for a large fraction of the population, the kind of data becoming available now don’t serve to persuade anyone of either the situation or they need to change.”
“I’m not an expert in this area, but I have wondered whether actually our species cognitively has the capacity to deal with these issues. You know, we evolved over several hundred thousand years where long-term issues were simply not an issue. The main concern was to escape immediate danger, acquire food over the next 24 hours, and at the very longest, move so as to cope with seasonal changes.
But if you had two cavemen sitting there, one guy says, “Let’s run. There’s a tiger coming.” And the other one says, “Let’s develop some hundred-year scenarios,” the first one is going to pass on his genes and the second one isn’t. And here we are two, three hundred thousand years later.
It has occurred to me that we simply will not deal with this issue. You know, somebody said to me the other day, “Well, we got to save the planet.” And I said, “No, we don’t, the planet always saves itself.” You know, we worry about climate change. Climate change is not worried about us. Climate change is a mechanism by which the planet re-establishes some sort of dynamic equilibrium in this little thin micro percentage fraction of its surface.
And if it takes the planet a million years, two million years, you know, it’s not a matter of great concern to the planet. But, of course, it has enormous implications for our species.”
So all this got me thinking that it may be that it’s not, as you sometimes suggest, that the powers that be don’t understand the data about where SEEDs suggests were going, it’s simply that there’s no currently acceptable solution for addressing it.
Excellent summary Ladydog70, thank you and I fully agree. I believe that it is something called ‘normalcy bias’ or ‘confirmation bias’ which seems to afflict most of us who are just trying to survive in a competitive world with little time left to discuss the future, as you rightly surmise.
Me? Well I am from the planet ‘Zob’ and I am only here to report the failing conditions of planet earth before it is destroyed in the construction of a hyper super-space highway which is necessary for the continued expansion of our Alpha Centauri system: For those that don’t know:
Confirmed planets: Only one planet has been confirmed for the Alpha Centauri system: Proxima Centauri b. It is slightly larger than the Earth, and orbits around Proxima Centauri in its habitable zone. Stars: Proxima Centauri Orbits: Earth Category: Star system, Binary star Constellation: Centaurus
Sorry guys, Ford Prefect and Elon Musk will be advising you soon about what you need to do to preserve the essential DNA/RNA database for reconstruction on planet Mars in due course
Happy Christmas to all; happiness and goodwill to everyone for the New Year
Hello Peter and thanks for your good wishes.
I hope you enjoy the chance to settle down with a Pan Galactic Gargle Blaster over the festive season as I will with my old Port Ellen Malt Whisky
You got it dead right, my friend :-))))
I tend to think, based on (a) their continued reliance on ‘conventional’ economics, and (b) the lack of effective policies, that the authorities either don’t understand the reality of the situation, or don’t want to.
But it’s perfectly possible that, as you say, they simply can’t find “acceptable” solutions.
This raises the question: acceptable to whom?
One possibility is “acceptable” to those who support current inequalities of wealth and income.
A second might be “acceptable to that section of opinion-formers whose priorities might be undermined by the giving of higher priority to economic issues”.
A third could be “acceptable within the institutional default-position of continuity”.
After observing the actions of the Powerful for a while, my conclusion is that the most explanatory assumption is your last one. Adaptation requires not a Reformation, but a Revolution. The Revolution(s) may happen in a large scale bloodletting (e.g., the Bolsheviks in Russia in 1917) or as small groups splinter and walk away (people who join monasteries or exclusionary religious groups; various forms of survivalism).
On that latter point, an academic study of the Dancing Rabbit commune in rural Missouri by a Graduate Student found that the members are consuming about 80 percent less energy than the average American and are at least as happy. The two items they have not reduced are education and travel. I have spoken about an ‘adjacent and accessible’ evolutionary path, and the existence of radically different ways of life by even small groups can be seen as a proof of concept and therefore a threat to the status quo. But the realities of wealth distribution in the world in general and the US and the banana republics in particular severely restrict most people from choosing any path other than that laid out by the status quo. One has to have succeeded in the pursuit of wealth, or have a family which has succeeded, and then have a ‘come to Jesus’ moment and turn one’s back on it all. Land is still the basis for a simple life, and the bubble in land prices precludes the historical American dependence on ‘lighting out for the Territory’ as an escape.
I was listening to a Dr. Ronald Jaffe talk last evening. He is an old man now. He was asked about his wedding. He said that he was raised in a conventional Jewish family. When he and his wife decided to formalize their relationship, they set aside one week to get a very wide variety of marriages performed. Because Jaffe was a well-known doctor, he knows a lot of people. They had about a dozen different religious marriages performed by eminent religious leaders during that week, including a session with the Dalai Lama. It reminded me of the late 60s and early 70s and the spirit of transcendence of the conventional. I think that expansive spirit is mostly dead as a doornail.
I want to follow up on your comment that the authorities “don’t understand the reality of the situation, or don’t want to” as opposed to my suggested alternative that they do but they simply can’t find “acceptable” solutions.
I find it hard to accept that they don’t understand or at least have never considered it and may have rejected it.
I don’t reject anything that you say about how wedded they are to conventional economic thinking or the business as usual, future will be an extrapolation of the past approach.
I just think that with all the planning work that is done in the Bank of England, Cabinet Office etc in the UK and the other national and international institutions it must be unlikely that they have not considered the issues we discuss here.
That would require me to accept that they, Governments and the international institutions, have not only managed to miss your work but also that of all the others such as Gail Tverberg, Donella & Dennis Meadows and Jørgen Randers in the Limits to Growth, Professor Ugo Bardi and so on.
On balance which of your options would you think most likely, that they don’t understand or that they don’t want to.?
A second questions then comes to mind, would there be benefits to a nation to understand the true situation first or to putting off understanding as late as possible?
Good points. Rather than try to answer this now, I’ll come back to this topic in the New Year.
One thing to ponder, though, is this – why are the Fed, and others, seemingly making their #1 priority the prevention of a stock market crash?
Shouldn’t homelessness, inadequacy both of savings and of pension provision, cost of essentials, a disadvantaged younger generation, massive student debt, and numerous other “real” economic issues be at least as important?
Re: “One thing to ponder, though, is this – why are the Fed, and others, seemingly making their #1 priority the prevention of a stock market crash?
Shouldn’t homelessness, inadequacy both of savings and of pension provision, cost of essentials, a disadvantaged younger generation, massive student debt, and numerous other “real” economic issues be at least as important?”
The British political system, Canadian and many others don’t have the same degree of campaign finance spending as does the US. The two major parties here are largely puppets of the big money donors. Even if sometimes unconsciously, most in power want the system laying golden eggs for the elite to hold. They give the minimum consideration they think they can get away with to everyone else,
Also, pension plans are at high risk of folding now if/when a crash occurs given only 2% rates on decent quality bonds. No Fed leader wants that to occur on their watch. Ditto for whichever party is in power. It looks to me that the Dems have no strong potential candidate to challenge DJT. Sadly, they too worship the growth god and are beholding to donors. So, what most people think is fair and right is unlikely to be realized.
Ironically, though, QE/ZIRP is the main CAUSE of the parlous state of pension systems. Fundamentally, pension systems work on the basis of “how much income do we buy per $1000 invested?” Rising asset prices produce a one-off capital gain, which is a paper gain anyway, and perhaps not capable of being monetized. But high asset prices reduce the amount of forward income that you get for your $1000.
It used to be said that, to procure an adequate income in retirement, one needed to invest 10% of current income. I’ve estimated that, since ZIRP, that’s risen to around 27%, which hardly anyone can afford.
As for the Dems, I fail to see a promising candidate, which has to be bad news for democratic debate. A lot of them are simply “establishment liberals”, whose concerns for “equality” don’t extend into income and wealth. One or two have some good ideas, but this is patchy. The impeachment process looks to my, from overseas, highly likely to backfire.
Mr Trump will doubtless campaign on the “self-serving establishment vs ordinary Americans” tag again. At the moment, I think he’s in pole position.
For those who missed it:
“ Emerging and developing economies already are more vulnerable on a variety of fronts than they were ahead of the last crisis,” he said. “75 per cent of them now have budget deficits, their foreign currency denominated corporate debt is significantly higher, and their current account deficits are four times as large as they were in 2007. “Under these circumstances, a sudden rise in risk premiums could precipitate a financial crisis, as has happened many times in the past.”
Which is why central banks can never allow a “sudden rise in risk premiums.”
Which is why interest rates can never be allowed to rise again.
Which is why the can must be kicked at all costs, and why debt growth will only accelerate.
Which is why the “really smart people” will keep repeating the same idiotic drivel until the next crisis finally hits.
Which is why the next crisis may be the last.”
Thanks for another very perceptive, but very sobering, article.
It’s difficult to see what can reverse these trends, and by reverse I mean more countervailing actions to the secular growth in ECoE, rather than reverse ECoE itself.
It seems to me it would not only require a revolution in thinking but the willingness to recognise that remedies may not be consistent with ones self interest and getting people to abandon what might be called a fundamental feature of human behavior – selfishness – is a rather tall order. One is then left with the ultimately destructive, but arguably noble in a way, of the human race freely bringing about its own destruction.
However, I suspect that the situation will be rebalanced, somewhat at least, by life’s contingencies in the form not only of financial crashes but wars pestilence and famine.
On that rather downbeat note may I wish you and all the other very intelligent commentors on this blog a Merry Christmas and a Happy New Year.
After maybe 1/4 of a year here, it has been satisfying to exchange views with this diverse group. Bob mentions 3 of the Four Horsemen, and I agree with him. Voluntary shrinkage is not in (“on” to you Brits) the cards.
My personal holiday just passed: Winter Solstice. It will be a bit lighter each day now. Edith will make some latkes for the progeny as requested by our Christian daughter-in-law. World Junior Ice Hockey games begin the 26th, and that’s always fun for me. Good food and wines from our cellar are hard to beat.
Walking most days in the woods with our dog (skiing or snowshoeing when possible) keeps us in touch with nature and fairly fit. The air is quite good, and the environs safe. I can’t ask for more. We have much to be thankful for. I hope you all enjoy your holiday season as much as we do.
I must agree,
Human Nature being what it is, does not really give much rise to hope.
The world today really is a mad place, and it is getting madder by the day.
I am now of the opinion that it needs to burn. The days for any meaningful reform have passed, we now need to pull everything down and start afresh . . well, we won’t really need to pull anything down because society is actually destroying itself as we speak.
However, as Dr. Tim points out, decline is a process not an event, so we Boomers will probably still all be able to live out our days in relative comfort.
It is our grandchildren and their futures that we need to be fearful for.
I did not read your comment as being “downbeat”, instead I did see a silver lining to it.
We do need to clear out the rot in our society, and this is how it is done.
It will be exceedingly painful and it will be exceedingly unfair, but the society that will arise from the ashes will have different Values.
They will look back upon our wasteful, hedonistic and materialistic lifestyles and they will see that happiness was in short supply.
Johan, again, your comments are pure.
Our ability to be capable to think didn’t make it pure. The same greed, tribalism and opportunist thinking occurs again and agian.
Size didn’t matter; dinosaurs.
Brains size didn’t matter; humanoids.
Another failed experiment
Oil leverage just made it worse.
Mass focus is on asset value instead of soil depletion, and the greenies want to share asset values with more soil depletion per capita, with 7 billion useless eaters. Duh…
One of your Best,
Merry Christmas Tim,
God Jul, From my small band of Vikings in Southern Sweden.
Just spotted this which confirms the full speed ahead mindset that is universal these days. Humans want energy slaves, and these fill the bill.
Russia’s Floating Nuclear Power Plant Began Generating Electricity
Russia’s floating nuclear power plant is now operational after making the long journey across the Arctic Ocean.
The power plant, Akademik Lomonosov, docked in the remote town of Pevek in September, Business Insider reports, where it’s now generating electricity for the first time. Operating a nuclear plant atop a barge is a world-first, and Russia expects the twin reactors to power as many as 100,000 homes — a plan that’s making environmentalists uneasy.
“Chernobyl on Ice”
Critics of the plan have referred to Akademik Lomonosov as “Chernobyl on ice” or a “nuclear Titanic.”
While the Russian barge seems to have completed its voyage without incident, it doesn’t take a particularly active imagination to imagine how catastrophic any mishaps along the way could have been for the global environment.
First of Many
For better or worse, the rest of the world is catching on and copying Russia’s plan for portable nuclear reactors. Earlier this year, China announced plans to construct 20 similar power plants, all intended to float in the East China Sea and power artificial islands.
While the teams behind these power plants presumably considered and accommodated the possibility of large waves and bad weather, the rise of these free-floating nuclear reactors isn’t the most reassuring development as we head into a new year.
READ MORE: A floating nuclear power plant that activists dubbed ‘Chernobyl on ice’ has started producing electricity in Russia. Here’s what it looks like. [Business Insider]
More on the Akademik Lomonosov: Russia Is Floating a Nuclear Power Plant Across the Arctic
Speaking of Chernobyl (reminder, it’s in the Kiev oblast of Ukraine). In 1990 electricity production of Ukrainian SSR was 298.5 terawatts-hour, of which 221.7 was produced by thermal stations, 76.1 by nuclear ones (the rest hydro). By 2014 electricity production was reduced to 181.9 kwh, almost entirely due to reduction of thermal stations output to 82.8 twh; NPPs output increased, to 88.4 twh.
Thus, I’d say that NPPs prevented total collapse of Ukraine. Of course, some would say it’s not a good thing either, but it is what it is.
Vic – you are being a little naïve if you think that the additional nuclear energy production has “saved Ukraine from collapse”.- welcome as that electricity is for Ukrainians. Since a Western backed coup in 2014 installed a fascist backward looking junta to deliberately antagonise Russia economically wise Ukraine has disintegrated . Demographically wise Ukraine’s population is declining at nearly twice the rate of Japan. Militarily it is in poor shape having performed badly against the rebels of Donbass.
Keeping the lights on is one thing – collapse is another thing entirely. It is an on going process rather than a sudden event. A Stock Market crash will only highlight what is already hidden in plain sight
“you are being a little naïve if you think that the additional nuclear energy production has saved Ukraine from collapse”
I mean it could’ve been much worse. It did collapse (obviously), but partially. BTW, Donetsk and Lugansk oblasts were the most industrialized regions, perhaps more industrialized than Kiev.
I also don’t condone Nazism in general, but especially the Nazism of Slavs (or Jews). This is indeed an insult to humanity. But that’s probably not directly related to energy. Humanity is all that great, that much is certain.
I didn’t write this:
“you are being a little naïve if you think that the additional nuclear energy production has saved Ukraine from collapse”
No Steven, I wrote this. Point being collapse is an unevenly distributed beast. No one power source will “save us” per se – it is about husbanding resources on the downside of the energy descent.
The political situation will be an interesting one to watch. Expectations of jam tomorrow will be dashed
They need energy leverage, and would like the fish to deal with the pollution.
That’s tribalism. Pure and simple.
@ Don S. Re:
” Land is still the basis for a simple life, and the bubble in land prices precludes the historical American dependence on ‘lighting out for the Territory’ as an escape.”
There are still many parts of the US and Canada where land is inexpensive. Houses too. If the local economy is stagnant or shrinking, the cultural and physical amenities do likewise. Few people want to move there. Escape is still possible to pursue alternative lifestyles there. A group makes it easier than a single family, though. Isolation isn’t in our genes. (social mammals)
“While the Russian barge seems to have completed its voyage without incident, it doesn’t take a particularly active imagination to imagine how catastrophic any mishaps along the way could have been for the global environment.”
Virtually none, even if there had been a nuclear meltdown and large release for some unforeseeable reason. Overactive imagination is precisely the problem with anti-nuclear doomers. In the worst realistic scenario, a serious accident would have meant higher background radiation levels over a few hundred square miles of arctic tundra where very few people live anyway. Not a good thing by any means, but certainly not a global disaster. There simply isn’t enough fission products in the core to significantly raise dose rates for the world as a whole, even if the materials spread beyond the local area. Fukushima is much the same. A few hundred square miles of Japan now have higher background radiation level than they did before. A pain in the arse for people that happened to be living there, but not really a global disaster in itself. What makes it more damaging is the human response.
People that don’t like nuclear power also tend to know the least about it. They seem to think that an accident in a reactor anywhere in the world will unleash a global zombie apocalypse. The reality is that nuclear meltdowns release radioactive pollution, that increases toxic load on the bodies of people that are exposed to it, no different to fossil fuel air pollution. Not a good thing, but people need to get real about it.
Well, a part of the reason for fear of nuclear energy is its military applications. Hiroshima, Nagasaki, RDS-202 and so forth. Fear, of course, is exactly what military planners wanted to achieve. This is unfortunate for civilian nuclear industry, but at least it helped to avoid the WW3 (so far), which is no small thing. That’s another proof of just how useful the nuclear energy is 🙂
Not everyone is afraid of it anyway.
There is a reason why The Farm took root in 1971 in rural and depressed Tennessee, and not in San Francisco. And there is a reason why the Dancing Rabbit found a place in rural Missouri. And why Dmitry Orlov had a short career in publishing homesteading books featuring very unfashionable neighborhoods. Still, one of the larger line items in an intentional community’s budget is taxes. I’m not real familiar with Detroit, but I imagine that the urban homesteaders who reclaim destroyed properties also end up having to pay high taxes because previous administrations assumed BAU would continue forever and debt was a sound investment in the future.
Steven Gaskin, the leader of The Farm movement, was a Biblical Communist…as described in the book of Acts. He said that the aim of the community was not to overthrow the government, but to assume the functions of the government. Marx called for ‘the withering away of the State’. State indebtedness has definitely not withered away in the last 50 years. And the ‘solution’ for the US (and maybe China) is a perpetually growing ‘defense’ budget. Which means that taxes, unless there is a Revolution with a capital R, are going to be a perpetual problem for people with very low money incomes. Not to speak of the vast amounts of land held by the very rich….which is at scary proportions in Britain.
America’s first Civil War was the Whiskey Rebellion in the Appalachians. The mountain people perceived that they got nothing good from Washington or the state capital and just didn’t pay taxes. And so George Washington and Hamilton set out to hang a few of them as an example to the rest.
Charles Hugh Smith has a cheery prediction for the 2020s: https://www.oftwominds.com/blogdec19/conflicts12-19.html
Happy Yuletide everyone!
As just one more example of the implications of degrowth, debt default, a cash-flow economy, voluntary simplicity, etc.
My county in North Carolina has historically permitted people to live in dwellings with a maximum dimension of 12 feet by 12 feet without complying with building codes and being taxed as an ‘agricultural outbuilding’ (e.g., a chicken coop). The people are supposed to ‘not live there permanently’, but that part has been ignored in practice. You can find a book Twelve By Twelve written by an international development guy who was spending some time here as his father died. He moved into a Twelve By Twelve, built for an anti-nuclear pediatrician activist, by a friend of mine.
The county does not have a pristine record, however. While I was working at the farm, a middle-aged man would come and work for food. He was living in an old chicken coop on the property of the farmer. The farmer wasn’t charging him anything. This being the South, I should also mention that he was black. He lived unobtrusively. But early one morning, he was going out to do day labor when a neighbor woman spotted him. So she immediately called the cops about the ‘dangerous black man’ who had invaded her pristine neighborhood. The cops did their duty and the man went off to survive somewhere else.
In the neighboring county, including Chapel Hill and the University of North Carolina, a young man showed up with a Tiny House on wheels and parked it in a rural place. It eventually came to the attention of the Powers That Be, who required that he remove himself from the county as rapidly as possible..because his tiny house could not qualify as a real house nor as a mobile home and so there was no way to tax it. The county is supposed to be ‘liberal’…but ‘liberal’ doesn’t include letting people live with very little money.
When I moved to New Jersey back in the 1960s, I found that public discourse was dominated by ‘ratables’…something on which property taxes could be levied. I found it astonishing that so little attention was paid to the quality of life, and so much to paying taxes…when the ‘ratables’ were so evidently diminishing the quality of life.
Do not underestimate the deadly effect of taxes…Macron should make note, if he is reading this.
The dangerous black man turns white as soon as the fogs of fiat turn south
Deal with it
I suspect that the answer to your question is:
“You will not get from this site data which you can examine and audit and do the sort of analyses for the world economy the kind of thing you have done for shale in the US”
The ECoE methodology Dr. Morgan uses is proprietary. So the best you can do is look at it and examine whether it seems to be consistent with the macro events you can see happening in the world. If so, the numbers may be indicative of the nature and magnitude of unfolding problems.
There is also the issue of adaptation. If ECoE is rising, can a society adapt by using less energy and still achieve a sort of prosperity which would be different than the sort of prosperity the society expects today? On that issue, the site will point to other studies which show that the world is not, in fact, decoupling. However, the failure to decouple is facilitated by big increases in debt. The site will not provide an answer as to what would have happened if the central bankers had not facilitated the big increases in debt. Would decoupling have begun if the world were using a hard currency? This site cannot tell us. Would the world have experienced the kind of crash and rebirth that Ugo Bardi discerns in history? This site cannot tell you the answer to that question.
PS. Thanks for your work on shale. Very informative.
A big thank you Tim for all your informative blog posts this year. Always a must read.
Also a thank you to all the commenters that keep such lively debate going – especially Xabier, Houtskool, the Dons, ladydog70 and ewaf88 who have been commenting here for a long time. All worth reading.
I’d like to second Niko’s thanks to you Tim; as well as to the other consistent commenters here on the SEE blog. I’ve been visiting for a few years and I’ve learned so much of great worth from you all. The posts and comments here capture and integrate many of my own thoughts, feelings, and intuitions which I often struggle to clarify for myself. I hope I can offer a useful comment here or there as my understanding of SEE and it’s ramifications become clearer to me. Best wishes to all of you during 2020.
Thank you very much indeed. I feel that I learn an enormous amount from comments and discussion here. It’s a humbling thought that well in excess of 50,000 different people have visited this site in 2019.
Early next year I’m planning to assemble a succinct summary of the principles of SEE. I like to think that, with the benefits of so much constructive debate, we now have a coherent and logical interpretation of how energy drives the economy, which in turn shapes so many other issues.
With the theory refined and the SEEDS model working well, we have the platform on which to explore numerous issues – and, as ever, I’ll be guided by you and other commenters as to what we should be discussing.
With very best wishes for 2020
Excursion into Kunstler, Keene, and Garrett
The Kunstler interview with Steve Keene covers the usual monetary bases and then veers into a discussion of the real economy. Keene mentions that he has been working with Tim Garrett, and sounds pretty pessimistic. Which prompted me to go check and see what Garrett has been writing recently. Which is also pretty pessimistic.
One coin which did drop for me in the Garrett interview is his emphasis on how much energy is required just to keep the current size of the economy functioning. As energy costs rise, then it seems to me that some parts of the existing economy have to be sacrificed.
PS. Keene is in Amsterdam, where there are apparently a lot fewer homeless people than in London.
Note on Steve Keene
During the discussion with Kunstler, the subject of governance comes up. Keene predicts that a less democratic form of governance will be necessary to address the twin problems of environment and energy decline. He likens it to WWII, when all the governments involved became much less democratic. As one example that I would point out, the income tax rates on rich people in the US approached 100 percent. So the government of a supposed ‘democracy’ was essentially seizing money and redirecting the spending. In addition, that government was printing lots of money which would eventually have to be either paid back from taxes or else inflated away. That government was also engaged in heavy doses of propaganda to further its own agenda. When I was a child more than a few people believed that Roosevelt ‘allowed’ Pearl Harbor to happen….same as Lyndon Johnson and the Gulf of Tonkin. And who will ever know the truth about the World Trade Center?
The EU official who said ‘when it gets serious, you have to lie’ understood it all too well.
Picking up on the Pearl Harbor reference, one of the most remarkable (and scary) things about that for me is that the Japanese naval high command war-gamed ‘Pearl and after’ on, apparently, nine different scenarios, each progressively more optimistic than the one before.
In all cases, Japan lost, the only point of difference being how long it took for them to lose. Yet they still went ahead.
Adm Yamamoto swapped jobs, being moved from shore-based CinC to command at sea, this being the only way the IJN could protect him from assassination by pro-war fanatics incensed by his ‘realistic’/’defeatist’ views.
This seems illustrative of the point where logic breaks down, and a combination of fanaticism and wishful thinking takes over. Even the fanatics couldn’t have been wholly blind to the impossibility of Japan defeating the United States – but backing down was ‘unthinkable‘, and a ‘loss of face‘.
Likewise, it seems impossible that the implications of degrowth, the environment and extreme financial recklessness can be unknown, even by the most blinkered. So I have to wonder if rational responses have become ‘unthinkable’, and a ‘loss of face’.
You have a point here, Tim, which I hadn’t considered. Maybe the reality is just too horrible for them. After all, the whole edifice is based on confidence; loose that and the house of cards collapses.
The same is true of the Fed. They know they need to do QE4 urgently but what does that tell the the mob? Capitulation during a time of, what, the greatest economy ever?
Watch their actions and follow the money, is my shibboleth.
There might be a case for a publishing a SEEDS-based assessment of the US economy here, I think.
Good idea Tim. I follow America and the Fed because it is the US dollar that drives the global economy and I suspect the Fed control or influence the BIS, IMF, World Bank and UN.
Europe is in serious trouble, not least, caused by their negative interest rates. Mises has a good article on this today: https://mises.org/wire/how-todays-central-bankers-threaten-civilization
The USA economy is in a parlous state and the statistics are massaged beyond belief to meet the aspirations of MAGA. I follow John William’s http://www.shadowstats.com/
Hope you can find the time!
Another fascinating aspect of that period is how the authorities in Singapore sought to assure the public that there was no danger of invasion. The Japanese, they were told, were short-sighted, were baffled by anything mechanical, and made everything out of bamboo. Yet Japan’s highly advanced aircraft were, surely, a matter of record. It’s amazing how people ‘believe what they want to believe’.
Stereotyping is most often misleading, something the group vehemently avoided during our counselling training – but we had to practice as it was revealed to be an ingrained trait of most members, Same thing goes for ‘generalisations’
Sadly, stereotyping is alive and well, especially in political ‘analysis’.
I lose track of how many times I hear that Candidate X will get (or won’t get) the “women’s vote”, the “black vote”, the “working class vote”, or whatever.
This is patronising drivel. Everyone is an individual, not a member of some generic “group” whose members all vote in the same way.
Here, Here! :-)))
You may find this essay interesting concerning history and human nature by William Ophuls.
Click to access 1cbuvtjss_92123.pdf
To understand the role that honor can play in war and peace, consider the decision of Japan to attack the United States. Sometime during the 1930s, a Japanese general visited Stanford University, and his hosts took him to a football game. Afterward, he turned to an aide and said, “We must never go to war with these people.” So the Japanese high command was fully aware that war with the United States was fraught with risk. Shortly before the attack on Pearl Harbor, Admiral Isoroku Yamamoto, its chief author and proponent, told members of the Japanese Cabinet, “In the first six to twelve months of a war with the United States and Great Britain I will run wild and win victory upon victory. But then, if the war continues after that, I have no expectation of success.” Precisely six 14months later, Japan was decisively defeated at the Battle of Midway, a blow from which it never recovered. If we ask why the Japanese military bet their nations’s future on such a risky strategy, the answer is, of course, complicated, but honor played a key role. Roosevelt’s policies were designed to strangle Japan’s war machine and frustrate its imperial designs, an outcome intolerable to a government run by descendants of samurai. Far better to die a noble death fighting for the Emperor than cravenly yield to the humiliating demands of the Americans.
As an aside here, Japan went to war to secure control of oil supplies in the then Dutch East Indies, but failed to institute a convoy system to ensure that this oil reached Japan, with the result that its merchant fleet was all but wiped out in the first year of war.
It also named its area of conquest the “Greater South East Asia Co-Prosperity Sphere”……
This is well worth reading.
The article you referred to is fascinating. And it made me think of the UK Labour Party offering more and more free goodies as the election campaign progressed; this may have been counter-productive as people could see that they were being bribed and that there would not be the money to afford it.
Parts of The Book of Revelation no longer look like fantasy!
“16 And he causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads:
17 And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.” [Government Cryptocurrency perhaps?]
Thanks for a year of very interesting articles, Dr Tim, and I look forward to more in 2020.
I would like to express my sincere thanks and appreciation to Dr Tim and fellow posters for the way in which they continue to inform and educate my mind. I have learned such a lot.
I read Dr Tim’s book ‘Life After Growth’ in 2014 in which he explains matters simply and readily and his basic thesis immediately ‘grabbed me’. Over the last five or six years I view events as confirming – or at least not disproving – the ideas that Dr Tim set-out with great succinctness and clarity.
My disappointment and dismay, such that it is, arises from the failure of ‘The Fourth Estate’.
I can well understand privately-owned ‘news’ organisations whose primary purpose is to promote the interests of their owners by suppressing, ignoring and distorting important stories, but the failure of the British Broadcasting Corporation (BBC) to engage with heterodox ideas, such as Surplus Energy Economics, amounts to nothing less than a repudiation of public service broadcasting; and gross dereliction of duty – in my view.
I am sorry to be writing with such bluntness and criticism.
The recent general election campaign in the United Kingdom has been an experience that I found surreal for none of the mainstream parties acknowledged that even using ONS figures the trend rate of economic growth has halved! The approach seemed to be: denial, delusion and distraction. It’s very dispiriting.
Thanks Kevin, much appreciated.
What has happened to the BBC is depressing, for anyone old enough to remember it in its heyday. It’s always been somewhat insular, cliquey and “trendy left”, but now has a definite agenda and doesn’t hesitate to push it at each and every opportunity.
For example, it has run anti-Trump articles on its website on an almost daily basis ever since he was elected. Its commentary on the newly-named governor of the BoE was to regret that he “has one key flaw: he is a white male”. Reporting becomes almost celebratory in tone on some issues, and condemnatory on others. It illustrated an article about a right-wing political leader in Europe with pictures of Franco and Hitler and, if I remember correctly, used a picture of Stalin in an article about Mr Trump.
Mr Johnson has said, albeit as an aside, that he will look at the licence fee, which has to be paid by anyone owning a television in the UK. Others have proposed privatization, though I suspect than a governing council, elected by all fee-payers, might be a better idea. It seems to have become a self-perpetuating institution, in that recruitment probably focuses on recruiting “people like us”, from whom future top people are in due course selected. Anyone suggesting, in a job application, that Mr Trump, or even Mr Johnson, is “not a bad bloke really” would, I’m pretty sure, get short shrift (and not on grounds of syntax!)
Nobody should get the idea that it promotes British government propaganda,though. Rather, it’s become a campaigner for “liberal” causes, which it selects itself.
I think you’re spot on, Tim. The CBC (Canada) is the same in my opinion. It has been so for at least two decades, and I suspect double that. Edith and I moved to Ottawa in ’99, leaving in ’07 as dual citizens. Conservative Canadians are like moderate Democrats in the US.
Yamamoto and Stalin
I was browsing in a used book store and found a biography of Mamamoto. It said that he told confidants that war with the US was unwinable because Japanese buildings used wood, which could easily be destroyed with incendiary bombs. It was much easier to do to Japan what Churchill did to Dresden…create lethal fire-storms. Japan also had no effective air defense system, unlike Germany.
Stalin had his own blind side. After the winter war with Finland, Stalin consulted with his generals about how the war went. The ones he listened to told him everything was fine, and war with Hitler could begin at any time. The ones he DIDN’T listen to told him that the winter war had revealed serious deficiencies and to avoid war with Hitler. We know how that ended. Zhukov snatched a victory out of the jaws of defeat at Stalingrad, but the cost of the war to the Soviets is still being paid for.
Excellent article by Ellen Brown
Ellen Brown promotes public banks, among other projects. So this article looks not only at the biology but also the financing.
I do have one qualm about the statistics. As I understand them, the calculations that we can take ALL of the excess carbon out of the environment is founded on a comparison of carbon in the atmosphere to the carbon we can put into the soil. But about 90 percent of the carbon we have burned is stored in the oceans. If we reduce atmospheric carbon dioxide, will the oceans begin to return carbon dioxide into the atmosphere? I haven’t heard a definitive answer on that topic. We do know that nature follows gradients.
Nevertheless, what Ellen proposes must be one of the solutions we are looking for. Among other things, it is a way to relocalize food to deal with the coming problems in transportation and the increasing cost of using energy in a highly industrialized food system and in restoring health by returning to unprocessed foods.
Don The Carbon Cycle operates over various periodic Cycles from Geological( Millenia) to Seasonal (Annual). Atmospheric Carbon is Seasonal. Carbon Flux is also Regional in that Outgassing from the Oceans occurs in the warmer equatorial latitudes and the Colder Poles act as a carbon sink following Henry’s Law. Atmospheric Pressure also affects the flux.
This is an excellent talk on Soil and Carbon.
Mammon, Child of Pride
“Greed is a bottomless pit which exhausts the person in an endless effort to satisfy the need without ever reaching satisfaction.”
Great article on Zero Hedge, skip the epstein part, a scientist at Cornell wrote this take down:
(3) Consensus means jack squat. “We declare, with more than 11,000 scientist signatories from around the world, clearly and unequivocally that planet Earth is facing a climate emergency.”4 Really? Unequivocally? If this is really what they signed verbatim, we have located 11,000 scientifically trained nitwits.
Here are just a few equivocators:
The Global Warming Petition Project rounded up over 31,000 scientists (9,000 with PhDs) equivocating that the panic over climate change is bullshit. Worldwide there are 21 million degrees in science, from bachelor degrees to PhDs, blurring what “scientist” means in these petitions.5
A letter sent by 49 former NASA scientists and astronauts, all with PhDs in tow, urged NASA to dial back their support of the global warming narrative.6
A letter authored by 500 carefully vetted scientists—big swinging dicks and ovaries of steel—urged the UN to acknowledge there is no climate crisis.7
In 2015, 30 Nobel laureates got huge media attention by signing a letter asking for immediate action on climate change while it went unnoticed that 35 other Nobel laureates sitting in the room did not sign.8
There are many more inconvenient facts on this essay for those with enquiring minds
Excellent Magus, thank you, and I concur with you assessments. The bulk of the scientists are compromised through their bursaries, grants and endowments. They are bought and paid for by the banksters, ruling elites, billionaires and mega corporations. A glance at Monsanto is sufficient to confirm my views as fact.
Whilst agreeing, I’d have to suggest two qualifications here.
First, I don’t think that all scientists are compromised in this way. Moreover, whilst some might be beholden to the “status quo lobby”, there is an “environmental lobby” out there, too.
Second, until it’s understood that the economy is an energy system, not a financial one, all proposed policies are compromised by a set of gravely mistaken basic assumptions.
Thanks Tim and I do agree wholeheartedly. However, I did say “the bulk of the scientists” assuming that few are free agents, but of course there are some remarkable independents. Maybe I was unusually harsh. However the antics of the general American academic network leaves much to be desired, especially with their ultra PC attitudes with which, regrettably, they are polluting the minds of their students.
I am finding it difficult to convince our ‘masters of the financial universe’ to accept your theory on the real energy-based nature of our economic systems. I suppose it is difficult to convince them of the argument when their salaries depend upon it, to paraphrase Upton Sinclair. I will continue to spread the message. I am sure you have read this, but others might not have:
“Second, until it’s understood that the economy is an energy system, not a financial one, all proposed policies are compromised by a set of gravely mistaken basic assumptions.”
I would suggest a second principle which must be understood in order to make any sense of all the aggressive acts and propaganda:
“The exponential increases in ECoE require that the non-energy economy shrink. It is unlikely that small decrements at the margin can deal with the situation, so attempts such as monetary adventurism to try to keep BAU alive and well, will almost certainly fail. The alternative is structural changes, which radically restructure sectors of the economy in the direction of more effective use of energy will be required. Attempts at structural change will provoke intense political struggle and perhaps international and civil wars.”
As examples of structures which should be getting scrutiny:
*The US consumption of energy in comparison with everyone else
*The fact that industrial food is a huge energy sink
*The connection between industrial food and chronic disease
*The capacity of carbon farming to sequester carbon released in industrial processes
*The design of cities and the laws and customs which inhibit change
*New and dangerous arms races
*The replacement of digital genes (8 percent) with analog epigenetics (92 percent) as explanatory variables, changing our perception of what is possible
That isn’t a complete list by any means. I also don’t know how to get attention focused in a post-truth society awash in digital propaganda.
Indeed so, and my reply to the previous comment was necessarily brief.
It seems inescapable to me that our current economic ‘system’ faces an imminent crisis. The relationship between asset prices and incomes has now moved far beyond sustainable limits. Just one measure you might apply here is “how many years’ average income does it take to buy the average-priced home?”, and how that metric looks over time.
From here, the best (relatively ‘best’) outcome is a crash in asset prices, triggering a cascade (but hopefully a manageable one) of debt defaults. The worst (relatively) outcome is that the authorities, desperate to prevent this happening, pour so much new money into the system that they trigger hyperinflation.
This latter choice, if made, would qualify as the (financial) “crime of the century”, in terms, not just of the damage it would do, but its motives, too.
For this reason, I would hope to see, as the “least bad outcome”, a collapse in asset prices, which happens so quickly that the authorities give up on trying to stop it, and turn to managing its consequences instead. Not even the wealthiest benefit from any efforts at asset price support which trigger hyperinflation (if you were worth $5bn now, would you rather be worth $1bn next week, in money that still has value, or $5bn, but in worthless dollars?)
This is when recognition sinks in, bringing a new attitude to numerous things, including those on your list. For instance, any effective interpretation of the energy economy suggests that mass air transit has no future – but nobody is going to recognize this, until recognition is forced upon them.
Great comment doc. Nail on the head.
In my opinion both options, i.e. rising income vs declining assets, won’t be able to preserve the system. We are too far into the rabbit hole, both options would destroy our current system. That’s why i think the choice will be inflating debts away, simply because it gives us more time. Killing asset values at current would kill the ‘full faith’.
Our financial hub would have a heart attack and leave the machine without a steering wheele.
Later rather than sooner is the choice that’s left.
Option left is leadership, local leaders talking to regional leaders talking to other regional leaders. We must skip world leaders.
We all would like one of the straws to be long, but when we take a close look, all straws are equal. And within our current spectre of political correctness no one should disagree.
This relates to waste and energy. Alice is usually spot on.
Preface. Vaclav Smil doesn’t mention using plastic for heat, but in a letter to The Guardian, David Reed suggests:
“The effort of collecting, transporting and cleaning plastics for possible recycling has largely failed, created much more pollution and contributed massively to climate change. The idea of burning plastics and using the energy to heat our homes was proposed by the plastics company Dow more than 30 years ago: it suggested treating all plastics as “borrowed oil”. At that time, ordinary domestic waste had a calorific value of low-grade coal, so the suggestion was that this waste should be burned in efficient plants with heat recovery and treatment of the gases produced, perhaps even trapping the carbon dioxide produced…contunues
In the US, at the turn of the 20th century, the average person spent about half their income on food. Today, it is less than 10 percent. But at the turn of the century, food was a positive contributor in terms of energy. Now it takes 10 calories of fuel to generate 1 dietary calorie. If we think about how we got from there to where we are, we will find that monetary policy isn’t a very good explanatory way of thinking…but that the effects of fossil fuels explain a lot. Both in terms of reducing human labor in the production of food, but also in greatly expanding the non-food economy, so that both the numerator and the denominator changed to get us down below 10 percent.
Now imagine that fossil fuels are now subtracting, rather than adding. What will we go back to? Not necessarily in all the details, but just in general. Will it be 1950 or 1900 or 1850 or medieval times or the way Native Americans lived? I suggest that it is necessary to think in terms of scenarios, much the way Shell used to model the future. Economists differential equations simply won’t work.
“Now imagine that fossil fuels are now subtracting, rather than adding. What will we go back to? Not necessarily in all the details, but just in general. Will it be 1950 or 1900 or 1850 or medieval times or the way Native Americans lived?”
There are plenty of modern countries that have much lower energy consumption than the United States of America. Actually, almost all of them, except the likes of Qatar.
For example, your neighbor, United Mexican States, consumes (per capita) about 1/5th primary energy and electricity. Come to think of it, many Mexicans would probably qualify as Native Americans…
Google in the old days
Speaking of scenarios. It is obvious to me that changing the medical system from symptom suppression to actual cures achieved by giving the body what it needs to thrive is one essential ingredient of any desirable way forward in a world with less available energy. Joe Mercola, MD, was perhaps the first doctor to put up a website. Then Google came along with their search engine and really empowered people to find what they were looking for on the Web. Mercola’s web site was tremendously popular.
Then a dark, Satanic shadow came over Google and they embarked on a censorship program which is shrouded in secrecy, and they monetized everything that wasn’t nailed down. Any doctor who was promoting procedures and pharmaceuticals found themselves censored. Searches were redirected to sites featuring procedures and pharmaceuticals and loaded with advertisements. Since former Google executives are in key positions in Washington, no legal remedies are realistically available. Europe is more hostile to Google.
Mercola is putting together a ‘good Google’ site which will, for a very modest fee, allow practitioners to participate in a ‘health’ search engine. There will be no advertising and your data will not be sold.
Google is doing enormous harm. It is an example of one of the structural components of the BAU model which I think has to be demolished and its functions rebuilt…as Mercola is doing.
I agree that there’s little chance of Google’s market share of advertising being pulled back, or other regulatory intervention happening. But people are now switching to other search engines, such as Duck Duck Go.
To the best of my knowledge, though, Google remains almost entirely dependent on advertising for its revenue, and that might be a limiting factor – advertising funds a huge range of activities, but doesn’t look a growth-capable sector, with public prosperity decreasing.
There might also be increasing pressure in other countries to ‘buy non-American’. I don’t blame that mainly on Mr Trump, by the way, but on the role of US “tech” as perceived in various countries. I can’t see Washington imposing more regulation on Google et al, but I can certainly see Brussels, and others, doing so.
Corporates worldwide are going to find adapting to degrowth particularly challenging, a topic that I’m thinking of looking at here in 2020.
Not related to energy, but now that you mentioned Google, I wanted to get it off my chest… I noticed it censors the following (type it in google without quotes):
When typing that, I expected to get “clinton body count”, “aryan invasion theory” (of india) and “netanyahu indicted” as the first suggestions, but instead I got “clinton box” (don’t even want to know what that is) for the first query and nothing for others.
That also makes me think: if Google has censorship, does it also do propaganda? (notice that all queries are of political nature, and yes, the origin and activities of ancient Indo-Aryans has a lot to do with modern politics of India). I can’t recall any historical examples of the former without the latter, so the answer must be yes.
I don’t know the answer to that, since I don’t use Google.
Google, and the like are called “Tech” companies, but in reality there is nothing really Technical about them. They are data harvesting and advertising platforms.
You, dear user are their “product”, and Google sells “you” to their advertisers.
They are also not really there to benefit their users, so they are not going to give you the search results that you want.
They are going to give you the search results that they want you to have.
They are not apolitical !
Also, their Android OS on mobile phones are also just a big data harvesting operation, ( your private data, btw ) and this is passed on not only to big advertisers, but also to US government agencies.
Like Microsoft Windows, the US regulators allows them to operate a monopoly because they are US companies, and they aid US spying into every living room and every company office in the world.
I know its inconvenient, but everybody really does need to wake up and “smell the coffee”. Your data is yours, keep at least a modicum of privacy about yourself.
Ditch Facebook, ditch Microsoft and ditch Google.
You will be doing everybody including yourself a very big favour.
Low Quality Jobs
“When all that a country has left is the domestic manufacture of processed foodstuffs,” concludes the JQI White Paper, “you end up with a lot of unhealthy and unwealthy workers who are in dire shortage of security, much less dignity. A republic that offers no better than this cannot long endure.”
Here is a new index of ‘job quality’ focused on the US, but with relevant observations about other countries. The gist of it is that the US has steadily lost good jobs over the last 30 years, and replaced them with low quality jobs. They identify the loss of the good jobs as behind much of the dysfunction evident in the US. The quote above is in response to a Bush economic adviser who said that ‘it doesn’t matter whether a country makes computer chips or potato chips’.
This initiative is along the same lines as all the recent theorizing about ‘bullshit jobs’.
One of the things I find scary is the financialization of so much of the blue-collar trades. There are all kinds of service people driving around in vans doing things like appliance maintenance or landscaping or plumbing who have purchased a brand and an internet platform, but who are entirely dependent on what they themselves earn…there is no company to act as a flywheel if things turn down. If we have a repeat of 2008, I would expect widespread hardship on a scale much bigger than it was in 2008…given that so many people are living week to week.
It seems that great minds run in the same channels. Here is Charles Hugh Smith on the false lure of advertising as a savior of capitalism…Don Stewart
Marketing is the savior of capitalism. The most profitable and valuable enterprises globally are engaged in collecting and selling data–marketing. This is the savior of capitalism, which as noted above, has reached the end-game of financialization, globalization, etc.–what Immanuel Wallerstein characterized as “capitalism no longer works for capitalists.”
The assumption that marketing will save the system by generating new trillions in income and wealth assumes consumers have abundant disposable income (or credit) to spend. If incomes decline, and/or rising costs strip disposable income to the bone, then how valuable is all the data that’s being collected and sold as the key to profits and wealth? The unraveling of the credit-based consumer economy will also reveal the limits of marketing as the “industry” that will save capitalism from a fatal decline of profits, capital and credit.
Given my very high regard for CHS, I take that very kindly indeed.
I don’t know why it is, but I really dislike advertising.
Sometimes it’s cars driving through empty streets or winding mountain roads, rather than the reality of traffic jams, speed cameras and ‘where can I find a parking space?’ Other times it’s somebody buying a particular beer and then partying with sports stars, or a particular fragrance and getting a date with a film icon. My particular dislike is on-line gambling ads, which show grinning winners (who must be the minority) and never seem to show anyone losing. I think my problem is that customers are treated as gullible idiots.
My antidotes are sketches by Bob Newhart (‘Marketing the Wright brothers’, ‘Ben Frankin meets Madison Avenue’), and Tom Lehrer’s Christmas song.
As a student, I had a temporary job with a company supplying the perfume industry, and it was fascinating to learn that the bottle and the cardboard box were the costliest part of the physical product. Employees at our company went on trips to perfume-makers, and were allowed to fill large lemonade bottles at cost – which was pennies. By far the biggest cost of all, I learned, was advertising.
This personal viewpoint aside, I don’t see how ad revenues can grow, or indeed fail to shrink, with prosperity in decline. This isn’t just a problem for so-called “tech”, but also for – as an example – sports, largely funded by TV companies who themselves depend on ad revenues.
Excellent overview of the dysfunction of advertising/marketing, thank you Tim. And I entirely agree with your abhorrence of the dishonesty and manipulative nature of these ads, especially gambling ads, which i believe should be banned, as they are exploitative to the nth degree and rob people of their resources and dignity in short order. If only people would believe that there is no such thing as a free lunch – someone is paying somewhere.
There is a general deficit in the world understanding basic math and TPTB exploit this to manipulate the populace to their own ends. I remember my training at Xerox in the 1970s;the key takeaway being:: “You are not selling anything, Peter, you are helping people to buy!” Says it all for me.
Thanks, Don. Charles and I communicate intermittently, and he sends me his letter. I also communicated twice with Wallerstein about his decades long avoidance of overshoot. Socialism colors his writings, and as we know, a mixed economy is what most in the world want. People didn’t line up to get into the Eastern Block, and aren’t doing so now for North Korea! Plenty died trying to get out.
I turned off the television in 1961 and quit the daily newspaper about 20 years ago. I never pay attention to spectator sports except to morbidly follow trends.
At first I really had no ‘theory of avoidance’….but lately I have come to the conclusion that many people hate who they are, and seek out ‘you can be someone else’ by using an exotic perfume or becoming part of the crowd that watches certain TV programs or behaves insanely when some group of overly trained athletes engages in very high priced entertainment. One of the last great silent movies made in the US was titled The Crowd. Why do extremely rich people buy ‘sky boxes’ at exorbitantly costly sports arenas so they can watch televisions showing what is happening on a field far below them? Why do people obsess over social media?
A small example of how I see all this fakery playing out. A doctor I respect notes that the most efficient speed at which to walk is 3 miles per hour…therefore humans naturally gravitate toward 3 miles per hour…not ambling and not running. Now if we peel that back a little, we see that he is talking about people who are walking not because it is a means to an end but instead to become someone they are not…a lean, fit person like the ones they see in advertisements. Our distant ancestors did most of their walking as a means to an end. Johnny and Mary both walked 3 miles each way to the barn dance so they could meet each other. Hunters and gatherers walked to find food. Tribes migrated from winter quarters to summer pastures. Some cultures such as the Tarahumara in Mexico ran great distances just for the fun of it…but it never became a spectator sport.
Back to my doctor example. When a ‘health coach’ gives advice about exercise, they assume that one will be going to a commercial gym and exercising pointlessly in terms of doing any work, but pointedly in terms of becoming someone they are not.
I have learned a lot by watching the little people on the lawn at my food co-op. The parent takes them out of the stroller and puts them on their feet and they take off running. Why not walk at 3 miles per hour (or the little person’s equivalent)? And I suggest it is because they have a purpose. Little people need to explore the world, and they need excitement. They have an urgent need to develop their epigenetics so they can survive in a world which their digital genes laid down a million years ago could never have anticipated. And getting a rush of experience both dissipates their overflowing energy and facilitates their epigenetic maturity. Why do we old people shuffle? Because, for reasons we still don’t understand, our cells with an average age of a couple of years have nevertheless lost the ability to make all that bubbling energy that the toddlers can’t keep bottled up. But, and this is the magic part, a couple in their 30s can give birth to a perfect baby who senses that running is wonderful.
We have never had more science to guide us, but we have also never had more science which can be deployed to keep us clueless.