#163. Tales from Mount Incomprehension

THE FALSE DICHOTOMY CLINGS ON

There was more than a grain of logic in the observation by US treasury secretary Steven Mnuchin that climate activist Greta Thunberg should save her advice until “[a]fter she goes and studies economics in college”. If the authorities were to consent to her demand for the immediate cessation of the use of fossil fuels, the economy would crash and, quite apart from the misery that this would inflict on millions, we would have abandoned any capability to invest in a more sustainable way of life.

This said, taking a course in economics, as it is understood and taught conventionally, would not enhance, in the slightest, her understanding of the critical issues. Conventional economics teaches that economics is ‘the study of money’, and that energy is ‘just another input’. These claims cannot be called ‘contentious’. They are simply wrong.

Worse still, her audience at Davos – the Alpine pow-wow of the world’s political and economic high command – are almost wholly persuaded by a false interpretation which states that action on climate risks carries a “cost”, meaning that doing what she asks would be costlier than carrying on as we are, with an economy powered by oil, gas and coal.

This is a folly every bit as absolute as the argument that we must immediately cease all use of the energy sources on which the economic growth of the past two centuries has been based. Continued reliance on fossil fuels might or might not destroy the environment, but it would certainly condemn the economy to collapse.

A commonality of interests

Because I have an extensive ‘to-do’ list – and in the hope that readers might appreciate some brevity on this issue – let me be absolutely clear that neither side of the debate over the economy and the environment understands how these processes really work. Worse still, it seems that neither side wants to understand this reality.

There’s a hugely damaging false dichotomy around the assumption that there’s some kind of trade-off between our environmental and our economic best interests. If “Davos man” thinks that the economy can prosper so long as we cherry-pick the profitable bits of the environmental agenda (like carbon trading, and forcing everyone to buy a new car), and pour bucket-loads of greenwash over the rest of it, he (or she) could not be more wrong

Because literally none of the goods and services which comprise the economy could be produced without energy, it should hardly be necessary to point out that the economy is an energy system. Equally, it should be obvious that, whenever energy is accessed for our use, some of that energy is always consumed in the access process. This access component is known here as the Energy Cost of Energy (ECoE), and it forms a critical part of the equation which determines our prosperity.

The third part of this ‘trilogy of the blindingly obvious’ is that money has no intrinsic worth, and commands value only as a ‘claim’ on the products of energy. I make no apology for repeating that air-dropping cash (or any other form of money) to a person stranded in the desert, or cast adrift in a lifeboat, would bring him or her no assistance whatsoever.

Money is simply a medium of exchange, valid only when there is something for which it can be exchanged.

The complexity trap

The modern industrial economy is not only enormous by historic standards, but is extraordinarily complex as well. Scale and complexity make the modern economy high-maintenance in energy terms. Output grew rapidly in the period (roughly between 1945 and 1965) when trend ECoEs were at their historic nadir, but has struggled since then, as ECoEs have risen.

Analysis undertaken using SEEDS (the Surplus Energy Economics Data System) indicates that prosperity in the Advanced Economies (AEs) of the West ceased to grow when ECoEs hit a range between 3.5% and 5%. Less complex Emerging Market (EM) economies have greater ECoE tolerance, but they, too, start to become less prosperous once ECoEs reach levels between 8% and 10%. Both China and India have now entered this ‘growth killing ground’.

Back in the high-growth post-War decades, ECoEs were between 1% and 2%. By 2000, though, global trend ECoE had reached 4.1%, which is why the advanced West was already encountering something which bewildered economists labelled “secular stagnation”, though they were at a loss to explain why it was happening. By 2008 – when ECoE had reached 5.6% – efforts at denial based on credit adventurism had achieved nothing other than an escalation in risk which brought the credit (banking) system perilously close to the brink.

Since then, and whilst futile exercises in denial have segued into monetary adventurism, ECoE has continued its relentless rise. Last year, world trend ECoE broke through the 8% threshold at which prior growth in EM prosperity goes into reverse. This, ultimately, explains why global trade in goods is deteriorating, and why sales of everything from cars and smartphones to chips and components are sliding.

The average person in the West has been getting poorer for more than a decade, and, increasingly, he or she knows it, whatever claims to the contrary are made by decision-makers who, for the most part, still don’t understand how the economy really works.

Something very similar now looms for EM countries and their citizens – and, when evidence of EM economic deterioration becomes irrefutable, the myth of “perpetual growth” in the world economy will be exploded once and for all.

When that happens, all of the false assumptions on which a bloated financial system relies will crumble away.

Tenacious irrationality

The irony here is that, far from avoiding economy-damaging “costs”, continued reliance on fossil fuels would be a recipe for economic oblivion. The destructive upwards ratchet in ECoEs is driven by fossil fuels, which still provide four-fifths of our energy supply, and whose costs are rising exponentially now that depletion has taken over from scale and reach as the primary driver of cost. Far from imposing “costs” that will push us towards economic impoverishment, transitioning away from fossil fuels is the best way of minimising future hardship.

This means that economic considerations, when they are properly understood, support, rather than undermine, the arguments put forward by environmentalists.

But we should be equally wary of claims that renewable energy (RE) can usher in some kind of economic nirvana. The ECoEs of REs are highly unlikely ever to fall below 10%, a point far above prosperity maintenance thresholds (of 3.5-5% in the West, and 8-10% in the EMs), let alone give us a return to the ultra-low ECoEs of the post-1945 era of high growth.

Critically, transition to REs would require vast amounts of inputs whose supply relies almost entirely on the use of FFs. The idea that we can somehow “de-couple” economic activity from the use of energy, meanwhile, is utterly asinine.

The only logical conclusion is that we should indeed transition towards REs, but should not delude ourselves that doing this can spare us from deteriorating prosperity, or from other processes (such as de-complexification and de-layering) associated with it. The one-off gift of vast surplus energy from fossil sources is fading away, which, from an environmental point of view, might be just as well. What matters now is that we manage, in a pragmatic and equitable way, the transition to lower levels of energy use and gradually eroding prosperity.

It’s a disturbing thought that our economic and environmental futures are trapped in a slanging match between green fanaticism and Davos-typified cynicism. It’s a truism, of course, that people tend to believe what they want to believe – but this is a point at which the reality of energy as the critical link between prosperity and the planet needs to force its way to the fore.

If there’s cause for optimism here, it is that reality usually triumphs over wishful thinking. The only real imponderables about this are the duration of the transition to reality, and the scale of the damage that protracted delusion will inflict.

800 thoughts on “#163. Tales from Mount Incomprehension

    • Very good indeed, and I recommend it to everyone. What he has to say about the limitations of RE, and the way growth is not just a feature of the economy but a predicate, is extremely telling.

    • Point is, imho, the ‘institutes’, like WTO, IMF, $ standard, UN etc

      are defenders of a status quo that shouldn’t have been established in the first place

      Based on interests instead of nature

      Based on growth funded with debt. It’s a losing game, and we all know it.

      But we won’t act. Because we think the next shampoo bottle will be there, on the shelve.

      Until it isn’t.

  1. Teaching someone how to ride a bicycle
    I was browsing in a bookstore, and although I am still just a teenager, my eye caught Daniel Levitin’s book Successful Aging: A Neuroscientist Explores the Power and Potential of Our Lives. Among other things, Levitin says our peak year turns out be at the age of 82, on average. Which means that most of the people reading this still have enough runway to get better and better.

    But as Levitin explains the many different mechanisms that govern memory, he explains why it is so difficult to teach someone to ride a bicycle, or how to touch type while thinking about where you want each finger to go. When we learn a complicated skill, we literally forget how to make the individual movements go together to produce the desired result. Consequently, we aren’t likely to be very good teachers of a young person who does not know how to ride a bicycle or touch type.

    A couple of things occur to me in terms of the discussion on this blog:
    *Old people may remember how things used to be before fossil fuels and surplus energy were ‘too cheap to meter’, and thus are not quite so scared of the Seneca Cliff which seems to be in our future.
    *The younger one is, the more dependence there is on the scaffolding which has been erected by society using surplus energy. Thus, young people today probably cannot even understand why anyone would want to memorize a telephone number. I have frequently thought about this while watching an old movie. The plot may turn on the person’s being unable to get to a pay-telephone in the busy train station. Can a young person make any sense at all of that?

    My conclusion is that what may make sense for most people is to develop at least some skills which are relevant in a society which has much reduced surplus energy. Whether that is gardening with seeds one has saved, or going all the way back to annual ‘primitive skills’ training, or just trying to figure out how to run a business on cash flow…each person has to decide for themselves.

    Don Stewart

    • Good points. As an example of an approach, an attitude, from when things and energy were not – compared with the past – dirt cheap.

      I learnt from the book restorer (started as an apprentice 1941, and trained by Edwardians) who taught me to be careful with materials and keep most ‘waste’: ‘I do this because I’m a parsimonious kind of man’ he used to say.

      Many a time now I can complete a job just by looking into my stores of off-cuts of leather, board and paper, much of which is now 20 years old.

      That, of course, takes a little more time than just cutting in to a new skin or sheet, but it is satisfying and useful.

      I’m very grateful for the habit he taught me,as by nature – like most artists – I tend to be extravagant and impulsive.

  2. Another suggestion for Degrowth
    Get really healthy. For many of us older people, that means getting our methylation tuned up. I recently had a doctor connected with a leading hospital refuse to order a test for my homocysteine…apparently because there are no drugs or procedures connected with correcting it if it is found to be out of range. Homocysteine out of range indicates that one’s methylation cycle is not optimum. How do you find out what you can do about your methylation cycle? Sign up for this free webinar:
    The Genius of Your Genes Summit from February 10-16, 2020, free and online! Click link to register: https://buff.ly/37UQiqb

    You can either watch for free during the 24 hours following each speaker’s appearance, or you can pay a relatively modest fee and get all the episodes now and forever more as a video, or a little more for other options including transcripts. I paid a little, and got early access because I am really interested in getting my homocysteine back in range (I went to a cash payment lab and got the test). I recommend listening to Kara Fitzgerald talk about her current trial of a methylation diet and lifestyle intervention. While it is not yet published, and so she can’t reveal too many of the details, the results are quite good. The advantage of using lifestyle over drugs is that it is easy to screw things up with high doses of drugs, but hard to poison yourself with food, exercise, sleep, and meditation. Kara is a little scatterbrained, but it is worth exercising a little patience if you are old and your methylation cycle needs tuning (as she says many older people are). You will learn that the epigenetic effects of the lifestyle interventions ‘moved the markers in the direction of health’. (Epigenetic markers are methyl groups which are added or deleted from a gene to control its expression. So, for example, markers can cause on oncogene (cancer promoting) to silence and a tumor suppressor gene to become active.)

    The second talk is by Amanda Archibald, author of The Genomic Kitchen. Amanda takes a broad view of how one can best prepare food to best take advantage of the genes you have. Her advice will overlap with Kara’s, but her focus is not solely on methylation. She is also more about the details of the work in the kitchen. To get inspired, listen to her describing the village in Greece.

    Why is this important? As Surplus Energy declines, you don’t want to be dependent on doctors and hospitals and drug companies. Relative to the current scare about viruses, you will learn how to turn on the anti-viral genes, for example.

    Don Stewart
    PS. I have only watched these two talks. I am sure there are some clinkers in the line-up, so buyer beware…and I am an amateur.

  3. Tim, I first came across your Perfect Storm article a couple years ago and then found you here on this blog. I’ve enjoyed reading your articles.

    Two questions:
    1) Do you have a summary of all data inputs and the rough algorithm / methods of SEEDS? Have you considered trying to publish? Your results make sense, but I don’t have a way to evaluate your conclusions myself (e.g. declining prosperity, declining EROEI/ increasing energy cost). I’m really interested in seeing how you’ve constructed the model.

    2) Hypothetically, if we somehow achieved near “infinite” energy via, e.g., fusion (note I’m not saying we’re anywhere close to this), then how would the economy respond? In some sense, there would be sufficient resources (at least for some amount of time) for everyone to live an incredibly prosperous life–minus black swan events like pandemic disease and natural disaster?

    • Thanks, glad you enjoy it.

      On the first question, we’re at a point where conventional economic interpretations are failing (on which, I believe, the evidence is becoming overwhelming), and alternatives are much needed. So I prefer to see events valIidate my conclusions (which, I submit, seems to be happening). Also, having spent more than five years developing it, I see no logic in handing SEEDS methodologies to commercial users of failing economic methods who are (whether they know it yet or not) in need of something better. I’ve always been in favour of providing more detailed output data to those interested in them.

      Fusion theory dates back almost a century, and we still seem to be a very long way from making it work. Hypothetically, if we could make it viable, we’d still need huge material inputs to apply it, for which we would rely on existing energy technologies. If we had ‘all but free’ electricity, obviously that would be a game-changer, providing we could find ways to convert a multiplicity of applications to electric power.

    • I agree with all you say JR and SEEDS definitely has some solutions. My friend Gerry has asked Tim the same question; how are SEEDS calculated – what are the premises, to try and understand it more fully. I, however, am happy to accept Tim’s formulae because my tiny mind is not expert enough to evaluate his methods anyway. In Tim we trust!

      But my concern is that if we ever master fusion, then with virtually limitless energy supply, our global population would go exponential and cause severe disruptions to the planet. Therefore a method to limit population growth would have to be found – pronto. We are already drowning in catastrophic pollution.

    • Re #2., if exosomatic energy was inexpensive and plentiful, Homo rapacious-superstitious would increase the rate of planetary ecosystem destruction, biodiversity loss, and resource throughput. Population growth would be freed short term of bottleneck restraints. Eventually another weak link (besides energy) would topple the growth. Look up Leibig’sLaw.

    • I think I should just point out that even limitless fusion electricity wouldn’t give us limitless portable energy – it wouldn’t give us back the power-to-weight ratio of the abundant petroleum that we had in former times.

    • You are so right Don, I have never figured why they don’t push hydrogen – it seems so obvious. Clearly I don’t have enough knowledge about this tech.

    • @Austrianpeter
      Hydrogen ( H ) burns ( +O ) to produce H2O. Nice and clean.
      Hydrogen is a gas, needs to be compressed or liquified if you want to have any meaningful quantity of the stuff.
      Trouble is, Liquid Hyrdrogen is very cold ( -250degC ) and it must be kept above its critical pressure of about 13 bar, so the hardware required to do that is very cumbersome and robust, and hence heavy and usually expensive.
      There were some interesting trials using liquid Hydrogen to power aircraft, I remember reading about an experimental Russian TU-154 airliner modified.
      Sure, it was probably safer than the Hindenburg, but the LH fuel containers were probably so heavy that there was no room left for any payload.
      Kerosene is just so much simpler to work with.

    • My last comment disappeared – no idea why. Anyway I was saying: many thanks Johan and I understand the limitations of H a little better – great place this to learn new things and grateful to Tim for such a vibrant site.

  4. Unlimited energy surely comes in the category of:

    ‘Be careful what you wish for: you might get it!’

    Better by far to accept and live within limits, however harsh and frustrating.

    In my modest example above, with unlimited credit I could buy fresh materials for every job instead of delving in to the scraps box, but would that be a good thing really?

    Also, there is some fun and stimulation in juggling limited resources: just as I’ve derived great pleasure from making nice furniture from a huge pile of wood from a gutted house that a builder friend left with me 5 years ago, to save recycling fees at the local dump.

    Better for the hunter to run and plan to get his dinner, surely, than just toddle down to the supermarket.

    As for our host’s methodology, the headlines every day prove the robustness of his conclusions, all too well.

    • Thanks.

      Actually I need to think through (a) how best to apply SEEDS, (b) how best to explain how it works, and (c) how best to make its findings available.

      This seems particularly pertinent given the palpable breakdown of conventional modeling. There are numerous examples of things that would (and wouldn’t) be happening if decision-makers stopped relying on failed financial models of the economy.

    • Good link Peter – regarding the virus it’s possible less Chinese people have died in total than usual due to lockdowns resulting in far less traffic and the subsequent reduction in traffic related accidents.

    • Yes Don, it is amazing how our enthusiasm for drama carries our rationality to heights never seen before – especially now that we have such easy communications worldwide!

    • Also after the terrible events of 9/11 an analyst said that more people were killed on the roads due to planes being grounded and people not wanting to fly (above the normal amount killed in road accidents) than were killed in the attack.

      Donald

    • https://oip.wiki/Main_Page

      https://etdb.caltech.edu/

      Hi Tim, I think a combination of the Database available commercially on the flo Blockchain along with some sort of synthesis with materials passport database which could also be incorporated into the Medici Land approach to Land Title databases.

      The Database, flo metadata indexing approach keeps the intellectual property both monetizable at small to large scales

  5. Comparisons with total annual flu deaths, TB, etc are rather misconceived for this reason: those deaths are a steady drip, just business as usual, and place no great strain on health services and drug supplies; whereas a new virus with a higher complications/mortality rate can swamp local or even national health provision in a very short time-frame.

    I suspect that the Chinese lock-downs are designed to avoid that happening -above all riots by scared people at hospitals – as well as to cloud the issue as to how many exactly are dying, and the level of care they receive -politically sensitive issues everywhere but above all in China.

    So, to say that one is statistically more likely to die in a car or plane crash, or even of TB or Dengue fever may be correct, but is quite irrelevant really once the novel virus has appeared on one’s own street. A virus moreover, that might mutate dangerously.

    I almost got crushed on my bike between two cars at a blind corner the other week, but I am confident that if the worst had happened an ambulance would have arrived and a bed found for me at Addenbrookes – first time in 20 years of using that route, but a possibility I had always foreseen given a careless driver. I would have been just another routine patient.

    However, once a pandemic hits, the chance of getting an intensive care bed and the right powerful drugs would go down greatly unless one were in the first wave of patients. That’s the difference.

    • Please see my comment below, which coincided with yours.

      There are two economic strains which look particularly important. The first is in the corporate sector, where companies are already asking how they are supposed to pay taxes, or carry on paying employees, under these conditions (to which might be added ‘how are we to carry on meeting debt service obligations?’).

      This matters to Beijing because the nightmare for the CPC is large-scale urban unemployment. It would not be a surprise if steps were taken to counter possible unrest, though it’s hard to see how Beijing can give tax holidays or subsidise payrolls.

      The second strain is likely to be in capital flows – China needs continuing inward investment, and certainly doesn’t need capital outflows.

    • By the looks of it China has been treating the virus as a serious issue after downplaying it for a few days. Beijing is trying to beat the r0 with the quarantine, and most likely the problem is severe enough for the PRC to undertake such a costly economic measure. If it works, then it might be well worth the cost. I mean, those things can mutate, especially in a large population pool. We’ll see if the containement strategy succeeds soon enough (doubling time is about 3.5dy so far, so if it starts fattening then good.) If the doubling time gets shorter, then it will be time to worry.

      I doubt that such heavy handed measures would have even been possible in the US/EU at such an early stage of the epidemic.

      Anyway, the mortality/r0 combination is bad enough to potentially become a serious issue if containement fails. 3% mortality is no joke (this is spanish flu level). However, one also has to consider the large uncertainties on those values.

  6. Just to be clear about the coronavirus, it’s unlikely that even the experts can yet be sure about the seriousness of this event. We do know that responses by the Chinese authorities are going to have an adverse impact on the economy. To this extent, the massive liquidity injection exercise makes sense.

    What we can not say, though, is that, if the coronavirus hadn’t happened, everything in the Chinese economy would have been fine, and no big stimulus action by the PBOB would have been necessary.

    For a number of years now, Chinese growth has been propelled by massive borrowing and, over an extended period, we’ve noted rapid deceleration, combined with worsening financial stresses. SEEDS has long been saying, as regular readers will know, that prior growth in Chinese prosperity was nearing a point of reversal, and that financial risk has become acute.

  7. Excellent summary of the Chinese situation. A reversal in prosperity growth is going to go down very poorly with Chinese nationalists who have been rubbing their hands at China’s prospective global superpower status, and increasingly throwing their weight around regionally.

    Worth looking at the Youtube videos from France showing the stand-off between firefighters and the police: sad to see such a disintegration of the relationship between two such vital groups of public servants – and between the state and the people.

    And yet, Macron seems content to let it play out: his political maladroitness continues to astonish.

  8. An article in The Guardian seems to indicate that the ill-conceived HS2 will go ahead for essentially political, not economic, reasons: in its own way just as dismaying….

    So much needs to be done, now, with rationalising transport in the UK, not pouring funds in to that pointless line!

    • HS2 is typical of many projects, in and beyond transport, and throughout the world, based on an extrapolatory calculus which is itself based on the assumption of “perpetual growth” – ‘if demand continues to grow by X% annually, after Y number of years we’re going to need Z amount of extra capacity’.

    • For some time now I have been puzzling over the most appropriate transport policies for de-growth. Which must be to do with, at first, not increasing capacities, and then, later, reducing them. The problem is that, because the transport/development process is dynamic, it is impossible to predict the human behavioural consequences of doing anything. Years ago, in the late 1960s, when I was Head of Transportation in the city of Southampton, I persuaded the Council to manage the traffic system, so as to reduce the city centre bound car traffic. By reducing the capacity for cars. The result was, in due course, that this accelerated out of town shopping development. So obvious you might think. But we were in denial of the potential consequences of what we did. We may be right now about the big picture of de-growth, but ideas and plans for the future will have to emerge from the bottom up. As things were before the establishment became all-powerful!

    • Transport is such a huge issue that it’s almost worth a discussion to itself.

      I’m becoming more and more doubtful about EVs. Their ‘green’ credentials seem dubious, and the infrastructure cost of switch-over is huge. It’s a reasonable supposition that some would like to see motorists required to buy new vehicles. My doubts are increased by the lack of nearer-term measures, such as limiting engine sizes, and adopting a preference for hybrids.

      Above all, though, both de-growth and environmental considerations suggest that the future path should be based on public transport, with other systems (such as work patterns and housing) re-designed accordingly.

    • @Dr. Morgan
      This is not to disagree with anything you just said. But I believe the problems with transportation go deep into human behavior. One cannot observe children without sensing the euphoria when they learn to crawl, and then, very briefly, to walk holding mommy and daddy’s hand, and then very quickly to run just because it feels good. When Adrian Bejan began to explore his Constructal Theory, he identified everything with movement…we try to maximize movement, or, as he calls it, access.. I think his view has changed somewhat to also encompass other factors to be balanced. But there is no doubt in my mind that restricting people’s mobility is a serious issue.

      So…we can think of many potential solutions:
      *Extremely rapid transit to the city center
      *Autonomous self-driving vehicles to get people around a decentralized city such as Los Angeles
      *Abandoning the mega-cities in favor of villages
      And so forth. I need not enumerate all the problems with each of these.

      I am not aware of serious investigations of how we can best handle transportation, except those assuming that some sort of pixie dust will enable us to continue to move about very similar to what we do now. If that assumption is just plain wrong, I think we are in trouble.

      Don Stewart

    • I am with 100% Tim. Public transport it has to be. The age of personalised transport is coming to a close rapidly as ECoE accelerates.

      Unfortunately, the local authorities who have the power to do something about it are lacking vision and energy to implement such a change in the way we move about. It has ever been so – but let’s keep pressing the point. An article on the benefits of tram and bus (free at point of access) might enlighten some worthy souls.

    • Don, Peter:

      Transport is “at the sharp end” of how we tackle both de-growth and the environment. I would advocate a triple-track approach;

      – Redesign how cars are built and used

      – Invest in functional (rather than showpiece) public transport systems

      – Re-think issues such as work and housing

      I would start by imposing an engine size limit on all new cars (after all, 1500cc is enough for F1) and mandating all-hybrid product slates. Both could be done within five years or so (and why aren’t climate lobbyists on to this?)

      Public transport needs to be clean, safe, frequent and quick. It could also take you to places (like city centres) closed to cars. Anyone who has lived in a city centre knows that owning a car can be a real pain (parking, traffic jams, etc), so really good trams, buses and rail wouldn’t be a hard sell.

    • Agreed Tim, it all makes sense; “Necessity is definitely the mother of invention” and I am sure this will come to the fore eventually. Clearly EVs are not a mass solution and the elite know this obvious fact, except most of the 99% don’t, and are dreaming of owning one, one day, it won’t happen IMHO.

      When the next crisis is over and the NWO is in effect, when we have 50%+ unemployment and people are ‘just-managing’ on UBI (Universal Basic Income). Peace and ‘prosperity’ will abound except unlike today, most of our modern conveniences will be removed. It is all forecast in Revelations apparently, so a religious friend of mine tells me.

      But of course is is dangerous to foretell the future, so I will say that I am conjecturing.

    • “Peace and ‘prosperity’ will abound except unlike today, most of our modern conveniences will be removed. It is all forecast in Revelations apparently, so a religious friend of mine tells me.”

      Seems to me that Peter and Don (and perhaps a few others here) are overly optimistic. Sporadic violence has been increasing in most countries this century. (Pinker, Lomborg, and Rosling cherry pick)

      Tim and others accept that, like overcrowded rats, humans turn against each other under material stress. Big Brother, with facial ID and drones, etc will likely be keeping whatever order exists in urban areas. In the hinterlands I expect small clans to cooperate to defend against rovers seeking sustenance. Degrowth with population overshoot is a powder keg.

    • Yes, Stephen, it could all come to pass as you say – none of us have a crystal ball. But I hope that my faith in human nature when under stress, like during the war, will come through. It worked last time and I remember the aftermath – rationing etc. It was all very British and orderly – but perhaps not this time, although some say human nature doesn’t change.

    • “it is impossible to predict the human behavioural consequences of doing anything.”

      Barry, interesting story. When I worked for HMG doing ‘change projects’ to ‘solve problems’ it became apparent to me that problems are a bit like energy, you can’t create or destroy them, you can just transform them and move them around. It’s like ‘whack-a-mole’ where the goal is to get the mole(s) to pop up in a field you don’t have responsibility for.

      This doesn’t mean to say people can’t “solve problems”. I suggest they use my definition of a “successfully solved problem”, which I developed when mentoring junior team members:

      – A sufficiently improved perception of the original situation from the perspective of key stakeholders, where the consequences of the implemented changes are not within the key stakeholder’s boundary of concern (time, geography, or responsibility).

      QE, ZIRP 😜

    • If we recognise (as most of us here do) the inevitability of de-growth, de-complexifying and de-layering, administration is really going to have to become a lot more efficient, and, perhaps, C. Northcote Parkinson’s famous book should be made mandatory reading?

      As it happens, I’m working on a project along these lines so your thoughts are most helpful.

      I’ve always liked the story about Lord ‘Jackie’ Fisher at the Admiralty. When he was 1SL in 1905, he abolished an Admirality department responsible for issuing cutlasses. When he returned in 1915, he found that this department had reinvented itself, and had to abolish it again!

      During WW2, the Board of Trade mandated lifejackets whose design was lethal, as the cork neck support broke a person’s neck if he jumped into the sea. When, after much pressure, this was withdrawn, it was replaced with a design guaranteed to absorb fuel oil, become saturated, and sink.

      I’ve heard that, during the Second World War, a department was created to advise people how to make interesting meals from the limited ingredients available during rationing. I’ve heard that this ‘wartime emergency’ department continued to exist into the 1980s…..

    • I have to add that banning the sale of ICE and hybrid cars from sale after 2035 falls into the category of “an answer looking for a question”. The right answers, surely, are fewer and smaller cars, more public transport and the maximised use of the potential of hybrids – all of it to be done ASAP.

    • I sense that, so far, the discussion on transport has assumed a “business as usual” stance. The reality, already emerging, is quite different and, as yet, impossible to understand.

      For example. Here in the Welsh Marches (the border territory between England and Wales) , despite formal policies to the contrary, the number of new houses being built has been increasing for the last 10 years or so. (But the population has been going down!) Now, the statutory bodies seem to be coming to terms with this and their plans are now permitting more new rural housing, albeit being built to urban standards – high densities, tiny gardens, highway designs seen by highway engineers to be safe, etc. All of which is a response to urban people wanting to move out, and doing so by buying the cottages of the locals and upgrading them into the middle class designs they were used to in the suburbs. So, the children of locals, when they grow up, have to move into suburbia.

      This is an area with hardly any public transport (we have a bus three times per week), very few shops (none in my village) and pubs worth converting to dwelling. And yet, Sainsburys (supermarket) deliver the same day for orders before lunch time and we also have weekly deliveries of organic fruit and veg. Incomers seem happy!

      The big picture can be seen as a move out from the cities, by people frightened to remain there, who see country living as preferable for all sorts of reasons. Including, I assume, living amongst others suffering declining prosperity.

      This is but one aspect of the emerging and ongoing big picture. But not seen by the powers-that-be as pointing to fundamental change. (Yet another denial). Because to do so would be alien to their vested interests.

      Trams may be a stop-gap idea, but will capital funding be available in times of de-growth with the NHS in dire traits?

      Another change: in our area since we moved here 40 years ago, there has been what seems like to a huge growth of all sorts of therapists. For those fed up with the NHS.

      Then there is local government. All sorts of unexpected consequences of so-called public service decline. Mostly invisible to the casual observer. A nice one visible one round here, is the use of redundant telephone boxes for village libraries, min-art galleries and other community projects.

      All of which is changing travel behaviour.

      And then there is delayering of public/community services. Down to local communities and individuals.

      It is all part of the big picture.

      We must avoid getting trapped into seeing all kinds of transport (rail and road) as services, to replace what we do now, albeit more environmentally friendly. Will they be sustainable?

      The big picture must be an early step in thinking about the future. Also, we must think beyond now, to when de-growth is recognised for what it will become in day-to-day life.

    • @AustrianPeter,
      regarding your comment above about people pulling together, like during the war years. I doubt that that would happen again.
      Today’s society is too fragmented, and we no longer have the same community spirit. During the war years families all worked together because they knew each other and all shared common values.
      Today, society is defined not by family but by ideological groups, feminists, immigrants, homosexuals muslims, et al. These people all l walk the same streets and breathe the same air together, but that is where the commonality ends.
      There is no community. Friction is inevitable
      This is one of the more important issues to consider when we discuss de-layering and decline.

    • All very good Johan and thank you for pointing out this structure of society today. I would hope that, as herd animals all faced with a common catastrophe which threatens our very existence, we would pull together. Perhaps I have too much belief in human nature?

      Perhaps also we will now devolve into jungle warfare as a sort of Mad Max situation, especially in cities. My local village community in the depths of rural Somerset, however, is more likely to respond benevolently unlike the anonymous societies embedded in the urban sprawl.

  9. If UK were to turn…all cars into electric, we would need twice world annual cobalt & half of annual copper production.”
    –Richard Herrington, head of earth sciences at London’s National History Museum

    Tweeted by Art Berman….Don Stewart

    • Hadn’t you heard Don? The EVs are for the elite only – the rest of us will be priced out and ICE will be banned. Only place to GO will be public transport. That’s the plan.

    • Dutch gov is going to subsidize EV’s. €4000 for a new one, €2000 second hand.

      So there is it again, we cannot afford it, so we subsidize it.

      Up to 1300% debt/gdp ratio’s.

  10. I am seriously considering buying a velomobile for my daily commute. But the price is quite high at €5000.
    https://www.podbike.com/en/

    These vehicles seem to offer the same utility as a car under urban conditions, but using a tiny fraction of the energy. Some are electrically assisted, but the battery required for models that I have seen appears to be just a few hundred Wh. That is about 1% the size of a Tesla battery and small enough to remove from the vehicle for recharging.

    • Interesting, and thanks for the link.

      At a less ambitious scale, I’ve always liked the Smart, ever since I had one as a courtesy car from Merc. What you can’t know until you experience one is how much sheer fun they are, quite apart from all the practical benefits such as high mpg, low emissions, easy parking, very low depreciation, and so on. Smart also resolved the safety issue, which might be tricky for velomobiles.

    • Smart car or velomobile in a crash with a SUV is not a pretty thought.
      A start would be banning all large vehicles from parts of the city and slowly increasing that size every year.

    • I think it’s only fair to say than Smart have tackled this pretty well, and obtained the car’s regulatory approval in Germany, which is pretty tough.

      Behind its plastic outer panels – themselves rather advanced – the Smart has a very strong central frame, curved at the bottom, boat-shaped in section, so that the force of a shunt lifts it upwards. Each wheel assembly is, as I understand it, a self-contained crumple-zone, and the same applies to other parts of the structure.

      At this rate I’m going to sound like a sales executive for Smart! But I really do believe that this sort of small (and clever) design, coupled with hybrid technology, is the way to go whilst overall car use declines.

      Finally, it’s interesting to note that the length and width of the Smart are the same as the original Mini, illustrating quite how far cars have grown over time.

    • I must admit that I simply don’t understand the appeal of SUVs. They make perfect sense for a farmer or similar, except that surely he or she would buy a “real” off-road vehicle, like a Land Rover or a Jeep, not one of the pseudo-4x4s that seem to account for most SUV sales. It doesn’t help, for me, that most of them are pretty ugly.

      This said, my own taste runs to the “small, fast and stylish”, rather than the clunky, thirsty and hard-to-park.

      Neither do I understand why parking within, say, 250 metres of a school entrance isn’t prohibited – it is, surely, polluting as well as dangerous?

    • I think it’s the psychology of driving in a bigger ‘safer’ car which drives people to buy them.

      They feel safer from the World around them they they feel – quite rightly – has more threat from crime.

    • Don – suspect it is more than simple psychology of a big car, many push and pull factors have evolved to create the complex web of interdependencies that we’ve grown up with as a ‘normal’ and desirable economy. Not exhaustive due to space, but think it through – companies need to grow, their share price is profit or profitability dependent, and governments need GDP. In a debt driven economy, big ticket items are a natural focus (for example houses, shopping malls, cars, caravans & motorhomes, university fees, and coming up – healthcare). Taking the SUV example, manufacturers have saturated the market with current model(s) but they need to maintain sales just to stand still. To get growth, they need to sell more units or get a higher value per unit, or takeover competitor(s) to reduce costs. If the market is saturated with existing car owners, the company has to to create a perceived need for example ‘improved family safety’ for which their product (SUV), then satisfies demand with higher price thus justified We’ve all seen the emotive adverts, and from threads past it seems many of us here can see through the pointless puff. Finance enables dealers to do their bit, and tempting credit deals can also help create demand where marketing of the SUV unit itself might have failed. The consumer is persuaded to ditch a (possibly) perfectly good car and trade up, and even better every member of the driving-age family can own a car on credit. Win for manufacturers, dealers, finance houses, banks, government, advertising & PR industry, etc..

      Now we are seeing the effects of EROEI – as so wonderfully articulated by Dr Morgan and SEEDS (amongst others) – becoming more obvious, prosperity deteriorating (outside the FIRE sector), meaning less disposable income to spend on big ticket items. Still with SUV’s, how do manufacturers, dealers, finance & government respond to drive the growth needed to increase their profitability and sustain the debt mountain being created in the economy? Government subsidises car industry to help maintain market, but market is under threat not just because of saturation, but because increasingly sweet credit deals have contributed to dangerously high levels of consumer debt and saturated the market with high value cars – the answer to growing the company cannot necessarily be higher value cars. The green lobby are pressing (laudably but naively) for EV’s and both government and manufacturers see the answer to their need for an innovation to drive sales (by extension profits and GDP). Not lower value cars necessarily – just replace the whole stock. Government launches cynical campaign about dangers of air pollution from ICE cars that they didn’t care two hoots about before (and I’ll bet still don’t In private), manufacturers float greenwash marketing to show EV’s solve that publicised danger, government subsidises plant & machinery & infrastructure to enable hoped-for growth produced by the wholesale replacement of ICE stock and all that building work associated with infrastructure to charge the EV’s, everyone along the distribution channel and associated services buys into the vision. Relief! Directors and shareholders of manufacturers and dealers secure for the next short term, ditto finance houses and banks, advertising & PR, and so on. Everyone writes business plans showing growth and profits, and target all resources into making sure it happens as intended. Government awaits boosted GDP, companies have ticked future profitability and potential share price boxes, no-one cares for environmental consequences. Leaving aside all the other problems with EV, once we’ve all got EV’s the question comes round again for all parties involved – where will they get growth from then??

      In short Don, I think the psychology that makes people buy SUV’s (or any other vehicle companies want to make for their next cash cow) is not necessarily spontaneous, there are a lot of hidden and vested interests behind it.

    • I agree that psychology frequently drives the ship. Here is a note I sent to my son just a few minutes ago:

      “The first article provides insights into the Australian prime ministers seemingly irrational responses to the fires:
      https://reneweconomy.com.au/morrisons-refusal-to-move-on-climate-and-the-prosperity-doctrine-99530/

      The second article exposes the equally ‘religious’ beliefs of the Green New Deal:
      https://www.resilience.org/stories/2020-02-03/energy-and-the-green-new-deal/

      From my perspective, we have an ecological, scientific, engineering problem which has to be dealt with in terms of human values. As in…are we at all interested in leaving a habitable planet for our grandchildren?

      The Green New Deal and the Australian Prime Minister are both engaged in what an old professor of mine called Magical Thinking…if we fervently wish it to be so, then it must be so!”

      The only solution that comes to my mind is rapid and painful feedback when we make bad decisions. Governments (and corporations) promise that it is all just fun and games…they have our back. ‘They have our back’ if probably the last and biggest delusion.

      Don Stewart

    • The ultimate in programming consumers to buy something they don’t really need.

      I’m interested in the impact electric scooters especially when they can get battery density up by a factor of 3 to 5 times.

      The UK Government is looking into allowing them – perhaps in bike lanes – and I would seriously consider one if I still had to commute.

  11. Pingback: The place Did The Prosperity Go? - MikesLists.com

  12. I would agree, and the psychological safety aspect particularly applies to women and above all mothers: with men, a big expensive car is still ego-projection and a marker of status in the social hierarchy.

    I’m not sure what this says about me and my rusty old bike…..

    • I suggest you coat your bike in rust converter and then paint it bright orange.

      It’ll really say that you’ve arrived in life (after peddling of course)

    • Yes, hierarchy is “in the genes” as mate selection (when male force or planned marriage isn’t the mechanism) is usually done by women. Seeking a protector and provider for self and offspring was selected over many millennia. Note that most religions are patriarchal. The last century has seen cultural modifications with more women working and independent in some countries. But the vestiges are still there with security, prestige, and material well-being more desired than the alternatives.

  13. Cruising in velomobiles or dinky cars is not going to go down well with the drug dealers here, either: pretty hard to look menacing and cool in one of those. Tinted windows wouldn’t quite do it….

    If the police stopped and searched those types on sight – always driving about during the day with no obvious employment – we could clean up the country pretty quickly.

  14. Well, it’s been good to link up with your blog, Tim. For some unknown reason I ceased getting them maybe a year ago until today when this current batch appeared in my in-box’ I certainly didn’t choose to drop out.

    Anyway I have used my time to go much more deeply into economics, because I see you are still wedded to the mainstream views, which with the advent of AOC [Alexandria Ocasio-Cortez] into the US Congress with her green new deal and advice to study MMT to go with it has galvanised action over MMT [Modern Monetary Theory] It is now becoming mainstream but already it has chopped down much of the stupidity of the mainstream edifice. It’s not falling over just yet, but its demise would free up study of ReaL economics instead of the fiction that passes for it today.
    Unfortunately you don’t yet get it because some of your comments give you away, and the consequences for your arguments suffer. Tax is the big flaw.

    I’ll illustrate what I mean. Monetary Sovereign governments are monopoly issuers of the national currency, because the Constitution says so!. Consequences are that the government does not rely on Taxes as funding [It is impossible !!] Taxes are no limit to spending, real available resources are the limit, as you clearly understand. So things like pensions will all have to be absorbed by the federal government who can keep paying them until the end game ensues.

    Government spending is made possible when Congress issues appropriations bills to the house. The Fed just marks up the new numbers into reserve accounts the creditor has at the Fed e voila! currency is created. It goes into commercial banks accounts [never into the Fed itself] free of liability as new money. [A creator of currency cannot borrow or pay itself anything unless it has previously been spent into the non government sector]

    The mainstream has its “budget” backwards, a major reason why it cannot spend taxes. A normal budget will have a cost side opposed to a revenue side. and they cancel out to zero tax, at years’ end. You cannot have either side intruding on the other side. So Taxes are lost to the economy, Secondly spending has to precede taxing.Obviously you have to already have money to pay it. These are howlers the mainstream tries to hide. Another is the “Government debt”.It is a straight up con. Congress says the debt must match the budget deficit. It is an arbitrary sum supposedly raised to settle the national debt. But the act of money creation has settled the debt already. So not only is it useless The Fed has no need for it, so it’s just corporate assets called debt because they are stored in the Fed. A reverse book keeping act will refund the money. None of those silly statements about who owns it and a future debt mountain burden for our children.
    These are ALL cast iron facts. No assumptions necessary
    Right now there is an enormous fiscal space available to get the economy out of trouble. It will put off the evil day of reckoning if people can act more sensibly now.

    Your conclusions are good, Tim. Just catch up with economics!

    • You cannot stop malevolent actors fiddling with the truth. You just have to learn to recognise it and not fall for it. All I was doing was showing up the falsities that underpin the mainstream economic spin. Your article seems aware of it too but I have yet to digest it.

    • My article was from a good friend who I believe understands, or as he says, ‘gets it’. I felt you did the same and was asking for your assessment. Look forward to your comment, thanks John.

    • @JohnD,
      What happens when the Chinese demand payment for their widgets in delivered solid gold bars, and the Saudi’s want the same for their oil, and the Germans for their cars ?
      What happens when nobody wants Federal Noddyland Dollars, and they only circulate within the USA and not worldwide ?

    • Not one word of your comment is valid. The Chinese put their spare money into the Fed[they like dollars and that won’t change] Seriously you need to reread what I wrote.Don’t just scan it as all you do is add to your preconceptions, which are false. What I wrote was a break down of the nostrums used by the mainstream to get us to act against our own interests. So they have the budget backwards, and they want you to believe the national debt is a problem our children will face. All totally false. Your comment is a total non sequitur. Try harder!!!

    • Quote : “Not one word of your comment is valid.”

      Why do I get that feeling that I am talking to the Jehovas Witnesses or some other cult that claims everybody ( except for them of course ) is wrong ?

    • You are well on the way to comprehension just through reading Tim’s work. Just keep trying It’s not impossible, but it’s uphill against the tide of misinformation that afflicts us every moment. Vested interests want us to just accept their lies. We have to fight that.

    • After an NYU Philosophy degree and grad studies, 2.5 decades in financial derivatives, on the first panel on currency options at the NY Fed, retirement at 45, 3 decades in alt. economics incl. ecological and biophysical, I embrace uncertainty and imperfect comprehension of Homo superstitious-hierarch. From where doth your certainty derive?

    • My qualifications are not important, GIGO applies to Nobel Prize winners too [esp in economics!!!] My sources are the Constitution, Currency laws, Accounting identities etc, all are neglected by the mainstream nonsense. If that’s what you learnt at Uni I can only
      pity you. So much to unlearn! I also correspond with and am friends with the founders of MMT; Warren Mosler, Bill Mitchell, Steven Hail, Phil Lamb, – all here in Oz, and many correspondents on the internet overseas. I can recommend them.

    • Watch MMT potentially destroy the relative value of some currencies, and then the “creators” will ask: “why?” Then you and your theorists can try to explain their way out of a nonsense position. Fiat is based upon confidence in present value as an exchange vehicle for other currencies, services, and stuff. MMT is not magic! It cannot, by itself, create confidence, not stop devaluations.

      Funny that you pity someone who earned a % of profits in a non-victim game (only the wealthy play it), left at 45 for organic gardening and study, has done pro-bono sustainability work for 30 years, is the only Yank member of the Canadian Association for the Club of Rome, has decent health and a loving family. Hope you are as fortunate!

  15. John tell me then – with all your up to date knowledge – how do the World economies make their interest rates positive again (after inflation) without bankrupting or hurting current businesses and hone owners etc.

    • Well, the only way forward is up. Up to higher interest rates. Monetary policy is done with its ability to massage the economy. It’s down to Fiscal policy now. And the answer is SPENDING.[deficit spending] More money in the system will destroy austerity and get the economy moving again. subject to all the provisos Tim describes here. We may need a debt Jubilee to reset the clock back 25 years. See Steve Keen on that.

    • Well thank you for your reply but as Tim has pointed out numerous times – savings and interest payments are claims on future production.

      If there’s not enough energy left to meet these claims then they cannot be met – in the same way that the huge mountain if World debt can never be paid back – so it keeps on rolling becoming a future generations problem.

      Tim summed it all up by correctly by pointing out that we’re stealing from the future.

    • First of all, welcome back, John.

      To clarify, I have nothing against MMT as such. My position is that NO monetary theory holds the answers, because the economy is an energy system, not a financial one, and money plays a secondary role.

      Looking at SEEDS data, back in the 1960s ECoEs were not much above 1%. The economy really was growing. In some years, world oil consumption increased by as much as 8%. Growth in the ownership of everything from cars to domestic appliances was rapid. America put a man on the Moon. I’m sure there were problems, but that was a low-ECoE economy in which ‘anything seemed possible’.

      There’s no way back to those energy-economic conditions. I believe that the ECoEs of renewables will flatten out at somewhere between 10% and 11%. FF ECoEs will keep rising. Overall ECoEs will do the same, their rate of increase blunted, at best, by REs.

      Monetary conditions reflect these realities. Since the late ’90s, the authorities have been trying one financial ‘fix’ after another. First we had ‘credit adventurism’. Since 2008, we’ve had ‘monetary adventurism’. These haven’t worked, because they can’t.

      Moreover, they are distractions. The public are offered one excuse after another. The factors in play here are energy supply, ECoE and population numbers.

    • 2nd go .The last one said you site had no information, Weird. Anyway it was lost’ I started by saying that I agree with youTim about the energy Importance -That we are part of the energy equation and not above it. B

    • Tim, I’ve had several goes at answering your reply. You can see a couple of fragments, due to the computer mucking up.In my reply I posted to Don which did manage to send I used an analogy comparing standard economics with classical biology. The idea was to demonstrate just how backward is the mainstream ideology compared to MMT, and all MMT is is the up to date version, based not on descriptions of human behaviour but the cast iron accountancy conventions and the Constitution which give money creation a monopoly of the national government. So just as your “Seeds” is a statistical description of real resource use we can use it to pose questions and answers about the future etc. and how our superior understanding of economics will play out with them. It will not be what the mainstream predicts, not at all. I think you have to take MMT on board because your ideas will change in light of the different data. Not just you of course, most of us. The ECoE’s will remain. The Monetary/Credit “adventurism” will not. The Monetary system isa vital part of the energy system as it relates one way or another to the understanding of economics. It can be described as a Copernican revolution as well as the biological one.

    • I’m not sure, John, whether MMT is viewed as (a) an explanation for monetary processes, or (b) a solution to the issues that confront us. Of course, it’s the latter that I/we are really concentrating on.

      This poses the question of what help MMT could provide where forward scenarios are concerned. i think that, broadly, there are two such scenarios.

      The ‘benign’ scenario is gradual (though unprecedented) deteriorating in prosperity. This is where SEEDS is. In overview, it states that the world’s average person will, compared with 2018, be 10% poorer by 2030, and 20% poorer by 2040. Even under this ‘benign’ scenario, we should expect equity and other asset markets to slump, debt defaults to cascade, and governments to be replaced by parties advocating drastic redistribution.

      The malign version states that deterioration in prosperity accelerates, and becomes non-linear. Some activities collapse because of the failure of others on which they depend, with ‘critical mass’ being lost just as ‘utilization rate’ slump creates chaos. Under this type of situation, nothing resembling the current financial system can survive.

      My problem is seeing how MMT can offer answers even to the former scenario, let alone the latter.

  16. The UK government today decrees that new vehicles will be electric only (no hybrids) by 2035 – brought forward by 5 years. I thought Dominic Cummings was smart?

    If the market for diesel shrinks to the farming, producing and transport sectors won’t it get very expensive and surely consumer goods RPI will go through the roof?

    I predict a disaster here. I will be buying a cheap ICE soon!

    • Well, Mr Cummings’ job, as I understand it, is to modernise the workings of government, rather than set policy.

      All along I’ve had doubts about the wisdom of EVs, and my doubts are strengthening all the time.

      They might make sense if they enabled us to use less fossil fuels, i.e. could be powered by renewables. But there is no evidence that this is feasible, so the likelihood is that oil not used in cars would have to be used in power stations instead.

      Both the IEA and U.S. EIA see us using more oil, a lot more gas, and the same amount of coal in 2040 as we do now. Renewables are set to grow more slowly than total electricity demand. All that EVs might achieve, then, is transferring Co2 and pollution from roads to power stations. The economics of renewables as add-ons (backed up by FFs and nuclear) are quite different from the economics of stand-alone renewables. Moreover, both capacity additions and investment have stalled.

      EVs need a whole new infrastructure, with correspondingly huge use of energy and other materials to create it.

      The push for EVs might be virtue signalling, or throwing a lifebelt to the car industry.

      Of course, the context here is a continued belief in perpetual growth,

    • Tim: You mention the “continued belief in perpetual growth”. Maybe the denial that this is so is entirely because of the vested interests of the establishment, car manufacturers and car owners. Do you think this can ever change?

    • I think we have to recognise, first, that the ‘consensus’ continues to adhere to the view that (a) the economy is a financial system, (b) energy is ‘just another input’, and (c) everything pointing in other directions is just a consequence of ‘one off events’.

      The debate about the environment is giving a higher profile to energy issues, but we’ll have to wait until deteriorating prosperity becomes wholly undeniable before ‘economics is the study of money’ goes the same way as ‘the Earth is Flat’.

      There are, of course, vested interests involved. Carbon trading and EVs are examples of ‘cherry picking’ the environmental agenda. Plans to make aviation ‘carbon neutral’ – ho hum – by planting trees are a striking example.

      The full implications of de-growth would terrify ‘the powers that be’ if they became aware of them. We’re only starting, here, to explore what some of those implications are.

    • The BBC news has just mentioned “the culture of denial”. In relation to the Breast Surgeon Inquiry. I sense this is new-think. Good!!!

    • Yes, Jonathan we will be able to pick up an ICE for very cheap, but will the Environment-nazi’s let us run them ?
      Where will we get the petrol from ?
      On a less sarcastic note, I think that as we get closer to the planned date, it will get pushed out, and the idea eventually dropped as reality sinks in.

  17. It might be worth adding here that SEEDS has been saying for some time that growth in prosperity per capita in both India and China will end by 2021.

    Of course this, and the deterioration in global prosperity, will doubtless be passed off for a number of years as the results of one-off events.

    Hope may or may not “spring eternal”, but denial certainly does.

  18. On the Honest John website the Smart ForFour has a real World average of 44.7 with a range from 34 to 54 based on drivers submissions.

    34 bring urban and 54 motorway.

    If you’re after some incredible economy the Suzuki swift 1.0 Booster jet gets 47 -73 in the real World.

    This is what the planet needs

  19. Dr Kevin
    Very prescient remarks above!

    In a similar way, “profits” only exist because externalities are forced onto others by the legal system’s separation of mine and thine. Viewed systematically and wholistically, there are no profits, only wasted resources.

    Unfortunately human property rights and obligations are expressions of human power relationships driven by status seeking (no, they are not founded on “natural law”) completely divorced from the earth’s ecosystems, so the human pinnacle is multiple billionaires living in tiny luxury bubbles within a toxic wasteland.

    • “Natural Law” seems to me to be an anthropogenic invention, like deities. Status and hierarchy, however, are behavioral characteristics of social mammals. Mate selection in humans, when not by male force or arranged marriage, has been dominated by female choice. Over many millennia, selection of protector/provider males by females reinforced the status of those abilities. What began as hunters and security givers slowly became warlords. lords of the manor, clever manipulators and traders, star athletes, and other financial winners. To expect that to change is unrealistic in my view.

  20. Tim’s blog is beginning to attract wide attention.
    https://www.legalreader.com/where-did-the-prosperity-go/

    Having read this blog for a few years now, I do find it hard understand why anyone would expect the economy to follow different physical laws to any other machine on the planet. Economists appear to view it as a metaphysical creation, forgetting that it is really a collection of processes that manipulate matter for human benefit. This is the peril of having too few real scientists and engineers within the halls of power.

    • Economics suffers from: 1/ Having originated in a age when ecological and scientific knowledge was practically zero; 2/ contamination by political and moral and social narratives; and 3/ Ivory Tower distortions and unreality – academics who have never been near any of the physical processes that maintain our civilization.

      So, one false premise tends to be built on another – rather like the old theologies.

      Equally, once in government, engineers and scientists would -like ambitious professional career economists – be subject to huge political pressures and not free to be utterly rational or open in their statements and policy recommendations. The little boy who pointed out that the emperor was naked was hanged, wasn’t he? 🙂

      See Kevin’s earlier comments on the realities of consultative government work!

  21. @Dr. Morgan
    ‘welcome back John’
    I’d like to take some of your suggestions that fossil fuels will have to be subsidized and try to glean some ideas about what that scenario might involve. First, energy production can only be ‘subsidized’ by energy. Money can’t produce energy directly. What money can do is direct the 85 percent of the energy from the fossils which is not used directly to produce the fossil energy away from ordinary consumption and into the production of yet more of the remaining fossil energy. The situation is very much like wartime rationing when production was directed toward the military rather than to the ‘market equilibrium’. So government would have to abandon ‘guns AND butter’ for ‘more guns, LESS butter’. Second, government would need to prioritize and distinguish between needs and wants and bad habits…between green salads for lunch with clean drinking water, keeping the house at 74F all winter and 78F in the summer, and Las Vegas.

    Prioritization will be either impossible or very difficult…because of the tangled global supply chains. People who looked at the rationing option around 2005 quickly concluded that it couldn’t be done. Perhaps the only thing governments can do at this point is to collapse the asset bubbles and engage in debt jubilees and then let the market sort it out. A very painful and uncertain process.

    Don Stewart

    • I’ll repeat here a failed attempt to send a response yesterday and another this morning. It’s about economics as it is generally [mis] understood in the mainstream.
      We can describe the mainstream in these terms, roughly quoted here;
      Modern economics [the mainstream] not MMT, resembles Pre-Darwinian biology. Before Darwin, biologists believed that life on Earth was created by God. This seductive idea stunted scientific progress for hundreds of years until Darwin’s dangerous idea, evolution by natural selection, gave meaning to the evidence all around us.

      MMT does not reinvent the wheel, The wheel already exists.

    • This post adds no detail to your prior ones, and explains nothing. If money supply grows excessively via direct government issue and/or via borrowing, the risks include loss of confidence in the currency, and forced devaluation by market pressure. MMT cannot control that. Human perceptions do.
      Meanwhile fiat is nothing but power to access services and stuff. It has zero inherent value. Ditto credit.

  22. @steve kurtz
    Yes agreed “natural law” is a sanctification of human power relations, as is religion and even economists’ reification and deification of “the market.”
    Hiding the ball with metaphysical claptrap.

  23. Back in the 1970s, a significant amount of work went into developing high conversion ratio light water reactors.
    https://www.sciencedirect.com/science/article/pii/0306454975900894
    https://www.osti.gov/biblio/5626620-feasibility-analysis-high-conversion-ratio-pressurized-water-reactor-core-designs

    This was in anticipation of widespread fuel reprocessing and a large increase in the use of nuclear power leading to imminent shortfalls in uranium supply. A high conversion ratio PWR is technically much easier to achieve than a fully developed sodium cooled breeder reactor, as it can make use of existing light water reactor technology with some modifications. The first link above suggests that a high fuel fraction core could achieve a conversion factor of 0.9. That implies that a fuel cycle based on high conversion ratio reactors could ultimately reduce uranium consumption per unit energy by 90%. This would make seawater derived uranium far more affordable.

    Two other important innovations since the 1970s, are the development of high burnup fuels, and the development of uranium nitride based fuels, which have twice the heavy metal density of oxide based fuels. Both developments improve the conversion ratio. Building larger reactor cores would also benefit conversion ratio, as larger cores have better neutron economy, as surface area to volume ratio is lower.

    If political support were available, high conversion LWRs could be built quite rapidly, as very little new technology is needed to make this concept work. Given the reduced uranium demand per unit energy and the availability of limitless uranium in seawater; reactors of this type could meet a large proportion of global energy requirements for a long time into the future. With a closed fuel cycle, the long-lived nuclear waste problem would be greatly reduced.

    • Very clever to be sure but does it scale? What is the ECoE (not a guessed affordability) of extracting uranium from seawater? If there is any thought given to that, I’d love to see the link. How do technological improvements improve the ECoE of the system, if at all?

    • I have reproduced this from the comments section of the previous article.
      ____________________________________________________________________
      This link tells us rather more.
      https://newatlas.com/nuclear-uranium-seawater-fibers/55033/

      1kg of treated acrylic fibres, will yield 5grams of uranium per month. That’s 60 grams per year. A 1000MWe nuclear powerplant, requires 6 grams of natural uranium for 1 second of operation. So 60 grams would yield 10GJ of electric power in a nuclear reactor.

      According to wiki, the embodied energy of vinyl plastics is about 70MJ/kg. The fibres have been doped, so let’s assume an embodied energy of 100MJ/kg. So in their first year they would return 100x their own embodied energy in nuclear electricity. How long would they last in the water? Wave action would fray them in the end and uv in sunlight would make them brittle. If they have similar resistance to polyethylene, it should be possible to get a few years out of them.
      ___________________________________________________________________

      If the fibres last a few years in sea water, then the ECoE of water mining from sea water should be less than 1% for the fuel harvesting process. If high conversion ratio reactors are deployed, ECoE should be reduced by a factor of 5-10.

      However, there will be some embodied energy in reprocessing equipment, which cannot be avoided in a conversion cycle. Also, high conversion ratio cores will have lower power density. This will tend to drive up energy cost, by requiring a larger core and larger pressure vessel. Other systems shouldn’t be affected.

  24. Popping Bubbles
    Setting aside all the notions that nuclear is going to save us, and if we accept Dr. Morgan’s conclusion that ECoE is inevitably going to rise or plateau at levels inconsistent with our current economic and social environment….

    Then why do I suggest that the wealth bubble needs to be popped? The short answer is suggested by the state of the oil business, particularly in the US. We observe that despite both Libya and Iran being virtually out of action, oil prices in the US have been falling. And despite desperate measures to drive interest rates even lower, it is unlikely that shale (which is THE story in the US) will ever make money. Meanwhile, the stock market goes ever higher.

    I suggest that pouring money into the pockets of the already rich does very little to help 90 percent of the US population. We can see from other published data that ‘real’ GDP requires a relatively constant amount of energy consumption, and we are aware that the US government manipulates inflation data in ways which disadvantage the 90 percent (e.g., by suppressing social welfare payments). The understatement of inflation leads to erroneous conclusions about the relationship between energy consumption and real GDP…real GDP has actually been falling, so the amount of energy required to produce real growth is increasing…not stable. Dr. Morgan accepts the official GDP numbers, but gets at the same issue by developing metrics which relate ECoE to growth.

    My suggestion is that what is necessary in order to maintain a functioning economy is to either make more energy available to a debt-free population, or else to reduce energy needs by reworking society and the economy, or both. Simply inflating the stock market does neither. If bubbles are popped and debts are written down, then the 90 percent can get about readjusting their lives to the reality of higher energy costs. Such readjustments can be thought of as rejuvenating Main Street and relearning frugality and cash flow. Messy and fraught with danger, but is there any alternative?

    For one example from Australia of reducing the amount of energy required for a flourishing family, see this from David Holmgren:
    “Abdallah House (RetroSuburbia case study) produced over half a tonne of food last year, with a total yield of 498kg of fruit and vegetables along with 805 eggs collected, which was a significant improvement on their harvest from 2017 (308kg +718 eggs). This was harvested from a garden farming area of 387m² (land size, less roof area) in a year that they recorded 344.5 mm of rain, 41% lower than the long term average. This equates to a fruit/veg yield of 1.29kg/m².

    Richard Telford from Abdallah House said his whole family was involved in the recording of the yield, which has required some discipline. You can see the full data on the Abdallah House Case Study page.

    Richard says he’d like to encourage other RetroSuburbanites to have a go at recording yields. “Together we can show a better way to live.”

    Don Stewart
    PS. For the Americans who can’t comprehend metric, they have a little less than an acre.

  25. I’ll certainly read that, but briefly, what are the external inputs ie fertilizers, and so on?

    I also suspect that as we decline, governments will reach for the obvious traditional levers, one of which is greatly increased property taxes. Or even outlaw such home production in order to support the industrial farming complex -you can bet that Big-Ag won’t like too much self-sufficiency!

    They might also very well make capture of rain on one’s property illegal. Nationalisation of property in a revolutionary scenario (the ‘Tagio Uprising’? ) is also plausible.

    In other words, people will be prevented from helping themselves and hog-tied by the failing system and the irrationalities and corruption which arise from the situation.

    The history of civilisations in decline is generally that the elites grind everyone else into the ground while attempting to maintain an ultimately unviable status quo. It’s a sorry record. Even the most benevolent attempts at adaptation go wrong.

    Real world example. A few years ago, when walking the dog, I met a woman from Eastern Europe who was out and about enjoying our countryside here: she knew how to run a farm, but due to the corruption of the post-Soviet mafia government of her country, the land permits were sewn up by the local boss for his private profit and the benefit of his cronies. He lived very well on the profits from this. She couldn’t pay the fees and bribes, so came to Britain to do office work and save the cash to pay back home. Sad tale. The bad literally driving out the good…..

    • @Xabier
      If you are asking me about their external inputs? I haven’t studied the case, but the Retro-Suburbia concept is heavily into rainwater harvesting, using grey water from the house, recycling everything, and picking up urban detritus which can make compost facilitated by chickens and rabbits and worms. I doubt they are using any commercial fertilizers or pesticides or herbicides. They are probably using things like drip tapes and perhaps some season extension fabrics. The house, being a retrofit of a 1950s Australian bungalow, will probably not be as energy efficient as David’s house, which was built from scratch decades later and with an eye to an energy crisis. All in all, they are probably at a small fraction of the average Australian.

      Don Stewart
      PS. Have you seen the recycling system involving rabbit cages on top of worm bins? An excellent way to turn garden waste into compost efficiently and rapidly.

    • “The history of civilisations in decline is generally that the elites grind everyone else into the ground while attempting to maintain an ultimately unviable status quo. It’s a sorry record. Even the most benevolent attempts at adaptation go wrong.”

      Xabier, some interesting research related to this topic here, you’ve probably seen it already:

      https://www.sciencedirect.com/science/article/pii/S0921800914000615

      Two important points, from the abstract, I have added some EMPHASIS and [context]:

      “A sustainable steady state is shown to be possible in different types of societies [if elites and commoners can collaborate].”

      “But over-exploitation of EITHER Labor [by the elites] OR Nature [by all actors] results in a societal collapse.”

      The idea of modelling elites as a predator is contentious, but provides interesting insights.

    • @drkevinoneill
      Modeling predators and prey is the best way to think about dynamics, in many cases…in my opinion. Ray Cronise, along with Julieanna Hever, wrote a book The Healthspan Solution. In it, he cautions people not to be bitter about the behavior of corporations. He says, and I paraphrase, “the job of the corporations is to take your money any way they can, and your job is to defend yourself”. Their book, obviously, is about defending oneself. I suggest that the attitude that Cronise suggests, and the modeling of predator/ prey relationships, is necessary for sanity.

      Somebody, I forget who, recently said that the most important education a child can get is how to defend itself in the modern world….in the midst of unprecedented lures and noises and social pressures to conform.

      Don Stewart

  26. Hi Tim,

    I wanted to ask your opinion on the last few months German manufacturing figures. Are they a nothing to see here blip that will soon return to trend or signs of things to come?

    The latest SEEDS data is I’m sure interesting but the state of the German economy and in particular it’s manufacturing sector probably has as much to say about the international situation as the domestic economy.

    • The economic performance of Germany has been markedly different from other EA countries. SEEDS shows that German prosperity per capita only peaked in 2018, long after the same thing happened in all other EA countries. But trend growth – adjusted for credit effects – has slowed markedly, from 2.4% in 2017 to just 0.2% (provisional) in 2019. Meanwhile, ECoE has, of course, been rising.

      My interpretation is that Germany has been a long-term beneficiary of the Euro system, but that this benefit has started fading away because of weakness in other EA economies.

      So sharp deterioration in headline numbers (GDP growth, industrial output, etc) has been wholly unsurprising.

      Finally, Germany is owed close to EUR $1tn through the Target2 clearing system, essentially by Italy and Spain.

    • Tim,

      Regarding Target 2, is this real actual money that Germany could spend or is it central bank electronic money that doesn’t matter and is there any chance/ policy for it to be repaid or at least come more in line with a less shocking balance. Why, one wonders aren’t the Germans bothered by the imbalance?

    • It’s real money. If, say, a Spaniard buys a Mercedes, the payment goes from Spain to Germany, just as the car goes the other way. Target2 is the clearing system for such payments.

      Some Germans (notably some academics) are indeed concerned about this! But this concern isn’t fashionable, neither is Target2 well known to the general public, or even to many financial experts.

    • Wait a minute, TARGET 2 isn’t real money.

      Sorry doc…

      Just in my opinion, but, Target 2 is just another example of borrowing from a de-growing future, i.e. ; a shuffle within the flaws of the Eurozone, compensation for the uncompetitiveness of the south, knowing that it will never be repaid, at least, not in value. In currency remains to be seen.

      This is not about ‘money’, ladies and gents. It’s about interests. Like keeping up the flow of stuff, politics, mindset of the plebes, control.

      The status quo that keeps us from smashing skulls.

      Until reality sets in, as soon as currencies lose their value.

      Learn the difference between money and currency, and what they do in growth and de-growth.

      Board the physical plane, the monetary plane is about to go down. And out.

  27. As an example of how scientists can be co-opted by corrupt governments, just look at the unconvincing – and supposedly reassuring – statements being made by senior Chinese physicians regarding the new coronavirus and it all being over by April.

    There is simply no escaping basic human nature.

    Not to mention the doctors who cooperated enthusiastically with the Soviet and Nazi tyrannies in their most evil,mendacious and insane policies.

    The ‘If only we were ruled by technocrats and scientists’ meme is mere delusion. They too need pay-cheques, need to live, and can go mad.

  28. There is an excellent interview with David Korowicz on the ‘Resilience’ site, from 2014 I think, on the perils (even impossibility) of managed and benign de-growth. Very well worth looking up.

    He begins with reasoning about the reality of traditional ‘heirloom’ apple farms in Central Asia being drawn in to the debt and FF economic system, moving up the complexity ladder – and in to greater vulnerability and less inherent resilience.

    Or, as I like to put it:

    ‘Kicking out the rungs of the ladder as you climb up.’ Great view from the top, but…….

  29. Should we all go to Bavaria and walk in the snow?

    Off-line, I mentioned to one of the commenters here that we need to engage in “Yes, And…” processes such as are used in Improv, and cited the actor Alan Alda as a proponent. The suggestion was received with derision. Well…here is Rob Hopkins on his experience using “Yes, And…” as an advisory group tries to help Patagonia re-imagine it’s future:

    https://www.resilience.org/stories/2020-02-06/the-snowy-walk-of-what-if/

    “We were also invited to practice ‘Yes, And’. The idea was to not shut down other people’s ideas with our fears, reservations, objections or lack of enthusiasm, rather to build on the previous suggestion, to add to it, to explore it more deeply. And so we walked, and the ideas began to pour out.”

    I suggest that this blog probably isn’t the place for it, but “Yes, And…” thinking is required to get all of us out of our quagmire.

    Don Stewart

    • As I’m the doomer on this list, few wouldn’t know to whom you are referring. You built a straw man. I never say “don’t try.” But researching realistic probabilities is required to maximize outcomes. Approaches need to be compared, with limited energy and resources applied to those with the highest likelihood of success..

      I wager for charity on outcomes at longbets DOT org If you or anyone believes that you have a plan to reverse the downslope of the Problematique (Club of Rome term), you should be open to all critiques rather than smoke the hopium pipe. Idealism hasn’t worked for the past 50 years (while population doubled), and I wager it won’t in the next 10, 20, 30,…

  30. The article that Xabier refers to above is called “How to Become Trapped.” It’s about the folly of sacrificing a local economy that supports basic needs in order to participate in the global economy to obtain money, with which to buy basic needs and hopefully much more. It is at: https://www.resilience.org/stories/2014-03-19/how-to-be-trapped-an-interview-with-david-korowicz/

    Another in the same vein, somewhat more pointed, is Ian Welsh’s brief essay, “Why Nations Can’t Resist Austerity.” Quite short and very well worth reading: https://www.ianwelsh.net/why-nations-cant-resist-austerity/

  31. A start for a ‘Yes…And” conference.

    I have done these two ways:
    *If you (the boss) don’t know what the problem is, then you start with a very open discussion of all the various pains people are feeling. You sort that down to some fundamental issues and try to discern what is driving the malfunction. When your advisory group comes to agreement, then you begin to start the exploration of precisely what has gone wrong and what sorts of actions might ameliorate the damage.
    *If you (the boss) know what the problem is, but you don’t know how to solve it, you lay out in more detail your perception of the problem, and you either let the group develop a list of solutions, or you may lay before the group the recommendations from some outside source, such as a consultant.

    So…we are in situation #2…the problems are well known to everyone except economists: energy depletion; resource depletion; over financialization; overpopulation; climate changes already baked in, etc. And, fortunately for us, we have Bill Rees’ list of things we need to do:
    http://energyskeptic.com

    So the first thing for our “Yes…And” adventure is to have the group critically think about each of his 11 points. Should any be rejected? Do any need to be added? (With a group which is physically together and which has had some bonding time, it is usually pretty easy to get people to think in terms of the good of all…not just their own particular interests. However, if the participants are specifically representing a constituency (e.g., the Saudi delegation and oil), the problem may be overwhelming.)

    If the group agrees on Rees’ list, or some amended list, then the exploration of specific actions needs to start. This will take many branches…for example, the first in Rees’ list involves massive destruction of paper wealth. So dealing with the loss of paper wealth becomes an extremely important sub-heading.

    I hope this is clear enough, without being too detailed.

    Don Stewart

    • Bill has been a friend for nearly 20 years. We presented at the same conferences in Toronto. We email at least monthly. He is a *pessimist,* and has said so many times, including here. (at the end of the 11 items)
      ——-
      Rees:
      ” ‘What? A deliberate contraction? That’s not going to happen!” I hear you say. And you are probably correct. It should by now be clear that H. sapiens is not primarily a rational species.

      But in being correct you only prove me correct. Disastrous climate change and energy shortages are near certainties in this century and global societal collapse a growing possibility that puts billions at risk.’ ”
      ——-

      Note: the destruction of paper wealth is not in his list. It is one of the likely outcomes of the end of growth in the opinion of most, maybe all, on this blog.

      Steve
      —————-

      Rees:

      1. Formal recognition of the end of material growth and the need to reduce the human ecological footprint;

      2. Acknowledgement that, as long as we remain in overshoot — exploiting essential ecosystems faster than they can regenerate — sustainable production/consumption means less production/consumption;

      3. Recognition of the theoretical and practical difficulties/impossibility of an all-green quantitatively equivalent energy transition;

      4. Assistance to communities, families and individuals to facilitate the adoption of sustainable lifestyles (even North Americans lived happily on half the energy per capita in the 1960s that we use today);

      5. Identification and implementation of strategies (e.g., taxes, fines) to encourage/force individuals and corporations to eliminate unnecessary fossil fuel use and reduce energy waste (half or more of energy “consumed” is wasted through inefficiencies and carelessness);

      6. Programs to retrain the workforce for constructive employment in the new survival economy;

      7. Policies to restructure the global and national economies to remain within the remaining “allowable” carbon budget while developing/improving sustainable energy alternatives;

      8. Processes to allocate the remaining carbon budget (through rationing, quotas, etc.) fairly to essential uses only, such as food production, space/water heating, inter-urban transportation;

      9. Plans to reduce the need for interregional transportation and increase regional resilience by re-localizing essential economic activity (de-globalization);

      10. Recognition that equitable sustainability requires fiscal mechanisms for income/wealth redistribution;

      11. A global population strategy to enable a smooth descent to the two to three billion that could live comfortably indefinitely within the biophysical means of nature.

      “What? A deliberate contraction? That’s not going to happen!” I hear you say. And you are probably correct. It should by now be clear that H. sapiens is not primarily a rational species.

      But in being correct you only prove me correct. Disastrous climate change and energy shortages are near certainties in this century and global societal collapse a growing possibility that puts billions at risk.

      ——–

    • @Steven Kurtz
      One should ALWAYS look at the exceptions to the rule. One of my selections for any advisory group would be someone who has witnessed an outlier. For example, the Stanford scientist Robert Sapolsky who observed a baboon group change from hyper-aggressive to peaceful.

      It’s fair enough to be cautious in one’s expectations, but a huge mistake to think that one has proven one’s case until one has examined the exceptions.

      Don Stewart

  32. The wise and witty Bill Bonner (founder of MoneyWeek.com) tackles the absurd MMT as espoused by Stephanie Kelton (advisor to Bernie Sanders):

    Ms. Kelton thinks she knows what people need. They shouldn’t be allowed to decide for themselves, by spending their own money in their own way. Instead, the feds should cover the “deficits,” as she sees them. How? By printing money.

    And what about inflation? As long as the economy is operating below “capacity,” she believes consumer prices won’t rise. As long as there are empty seats at the Jack-in-the-Box, in other words, the feds should try to fill them by printing money.

    Ms. Kelton thinks of government spending – even of the fake money it prints – as a form of output. As the government prints more and more, she believes, the Jack-in-the-Box fills up. When it is full, diners are then competing for seats… prices rise… and then the feds should back off.

    “We need new lenses [to view economic matters],” she claimed. “And I could give those lenses to a Republican or to a Democrat. They should work for them both.”

    And get this: Ms. Kelton says that when the feds “invest” in education, roads, and infrastructure, they might be able to spend almost an infinite amount of money, because the spending increases the “carrying capacity” of the economy.

    The feds spend, the carrying capacity grows, and they can spend more! Whee!

    Yes, inflation is always and everywhere a rip-off. And both Republicans and Democrats are looking for ways to do more of it. MMT gives them the tinted glasses they need.

    https://www.bonnerandpartners.com/bill-bonner-diary/modern-monetary-theory-is-accepted-among-government-economists/

    • Bill Bonner misrepresents what Stephanie Kelton has to say. He’s damning with faint praise, a new tactic amongst those for whom MMT is a mystery. It’s also premature to say central bankers are all sold on the idea That is totally off in the future. and your characterising of it as absurd just shows how far behind the 8ball you lie. There is nothing you or he says that cannot be explained sensibly. After all mainstream economics is the centre of all the mischief economics creates, what with praise for budget surpluses, budgets back to front and unpayable debt nonsense. MMT resolves all that nonsense. You clearly are not up to it if you can’t distinguish right from wrong, reality from fancy.

    • “Bill Bonner Interview: hold on to your cash, the real financial crisis is yet to come
      . . . 16 Sep 2015”
      One day he will be proved right?

  33. Here is an extremely interesting article which goes through the core topics of energetic economics, based on a research project funded by the Finish government, worth reading the summary and the complete report (link inside the article). An utter importance is given the concept of ‘debt exhaustion’, previously discussed here by Dr.Morgan.
    Enjoy the read!
    https://www.vice.com/en_us/article/8848g5/government-agency-warns-global-oil-industry-is-on-the-brink-of-a-meltdown

    • Good article (with the caveat that renewables aren’t a fix for this problem).

      Fundamentally, the ‘real’ economy of energy-determined prosperity, and the ‘financial’ economy of money and credit ‘claims’ on that prosperity, have diverged beyond any sustainable relationship. The financial economy is like a car with no brakes and extremely faulty steering.

    • Nafeez Ahmed does not, in my opinion, do the report justice, he does link to the original document though.

      Click to access 70_2019.pdf

      The report is 500 pages long but not text dense and an easy read and very good reference source, due to fantastic graphics of all of the data sets it analyses. The Report is very strong on the geopolitical and petrodollar aspects of the question and does not major on EROI although it does a good job of introducing the concept.
      The report hints at Circular economy but does not go deeply into it, Embodied Energy concepts are absent and the difficulty of applying the Energy insights to an economy historically modelled in Financial metrics is quite apparent, I do not think the report successfully separates the two things out although it does highlight the apples and oranges comparison problem.

    • A while back, I examined the possibility of transporting freight over long distances through water filled pipelines, in submerged cylindrical capsules. This could use entirely renewable energy for its power source, without the need for energy storage. Here is the post I wrote.
      **************************************************************

      If we are to wean ourselves off of fossil fuels and onto more renewable energy sources, then we need more energy efficient freight transportation that does not depend upon stored chemical energy.

      Some updated calculations on hydraulic capsule pipelines. The idea is basically a variant of canal transport, with material goods housed in torpedo like neutrally buoyant capsules and carried along a pipe by water flow. Quite a low tech idea and naturally limited to fairly low speeds of no more than a few metres per second. The idea is for pipelines to carry large volumes of freight in water-tight containers between hubs outside of large towns and cities. Transport to and from the hub and customers will be carried out by short-range trucks, powered by battery, compressed air, stored heat, etc. Truck one-way journey lengths should be no greater than ~30km, preferably <10km, as the low energy density of many alternative power sources tends to limit range.

      Baseline assumptions: A submerged polyethylene lined concrete pipe. Inner diameter is 2m; outer diameter is 2.4m. Flow speed is 3m/s (10.8km/hour). Useful freight is assumed to displace about half of the water volume of the pipe. Jet pumps provide the energy input needed to counteract frictional head losses.

      I made a few calculations of the energy consumption for the defined parameters. Results: 55KJ per tonne-km, assuming 90% pumping efficiency. That is 2.3% of the energy consumption of truck transportation of freight in the US and about 26% of the energy cost of rail freight per tonne-km.

      The idea has strengths and weaknesses. Its strengths are very low energy consumption per tonne-km and the ability to use renewable electricity or direct mechanical power to directly power the pumps, without the need for energy losses in storage (as with hydrogen and other synthetic fuel powered vehicles). Also, because flow resistance scales in proportion to the square of speed, a 50% reduction in the availability of intermittent pumping power would only reduce flow speed by 29%. There are no labour costs associated with transport, other than sorting the containers at each end.

      The most significant weaknesses of the concept are (1) its low speed; (2) the need to achieve high utilisation in order to gain the benefits of energy efficiency, since flow resistance is the same regardless of the load factor; (3) the need to build underground pipelines hundreds of kilometres long – no small task.

      I estimated that a 1000km long pipe would require some 3million tonnes of concrete. Using the UK as an example, let us assume that the we install as much hydraulic pipe length as the country's motorway network ~14,000km, which increases to 28,000km assuming flow in both directions. That means 84million tonnes of concrete. A single kg of concrete has embodied energy of about 1MJ, so the total embodied energy in all of the concrete would be 84,000TJ, or 23.5TWh. That is equivalent to about 5 days of present total energy consumption for the UK. So the investment certainly looks achievable from an embodied energy viewpoint.

    • Australia could do with such a pipeline.It is the driest continent but has a monsoon climate in the far north west. The Fitzroy river, is not a very big one, but at peak flow becomes the second biggest river behind the Amazon. Almost all that water flows north into the sea. We have schemes a foot to reverse the flow “downhill” South to the more populated parts of the country.Our pop density is 3 pp /Mk2. The climate is drying out as we cut down our forests etc, A 3000k pipeline dia 2000mm would supply a useful back up to our largely dry river system. I believe it would be viable but I’ve yet so see any calculations in regard. Just for the water!

  34. There’s a report in the BBC that there’s a shortage of contraceptives in both pill and injectable versions.

    Of course there are other methods but what would happen in a resource scarce World where there was a severe shortage of all forms?

    Unwanted pregnancies – more transmission of STIs – all of which struggling social and health services would find difficult to deal with.

  35. The Finnish Study
    I first got interested in the “thermodynamic exhaustion” angle on oil when Shortonoil was posting several years ago. His model predicted that the dollar value of the economic activity supported by oil was declining to the zero point just about now. Since there would be no oil supported economic value available in 2020 and thereafter, the price of oil would sink to zero. The view was, of course, heretical and roundly criticized. While I think his model had some problems, his underlying insight was, in my opinion, profound. It’s not all about the cost of producing the oil and the products, it’s the economic value compared to the cost.

    For example, we know from the Circular Economy people that driving an automobile exhausts all of the energy in the fuel used. But who is willing to pay you to simply drive around in an automobile? And if the answer is ‘no one’, then the actual economic value of the oil used to drive around is zero. It may have ‘hedonic value’, but its economic value is Zero. Oil can only be sold for its hedonic value if there are potential customers who are selling oil for its economic value and thus have money to burn. The notion of ‘energy slaves’ is a useful hedonic concept, but is not directly translatable into economic value.

    Think of an eastern potentate (at least in Western movies) being carried aloft by a dozen slaves. Is anyone willing to pay for the cost of the slaves? And the answer is that no one is WILLING to pay, and can only be FORCED to pay. Consequently, if force fails for any reason, the potentate will have to walk like the rest of us.

    Alternatively, consider using oil to drive an earth moving machine to terrace an agricultural field so that rain water is more effectively utilized to produce food. The food is an economic value, and so the fuel for the machines has economic value. Here the notion of ‘energy slaves’ is very relevant.

    The illusion that hedonic values are the ultimate value in the economy is comforting to think about…maybe the universe wants me to be happy?…they are not real economics. Dissipating the energy in a barrel of oil, but producing nothing of economic value, is a dead end.

    Which suggests to us that the current economic model in the US is not sustainable. One can imagine transforming the US economy to use more energy expensive oil to produce more economically valuable products and fewer products which have only hedonic value, but it requires a revolution in business practices, consumer psychology and behavior, and an upheaval in governance.

    • As Alice Friedemann (Energy Skeptic) has written, large trucks require diesel fuel. They are the major distribution mechanisms in developed economies. Oil has economic value there, and currently there is no alternative.

    • I, for one, don’t doubt that the economics of oil are deteriorating rapidly – and where would we be without US shale, a perennial cash-burner subsidised throughout by investors and lenders? After all, I proposed here, last year, the seemingly-radical idea that the US might have to subsidise its shale sector in the national interest.

      But please remember that costs of transition to RE have been put, pretty reliably, at between $95tn and $110tn (the latter comparable to 720x the Apollo programme). The UK is, at this moment, reassessing how it raises £5.5bn annually from consumers to subsidise renewables.

      Even the top-line estimates seem to assume some further falls in the unit costs of RE and the efficiencies of batteries.

      $110tn is just a number, bigger than most of us can contemplate. But just think how much copper, steel, plastics etc you can buy with that money – and how much oil, gas and coal is required to make those supplies available.

      Another way to look at this could be that the private enterprise model of energy supply might be failing. If no company can earn a decent return on oil, or REs, or shoulder the risk of nuclear, we might end up relying on state subsidy, and ‘he who pays the piper calls the tune’.

      Moreover, the authorities are accustomed to pumping huge sums into the system to prevent an asset price crash, an effort that seems wholly wasteful in that it is destined to fail.

      So where I think we end up is with QE-type subsidy for energy supply – and that’s when fiat currencies are in real trouble.

  36. MMT is a description of how the government creation of money works, it is not a prescription of how to spend money into the economy. That part is handled by the political process.

    We already have MMT, its why we never lack for funds to spend on war or the military, why the Congress can approve a 750 billion TARP bailout to make sure Goldman Sachs gets paid on its derivative bets and Wall Street gets its bonuses after causing a massive financial collapse. It’s why the Fed can fund 29 Trillion to bailout financial institutions. It’s why we can give the largest tax cut in history to megacorporations and rich people. All without worrying about how we are going to pay for it, which (amazingly) is an issue only when we are talking about health care or social needs .

    No it doesn’t solve resource problems but as Tim has pointed out, no financial system does.

    • That is right. MMT proponents, Bill Mitchell, for example says we already live in an MMT economy. It’s just profoundly confused by mainstream economics, which is profoundly misleading, and worse.
      The mainstream nostrums will just accelerate the downfall of the economy. MMT will allow some management of the economy in everybody’s better interests. Resources are the key to both, the mainstream is a grand waste of them and will bring on collapse much sooner. MMT is not an antidote but a recipe for better management of the resources we need to extend survival.

    • The big question, now and in the very near future, is whether their determination to prevent asset price crashes will lead central banks to inject enough new liquidity to destroy faith in fiat money.

      The irony is that asset prices are going to slump in one way or another anyway.

    • In the MMT world, I want to be the one who decides who gets the money !
      I mean, in an MMT world, why would anyone want to be anything other than a central banker ?
      Why do a real job, when the government is going to provide you with one, just to ensure that you are spending.

    • Interesting article. If I believed that the economy could continue to grow, there are a lof of things that might worry me, this topic included.

  37. Tim – you may have already read it – but today’s CapX has a really interesting article under heading The Russian Tripod.

    It is a tad off topic.

  38. Seems still enough surplus for this. 😉

    Steve

    https://futurism.com/the-byte/ben-jerrys-ice-cream-drone-delivery-system

    Ben & Jerry’s Is Testing a Drone Delivery System for Ice Cream
    Soaring Sweets

    Soon, you might not have to go to the nearest grocery store to satisfy your ice cream craving. Your ice cream could come to you — via a drone.

    On Tuesday, drone startup Terra Drone Europe announced that it had partnered with Unilever, the parent company of Ben & Jerry’s, to test a drone delivery system for the ice cream maker’s beloved ice cream cups.

    Dessert Via Drone

    Terra Drone demonstrated how the ice cream delivery system would work at a recent Unilever investor event, according to a press release.

    For the demo, Terra fitted a multi-copter drone with a special container designed to house three of Ben & Jerry’s 72-gram mini cups. After loading up the container, Terra Drone showed how the drone could fly a predetermined path within the Unilever facility.

    Half Baked

    The next step in the partnership will see Terra Drone delivering Ben & Jerry’s to people in New York, according to the press release.

    However, the release doesn’t say when those deliveries might kick off, or whether they’ll be statewide or limited to just certain parts of New York. Neither Unilever nor Ben & Jerry’s responded to PC Mag’s request for comment on the program, either.

    That means that, for now, we’ll just have to be satisfied with the knowledge that ice cream will reportedly be zipping around overhead somewhere in New York at some point in time.

    READ MORE: Drones May One Day Deliver Your Ben & Jerry’s Ice Cream [PC Mag]

    More on drone delivery: Why a Former Military Drone Pilot Now Steers Burrito Delivery Bots

    • Big business generally seems stuck in some kind of time-warp.

      We know that the economics of oil supply are weakening, that renewables will need huge subsidies, and that environmental challenges seem to be intensifying.

      Yet business keeps promoting new ways to use energy – drones, satellites, data, space tourism, self-driving cars, EVs, and consumption generally. This example, by the way, sounds small, and seems simply silly, but the broader issue is a huge disconnect.

    • No, Steve, Surplus [and I assume you refer to the fiscal Budget] does not add fiscal space for any spending. It takes it away. gets written off.

    • It occurs to me that MMT may well be co-opted as an excuse for what the authorities want to (or feel they have to) do anyway.

      Here’s a list (by no means covering everything):

      – Subsidise the supply of oil

      – Subsidise the development of renewables

      Help people on lower incomes worst affected by deteriorating prosperity

      – Fund public services as deteriorating prosperity undercuts tax revenues

      Rescue parts of the financial system when (and it’s not if) another crisis occurs

      – Paper over one-off effects (such as the coronavirus)

      – Prevent a slump in asset prices

      All of these (except the last) can be portrayed as ‘necessary’ or ‘essential’, so politicians might be tempted to use MMT to cloak these actions.

      Essentially, the fiat currency system is in conflict with the real, energy-driven economy – a contest which can only have one outcome.

    • @Dr. Morgan
      I am not privy to the business plan of the drone delivery companies. BUT, I can speculate a little. We already have an MMT, it’s just that it involves some very simple monetary adventurism…which tends to create a few haves and very many have-nots. So, as I have commented before, the MMT we already have is allocating resources to the rich. The rich have children who get unbelievably elaborate parties for birthdays, bar-mitzvah’s, weddings, etc. While we kids cranked the ice cream maker in my childhood, now the favorites of the central bankers can get drone delivery of Baskin-Robbins delicacies delivered to the manicured lawn.

      If such deliveries subtract a little from the fuel a poor blue collar guy might use to drive to work (e.g., the Yellow Vests), some rubber bullets will do them good.

      Don Stewart

    • I have to say, Don, that I can foresee no economic outcome which doesn’t involve wholesale redistribution.

      Also, how much wealth will the richest really have, after equities crash, and debt becomes subject to cascading defaults?

      The smartest of them are probably looking already at defensive measures – of which the very worst is to invest in a bunker (for reasons which I won’t go into), whilst the best involve some form of front-running these trends (again, I won’t specify).

    • This tends to confirm the Tainter thesis that dying civilisations often propose more complexity as an answer to the problems of decline -no or inadequate growth – which make a short-term profit for some and seem like a solution, but which really only constitute a further burden hastening the end.

      Innovation devoid of good sense, forced us on with the lure of spurious promises of renewed growth and the excitement of Progress……

    • Indeed.

      Part of this, of course, is “tech”, which seems to be coming up with new ways to use energy just when – economically and environmentally – we need to be using less – great timing, guys…………….

    • Dear doc, again, i would like to thank you for providing your excellent blog, your participation in the comments and your honesty. And thank you for sharing your knowledge with us.

      I do hope, indeed, other insights will become mainstream before it is too late, but i doubt it.

      Maybe they will throw in some kind of virus to ‘cull the economy’, who knows.

      ‘They’ won’t acknowledge doc. They won’t. They will let it crash and burn. Their DNA isn’t strong enough for the job. Neither is ours.

  39. The politicians, and central bankers, will almost certainly reach out wildly for any theory which provides them with conceptual cover for their desperate actions, and MMT will do as well as any other fantasy: but I would agree, elemental physics will trump everything else – how can it not?

    If this new virus spreads, and makes great inroads on the elderly population, or even many of those of only 55+, and continues to do so annually as an endemic factor -like TB until recently, but that of course often took the very young – we shall at least have some respite from the financially and logistically impossible burden of elderly care and pensions which looms over us.

    Not enough, though, in the absence of severe population contraction: but this is where industrial economics and the need for maintaining high demand clashes with ecological considerations and resource scarcity (ie unviability of hard-to-access resources, not just fossil fuels).

    • I’m not commenting on the severity of the coronavirus itself, because I’m not even sure if the experts know yet – and I certainly don’t.

      China appears to have closed down about 70% of GDP for the duration – and the knock-on effects to other economies already look serious.

      This said, China’s economy was ALREADY decelerating markedly – so watch out for any “if it hadn’t been for the virus”-type excuses.

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