#217. No ‘soft landing’

MODELLING THE RETURN OF EQUILIBRIUM

“The proper study of mankind is man”, wrote the poet Alexander Pope in An Essay on Man.

We can usefully paraphrase this to the effect that ‘the proper study of economic man is prosperity’.

Correctly understood, material prosperity is a function of the use of energy.

We know, after all, that nothing that has any economic utility at all can be supplied without the use of energy. We also know that, whenever energy is accessed for our use, some of that energy is always consumed in the access process, so is not available for any other economic purpose. 

From this understanding follows an equation, straightforward in principle, that calibrates material prosperity.

The ‘consumed in access’ proportion of energy supply is known here as the Energy Cost of Energy, or ECoE.

If we deduct ECoE from total energy available, we’re left with surplus energy, which is the direct material correlate of prosperity.

If we further divide this aggregate surplus energy prosperity by population numbers, the result is prosperity per capita.

Measuring prosperity

The SEEDS economic model – the Surplus Energy Economics Data System – has been designed to interpret the economy in this way. Expressed (for convenience) in financial terms, global aggregate prosperity grew by slightly less than 1.4% annually between 2000 and 2020, meaning that it increased by a total of 31% between those years. 

Over that same period, world population numbers increased by 25%. This means that the average person was slightly less than 5% better off in 2020 than he or she had been back in 2000.

These, of course, are global averages, combining performances that vary regionally and nationally. The average Western citizen has been getting poorer since well before the global financial crisis (GFC) of 2008-09. Prosperity per person has continued to improve, albeit it at decelerating rates, in the EM (emerging market) economies.

Looking ahead, we know that the ECoEs of economies which remain reliant on energy from oil, gas and coal are continuing to rise. There are compelling environmental and economic reasons for endeavouring to transition from fossil fuels to alternatives, principally renewable energy sources (REs) such as wind and solar power.

The question here isn’t the feasibility of quantitative conversion to REs. Rather, what we need to know is whether this transition will drive ECoEs back downwards. The hierarchy of challenges involved in transition make this improbable. Even if REs can usher in an era of lower ECoEs, they certainly can’t do so now.    

This interpretation points unequivocally towards further deterioration in prosperity. The average Westerner will carry on getting poorer, whilst prior growth in prosperity per capita in EM countries will go into reverse.

Within this broad projection of eroding prosperity, we also know that the real cost of essentials will carry on rising, not least because most necessities are energy-intensive.

What results is a leveraged equation in which prosperity net of essentials falls more rapidly than top-line prosperity itself. This means that essentials will account for a steadily rising proportion of total prosperity.

It follows from this that both capital investment and the scope for the consumption of discretionary (non-essential) goods and services will be reduced.

None of this constitutes a prophecy of ‘collapse’.

Rather, it poses the challenge of adaption to lower prosperity after more than two centuries in which, thanks to the supply of ultimately finite low-cost fossil fuel energy, world prosperity has expanded very rapidly.  

A process of denial

Conventional interpretations of economics do not recognize the analysis sketched out here. The economy is presented, not as an energy dynamic, but as a system that is wholly financial.

Energy and other resource constraints are dismissed with the nostrum that [financial] demand produces [material] supply.

This nostrum can be described as the systemic fallacy of conventional economics. The reality, of course, is that no amount of monetary demand can create resources (such as low-cost energy) that do not exist in nature.

By the same token, we cannot “stimulate” our way to greater material prosperity, “grow out of” debt and other financial commitments to the future, borrow our way to financial solvency, or “invest” (meaning monetise) our way to economic and environmental sustainability.

To paraphrase Pope again, though, ‘hype springs eternal in the human breast’. The latest version of cornucopian hype is that growth in perpetuity can be delivered through the alchemy of “technology”. This ignores the inconvenient reality that the potential of technology is limited by the laws of physics.

Things being as they are, conventional economic interpretation continues to insist that infinite economic growth remains a plausible outcome on a planet that, ultimately, is finite. Nowhere in classical economics will you find any recognition of the concept of ECoE. The word ‘prosperity’ is sometimes employed, but not in the precise and material sense in which it is used here.

This ‘money-only’ fallacy applies, not just to projections for the future, but to interpretation of the recent past. For the period between 2000 and 2020, for example, we’re told that the economy enjoyed “growth” averaging 3.4% annually, and expanded by 94% over that period as a whole.

In pursuit of reconciliation

Here, then, are two contradictory statements. The first is that the economy ‘grew by 3.4% annually’ between 2000 and 2020.

The second is that prosperity ‘expanded by less than 1.4% per year’ over that same period.

We could reconcile these two statements by asserting that the rate of inflation used in the measurement of ‘real’ (ex-inflation) GDP has been understated.

The SEEDS model makes this calculation by calibrating RRCI (the Realized Rate of Comprehensive Inflation). If you took out official inflation (of 1.5%) between 2000 and 2020, and used instead an RRCI rate of 3.5%, reported growth in real GDP would align with growth in real prosperity, as calculated on an energy basis.

There seems little doubt that inflation has been understated – routinely and significantly – in official numbers. This suggests that energy-based analysis can improve our understanding of the economy through the measurement of RRCI.

Measuring difference

For present purposes, though, our best route is to accept that GDP and prosperity are measures of two different things.

Prosperity measures material economic output as it relates to the supply of goods and services.

GDP, on the other hand, is a measure of economic activity, referencing the financial transactions by which these goods and services change hands. 

This presents us with a different requirement for reconciliation. The implication is that the financial value ascribed to activity has expanded much more rapidly than the far more pedestrian rate of increase in the output of material goods and services.

There is abundant evidence, both quantitative and qualitative, for this proposition.

Quantitatively, debt expanded by $216 trillion (190%) between 2000 and 2020, a period in which GDP increased by only $64tn (94%). Broader financial liabilities, which include the unregulated shadow banking system, have grown even more rapidly. The same is true of unfunded pension commitments, where we have seen the emergence of enormous “gaps” in the adequacy of provision.

Colloquially, we know that millions of Americans have been described, persuasively, as “debt slaves”, and that millions of people in Britain now use various forms of ‘BNPL’ (meaning “buy now, pay later”), even as more traditional forms of credit-funded consumption have continued to expand.

A growing proportion of the corporate sector has transitioned towards a model based on streams of income, in which the ‘signing up of’ customers is regarded as more significant than actual levels of current sales.

Evidence of the financialization of the economy is, of course, to be found in the prevalence of negative real interest rates, a product of policies which, when first introduced more than a dozen years ago, were presented as “temporary” expedients.

The negative real cost of capital has inflated the prices of assets to levels far beyond anything that can be justified using traditional measures of value.            

From here, where?

As objective observers, our focus needs to be on predictable outcomes.

We have persuasive evidence that economic activity has been inflated to levels far in excess of underlying material prosperity. We can conclude that this process has created unsustainable rates of increase in financial commitments, which include formal debt, informal indebtedness, pension promises and expectations of futurity.

We also know that these processes have driven asset prices to unsustainably elevated levels.

Now that growth in prosperity has deteriorated into negative territory, it seems hard to avoid the conclusion that what lies ahead is an enforced restoration of equilibrium between the ‘financial’ economy of money and credit and the ‘real’ economy of goods and services (and, ultimately, of surplus energy).           

Our attention now needs to be devoted to the mechanisms by which equilibrium is restored.

A recent SEEDS project has involved the calibration of a potential ‘soft landing’, by which we manage the restoration of financial and economic equilibrium.

You will not be surprised that the engineering of a ‘soft landing’ is both (a) mathematically feasible, and (b) politically almost impossible.

Essentially, economies would have to accept now adjustments that will, in any case, be enforced upon them at a later point by economic, material, political and environmental trends.

The key word here is “later”. Where unpleasant realities are concerned, ‘never accept today what you can put off until tomorrow’ is an axiom, not just of politics, but of society more generally.

Moreover, there are structural factors – most obviously in America, Britain and the Euro Area – which make the adoption of ‘soft landing’ policies virtually unthinkable.   

In the absence of a soft landing, what lies ahead is a scenario in which we are forced to adjust to ‘prosperity reality’. The likeliest mechanism is inflation and, specifically, escalation in the cost of essentials.

As what is called colloquially ‘the cost of living’ accelerates beyond the affordability of millions, the authorities are likely to be dragged, with the utmost reluctance, into a situation where inflation has to be tamed.

That’s the point – and it’s likely to be very soon – at which equilibrium is restored between an inflated financial system and an eroding underlying economy.

There is analytical value in the modelling of what a soft-landing would look like, even though we know that this course of action isn’t going to be adopted. 

Essentially, a conceptual soft-landing gives us a template against which to measure what actually happens, much as the measurement of prosperity provides a benchmark which can be used to quantify the difference between the economy as it appears and the economy as it is.               

 

 

86 thoughts on “#217. No ‘soft landing’

  1. Excellent points. I had never thought about the velocity angle, which you state very clearly.
    Don Stewart

    • Thanks Don.

      I think the velocity issue is interesting. Mathematically, it’s M(2? 3? x?)/GDP, but colloquially it’s ‘how long do consumers hold on to money before they spend it?’

      For a long time now it’s been hard to reconcile the mathematical with the colloquial. Maybe we have the answer.

    • @Dr. Morgan
      I was just doing some thinking in my head, with few numbers, a couple of days ago. We know that gasoline prices in the US hit 4 dollars per gallon more than a decade ago. It’s now about 3.25 dollars per gallon where I live. Consider the monetary economy of that time to be 100. We are probably at 400 now in terms of the monetary economy, considering all of the money printing (mostly as debt) which has happened in the meantime. So there are vastly more dollars floating around and the price of gasoline hasn’t increased at all in nominal terms. So why is Biden pleading with OPEC+ to increase production? Is gasoline really cheaper in ‘inflation adjusted’ money?

      Just as a matter of historical interest. I had a conversation with Bedford Hill a dozen years ago on the subject of why he didn’t use ‘real’ dollar amounts in his calculations. The clincher for him was that his model more accurately fit the data when he used actual prices, not inflation adjusted prices. He and I both thought that the governments are entirely capable of making the ‘inflation adjusted’ prices virtually anything they want them to be. But he was savagely attacked for his supposed failure to use the officially sanctioned ‘real’ prices.

      Don Stewart

  2. Thank you Dr Tim for your latest analysis.

    Even the most inattentive citizens of the world have probably noticed that the “I” word is making regular appearances in the mainstream media. However, there will be no mention of your RRCI measure of inflation in the MSM, I would guess. Do you have any plans to open up this concept to the world at large, and actually are you going to open it up on this forum as a starting point? My immediate thoughts are what exactly are the differences between RRCI and conventional measures of inflation?

    • Thank you, Neill.

      RRCI is an interesting project, now very nearly complete. In a way it follows on from the UK Essentials Index that got a lot of coverage when I developed it at Tullett Prebon.

      In terms of differences, there are big objections to CPI/RPI, and to the GDP Deflator, so RRCI, in part, provides an alternative. The clue really is in “Comprehensive” – in theory, RRCI should capture the effects of asset price inflation. This is something generally excluded from measurement of inflation, but critical in our current circumstances.

      By all means use this latest article as a start-point on RRCI.

      I think we now have what I might call an ‘interesting suite of tools’, including RRCI, and the line suggested here, and noted by Don, on velocity.

  3. @Dr. Morgan
    If there is 4 times the money floating around now, then the average citizen has to have garnered 4 times more money to afford a gallon of gasoline. The average American does NOT have 4 times the income or savings that they had a decade ago. If a corporation has been frugal with their borrowing, they have suffered a large decline in their ability to use gasoline or diesel. A person on a fixed pension, or an artificially repressed social security income, has lost status in the contest for control of gasoline and diesel…unless they have monetized some assets through mechanisms like reverse mortgages.

    Max and Stacey talk a lot about the Cantillon effect…those close to the money spigot get the goodies and everyone else does without. They use their argument to lambaste the Fed for pursuing its ‘Wealth Effect’ program.

    Money is how resources are allocated. The Wealth Effect policy is a blatant statement that the Fed wants the trillionaires to be allocated more while ordinary people are allocated less.

    Economists want to believe that money creates its own supply. They are delusional.

    The New York Times today says that the US economy really is NOT healthy, just as the public opinion polls claim. The Times thinks it is because of the fallout from Covid and the draconian measures adopted to combat it. I suggest they ought to also be looking at the status of money and debt and the failure of a Federal Reserve which is entirely focused on their manipulated accounts.

    Don Stewart

  4. Thanks, Tim, great article!

    Am I correct in understanding velocity as a measure of the growth in the money supply relative to prosperity rather than GDP? If so, then it is also a measure of the extent or rate at which we are producing excess claims on underlying real goods and services ex financialization, as well as an indication of eventual inflation? Do I have this right?

    I like your idea of using the soft-landing model as a baseline against which we compare what is actually happening. Lol, I think you finally found a way to measure (degree of) dystopia mathematically! Congratulations! Gives new meaning to the descriptor, “the dismal science”!

    • Thanks Tagio, much appreciated! I do think our understanding is progressing.

      You are right about velocity and financialization.

      I thought about using the ‘soft-landing’ modelling exercise as the basis of this article, but opted in the end for a more general theme looking at issues like velocity and RRCI.

    • The answer is “No”. Dr Morgan has got it right.

      Source: Federal Reserve Bank of St. Louis Release: Money Velocity
      Units: Ratio, Seasonally Adjusted

      Frequency: Quarterly

      Calculated as the ratio of quarterly nominal GDP to the quarterly average of M2 money stock.

    • Thanks. I think you and others are right, and I’ve made an inversion error, a.k.a. schoolboy howler.

      I think the point made is right, though, about financialization, overstated economic output and so on.

    • The FRED definition is as follows:

      Velocity is: “Calculated as the ratio of quarterly nominal GDP to the quarterly average of M2 money stock”.

      The key word seems to be “ratio”.

      Here are some FRED figures (annual, USD bn):

      2010: M2: 8,624 GDP: 15,049 Velocity: 1.745
      2019: M2: 14,836 GDP: 21,373 Velocity: 1.441

      Comparisons:
      M2: +72%
      GDP: +42%
      Velocity: -17%

    • am I right in saying GDP is an overall measure of economic activity within the human enterprise,
      the human enterprise could roughly be divided into two subsets; the real economy of things and people and the financial economy,
      that since ‘the big bang’ in the 1980’s the financial economy has been unfettered and allowed to do as it wishes whilst the real economy of things and people has begun to stagnate due to constraints on energy,
      the two subset economies have diverged,
      when the divergence became too great the 2008 GFC occured,
      the cure for the GFC was QE, but that was injected into the top, the financial economy, this allowed the divergence to continue but with most of the activity contained in the financial economy, causing inflation in asset prices but not really leaking into the real economy of things and people and causing price inflation in products, services and commodities,
      this worked up till about 2018 when the energy situation took another turn for the worse,
      yet more QE is being poured into the top causing yet more asset inflation whilst the real economy has gone beyond stagnation and is into deflation,

      in a tale of two economies, the real economy of things and people has seen the velocity of money decelerating over 40 years,
      but to compensate the velocity of money in the financial economy has been accelerating,

      if the two can be kept in balance the illusion of healthy GDP can be maintained,
      but we may be in a situation where the real economy is deflating at a greater pace than the financial economy is being artificially inflated,
      the divergence has also become glaringly obvious,

      these two subset economies are supposed to be symbiotic, inter-related and parts of the whole,
      but with such a profound divergence, for clarity, we maybe could think of them as largely two economies going in different directions,
      the degree of divergence generates tension, i.e. sales dropping whilst corporate stock rises,
      orthodox economics doesn’t recognise the divergence and still measures the entire human enterprise as a single entity,
      hence consternation at the velocity of money slowing whilst the financial markets boom,

  5. I’m no economist, but your definition of velocity of money looks strange to my (physicist) mind. GDP already has the units of velocity (money transfer per unit time), and so should be in the numerator rather than the denominator. Division by the total money in existence is a normalisation factor that allows velocities to be compared between different periods or systems (I don’t know why this isn’t called the frequency of money…).

    A quick check of wikipedia seems to confirm that the standard definition of the velocity of money is indeed GDP/money supply.

    If I’m correct, then your argument has to be inverted. Using prosperity rather than GDP reduces the ‘velocity of money’. This makes sense to me, since money flows tied up in the financial system and in accessing energy are discounted. However, my suggestion would be to call this the ‘velocity of prosperity’ rather than of money, and retain ‘velocity of money’ for GDP/money supply.

    I don’t currently see what you learn by comparing the ‘velocity of money’ to the ‘velocity of prosperity’ that you don’t already see from directly comparing prosperity and GDP. However, maybe the evolution of the ‘velocity of prosperity’ over time is a useful way to determine what fraction of the money supply is tied up in the financial and energy accessing parts of the system, as opposed to the productive economy? Similarly, maybe it could be used to compare the financialisation of different countries?

    If I have missed something, I’m very happy to be corrected (or ignored).

    I’m not in the habit of leaving comments on the internet, but have found reading your work valuable over the years, so am happy if I can make a very minor contribution to help you sharpen your arguments.

  6. Tim, thanks for another cogent article.

    For some reason that I can’t explain, the first half seems to present the effect of rising ECoE (and introduced SEEDS) from a slightly different perspective. I like that. I’ve always thought that a notion is more robust when it “works” when explained in different ways. I wish I could put my finger on what it is that changed from earlier posts. But the effect is to provide evidence for the convergent validity of your ideas.

    Another notion also caught my attention. Your text, “… transitioned towards a model based on streams of income… ” was pointing out a recent change in business models that I took as worrisome (and I think that’s your intention, and I agree). But then I got to thinking of what a “provisioning economy” might look like. It might include enterprises like CSAs (Community Supported Agriculture relationships) where folks prepay for a share of the harvest (the stream or flow of goods from the soil), however that flow works out given the uncertainty of farming. I’ve always liked CSAs that intentionally state that the consumer is agreeing to assume some of the risk of farming (i.e., agreeing to accept overflowing produce box some weeks/years, and a tiny amount on other weeks/years with no change in the amount paid in to the CSA). Likewise, living off the “flow/stream” of solar energy (with full understanding and acceptance that this involved intermittency) also seems an element of living well within the limits of a local resource system. Maybe, within a “provisioning economy”, one principle is to organize around streams of natural incomes? Ecology accepts this, biophysical economics probably does (although I’ll have to “look that up”), and perhaps planning the principles of a provisioning economy should start there?

    • I suspect that a sustainable “provisioning economy” starts with maximizing the provisioning at the household level and minimizing the outsourcing of supply. This keeps the energy required to access resources to a minimum. Long supply chains, even if from “streams of natural incomes” are energy intensive, and if they get too long they increase overall risk more than they decrease risk through sharing of resources. Reducing the spatial scale of resource acquisition maximizes the chances of staying within carrying capacity.

      Brian Czech has published a good summary of the issues central to ecological economics. Scale is one of them.

      Click to access Czech_Ecological_Economics.pdf

    • Thanks Joe. I’ll check out Czech’s piece. You’re right in that I should have written “streams of LOCAL natural resources.”

      Tom Princen has written on “distancing” and its negative effect on community resilience where the notion of distance is not just geographic but also layers, middle-people, etc. Be interesting to see how his work syncs with Czech’s.

  7. Tom Murphy of Do The Math
    https://dothemath.ucsd.edu/2021/11/caught-up-in-complexity/

    Tom is part of what I would describe as the Overshoot crowd…tackling individual problems doesn’t solve the overarching problem. You can read the previous article, where he attempts to get a group of scientists together to look at the larger picture. Take a look at the comments. I don’t find them all that encouraging, but you may be more or less optimistic than I am.
    Don Stewart

  8. While “velocity” may be technically wrong the way you measured it Tim, I find the inverse of velocity is a way of measuring a different kind of velocity – the rate at which we are multiplying financial claims over the prosperity base

  9. Just read an article about the currency crisis in Turkey and its possible effects on EU countries.
    Concerns about the country not raising its interest rates, possible “contagion risks” to EU banks when it should really go down, inflation as a cause of Erdogan loosing popular support…is it just me, or shouldn’t we be applying the same round of questions to our own situation?

  10. “…what lies ahead is an enforced restoration of equilibrium…”

    You really hit the nail on the head Mr Morgan. It looks like central banks will continue to fight deflation, regardless of the macro trends or pain caused to wider society.

    Thank you.

    Jon

  11. It would seem to me that all roads, whether energy constraints, material constraints or financial constraints, lead to a contracted public sector and the culling of bureaucratic bloat.

    Similarly, the above constraints will also simplify and delayer national and global economies to varying unequal degrees.

    Thus, the section of society most vulnerable is those engaged in discretionary economic activity whether in the public sector or the private sector.

    In this respect, the delaying function of QE, cheap credit and population growth is to protect the discretionary asset class and in particular the discretionary middle class. Thus any feasible soft landing can only be mediated via the middle class.

    Failure to do so means inflationary tendencies which will hit the working class first which then provides a political angle by which the middle classes can claim governmental incompetence whether on the left or the right.

    Further still, any attempts to contract the middle classes and their excessive consumption will meet with political reaction and the political consolidation of the middle classes as a powerful political force that is adamantly opposed to its own immiseration despite being for the highest ecological good.

    Thus, to avoid ecological overshoot and the inflationary immiseration of the working class, the public sector must be contracted and rid of its bureaucratic bloat so that the private sector can be made more productive and resilient.

    This soft landing policy is designed with the counteractive economic forces of public sector contraction and private sector expansion in order to mitigate immediate middle class losses with small increases in prosperity as wages and prices are pushed down due to increased private sector labour market competition.

    Similarly, a contracted public sector provides opportunities for decreased taxes which will in theory lead to more disposable income to counteract rising ECoEs.

    Post growth implies the need for sufficiency and a deep understanding of the relatively fixed availability of goods, services and jobs. Those that are not ecologically essential will need to be progressively culled.

    • @ Steve,

      Let’s not kid ourselves that excessive consumption is exclusively the remit of the so called “middle class”. It’s happening throughout society, with the probable exception of the poor.

      I distinguish between the working class and the poor, because they are very definitely not a congruent fit. I recently had a plumber wanting to charge me 66 quid an hour for some basic work. That guy certainly isn’t poor, but he does fit the traditional characterisation of “working class”.

      To be honest, I’m not sure of how the various classes are actually defined any more, and even less sure if the definitions would be helpful when it comes to pointing the finger at excessive consumerism. A so called “middle class” family who are “savers”, will lock up a considerable amount “claims on resources” in the form of savings and; these savings might end up being passed on to the next generation rather than being “consumed”. In contrast, our greedy “working class” plumber is clearly earning enough money to participate in excessive consumption should he wish to do so.

      As I said, it’s probably only the genuinely poor who can be absolved of any culpability when it comes to consumerism.

      In tune with the discussion around volume of money flow in this latest article, it seems more relevant to characterise excessive consumption by the amount of discretionary “stuff” flowing into a household, rather than by some kind of class orientated demarcation.

    • Neill. A detailed analysis shows that the middle class earn 63% of national income whereby the 1% earns 11% and the working class 25%.

      https://ifs.org.uk/publications/9178

      Thus if you can explain how having access to 63% of national income does not lead to the excessive energy and material consumption of multiple cars, large houses, extracurricular activities, high culture, 2nd homes, long distant vacations, marketing services, city breaks, bureaucratic bloat, demand driven inflation and liberal media bias that is specifically seeking to protect these priveleged material interests, that would be much appreciated.

      Ps, savings are invested in other sectors of the economy which then contribute towards human ecological overshoot.

    • Post growth Simplification.

      Towns and rural communities left without access to crucial banking services have been handed a lifeline after high street banks agreed to launch shared branches across the country.

      All major high street banks have agreed to fund so-called “banking hubs”, run by the Post Office, in areas left without easy access to cash.

      The hubs will offer an over-the-counter basic banking facility as well as dedicated rooms where customers can meet with bankers from their own bank for more complex transactions.

      https://www.telegraph.co.uk/money/consumer-affairs/lifeline-towns-abandoned-high-street-banks/?WT.mc_id=e_DM1534522&WT.tsrc=email&etype=Edi_FAM_New_ES&utmsource=email&utm_medium=Edi_FAM_New_ES20211215&utm_campaign=DM1534522

    • Steve,
      I am not sure that income per class is a good guide to the scope of over-consumption. The militaries of the world make no income but are vast consumers. The U.S. military organizations spend money spirited out of a computer and consume/destroy material resources that would otherwise be available for life-support with abandon. The U.S. military is probably the biggest Uberconsumer (to co-opt Nietzsche) of all organizations in the world.

      An analysis by sector might be more appropriate and revealing than bottom-lining it by class in Western developed economies, who are all overconsuming as compared to developing and undeveloped economies.

    • Tagio.

      Personally I wouldn’t say the Western working class is overconsuming by a global low/medium/high impact distribution metric since the working class are much closer to the essential/discretionary cross over point. This means any discretionary consumption might actually be within planetary limits using a low/medium/high impact distribution metric.

      So presumably your point of view is based on a global equal impact distribution network, which makes your and my points of view political.

      I personally don’t think we can materially or energetically afford the transaction costs of transitioning to global egalitarianism considering the resistance by the middle class to downshift which makes egalitarianism practically impossible.

      So I prefer to work with what we got which includes a relatively well defined real world metric of low, medium and high impact in terms of a class system.

      Broadly speaking, the working class have a smaller volume of the money supply compared to the middle class and of course the upper class, so in easy to understand language, a soft landing is very easily articulated by simply stating that the Western middle class need to downshift if we are to draw back the species from planetary ecological overshoot.

      Call it Levelling Up if you like.

      Beyond that policy title and policy summary, sectoral analysis is needed in terms of identifying the middle class jobs that need to be simplified and delayered, which would need to be done democratically in order to bypass the cronyism and corruption of organisational self assessment.

      I’m sure this isn’t too difficult to do, especially in terms of the public sector of which of course, the Armed Forces is a part.

      For example, at our allotment, the recent storm blew the felt of our clubhouse roof. Easy enough to replace at £15k, which we can just about afford, but being a public buildings means the red tape takes the council’s quote to £40-60k and so the likelihood of the clubhouse being demolished.

      In the email from the allotment officer, she mentioned senior management, project coordinator, structural surveyor, asbestos assesser and legal team which implies to me that the cost of red tape bureaucratic officials was actually making the council’s own maintenance services too expensive to afford.

      This should ring loud alarm bells to anyone who is interested in sustainability, resilience and sufficiency since if we can’t afford to maintain our public assets because the cost of sustaining red tape jobs takes precedence, then we are going to be left with all chiefs and no indians. And once all the public assets have been demolished due to dereliction, what on earth are these bureaucratic officials going to do with no assets to manage.

      Middle class bloat is a vicious circle or a positive feedback mechanism leading to neglect and cronyism rather than sustainability and community wellbeing. This can be seen at Western national levels and at global levels too.

      So as I say, all roads lead to the contraction of the public sector whether it is energy, material or financial constraints. We either have that forced upon us which is the preference of the UK left so they can blame the UK right, or we can do it through voluntary redundancy and labour attrition and deal with the howling of austerity by the UK left at the next general election.

    • @ Steve Gwynne

      I think I can see where you have plucked your figures from, assuming it was the tables appended to the IFS page that you linked. However, I can see no reference to “class” in the IFS document. They refer to income percentiles. Is it the case that you have interpreted national income percentiles as representing some kind of class structure, i.e. the old fashioned demarcation of working class, lower middle class, upper middle class and upper class? If so, is that really helpful in the bigger picture of today’s challenges? I thought the politics of “class warfare” had been left behind as a 20th century relic.

      Anyway, as you insist on using the terminology of class, let me ask if you are working to some kind of nationally recognised definitions for your demarcation of the classes, or was it a bit more arbitrary than that? Are you using the term middle class to really mean middle income?

    • Thanks Neill

      Low, medium and high ecological impact in relation to income is my rudimentary starting point which is then being broadly associated with my political categories of class. But yes low, middle and high income earners can be similarly incorporated.

      Personally, I find Class is particularly useful in relation to post growth, because it highlights the cultural differentiation between different income percentiles and their broadly similar consumption habits. Whereas, in my opinion, referring to income as the main signifier, neutralises those cultural differentiations and makes them harder to scrutinize. As such, in my experience, more neutral categories facilitates displacement (passing the buck) which seems to align with the maximum power principle.

      Similarly, class consumption habits are easily observed as opposed to income consumption habits, although I assume they could be easily learnt like learning to use a new currency. But again the danger is that incumbents will narrow the categories to hide broader trends.

      So overall I think it is only considered a historical relic because it is possibly the greatest weakspot for the middle class, especially politically.

      In my ecological activism, I’m finding, for the liberal middle class in particular (whose politics is normally about the preservation of others), class analysis is treated like poison. Presumably because it helps to identify group behaviour which is materially self serving which is often associated with the sophisticated use of logical fallacies.

      I think Marx might have been on to something, especially class metabolism, so it is quite telling that Blair rejected class in order to fashion Britain into an overtly middle class service sector country on the global stage.

      Unfortunately, rising ECoEs gatecrashed his party and his hope of everyone becoming middle class was halted by a global financial crash and severe material constraints in the form of austerity.

      Since the original plan has been abandoned along with the possibility of a deep civic associationism via the Big Society, then overt class based socioeconomic categories have begun to remerge as a result of efforts to leave the EU and then the efforts to overturn the Brexit referendum result.

      Brexit and the rejection of Brexit has begun the remergence of class politics as a means of understanding race politics and ecological politics with the most ostensible demarcation between the liberal middle class and the conservative middle and working classes.

      From my point of view, both America and Britain are in the midst of a class based civil war with thankfully most of the violence being conducted virtually online.

      A decoupled low impact civil war. That’s not bad going is it in terms of human evolution 😁

      In terms of communicating and analysing these political economy events, class it turns out is a very useful analytical tool. Especially at the broad brush level.

      In my experience, it is best to name trends rather than ignore them if we want our analytical tools to adequately reflect material realities without the need for impenetrable or confusing jargon.

      Do you have any knowledge of any other trend derived social analytical tools, other than poverty, which helps to observe and analyse consumption dynamics and their velocities as part of a broader ‘closed’ system or network.

      Presumably, the higher the class, the higher the velocity of circularity of money. At least I think.

  12. When will equilibrium be restored between an inflated financial system and an eroding underlying economy? Well, according to John Michael Greer: eventually.

    we are in a “prolonged economic contraction – not a recession, or even a depression, but a change in the fundamental dynamic of the economy. Over the centuries just past, a rising tide of economic growth was interrupted by occasional periods of contraction; over the centuries ahead, the long decline of the industrial economy will doubtless be interrupted by occasional periods of relative prosperity. Just as a rising tide lifts all boats, a falling tide lowers them all, and if the tide goes out far enough, a great many boats will end up high and dry.

    The desperate attempt by full-time and part-time members of the rentier class to avoid dealing with this unwelcome reality has had the ironic result of making the situation much worse than it had to be. As actual investments in productive economic activities stopped yielding a noticeable profit, more and more investors sought to make money via a menagerie of exotic financial livestock notable for their complete disconnection from the economy of goods and services. The result was a series of classic speculative bubbles, culminating in the crash of 2008 and the crisis still unfolding around us. In the process, eager investors who might have lost their money slowly over a period of years have, instead, lost it all at once.

    Still, in a contracting economy, on average, all investments lose money. This is the hard reality with which all of us will have to deal. This is why, in the twilight years of the Roman world, a complex money economy that made heavy use of credit and investment gave way to purely local economies of barter and customary exchange, in which money played a very minor role and credit was unheard of. It is also why the two great religious movements that rose out of Rome’s ruins, Christianity and Islam, both considered lending at interest a mortal sin – though Christianity managed to talk itself out of that useful teaching some centuries ago.

    Thus the only investment advice I can offer is to get out of investments altogether, and put your money into something that will actually be useful: training in practical skills that will make you employable in a deindustrializing economy, for example, or extra insulation so you can keep your home livable with less energy. At this point in history, the belief that it’s possible to have your money make your living for you is basically a delusion; it’s likely to be a fairly persistent one, but those who can shake themselves free of it and adjust to life in a radically different economic reality are likely to do better than those who keep on chasing the prospects of an age that is ending around us. ”

    There will come a time “when money and the market play little role in most people’s lives and labor and land become the foundation of a new, impoverished, but relatively stable society where the rule of law again becomes a reality. None of us living today will see that period arrive, but it’s good to know where the process is headed.”

    • Jfisher and all: Good discussion. If there are some readers here under 40, it is likely that some will live to see a radically different economy develop. Fossil fuel usage likely peaks globally within a few decades. What could keep the circus going would be next gen nuclear and/or the long shot of fusion. Population growth rates are dropping rapidly in China- far below replacement rate, and India is now at replacement level which is a shocker. Ecological limits and quality are pinching hard.

      As to the declining prosperity Dr. Morgan has correctly nailed, here’s an indicator from the US which fits right in:
      “Seventy-three percent of Americans die with debt. And on average, they die $62,000 in the red.”

      from: https://www.debt.com/what-happens-to-your-debt-when-you-die/

    • @Steven Kurtz
      I wonder how much of that terminal debt is owed to the medical system? Most of the people in the world die quietly. Americans die in hospitals.
      Don Stewart

  13. Very fine article again; thank you. It’s a dank Monday morning here in the UK and, following the PM ‘address to the nation’ yesterday evening, the ‘jitter index’ has increased to ever-higher levels. The fantasy that c.1m vaccine booster jabs can be delivered by our battered NHS (GP’s given 12 hours notice to drop everything else) by 31 December has made an exhausted populace panic. Lateral flow tests are ‘out of stock’ this morning, and it’s pretty much impossible to book a ‘booster’ jab (I have had mine) because of ‘Omicron Anxiety’.

    More shops are being permanently shuttered – just visit any town or city here, and we are being encouraged to ‘WFH’ again, which will accelerate the collapse of more businesses that rely on discretionary spending. And taxes are going up in the Spring.

    It really is a gloomy nation, and many families are creaking under the strain as essential expenditure keeps on rising; we are beginning to notice. Hey, ho!

    • A quick comment Mark if you don’t mind. Recently I was on the coach from Birmingham to Sunderland. It was interesting to see that Birmingham is dead, Leeds is dead, Middlesbrough is dead and Sunderland is dead but Manchester was absolutely busy and thriving even though by all local media accounts, the Birmingham economy is thriving with an expected growth of 7.1%.

      The retail footfall in Birmingham appears to be dramatically down but other sectors seem to be on the up with frequent local media reports of business expansions. It would appear it is difficult to know exactly what is going on without detailed sectoral analysis.

  14. Mr Gwynne, I can only speak from personal experience after visiting Bristol, Bath, Leamington Spa, Warwick, and a couple of small Cotswold villages/towns lately. aside from ‘convenience stores’ and pharmacies, there were very many closed retail outlets, of all types – most places are starting to look rather down-at-heel, I sense. In Bourton-on-the-Water, we stopped for lunch in a well-appointed pub on a recent Friday lunchtime. Aside from us, there were no more than four other people in the pub. Life seems very hard for smaller bricks & mortar retailers as more and more people shop on-line and some have to eschew ‘stuff’ as they suffer from ‘want of coin’. In Leamington Spa the other day, there were four closed charity shops – although, of course, they might have been on very short-term leases.
    Amongst my clients, there has been a marked shift towards paying off debt, spending less on ‘stuff’, saving and concentrating on boosting income where possible. Perhaps that’s unique to my clients, but I very much doubt it.
    Many people are doing well, we must remember – the majority, I’m glad to say.

  15. Class, Income, Ecological Footprint
    These a tricky ways to categorize. For example, there was a brief twitter-storm in the US when Whole Foods Markets fired some food service workers for taking home some leftover food at the end of the day. Homeless people, or just the thrifty, routinely dumpster dive in Whole Foods trash bins. Now these people are clearly not in the Upper Crust in terms of social status. And, by American standards, their income is low. But in terms of their ecological footprint, they are living like kings of old. What they rescue from the dumpster was ecologically very expensive to produce. Their footprint exceeds any reasonable future allowable. So how do you put them into a nice, neat category?
    Don Stewart

  16. Interesting report on last nights (BBC) Panorama program. The latest credit wheeze to keep sales (and consumption) humming along is the rapidly growing sector of “Buy now, pay later” companies, such as Klarna. What grabbed my attention was that these credit facilities are not just being used to buy the latest fashion throwaway, or Christmas presents for the kids. Some people are now using them to buy the weekly groceries. Yep, the weekly essentials are being procured on “tick”. I guess that if the Klarna’s of this world weren’t there, the same people would be turning up at food banks to put bread on the table. No doubt some of them will end up there anyway, once all their lines of credit are maxed out. Just wait until interest rates start to rise.

    • I didn’t see the show and only read about ‘buy now pay later’ last week but in the article I read there was no mention of the down sides. I wondered at the time what the terms were, interest rates, consequences for missed payment etc. I’m assuming that Panorama went into this?

    • @ Richard,

      Panorama went into as far as you can in a 30 minute slot. They did tease out that people are ending up in the clutches of debt collection agencies.

      One of the key points about these “buy now, pay later” companies is that they are unregulated and no credit checks are required. People who wouldn’t be able to obtain a credit card due to poor credit ratings, have no problem signing up to the “buy now, pay later” companies.” It’s the new sub-prime of credit purchasing. The BBC reporter opened accounts with 6 different companies in the same day, and started spending immediately.
      Still, I suppose for the needy, it’s better than the local loan shark and his heavies.

      From a macro perspective, it’s yet another snowflake that could start the financial avalanche when this sub-prime venture blows up

    • The recent stability report by the Bank of England gave the system a clean bill of health. (It would have been staggering if it had not).

      One of the tests seems to be that the banking system is capable of continuing to lend.

      As in other countries, financial stability seems to be deemed coterminous with a continuing ability to carry on increasing total debt.

      This might remind some readers of the UK ‘Carry On’ comedy film franchise, starring, amongst others, Sid James, Barbara Windsor and Hattie Jacques. Films included ‘Carry on Sergeant’, ‘Carry on Doctor’ and ‘Carry On Up the Khyber’

      Maybe ‘Carry on Lending’ is the latest instalment?

    • Basically these are interest free for a few months and it’s funded by the retailer as a means of boosting sales. Becomes a problem if payments are missed of course.
      Seemed to me many of the people who do this are not on the bottom rung of society but probably people who are not good with money and trying to lead a lifestyle that they think they should have. Struck by the throwaway comment by one lady of ‘I like to spoil my kids’. I doubt she would buy secondhand as my parents might have done when money was tight.

      Worrying that people are using it for food however. But then we need continued debt to prevent the economy collapsing.

    • The pitfalls with AI trying to mimic human beings were identified by Hubert Dreyfus in a 1972 MIT publication, “What Computers Still Can’t Do.” Among other things, computers & digital processing can’t do induction, a formidable shortcoming. The modern approach is to come up with ways that mimic induction. They also still can’t run to catch a baseball hit to somewhere in center field or throw a football to a receiver – this level of physical processing and manipulation still eludes them.

      As with all machines in the past, their use and efficiency depends on humans adapting to work within the machine input parameters, limitations and requirements, not vice versa. It is the human ability to adapt to and to incorporate them as extensions of the human body that makes them useful. While there are people who are genuinely working to expand knowledge and make AI better, in my minimally informed opinion (LOL), the hype seems to be mostly BS for pump and dump schemes and to keep workers in line by threats of job loss.

    • tagio, https://www.professional-ai.com/inductive-reasoning.html suggests otherwise – or is this what you mean by mimicking? In which case, we can have a philosophical discussion around if it looks like a duck and quacks like a duck, then let’s call it a duck.

      The definition of inductive reasoning seems to cover a neural net “learning” how to identify whether a dog is in a picture, by generalising from thousands of examples.

      Your examples about running to catch a baseball or throw a football to a receiver – not really AI, IMO – just some engineering of a suitable robot plus maths to calculate the trajectory required. Note that ships already have auto-guns that can take out anti-ship missiles – taking into account the motion of the ship as well as any jinking by the missile. I would suggest that is pretty close to throwing a football to a receiver.

      I did do a degree in AI over 30 years ago, before the age of neural nets, for what it is worth.

    • My Two Cents on AI
      It has become very difficult to do many aspects of biological research without using AI tools. If we are dealing, for example, with a host of microbes, each with their own biological networks, and their own capacity for quorum sensing, a rapidly changing environment, and the unique human host body which has daily cycles, then Big Data techniques are almost essential.

      Where I do not think that AI is of much help is in the realm of the peculiarly human. For example, there are some people who think that an increased death rate among us humans is a good thing in a world suffering from Overshoot. I can’t think of anything an AI program could add to that discussion. The AI program may sharpen our projections of what a variety of policies might yield, but ultimate answers are probably going to remain distinctively human.

      Don Stewart

    • Richard, as you know far more than me about AI, I have nothing to add other than that I’ve seen a few articles on the Google that indicate that the current programs are “mimicking” induction. I certainly don’t know enough to understand how it differs from “real” induction or to address the walks like a duck issue. I am way out of my depth on this topic, so best to assume I am just an eejit blowing smoke here.

      I will note that Alice isn’t impressed with AI’s ability to learn to recognize an object. “Image recognition training requires huge amounts of data, it took 1.2 million images to train AI to recognize 1,000 objects, while a child can learn to recognize a new kind of object or animal with just one example (Simonite 2016).”

      Or to physically perform motor skill tasks:
      “To program a robotic hand to manipulate a Rubik’s cube required 1,000 desktop computers plus a dozen machines with special graphics chips for several months, consuming about 2.8 gigawatt hours of electricity, the output of three nuclear power plants for an hour. Machine-learning algorithms consume more and more energy and data while training longer and longer (Knight 2020).”

      Based on this sort of stuff, I doubt the AI revolution is at hand, and my impression is that there’s tremendous hype, similar to the sort of junk future marketed to us decades ago that suggested we were going to be living like the Jetsons round about now.

    • Tagio, I agree that there is a lot of hype, and we definitely shouldn’t read too much into the current technology, such as image recognition. As you point out, it takes massive data to be able to “understand” an image, but a baby can indeed learn to recognise from just a few samples.

      However, I believe in Strong AI – in other words, I believe that there is nothing fundamental in how the brain works, that can’t be replicated by a computer at some point in the future (and that includes emotions, intuition, etc). We just haven’t worked out how yet, and given what this blog is about, probably never will.

  17. I’ve just picked up on some interesting market data from a reliable source.

    To summarise, approximately 15% of companies in the S&P 500 are trading above 10X sales value. This is an extraordinary figure, and it’s climbed exponentially since 2019. To put this aberration into perspective, it’s TWICE the number of companies that were trading above 10X sales at the height of the Dotcom boom in 1999. Look how that ended. Apple currently trades on 32x earnings, and is approaching a value of $3 trillion (it might be there by now). These are mind boggling figures.

    To quote the source of this data, “there is no longer a stock market bubble… there is a mega-bubble”

    Hey-ho, what goes up must come down. Is that the sound of air hissing out from somewhere that I hear?

    • neill61: Is there a reason you don’t disclose the source of the quote? Is it forbidden to share it? Illegal?

  18. Will the US (and other nation states) Fall Apart?
    70 years ago Eric Hoffer, a San Francisco longshoreman, wrote a book about mass movements and true believers. Liz Cheney, the Wyoming Republican, now in deep doo doo with her party for criticizing Donald Trump, has read into the Congressional Record tweets from Donald Trump, Jr. and various officials at Fox News urging Trump to leave the White House after he lost the election because “this shit has gone too far”.

    In order to get some perspective on whether Republican voters might open their eyes, and Democrats might reassess their “Russian Collusion” narrative, and the leaders in Washington might get on with the urgent business at hand, it may be useful to review Hoffer’s message:

    https://reasonandmeaning.com/2017/09/04/summary-of-eric-hoffers-the-true-believer/

    Also very likely applicable to the faith that money is the economy, that technology will surely save us, etc.

    Don Stewart

    • @ Steven B Kurtz

      There’s nothing malign about the source of my data, but I’m not at liberty to copy and paste any of the original text, because it’s from a copyright subscription publication.

      The source of the information is Charlie Morris, a well-respected analyst, fund manager, and journalist in the UK. The data he presented is all available in the public domain, although not necessarily quick and easy to put together. You may need a Bloomberg terminal or something similar to fish it out from primary sources.

    • Dear Mr. Stewart:

      I guess it was just a matter of time before someone resurrected Eric Hoffer. In the 70’s crypto-fascist Globe & Mail columnist, Richard Needham used to write about him extensively. From my (fading!) memory of Hoffer, I seem to recall a persona more like that described in this article:

      https://www.jacobinmag.com/2014/09/the-rights-working-class-philosopher

      If you want a working class philosopher that can describe modern society, I would suggest Joe Bageant. He even comes from your neck of the woods:

      https://thebaffler.com/salvos/toxically-pure

    • This website looks like it still has a few holes, but does well to bring together many ideas from different thinkers familiar to all of us in a single place in a useful narrative for the layman. I still don’t understand what the “fan” is referring to though ( or maybe it’s the the thing that the poop will hit). Thanks for posting.

  19. The thing I notice about The Jetsons now that I am much older, is the background assumption that, although the world will be full of marvelous new gadgets and robot (slave) labor to free housewives from drudgery, we would all continue to be office drones and shopaholics, living in the sky and even further removed from nature.

    Conditioning for young minds.

  20. Ian Welsh’s article on the 13th, “A quick understanding of inflation and current supply chain issues,” might be an interesting read to some of the commenters on this blog. While Ian writes from a definite ideological and political perspective, in this article he is noting that the only solution the “elites” have ever known is incapable of working to salvage the system. It hints at an interesting idea that parallels the ECoE concept from the political “management” side – the increasing cost of measures to financially benefit elites increases until it begins to destroy the real economy. Steve Ludlum has a nice way of summing it all up with his First Law of Economics: “The costs of managing any surplus increase along with it to the point where costs ultimately exceed the worth of the surplus itself.”

    From Ian’s article:
    “In other words we have a structural logistical problem caused by our systems being over-engineered for efficiency as measured by profits, without any slack or being designed to make sense. People familiar with the system I talk to tell me that no one understands it; it’s too complicated and dispersed.

    But for 42 years we’ve relied, almost completely, on financial solutions to economic problems, run primarily through central banks with finance and treasury departments occasionally assisting. The solution to every problem has been to give rich people and corporations more money and assume that will create “supply”, while crippling everyone else to manage “demand.”

    That won’t work for this. Giving rich people more money won’t fix things, because the people who run the logistics system are making a lot of money off of the shortages: their profits are up. They’ll take money if the Fed wants to give it to them, but they have no reason to fix anything.

    In principle I suppose one can cut even more money off to ordinary people, and that’s what is being done in stages and pandemic support is removed, but the shortages are so severe this may lead to even Americans and Britons, some of the most supine people in the world, deciding that rioting is better than starvation.

    Or maybe it won’t. Maybe they are so beaten down, that unlike Indian farmers (who recently forced their leader Modi to back down) they will simply sit and take it.

    But this isn’t a problem which can be fixed by the usual “if we just give more money to rich people and privatize some more the market will sort it out” solution that have been essentially the only policy methods modern elites have ever known.”

    • Isn’t that just another description of trickle down economics? Which is of course self-serving nonsense. That anyone took such claptrap seriously is beyond farce.

  21. If you visit the following link you will find a map of the day-ahead electricity prices in Europe.

    Hint: They are high and seemingly record-breaking

  22. We cannot wean ourselves off of excessive consumption if we continue to add over 80 million new mouths to feed every year. The math is clear even if the leaders minds are not. We, as a species are in massive overshoot trying to explain it away as simply a need for more resources like the $45 trillion worth barely available in the rapidly melting Arctic. We have become the great miscalculation of evolution, big brains but bigger egos.

  23. Sorry, last post for a couple of days, I promise. One of Steve Ludlum’s best, contains strategies for weathering the coming decline, one of which is:
    “Think toward nature’s parsimonious ‘economy of needs’. These are simple: food and water, clothing, shelter along with delight – love, sex and a stimulating and beautiful environment. Compare this to the industrial regime of robots and furnaces; capital consumption, waste, and profits … of material excess alongside the artificial scarcity of abstract ‘money’; of toxic contamination, greed and violence and their tyranny over all things and the extinguishing of life itself.”
    “A Creping Sense of Futility” at economic-undertowDOTcom

  24. @Tagio
    Ludlum’s “economy of needs” bears more than a passing resemblance to a bit of management theory that’s been around since the 1940’s. I refer to Maslow’s Hierarchy of needs, which is a motivational theory. Also referred to as Maslow’s pyramid of needs, the most basic of Physiological needs (food, drink, shelter, warmth, sleep, clothing) form the base of the pyramid and Self-actualisation needs form the tip.

    I think it’s informative to look at Maslow’s pyramid in terms of the hideous inequality between the richest folks (concerned with self-fulfilment and peak experiences) and the poorest folks who face daily battles to meet basic physiological needs.

    I’m struggling to reconcile certain things that I’ve seen in 2021, with living in an advanced developed economy that is 5th biggest in the world, and a major global financial capital.
    For example, recently I’ve noticed that as shop doorways in the city centre are becoming fully occupied by the homeless, those without a doorway to call their own, are moving to out of town shopping centres and retail parks. It’s the first time I’ve seen that in my part of the world.

    These days I’m not surprised by many things, but one of the truly shocking experiences of 2021 was the ITV (news) series of reports on sub-standard housing in the UK. The number of properties that are barely fit for human habitation is staggering. From memory, they put the figure at over 1 million sub-standard dwellings. It’s not just unscrupulous private landlord’s either. Some of the worst examples belonged to local authorities and housing associations. Some of the conditions are so bad that they are fuelling a health crisis, that’s putting additional pressure on the NHS.

    I keep asking myself, how can these kinds of things be happening in a supposedly wealthy nation? Am I really living in 21st century Britain? That leads to the question, where has all the money gone? By money, I mean national wealth. I suppose a better question to ask, is who squandered our wealth, and on what? Is it as simple as QE has lined the pockets of the rich and driven the poor to destitution? I doubt it, because things are never usually that simple.

    If the examples I quote are a sign of things to come, it’s going to be grim.

    • What’s worse, Picketty’s 2013 book suggested that under capitalism this poor->rich transfer spontaneously continues for ever. The returns available on a fortune of £30,000,000,000 are much higher than on £3,000, making this a vicious circle.

      I don’t remember seeing people in doorways in the 1970s. But maybe I wasn’t looking because I just assumed that such things didn’t happen then. Anyone else have any better idea?

      People were on average poorer in the 1970s, that’s certain. Maybe the bottom 10% were relatively better off and so were less likely to default on the mortgage or rent.

    • Interestingly, it is argued Maslow inverted the hierarchy of needs from the Blackfoot original.

      https://lincolnmichel.wordpress.com/2014/04/19/maslows-hierarchy-connected-to-blackfoot-beliefs/

      Other articles on Maslow inverted exist online too from other perspectives.

      The general argument being that Maslow inverted the original hierarchy to better reflect his developmental individualism in contrast to the developmental communitarianism upheld by the Blackfoot.

    • @Steve G., Thanks for this link from 2014. Valuable input for those exploring a Resolutique. I’m pessimistic, but know several who won’t give up trying. I try to help a bit.

    • There’s been a lot of back-and-forth on Maslow’s hierarchy over the years, both its origin and the reason he created such a rigid structure (the “hierarchy”). One possible explanation for the rigidity is that motivational theories of that time were exploring Guttman scales (where you have an accumulating score and achievement steps. Say like grades). That is, you get to fulfill the next level-of-need after you’ve achieved the previous one (i.e., we HAVE to fulfill physiological needs before we can address safety needs, and so on). The needs themselves seem appropriate for understanding psychological well-being (i.e., physiological, safety, love and belonging, esteem, and self-actualization). But the rigid hierarchy isn’t well supported.

      Victor Frankl’s work (i.e., human nature is motivated by the search for a life purpose), which came out of his experiences in a concentration camp during WW2, argued first for inverting the hierarchy and later for just making it clear how powerful a motivational force were meaningful work, love, and showing courage in the face of a threat.

      Inverting Maslow’s hierarchy is hard for some people to imagine, let alone accept. But Frankl’s quote (which paraphrases many similar ones from many cultures) captures the idea: “Those who have a ‘why’ to live, can bear with almost any ‘how’.”

  25. The map of energy “day-ahead prices” posted by Oleander didn’t show the UK, so I checked what it was for the UK on the same day (yesterday) using Nord Pool market data. The UK price was 484.39 euros, which was significantly more expensive than any of the other countries shown on the map. That compares to a price of 56.54 euro’s on the same day last year. Wow, there’s inflation for you! I suspect yesterday’s price in the UK could be an all-time record high. Interestingly, I didn’t see any mention of it on mainstream news.

    Still, at least the lights are still on, albeit at an exorbitant cost. I wonder if it will stay that way? I’m looking at live grid data to see what’s keeping the lights on at the moment. Well it isn’t wind and solar, I can tell you that. I can see that the wind turbines on the hills above me are stationary, and the grid data confirms they are only contributing around 7% of total supply. Meanwhile it looks like someone has fired up one of the last remaining coal burners to plug the gap. Coal is currently generating about 5% of requirements. We are also tapping the interconnectors to import about 5% of requirements. According to the met office, most of the UK looks set to experience settled weather with very low wind speeds well into next week. Let’s hope that there are no unexpected outages of major generating plant. Former boy scouts will already have prepared the candles and set the log burner.

  26. A Good Guy Gets Some Attention
    Bloomberg selected Ricard Heinberg’s book Power as one of the best books os 2021:
    “This is a hard look at a brutal fact; there are limits to growth on a finite planet. After 50 years of dismissing this clear, physical truth, we can see we are entering the endgame where we are beginning to run out of everything, starting with energy. We must profoundly change our ways and do it fast, according to Heinberg, or suffer the direst of consequences.”

    — Jeremy Grantham
    Long-term investment strategist,
    Grantham, Mayo, Van Otterloo, & Co.

  27. Biology and AI
    Here is a very current example of the application of Big Data technology to a biological/ medical/ behavioral/ cognitive problem…Irritable Bowel Syndrome, or IBS:
    https://emeranmayer.com/blog/

    Look for the heading:
    Anxiety and IBS – Two Sides of the Same Coin?

    As a side note, the attempt to segregate problems into the conventional silos of medicine or biology is clearly not the solution to many of our problems. I suggest that we will eventually admit that all of the problems attendant to increasing ECoE or depletion of other natural resources will likewise require a multi-disciplinary approach.

    Those of you familiar with the notion that Relativity is a foundational principle of science will not be surprised. Everything really is connected to everything else.

    Don Stewart

    • I would recommend this book.

      Whilst the plan it describes is not a complete solution to our problems, it is a major part of any solution that does not involve die off. We have outgrown the Earth. With Elon Musk’s success in developing a cheap reusable rocket vehicle, the most important tool enabling the vision described in this book is now in place.

  28. Rachel Donald
    “Common Sense vs Economics
    Rewriting economics to allow the best of human nature to triumph

    Did you know that four years of studying mainstream economics at university has such a profound impact on students that their value systems change? And not for the better.
    Economic theory affects the very fabric of human society, and the dominant neoliberal model is at the root of many of the crises we face. Assuming human nature is fundamentally selfish has created a terrible feedback loop of individualism, precarity and abuse. Ecological economists are fighting back with new models, models they believe are more in line with humankind’s long history of collaboration.”

    The best way to find the article is perhaps to search on some key words. Rachel changed the name of her blog, but my computer is stuck in machine language and doesn’t adapt well to modern coding??? Or I am an old dog and just don’t learn new tricks???

    At any rate, the notion that humans are led to cooperate to solve problems they cannot solve alone is very current. David Graeber’s new (and last) book is an example. I am about to be imprisoned in a narrow tube flying high in the air for hundreds of miles for 3 hours, so it’s a good opportunity to take Graeber’s book and immerse myself in it.

    One of my qualms about the ‘cooperative ape’ hypothesis is that we tend to select leaders who are psychopaths or sociopaths, or maybe both. For every well meaning ambassador trying to negotiate peace, there is an unreconstructed warrior in the Pentagon trying to figure out how to use naked force to get what he wants. “If only one of them survives, and there are two of us, WE WIN!”.

    Don Stewart

  29. Jean Laherrere

    Jean keeps on producing fact based projections of world oil and gas production. Here is his current work:

    Click to access graphsjhl-17dec21.pdf

    “It is amazing to find that EIA/AEO2021 forecasts in 2050 shale gas production still on the

    rise, over 40 Tcf, when my forecast for 2050 is zero!”

    Much of this is in French, but I think it is obvious that much of the future production expected is either high cost or imaginary. David Hughes’ recent work regarding US tight oil and gas is in general agreement with Jean.

    Don Stewart

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