What Happened to Self Reliance?

How often do you hear the phrase "Self Reliance" these days? I never hear it.

Apparently being self-reliant is out of style. It seems that we the people have become a nation of consumers, and consumers are not self reliant. Oil producing countries, advertisers, government, political parties, and employers, to name a few, want us to be consumers and not self reliant. They want us to spend our money and depend on them for information, compensation, energy, food, entitlements, loans, tax breaks, etc. (Likewise, the United States government consumes more than its revenue; it depends on purchases of debt by China and other countries to fund the endless overspending.) But the really ugly skeleton in the closet is our dependence on fossil fuels.

Cutting back on our energy use is critical. Leadership in this realm has been mixed at best. Many of the celebrity Americans who promote energy conservation and alternative energy don't walk their talk. Al Gore and his huge mansion are a glaring example.

Blogger and writer John Michael Greer is preparing for a future where fossil fuels are very expensive and scarce; he intends to be self reliant. He writes extensively about why and how to conserve energy. Does he walk his talk? He recently reported:

I've never owned a cell phone, a car, a microwave, a television, or most of the other conveniences so many Americans think of as essential to life. I do own a computer — it's essential to the way I make my living — and my compromise there is that I don't buy new computers; I take the old ones that would otherwise end up in a landfill, and keep them out of the ecosystem. I still use a very modest amount of grid power — our power bills run in the $30-$40 a month range — since my wife and I bought a home of our own for the first time in 2009, and we haven't yet raised the money for an off-grid system (or for several other improvements I have on the list, such as solar water heaters and composting toilets). 

Some of my food comes from a backyard organic garden; much of the remainder is from the farmer's market in season; almost none is processed and packaged, though that's as much because I have a hard time choking down standard American food products as anything else. Organic wastes, almost without exception, go into the composter out back. I don't use mainstream medicine, though that's a complex issue in its own right — I've had too many family members killed or harmed by MDs to trust my health to them, among other things. (see Comments)

His sacrifices are rather shocking to most of us in America. It's easy to say he's weird and ignore the fact that he is much more self reliant than anyone we know.

Most of the poor in this country own a cell phone and a TV. (Government programs often pay for cells phones for the poor.) Many of these same people are unhealthy, in debt, and utterly dependent on someone else's money to pay for their lifestyle. They are not self reliant and never will be.

Why am I bringing this up? Dependence weakens individuals and countries – self reliance strengthens. The US needs to be stronger to weather the storms that loom on the horizon. What if… Iran and Israel go to war. Would Israel destroy Iran's oil wells? Would Iran destroy Saudi Arabia's oil wells? The price of oil could jump to $400 – $500 a barrel. Gas prices in the US could be $16 – $20 per gallon. Heating and cooling our homes could quadruple in price. How quickly could our government adapt? How would unprepared people adapt?

Maybe self-reliant people can teach us a thing or two. What do you think?

Why the Climate Change and Peak Oil Movement Are Failing

John Michael Greer points out why the climate change and peak oil movements have very little traction among the powerful people who make the rules.

…three factors.

The first was the astonishing political naivete of the climate change movement. All through the last decade, that movement has allowed its opponents to define the terms of public debate, execute a series of efficient end runs around even the most telling points made by climate science, and tar the movement in ever more imaginative ways, without taking any meaningful steps to counter these moves or even showing any overt interest in learning from its failures. Partly this unfolds from the fixation of the American left on the experiences of the 1960s, a fixation that has seen one movement after another blindly following a set of strategies that have not actually worked since the end of the Vietnam war; partly, I suspect, it’s rooted in the background of most of the leading figures in the climate change movement, who are used to the very different culture of scientific debate and simply have no notion how to address the very different needs of public debate in society that does not share their values.

This latter point leads to the second primary factor in the failure of the climate change movement, which is the extent that it attempted to rely on the prestige of institutional science at a time when that prestige has undergone a drastic decline. The public has become all too aware that the expert opinion of distinguished scientists has become a commodity, bought and sold for a price that these days isn’t always discreetly disguised as grant money or the like. The public has also been repeatedly shown that the public scientific consensus of one decade is fairly often the discarded theory of the next. When you grow up constantly hearing from medical authorities that cholesterol is bad for you and polyunsaturated fats are good for you, and then suddenly he medical authorities are saying that polyunsaturated fats are bad for you and some kinds of cholesterol are good, a certain degree of blind faith in the pronouncements of scientists goes out the window.

Part of the problem here is the gap between the face institutional science presents to its practitioners and the face it shows to the general public. In the 1970s, for example, the public consensus among climate scientists was that the Earth faced a new ice age sometime in the not too distant future. This was actually only one of several competing views aired privately among scientists at the time, and there were spirited debates on the subject in climatological conferences and journals, but you wouldn’t have learned that from the books and TV programs, many of the former written by qualified scientists and most of the latter featuring them, that announced an imminent ice age to the world at large. It’s become fashionable in some circles just now to insist that that never happened, but the relics of that time are still to be found on library shelves and in museums. When I visited the Museum of Natural History in Washington DC a year ago, for example, the exhibit on ice age mammals had a fine example: an illuminated display, prominently located, explaining that scientists expected a new ice age sometime in the next millennium or so. An embarrassed staff member had taped up a makeshift sign next to it announcing that current scientific opinion no longer supported that claim, and the display would be replaced sometime soon.

The mental whiplash caused by sudden changes in scientific opinion, each one announced to the public in terms much less tentative than it generally deserves, has played a larger role in hamstringing climate change activism than most of its supporters may find it comfortable to admit. Notice, though, that the uncertain nature of scientific knowledge didn’t prevent the passage of the Endangered Species Act or a baker’s dozen of other environmental initiatives in the Seventies; in fact, the scientific community was far more divided over ecological issues at that time than it is about climate change today. That was arguably a benefit, because it forced proponents of environmental protection to approach it as a political issue, to get down into the mud wrestling pit with their opponents, and to address the hopes, fears, and concerns of the general public head on, in terms the public could understand and accept. By and large, climate change activists have not done this, and this is an important reason why they have been so thoroughly thrashed by the other side.

Still, I’ve come to think that a third factor has played at least as important a role in gutting the climate change movement. This is the pervasive mismatch between the lifestyles that the leadership of that movement have been advocating for everyone else and the lifestyle that they themselves have led. When Al Gore, after having been called out on this point, was reduced to insisting that his sprawling mansion has a lower carbon footprint than other homes on the same grandiose scale, he exposed a fault line that runs straight through climate change activism, and bids fair to imitate those old legends of California’s future and dump the entire movement into the sea.

…I long ago lost track of the number of times I’ve heard people in one or another corner of the activist scene throw up their hands in despair and describe the task of organizing people to seek some form of change or other as being like trying to herd cats. In point of fact, herding cats is one of the easiest things in the world. All you have to do is go to the place you want the cats to go, carrying with you a #10 can of tuna and an electric can opener. The moment the cats hear the whirr of the can opener and smell the fragrance of the tuna, they’ll come at a run, and you’ll have your herd exactly where you want them. Now of course that strategy assumes two things. It assumes that you’re willing to go to the place you want the cats to go, and it also assumes that you have something to offer them when they get there.

That sums up what has been one of the most critical problems with the climate change movement: it has been calling on the world to accept a lifestyle that the movement’s own leaders have shown no willingness to adopt themselves, and thus have been in no position to model for the benefit of others. That’s left the movement wide open to accusations that it means its policies to apply only to other people – accusations that have not exactly been quelled by the efforts of various countries, the US very much included, to push as much of the burden of carbon reduction as possible onto their political and economic rivals. I trust I don’t have to spell out how such suspicions will be amplified by Shearman’s cheerleading for exactly the sort of authoritarian politics in which some people’s carbon footprint would inevitably be more equal than others’.

All these points are profoundly relevant to the core project of this blog, for many of the weaknesses I’ve traced out are also found in the peak oil movement. That movement has no shortage of political naivete, and it has plenty of spokespeople who mistakenly assume that their professional expertise – significant as that very often is – can be cashed in at par for influence on public debate. It also has its share of leaders who are perfectly willing to talk in the abstract about how people need to ditch their autos and give up air travel, but insist that they themselves need their SUV for one reason or another and wouldn’t dream of going to the next ASPO conference by train. These are serious weaknesses; unchecked, they could be fatal.

Of course there are other, critical reasons why a certain degree of political sophistication, a recognition that expertise is not enough to carry public debates, and a willingness to embrace the lifestyles one proposes for others – and especially the last of these – are essential just now. The most important of those reasons is that in terms of industrial civilization’s energy future, it’s very late in the day.

Gardeners: Earthworms are very Beneficial for the Soil in your Garden

Pesticides and herbicides kill good bugs as well as the bad bugs. That is one of many reasons why industrial agriculture is unsustainable. John Michael Greer describes the role of the earthworm in this excerpt from Animals I: Birds, Bats, and Bumblebees.

A garden is an ecosystem managed in such a way that human beings get to eat a significant fraction of the net primary production of the plants that grow there. Net primary production? That’s the amount of energy each year that the plants in a given ecosystem take in from the Sun and store in the form of sugars and other compounds that can be eaten by some other living thing. Everything other than plants in any ecosystem gets its fuel from the net primary production of that ecosystem, or of another ecosystem that feeds energy into it.

You’re not going to get anything close to a majority of the net primary production of your garden onto your dinner table, by the way, and it’s a mistake to try; if you do, you’ll starve other living things that depend on a share of net primary production to keep their own dinner tables stocked, and you need these other living things in order to have a healthy and productive garden. (Ignoring this latter point is one of the critical errors of today’s industrial agriculture.) Your goal instead is to make sure that as much of the net primary production diverted from your table as possible goes to living things that earn their keep by doing something for your benefit.

Here’s an example. A certain amount of each year’s net primary production from your garden goes to feed earthworms. Any gardener with the brains the gods gave geese won’t grudge them their share, because earthworms break down organic matter into forms plants can use, and they improve the texture and drainage of soil as they do it. Charles Darwin – yes, that Charles Darwin – wrote a brilliant and too often neglected book on the role of earthworms in the creation of topsoil; what he found, to drastically simplify a classic piece of ecological research, is that earthworms are topsoil-making machines, and the more you’ve got, the better your soil and the higher your crop yields will tend to be.

Climate Change and Politics in Copenhagen: We Won’t Get Fooled Again?

I'm so tired of being misled by our leaders that I search for people who don't sugarcoat what they see happening. This leads to inner conflict: the satisfaction of getting a somewhat realistic view of the problems that we face up the creek, and anger from realizing that how skilled our leaders are at promising to solve problems to gain power.

John Michael Greer doesn't sugarcoat what he sees. Below are some excerpts from his recent essay on the politics of climate change conference in Copenhagen. Don't read this unless you enjoy dark humor and you want to become more cynical. The realization that there are no easy solutions is always very difficult to swallow.

Link: The Archdruid Report: The Human Ecology of Collapse.

The question that has to be asked is whether a modern industrial society can exist at all without vast and rising inputs of essentially free energy, of the sort only available on this planet from fossil fuels, and the answer is no.

…will somebody please explain to me someday how a head of state got given the Nobel Peace Prize while he was enthusiastically waging two wars?

Meanwhile the socialists are insisting that it’s all capitalism’s fault and can be solved promptly by a socialist revolution, never mind the awkward little fact that the environmental records of socialist countries are by and large even worse than those of capitalist ones; other radicalisms of left and right make the same claim as the socialists, often with even less justification.

I think a great many people are beginning to realize that whatever results come out of Copenhagen, a meaningful response to the increasing instability of global climate will not be among them.

Suppose, for the sake of discussion, that Obama agreed to cut US carbon emissions far enough to make a real impact on global climate change. Would those cuts happen? No, because Congress would have to agree to implement them, and Congress – even though it is controlled by a Democratic majority – has so far been unable to pass even the most ineffectual legislation on the subject.

Suppose the improbable happened, and both Obama and Congress agreed to implement serious carbon emission cuts. What would the result be? Much more likely than not, a decisive Republican victory in the 2010 congressional elections, followed by the repeal of the laws mandating the cuts. Carbon emissions can’t be cut by waving a magic wand; the cuts will cost trillions of dollars at a time when budgets are already strained, and impose steep additional costs throughout the economy.

any nation that accepts serious carbon emission cuts will place itself at a steep economic disadvantage compared to those nations that don’t.

Business executives whose companies will bear a large share of the costs of curbing carbon emissions have funded some very dubious science, and some even more dubious publicity campaigns, in order to duck those costs; academics have either tailored their findings to climb onto the climate change bandwagon, or whored themselves out to corporate interests willing to pay handsomely for anyone in a lab coat who will repeat their party line; politicians on both sides of the aisle have distorted facts grotesquely to further their own careers.

Beneath all the yelling, though, are a set of brutal facts nobody is willing to address. Whether or not the current round of climate instability is entirely the product of anthropogenic CO2 emissions is actually not that important, because it’s even more stupid to dump greenhouse gases into a naturally unstable climate system than it would be to dump them into a stable one. Over the long run, the only level of carbon pollution that is actually sustainable is zero net emissions, and getting there any time soon would require something not far from the dismantling of industrial society and its replacement with something much less affluent.

Even if it turns out to be possible to power something like an industrial society on renewable resources, the huge energy, labor, and materials costs needed to develop renewable energy and replace most of the infrastructure of today’s society with new systems geared to new energy sources will have to be paid out of existing supplies; thus everything else would have to be cut to the bone, or beyond.

I long ago lost track of the number of global warming bumper stickers I’ve seen on the rear ends of SUVs.

Nobody, but nobody, is willing to deal with the harsh reality of what a carbon-neutral society would have to be like. This is what makes the blame game so popular, and it also provides the impetus behind meaningless gestures of the sort that are on the table at Copenhagen.

a strong case can be made that the most viable option for anyone in a leadership position is to enjoy the party while it lasts, and hope you can duck the blame when it all comes crashing down.

the immediate costs of doing something about the issue are so high, and so unendurable, that very few people in positions of influence are willing to stick their necks out, and those who do so can count on being shortened by a head by others who are more than willing to cash in on their folly.

Both Sides of the Global Warming Debate Are Wrong

John Michael Greer, one of my favorite sources of intelligence, describes why the global warming debate is so polarized, with scientific "evidence" being used by both sides. He suggests that we should be more concerned about Peak Oil, which is less controversial and more predictable, but not very marketable. Excerpts below.

Click on the link below to read the whole essay. The comments are very interesting also.

Link: The Archdruid Report: Hagbard's Law

…Hagbard’s Law is a massive factor in modern societies. Coined by Robert Shea and Robert Anton Wilson in their tremendous satire Illuminatus!, Hagbard’s Law states that information can only be communicated between equals, since in a hierarchy, those in inferior positions face very strong incentives to tell their superiors what the superiors want to hear rather than ‘fessing up to the truth. The more levels of hierarchy between the people who gather information and the ones who make decisions, the more communication tends to be blocked by Hagbard’s Law; in today’s governments and corporations, the disconnect between the reality visible on the ground and the numbers viewed from the top of the pyramid is as often as not total.

Many of my readers will be aware that two examples of this sort of figure-juggling surfaced in the last couple of weeks. From somewhere in the bowels of the International Energy Agency (IEA), a bureaucracy created and funded by the world’s industrial nations to provide statistics on energy use, two whistleblowers announced that the 2009 figures that were about to be released had been jiggered, as past figures had been, under pressure from the US government. The reason for the pressure, according to the whistleblowers, was that accurate figures would be bad for the US economy – as indeed they would be, for much the same reason that a diagnosis of terminal illness is bad for one’s prospects of buying life insurance.

Of course news stories about the leaks brought a flurry of denials from the IEA. Doubtless some people were fooled; still, the gaping chasm between the IEA’s rosy predictions of future oil production and the evidence assembled by independent researchers has been a subject of discussion in peak oil circles for some years now, and it was useful to have insiders confirm the presence of fudge factors outside analysts have long since teased out of the data.

The second and much more controversial example came to light when persons unknown dumped onto the internet a very large collection of private emails from a British academic center studying global warming. Like everything else involved with global warming, the contents of the emails became the focus of a raging debate between opposed armies of true believers, but the emails do suggest that a certain amount of data-fudging and scientific misconduct is going on in the large and lucrative scientific industry surrounding climate change.

The result is a great deal of faux science that manipulates experimental designs and statistical analyses to support points of view that happen to be fashionable, either within a scientific field or in the broader society. I saw easily half a dozen examples of this sort of thing in action back in my college days, which spanned all of five years and two universities. Still, you don’t need a ringside seat to watch the action: simply pay attention to how often the results of studies just happen to support the interests of whoever provided the funding for them. You don’t need to apply a chi-square test here to watch Hagbard’s Law in action.

There’s good reason to think that the feedback loop by which popular attitudes generate their own supporting evidence via dubious science has distorted the global warming debate. The fingerprints show up all over the weird disconnect between current global warming science and the findings of paleoclimatology, which show that sudden, drastic climate changes have been routine events in Earth’s long history; that the Earth was actually warmer than the temperatures predicted by current doomsday scenarios at the peak of the current interglacial period only six thousand years ago; and that the Earth has been a hothouse jungle planet without ice caps or glaciers for around 80% of the time since multicellular life evolved here. Technically speaking, we’re still in an ice age – the current interglacial is on schedule to end in the next few thousand years, giving way to a new glaciation for a hundred thousand years or so, with several million years of further cycles still in the pipeline – and claims that setting the planetary thermostat a little closer to its normal range will terminate life on Earth are thus at least open to question.

What interests me most about the current global warming debate is that these facts, when they get any air time at all, commonly get treated as ammunition for the denialist side of the debate. This hardly follows. Paleoclimatology shows that the Earth’s climate is unstable, and prone to drastic shifts that can place massive strains on local and regional ecosystems. It’s equally clear that number juggling in a British laboratory does not change the fact that the Arctic ice sheet is breaking up, say, or that a great many parts of the world are seeing their climates warp out of all recognition. Even if natural forces are driving these shifts, this is hardly a good time to dump vast quantities of greenhouse gases into an already unstable atmosphere – you could as well claim that because a forest fire was started by lightning, dumping planeloads of gasoline around its edges can’t possibly cause any harm.

The problem with the global warming debate just now is that tolerably well funded groups on both sides are using dubious science to advance their own agendas and push the debate further toward the extremes. The common habit of thinking in rigid binaries comes into play here; it’s easy enough for global warming believers to insist that anyone who questions their claims must be a global warming denier, while their opponents do the same thing in reverse, and the tumult and the shouting helps bury the idea that the territory between the two polarized extremes might be worth exploring. As a result, moderate views are being squeezed out, as the radicals on one side try to stampede the public toward grandiose schemes of very questionable effect, while the radicals on the other try to stampede the public toward doing nothing at all.

It’s instructive to compare the resulting brouhaha to the parallel, if much less heavily publicized, debate over peak oil. The peak oil scene has certainly seen its share of overblown apocalyptic claims, and it certainly has its own breed of deniers, who insist that the free market, the march of progress, or some other conveniently unquantifiable factor will make infinite material expansion on a finite planet less of an oxymoron than all logic and evidence suggests it will be. Still, most of the action in the peak oil scene nowadays is happening in the wide spectrum between these two extremes. We’ve got ecogeeks pushing alternative energy, Transition Towners building local communities, “preppers” learning survival skills, and more; even if most of these ventures miss their mark, as doubtless most of them will, the chance of finding useful strategies for a difficult future goes up with each alternative explored.

The difference between the two debates extends to the interface between statistics and power discussed earlier in this post. Both sides of the global warming debate, it’s fair to say, have fairly robust political and financial payoffs in view. The established industrial powers of the West and the rising industrial nations elsewhere are each trying to use global warming to impose competitive disadvantages on the other; fossil fuel companies are scrambling to shore up their economic position, while the rapidly expanding renewables industry is trying to elbow its way to the government feed trough; political parties are lining up to turn one side or the other into a captive constituency that can be milked for votes and donations, and so forth.

Still, I find myself wondering if Hagbard’s Law plays a much bigger role here than any deliberate plan. The global warming story, if you boil it down to its bones, is the kind of story our culture loves to tell – a narrative about human power. Look at us, it says, we’re so mighty we can destroy the world! The peak oil story, by contrast, is the kind of story we don’t like – a story about natural limits that apply, yes, even to us. From the standpoint of peak oil, our self-anointed status as evolution’s fair-haired child starts looking like the delusion it arguably is, and it becomes hard to avoid the thought that we may have to settle for the rather less flattering role of just another species that overshot the carrying capacity of its environment and experienced the usual consequences.

Can the American Lifestyle Survive the End of Cheap, Abundant Oil?

John Michael Greer's essay A Gesture from the Invisible Hand explains why the end of cheap, abundant fossil fuels undermines the economies of the societies that are dependent on oil. This is really bad news for the "civilized" countries — and why denial from our leaders is the norm. Excerpts below.

This "peak oil" aftermath theme also explains why debt is accelerating and China is becoming a dominant economic power.

Link: The Archdruid Report: A Gesture from the Invisible Hand

It’s common, for example, to hear well-intentioned people insist that the market, as a matter of course, will respond to restricted fossil fuel production by channeling investment funds either in more effective means of producing fossil fuels, on the one hand, or new energy sources on the other. The logic seems impeccable at first glance: as the price of oil, for example, goes up, the profit to be made by bringing more oil or oil substitutes onto the market goes up as well; investors eager to maximize their profits will therefore pour money into ventures producing oil and oil substitutes, and production will rise accordingly until the price comes back down.

Energy is one of those places: in some ways, the most important of all. Energy is not simply one commodity among others; it is the ur-commodity, the foundation for all economic activity. It follows laws of its own – the laws of thermodynamics, notably – which are not the same as the laws of economics, and when the two sets of laws come into conflict, the laws of thermodynamics win every time.

This is necessary because energy doesn't follow the ordinary rules of economic exchange. Most other commodities still exist after they've been exchanged for something else, and this makes exchanges reversible; for example, if you sell gold to buy marble, you can normally turn around and sell marble to buy gold. The invisible hand works here; if marble is in short supply, those who have gold and want marble may have to offer more gold for their choice of building materials, but the marble quarries will be working overtime to balance things out.

Energy is different. Once you turn the energy content of a few million bushels of grain into a pyramid, say, by using the grain to feed workers who cut and haul the stones, that energy is gone, and you cannot turn the pyramid back into grain; all you can do is wait until the next harvest. If that harvest fails, and the stored energy in the granaries has already been turned into pyramids, neither the market economy of goods and services or the abstract system of distributing goods and services can make up for it. Nor, of course, can you send an extra ten thousand workers into the fields if you don't have the grain to keep them alive.

The arrival of geological limits to increasing fossil fuel production places a burden on the economy, because the cost in energy, labor, and materials (rather than money) to extract fossil fuels does not depend on market forces. On average, it goes up over time, as easily accessible reserves are depleted and have to be replaced by those more difficult and costly to extract. Improved efficiencies and new technologies can counter that to a limited extent, but both these face the familiar problem of diminishing returns as the laws of thermodynamics, and other physical laws, come into play.

As a society nears the geological limits to production, in other words, a steadily growing fraction of its total supply of energy, resources, and labor have to be devoted to the task of bringing in the energy that keeps the entire economy moving.This percentage may be small at first, but it's effectively a tax in kind on every productive economic activity, and as it grows it makes productive economic activity less profitable. The process by which money produces more money consumes next to no energy, by contrast, and so financial investments don't lose ground due to rising energy costs.

This makes financial investments, on average, relatively more profitable than investing in the kinds of economic activity that use energy to produce nonfinancial goods and services. The higher the burden imposed by energy costs, the more sweeping the disparity becomes; the result, of course, is that individuals trying to maximize their own economic gains move their money out of investments in the productive economy of goods and services, and into the paper economy of finance.

Ironically, this happens just as a perpetually expanding money supply driven by mass borrowing at interest has become an anachronism unsuited to the new economic reality of energy contraction. It also guarantees that any attempt to limit the financial sphere of the economy will face mass opposition, not only from financiers, but from millions of ordinary citizens whose dream of a comfortable retirement depends on the hope that financial investments will outperform the faltering economy of goods and services. Meanwhile, just as the economy most needs massive reinvestment in productive capacity to retool itself for the very different world defined by contracting energy supplies, investment money seeking higher returns flees the productive economy for the realm of abstract paper wealth.

One intriguing detail of this scenario is that it has already affected the first major oil producer to reach peak oil — yes, that would be the United States. It's unlikely to be accidental that in the wake of its own 1972 production peak, the American economy has followed exactly this trajectory of massive disinvestment in the productive economy and massive expansion of the paper economy of finance. Plenty of other factors played a role in that process, no doubt, but I suspect that the unsteady but inexorable rise in energy costs over the last forty years or so may have had much more to do with the gutting of the American economy than most people suspect.

If this is correct, now that petroleum production has encountered the same limits globally that put it into a decline here in the United States, the same pattern of disinvestment in the production of goods and services coupled with metastatic expansion of the financial sector may show up on a much broader scale. There are limits to how far it can go, of course, not least because financiers and retirees alike are fond of consumer goods now and then, but those limits have not been reached yet, not by a long shot. It's all too easy to foresee a future in which industry, agriculture, and every other sector of the economy that produces goods and services suffer from chronic underinvestment, energy costs continue rising, and collapsing infrastructure becomes a dominant factor in daily life, while the Wall Street Journal (printed in Shanghai by then) announces the emergence of the first half dozen quadrillionaires in the derivatives-of-derivatives-of-derivatives market.

Perhaps the most important limit in the way of such a rush toward economic absurdity is the simple fact that not every economy uses the individual decisions of investors pursuing private gain to allocate investment capital. It may not be accidental that quite a few of the world's most successful economies just now, with China well in the lead, make their investment decisions based at least in part on political, military, and strategic grounds, while the nation that preens itself most proudly on its market economy — yes, that would be the United States again — is lurching from one economic debacle to another.

Show Us the Money

John Michael Greer explains what will eventually happen to debt-infested and overspending governments who use financial paper to pay for real goods and services. Excerpts below.

Link: The Archdruid Report: The Twilight of Money

Over the last century, with the assistance of the economic hypercomplexity made possible by fossil fuels, the world’s industrial nations have taken the process of economic abstraction further than any previous civilization. On top of the usual levels of abstraction – a commodity used to measure value (gold), receipts that could be exchanged for that commodity (paper money), and promises to pay the receipts (checks and other financial paper) – contemporary societies have built an extraordinary pyramid of additional abstractions. Unlike the pyramids of Egypt, furthermore, this one has its narrow end on the ground, in the realm of actual goods and services, and widens as it goes up.

The consequence of all this pyramid building is that there are not enough goods and services on Earth to equal, at current prices, more than a small percentage of the face value of stocks, bonds, derivatives, and other fiscal exotica now in circulation. The vast majority of economic activity in today’s world consists purely of exchanges among these representations of representations of representations of wealth. This is why the real economy of goods and services can go into a freefall like the one now under way, without having more than a modest impact so far on an increasingly hallucinatory economy of fiscal abstractions.

An economy of hallucinated wealth depends utterly on the willingness of all participants to pretend that the hallucinations have real value. When that willingness slackens, the pretense can evaporate in record time. This is how financial bubbles turn into financial panics: the collective fantasy of value that surrounds tulip bulbs, or stocks, or suburban tract housing, or any other speculative vehicle, dissolves into a mad rush for the exits. That rush has been peaceful to date; but it need not always be.

Finally, of course, bubbles always pop. When that happens, the speculative vehicle du jour comes crashing back to earth, losing the great majority of its assumed value, and the mass of amateur investors, having lost anything they made and usually a great deal more, trickle away from the market. This has not yet happened to the current money bubble. It might be a good idea to start thinking about what might happen if it does so.

The effects of a money panic would be focused uncomfortably close to home, I suspect, because the bulk of the hyperexpansion of money in recent decades has focused on a single currency, the US dollar. That bomb might have been defused if last year’s collapse of the housing bubble had been allowed to run its course, because this would have eliminated no small amount of the dollar-denominated abstractions generated by the excesses of recent years. Unfortunately the US government chose instead to try to reinflate the bubble economy by spending money it doesn’t have through an orgy of borrowing and some very dubious fiscal gimmickry. A great many foreign governments are accordingly becoming reluctant to lend the US more money, and at least one rising power – China – has been quietly cashing in its dollar reserves for commodities and other forms of far less abstract wealth.

Up until now, it has been in the best interests of other industrial nations to prop up the United States with a steady stream of credit, so that it can bankrupt itself filling its self-imposed role as global policeman. It’s been a very comfortable arrangement, since other nations haven’t had to shoulder more than a tiny fraction of the costs of dealing with rogue states, keeping the Middle East divided against itself, or maintaining economic hegemony over an increasingly restive Third World, while receiving the benefits of all these policies. The end of the age of cheap fossil fuel, however, has thrown a wild card into the game. As world petroleum production falters, it must have occurred to the leaders of other nations that if the United States no longer consumed roughly a quarter of the world’s fossil fuel supply, there would be a great deal more for everyone else to share out. The possibility that other nations might decide that this potential gain outweighs the advantages of keeping the United States solvent may make the next decade or so interesting, in the sense of the famous Chinese curse.

Over the longer term, on the other hand, it’s safe to assume that the vast majority of paper assets now in circulation, whatever the currency in which they’re denominated, will lose essentially all their value. This might happen quickly, or it might unfold over decades, but the world’s supply of abstract representations of wealth is so much vaster than its supply of concrete wealth that something has to give sooner or later. Future economic growth won’t make up the difference; the end of the age of cheap fossil fuel makes growth in the real economy of goods and services a thing of the past, outside of rare and self-limiting situations. As the limits to growth tighten, and become first barriers to growth and then drivers of contraction, shrinkage in the real economy will become the rule, heightening the mismatch between money and wealth and increasing the pressure toward depreciation of the real value of paper assets.

Once again, though, all this has happened before. Just as increasing economic abstraction is a common feature of the history of complex societies, the unraveling of that abstraction is a common feature of their decline and fall. The desperate expedients now being pursued to expand the American money supply in a rapidly contracting economy have exact equivalents in, say, the equally desperate measures taken by the Roman Empire in its last years to expand its own money supply by debasing its coinage.

Money Is Not Real Wealth

John Michael Greer continues to eviscerate conventional economic thinking in his series on economics. Excerpts below.

Link: The Archdruid Report: The Metastasis of Money.

If economists took a wider view of the history of their discipline than they generally do, they might have noticed that what most of them consider a fundamental feature of all economies worth studying – the centrality of money – is actually a unique feature of an economic era defined by cheap abundant energy. Since the fossil fuels that made that era possible are being extracted at a pace many times the rate at which new supplies are being discovered, current assumptions about the role of money in society may be in for a series of unexpected revisions.

In an ironic way, this process of revision may be fostered by the antics of the world’s industrial nations as they try to forestall the Great Recession by spending money they don’t have. The economic crisis that gripped the world in 2008 was primarily driven by a drastic mismatch between money and wealth. When the price of a rundown suburban house zoomed from $75,000 to $575,000, for example, the change marked a distortion in the yardstick rather than any actual increase in the wealth being measured. That distortion caused every economic decision based on it – for example, a buyer’s willingness to go over his head into debt to buy the house, or a bank’s willingness to lend money on the basis of imaginary equity – to suffer similar distortions. Now that the yardsticks have snapped back to something like their proper length, the results of the distortion have to be cleared out of the economy if the amount of money in the system is once again to reflect the actual amount of wealth.

Yet this is exactly what governments and businesses are doing their level best to forestall. Governments are scrambling to prop up economic activity at a pace the real wealth of their societies can no longer support; banks and businesses are doing everything in their power to divert attention from the fact that a great many of the financial assets propping up their balance sheets were never worth anything in the first place and now, if possible, are worth even less. Both are doing so by the simple expedient of spending money they don’t have. As government deficits worldwide spin out of control and the total notional value of the world’s derivatives market climbs steadily above one quadrillion dollars, the decoupling of money from wealth is even more extreme than it was at the height of the real estate bubble.

The Blindness of Economics

John Michael Greer describes why conventional economists cannot lead us out of the financial crisis. Excerpts below.

Link: The Archdruid Report: Why Economists Fail

…the profession seems to have become incapable of learning from its most glaring and highly publicized mistakes. This is all the more troubling in that you’ll find many economists among the pundits who insist that industrial economies need not trouble themselves about the impact of limitless economic growth on the biosphere that supports all our lives. If they’re as wrong about that as so many other economists were about the housing bubble, they’ve made a fateful leap from risking billions of dollars to risking billions of lives.

First of all, for professional economists, being wrong is much more lucrative than being right. During the runup to a speculative binge, and even more so during the binge itself, a great many people are willing to pay handsomely to be told that throwing their money into the speculation du jour is the right thing to do. Very few people are willing to pay to be told that they might as well flush it down the toilet, even – indeed, especially – when this is the case. During and after the crash, by contrast, most people have enough calls on their remaining money that paying economists to say anything at all is low on the priority list.

The same rule applies to professorships at universities, positions at brokerages, and many of the other sources of income open to economists. When markets are rising, those who encourage people to indulge their fantasies of overnight wealth will be far more popular, and thus more employable, than those who warn them of the inevitable outcome of pursuing such fantasies; when markets are plunging, and the reverse might be true, nobody’s hiring. Apply the same logic to the fate of industrial society and the results are much the same; those who promote policies that allow people to get rich and live extravagantly today can count on an enthusiastic response, even if those same policies condemn industrial society to a death spiral in the decades ahead. Posterity, it’s worth remembering, pays nobody’s salaries today.

Second, like many contemporary fields of study, economics suffers from a bad case of premature scientification. The dazzling achievements of science have encouraged scholars in a great many fields to ape science’s methods in the hope of duplicating its successes, or at least cashing in on its prestige. Before Isaac Newton could make sense of the planets in their courses, though, thousands of observational astronomers had to amass the raw data with which he worked. The same thing is true of any successful science: what used to be called “natural history,” the systematic recording of what nature actually does, builds the foundation on which science erects structures of hypothesis and experiment.

Economics is particularly vulnerable to this sort of malign feedback because its raw material – human beings making economic decisions – is so complex that the only way to control all the variables is to impose conditions so arbitrary and rigid that the results have only the most distant relation to the real world. The logical way out of this trap is to concentrate on the equivalent of natural history, which is economic history: the record of what has actually happened in human communities under different economic conditions. This is exactly what those who predicted the housing crash did: they noted that a set of conditions in the past (a bubble) consistently led to a common result (a crash) and used that knowledge to make accurate predictions about the future.

Why did John Michael Greer move from Oregon to Maryland?

John Michael Greer walks his talk. He moved from Ashland, Oregon, to Cumberland, Maryland, based on his view of the future. While this may seem odd for a guy who is quite unconventional, his reasoning makes sense, given his assumptions. Read his essay on the move East at the link below (check out the great comments). I've included an excerpt below.

By the way – if his view of the future is on the mark – this is good news for the people who live in cities and towns that have been devastated by the transfer of jobs to lower-wage countries. Maybe my hometown of Martinsville, VA, will start to rebound!

Note: Greer has begun laying the groundwork for a nonprofit organization, The Cultural Conservers Foundation, aimed at preserving the legacies of the past and present into the future.

Link: The Archdruid Report: Betting on the Rust Belt

America is learning the hard way, as Britain did a century ago and Spain a century and a half before that, that the sheer economic burden of maintaining a global military presence is quite capable of pushing even the richest nation into bankruptcy. The Asian industrial powers that once churned out consumer goods for American stores are calmly retooling, using the billions we send them each year, to produce goods to meet the desires of their own newly prosperous people. Meanwhile the age of cheap abundant energy that made 20th century-style globalism possible in the first place is coming to an end around us. The economic model that built California’s past prosperity, in other words, is done enough to poke with a fork.

As far as I can tell, very few people on the west coast – or anywhere else – have begun to think through the implications of that troubling fact. I wonder, for example, how many states within driving range of California have drawn up plans to deal with the massive influx of economic refugees that will likely follow once California’s relatively lavish entitlement programs are slashed to the bone or shut down completely. I wonder whether any of the other west coast states, for that matter, have faced up to the possibility that the import-driven gravy train they’ve been riding for the last half century may just have run off the rails. If that’s the case – if Los Angeles, San Francisco, Portland and Seattle play the same role in coming decades that towns such as Pittsburgh, Cleveland, Buffalo and Gary played in the recent past – some of the most basic assumptions of American social geography are headed for the dumpster.

Sussing out the geography of the future in advance is no easy task, but the constraints bearing down on what’s left of the American economy offer a few hints worth noting. Now that we’re on the downslope of Hubbert’s peak – world production of conventional petroleum peaked in 2005 – energy costs will, on average, take a larger bite out of economies around the world with each passing year. One of the implications is that transport costs will no longer be a negligible part of the cost of goods shipped over long distances. More energy-efficient transport modalities will tend to replace less efficient ones because they, and thus the goods they ship, will be more affordable; equally, diseconomies of distance will tend to outweigh economies of scale and foster the reemergence of regional economies. Among the likely beneficiaries of these changes are the towns that thrived best in an earlier, more regional economy — those that are well served by rail and water transport, surrounded by farming regions that don’t depend on irrigation, not too far from major markets, and provided with ample and inexpensive real estate for the factories and warehouses of a downscaled and relocalizing industrial economy.