The Easiest Person to Fool

Friday, 17 April 2015

A Political Fanatsy, Part 2: Money and the Financial System

In my last post I talked in general terms about things a government might do to ease our transition to a significantly lower level of energy use, if it wasn't shackled by political realities. Things like encouraging and facilitating conservation, decentralization and rehumanization. But that was all a bit too vague to be very satisfying and I promised to make some more specific recommendations in my next post. I believe the three most important areas to consider are money, energy and food, and I'll be talking about them in this post and the following two.

I should say once more that this is a fantasy, and I don't think it has much chance at all of actually happening. More likely we'll continue on as we are and end up making the transition to a lower energy economy the hard way.

Money may seem an odd thing to consider first, but a great many of our interactions with the world are mediated by money. When we need or want something, we generally buy it rather than growing it or making it for ourselves. When we work, we usually make things that we neither need nor want and get paid in money rather than directly using the fruits of our labour. When we save, rather than stocking away real goods, we save money. And when we want to know the value of something, we check its price in dollars ( or whatever our favourite currency may be).

Because of this we are quite dependent on money, and the financial system that manages it. When that system isn’t working, we stand to suffer even if there isn’t a real shortage of what we need and we are still quite capable of doing productive work. And there’s certainly lots wrong with the financial system that could be fixed.

But there is more to the problem that just that.

When it comes right down to it, money is nothing more than a token for claims on future productivity. And since productivity is primarily based on energy, what money actually represents is surplus energy--the energy that is left over to fuel growth after we've supplied all the necessities of life.

In the last century, when fossil fuels were cheap and available in copious quantities, there was an abundant supply of surplus energy and economic growth was essentially unstoppable. Our financial system adapted to the demand for a constantly growing supply of money by creating money out of thin air, as debt. For providing this service, banks insisted on being paid back with interest. This worked fine as long as the economy was growing and the cycle of borrowing and paying back with interest could go on.

But the supply of surplus energy is now dwindling and the rate of economic growth is declining along with it. Our current debt based financial system is not set up to cope with this situation, and is having difficulty providing all the services we have come to rely on. You can print more money, but you can't print energy and no amount of adjusting the money supply or fine tuning of financial regulations can fix the energy problem.

Along with this comes another problem. Beyond just supplying various money related services to the rest of the economy, the financial sector has developed a whole set of activities based on trading money (or derivatives of money), on using money to make more money. And many of us have come to rely on such activities for our livelihoods, including people like me whose income comes from a pension fund. As long as the economy was growing reliably, this was very popular because it allowed one to make a living without any great expenditure of effort. Sadly, in a contracting economy, it doesn't work.

But what is it that a government should be trying to do? Ensure good times in the short run for the richest few percent of its citizens and the corporations they own? I think not. And since this is a political fantasy, I can say outright that for me the ideal society must provide its members with a useful role to play and in the process earn their livelihood, and assure them of protection and support in times of need. And this must be accomplished within the limits imposed by the carrying capacity of our finite planet.

Even if we weren't facing real problems like resource depletion and climate change, our current societies are not set up to do this.

The standard solution is to try to get the economy growing again, assuming that growth will solve all the other problems. Most governments are trapped in the mindset that this is the only solution, which is a pity, since many of our problems are actually caused by growth.

I would say that it is vital to resist the temptation to borrow money to "jump start" the economy. The automotive analogy is a good one, because cars need energy to run and so does the economy. The problem we face is not that the battery is dead, but that the fuel tank is nearly empty and the engine is starting to sputter. Trying to stimulate the "business as usual" economy is an effort doomed to fail and leave governments even further in debt.

What to do instead?

Well, first it would be vital to acknowledge the situation--that the limits to growth are real and a big part of our problem is caused by a decreasing energy surplus. Then it would be good to quit lying with statistics and make public a realistic appraisal of the current economic situation.

And then, we should have a look at all the things that have been done by governments attempting to keep "business as usual" going over that last few decades. There is a long list of excesses that need to be rolled back.

Reductions in taxation on corporations and the rich surely need to be reversed. It's become pretty clear that reducing taxes doesn't stimulate the economy or create jobs and a revenue starved government can't accomplish much but go deeper in debt, until it finally has to default on that debt. Tax reform should place the burden on those who can most afford to pay, discourage unsustainable activities and support the sort of government programs that will actually help us deal with the current situation and become more sustainable.

Governments have relaxed many regulations which businesses claimed were making it hard for them to operate profitably. But we know it was a declining surplus energy, not overregulation that caused the problem, and we also know that relaxing those regulations has made things worse in many ways.

I'm supposed to be focusing on money here, so I guess this isn't really the place to discuss environmental protection regulations (though they do need attention). I'll leave that for another day.

But financial regulations do bear directly on the subject of money, and many governments have drastically loosened regulations governing the FIRE industries (financial, insurance and real estate). This allowed those industries to pursue ever riskier endeavours in an attempt to offer high rates of return in a contracting economy (a fool's errand). What is really needed are stricter regulations to stop financeers from taking ridiculous risks at our expense. We should take the approach that financial institutions that are "too big to fail" are actually too big to exist.

Many governments have off loaded the job of managing the money supply on semi-independent central banks, organizations with strong ties to the financial industry. To me it seems like this is putting the fox in charge of the hen house. Governments should take over the central banks and directly manage the money supply, to make sure that more than just the big financial players benefit.

I should make it clear that I don't believe precious metals are of much use as a basis for money. The artificially high values we place on precious metals are far beyond what would be indicated by their practical uses--they are little different from the values we place on paper, "fiat" currencies, and are of little more use as a store of value. Currencies based on gold (or whichever metal you prefer) don't offer a real solution to managing a contracting economy.

Corporations in general (not just in the FIRE industries) have gained such a high level of rights and political influence that people are almost second class citizens. This is at the very heart of the "political realities" that I discussed in my last post. First we need to change the regulations governing how election campaigns are funded, to reduce corporate influence. Then we need to cut back on corporate rights and increase their responsibilities.

Big business has been a major proponent of the "free market", mainly because a free market, unregulated by government, is much easier to manipulate. Those with the most financial power can control the operation of a free market to their own advantage. And even if it was free of such manipulation, the market is not an effective mechanism for regulating an economy. The individuals dealing in the market are not reliably rational nor are they guaranteed to always seek their own best interest (or even know what that might be). Markets have a long history of blowing bubbles and crashing, and need to be regulated to minimize such behaviour.

While granting corporations more rights, many governments have actively engaged in union busting, assisting companies in reducing wages and making working conditions worse. This is done in the name of increasing profits and stimulating growth, but workers are also consumers and when they have less disposable income demand goes down, making things harder for businesses, not easier.

Globalization and free trade agreements are more of the same. Moving manufacturing to countries where labour is less expensive and safety and environmental regulations are less strict has a short term beneficial effect on the bottom line of the companies who do it. But it basically guts the economies of the countries loosing those jobs, and eventually reduces the demand for the goods those companies sell. This is a "race to the bottom" that a wise government would do well to avoid.

Many governments have signed free trade agreements that, in addition to greasing the tracks for the "race to the bottom", bind them to support "business as usual" and restrict them from many activities that would actually help mitigate the effects of economic contraction, such as encouraging localization and protecting local economies from competition with the global economy. Those agreements need to be cancelled. A low energy economy is not going to be based on international trading, so promoting free trade is not something we need to worry about

I could go on like this for a while longer and I am sure my readers could pitch in with more ideas. Much of what has been done in an attempt to keep "business as usual" going has in fact made the economic contraction worse and harder for people to cope with. It would be a big help if governments would quit doing that. But none of this would stop the economy from contracting to a level of activity that matches the available supply of surplus energy.

We need a plan for a steady state economy that can function at the much lower level of energy that is available from renewable sources. This new system will have to be much simpler and less centralized than what we have at present, because we won't have the resources to do anything more complex. And it will have to work without relying on growth.

Exactly what such an economy would look like demands a post or perhaps series of posts in itself. And since this will involve decentralization, and policies set on a community-by-community basis, there is ample room for many different solutions. But I'd like to use the space I have left in this post to discuss how governments might help us get there from here without leaving a large part of the population stranded without savings or livelihood. And that plan is going to have to work at a time when government revenue, even with a more rational approach to taxation, is going to be shrinking along with the rest of the economy.

I've usually talked about all this in terms of energy, but it can be seen just as well from a financial viewpoint. Our current economy is growth based and globalized, and much of it is financialized as well. That is, based on trade in financial instruments rather than the manufacture of and trade in real goods. The economic contraction is irresistibly pushing us towards an economy that will be de-centralized, low energy and largely based on the production of necessities for the local population.

I expect that this transition will occur very unevenly. Of course, in the developing nations there are still areas that have never been industrialized and which will hardly notice this as a change at all. On the other hand there will be areas in the developed world that will prove very resistant to change and will instead optimize their systems to carry on with less and less surplus energy. Unfortunately that sort fine tuning makes for a very brittle system -- the very opposite of resilient -- which is highly susceptible to breakdown when conditions change. And we'll certainly be faced with lots of changing conditions in the decades to come: droughts, heavy weather and rising sea levels related to climate change, wars over resources, stock market bubbles and crashes to name only a few.

But even if, through good luck or good planning, we avoid that sort of thing, the economy will still be contracting and that will bring its own sort of slow, grinding change. This will hit first and hardest in rural and low-income urban areas. It is important to remember that a corporation’s overriding goal is to make a profit and pass that on to its shareholders. If part of its business is no longer profitable, it must be shutdown, regardless of whether the services and jobs it was providing are seen by ordinary people as vital.

If you are a wealthy shareholder in corporations that are still operating successfully, you can likely afford to live in a community that has not yet been touched by any of this and you probably wonder what all the fuss is about. But if you are an employee of the business being shut down or you rely on its products, you will have no doubt as to what the fuss is about. A couple of examples that are currently happening will make it easier to see what I mean and where this is leading us.

The first of these is the phenomenon of food deserts, which Wikipedia defines as "areas of relative exclusion where people experience physical and economic barriers to accessing healthy foods". Food deserts usually exist in rural areas and low-income urban communities, where it is difficult for retailers of fresh and healthy produce to make a profit, and so they have been replaced by fast food outlets and convenience stores. People in these areas are left with no affordable source of healthy food, since travelling to distant supermarkets would be too expensive in both time and money. Also note that the jobs offered at fast food outlets and convenience stores may well be poorer in pay and working conditions than those in the food markets they replace.

This sort of situation arises quietly and with relatively little uproar beyond some minor protests about the closing of a supermarket here and there. I've seen it happen in small rural towns in the area where I live and it is quite common in many large cities. There is little doubt the trend will continue, and one can hardly fault the corporations involved, they are only doing what they are set up to do. Should governments intervene and regulate corporations, forcing them to continue operating in unprofitable situations? The only practical way to do so would be through subsidies and tax breaks--more of the same losing strategy that we've been following for a while now.

The real solution lies in localizing the food supply, and much of this can happen on its own. But it would be even easier if governments would set up programs encouraging farmers and urban gardeners to grow food for local consumption, and encouraging people to set up farmers markets, food co-ops and so forth to connect the producers with their potential customers.

Along with this I expect to see a move away from the formal economy towards an informal economy that is less dependent on the financial system and less mediated by conventional money. Governments could help with this by encouraging the development of local money and local credit systems which would continue to function as the formal financial system gradually crumbles and fails.

The second example is the response of oil companies to the recent drop in oil prices. It is important to understand that this was caused by accumulated demand destruction during several years of high prices, not by a sudden glut of oil. Production of conventional oil peaked around 2005, and what growth in production we've seen since then has been from higher priced sources, like deep offshore wells, tar sands and fracking, which aren't profitable at the current lower prices. The big oil companies have responded by cutting back on investments in exploration and development, areas where they don't see much possibility of a profit. Even the "promising" non-conventional sources of oil are suffering cut backs.

I wouldn't hazard a guess as to how long oil prices will stay low--the interplay of declining supply and demand destruction as the economy contracts due to reduced surplus energy is much too complex to predict. But I will comment that it is starting to look like the limiting factor on the supply of fossil fuels is not how much is in the ground, but how much can be gotten out profitably. It doesn't matter a bit how much we need the energy, if it can't be produced profitably, it won't be produced at all. Governments could take over and run the energy business, as they already do in many countries, but if the business isn't profitable, that just means the governments will go further and further in debt.

In the meantime, we need to learn to get by with much less energy. That's the subject of my next post, but I have just a bit more to say yet about the economic transition that is the subject of this post.

Governments need to facilitate the transition to the low energy economy.

As the current economy contracts, more and more people will fall out of it and need help in making their move to the local, low-energy economy. Finding jobs in the new economy may not be as much of a problem as you'd think, because a lot of rehumanization will be going on in the new economy--that is machines will be replaced by people, especially in areas like agriculture. The trick will be helping people find a place where they are needed and getting them trained to do the new jobs.

But many will be saddled with debts that they have no hope of ever paying off. I strongly suspect that the best thing would be to forgive those debts. There is normally a great reluctance to forgive debt, on the basis that this creates a "moral hazard", encouraging people to borrow with no intention of repaying. But that is clearly not the situation here, and indeed a lot of this debt problem lies with the banks, who continued lending on the groundless assumption that economic growth would continue forever.

Of course, the flip side of forgiving loans is that creditors suffer. Indeed all those who take their livelihood from the financial system will suffer as it contracts, even pensioners like myself. And this will be more traumatic because of the high expectations we have held. But, presumably if the political fantasy we are considering is actually attainable, it will also be possible to sway public opinion to the idea that getting by on "just enough" is a laudable goal. A major part of that would be getting those who have been the most conspicuous consumers to set an example, particularly those in positions of power.

As an aid to those who are reading this whole series of "Political Fantasy" posts, here is a complete set of links.

Wednesday, 18 February 2015

A Political Fantasy, Part 1

Occasionally, I ask myself what could be done about the challenges we face in the age of scarcity, if political realities didn’t prevent us from addressing these problems on the provincial (state) and national scale?

When I originally sat down to write about this I had just finished a series of three posts on Deliberate Descent. This is based on adopting a lower energy lifestyle in a deliberate and organized fashion while we still have resources available to us to facilitate the transition, rather than waiting until we are forced to do so, at which point we will have far fewer resources. This is a response on the individual, family and community scale. I tend to focus there, because I think it unlikely that anything significant can be achieved on a larger scale.

Sometimes, though, it is nice to fantasize. What if the Prime Minister called up and asked me what I think he should do. Given our current PM’s leanings, this seems pretty unlikely. But the other problem is, what the heck would I tell him?

For me, the trouble is that all the political parties are only arguing over how the benefits of growth should be divided among the rich and the poor. Or when we are in a recession, arguing over what should be done to get growth started again, as if that is the only possible response. This sort of tunnel vision is a problem because things have changed and the system that worked fine in a growing economy driven by cheap energy doesn’t fit present conditions. Growth is over and what we need is a way to do degrowth (ungrowth?) with a minimum of pain and suffering. So far, we don’t even have a name for this, much less a workable response.

In order to take any steps toward coping with today’s reality, our governments would first have to acknowledge that reality. In fact, they are currently either ignorant of it or deeply in denial of it. And so I wrote my last two posts: The Great Contraction and Technology Isn’t the Answer. If you haven’t read them, now is the time—it will help make sense of what I have to say here.

Basically, for the past 200 years, cheap fossil fuels drove economic growth—almost inescapably, though no one was trying very hard to escape it. Government was a matter of keeping up with this. In the latter half of the twentieth century, western democracies settled into a pattern. In a democracy, getting elected is a major part of what politics is about. With the advent of mass media, a lot of money was needed to fund an election campaign. When trying to raise money, it is best to talk to those who have lots of it to spare, and convince them that your policies are in their best interest. Largely this means that you won’t be raising taxes or restricting the money making activities of industry. Of course, the purpose of a media campaign is to win the election, so promises must be made that appeal to a majority of voters, not just the rich. That means promising to spend money on job creation, stimulating economic growth and other programs that promise to benefit the whole population, or on the pet projects of a great many special interest groups, or both. When you finally get into power, keeping all these conflicting promises can lead to deficit financing. As long as the economy is growing, that isn’t so much of a problem. Even if you go so far as to reduce the tax rates, a somewhat smaller chunk of a much larger pie can cover growing government expenditures.

For the last forty years or so, the initial economic effects of fossil fuel depletion have led to both reductions in tax revenues and a call for more government programs to benefit those hit by the beginnings of economic contraction. Realistically this calls for tax increases or reductions in government programs, or both. But it takes a brave politician indeed to propose these things, and such a fellow is unlikely to get elected. Those that have been getting elected have piled up more and more government debt to bridge the gap between revenue and expenditures. These are the political realities I am talking about.

But there other others realities we need to face up to, as well. We really are running out of cheap fossil fuels, and there really isn’t anything to replace them.

The level of growth an economy can sustain is determined by the amount of surplus energy that is available. Surplus energy is the energy left over after you perform whatever activity it takes to access that energy—the energy returned on energy invested (EROEI). In the early 1900s it only took about one barrel of oil to get 100 barrels of it out of the ground, leaving a surplus energy of 99 barrels. All the energy sources now available to us, even using the best technology we can bring to bear on the problem, provide significantly less surplus energy.

Because of this, attempts to stimulate economic growth with government spending are doomed to fail. Whether we like it or not, and no matter what we do, our economy is going to shrink to a level that can be supported by the amount of surplus energy that is actually available—around one tenth of what was available at the height of cheap fossil fuel abundance. This is so little that there is serious doubt about the continued operation of our industrial society, what I often refer to as “business as usual”, at least without some major changes.

When many people become aware of this, they jump to the conclusion that those “major changes” amount to a sudden and catstrophic collapse into a new dark age. I don’t agree with that.

This “collapse” of industrial civilization is already occurring, but slowly and very unevenly. Thing seem to be going along just fine or even improving for a while, then there is a crisis or disaster of some sort and they get worse, only to settle out at some lower level and stay there or even improve again for a while. At any one time, some regions seem hardly to be affected at all, while others are clearly suffering a serious decline.

And certainly there are aspects of our high tech industrial civilization that we will not be able to sustain at a decreased level of surplus energy. But it is not necessary to fall all the way back to the level of civilization that existed when food and firewood were the only sources of energy. Even if food and firewood were our only sources of energy, we could do much better with them than we did hundreds of years ago. We know a lot more and we have the resources of our current high tech society to work with as we begin our descent to a lower level of energy use. And beyond food and firewood there are other renewables—wind, water and solar, at least, that can be used much more effectively now than they were in the dark ages, even with relatively low tech equipment.

People also tend to assume that as we fall back to lower levels of energy use, our society will have to revert back to the forms it took when last we operated at that energy level. This is just plain silly, as social practices and cultural mores have very little to do with technology and energy use.

So, I think our government should be taking action to mitigate human suffering over the decades to come as we transition through economic contraction to a sustainable, steady state economy at a some substantially lower level of energy use. And doing it in such a way as to preserve the civil liberties and social justice advances we’ve made over the last couple of centuries.

At present most governments are convinced that stimulating economic growth is the only way to improve things, when in fact reckless spending and tax reductions are actually making things worse, by increasing deficits and reducing government capability to respond to the challenges we face.

I know that many people feel that government is the problem and the only solution is less government, but I disagree. Government is the best sort of organization for pursuing certain goals, especially when those aren’t likely to be accomplished through market mechanisms and the profit motive—exactly the kind of goals I am discussing here.

It is not that difficult to think of some things that a government could do… if we are going to fantasize about not being restricted by political realities. But a revenue starved government can do little to help. So, governments who have been reducing taxes in the mistaken belief that this will stimulate the economy are going to have to switch gear and start increasing taxes, and those who are most able to pay must surely shoulder a larger share of the burden. This needs to be done soon, as the tax base will dwindle as the economy slows down and governments will have to scale back their activities to match the lower level of tax generating economic activity. But it seems to me there is still a window of opportunity, and much that can be done by a government that is willing to face up to reality and take action.

Finding (or electing) such a government is another matter. Remember, this is a fantasy and I don’t for a moment expect that it will ever come true. What is far more likely is that we will do this the hard way, continuing on with business as usual until change is forced upon us by circumstances beyond our control. At that point, our ability to respond effectively will be considerably less than it is now. If you disagree with me about the inevitability of what faces us, that’s fine. I’m pretty sure you are suffering from some degree of denial, but enjoy yourself until reality comes crashing in.

Back to my fantasy. Having acknowledged that because of the decreasing availability of cheap energy the economy will continue to contract, and that high taxes are not what is causing the contraction, governments need to increase taxes on those who are most able to pay, and focus spending where it will do the most good. They also need to stop subsidies, tax breaks and other forms of support for the people, corporations and activities which are making the situation worse by trying to keep “business as usual” going just a little longer. Then we need to sort through all the worthy projects up for consideration and fund those that will best help people adapt to the realities of economic contraction and move them toward a sustainable non-growth economy at a sustainable level of energy use.

There are three areas of change that governments could promote and support that would make a huge difference. John Michael Greer, one of my favourite authors, speaks eloquently about this, so I will first quote him directly and then make a few comments of my own. These quotes are from a blog post where Greer is talking about the “bargaining” stage of our grief for industrial civilization, where we start to come up with ideas for what we can give up and how we can change in order to retain some elements of civilization.

First is conservation. That’s the missing piece in most proposals for dealing with peak oil. The chasm into which so many well-intentioned projects have tumbled over the last decade is that nothing available to us can support the raw extravagance of energy and resource consumption we’re used to, once cheap abundant fossil fuels aren’t there any more, so—ahem—we have to use less. Too much talk about using less in recent years, though, has been limited to urging energy and resource abstinence as a badge of moral purity, and—well, let’s just say that abstinence education did about as much good there as it does in any other context.

The things that played the largest role in hammering down US energy consumption in the 1970s energy crisis were unromantic but effective techniques such as insulation, weatherstripping, and the like, all of which allow a smaller amount of energy to do the work previously done by more. Similar initiatives were tried out in business and industry, with good results; expanding public transit and passenger rail did the same thing in a different context, and so on. All of these are essential parts of any serious response to the end of cheap energy. If your proposed bargain makes conservation the core of your response to fossil fuel and resource depletion, in other words, you’ll face no criticism from me.

Greer has written elsewhere about “LESS”—less energy, stuff and stimulation. We need to be aiming for “just enough” to get by on, rather than more of everything for everyone, which seems to be the ideal at the moment.

Another thing we need a lot less of is waste. Waste is currently seen as an entitlement, or at the very least an unfortunate necessity, when in fact it is at the heart of many of our problems. Our industrial society is in many ways little more than a way of using the energy of fossil fuels to turn natural resources into pollution and garbage, while producing a few consumer good in the process. And even those goods are expected to wear out and be thrown “away” fairly quickly.

The problem is that you can’t use an open ended system inside a closed system like our planet. Not for long, anyway. So we need to switch over to circular systems that reuse the materials involved as much as possible. This includes using human wastes (humanure) for fertilizer in agriculture.

Second is decentralization. One of the things that makes potential failures in today’s large-scale industrial infrastructures so threatening is that so many people are dependent on single systems. Too many recent green-energy projects have tried to head further down the same dangerous slope, making whole continents dependent on a handful of pipelines, power grids, or what have you. In an age of declining energy and resource availability, coupled with a rising tide of crises, the way to ensure resilience and stability is to decentralize instead: to make each locality able to meet as many of its own needs as possible, so that troubles in one area don’t automatically propagate to others, and an area that suffers a systems failure can receive help from nearby places where everything still works.

Here again, this involves proven techniques, and extends across a very broad range of human needs. Policies that encourage local victory gardens, truck farms, and other food production became standard practice in the great wars of the 20th century precisely because they took some of the strain off overburdened economies and food-distribution systems. Home production of goods and services for home use has long played a similar role. For that matter, transferring electrical power and other utilities and the less urgent functions of government to regional and local bodies instead of doing them on the national level will have parallel benefits in an age of retrenchment and crisis. Put decentralization into your bargain, and I’ll applaud enthusiastically.

When energy was cheap, the benefits of centralization and the complexity that comes with it outweighed the costs. Indeed we have been largely unaware of those costs, but they are now starting to catch up with us. The solution is de-globalization, relocalization, re-ruralization, de-urbanization and a general loosening of control from central authorities.

Already we are seeing a move toward this as some areas see resources spent supporting central governments as a burden that gives little in return. Central governments need to acknowledge that they aren’t playing a winning hand and step back as gracefully as possible.

Third is rehumanization. That’s an unfamiliar word for a concept that will soon be central to meaningful economic policy throughout the developed world. Industrial societies are currently beset with two massive problems: high energy costs, on the one hand, and high unemployment on the other. Both problems can be solved at a single stroke by replacing energy-hungry machines with human workers. Rehumanizing the economy—hiring people to do jobs rather than installing machines to do them—requires removing and reversing a galaxy of perverse incentives favoring automation at the expense of employment, and this will need to be done while maintaining wages and benefits at levels that won’t push additional costs onto government or the community.

The benefits here aren’t limited to mere energy cost savings. Every economic activity that can be done by human beings rather than machinery is freed from the constant risk of being whipsawed by energy prices, held hostage by resource nationalism, and battered in dozens of other ways by the consequences of energy and resource depletion. That applies to paid employment, but it also applies to the production of goods and services in the household economy, which has also been curtailed by perverse incentives, and needs to be revived and supported by sensible new policies. A rehumanized economy is a resilient economy for another reason, too: the most effective way to maximize economic stability is to provide ample employment at adequate wages for the workforce, whose paychecks fund the purchases that keep the economy going. Make rehumanization an important part of your plan to save the world and I won’t be the only one cheering.

Along with rehumanization must come reskilling—relearning many of the skills that we’ve off loaded onto machines.

Of course, so far, all this talk has been in generalities. That’s the right place to start, of course. For the most part, the tools of government are blunt instruments and work by pushing society in a general direction. Today most governments are pushing in precisely the wrong direction. They could do a lot just by stopping that and could do even better by pushing in the right directions, as outlined above.

Even so, I really would like to be able to offer some specific suggestions, and in my next post I’ll do exactly that.

As an aid to those who are reading this whole series of "Political Fantasy" posts, here is a complete set of links.

Sunday, 31 August 2014

Technology Isn't the Answer, depending on what question you're asking...

In my last post I talked about how the economy and energy are linked together and how depletion of fossil fuel resources is effecting the economy. I promised to explain why I don’t think technology can solve the problem. So here we go...

When I first heard about Peak Oil, my reaction was basically, “That’s pretty bleak, but surely we’ll develop some technology to solve the problem”. I spent my working life in the power industry, I enjoyed learning the latest technologies and I thought I knew what we could potentially do. Fifteen years later, I am convinced that technology doesn’t hold the answer, at least not to the questions most people are asking of it.

For most people, I think the question is, “Can technology allow industrial civilization to keep growing, essentially without limits, as it was doing during the latter half of the twentieth century, so that we can carry on without a significant change in lifestyle, or better yet, with continued improvements in lifestyle.” The answer to that question is easy, and it’s, “no.” For anyone who grew up in the latter half of the twentieth century, though, this is a very counter intuitive answer, and I think it is worth going into some detail about why I say “no.”

Because of the way our financial systems are set up, industrial civilization must continue to grow. The kind of growth we are talking about is exponential and in the real world it always runs into limits. As I’ve commented before, people don’t have a good grasp of how exponential growth works, and we always seem to be surprised by where it leads. While it might be worthwhile revisiting the idea of limits to growth at some point, today I want to focus on technology.

First, let’s be clear how I feel about technology — it is an essential part of being human. When we are faced with a problem, we typically solve it by applying more complex technology. Sometimes this leads us into a corner, a “progress trap”, and we are forced to simplify. But we rarely do it willingly. It seems to me we are currently caught in one of those progress traps, based on our reliance on fossil fuels--a dead end because those resources are becoming depleted. The way out is through simplification of our technology, not further investment in complexity.

I think the enlightenment was a good thing--it added some very important thinking tools (critical thinking and the scientific method, along with all sorts of new mathematics) to our mental tool kit. The enlightenment and heat engines for converting fuels into mechanical power were two separate, necessary but not sufficient conditions for the development of industrial civilization. Put them together and voila, industrial revolution.

Many people who have thought about this are not convinced that it was a good thing. I'll agree that when taken too far, it has gotten us into trouble. And while that trouble is a major thing, I still think the benefits were worth it, though it is a pity we couldn’t have stopped before things got to the state they are currently in.

I am particularly irritated when I hear ivory tower intellectuals bemoaning the failings of technology when their lifestyle is completely dependent on very complex technology, of which they are largely unaware. Lewis Mumford’s book “Technics & Civilization” comes to mind--let’s just say I laid it down in disgust before finishing.

So, if the question is, “will our response to the challenges that face us involve the use of technology”, then I would say, “absolutely yes!”

But I am also pretty irritated with people who say “surely they’ll come up with something”, and are willing to just leave it at that, trusting that "they" will indeed look after it. A pretty unjustified leap of faith, I’d say.

Many people believe technological breakthroughs will soon give us access to sources of energy as rich or richer that fossil fuels and let business continue on as usual, or perhaps even better than usual. Others think that we can find a way to maintain our current lifestyle by using renewable energy sources and improving the efficiency with which we use that energy. I don;t agree with either of those ideas.

I’ve spent quite a few years researching this subject and I will share my conclusions shortly, but I can recommend a couple of writers who will lead you through this in more detail than I have space for here. Tom Murphy is a physicist whose blog Do the Math does an excellent job of just that--doing the math. David MacKay is an engineer whose book “Sustainable Energy -- without the hot air” is another valuable resource. It’s contents are available on line at http://www.withouthotair.com/. Both writers are accessible to anyone who was comfortable with high school math, and even if numbers aren’t your friends, they also make their conclusions clear in simple English.

But now for my conclusions. One thing to get clear is that technology is not energy, indeed technology uses energy, rather than creating it. Many people are confused about this because we do use technology to access sources of energy and convert them into more useful forms. During recent history technological advances have allowed us to access more sources of energy than ever before. But make no mistake, if you don’t have a prime mover, a source of energy, all the technology in the world isn’t going to help.

So, can we find a way to make our “business as usual”, growth based economy keep going for the foreseeable future? This means finding a way to keep an ever growing population fed, housed, clothed and entertained to an ever improving standard. Energy seems to be the key and by looking closely at energy, we can find some answers.

There are indeed huge quantities of hydrocarbons (fossil fuels) trapped underground in rock formations where we can’t access them at the moment. Let’s assume technology improves and allows us to access those resources. Enough to last several hundred years, which for many people is effectively forever. At any rate, long before we run out of those resources, sometime in the next few decades, we will have released such vast quantities of carbon dioxide into the atmosphere that climate change will spoil the future we are trying to build here. I don’t usually argue that near term extinction for the human race is a possibility to take seriously, but that would be one way to make it a reality.

OK, can we tap into some cleaner sources of energy? What about nuclear fission or maybe even nuclear fusion?

Fissionable materials are pretty rare and every analysis I read says that if we built fission reactors to replace fossil fuels as our energy source, we’d run out of fissionable materials in a few decades. Yes, there’s thorium as well as uranium and there are breeder reactors. That would get us a few more decades. But not enough to last into anybody’s definition of the foreseeable future.

But there is enough fusion fuel (heavy hydrogen) in the oceans to last a very long time. We don’t have working fusion reactors yet, but maybe it’s time we doubled or quadrupled the research budget (instead of halving it, as we recently did to the funding for one fusion research project) and get the problem solved. Once we can tap into nuclear fusion as an energy source, our problems are solved, right? Wrong. The process of making usable energy from any of these resources, gives off quite a lot of waste heat. This isn’t some failing of insufficiently advanced technology, but a simple consequence the laws of thermodynamics. Typical power plants runs with an efficiency of 25 to 35 percent. The rest of the energy ends up in the environment. The downside of fusion is that it can keep us going long enough for that to be a problem. If our civilization keeps on as it is for a few hundred more years, we’ll have released enough waste heat to boil the oceans. This is quite a lot worse than the few degrees of warming we’d get from releasing more greenhouses gasses into the atmosphere. And it is not dependent of which energy source we choose — whatever it is, if it allows us to continue growing for a few hundred years, we end up with this problem. Another deal breaker, for sure.

What about space resources and generating power off the planet so we don’t have to worry so much about waste heat? Solar power stations in orbit, beaming energy down to receiving stations here on earth. This just puts the waste heat problem off for a few hundred more years, since we’d still be adding some heat to the environment. In order to radiate it away, the temperature has to go up. If we keep growing, eventually it becomes a problem.

Some of you will be jumping up and down in frustration at all the other problems with any of these idea, that I appear to be ignoring. I am aware of those problems, and I agree that the analysis above is pretty cavalier. But I’m trying to show there are fundamental problems that stop these ideas from working even before we consider more subtle issues.

Perhaps the problem is growth. I would certainly say so. What if we stop growing and switch over to clean, renewable energy sources? The wonderful thing about such a plan is that it is simplicity itself to implement. We just keep going as we are at present and let nature take its course.

Climate change and the end of industrial agriculture as fossil fuels run out would reduce the human population to a fraction of it’s present level. Before many decades passed, we’d be back to firewood and food as energy sources. Straight back to the dark ages, though with the benefit of what knowledge we can retain from the industrial era and all the refined metal and machinery that will be lying around waiting to be salvaged, maybe not quite as far back as you might think.

Still, I’ll bet you are not so keen on the idea. Well, neither am I. It seems to be where we are heading, though. Can we find some way to hold things together, solve, avoid or mitigate the many problems we’re facing and retain at least some of the benefits of the high tech society we are now living in, without its downside? To that I will answer, “maybe....”

I often think that if we had switched over to a non-growth based economy in the first half of the twentieth century, things would have been much simpler. With a smaller population and concerted efforts to conserve, to get by on “just enough”, the supply of fossil fuels would have lasted much longer and climate change not have become a problem until much later in the game. This would have given us a much better chance to succeed at a transition to renewable energy sources. The “just enough is good” attitude, especially, would make this easier to accomplish. As opposed to our current “more is always better” and “waste is our entitlement” approach to things. But...woulda, coulda and shoulda are futile words.

As I said earlier, many think that we can find a way to maintain our current lifestyle and continue with "sustainable growth"(whatever that may be) by using renewable energy sources and improving the efficiency with which we use that energy. That is not what I am saying “maybe” to. It seems to me that retaining the benefits of science and technology is a vastly more attainable goal than maintaining our current lifestyle. Let’s consider why renewables can’t support an industrial society of the sort we currently have.

When it comes to energy, it’s not just the amount of energy that is available to us, but also the difference between what it costs us to acquire the energy and the value of what we can produce with it – the “surplus energy”. This can be represented by a single number, the Energy Returned on Energy Invested or “EROEI”. This surplus energy is what fuels productivity, and makes our economy grow. You can average together the EROEI’s of all the energy sources that an economy uses. When that number goes below a certain level (around 15), the economy ceases to grow and goes into a recession. “Capital formation”--raising money to start projects becomes difficult. As the number goes lower, it becomes difficult even to raise enough money to maintain vital infrastructure and things start to crumble.

I scanned the graph above from Tim Morgan’s book, Life After Growth. The red line at EROEI=15 is mine. The horizontal axis represents EROEI, and that quantity decreases are we move from left to right. The vertical axis represents the percentage “profit” of gross energy extracted. The graph shows the EROEI of the various energy sources that are available to us. If a country is looking to develop new energy sources to improve its economic situation, it needs to pick sources that will improve its average EROEI. Spending money on energy sources with an EROEI of less your current average actually make things worse. Most of the developed nations have an average EROEI around 9 to 12 these days.

Nuclear fusion is not on the graph, presumably because there are no working fusion reactors to get data from. But it is proving much harder to build them than it was to build fission reactors, so it is a pretty good bet that if we do build them, their EROEI will be even worse that fission reactors, which are in the 8 to 10 range.

There are a few energy sources worth of mention that aren’t on the graph. A quick Google search led me to this website, which borrows a table from Richard Heinberg’s book, “Searching for a Miracle: ‘Net Energy’ Limits & the Fate of Industrial Society”

The EROEI’s quoted there vary a little from Morgan’s diagram, but none of these numbers are meant to be taken a terribly precise. Heinberg tells us that wave energy systems have an EROEI of around 15, geothermal 2 to 13, and tidal around 6.

So, I have introduced several criteria for evaluating energy sources: long term considerations like waste heat, emission of greenhouse gases, availability of a long term supply or renewability, and perhaps most important, having an EROEI of greater than 15.

It is also important to realize that if an energy source requires the infrastructure provided by an high tech industrial economy to make it work, but has an EROEI of less than 15 then it cannot support the sort of economy that is needed to make it work. Eventually the infrastructure will crumble and that energy source will no longer be accessible. Off the top of my head I would say this applies to nuclear fission and solar photovoltaics in particular.

If we are looking to maintain a growing industrial civilization we can quickly eliminate all the energy sources to the right of the red line on the graph. High tech isn’t going to help with that, because using more complex technology will tend to lower the EROEI, not raise it, because of the extra energy needed to build and run such equipment.

So let’s look at the energy sources on the left side of the graph.

Wind is intermittent and I do not believe that this has been taken into account in calculating the EROEI shown on the graph. When you add in the cost of storage equipment or companion generation needed to fit wind into a grid that is committed to supplying continuous and reliable power, the EROEI is much worse. That is why I would move wind to the right of the red line on the graph.

1970s oil and gas finds are moving into the decline phase at the end of their lives and that is what is causing our current energy crisis. Non-renewable energy sources tend to move to the right on this graph as they become depleted, because we always use “pick the low hanging fruit first”, leaving the poorer quality, harder to access parts of the resource for later. Note also, that current oil and gas finds are over on the right side of the graph. The vast amounts of hydrocarbons still in the ground all have a very low EROEI, sometimes less than 1. Hypothetical discussion about there being enough fossil fuels left to last hundreds of years tend to ignore this.

Coal has a good EROEI, but that is for coal sitting at the mine head. Transporting it to a power station and burning it to produce electricity reduces the EROEI considerably, probably by a factor of 3, down to 25. Using it to replace oil and gas will result in vastly increased emissions of carbon dioxide. Schemes for capturing the CO2 and keeping it out of the atmosphere have been suggested, but energy is used in those schemes, from 10 to 40% of the energy in the coal being burned. So if we have to capture and store the CO2 released by burning coal its EROEI starts to get down close to or below 15. And the technology to do this hasn’t been developed yet. Further, coal extraction is moving toward a peak just like oil and natural gas, which may come as soon as 2025. Already we have used up most of the high quality coal and have been forced to mine the lower quality stuff.

Obviously, 1930s oil and gas finds are history.

Hydroelectricity is fine and no doubt the few remaining suitable locations will be developed. But there just isn’t enough to replace fossil fuels.

But what about proposed energy sources that haven’t yet been built, so there is no EROEI data to evaluate?

If you have a favourite one, feel free to bring it up in the comments section. I’ll let you know what I think of the idea and I’ll be very relieved if you come up with something that will work . But I am pretty certain that most such suggestions will fall into a few categories:

1) Energy sources which fail for the reasons I’ve already discussed, though perhaps in a less obvious ways.

2) Things that are science fiction--just not physically possible.

3) They are “academic or paper reactors”. This phrase comes from Hyman G. Rickover, who was a United States Navy admiral who directed the original development of naval nuclear propulsion and controlled its operations for three decades as director of Naval Reactors. In addition, he oversaw the development of the Shippingport Atomic Power Station, the world's first commercial pressurized water reactor used for generating electricity. Rickover is known as the "Father of the Nuclear Navy." Even though he was pretty clearly in favour of nuclear power, he had this to say:

An academic reactor or reactor plant almost always has the following basic characteristics:

It is simple.

It is small.

It is cheap.

It is light.

It can be built very quickly.

It is very flexible in purpose.

Very little development will be required. It will use off-the-shelf components.

The reactor is in the study phase. It is not being built now.

On the other hand a practical reactor can be distinguished by the following characteristics:

It is being built now.

It is behind schedule.

It requires an immense amount of development on apparently trivial items.

It is very expensive.

It takes a long time to build because of its engineering development problems.

It is large.

It is heavy.

It is complicated.

The tools of the academic designer are a piece of paper and a pencil with an eraser. If a mistake is made, it can always be erased and changed. If the practical-reactor designer errs, he wears the mistake around his neck; it cannot be erased. Everyone sees it.

The academic-reactor designer is a dilettante. He has not had to assume any real responsibility in connection with his projects. He is free to luxuriate in elegant ideas, the practical shortcomings of which can be relegated to the category of "mere technical details." The practical-reactor designer must live with these same technical details. Although recalcitrant and awkward, they must be solved and cannot be put off until tomorrow. Their solution requires manpower, time and money.

Unfortunately for those who must make far-reaching decision without the benefit of an intimate knowledge of reactor technology, and unfortunately for the interested public, it is much easier to get the academic side of an issue than the practical side. For a large part those involved with the academic reactors have more inclination and time to present their ideas in reports and orally to those who will listen. Since they are innocently unaware of the real but hidden difficulties of their plans, they speak with great facility and confidence. Those involved with practical reactors, humbled by their experiences, speak less and worry more.

Yet it is incumbent on those in high places to make wise decisions and it is reasonable and important that the public be correctly informed. It is consequently incumbent on all of us to state the facts as forthrightly as possible.

Sadly, the whole energy field, conventional and alternative, is littered with paper reactors. Don't be fooled by them

4) Similar to mistaking academic ideas for practical ones, is the tendency to assume that if something needs to be done, the means to do it will be found. In a failing economy (EROEI less than 15) finding the means to do anything much is very challenging. In fact it is a major concern that we won’t be able to scrape together cash to do many possible and practical things which would improve the situation.

5) Energy sources will scalability problems. Sources that pass all the other tests but exist such small quantity that they can’t be scaled up to solve our problems. Burning waste is one such example. Yes, some energy can be generated by incinerating garbage. But there is only so much garbage and scaling up the creation of garbage is not something we want to do. As the economy declines further, there will be less. Indeed much of what needs to be done will result in much less garbage being created. So its potential as a source of energy will decline as time passes, instead of increasing.

All of this is why I don’t think technology offers much hope of enabling “business as usual” to continue as usual. Indeed, I don’t believe there is much chance of that happening at all.

I’d like to close by suggesting that maybe we are looking at things from the wrong angle. What if we could change our requirements for energy to fit what’s available? I’m not primarily talking about efficiency here, especially the sort of efficiency improvement that adds complexity and cost and lowers EROEI. What I am talking about, yet again, is lifestyle changes. This seems to be a taboo subject, but I appears to me to be the one real answer. There just aren’t any energy sources that will support a growing high tech society on an on-going basis. But it seems to me we could have a non-growing (steady state) society at a somewhat lower level of population, technology and resource use, without falling all the way down to the seventeenth century, or worse yet, the stone age.

I am on record as saying that I expect our industrial civilization will collapse over the next few decades. But I am definitely not talking about some sort of apocalypse. I expect this fall will be a bumpy but gradual one. As it collapses the ability of our industrial civilization to provide the necessities of life will decrease and we will be left to fend for ourselves. There is much that can be done to reduce how far the decline goes and to lessen the abruptness with which it occurs. Efforts in that direction have to be applauded for their potential to reduce human suffering. In my next post I’ll consider what a government that wasn’t shackled by “political realities” could do to mitigate the effects of the collapse.

As an aid to those who are reading this whole series of "Political Fantasy" posts, here is a complete set of links.

Monday, 4 August 2014

The Great Contraction

I sat down recently to write a blog post about what government could do today if “political realities” allowed politicians to acknowledge the “real” realities of life in the age of scarcity.

I quickly realized that before I could really address what might be done, it would be necessary to lay out clearly what those realities are -- that we are not recovering from a recession, but rather just at the start of what may come to be known as “the Great Contraction”.

Early in the history of this blog I wrote a post on economic contraction(http://theeasiestpersontofool.blogspot.ca/2012/03/economic-contraction.html). That was two years ago and as events have progressed, it has become more obvious what the situation is and what lies ahead. I have to give full credit to Charles Hall, Tim Morgan, Gail Tverberg, Nate Hagens, Joseph Tainter and John Michael Greer among others for expressing this in terms that are pretty easy to understand.

Foremost among these would be Drs. Charles Hall and Tim Morgan. There is a bit of a controversy suggesting that Morgan may have borrowed most of his work from Hall without giving Hall any credit. I don’t know if this is so, but I think it is at least possible that Morgan developed his ideas about surplus energy independently. At any rate, Hall’s book costs about $80 and is quite academic, while Morgan’s costs about $20 and is a quick read, making these ideas accessible to many people who would never tackle Hall’s work. Morgan has also published excellent summaries of his ideas on the web, at various lengths:
a brief web page: http://www.surplusenergyeconomics.com/
a medium length pdf file: http://surplusenergyeconomics.files.wordpress.com/2014/01/brief-guide.pdf
and this pdf file, with most of what is in his book: http://ftalphaville.ft.com/files/2013/01/Perfect-Storm-LR.pdf

For many years I found economics quite confusing -- there seemed to be something missing from the economic theories I was reading. For the average person, the economy is about money. You work to get it, spend it to live, save some for the future if you are lucky. But if you ever try to figure out where it really comes from and how its value is determined, you’ll probably end up with a headache and no satisfying answers. This is because, despite what many economists believe, the economy is not really about money – money is just a set of tokens used to keep track of what is going on at a deeper level.

The economy is actually about people working to produce goods and services needed and/or wanted by other people. “Working” is the key word here. To accomplish work, energy must be consumed, be it food powering muscles or fuel powering engines. So energy is the essential resource that enables all production. And it’s not just the amount of energy that is available to us, but also the difference between what it costs us to acquire the energy and the value of what we can produce with it – the “surplus energy”.

This is expressed in the ratio “Energy Returned on Energy Invested” or EROEI. Every energy source that is available to us has a certain characteristic EROEI. It’s pretty obvious that if it takes more energy to make a fuel than you get from burning it (if its EROEI is less than one) then you’d be wasting your time to use it. But what isn’t so obvious is that an energy source must have an EROEI considerably higher than one in order to drive the kind of economy we’ve had for the last couple of hundred years. It seems that if the average EROEI of the energy sources we’re using falls below about 15, the economy fails to generate enough surplus wealth to allow us to make capital investments, or even repair existing infrastructure.

Many people assume that technology can solve this problem for us. I don’t agree and I’ll be devoting my next blog post to why I don’t, but before going there it is important to look at the actual consequences falling EROEI has had over that last few decades.

Currently, most countries find their overall EROEI somewhere in the middle of the range between 5 and 15, and this is the source of the economic troubles we are having. This is a fundamental problem that doesn’t really have a “solution.” No amount of government borrowing to “jump start” economic growth, no amount of fine tuning taxation or the monetary system, or fiddling with banking or financial regulations is going to make any real difference. If we can’t find energy sources with a higher EROEI (and it appears that we can’t), then we’ll have to find a way to live with the consequences lower EROEI’s -- we’ll have to adapt to economic contraction.

I scanned this graph from Tim Morgan’s book, Life After Growth. The red line at EROEI=15 is mine. The horizontal axis represents EROEI, and that quantity decreases are we move from left to right. The vertical axis represents the percentage “profit” of gross energy extracted. The main thing to note is the way the profit drops off to the right of EROEI=15, and that most of the energy forms that people are proposing as replacements for conventional fossil fuels have EROEI’s of less than 15, the minimum required to keep “business as usual” purring along as usual.

It is also important to be aware of the relationship between surplus energy and techological complexity. When faced with a problem, we humans tend to find a solution in the form of a more complex technology. It is common these days to confuse energy and technology, because so much of our access to energy sources is mediated by complex technology. But technology is always just a way of using energy that already exists, and complex technologies always consume more energy than the simpler ones they replace. Of course the point of moving to more complex technology is that it gives us access to more energy than we currently have. Up to a point there is a net gain in tbe amount of surplus energy technology makes available, but beyond that point more complexity actually gives us less surplus energy.

I scanned this graph from Joseph Tainter’s book “The Collapse of Complex Societies”. The horizontal axis is complexity, increasing as we move from left to right. The vertical axis is the benefit we get on our investment in complexity. Note that as we move to the right of the origin, benefit initially goes up quickly, then less and less quickly until at point C2 the benefit reaches a maximum and further increases in complexity actually yield less benefit, until at point C3, benefits have decreased back to the same level as at C1, a much lower level of complexity. Looking at history there are many cases of a society reaching point C3 and then falling fairly quickly back to point C1 or below, drastically reducing complexity with little loss in benefits. This is what Tainter means by collapse.

For most of human history, stored solar energy in the form of food and firewood were the only available sources of energy. And muscles (human or animal) were the only way of converting fuel (food, in this case) into useful mechanical energy. Hunter gatherers, using the simplest technology, worked with an EROEI of around 10. Advanced agricultural societies, before the industrial revolution, had an EROEI of around 6. And today’s industrial agriculture, considered by itself, has an EROEI of around 0.1, using 10 units of fossil fuel for every unit of food energy produced. You may wonder why we went in this direction if the energy return for our efforts kept getting lower. While a hunter gatherer got a good return on his efforts, there was a limited amount of energy available to be had in his environment and the supply was for the most part beyond his control. Hunter gathers worked shorter hours than we do as long as times were good and when times weren’t good they either had to suffer where they were or move on to better hunting grounds.

With agriculture came greater control of the environment -- being able to plant whole fields full of nothing but edible plants, herding animals rather than hunting them. And it was easy to work longer hours, indeed in the busy season on a farm there is always more work to do. So the net result was the ability to support more people in a smaller area, with enough surplus food to support a class of non-farmers. And since farmers were not mobile, it was easy for the “upper” class to tax that surplus and live off of it.

Farming villages grew into cities and cities grew into empires. The surplus energy to fuel all this growth came from food and firewood, and once a city had maxed out it’s local farmland and forest, there was nothing for it but to expand farther into the surrounding territory. Due to the limitations of transportation technology, this had limits.

It is interesting to note many of these civilizations eventually collapsed, indeed very few are left today. There are many reasons for this including contact with Western civilization in the last couple of hundred years. But one of the most common causes of collapse is failure to manage agricultural land and forests (their only sources of surplus energy) in a sustainable manner. One might ask that if this is even possible. It has been done, though, by several societies at the agricultural village level and by at least one at the nation state/empire level. But that is another story. At any rate, the collapse of an empire is not the end of the world -- merely a step down to a less complex level of technology and a lesser degree of governmental centralization.

With the industrial revolution came some fundamental changes in the surplus energy equation. With the invention of the steam engine, heat could be converted into mechanical energy. Hardly enough can be said about what a game changing thing this was. Yes, late in the age of agricultural civilization, falling water and wind were harnessed to do work, but this was a relatively minor thing compared heat engines fueled by coal. Coal could be had for free -- you just had to dig it out of the ground and the energy needed to do that was a tiny fraction of the energy to be had from the coal itself. And the difference between the cost of coal and the value of the work it can do when burned in a steam engine made a huge difference to industries that had previously used human or animal muscles for mechanical power.

As an example, the cost of coal is currently around $64 per metric tonne. Burned in an engine that is 25% efficient, that tonne of coal will produce an amount of mechanical energy equivalent to around 25,000 manhours of strenuous human labour. Where I live, the minimum wage is $10.50 (Canadian dollars) per hour, so considered on this basis, the mechanical energy produced by burning $64 dollars worth of coal is worth $262,500 if it had to be replaced by human muscle power.

Similar calculations can be done for oil and natural gas. Of course that sort of calculation is a gross simplification that ignores many important factors, but it gives you some idea of the difference between the price and the value of fossil fuel energy. That difference was the engine behind economic growth during the industrial revolution and in the years since then.

So, the economies of nations that could take advantage of fossil fuels and heat engines started to grow much faster, and kept growing for the last 200 years. This is where money and banking came to play a larger part in the story. It is important to keep firmly in mind that money is just a marker for real wealth, which exists in two forms: real, useful goods and claims on future productivity -- the ability to make more useful goods down the road. Since productivity is based on surplus energy, the wealth available in a society is approximately equivalent to the amount of surplus energy available. As long as productivity was based largely on what could be done with human muscles, growth was slow. Money based on precious metals worked because we could dig them out of the ground approximately as fast as the money supply needed to expand to accommodate economic growth.

Economic growth really began to speed up in the 20th century and the money supply became a problem. After WWII, most countries switched over from the “gold standard” to fiat currency, which is basically money created by banks out of thin air when they lend it to you. A lot of people think this is crazy, but with a rapidly growing economy it is just about the only way for the supply of money to keep up.

So, in our current financial system, money is debt. Because debts are required to be repaid with interest, the economy must grow so that there will be more money to pay back the interest. Where does that money come from? More loans, of course. This means that if growth stops or even slows down, there will be many loans which can’t be paid back.

At the moment we have no idea of how to wrap this process up and switch to a zero or negative growth economy. Though very few people can imagine why we would want to do that, we have in fact no choice but to do so. It would be worth a quite a bit of effort to find a way to do it that doesn’t end in disaster.

The thing is, all this economic growth is driven by surplus energy from fossil fuels, but the supply of readily accessible fossil fuels is not infinite, nor is there any workable replacement in sight. Yes, there are huge fossil fuel resources buried in the Earth’s crust, but it is a serious error to divide the resource quantities by our current rate of use and conclude that we have decades or even centuries of supply left. The EROEI of most of these resource is so low that they will not sustain a modern industrial economy, nor can they be accessed at a high enough rate to meet current demand.

I am pretty sure that 200 years ago, when we set out on this course, it should have been obvious that someday the party would have to end. But as long as the end was a long way in the future, it was easy to leave it for a future generation worry about it.

When I first found out about Peak Oil fifteen years ago, I had a picture in my mind of big underground caverns full of oil, in places like Alberta, Texas and the Middle East. By drilling enough wells, you could keep up with growing demand--until getting to the bottom of the tank. Then supply would drop off very fast and the price would go through the roof, causing the economy to crash permanently.

Actually, that’s not what the petroleum geologists who were talking about Peak Oil meant at all. Oil is found in porous rock formations, in deposits of various size and quality, at various depths, and unequally distributed around the planet. This has some consequences, many of which have played out over the last 40 years or so.

What follows, by the way, are observations of what has been happening, not predictions. When I switch over to making predictions, I’ll let you know.

When using resources like fossil fuels, we tend to pick the low hanging fruit first. That is, the least expensive, most easily accessed resources are always used up first. The alternative would be to ignore them in favour of ones that are harder to come by. Which, when you think about it, would be pretty dumb. But going this way does have some consequences, in that by the time you have set up a system that is really dependent on the resource, the low hanging fruit is gone and what is left is more expensive and so the system faces some challenges.

What I think was not well understood initially (and is still not understood by all but a small minority) was the key role energy plays in the economy and the feedback mechanism that exists between the price of energy and economic growth. All but one of the recessions since 1950 were preceded by a spike in oil prices, in other words, a reduction in the availability of surplus energy. Well before we reach the peak of oil production, the EROEI starts to decrease, the price goes up and this slows down the economy. Demand for oil is reduced and the price comes back down. At this point the economy may start to grow again, as it did many times since the 1970s, or it may not, as has been the case since 2008.

Of course, since oil is not evenly distributed throughout the world, some countries have more, some less. And some use more oil than others. The significance of this can be seen by looking back over the last few decades.

What I am calling the Great Contraction really started in the 1970s when oil production peaked in the continental US.

The US was well endowed with oil resources, but it also was (and still is) a major user of oil. From the end of WWII to 1973, oil flowed freely and drove the American economy in an unprecedented burst of growth which seemed to be bring all things good to the American people. So it is not surprising that oil production peaked in the continental USA before much of the rest of the world, in the 1970s. But, hey, no problem, there was still lots of oil available on the world market, the price was low, and the USA was a very productive industrial country, so it could afford to import oil, right? Yes, except for OPEC, the Organization of Petroleum Exporting Countries, who saw the opportunity created by the situation, and spurred into action by the American and European support for Israel in the Yom Kippur War, declared an embargo which forced the price of oil from $3 per barrel up to $12 per barrel. This was a profound shock and sent most of the world reeling into a recession. Then the Iran-Iraq war in 1979 reduced the production of oil in both those countries and caused another oil shock.

Jimmy Carter was about to set the US on a course towards what we now call sustainability, but Reagan won the election in 1980, and with a last gush of oil from Alaska, kept the party going for a few more years. Something similar happened in Britain with Thatcher and the North Sea oil. But it should have been clear that this was a temporary reprieve. Governments have done their best to diddle with the economic indicators, but a close look beneath that facade shows that real growth stopped in the 1990s.

Since then we’ve got by on ever increasing debt, globalization, and the gradual elimination of the middle class, financing a few more years of partying for the rich. But all these stop gap measures were in fact huge mistakes, which have only made things worse, not better, for all but a very few people.

Countries like the “PIGS” in Europe with little or no fossil fuel resources have suffered greatly, as the rising cost of imported energy has forced them towards bankruptcy.

The oil exporting countries have found themselves temporarily rolling in cash and have even had trouble finding places to invest their money. Some of it has gone to subsidizing the cost of food and fuel for their own citizens. This is a bit of trap, for as their oil reserves decline and they have to start importing energy to keep up with domestic demand, they switch over very quickly from being rich to being poor, leaving their people very unhappy. Egypt over the last few years has been a clear example of this.

As the economy has slowed down, interest rates have been lowered in an attempt to keep things moving, and returns on investments in general have decreased. Those with money to invest have been left with a real problem of where to invest that money at a “reasonable rate”. They have been forced to accept higher risks, often buying into bubbles, and losing it all when the bubbles burst. Since the crash of 2008 markets have recovered nicely, even though the real economy has not. Much of this has been the result of governments printing money, which is just another sort of bubble. At the moment much so called wealth consists of promises that probably can’t be kept (debts that will never be repaid).

As more and more conventional oil fields go into decline, we are turning to fossil fuels with ever lower EROEI’s. Tight oil and gas, which have to be “fracked” from the shale formation where they are found are the current poster child for this. And in the last decade they have made a big difference, offsetting much of the decline in conventional oil. Fracking has been heralded as the solution to America’s energy problem for the next century, but in fact the decline rate on fracked wells in very high and the “sweet spots” in the shale formations have already be tapped. It also seems that original estimate of the amount of oil and gas available in these formations may have been rather optimistic. The estimates for the Monterey shale in California were downgraded by 94% this spring.

Here in Canada, Alberta’s tar sands are said to hold great promise, but the EROEI is in the range of 2 to 3, So this is little more than a way of turning high quality natural gas into low quality syncrude, and doing a lot of environmental damage in the process. And lowering Canada’s overall EROEI while they are at it. We have been told for years that there are hundred of years worth of coal left in the ground, but when you look at the coal supply situation, it seems not nearly so good, with most of the high quality coal gone and most of what’s left being the lower quality types, with a much lower energy content.

OK, that’s how things stand currently. Those predictions I was talking about start here. And some opinions as well.

Continual growth in on a finite planet is clearly impossible. But it seems that long before we ever get to outright physical limits on growth, the surplus energy available from fossil fuels--the resource that have been driving growth--will run out. Our economy shrinks or grows according to the amount of surplus energy available. For the last 200 years, there was abundant surplus energy and the economy grew. Now that abundance is dwindling and the economy will inevitably shrink until it matches the level of surplus energy that will be available without fossil fuels, basically from sunlight and its derivatives. We are entering a period of decline. There is no question of this. The question is how fast, how far and how much human suffering will be involved.

The fracking bubble will burst sometime in the next few years, causing financial havoc and in all likelihood a stock market crash. And when all those tight oil and gas wells go into terminal decline, there will be a real shortage of energy. Energy prices may temporarily shoot up, but demand destruction will slow the economy down and oil prices will settle out not much above where they are now, but at a lower level of energy use and a lower level of economic activity.

This contracted economy will not be able to support continued efforts to access low EROEI energy sources like the tar sands. We will turn to coal for more of our energy needs and very quickly use up the remaining reserves of coal.

All this will mean fewer jobs and more people looking for government support.

At the same time, governments are going to become less and less effective at providing that support, simply because their tax revenues are going to drop over the years ahead. First, as the economy continues to contract, the tax base contracts along with it. But beyond that, wealthy individuals and large corporations have the political clout to ensure tax cuts for themselves--they have the power to simply refuse to be taxed. And as the rest of us become poorer, we will have less income and less property to tax. The result of this will be tax starved governments, who will be even less capable of supporting the growing numbers of citizens in need.

As fossil fuel reserves become more and more constrained this will happen again and again. Demand destruction will continue until our standard of living has decreased to the point where it can be supported by renewable energy resources, where our energy income from the sun matches our energy use.

In the 1970’s there was sufficient oil, coal and natural gas left to fuel this switchover and “powerdown” the world economy in a controlled fashion, taking advantage of the full range of renewables. To initially set up the infrastructure for many of these renewables, a high level of surplus energy and a global network of suppliers maintaining a high level of technology is required. If we wait until economic contraction is well underway, the global network is starting to fall apart, and remaining fossil energy resources are further constrained, we may not be able to take advantage of all the available renewables, falling to a much lower level of technological energy use. Perhaps as far as firewood and muscle power, supplemented, if we are lucky, by wind and water power where that is most easily available. It seems likely that we will end up getting along with between 10% and 20% as much energy as we in the west are now using. Toward the upper end of that range if the decline is well managed, perhaps even below the lower end is it is not. Of course for many people in the developing world, this won’t be much of a change.

This decline will be relatively slow, taking many years. It will progress at various rates over time and hit some areas harder than others. Gradually, the highly networked global economy will breakdown and we will be forced to fall back to local resources. Occasionally that breakdown will come in larger, more catastrophic jumps. Occasionally there will be wars over resources, and revolutions when people blame their governments for the continued decline.

Now I think it is clear that a government which was aware of this decline (and its inevitability)-- even a tax starved government--could take steps to mitigate its negative effects. Very different steps from the attempts to use debt to jump start the economy that we are currently seeing. And very different from governments who choose to fight wars over resources that have almost run out anyway. I’ll be talking about that in a post coming soon.

But by this point many of you will be eager to point out that technological breakthroughs are sure to give us access to sources of energy as rich or richer that fossil fuels and let business continue on as usual, or perhaps even better than usual. Or perhaps you think that we can find a way to maintain our current lifestyle using renewable energy sources. Well, I wish it were so, but I really don’t think either of those scenarios is going to happen. In my next post I’ll be talking about technology and why I don’t think it is not the answer (depending, of course on what question we are asking.)

As an aid to those who want to read this whole series of "Political Fantasy" posts, here is a complete set of links.

Wednesday, 30 July 2014

Age of Limits 2014

I took off for a long weekend (5 days actually) by myself at the end of May this year. Most of my readers here are family or friends, and will be aware how unusual a thing this was for me.

I went to the Age of Limits Conference, at Four Quarters Interfaith Sanctuary near Artemas, Pennsylvania, May 22–26.

Three of my favorite bloggers (John Michael Greer, Dmitry Orlov and Gail Tverberg) were speaking at the conference, so I wanted to go, as I had wanted to go the previous two years. What tipped the balance this year was another speaker, Dennis Meadows, one of the authors of “The Limits to Growth”, a book that I read back in the 1970s, which dealt with the issues I’ve been discussing here long before I (or hardly anyone else) began to take them seriously. So this year I really, really wanted to go.

But... many buts…. I rarely go anywhere without Carolynn, my long suffering wife. I really don’t like driving, especially long trips and the US is certainly not my favourite place. It would be about a 12 hours drive, so I’d have to leave early, and I am not a morning person–single digit hours are NOT for me. Further, I would be camping out for the 4 nights. It had been over 10 years since I spent a night in a tent, much less 4 nights. Carolynn’s idea of camping out is staying in a three star hotel, and I have always been glad to support her in this. And the meal plan featured only two meals a day, which is definitely not my habit.

Still, by some miracle, I didn’t succumb to any of these excuses to call off the trip, gathered up the necessary camping equipment and headed out at 8 am on Thursday May 22. Fortified by a large cup of coffee, I managed to stay awake for the whole drive (I think). At any rate, I did manage to stay on the road. Crossing the border, despite all the stories I had heard, was no problem. Seems like border guards don’t see anything suspicious in old white guys with short hair (like me).

After several arguments with the GPS in my new smart phone, I rolled into the Four Quarters Interfaith Sanctuary, on a farm in the Allegheny Mountains, at the very southern edge of Pennsylvania.

The last few miles of roads, after making a wrong turn and having to follow the GPS since I had no idea where I was, reminded me of the township where I grew up: short on gravel and marked “no winter maintenance”, threaded windingly among hills and hardwood bush. And Four Quarters reminded me of the area just to the east of where I grew up in Ontario, where the land drops over on the edge of the Niagara Escarpment. It felt a long way from civilization, which suits me just fine.

I did survive the weekend camping out -- enjoyed it actually. It didn’t rain and the temperature, even in the middle of the night, never went below the mid forties (Fahrenheit). A good air mattress and heavy down sleeping bag kept me comfortable at night. There was one evening session when it got pretty chilly, but I put on the long underwear and heavy socks that I had brought along just in case, and was quite comfortable. I grabbed an apple each day at breakfast and ate it around noon. Breakfast and dinner were quite generous in quantity and excellent in taste, so hunger was no problem at all.

It was very encouraging, really, that an old codger like me who has been living pretty close to home for a long time, could actually enjoy an outing like this. But enough about my silliness, what is this Four Quarters place and what was the Age of Limits Conference actually all about?

My apologies to the people of Four Quarters for any undue simplifications or outright errors in what follows.

For those who haven’t clicked on the link (their website does present one with quite a lot of reading), here is an excerpt:

Four Quarters was founded in 1995 to provide safe harbor for the practice of both indigenous and modern Earth Religions, and to help preserve their spiritual roots into the future. The following years have witnessed the organic growth of a truly Progressive Community, one that is firmly rooted in the natural Land of Four Quarters. As we move through our second decade, we have made tremendous progress from our very humble beginnings, with almost 350 Members in support of this Community of Choice. A Community that incorporates progressive ideas of Family, Ecology, Culture and Tribe; bound together by our diverse Earth Based Spirituality.

You may wonder how I, an avowed atheist, felt going to such a place. But I am a lot less bothered by Earth religions with their immanent gods than I am by the religions of the Book, with their one transcendent God. Here is an excerpt of Four Quarters Constitution:

1.2.0···· * We do not attempt to define the belief of the individual, knowing that belief is a deeply personal matter, a part of our ongoing journey together.
1.2.2···· * We do recognize, support and incorporate into the body of our experience as a Church those practices and beliefs that we perceive are commonly shared and expressed among the many indigenous and modern traditions of Earth Religion.
1.2.4···· * These practices and beliefs include, but are not limited to: the manifestation of Spirit as a gender duality and polarity; our honor of the Circle in its completeness and its directions; polytheism and monotheism as accessible and understandable expressions of the divine impulse; the wheel of the year as a means of understanding ourselves and our world; and the recognition of nature as the source and endpoint, image and reflection, of ourselves and our experience of Spirit.
1.4···· * Our tradition is one of public service through work; on the land and amongst the public; to foster and protect The Standing Stones as sanctuary for all.

Hmmm… a church that doesn’t tell you what to believe, and concentrates on a progressive kind of public service. They seem to be making it up as they go along, but taking care to do a good job of that. Of course, in my opinion, all religions are being made up as they go along, but most are doing a terrible job of it and don’t seem to see what the problem is with that.

In the material sense Four Quarters is (again quoting from their website):

...150 acres of extremely beautiful and diverse land in the Allegheny foothills of south central Pennsylvania. We are located 15 miles west of the intersection of Interstates 68 and 70 at Hancock, Maryland, just a mile across the state line into Pennsylvania.
The Land is surrounded on three sides by a horseshoe bend in Sidling Creek, one of the cleanest free-flowing streams in the state as it cuts through Town Hill Mountain. The creek forms a naturally secluded retreat, framed by high cliffs and blessed with fine natural swimming.
The land features a broad range of ecological habitats ranging from creekside wetland to dry cliff face, mature forest to hilltop meadow. Four Quarters is listed as the most ecologically diverse tract of land in Bedford County, Pennsylvania by The Western Pennsylvania Nature Conservancy and we are ever mindful of this trust in caring for the Land.
Providing access to exceptional natural surroundings for individual spiritual growth is a primary purpose for which Four Quarters was founded.

Of those 150 acres, about 30 are suitable for farming and the rest is various sorts of bush, meadows and streams, parts of which have been set up as campsites, a dormitory, the Pavilion where the conference took place, the “Starvin’ Artists” kitchen and areas (such as the Stone Circle) for the ceremonial activities of the Church.

Four Quarters owns, free of mortgage, the 120 acres of the centre, where six adults live permanently in an income sharing community, working with the vital help of staff volunteers and 350 members. Everything is built and maintained by member volunteers who receive no monetary recompense for their labour.

My bad knee was acting up and didn’t like the 12 hour drive, so I didn’t get around the grounds of the place as much as I would have liked, and because I wanted to get back before too late on Monday I missed the tour that was offered Monday afternoon. Well, maybe next year.

I did get to set my tent up in a nice grassy area very close to the washrooms and showers and close to “Coffee Dragons”, where free coffee was on tap from early morning until much later at night than I ever drink coffee.

The thing about the people of Four Quarters is that, whatever else they may believe, they do recognize the reality of those limits that Meadows et al were talking about in “The Limits to Growth” forty years ago. Further they believe that as our industrial society runs up against those limits, the result will eventually be the collapse of that society. The only questions are those of timing and details and how we can hope to cope with the situation as it unfolds. This is why they are hosting “The Age of Limits”.

What follows is an outline of the conference and my reactions to it.

The Thursday evening Meet and Greet was nicely underway by the time I got my tent up and wandered down to the Pavillion. There was close to a majority of “old white guys” like me, with beards very much in fashion. Also a surprising number of women and young people. But very few people of color. People seemed quite eager to say hello and introduce themselves, something I find difficult to do. So I actually did get to meet a few people. One was KMO, of the C-Realm podcast. I had already visited the C-Realm website, but had somehow got the impression most of the podcasts concentrated on pretty flakey subjects. Since then, I have looked closer and found that while there is some of that, there are also a lot of interviews with very interesting people, discussing very interesting subjects. And KMO is a top notch interviewer.

Throughout the weekend being a Canadian proved a great basis for conversations, and I was surprised to find there were at least three other Canadians there.

Friday morning’s speaker was Orren Whiddon, Executive Officer of the Four Quarters Church. He explained the intended interactive nature of the conference with extensive question and answer sessions after each speaker’s presentation, and “conversations in the round” Friday and Saturday evening. Plus, of course, ample opportunities for one on one conversations with other attendees, even, as I found, the “celebrities”.

Orren also spoke about his own journey to being collapse aware, and gave a number tantalizing hints about the history and organization of Four Quarters. I did get one chance to speak with him one-on-one later in the conference, and thanked him for a job well done. But I would like to have a chance to talk to him quite a bit more. A very interesting fellow.

Friday afternoon Albert Bates gave us a short history of ecovillages. Bates was one of the founders of The Farm in Tennessee, one of the first ecovillages. An ecovillage, what we called a “commune” back in the 1960s,and what is now known as an “intentional community” is a group of people with a communitarian bent, aiming to live together in a way that both reduces their dependence on the “business as usual” world and the burden they place on the environment. Good goals, it seems, and also a good starting point for the kind of “lifeboat” communities that many collapse aware people are thinking about. Of course there have been many problems with setting up such communities and with keeping them running for extended lengths of time. But people are still trying and learning a lot in the process.

Friday night’s conversation in the round was entitled “Personal Collapse Mitigation Strategies” and was moderated by Peter Kilde, KMO and Whiddon. As an aid to getting the discussion rolling, this question was posed, “If you were given a million dollars, what would you do to mitigate collapse?” I may have the exact amount wrong, but in any case it seems like a dumb question to me, since the nature of collapse is such that coming into large sums of money is one of the least likely things to happen in the process. A better question might be what can we do with a minimum of cash. Nonetheless, the question did serve to get conversation going. Many people felt that consciousness raising efforts would be the way to go–after all, people who are unaware of what is coming can hardly plan to mitigate its effects. We are, however, working against a level of denial that is pretty amazing. I would have liked to hear more about “deliberate descent” sort of strategies, but oh well….

Saturday morning Dmitry Orlov gave a talk entitled “Communities That Abide II”. Part two because he gave a similar talk last year outlining the characteristics of communities that have been able to maintain a separate and different lifestyle across generations while living within but to at least some extent not being a part of industrial civilization.

Dmitry got a pretty negative response from the feminists in the audience, or perhaps more accurately from people concerned about social justice. Many such communities are patriarchies and he may have made some comments to the effect that the sort of social justice that progressive people expect these days is a product of our fossil fuel powered society and we can’t expect it to be maintained in a lower energy world. This is a common idea among old white male collapse niks. But it is not an idea that I accept, nor did the majority of people at Age of Limits this year. Dimitry was no longer pushing it (if he ever was) and may indeed have changed his mind on the subject, so he didn’t get such a negative reaction. It may be that those “negative” aspects of these communities are largely irrelevant. He did emphasize two of the more important aspects of such communities: what makes them successful (socially and economically), and what keeps them together.

Of course, communism is still a dirty word in the US. But call it what you will, communities whose members work together, pooling their resources and their labour and relying on the formal economy for relatively little, have a tremendous advantage over those of us who are stuck in the formal economy with most our relationships monetized. Being part of a group where you know you have a role to play, and that you know will take care of you simply because you are one of them is a hugely positive thing and one that most people is our society never experience.

What it is that keeps communities together is a more complex subject, best to get a copy of Dmitry’s book on the subject—I picked up a copy at the conference, and you can get it as an ebook at Amazon.

Saturday afternoon, Dennis Meadows talked about “The Dynamics of Societal Collapse”. He started by saying that this was the first time he had ever spoken to an audience that was already convinced that limits are real, so bear with him, because this would be a new version of his usual presentation. Here is a link to his usual presentation with comments on what was added at Age of Limits: energyskeptic.com/2014/dennis-meadows-collapse-is-inevitable-now-2015-2020/

He said that he has boxes piled up to the ceiling of papers refuting the conclusions of The Limits to Growth, and only one small box of papers supporting those conclusions. Even so, the actual numbers plotted beside the Limits to Growth “predictions” show that the world is following their “business as usual” scenario, and appears to be headed for collapse, sometime between 2015 and 2020.

In 1972, we were at something like 90% of the planet’s carrying capacity. We could have switched to a sustainable lifestyle by simply slowing down. We are now at approximately 150% of carrying capacity and that overload is reducing the planet’s carrying capacity every day. So at some point our population will stop growing and decrease to a level that is sustainable. We are facing a period of decline, and while we still need to work on reducing pollution, changing our energy sources and reducing our reliance on violence as a way of solving problems, we more than ever need to work on increasing our resilience. If we go into the coming period of decline without being prepared for it, it will strip away our values and take us to a very unpleasant place indeed. But if we are prepared and resilient, it may be possible to retain democracy, equity and social justice.

Dennis explained we are facing two type of problems: easy ones and hard ones. For easy problems, the actions that solve the problem also make it better in the short term. The market and politics deals with this sort of problem quite well. Hard problems are the ones that require sacrifice now for benefits later. The actions that solve them make things worse in the short term, and this requires the sort of decision making that the market and politics invariably get wrong.

Meadows also did some practical demonstrations that I think are worth recounting.

First he asked us to cross our arms in the way that we usually do, and note which wrist was on top. Then he had us put our arms back down and cross them again, again noting which wrist was on top. Then he asked how many have done it the same way both times (everybody) and then how many had the right wrist on top and how many had the left wrist (about 50/50). He explained that the point of this was that you cross your arms when you aren’t going to be doing anything with them and it would be stupid to have to stop and think about which way to do it every time. So we form a habit. Over the last couple of centuries we have formed a complex set of habits to do with growth, and they have worked very well for us. But now the circumstances have changed and we need to develop new habits.

Then he asked us to cross our arms the other way. The result was amusing to watch, with many people having to try more than once to do it. He commented that we had probably noted three things: it is possible, it’s a little hard to figure out and we make mistakes in the process, and it feels uncomfortable at first. This is also true of the changes we need to make to build a sustainable society.

Then there was the hula hoop thing. Arrange 5 or 6 people in a circle facing inwards, supporting a hula hoop on one extended finger each. Tell them to lower the hoop to the ground. If any of the fingers drops too quickly, losing contact with the hoop, they must start again. This requires such fine co-ordination that it is very difficult to even keep the hoop still. Usually, it goes up and it is practically impossible to lower it. This is justy because of the geometry and physics of the situation. But lower the number of people to 3 and it works fine, again because of the geometry. The point being that there are many strategies that don’t work, even with people who have the best of intentions and work really hard, because the plan itself is not workable. But what’s wrong is subtle enough that people can’t see it.

I think that identifying strategies that don’t work and abandoning them for ones that do is going to be one of our biggest challenges and an area where we need to focus a great deal of effort.

His third practical demonstration might be called “One,Two, Three, Clap”. He told us that he would count to three, then say clap and we should all clap our hands together. Then he counted to three, clapped his hands and then said clap. About half of us clapped when he did, the other half clapped when he said “clap”. Dennis observed that we had understood what he had said, we agreed with it and we wanted to do it. But as soon as his actions were different from his words, we paid attention to his actions. He concluded by saying if we leave here promoting sustainable development, but our actions are consistent with overshoot, we’ll get overshoot. A sobering thought.

Meadows commented that the original simulation didn’t distinguish between energy resources and other resources. He would like to see the study redone separating out fossil fuels into their own category. But there is very little interest and no funding for such an effort today, so it won’t likely happen.

In the lull between supper and the evening session, a fellow by the name of Jack Alpert (link to his website: www.skil.org) showed a couple of short videos about his plan to solve the problems facing the human race without reducing our standard of living. Apparently there are two or three locations in the world where there are locally concentrated water power resources enough to sustain a high energy use society. But not for billions of people. More like 500 million total. So if we reduce our population down to that level while setting up the infrastructure needed in those two or three areas, about 500 million of us can have our cake and eat it too. He proposed to achieve this reduction in population by reducing the birth rate, by convincing people that it is the right thing to do. The interesting thing was that the negative reaction to his ideas was all focused on that one aspect: that people could and should be convinced to voluntarily reduce our population to a small fraction of its current level. Particularly in the light of the discussion that followed later that evening (see below). Apparently people think that it is inevitable that human population will be reduced by disaster but highly improbable that it could be done intentionally. I felt kind of sorry for Jack, who while not exactly surprised by the negative reaction, was obviously disappointed by it. Just another great idea that’s not going to happen.

I talked to Jack later about the electrical system central to his plan and offered some of my experience with the maintenance and unplanned failure of grid equipment. Flocks of black swans seem to hover over electrical grids.

Saturday night’s conversation in the round was entitled “Timelines in Collapse”, and started with going around the room and having everyone give the date they expect human population would peak and optionally, how long after that it will have declined by 50%.

The average prediction turned out to be in the early 2040s, not far off my prediction of 2045. Of course, my prediction was entirely pulled out of my ass… more based on the fact that I expect to be long gone by 2045 than anything else. Later in the discussion Orren mentioned that he had expected us all to pick dates conveniently far in the future. But many, especially the younger folks picked dates that they will very likely live to see. So they had some “skin in the game”. As arbitrary as the dates we picked may have seemed, they did serve as a springboard for some lively discussion. One thing that was discussed is that most of the damage of collapse will have been done by the time the population actually peaks and starts to decline. So my prediction of 2045 means not that things won’t start getting bad until then, but that they will have gotten bad enough to actually stop population growth. John Michael Greer, who predicts a slow and gradual collapse, didn’t think the population would peak until much later in this century. I generally find his arguments pretty convincing, so maybe I was actually being too pessimistic.

Even though it took place in the U.S., there were very few overt, in your face Christians at this event (2 by my count), I guess it was inevitable that one of them would get up and say something about God saving us from the coming troubles. It was entertaining when John Michael Greer asked the facilitators if he could respond to this suggestion. He made the night for me with his comments about the unbelievable feeling of entitlement common among Christians and the extreme unlikelihood, in the light of the human race’s record over the last few hundred years, that the universe or God or whatever you will, is going to bail us out of the mess we’ve gotten ourselves into.

Sunday morning on the way to breakfast, I introduced myself to Greer and secured his permission to use some of his ideas in my blog. Very easy fellow to talk to.

Sunday morning Gail Tverberg spoke on “Converging Crises”. Here is a link to her blog entry discussing the presentation:
http://ourfiniteworld.com/2014/05/29/converging-energy-crises-and-how-our-current-situation-differs-from-the-past/.

While she did give a good summary of the crises facing our industrial civilization, and had some wonderful graphs to illustrate them, she left me hanging without any unified picture of what comes next. Gail is an actuary and applies that expertise to talk about the economy and is certainly aware of the “Surplus Energy” interpretation of economics, but I don’t think she has fully grasped its strengths when to comes to explaining the mess we are in and predicting what comes next. Or perhaps, based on a recent blog post of hers, she knows more about this than I do. Maybe even at Age of Limits she mentioned the idea that the global economy is a network with fragile parts and delicate connections, which may quit working because of point failures long before surplus energy analysis would suggest it should.

She talked about the “Fracking Bubble”, which is set to burst shortly and that will probably lead to a stock market crash, if something else doesn’t trigger it first.

And she did bring up one idea that I found very intriguing: the predicament of oil companies as the cost of producing oil keeps going up, but oil prices are limited by demand destruction. At some point it just doesn’t pay anymore and this happens long before the oil has actually run out. Already many of the large oil companies are cutting back on exploration--it costs more than the value of the relatively small discoveries that are being made. I can’t help wondering what will happen when oil companies start closing up shop and and leave us with real, major shortages. The conventional answer has been that prices will go up enough to make the business pay, but it seems more likely that the economy will go into an even deeper recession, reducing the demand for oil to match the available supply.

Another realization came to me while listening to Gail, though it wasn’t something she specifically said. Governments are going to become less and less effective agents of change, simply because their tax revenues are going to drop over the years ahead. First, as the economy continues to contract, the tax base contracts along with it. But beyond that, wealthy individuals and large corporations have the political clout to ensure tax cuts for themselves--they have the power to simply refuse to be taxed. And as the rest of us become poorer, we will have less income to tax. The result of this will be tax starved governments, who will be even less capable of dealing with the coming crises than they are today. Looks to me like we will have to learn to take care of ourselves.

At noon John Michael Greer took over and talked about Dark Ages. Greer sees history as cyclical, and explained that our civilization has all the earmarks of one headed for collapse and a subsequent dark age. Based on previous dark ages, he presented a pretty detailed picture of what the next one will look like. Of course, many people are convinced that things are different this time, and by that they mean “not as bad”. John Michael has his counter arguments nicely lined up and is pretty adept at making fun of the “it’s different this time” attitude. Of all the speakers, John is probably the one who has influenced my thinking the most. Rather than going on at length about what he had to say, I’ll just advise you to read his blog.

He was followed by Mark Cochrane, a bona fide climate scientist. Last year at Age of Limits Guy MacPherson spoke about climate change. He is convinced that we are facing the near term extinction of the human race (by 2030). Many of us disagree. Here are some links to arguments against MacPherson:
fractalplanet.wordpress.com/2014/02/17/how-guy-mcpherson-gets-it-wrong/
planet3.org/2014/03/13/mcphersons-evidence-that-doom-doom-doom/
MacPherson, it seems, is not really a climate scientist and his opinions are not backed up by real evidence.

Cochrane began his presentation with the statement, “We are all going to die.” Which, of course, is true, and was met with nervous laughter. He immediately went on to debunk the idea of short term extinction due to rapid climate change. Then he described the sort of climate change that we can expect to see in the somewhat longer term, for the rest of this century and beyond. And the news was not pleasant. Many changes will occur too fast for plants and animal to adapt or move. And hardly anywhere on the planet will not be affected. Many of us went away wondering how much better this picture was than short term extinction.

Sunday night, instead of a conversation in the round, there was a dance in the pavilion, “La Danse des Mortes Heureux” -- the Dance of the Happy Dead. There was a fiddler in the band, so I was happy anyway, though my bum knee didn’t allow me to take part. I wandered away from the dance fairly early and found myself under the tent next to Coffee Dragons, sitting at a table next to John Michael Greer and “shooting the shit” for an hour or so on largely non-serious subjects.

Monday morning I got Dmitry Orlov to autograph my copy of Communities That abide, had breakfast and left for home. For those who stayed, there was another conversation featuring attendees’ reactions to the Age of Limits, and that was followed by a “Closing Circle” in the Stone Circle.

The “Retro Progressive’s Practicum” followed for the rest of the week, with five days of BioChar hands on with Albert Bates, kiln fabrication in Four Quarters’ metal shop, visits to adjoining organic farms and night-time conversation on the practical aspects of communitarian living. Really wish I could have stayed for this.

After taking a few weeks to think it over, I have to say that Age of Limits solidified my thoughts on collapse. I’ve been entertaining thoughts in vein of “if only we could get our act together and do this, that or the other thing, maybe we could get through this with relatively little trouble.” Such schemes are extremely unlikely to succeed, but they do have a seductive appeal. One is better focusing on preparing for what is almost certainly coming.

One a more positive note, it seems that there may be something to the intentional community idea after all. I had grown very skeptical about the likelihood of finding myself in any sort of functional community, intentional or not. But it seems that some people, like those at Four Quarters, are making it work. Perhaps there is hope.

Here are some more links to blog posts and podcasts about Age of Limits 2014:
Albert Bates: peaksurfer.blogspot.ca/2014/05/a-gathering-of-silverbacks-age-of.html
Dmitri Orlov: cluborlov.blogspot.ca/2014/05/review-age-of-limits-2014.html
Orren Widdon: c-realm.com/podcasts/crealm/409-the-ultimate-metric-of-doom/
KMO c-realm.blogspot.ca/2014/06/three-conference-in-three-weeks.html
c-realm.com/podcasts/crealm/414-recognizing-our-dark-mirror/
donalfagan.wordpress.com/2014/06/04/after-what-seemed-like-an-age/
damnthematrix.wordpress.com/2014/05/31/age-of-limits-2014/
c-realm.com/podcasts/crealm/417-timelines-for-collapse/

Pages

Friday, 17 April 2015

A Political Fanatsy, Part 2: Money and the Financial System

Wednesday, 18 February 2015

A Political Fantasy, Part 1

Sunday, 31 August 2014

Technology Isn't the Answer, depending on what question you're asking...

Monday, 4 August 2014

The Great Contraction

Wednesday, 30 July 2014

Age of Limits 2014