Why Standard Economic Models Don’t Work–Our Economy is a Network

The story of energy and the economy seems to be an obvious common sense one: some sources of energy are becoming scarce or overly polluting, so we need to develop new ones. The new ones may be more expensive, but the world will adapt. Prices will rise and people will learn to do more with less. Everything will work out in the end. It is only a matter of time and a little faith. In fact, the Financial Times published an article recently called “Looking Past the Death of Peak Oil” that pretty much followed this line of reasoning.

Energy Common Sense Doesn’t Work Because the World is Finite 

The main reason such common sense doesn’t work is because in a finite world, every action we take has many direct and indirect effects. This chain of effects produces connectedness that makes the economy operate as a network. This network behaves differently than most of us would expect. This networked behavior is not reflected in current economic models.

Most people believe that the amount of oil in the ground is the limiting factor for oil extraction. In a finite world, this isn’t true. In a finite world, the limiting factor is feedback loops that lead to inadequate wages, inadequate debt growth, inadequate tax revenue, and ultimately inadequate funds for investment in oil extraction. The behavior of networks may lead to economic collapses of oil exporters, and even to a collapse of the overall economic system.

An issue that is often overlooked in the standard view of oil limits is diminishing returns. With diminishing returns, the cost of extraction eventually rises because the easy-to-obtain resources are extracted first. For a time, the rising cost of extraction can be hidden by advances in technology and increased mechanization, but at some point, the inflation-adjusted cost of oil production starts to rise.

With diminishing returns, the economy is, in effect, becoming less and less efficient, instead of becoming more and more efficient. As this effect feeds through the system, wages tend to fall and the economy tends to shrink rather than grow. Because of the way a networked system “works,” this shrinkage tends to collapse the economy. The usage of  energy products of all kinds is likely to fall, more or less simultaneously.

In some ways current, economic models are the equivalent of flat maps, when we live in a spherical world. These models work pretty well for a while, but eventually, their predictions deviate further and further from reality. The reason our models of the future are wrong is because we are not imagining the system correctly.

The Connectedness of a Finite World 

In a finite world, an action a person takes has wide-ranging impacts. The amount of food I eat, or the amount of minerals I extract from the earth, affects what other people (now and in the future) can do, and what other species can do.

To illustrate, let’s look at an exaggerated example. At any given time, there is only so much broccoli that is ready for harvest. If I decide to corner the broccoli market and buy up 50% of the world’s broccoli supply, that means that other people will have less broccoli available to buy. If those growing the broccoli spray the growing crop with pesticides, “broccoli pests” (caterpillars, aphids, and other insects) will die back in number, perhaps contributing to a decline of those species. The pesticides may also affect desirable species, like bees.

Growing the broccoli will also deplete the soil of nutrients. If 50% of the world’s broccoli is shipped to me, the nutrients from the soil will find their way around the world to me. These nutrients are not likely to be replaced in the soil where the broccoli was grown without long-distance transport of nutrients.

To take another example, if I (or the imaginary company I own) extract oil from the ground, the extraction and the selling of that oil will have many far-ranging effects:

  •  The oil I extract will most likely be the cheapest, easiest-to-extract oil that I can find. Because of this, the oil that is left will tend to be more expensive to extract. My extraction of oil thus contributes to diminishing returns–that is, the tendency of the cost of oil extraction to rise over time as resources deplete.
  • The petroleum I extract from the ground will consist of a mixture of hydrocarbon chains of varying lengths. When I send the petroleum to a refinery, the refinery will separate the petroleum into varying length chains: short chains are gasses, longer chains are liquids, still longer ones are very viscous, and the longest ones are solids, such as asphalt. Different length chains are used for different purposes. The shortest chains are natural gas. Some chains are sold as gasoline, some as diesel, and some as lubricants. Some parts of the petroleum spectrum are used to make plastics, medicines, fabrics, and pesticides. All of these uses will help create jobs in a wide range of industries. Indirectly, these uses are likely to enable higher food production, and thus higher population.
  • When I extract the oil from the ground, the process itself will use some oil and natural gas. Refining the oil will also use energy.
  • Jobs will be created in the oil industry. People with these jobs will spend their money on goods and services of all sorts, indirectly leading to greater availability of jobs outside the oil industry.
  • Oil’s price is important. The lower the price, the more affordable products using oil will be, such as cars.
  • In order for consumers to purchase cars that will operate using gasoline, there will likely be a need for debt to buy the cars. Thus, the extraction of oil is tightly tied to the build-up of debt.
  • As an oil producer, I will pay taxes of many different types to all levels of governments. (Governments of oil exporting countries tend to get a high percentage of their revenue from taxes on oil. Even in non-exporting countries, taxes on oil tend to be high.) Consumers will also pay taxes, such as gasoline taxes.
  • The jobs that are created through the use of oil will lead to more tax revenue, because wage earners pay income taxes.
  • The government will need to build more roads, partly for the additional cars that operate on the roads thanks to the use of gasoline and diesel, and partly to repair the damage that is done as trucks travel to oil extraction sites.
  • To keep the oil extraction process going, there will likely need to be schools and medical facilities to take care of the workers and their families, and to educate those workers.

Needless to say, there are other effects as well. The existence of my oil in the marketplace will somehow affect the market price of oil. Burning of the oil may affect the climate, and will tend to acidify oceans. It would be possible to go on and on.

The Difficulty of Substituting Away from Oil 

In some sense, the use of oil is very deeply imbedded into the operation of the overall economy. We can talk about electricity replacing oil, but oil’s involvement in the economy is so pervasive, it can’t possibly replace everything. Perhaps electricity might replace gasoline in private passenger automobiles. Such a change would reduce the demand for hydrocarbon chains of a certain length (C7 to C11), but that only reduces demand for one “slice” of the oil mixture. Both shorter and longer chain hydrocarbons would be unaffected.

The price of gasoline will drop, (making Chinese buyers happy because more will be able to afford to use motorcycles), but what else will happen? Won’t we still need as much diesel, and as many medicines as before? Refiners can fairly easily break longer-chain molecules into shorter-chain molecules, so they can make diesel or asphalt into gasoline. But going the other direction doesn’t work well at all. Making gasoline into shorter chains would be a huge waste, because gasoline is much more valuable than the resulting gases.

How about replacing all of the taxes directly and indirectly related to the unused gasoline?  Will the price of electricity used in electric-powered vehicles be adjusted to cover the foregone tax revenue?

If a liquid substitute for oil is made, it needs to be low priced, because a high-priced substitute for oil is very different from a low-priced substitute. Part of the problem is that high-priced substitutes do not leave enough “room” for taxes for governments. Another part of the problem is that customers cannot afford high-priced oil products. They cut back on discretionary expenditures, and the economy tends to contract. There are layoffs in the discretionary sectors, and (again) the government finds it difficult to collect enough tax revenue.

The Economy as a Networked System

I think of the world economic system as being a networked system, something like the dome shown in Figure 1. The dome behaves as an object that is different from the many wooden sticks from which it is made. The dome can collapse if sticks are removed.

Figure 1. Dome constructed using Leonardo Sticks

Figure 1. Dome constructed using Leonardo Sticks

The world economy consists of a network of businesses, consumers, governments, and resources that is bound together with a financial system. It is self-organizing, in the sense that consumers decide what to buy based on what products are available at what prices. New businesses are formed based on the overall environment: potential customers, competition, resource availability, services available from other businesses, and laws. Governments participate in the system as well, building infrastructure, making laws, and charging taxes.

Over time, all of these gradually change. If one business changes, other business and consumers are likely to make changes in response. Even governments may change: make new laws, or build new infrastructure. Over time, the tendency is to build a larger and more complex network. Unused portions of the network tend to wither away–for example, few businesses make buggy whips today. This is why the network is illustrated as hollow. This feature makes it difficult for the network to “go backward.”

The network got its start as a way to deliver food energy to people. Gradually economies expanded to include other goods and services. Because energy is required to “do work,” (such as provide heat, mechanical energy, or electricity), energy is always central to an economy. In fact, the economy might be considered an energy delivery system. This is especially the case if we consider wages to be payment for an important type of energy–human energy.

Because of the way the network has grown over time, there is considerable interdependency among different types of energy. For example, electricity powers oil pipelines and gasoline pumps. Oil is used to maintain the electric grid. Nuclear electric plants depend on electricity from the grid to restart their operations after outages. Thus, if one type of energy “has a problem,” this problem is likely to spread to other types of energy. This is the opposite of the common belief that energy substitution will fix all problems.

Economies are Prone to Collapse

We know the wooden dome in Figure 1 can collapse if “things go wrong.” History shows that many civilizations have collapsed in the past. Research has been done to see why this is the case.

Joseph Tainter’s research indicates that diminishing returns played an important role in the collapse of past civilizations. Diminishing returns would be a problem when adding more workers didn’t add a corresponding amount more output, particularly with respect to food. Such a situation might be reached when population grew too large for a piece of arable land. Degradation of soil fertility might play a role as well.

Today, we are reaching diminishing returns with respect to oil supply, as evidenced by the rising cost of oil extraction. This is occurring because we removed the easy to extract oil, and now must move on to the more expensive to extract oil. In effect, the system is becoming less efficient. More workers and more resources of other types are needed to produce a given barrel of oil. The value of the barrel of oil in terms of what it can do as work (say, how far it can move a car, or how much heat it can produce) is unchanged, so the value each worker is producing is less. This is the opposite of efficiency.

Peter Turchin and Sergey Nefedov have done research on the nature of past collapses, documented in a book called Secular Cycles. An economy would clear a piece of land, or discover an approach to irrigation, or by some other means discover a way to expand the number of people who could live in an area. The resulting economy would grow for well over 100 years, until population started catching up with resource availability. A period of stagflation followed, typically for about 50 or 60 years, as the economy tried to continue to grow, but bumped against increasing obstacles. Wage disparity grew as wages of new workers lagged. Debt also grew.

Eventually collapse occurred, over a period of 20 to 50 years. Often, much of the population died off. An inter-cycle period followed, during which resources regenerated, so that a new civilization could arise.

Figure 2. Shape of typical Secular Cycle, based on work of Peter Turkin and Sergey Nefedov in Secular Cycles.

Figure 2. Shape of typical Secular Cycle, based on work of Peter Turkin and Sergey Nefedov in Secular Cycles.

One of the major issues in past collapses was difficulty in funding government services. Part of the problem was that wages of common workers were low, making it difficult to collect enough taxes. Part of governments’ problems were that their costs went up, as they tried to solve the increasingly complex problems of society. Today these costs might include unemployment insurance and bailing out banks; in ages past they included larger armies to try to conquer new lands with more resources, as their own resources depleted.

Today’s Situation 

Our situation isn’t too different. The economy started growing in the early 1800s, about the time we started using fossil fuels, thanks to technology that allowed us to use them. Oil is the fossil fuel that is depleting most quickly, because it is very valuable in many uses, including transportation, agriculture, construction, mining, and as a raw material to produce many goods we use every day.

Our economy seems to have hit stagflation in the early 1970s, when oil prices first began to spike. Now, some of the symptoms we are seeing are looking distressingly like the symptoms that other civilizations saw prior to the beginning of collapse. Our networked system has many weak points:

  • Oil exporters Governments can collapse, as the government of the Former Soviet Union did in 1991, if oil prices are too low. The fact that oil prices have not risen since 2011 is probably contributing to unrest in the Middle East.
  • Oil importers Spikes in oil prices lead to recession.
  • Governments funding Debt keeps expanding; infrastructure needs fixes but they don’t get done; too many promises for pensions and healthcare.
  • Failing financial systems Debt defaults are likely to be a major problem if the economic system starts shrinking. Debt is needed to keep oil prices up.
  • Contagion if one energy product is in short supply This happens many ways. For example, nearly all businesses rely on both electricity and oil. If either one of these becomes unavailable (say oil to supply parts and ship goods to customers), then the business will need to close. Because of the business closure, demand for other energy products the business uses, such as electricity and natural gas, will drop at the same time. Direct use of energy products to produce other energy products (mentioned previously) also contributes to this contagion.

Unfortunately, when it comes to operating an economy, it is Liebig’s Law of the Minimum that rules. In other words, if any required element is missing, the system doesn’t work. If businesses can’t get financing, or can’t pay their employees because banks are closed, businesses may need to close. Workers will get laid off, and the inability to afford energy products (economists would call this “lack of demand”) will be what brings the system down.

Modeling our Current Economy 

Everywhere we look, we see models of how the energy system or the economy can be expected to work. None of the models match our current situation well.

Growth will Continue As in the Past It is pretty clear that this model is inadequate. Every revision to growth estimates seems to be downward. In a finite world, we know that growth at the same rate can’t continue forever–we would run out of resources, and places for people to stand. The networked nature of the system explains how the system really grows, and why this growth can’t continue indefinitely.

Rising Cost of Producing Energy Products Doesn’t Matter In a global world, we compete on the price of goods and services. The cost of producing these goods and services depends on (a) the cost of energy products used in making these goods and services (b) wages paid to workers for producing these services (c) government, healthcare, and other overhead costs, and (d) financing costs.

One part of our problem is that with globalization, we are competing against warm countries–countries that receive more free energy from the sun than we do, so are warmer than the US and Europe. Because of this free energy from the sun, homes do not need to be built as sturdily and less heat is needed in winter. Without these costs, wages do not need to be as high. These countries also tend to have less expensive healthcare systems and lower pensions for the elderly.

Governments can try to fix our non-competitive cost structure compared to these countries by reducing interest rates  as much as possible, but the fact remains–it is very difficult for countries in cold parts of the world to compete with countries in warm parts of the world in making goods. This cost competition problem becomes worse, as the price of energy products rises because we are competing with a cost of $0 for heating requirements. If cold countries add carbon taxes, but do not surcharge goods imported from warm countries, the disparity with warm countries becomes even worse.

In the early years of civilization, warm countries dominated the world economy. As energy prices rise, this situation is likely to again occur.

Price is Not Important  Apart from the warm country–cool country issue, there is another reason that energy cost (in real goods, not just in financial printed money) is important:

The price of the energy used in the economy is important because it is tied to how much must be “given up” to buy the oil or anther energy product (such as food). If energy is cheap, little needs to be given up to obtain the energy. Because of energy’s huge ability to do “work,” the work that is obtained can easily make goods and services that compensate for what has been given up. If energy is expensive, there is much less benefit (or perhaps negative benefit) when what is given up is compared to the work that the energy product provides. As a result, economic growth is held back by high-priced energy products of any kind.

Supply and Demand Leads to Higher Prices and Substitutes  Major obstacles to the standard model working are (a) diminishing returns with respect to oil supply, (b) recession and even government failure of oil importers, when oil prices rise and (c) civil unrest and even government failure in oil exporters, if oil prices don’t keep rising. If there isn’t enough oil supply, oil prices rise, but there are soon so many follow-on effects that oil prices fall back again.

Reserves/ Production This ratio supposedly tells how long we can produce oil (or natural gas or coal) at current extraction rates. This ratio is simply misleading. The real limit is how long the economy can function, given the feedback loops related to diminishing returns. If a person simply looks at investment dollars required, it becomes clear that this model doesn’t work. See my post IEA Investment Report – What is Right; What is Wrong.

IPCC Climate Change Model Estimates of future carbon emissions do not take into the networked nature of the energy system and economy, so tend to be high.  See my post Oil Limits and Climate Change – How They Fit Together.

Energy Payback Period, Energy Return on Energy Invested, and Life Cycle Analysis These approaches look at the efficiency of energy production, comparing energy used in the process to energy produced in the process. In some ways, they work–they show that we are becoming less and less efficient at producing oil, or coal, or natural gas, as we move to more difficult to extract resources. And they can be worthwhile, if a decision is being made as to which of two similar devices to purchase: Wind Turbine A or Wind Turbine B.

Unfortunately, modeling a finite world is virtually impossible. These approaches use narrow boundaries–energy used in pulling oil out of the ground, or making a wind turbine. It doesn’t tell as much as we need to know about new energy generation equipment, together with (a) changes needed elsewhere in the system and (b) whatever financial system is used to pay for the energy generated with that system, will actually work in the economy. To really analyze the situation, broader analyses are needed.

Furthermore, there are the inherent assumptions that (a) we have a long time period to make changes and (b) one energy source can be substituted for another. Neither of these assumptions is really true when we are this close to oil limits.

Where the Peak Oil Model Went Wrong

Part of the Peak Oil story is right: We are reaching oil limits, and those limits are hitting about now. Part of the Peak Oil story is not right, though, at least in  a common version that is prevalent now.  The version that is prevalent is more or less equivalent to the “standard” view of our current situation that I talked about at the beginning of the post. In this standard view, oil supply will not disappear very quickly–approximately 50% of the total amount of oil ever extracted will become available after the peak in oil production. There will be considerable substitution with other fuels, often at higher prices. The financial system may be affected, but it can be replaced, and the economy will continue.

This view is based on writing of M. King Hubbert back in 1957. At that time, it was commonly believed that nuclear energy would provide electricity too cheap to meter. In fact, in a 1962 paper, Hubbert talks about “reversing combustion,” to make liquid fuels. Thus, not only did his story include cheap electricity, it also included cheap liquid fuels, both in huge quantity.

Figure 3. Figure from Hubbert's 1956 paper, Nuclear Energy and the Fossil Fuels.

Figure 3. Figure from Hubbert’s 1956 paper, Nuclear Energy and the Fossil Fuels.

In such a situation, growth could continue indefinitely. There would be no need to replace huge numbers of vehicles with electric vehicles. Governments wouldn’t have a problem with funding. There would be no problem with collapse. The supply of oil and other fossil fuels could decline slowly, as suggested in his papers. Assuming that it is possible to extract about 50% of oil supply after peak is equivalent to assuming that the networked economy will hold together indefinitely–there will be no problem with collapse.

But the story of the cheap, rapid nuclear ramp-up didn’t materialize, and we gradually got closer to the time when limits were beginning to hit. Major changes were needed to Hubbert’s story to reflect the fact that we really didn’t have a fix that would keep business as usual going indefinitely. But these changes never took place. Instead the view of how little change was needed to keep the economy going kept getting downgraded more and more. “Standard” economic views filtered into the story, too.

There is a correct version of the oil limits story to tell. It is the story of the failure of networked systems. That is the story I am telling in my posts.

967 thoughts on “Why Standard Economic Models Don’t Work–Our Economy is a Network

  1. Dear Gail
    One more interesting thing in the Lawton/ Wheaton conversation. The discussion turns to Portland, OR vs. a sub-tropical location. Geoff says that Portland is probably better than the subtropics because Portland gets a lot of filtered sunshine rather than the blazing sun of the sub-tropics.

    I have posted here the advantages of using shade-cloth, or certain types of trees which make open shade, for precisely this reason. In direct, bright sunshine plant temperatures can climb into the range where they have to stop photosynthesizing…they will look wilty. A person today can learn a lot by building some simple supports and using shade cloth, which is lightweight spun fabric. In a ‘black Friday’ collapse, shade cloth would become unavailable. So the person would have a couple of years to come up with an alternative. One is to make bamboo shades which allow about half the sun light through. Tie the shades together with vines (Robinson Crusoe like) and drive tree limbs with forks into the ground and simply lay them on the forks to hold them up.

    In a ‘black Friday’ scenario, one is likely to have plenty to do besides worrying about bamboo shades, so having some shade cloth, knowing from experience what to do with it and when, is likely to pay big dividends.

    This is a ‘gardening’ approach rather than a 40 acres of corn approach.

    Don Stewart

  2. Dear Gail and All

    Few notes about the internet and it’s failure to solve most problems.

    Let’s begin with the article about Barbara Fredrickson in The Sun:


    I won’t try to summarize or dissect all the points she makes. But I believe that she highlights the problems with relying on the internet as a medium which can materially help with fundamental issues. For example, those who believe that human happiness is all about continued exponential expansion of the economy and the use of energy from non-solar sources, versus those who subscribe to a more biology based notion that happiness is the normal state of an organism that is living as Mother Nature designed it to live in the environment it evolved in. Or those who see ‘survival of the fittest’ as the sole test versus those who see ‘love’ (as Fredrickson describes it) as the ultimate goal, versus those who see humans as conflicted between the solitary and the social with no unambiguous formula for balancing the two.

    There are a number of useful references besides the Fredrickson article:
    *The book Scarcity: Why Having Too Little Means So Much by Sendhil Mullainathan and Eldar Shafir

    *The book Life on Earth, by E.O. Wilson and others. Available for free download from Apple Books.

    *. Geoff Lawton’s comment in an interview with Paul Wheaton that the solution to many of the world’s problems is the discovery of Abundance, once people focus on the important things and learn the skills necessary to achieve them. (This is what I would call a biologically based answer to the happiness question.)

    Just a few comments to weave them together a little. One cannot read Life on Earth without being impressed by the skill with which Mother Nature provides for our needs. For example, ATP molecules are the main source of energy for our cells. These molecules are used and reused hundreds of times each day, being reconstituted after each use. Photosynthesis produces ATP which powers our cells which maintain an internal environment which is quite distinct from the external environment (not in equilibrium). The disequilibrium is necessary for life as we know it, and cannot be maintained with energy. This system works entirely without our knowledge (until modern science made discoveries) and without our help…although we can mess it up.

    I think Geoff Lawton would include the workings of ATP and the other marvelous mechanisms which constitute Life as part of his Abundance equation. These are free gifts of Nature. Then Geoff would go on to add that we need to learn the skills of harvesting water, producing food, and making shelters and living in an emotional world such as Barbara Fredrickson describes. Then we have Abundance everywhere. Fossil fuels and industrial civilization may help a little, but not very much. Fossil fuels and industrial civilization can also do enormous damage.

    The Scarcity book details just how scarcity distorts our feelings and thinking. If we perceive that we have a scarcity of fossil fuels, then we will stray farther and farther from Lawton’s ideal and our feelings and behaviors will become more and more dysfunctional.

    Let’s suppose that I am sitting talking with someone. We discuss this and that, and finally begin to trade stories about how we are trying to bring more harmony and happiness into our lives. Now make a leap of faith and assume that Don Stewart is an accomplished Lovingkindness practitioner. Perhaps the other person’s idea is to ‘get closer to God’. Well…that’s not my idea. In person, I am far more likely to behave like the heroine in Cold Comfort Farm. If you have never seen that marvelous movie, you should make a point of it. A young woman comes to a run-down farm and succeeds in transforming the lives of the people she meets by helping them discover and achieve their goals. On the Internet, we would more likely engage in a shouting match, or just refuse to listen to each other. I think Fredrickson is right about the need for face to face contact.

    On the Internet the tendency is to pound on what we perceive to be wrong about the other person’s position. In face to face, we tend more to recognize the reality: two fallible humans searching for something they perceive rather dimly, are living in very different circumstances, have different capabilities and assets, and are starting from different physical and intellectual positions.

    The Internet is good for some things. For example, a fruit farmer in Quebec participated with a local photographer in putting together a show and tell on his innovative orchard. They are selling downloads and DVDs for 25 to 50 dollars. From what I hear, they give excellent advice in a beautiful presentation. This is preaching to the choir. Monsanto executives will definitely not be watching this, nor will senior officials in the Agriculture Department or most of the Land Grant colleges. If you could persuade the Monsanto, Dept of Ag, and Land Grant profs to eat one of his plums right off the tree…would it make any difference? Probably more difference than will ever be made by exchanges on the Internet.

    In summary, I suspect that the Internet is mostly useful for fine tuning practices and attitudes and beliefs which already exist. I don’t think it is very useful in building cooperation and good will between people who, while trying to achieve the same fundamental goal, are pursuing different methods. Nor do I think it is very good as a method for getting people to address their fundamental assumptions about the way things have to be.

    Don Stewart

    • I disagree, albeit not too absolutely.
      On the internet I meet people who are capable and willing to discuss important things, mixed in with a proportion of loons riding their one-track hobbyhorses and other loons delighting in their liberty to make public a-holes of themselves without need to persuade editors first.
      In the “real world” outside of the internet I meet only people who are “too busy” to discuss important things, people who are “too busy” to discuss important things, and people who are “too busy” to discuss important things.

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  4. gail

    I’m not sure if the warmer countries will have such a large energy advantage over colder countries. Depending how cold it is, the fact that humans tend to be able to deal with cooler temperatures that hot ones will increasingly be a disadvantage in warmer countries. Air-conditioning is just as energy intensive as heating is, and for a lot of countries they need to cool their buildings all year long to keep temperatures within a range that humans can be productive in.

    Another issue is the population density of warmer countries tends to be far higher than European ones, so it may be far harder for them to adjust?? They also tend to have currently less financial capacity to adopt to changes. If production capacity moves gradually that wont be such an issue, but for a lot of these countries to be able to absorb higher levels of manufacturing capacity they would need to invest large amounts of money in electricity networks / roads / ports.

    Finally, a lot of these warmer countries are way down on transparency indexes and high on corruption, so the cost advantages are nowhere near as high as they first look.

    Finally, I’d argue that if the richer countries are losing their ability to purchase goods and services, the need to build new manufacturing capacity warm countries will likely be minimal since most are mercantilist export oriented and follow the japan / korea / china model of keep internal consumption low. That may change over time, but then it’s a question of if their citizens can afford the products being produced.

    I don’t want to come off overly critical. I like the way you write and highlight the real issues we’re facing, but I just had issue with the way you sounded a bit too black and white with your argument over production moving to warmer climate countries when there are a lot of other variables involved.

    • You seem to be suggesting the BAU model will continue after the SHTF…. I think what comes after will be akin to being bombed back to the stone age — there will be no ‘means of production’ that even remotely resembles what we have — nor government — nor offices that require AC…

      That’s what happens when oil no longer flows — when there is no longer a grid — there is no longer energy to extract minerals and refine them and turn them into useful products.

      At best there will be very local communities with agrarian based economies. I will take a warm climate with good rainfall levels over a place that has winter if given the choice

      Population is not an issue — because most people in most places will starve and die.

    • “I’m not sure if the warmer countries will have such a large energy advantage over colder countries.”

      I think I agree with Jeffrey.

      I seem to recall someone’s analysis of the industriousness of warm versus cold climates — I think it was Jared Diamond, in Guns, Germs, and Steel, but I can’t find the reference at the moment, nor anything germain in the book index.

      The premise was that colder climates increased the industriousness of populations, whereas warmer climates tended to make people more complacent and less industrious.

      Yours to take with lots of grains of salt… this colder-climate person certainly feels more industrious when the leaves change colours and I don’t have my firewood in yet…

      • I think we need to keep in mind that ‘industrious’ required readily available energy…

        The easy to extract oil and coal that fueled the industrial revolution is gone — sticking a pipe into the ground to get oil is long over — hammering a coal seam and filling a bucket is no more.

        These days energy extraction is a high tech business aimed at the hard to reach fruit. When the SHTF that will end — and we will be in a far worse position than those pre 1800’s — because there will be no readily available energy sources.

        There will be plenty of scrap — but how would we recycle it without energy? We might burn trees — but as pointed out on earlier articles deforestation was becoming a problem before we started to burn coal.

        I am reading Arctic Dreams — and the author points out how herds of wild animals were nearly hunted to extinction well before modern man came on the scene… what will thousands of hungry people with hunting rifles do to the remaining animal populations?

        There is the saying that people in warmer climates did not develop much in the way of industry because they did not have to — they could easily grow an abundance of food year round. I think that food will be the issue going forward so I agree with Gail — warmer climates will have a huge advantage.

        However there remains the problem that even in warmer climates farming is industrial in nature — and anything associated with the word ‘industry’ is going to disappear when the cheap energy to drive it disappears.

        • The only problem with the south is there are so damn many people living there. Soon to be hungry people…I prefer those wide open empty spaces in the north where there’s firewood aplenty for the few who make it through the first year. And year by year, the cold climate will be less cold as planetary warming really takes hold. Its already happening in my neighborhood.

          • Given the choice I’d take interior BC and the mountains — but I was there last month and that short one crop max growing season concerns me… as does the population issue here.

            I am thinking that population is the lesser of the two problems because I suspect most people will just go catatonic and give up when their food runs out.

            It’s a very difficult call — inertia and the fact that I already have the land producing a lot of food here in Asia means we likely make our stand here.

            We dropped in another 60 banana plants + 20 or so more papaya in the past week… and just completed all the terracing and that will more than double what we can pull out of the entire space in the coming months.

            • Hey Paul, congratulations on all your terracing and food production. Sounds like you’ve got a good thing going there. You’re right that its a hard call to make. At this point its probably too late to change our situations even if we wanted to. I’ve often thought about getting a retirement place somewhere down by Penticton, BC. Seems like its got a nice combination of climate and population, fruit and fish and game animals. Nice people too. Bali must be a wonderful food producing region.

            • There’s a saying here ‘throw a box of toothpicks onto the ground and a few months later you’ll have a forest’

              Even I can get stuff to grow here (another thing that concerns me about BC — I am sure I would struggle to succeed as it is a lot more difficult to grow stuff there)

              That whole Okanagan area is good — but I am inclined towards the more remote frontier of the central Kootenay’s…

            • Yeah, I have lots of crop failures here in central interior Alaska. Things are just harder to grow here to start with then if you make a mistake, you’re season is toast. Never been to the Kootenays before, but have looked at it on the map. I guess we’re the only two awake right now in OFWland.

            • Just coming up on 330pm here so I’m up for a while yet heheh…. time for a cup of iced coconut water then it’s afternoon shift time out in the garden.

      • Or the moose hanging in the meat shed, the fish in the freezer or the gallons of blueberries picked. Its making me industrious just thinking about it.

        Its hard not to imagine that the north can be as or more industrious than the south when it was in the north where the Maybe we NEED to be a little less industrious and give our planet a break.

      • JP Rushton, Race Evolution and Behaviour. In cold countries they face major challenges of food over winter, hence complex societies predominate over traveller types. In Africa easy living alternates with famine droughts and plagues and consequently the fast breeders predominate over long-term investors. In china the means of cultivating rice in communally-organised paddies results in a far less individual culture hence they are so much less inventive than the whiteys.

    • What may behind your criticism of warmer climes being less suitable for humans is simply one of “entitlement”. Instead of us adjusting to a different environment we bring our environment with us, so AC is everywhere these days. The buildings we build reflect the. They are not suitable without big energy inputs to the tropics. We will live happily in the tropics we just have to understand we cannot continue the way we are today. The world would be nowhere near the limit of exhaustion if we had based our lives there.
      It’s our western desire for growth that has us on the brink of ruin. let’s not forget that!

      • Excellent points.

        I am in the tropics — I do not have AC – I use a fan but could live without that – most people here have nothing.

        Keep in mind many places in the tropics have siesta during the hottest part of the day.

        I believe the key going forward will be the ability to produce food – that means one crop in a cold climate – I can get 3 here in Bali.

        I am sure people can make do in the north or south — it will just be more difficult

        • I think you’re right, Paul. North or south, the people who make it through the Great Starvation of the first year, stand an excellent chance of making a comfortable enough living among the scraps and leavings of the dead and gone world. There will be so much useful stuff lying around to be had for the taking, that even recycling won’t be necessary for decades or longer. For example, how many hammers exist in the world. We won’t go all the way back to the stone age as long as there are millions of steel hammers lying around and millions of axles with metal wheels and rubber tires attached to them. Steel axes, plows, woodstoves, etc. etc. etc. For those who are left, the dead and gone world will provide a smorashboard of stuff to make life easier. Now if only the damn climate will cooperate.

          • er—I don’t want to disillusion you, but recycling metal needs heat.
            Reworking ferrous metal needs charcoal (ie trees) The industrial revolution kicked off in 1709 because we were running out of wood to make iron.
            Exactly what can be done in industrial terms, with a rubber tyre escapes me for the moment—especially when it comes to making life easier?
            I hope we can go on using metal tools, but I would point out that since mankind became a tool user, in general terms he has used them in 2 basic ways—to improve his own life—or destroy somebody else’s

            • EOM, my point was that the survivors/inheritors of the post manufacturing world won’t need to recycle, at least not much, because everything they could possibly want will have already been manufactured and will be lying around to be picked up and used. Why would they need to recycle the metal from an old car to make, say an axe, when there are millions of axes already in existence and will be so for quite some time.

          • Alaska—It is not in man’s nature to sit outside a shelter and bash things with hammers—he will attempt to ‘create’ or re create. Remember that knowledge will not be lost, just the means.
            He will want to do more than bang things and cut things, because he will know that such things are possible
            You might have all the basic hand tools in your possession, but what exactly would you do with them?
            Seems tools give you a choice: to adapt nature to aid our own survival, (food clothing etc)
            make something to trade, to help your survival, (Blacksmithing etc)
            or forcibly acquire something that someone is unwilling to give/trade. (weapons)
            My point being that hitting things with hammers must have a purpose.

            • “Remember that knowledge will not be lost, just the means.”

              How can you be certain?

              Surely, when the disks stop spinning, these conversations will be lost!

              I have a huge soft library of PDF books. That too will be lost when the disks stop spinning.

              I have a number of physical books, but there is a lot that can happen to them, as well. The next generation may not be able to read, for example, and books may be end up being used as fuel.

              It seems to me that our reliance on extrinsic knowledge is a fragile thing. My money’s on the cockroach, which has its knowledge self-replicated through DNA. I don’t know of any books that can do that before they turn yellow and brittle.

            • Dear Jan and Others
              I don’t deny that a lot of things might disappear. And while I think it is worthwhile to insure that our basic needs can be met by very low technologies, I can also appreciate what technology can do for us today.

              As one example, my daughter in Portland, OR raises chickens and ducks in her yard. She has struggled with predators over the last couple of years Her chicken and duck houses, which began as primitive structures, have evolved in the arms race with raccoons, possums, skunks, snakes, etc. Her latest acquisition is a solar powered gate opener. It is a box which contains a PV panel on the exterior, with a battery, a clock, and an opening mechanism inside the box. You seldom open the box for any reason. You put two magnets on the outside of the metal box where you want the gate to open and where you want the gate to close. As the seasons change, you move the magnets. The whole thing was less than 300 dollars. Having the device frees her up from having to always be at home when the gate needs to be opened or closed.

              A second example is the Apple Book E.O. Wilson’s Life on Earth. It is designed for use as a high school biology textbook. It is available free, thanks to a foundation. I can only say that biology wasn’t taught this way when I went to high school. I think it is a magnificent accomplishment. The integration of video and animations right into the text should accelerate learning considerably.

              Ugo Bardi’s blog entry today bemoans ‘overshoot’ in technology. One of his exhibits is the smart phone. I agree that smart phones can be used for pretty useless purposes, and that overuse of smart phones can have bad repercussions. On the other hand, I saw first hand how smart phones made the running of a small farm more efficient. If there was a downside, it was that the five or six people who worked at the farm tended to ask the farmer for instructions instead of taking responsibility themselves. Five or six years ago, when nobody had smart phones, people would decide, experience either good results or bad results, and learn something. I fear that constantly asking for instructions makes the intern process less productive. On the other hand, I have been working side by side with the farmer many times when he took calls from restaurants or suppliers and sold and bought products for the farm…without all the telephone tag or driving around town needlessly.

              I have seen many instances on this blog where those who are convinced that collapse is going to happen next week, or at least next month, are eager to deny that technology does any good things at all. I hope these examples give a more nuanced view.

              Don Stewart

            • In the meantime I see no reason why anyone would not continue to use BAU tools — I continue to dump truckloads of manure so we can stockpile compost — and I have purchased quite a few duplicates of many hand tools — anything that softens the blow a little.

              Forgoing the modern conveniences and comforts we enjoy would be pointless so may as well dance while the music plays

            • Jan
              we will have the knowledge of how to make an internal combustion engine, but not the means to make one.
              The steam engine didnt become practical on a large scale until we smelted iron in cheap quantities.
              If we cant make heat engines, then we are stuck using cold implements, ultimately sticks and stones

            • Agree — but as someone pointed out — there are a lot of ‘hammers’ and other tools around — and there will not be too many people left — so initially we probably don’t quite go back to the stone age

              Most will not take much solace in that — but it’s the best silver lining I can think of…

        • the great civilisations arose roughly in the regions of the tropics around the world, that should tell you a lot about the chances of large scale survival in the colder north or south

      • Yes. Who said we need to work a 40 hour week anyway? In the hot countries they had a very civilized 20 hour work week and a 2-3 hour siesta in the hottest part of the day. I like that kind of industriousness.

        • That’s what I mean. Here in Aus the aborigines were industrious for half the day and took time off for the remainder. They thought it very odd that the newcomers worked all day. Just shows they can still our “superior races” something useful!

          • I would suggest that they were not ‘industrious’ in industrial terms. Once you’ve gathered enough to eat and sustain you and your family for the day, there’s no point in doing more particularly in a warm climate
            Unfortunately we chose to build houses, roads, police, schools, armies and so on. So instead of producing sufficient unto the day–we have to support all those extras. But still the myth persists that we need only work 20 hours a week, why not 10? why work at all?
            We get away with working a 40 hour week because hydrocarbon energy adds power to provide everything we want, or think we want.
            One must assume that extolling the virtues of the aboriginal lifestyle means that we can do without the list of above ‘civilised’ assets.
            There persists a totally blinkered outlook on why we can exist in the way that we do. That somehow we have a choice in the matter. Oil lets you be lazy, at least till it runs out, After that, it will be interesting to see how successful the aboriginal lifestyle is for 7 billion people. http://tinyurl.com/oa854gt

            • How many people would be in the world if we let those under say about 30 years of age live and the rest of us kick the bucket. Seems fair to me, since we already had the taste of the riches that will no longer be there in the future.
              Find it amusing all the fossil fuel energy expended by those preparing for the “fall” to save their own hides, after admitting of a population crash. Why is it they should be entitled to be one of the few remaining? Suppose we will have another “Chapter” of the Bible concerning the chosen people!

            • One might turn that around and criticize those who selfishly had kids after the Limits to Growth study was published — who knew full well yet ignored what was coming — have caused this problem for the youth of today.

              But try telling someone it is selfish to have kids….

              At the end of the day nothing is fair — if anyone has the foresight to attempt to compensate for what is to come — then they will be more likely to live.

              Those with their faces buried in Facebook — watching Dancing with Stars — desiring to ‘live large’ — and laughing at anyone who might point out that this is going to end badly….

              All I can say is good luck to that — I made a conscious decision not to have kids primarily because of the fact that they would likely end up suffering and probably dying because of the exact limitations we are hitting now.

              Personally I intend to try to go on as long as I can — if the 30 somethings want to make 40 — they might do their best to emulate some of the wiser owls on this forum…

            • See if you can locate the video of Bill Moyers interview with Isaac Asimov, in the 1990’s I think.
              In it he says population growth will cause the loss of all the norms we live for today.
              It’s quoted in Al Bartletts video;

            • Excerpt – see p. 56 onwards for more:

              As an illustration of the commonality
              of energy, imagine filling the tank
              of a car with one gallon of gasoline,
              driving it until the fuel runs out,
              and then paying someone to push
              it back to the start-point. The ability
              of this person to do this depends, of
              course, upon sufficiency of nutrition,
              itself an energy equation. Obviously
              enough, the energy contained in food
              is converted by the human being into
              a capability for work, is exhausted, and
              requires continuous replacement. But
              this process is a circular one, in that the
              cultivation of food is a process which
              itself requires energy inputs, be they
              the labour of human beings (most
              simply in planting and harvesting), the
              labour of animals, the employment of
              machinery or the direct use of energy
              inputs such as fertilizers.

              The exercise of putting one gallon of
              fuel into a car, driving it until the fuel
              runs out and paying someone to push
              it back to the start-point also illustrates
              the huge difference between the price
              of energy and its value in terms of
              work done.

              According to the US Energy
              Information Administration
              ,one (US) gallon of gasoline equates to
              124,238 BTU of energy, which in turn
              corresponds to 36.4 kwh

              Since one hour of human physical labour
              corresponds to between 74 and 100
              watts, the labour-equivalent of the
              gasoline is in the range 364 to 492
              hours of work. Taking the average of
              these parameters (428 hours), and
              assuming that the individual is paid
              $15 per hour for this strenuous and
              tedious activity, it would cost $6,420
              to get the car back to the start-point.

              On this rough approximation, then, a
              gallon of fuel costing $3.50 generates
              work equivalent to between $5,460
              and $7,380 of human labour.

              One could come to a similarly-
              leveraged calculation of the energy
              cost-to-price mismatch by measuring
              the cost of employing workers
              pedalling dynamo-connected exercise
              bicycles to generate the energy
              used by electrical appliances in the
              typical Western home, and then
              comparing the result with the
              average electricity bill.
              the great breakthroughs –
              agriculture and the heat-engine

              The development of society and of the
              economy is, in reality, a story of how
              mankind overcame the limitations
              imposed by the energy equation. In
              the pre-agrarian, hunter-gatherer era
              (which lasted for at least 40,000 years),
              there was an approximate energy
              balance, in that the energy which
              each person derived from his food
              was roughly equivalent to the energy
              that he or she expended in finding
              or catching that food.

              Put simply, there was no energy surplus, and
              consequently no society. Each person
              had to be self-sufficient, or perish.

              The first of the two great breakthroughs
              in human development was the
              discovery of agriculture. Farming seems
              to have begun in the “fertile crescent”,
              an area which stretched from the Upper
              Nile through modern-day Lebanon,
              Israel and Syria to the basins of the
              Tigris and the Euphrates in what is now
              Iraq, and to the upper coastal regions
              on both sides of the Persian Gulf.

              This region is also known as “the cradle
              of civilisation”. Evidence of cultivated
              grain suggests that the transition from
              a hunter-gatherer to an agrarian way
              of life may first have occurred in about
              9,500BC, though millennia were to
              elapse before some of the staples of
              organised agriculture (such as crop
              rotation and the domestication of
              animals) were discovered.

              From an economic standpoint, the
              significance of the development of
              agriculture lay in the liberation of
              surplus energy. If twenty individuals or
              family units could now be supported
              by the labour of nineteen, the
              twentieth was freed to undertake…


            • Paul lays blame on the parents that selfishly gave life to children as a justification to extent his own life as long as possible. As if the “sins” of the parents are those of their offspring.
              Yes, indeed, Paul, I suppose it IS the WAY ONE LOOKS at it.
              I, too, made a determined decision not to have children also. What of it? Does it place me in a special place of selection? At the end is there fairness? Are we to blame someone? Perhaps only God and small children are in that realm.
              One function of “society” is to establishment of “fairness”.
              Paul, you and I won the lottery in human existence. Nothing can hurt us now. Sometimes one must recognize that it is time to depart from the ship.

            • No offense intended towards those with kids…. although I am sure some will be taken…

              So be it — I have endured plenty of criticism over the years for my decision not to father children and was called a Cassandra… and probably an idiot or worse behind my back…

              if you revisit my comment I was taking a different perspective on the initial comment (I could come up with many perspectives from which to view this situation for which I think I could put forward convincing arguments)

              I can’t remember the entire dialogue but if I recall I took that angle to point out how absurd it was that anyone should shoulder the blame for this — and that address the rhetoric that those of us over 30 should somehow step aside for the generation that did not have a chance.

              If the ‘Millenials’ or whatever we call the new generations these days —- want a chance —- then they need to get their faces out of their smartphones — stop checking every 30 seconds to see who has ‘liked’ their photos or whatever other useless things it is they do on Facebook…

              If they want a chance to come out the other end of this then it is up to them to see this for what it is — and do something about it.

              Because nobody is going to step aside and help them along — not mommy — not daddy —not the government — not even an aid agency ….

              And that goes for everyone else who is in denial about what is coming — in spite of overwhelming evidence (how many people are seeing that Guardian article??? — or that Homeland security is getting ready to go to war against YOU???) almost every last person is doing absolutely nothing.

              Which raises the question — why do we bother with trying to inform people of what is coming?

              Might I suggest it is because we are trying warn them that a train is roaring towards them — so that they might consider stepping aside…. yet they giggle like little children… and frolick on the tracks choosing to remain in oblivion.

              Do we owe the younger generation anything? Nope. Do we owe any generation anything. Nope.

              Should we blame anyone for this outcome — not really – although i could make a strong case against Norman Borlaug

              Very little is ever fair in life. If I had an IQ of 170 — but was born to a crack smoking whore in Detroit — where would I be now? No – it’s definitely not fair.

              We need to get over this feeling of entitlement — as was pointed out in this article …. the only way we were ever able to deliver on entitlements was because of cheap energy — and that is gone.

              I am reading Arctic Dreams — and I am amazed at how the animals and people survived in that harsh environment – on their wits, instincts, and sheer brute will.

              Big parallels with what is coming …. we are about to return to the ‘jungle’ — and the unprepared and weak will not get a chance.

              Sentimentality will have no place in such a world. Harsh – but true.

            • Paul, I read Arctic Dreams when I moved to Fairbanks in 1992. It is one of the finest natural history meditations that I have ever found. It was one of the things that inspired me to make my home here. I just got back from 10 days on an arctic river in the ANWR. Astounding place still full of wild creatures and essentially untouched by industrial man.

            • I had the opportunity to traverse the North West Passage starting in Resolute Bay a few years ago on an exploration ship — one motivation was that I had just read a book about a Hudson’s Bay trapper who was quite a character…

              I was interested to see the region before the we destroyed it — and also if the native communities had retained much in the way of ancient traditions.

              The scenery and the wildlife were incredible — however it was very disappointing to see the condition of the native people — they had very much lost their way as we push them to modernize and be part of our culture — yet they are unable to adapt — often because of racism… so now there is no going back and no going forward… which of course often results in unhappiness and substance abuse.

              As evidence of this failure to understand these people most of the others on the boat had the attitude of ‘we have done everything for you people and look at you’ — one native women who had a degree from an Ontario university stepped on that and said ‘we were doing quite well before you stepped to do everything for us — and let’s not forget that the original explorers to this region were like children — they would have died without our help’

              I felt I had to add to that with a comment that — perhaps giving people things is well intentioned but that never ends well does it — if the Canadian govt had given any one of us say $2000 per month free money — would we be on this ship? Now imagine the tables were turned and you had to live in a native community — how do you think you would deal with that? One thing would be different – rather than encountering racism mockery and abuse — the native community would almost certainly be welcoming and helpful to we idiots who wouldn’t last a day in the far north without help.

              Anyway – it was quite clear that ne’er the twain shall meet — as is usually the case with people who are unable or unwilling to ‘walk in the other person’s shoes’

              Magnificent land — magnificent book — I’d really like to visit again — but I suspect that is not going to be possible.

              Oh — when I mentioned the Hudson’s Bay fellow to a few of the old timers in the villages even though he has been dead for decades — they knew him well — he had left a trail of children throughout the north… quite the character indeed…

            • Its a pretty hopeless situation with Native folks here with drugs, booze, welfare, dependency, sexual abuse of women and children, fetal alcohol syndrome, and more. Yet, still there are a few bright spots. With the high cost of energy in the roadless communities there are still a few traditional villages where dog mushing, fishing and hunting still abide. Perhaps a few who remember will make it through.

            • Was this a guided tour? I’d like to get back to the canadian arctic but the flight rates are insane ($7000 or more!) unless you have a group like we did last time (even then I recall 2000).

              I am wondering of alaska might be an easier option if this holds together long enough to be able to get there…

            • Heaven’s no. I’ve been banging around up here long enough to do these kind of trips on my own. We hired a bushplane (friend of ours), borrowed an NRS raft (from other friends) and went out on our own for 10 days. Every family should do it. We basically gave the kids a full immersion backcountry Alaska survival course that was fun, too. Good for family unity. Also getting out into the natural world really helps me reset my optimism clock. It always helps to see the natural world operating as it should without a bunch of us mucking the place up. As the human world faded away and we fell into “river time” it was hard to imagine collapse.

            • You could do it, Paul. The flight in was about $2500.00US and then we floated north until we hit the trans-Alaska pipeline and drove back on the service road. You’d have to be willing to drive alot. We put 1200 miles on the truck to do it.

            • Thanks – might look at this next summer — if it is still possible of course…

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  6. Sometimes I wonder and hope whether we overlook something. Like. … can 10 billion people live in a system with 30 mbd of oil? Without individual motorized transportation for example and super efficient ways for light and heat, where everyone grows some food, where most everything is done through the web, and so on. Small probability to get to an equilibrium like that without a fast collapse to set the stage. … but I’m hoping. …

    • The web will not exist after the SHTF — because there will be no energy available to power the web — there will be no energy available to mine and smelt the minerals that are required to make computers and maintain the grid…

      The web is massively energy intensive — both the inputs used to build the infrastructure behind it — and the general functioning of the system e.g. http://www.datacenterknowledge.com/archives/2011/08/01/report-google-uses-about-900000-servers/

      There is no question in my mind — we are going back to the 1700’s shortly — but a) without the know how of how to survive in a pre-industrial time and b) all of the easy to get at resources such as surface coal and oil — are long gone…

      Of course there is also the other problem — we didn’t quite have as many people then either

        • John – clearly the BAU have put in place the means of control — but their methods remain based on the assumption that the BAU model – to a very limited extent – can continue.

          How will the NSA operate when nobody has a computer or internet service…

          How does the Deep State control the situation when the strategic reserves of petrol run dry…. armies are needed to enforce order — and armies run on gas…

          Perhaps the Deep State knows this — and these preparations are being made so that they can maintain their dominance for a few years longer… just as QE ZIRP were other tools to keep BAU going…

          This may not of course only be self-serving…. we may look back on the days of martial law as the last vestiges of anything approaching a civilized world…. when order breaks down because there is no entity that is even remotely decent to enforce it…. who knows what comes next…

    • We can hope, I suppose. One weak link is governments. Funding for them dries up early on. Can they continue, if they can’t provide Social Security, Medicare, road maintenance, and many other things people were expecting? How will repairs be made after storms, if governments are too poor to chip in with the cost of electrical repairs after storms?

      Then the problem becomes building and maintaining all of the necessary infrastructure. We think in terms of oil we use, but a big share of the 30 mbd of oil would need to be used by farmers, and in maintaining all of the pipelines for water and sewer, and to continue oil transport. Also maintaining electric power lines.

      It is not clear that the price of oil can be kept high enough, either, if a large number of people are out of work, and debt repayment isn’t working.

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