How increased inefficiency explains falling oil prices

Since about 2001, several sectors of the economy have become increasingly inefficient, in the sense that it takes more resources to produce a given output, such as 1000 barrels of oil. I believe that this growing inefficiency explains both slowing world economic growth and the sharp recent drop in prices of many commodities, including oil.

The mechanism at work is what I would call the crowding out effect. As more resources are required for the increasingly inefficient sectors of the economy, fewer resources are available to the rest of the economy. As a result, wages stagnate or decline. Central banks find it necessary lower interest rates, to keep the economy going.

Unfortunately, with stagnant or lower wages, consumers find that goods from the increasingly inefficiently sectors are increasingly unaffordable, especially if prices rise to cover the resource requirements of these inefficient sectors. For most periods in the past, commodities prices have stayed close to the cost of production (at least for the “marginal producer”). What we seem to be seeing recently is a drop in price to what consumers can afford for some of these increasingly unaffordable sectors. Unless this situation can be turned around quickly, the whole system risks collapse.

Increasingly Inefficient Sectors of the Economy 

We can think of several increasingly inefficient sectors of the economy:

Oil. The problem with oil is that much of the easy (and thus, cheap) to extract oil is gone. There seems to be a great deal of expensive-to-extract oil available. Some of it is deep under the sea, even under salt layers. Some of it is very heavy and needs to be “steamed” out. Some of it requires “fracking.” The extra extraction steps require the use of more human labor and more physical resources (oil and gas, metal pipes, fresh water), but output rises by very little. Liquid extenders to oil, such as biofuels and coal-to-liquid operations, also tend to be heavy resource users, further exacerbating the problem of the rising cost of production for liquid fuels.

I have described the problem behind rising costs as increasing inefficiency of production. The technical name for our problem is diminishing returns. This situation occurs when increased investment offers ever-smaller returns. Diminishing returns tends to occur to some extent whenever resources of any kind are extracted from the ground. If the extent of diminishing returns is small enough, total costs can be kept flat with technological advances. Our problem now is that diminishing returns have grown to such an extent that technological advances are no longer keeping pace. As a result, the cost of producing many types of goods and services is growing faster than wages.

Fresh Water. This is another increasingly inefficient sector of the economy, in terms of the amount of fresh water that can be produced with a given amount of resource investment. In some places deeper wells are needed; in others, desalination plants. Water from deeper wells may need additional treatment to remove the harmful minerals and radiation found in water from deeper wells.

As a result of the extra investment required, the price of fresh water is rising in many parts of the world. The higher cost is often justified as necessary to encourage conservation of a scarce resource. But from the point of view of the buyer, what is happening is an increasing price for the same product, or diminishing returns.

Grid Electricity. The price of grid electricity has been rising faster than inflation in many parts of the world for a variety of reasons. If nuclear plants are planned, they are being made in ways that are hopefully safer, but are more expensive. Adding solar PV and offshore wind is expensive, especially when grid changes to accommodate them are considered as well. Functioning plants of various kinds (coal, nuclear) are being replaced with other generation because of pollution problems (CO2) or feared pollution problems (radiation). The cost of producing electricity then rises because the cost of electricity from a fully depreciated plant of any kind is extremely low. Building any kind of new facility, no matter how theoretically efficient over, say, the next 40 years, requires physical resources and people’s time, in the current time period.

As these changes are made, the amount of grid electricity output does not rise very much compared to the resources and human labor required in the current period. The user experiences a higher cost for the same product. From the perspective of the user’s pocketbook, the result looks like diminishing returns.

Metals and Other Minerals. In the same manner as oil, we extract the easiest (and cheapest) to extract minerals first. These minerals include metals and other substances such as uranium, lithium, and rare earth minerals. Part of the problem is that ores of lower concentration must be used, leading to a need to move larger amounts of extraneous material that later must be disposed of. These ores may be found deeper in the ground or in more remote locations, adding to extraction costs. Furthermore, oil is generally used in the extraction of these minerals. As the cost of oil cost rises, this adds to the cost of mineral extraction, making minerals increasingly unaffordable.  

Advanced Education of Would-Be Workers. If 20% of the work force needs college educations, it makes sense to provide 20% of young people workers with college educations. If the percentage of workers requiring college educations rises to 30%, it makes sense to provide 30% of young people with college educations. Small percentages of more advanced degree recipients are needed as well.

Instead of following a common sense approach of educating only the number of workers who need a given amount of education with that amount of education, in the United States we have gotten onto a treadmill of encouraging increasing numbers of young people to pursue bachelors, masters, and Ph.D. degrees. To make matters worse, universities have established requirements that faculty do more research and less teaching, whether or not research in a particular field can be expected to benefit the economy to any significant extent. To accommodate this research-intensive approach, a layer of deans is added to work on obtaining funding for research. In addition, students are often provided more comfortable dorms with private rooms and private baths, adding costs to obtaining advanced education but not really enhancing future job prospects.

All of this produces an incredibly expensive higher education system, with costs way out of proportion to the increased wages a student can expect to earn from attending the university. Students are expected to pay for much of the cost of this system through debt to be paid back after graduation (or after dropping out). In some ways, the system might be viewed as an extremely expensive system of sorting out would-be job applicants, with widget makers with a college degree or master’s degree viewed more favorably than ones without, even if there is little use for an advanced degree in that particular job.

US Medical System. The US Medical system is particularly affected by the trend toward more advanced degrees. This approach results in a system where patients need to visit a variety of specialists to handle fairly common ailments, such as a broken arm or dementia in old age. To compensate for the high cost of their advanced education, specialists charge high fees. Hospitals have a large number of testing instruments at their disposal and use them whenever there is even slight justification.

Health outcomes in the US are remarkably bad compared to other developed countries, based on a study by the US Institute of Medicine called U.S. Health in International Perspective: Shorter Lives, Poorer Health.

According to this study, the US is falling farther and farther behind other developed countries in terms of health outcomes and life expectancy, despite healthcare spending that is more than twice as expensive as that of some other developed countries.

The higher cost is not entirely the fault of the healthcare system. The food production system provides food that is increasingly processed (so is convenient), but is not well adapted to our bodily needs. Food portions tend to be oversized, raising profits for fast food companies, but adversely affecting health of consumers. Transportation is set up in ways that deprive us of the exercise we need. Also, part of the reason for the adverse health outcomes is the fact that not all people are covered by health coverage, even with the recent addition of Obamacare.

Regardless of whose “fault” the problem is, the healthcare sector is becoming increasingly inefficient. In some sense, we are reaching diminishing returns here as well.

Effects of Inefficient Sectors on Business Operations

Businesses have a number of costs of operation. Unless wages are rising, they can’t easily raise prices without losing customers. So if costs rise in one area of their operations, they tend to try to cut costs in other areas of operations to offset this rise. This is the crowding out principle at work.

Among the sectors described above as having increasingly inefficient operations, the ones that directly affect businesses are

  • Oil
  • Fresh water
  • Electricity
  • Metals and other minerals
  • Healthcare

Areas where costs can be cut to make up for rising costs in the above areas include:

Lower interest rates. If interest rates are low, this reduces expenses for businesses. It also makes customers more able to tolerate higher costs of say, automobiles and houses and education, because the “monthly payment” can still appear reasonable, even if total cost rises. Lower interest rates help reduce needed government taxes as well, further helping both businesses and consumers. Because of these multiple favorable effects, it is not surprising that central banks have been lowering interest rates in recent years.

Reduced wages for workers. Wages often constitute a major share of a business’s costs. If the cost of oil or electricity or health insurance rises, a common work-around seems to be to transfer jobs to parts of the world where wage costs are lower. If energy costs are also lower in the alternative part of the world, this increases the attractiveness of moving jobs. Another work-around is computerization of job functions, using computers to replace jobs formerly done by workers. In fact, simply the possibility of sending work elsewhere or of computerization tends to hold wages down.

I have shown that, in fact, US wages tend to stagnate when oil prices are above $40 or $50 per barrel. This result is as we would expect, if high oil prices tend to crowd out wages.

Figure 2. Average wages in 2012$ compared to Brent oil price, also in 2012$. Average wages are total wages based on BEA data adjusted by the CPI-Urban, divided total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

Transfer of more health care costs to workers. Businesses can cut their costs by moving part of healthcare costs to workers, either through higher deductibles or through higher monthly payments for coverage. This approach has a similar effect as a wage cut.

Lower taxes on businesses. Government provided services can be paid for either by taxes on businesses or by taxes on workers. Many of these services benefit both businesses and workers, so the split as to how these taxes should be collected is not obvious. Businesses, especially international businesses, have the option of moving to locations with more favorable tax laws. The trend in recent years has been toward lower taxes on business revenue, shifting a greater share of taxes to wage earners. Higher taxes on wage earners also acts very similarly to a reduction in wages.

More debt. This is different kind of work-around for higher costs. Instead of reduced expenses, it provides increased revenue for businesses. This revenue is borrowed from a future period, with the promise that it will be repaid with interest. The use of more debt is especially prevalent in the sectors of the economy that are increasingly inefficient. For example, adding new desalination plants is enabled by more debt. Adding more renewable energy and more nuclear plants is enabled by more debt. The increasing the cost of higher education is enabled by more debt. Adding such debt is enabled by the lower interest rates mentioned above.

Effect on Wage Earners of Economy’s Growing Inefficiency

Wage earners find themselves caught in a world with growing inefficiency in many sectors. Their wages are not rising very much, except in a few occupations requiring very high education.

Wage earners find themselves increasingly squeezed. They take out big student loans, only to discover that they really cannot pay them back without deferring buying a home and having a family. Thus the housing industry stagnates. The need for new home furnishing drops as well. Births drop below the “replacement rate.” Young people forego buying cars, because they don’t have good-paying jobs. In fact, many are trying to go to school and work at a low-paid part-time job to support themselves. These jobs do not pay high enough wages to afford a car, so oil use tends to decline.

With wage levels low, women find that it does not make financial sense to join the paid work force if they have children, because the cost of transportation and child care is too high, relative to the wages of, say, a teacher–a job that requires a college education. The situation is similar if an elderly relative or handicapped adult child needs care. As a result, work force participation levels drop. This change started to occur about 2001 in the US.

Figure 3. US Number Employed / Population, where US Number Employed is Total Non-Farm Workers from Current Employment Statistics of the Bureau of Labor Statistics and Population is US Resident Population from the US Census. (This includes children and others not usually in the labor force.) 2012 is a partial year estimate.

The Effect of Diminishing Returns (and Crowding Out) on Debt

As the economy becomes less efficient, there are clearly multiple impacts on debt:

  • Both businesses and individuals need more debt, because they become less able to purchase the increasingly costly devices they are being asked to purchase (new cars, new factories, new oil extraction facilities requiring significant investment)
  • For businesses, the returns on this debt are falling in terms of output measured in units such as barrels of oil or kilowatt hours of electricity; it is only if ever-higher prices for the output can be charged that the debt can be repaid.
  • For citizens, wages are becoming less able to cover the cost of needed goods. This both increases the need for debt, and makes debt increasingly difficult to repay.
  • Diminishing returns leads to lower economic growth. It is only if interest rates can be kept very low that debt can possibly be repaid. At some point, required interest rates turn negative.

As long as an economy is expanding, it makes financial sense to “borrow from the future”.

Figure 4. Author’s image of an expanding economy.

It even makes sense to pay back the debt with interest, because with the growth, there is a reasonable possibility that even with interest, the amount available in the future period will still be increasing, even net of a debt payment.

Figure 5. Repaying loans is easy in a growing economy, but much more difficult in a shrinking economy.

If we think of interest being paid to what is sometimes called the rentier class (that is banks, insurance companies, pension plans, and rich individuals), then it is the rentier class that is being squeezed by the increased inefficiency that is leading to slow economic growth. In some cases, interest rates are even turning negative, reflecting the poor prospects for the economy. Of course, with negative interest rates, we cannot expect a whole lot of investment–people would rather keep money under their beds than invest it at a negative rate of return.

Crowding Out of Oil Usage

World oil consumption has been essentially flat since 1983 on a per-capita basis. Most people have not noticed this change, because world per capita energy consumption has been rising for many years, helping to raise standards of living around the world.1

Figure 6. World per capita oil and total energy consumption, based on BP Statistical Review of World Energy 2014 data.

The issue we are concerned about in this post is the squeezing out phenomenon, as it relates to oil. As we noted above, there are a number of industries that are becoming less and less efficient, including oil, electricity, metal and minerals, fresh water, higher education, and the medical system. Because of this issue, these sectors are using an  increasing share of the world’s oil supply, when direct and indirect usage are included.2

We don’t know exactly how much oil is being devoted to the six increasingly inefficient sectors described in this post, but we do know that the oil consumption per capita devoted to uses other than these six sectors must be falling, because the total is flat. Examples of sectors being crowded out are restaurants, hotels, news media, home building, computer manufacturing, vacation travel, lawn care, and most of the general economy.

The problem with increased inefficiency has been especially acute since 2001, as evidenced by falling employment ratios (Figure 3) and rising oil and commodity prices since that date. In Figure 7, we show two possible trajectories of oil available to the rest of society, net of use by these increasingly inefficient sectors.

Figure 7. World per capita oil consumption based on BP Statistical Review of World Energy oil data, and two possible trajectories of per capita oil supply available to the rest of the economy, selected by author.

It is very difficult for the sectors that are getting crowded out by the increasingly inefficient sectors to grow, despite growing energy usage other than oil. Oil has many specialized uses. Even if total energy use grows, it cannot make up for uses where oil is specifically needed, such as operating a diesel truck or operating road paving equipment. Thus costs to say, the newspaper industry, are higher if oil prices are higher, but the disposable income citizens have available to spend on newspapers is lower, resulting in the crowding out phenomenon.

Conclusion

We are dealing with a networked economy, which I have represented in the past as this child’s toy:

Figure 7. Dome constructed using Leonardo Sticks

All parts of our economy are interconnected. If parts of the economy is becoming increasingly inefficient, more than the cost of production in these parts of the economy are affected; other parts of the economy are affected as well, including wages, debt levels, and interest rates.

Wages are especially being crowded out, because the total amount of goods and services available for purchase in the world economy is growing more slowly. This is not intuitively obvious, unless a person stops to realize that if the world economy is growing more slowly, or actually shrinking, it is producing less. Each worker gets a share of this shrinking output, so it is reasonable to expect inflation-adjusted wages to be stagnating or declining, since a stagnating or declining collection of goods and services is all a person can expect.

At some point, something has to “give”. One thing we have seen recently is a sudden drop in oil prices that does not represent a sudden drop in the cost of extraction. Instead, it reflects the fact that current wages are not high enough to pay today’s high cost of oil extraction. There is getting to be a difference between

  • The full cost of oil extraction, including governmental services needed to keep the country’s economy functioning well enough for this extraction to continue, and
  • The amount the economy can afford, considering both wages and the increase (or decrease) in debt for the economy.

This situation is not simply affecting oil; it is also affecting other commodity prices as well. Clearly we cannot continue indefinitely on this trajectory. Something has to give. So far, what we have seen is a drop in oil prices and other commodity prices to levels that are likely to seriously disrupt production. How this will all play out is worrisome, if a person understands the dynamics behind what is happening.

Notes:

[1] The mix of fuels has been changing, however, with coal use rising in recent years (as we have shifted manufacturing to coal-producing countries) while oil use per capita has remained nearly flat since 1983 (Figure 6). The big decrease in oil consumption per capita in the late 1970s and early 1980s took place in response to the spike in oil prices in the 1970s and early 1980s. Electricity generation shifted from using oil to using coal or nuclear. Cars were made more efficient. Once the “low hanging fruit” were picked in this period, it has not been possible to reduce world per capita oil usage (including substitutes like biofuels and natural gas liquids).

[2] The oil usage I am counting is this analysis is both (a) direct usage by the industry and (b) usage by employees and contractors working in these industries. With a growing number of workers and high wages, these workers are able to afford nice homes, big cars, and vacations requiring air travel. Usage of oil by governments in oil exporting countries should probably also be included as (c) in this list of directly related types of usage, because this usage is necessary to maintain order in these countries.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
This entry was posted in Financial Implications and tagged , , , , , . Bookmark the permalink.

652 Responses to How increased inefficiency explains falling oil prices

  1. poynextdoor – Few words to say, many things to do, but all I want is you.
    poynextdoor says:

    Reblogged this on Poyspeaks.

  2. Pingback: Global Energy News / How increased inefficiency explains falling oil prices

  3. Pingback: Il fondo del barile #6 | Risorse Economia Ambiente

  4. Pingback: Oil and the Economy: Where Are We Headed in 2015-16? | VantageWire

  5. Pingback: Oil and the Economy: Where are We Headed in 2015-16? | Doomstead Diner

  6. gelderon52
    Ugo Bardi says:

    Hi, Gail, I commented on this post – and in particular on your “Seneca-style” graph – in my blog; at http://cassandralegacy.blogspot.it/2015/01/the-seneca-cliff-of-energy-production.html

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Thanks for the link to your blog post. You point out that we are basically saying the same thing.

      My chart should really be a little more rounded like your Seneca cliff chart, and like my Secular Cycles chart. In my forecast, I only plotted points at five year intervals, and drew straight lines to connect them. This produces a very pointed chart, even when the chart should really be more rounded.

      By the way, Ugo Bardi is also someone I know from The Oil Drum, and from a number of conferences that we have both spoken at over the years. I highly recommend that folks take a look at Ugo’s book Extracted: How the Quest for Mineral Wealth is Plundering the Planet, sponsored by the Club of Rome. I have learned a lot from Ugo over the years.

    • greglove30
      Greg says:

      I have a more simplistic view on the reasons why oil prices are low, inefficiency may have something to do with the overall picture, however, the main contributor I believe is simply oversupply.

      Basically, oversupply has created a world oil glut, no need to read any more into then that. When something is more abundant it is cheaper, plain and simple.

      Over the past five years, demand for oil has almost consistently outpaced production.
      This has kept the oil price high – averaging $US102.06 a barrel since January 2010 , which in turn spurred further production, as oil producers scrambled to take advantage of the booming profits.

      But as demand has weakened in Europe and Asia, due to economic growth slowing more quickly than expected, key European markets and China oil producers have begun posting record production, this has hit the oil prices from two directions, (lower demand and oversupply).

      Russia’s production is now at a post Soviet era high, Iraqi oil exports are at a 35 year peak, and the US has become the world’s largest oil producer, churning out 11 million barrels a day!

      Coupled with increasing output from Libya and Iraq during 2014, despite domestic turmoil, the oil price has tumbled more than 50 per cent since June 2014, as supply rapidly overtook demand.

      A key reason for the worldwide oil glut is the rapid rise of America’s domestic oil industry to global dominance.

      High oil prices prompted America to begin investing heavily in its domestic drilling operations as a means of obtaining energy inderdependance. Since 2008, the American domestic oil industry has boomed, as companies invested heavily in fracking projects on the expectation that high prices would continue. The US is now the world’s largest oil producer. Its enormous production output – about 11 million barrels a day in early 2014 – coupled with minimal need for oil imports has contributed to oversupply.

      The “break-even” price point is the price at which revenues from oil sales will allow the government to meet its spending commitments. It is particularly relevant to the OPEC nations, which use their oil revenues to fund their welfare programs which citizens have come to rely on.

      As the current situation is effectively a “price war” between US oil producers and the OPEC nations, the break even price is a critical measure when considering how far the price of oil might tumble.

      It comes down to how long both sides are willing to ride it out. That is, how much financial hardship they can take until one buckles.

      At $US47.43 a barrel, most OPEC producers are operating below profitability. However, the official line from OPEC is that they will not curb production, regardless of how far the price falls. Many of them have huge cash reserves (stockpiled during the boom) to fall back on. Saudi Arabia, which has $900 billion in cash reserves, has said it is prepared for the price to fall to $US20 a barrel.

      For this reason, most analysts expect the US shale industry to lose the oil price war, as many of the US fracking companies will be unable to withstand crippling debts in the medium term.

  7. Pingback: Oil and the Economy: Where are we Headed in 2015-16? - Arc Flash Studies

  8. Pingback: Environmentalists’ oil price panic reflects their own existential crisis | Eco Bio III Millennio

  9. Pingback: Oil and the Economy: Where are We Headed in 2015-16? | АНАЛИТИК UA

  10. Pingback: Oil & The Economy: The Limits Of A Finite World In 2015-16 | ZombieMarketsDevelopment

  11. Pingback: Oil & The Economy: The Limits Of A Finite World In 2015-16 | ZombieMarkets

  12. Pingback: Petroli i economia: cap a on anem? | Les CIÈNCIES en BLOC

  13. Pingback: zerohedge.com: World per capita oil and total energy consumption « blogivg

  14. Pingback: Oil and the Economy: Where are We Headed in 2015-16? | Our Finite World

  15. Oil Price Blowback

    Let’s cut to the chase: All these oil shenanigans are really aimed at just one man: Vladimir Putin. There are a number of reasons why Washington wants to get rid of Putin, the first of which is that the Russian president has become an obstacle to US plans to pivot to Asia. That’s the main issue. As long as Putin is calling the shots, there’s going to be growing resistance to NATO’s push eastward and Washington’s military expansion across Central Asia which could undermine US plans to encircle China and remain the world’s only superpower. Here’s an excerpt from Zbigniew Brzezinski’s The Grand Chessboard which helps to explain the importance Eurasia is in terms of Washington’s global ambitions:

    “..how America ‘manages’ Eurasia is critical. A power that dominates Eurasia would control two of the world’s three most advanced and economically productive regions. A mere glance at the map also suggests that control over Eurasia would almost automatically entail Africa’s subordination, rendering the Western Hemisphere and Oceania (Australia) geopolitically peripheral to the world’s central continent. About 75 per cent of the world’s people live in Eurasia, and most of the world’s physical wealth is there as well, both in its enterprises and underneath its soil. Eurasia accounts for about three-fourths of the world’s known energy resources.” (p.31) (Zbigniew Brzezinski, The Grand Chessboard: American Primacy And It’s Geostrategic Imperatives, Key Quotes From Zbigniew Brzezinksi’s Seminal Book)

    Get it? Prevailing in Asia is the administration’s top priority, which is why the US is rapidly moving its military assets into place.

    More http://www.counterpunch.org/2015/01/06/oil-price-blowback-is-putin-creating-a-new-world-order/

    • Let’s let Obama answer the question for himself. Here’s a clip from an NPR interview with the president just last week. About halfway through the interview, NPR’s Steve Inskeep asks Obama: “Are you just lucky that the price of oil went down and therefore their currency collapsed or …is it something that you did?

      Barack Obama: If you’ll recall, their (Russia) economy was already contracting and capital was fleeing even before oil collapsed. And part of our rationale in this process was that the only thing keeping that economy afloat was the price of oil. And if, in fact, we were steady in applying sanction pressure, which we have been, that over time it would make the economy of Russia sufficiently vulnerable that if and when there were disruptions with respect to the price of oil — which, inevitably, there are going to be sometime, if not this year then next year or the year after — that they’d have enormous difficulty managing it.” (Transcript: President Obama’s Full NPR Interview)

      Am I mistaken or did Obama just admit that he wanted “disruptions” in the “price of oil” because he figured Putin would have “enormous difficulty managing it”?

      Isn’t that the same as saying that it was all part of Washington’s plan; that plunging prices were just the icing on the cake for their asymmetrical attack on the Russian economy? It sure sounds like it. And that would also explain why Obama decided to allow domestic producers to dump more oil on the market even though it’s going to send prices lower. Apparently, none of that matters as long as the policy hurts Russia.

      So maybe the US-Saudi oil collusion theory isn’t so far fetched after all. Maybe Salon’s Patrick L. Smith was right when he said:

      “Less than a week after the Minsk Protocol was signed, Kerry made a little-noted trip to Jeddah to see King Abdullah at his summer residence. When it was reported at all, this was put across as part of Kerry’s campaign to secure Arab support in the fight against the Islamic State.

    • “Get it? Prevailing in Asia is the administration’s top priority, which is why the US is rapidly moving its military assets into place.”

      Even if that is the motive, it doesn’t mean they’ll succeed. It seems that Russia and Venezuela are being driven further into China’s sphere of influence, as they get bailouts to survive the low oil prices. This in turn could strengthen China, with wider Yuan use, more support for Chinese debt, etc.

  16. Don Stewart says:

    Dear Gail and All
    If you want to see a concrete example of what tiny brains and excellent cooperative skills can produce, check out this 5 minute video…Don Stewart

    • “If you want to see a concrete example of what tiny brains and excellent cooperative skills can produce, check out this 5 minute video”

      I wonder how much of an energy surplus they needed to build all that. And how long it took them, and how many of them.

      • Don Stewart says:

        Dear Matthew
        I can’t answer your question. I can only focus on things like:
        How long and how much money would it take the Pentagon to build that thing?

        Don Stewart

        • “I can only focus on things like:
          How long and how much money would it take the Pentagon to build that thing?”

          I don’t think it is fair to scale it up from ant sized to human sized; We could consume a million times as much per person if the world was as big to us as it is to ants.

  17. Siobhan says:

    U.S. Steel Lays Off 614 Because of Low Oil Prices
    Steel Maker Idles Ohio Plant That Makes Pipes for Oil Exploration, Drilling
    PITTSBURGH—Citing the collapse in global oil prices, U.S. Steel Corp. will idle its plant in Lorain, Ohio, laying off 614 workers, a company spokeswoman said Tuesday.
    […]
    Layoffs will begin on March 8, “with additional layoffs occurring through May 2015,” a U.S. Steel official wrote to the union…

    http://www.wsj.com/articles/u-s-steel-to-cut-jobs-amid-low-oil-prices-1420556069

  18. Good thesis Gail, but I see the lack of money for the 99% as the main driver for falling oil prices. In other words, since the 1% (or 1/10 of %, which is more likely) are vacuuming up more and more financial capital, this leaves a shrinking pie for the rest of the world. This leads to less consumption of “things,” a higher percentage of household debt to pay bills, and a concommittant slowdown in use of oil energy.

    Of course the answer is to decentralize capital and the sustainable way to get capital is to grow food from the soil in a sustainable manner. At the very least, this affords households a way to cut costs further.

    • ” In other words, since the 1% (or 1/10 of %, which is more likely) are vacuuming up more and more financial capital, this leaves a shrinking pie for the rest of the world.”

      People cannot keep pulling demand from the future forever. If you consume 110% today, someday you must consume 90% and repay the 10%, or you must default on your debt, and your lender will be stuck consuming only 90%.

  19. Pingback: Is Cheap Oil Really Bad News? | Donal

  20. Don Stewart says:

    Dear Gail and All

    Couple of final notes on the issue of cooperation, which I hope will clarify things.

    One of the reasons Mobus and Kalton don’t spend as much time on regression as they do on progression is that the history of Earth, so far, has been a story of progression. From a lifeless ocean to a magnificent explosion of life in water and on land. The life, in the larger sense, thrived on cooperation. Even as almost every living creature was food for some other living creature. I heard Janine Benyus say, about two years ago, that studies overwhelmingly show that, when things get tough, cooperation increases. (She didn’t give a reference).

    Let’s consider a practical example. Humans depend on plants to take carbon from the air and put it in the soil. I’d call the the human/ plant relationship ‘cooperation’. Plants, in a natural world, turn about 20 percent of the sugars they make through photosynthesis into root exudates which attract soil microbes which live on the carbon in the sugars. The microbes are eaten by other soil critters, which are eaten by other soil critter or, sometimes, die a natural death. When they die, the minerals in their bodies are released in water soluble form which can be taken up by the plants. If you don’t like the word ‘cooperation’ for this cycle, then you can make up some other name…but you can’t deny the facts.

    When humans put a lot of NPK fertilizer on the soil, the plants stop making the root exudates and the soil food web starves. The quality of the soil declines, and if the source of the NPK fertilizers is disrupted, the humans are in a world of hurt. The plants, meanwhile, will revert to making exudates and rebuilding the soil food web over the course of several years.

    In a world with lots of fossil fuels, humans can do OK by failing to cooperate with the plant/ soil/ soil food web system. When things get tough in terms of fossil fuels, only those humans who are able to cooperate with the plant/ soil/ soil food web will survive. Just as Janine says, cooperation will increase as things get tough.

    I have made the point several times, but let me reiterate. Corporations maximize cooperation and minimize competition. Mobus and Kalton spend a lot of time showing how complexity emerges out of systems which have potential but are unorganized. There is little distinction between the way a business emerges and the way a living creature emerges. Mobus and Kalton show a diagram with:
    Basic operational controls
    Basic logistical controls
    Basic tactical controls
    Conceptual tactical control
    Conceptual logistical controls
    Conceptual strategic controls
    These levels could be in a corporation or military, but they are actually describing the organization of a human brain. All these controls are designed to facilitate cooperation in service of overarching goals, such as survival. The controls also help with vital cooperative ventures, such as that between our body proper and our gut bacteria, and between our cell proper and the manufacture of ATP by a symbiotic process.

    Unless a corporation achieves total world dominance, then competition remains a fact of life, but most of the daily activity of an employee in a well-run corporation is about cooperating with others in the corporation and with suppliers and customers. Just as a plant is cooperating with microbes and other members of the soil food web.

    Now let’s suppose that the fossil fuel flow through a human system decreases significantly. As I have pointed out, some of the built structure is going to have to be jettisoned. Edpell, on this blog, has several times mentioned that more people will be living per hundred square feet. How would we describe that? I would call that more cooperation in the use of floor space. In Edo Japan, people in the cities tended to eat from food stalls. One of the reasons is because a food stall is the most fuel efficient way to cook food. Fuel in Edo was expensive. I would call that pattern of behavior cooperation. It is pretty far away from the 20,000 dollar kitchen dedicated to one cook (who seldom actually cooks) that you can see in glossy magazines. Could the US, as it learns to live with less fossil fuels, return to the Edo pattern? I wouldn’t be surprised. The same thing held for baths in hot water in Edo…they were communal.

    While ‘go it alone’ extracts a toll in terms of built environment, cooperation extracts a toll in terms of learning to temper one’s own desires to harmonize with others. I have commented on the move from small town to big, anonymous city. They require different skill sets. When Calista or my homesteader friend talk about the close-knit rural community, they are not kidding. And it takes certain skills to live that way, and the behavior entails some costs. But Nature has also given us hormones (notably, oxytocin) which help us bond in pursuit of common goals.

    The only people I can recall who referred to cooperating in a resource constrained environment as all roses and rainbows were those who are so certain that unconstrained violence is all our future holds.

    Don Stewart

  21. Daniel Hood
    Daniel Hood says:

    WTI @ 49:09 and falling as at 06/01/2015

    To say US fracking is under attack is a mild understatement. Oil is being used a weapon to short circuit other oil producing nations. Question remains, who’s going to blow up first? It does seem to me that China will act as banker of last resort to Venezuela, Iran, Russia as the US did post WW2 with respect to Europe, Japan. At the same time we know US/UK/EU are bust and heading for a deflationary tailspin.

    We know Obama’s desperate to pull out the ME decrying “energy independence”. Now being reminded of US obligations to the ME? Just follow the oil price.

    US oil consumption circa 18-19mb/d and if population continues to grow so too will consumption so efficiencies would have to continue to outpace population growth
    US oil production circa 10-11mb/d remainder of the 45% coming from OPEC & NON OPEC.
    (Saudis are by far largest exporter to US followed by Canada)

    US population growth rate circa 0.7% slowed from 1.2%
    US population circa 316+million
    US debt 18 trillion & counting
    US GDP 17 trillion
    US base rate 0.25%

    This is a fascinating battle. Can the US survive oil as low $20-$30p/b 2015-2016?

    Me thinks the house is about come down…

  22. Creedon says:

    A quote from the great JMG ” Doctor W, it’s not completely impossible that our empire may come apart suddenly — that does happen, historically speaking. In the next two years? I’d agree — a nonzero chance, but low.

    1/5/15, 7:02 PM
    When JMG is saying that there is a chance of the empire coming apart suddenly and Gail is saying that we are in a heap of trouble, the words speak for themselves.

  23. Don Stewart says:

    Dear Gail and All
    This will be a note about two subjects, as elucidated by Mobus and Kalton’s Principles of Systems Science.

    The first subject is cooperation and competition. On page 510 we find:

    ‘Cooperations and competition are systemically interwoven dynamics. Cooperation between linked components has an impact on how successful the assembly, which thereby becomes a component at a higher level of organization, will be competing against other assemblies at that level. The details of the nature of the cooperations and competitions will vary across levels,…but we see this dynamic playing an important role in system evolution at every level of organization.’

    In a footnote:
    ‘Group selection as a mechanism in evolution has been hotly debated. Darwin actually considered it as a valid type of selection that might help explain cooperation in social animals. But since the primacy of the gene theory rose, many evolutionists rejected the idea. Today more evidence has emerged that group selection is a very important selection mechanism underlying the evolution of altruism and cooperation. From a systems science perspective, since the cooperation/ competition mechanism is found universally, we can’t imagine it not being operative in human evolution’

    My opinion is that those who emphasize only competition are being blinded by the ‘selfish gene’ type of thinking. It is very clear that, for example, a human body is overwhelmingly an example of cooperation between components. It is also pretty clear to me that small groups of humans who are predominately cooperative are more likely to survive and reproduce than single individuals who have only enemies in the world. If, by some magic, we could persuade 7.2 billion people to cooperate, we might increase the chances of human survival.

    The second subject is the question of how life changes when the supply of money or energy (which are aspects of the same thing) increase or decrease. For example, the discussion of whether men or women suffer more from unemployment. The subject is too complex for me to elaborate on it here. But I suggest reading the chapter on Auto-Organization and Emergence. There is considerable discussion of what happens when energy is added to a system. There is much less discussion of what happens when energy (or money) is subtracted from a system…so you need to apply your own reasoning powers.

    When energy is added to a system, then the system tends to build new structure, which requires maintenance. Therefore, the ‘new steady state’ is at a higher energy (or money) level because of the maintenance expenses. If, for example, a person has adjusted to a higher energy or money state by building or purchasing more structure, and the energy and money begin to decline, then a structural adjustment is necessary. If the system is a human, then new pathways in the brain have been built, and psychological pain results from the forced givebacks. Take a fresh look at Alfred Doolittle and the chains of ‘middle class morality’ in Pygmalion (My Fair Lady).

    Don Stewart

    • Don – this stuff smells like something that emanates from an ivory tower.

      This really is such a simple issue.

      We have 7 billions people who will soon not be fed. There will not be nearly enough to go around when the collapse comes.

      They will not cooperate rather they will compete i.e. kill to get their hands on the extremely limited food sources that remain.

      They will pillage everything from the grocery stores, the neighbour’s apple tree, and the organic farms that a few people are diligently tending.

      Every deer, every moose, every rabbit, every dog, cat and rat that they can kill or capture will be roasted and eaten. We have strict limits on hunting and without any means to enforce them, the forests will be very quickly cleaned out by people with high powered rifles and shotguns.

      There is ample evidence from history of humans eating humans so that taboo should not be removed from the discussion just because it is too horrible to imagine. This is most definitely going to happen.

      It is ridiculous to think that the post collapse world will be one of gentle farmers markets with kindly folk selling their organic vegetables as happy healthy families make the walk with their wicker baskets to purchase wholesome food for their dinner tables.

      This is the holocausts of holocausts that we are facing.

      • “It is ridiculous to think that the post collapse world will be one of gentle farmers markets with kindly folk selling their organic vegetables as happy healthy families make the walk with their wicker baskets to purchase wholesome food for their dinner tables.

        This is the holocausts of holocausts that we are facing.”

        I suggest it depends on if the collapse happens over decades, or within a single year. All this concern about the fragility of the financial system, I think underestimates the desire people have to avoid a collapse. I think the worse things get, the more willing people will be to hand over more and more control to increasingly authoritarian governments.

        But how can the government have the resources to deal with everything? You may ask. We are rapidly developing a panopticon society, combined with Stasi-style situation with everyone spying on everyone. Heck, half the time it seems people self-report crimes by posting a video on Youtube, posting some pictures on Facebook, etc.

        • I peg the start date of the collapse as the turn of the century when oil came off the low of $12 in 1998 then started to climb past $20 and finally hitting $147.

          Let’s say 2001 (http://www.iea.org/textbase/npsum/high_oil04sum.pdf)

          So we have already been slowly collapsing for well over one decade; we did get a whiff of what a very fast, massive collapse would look like in 2008.

          Of course the PTB rushed in with their bag of financial magic tricks to fend that off, and we have continued with the slow collapse.

          The thing is, the financial tricks are starting to not have much effect on the real economy.

          The jobs situation across the world is becoming more dire by the day, incomes are getting creamed, debt levels continue to break records, corporate earnings and GDP projections are all pointing downwards, commodity prices are tumbling and deflation is a very real threat

          All of this, in spite of trillion upon trillion of ongoing stimulus.

          The stock markets keep going higher but that is all an illusion. Little good a record stock market will get you when company earnings are falling. Because that means more layoffs, less spending, and less tax revenues.

          And as we move down that curve it will accelerate, and it will culminate in a crisis that makes 2008 look tame by comparison. And because the entire global economy is being hollowed out, there will be no way to prop it up.

          Like a termite infested wooden house, it will appear strong because of the stock market numbers, but it will collapse in a heap of dust because the supports will be eaten through from the inside out.

          I cannot see how we do not go off a cliff at some point. I cannot see how we can possibly soft land this.

          Like Rogoff and Reinhardt stated in their book, it is never different.

          Math, physics, gravity, common sense and reality will prevail.

        • Interguru says:

          When Rosalynn Carter was about to enter the White House a reporter asked her, “How will it feel to live in a fish bowl?” She replied “I already did, I grew up in Plains” [ a small town ]. ( from memory — no source ). Until a few hundred years ago almost everyone lived in small communities where everyone knew everything. The growth of large cities made it possible to live in anonymity. Now technology is eroding our newly found anonymity. Is this good or bad?

          • “The growth of large cities made it possible to live in anonymity. Now technology is eroding our newly found anonymity. Is this good or bad?”

            I think it is more good than bad. I suspect that a good deal of the nonsense on the Internet – death threats, personal attacks, harassment, etc are enabled through anonymity. I think people tend to do less of that kind of thing if they have to face consequences for what they say and do.

        • garand555 says:

          @Matthew Krajcik

          We have been in a state of slow grinding collapse since at least 2000 or so. Look at the employment:population ratio, and you will see that was the peak. The old quote about “how did you go broke” to which the answer is “slowly at first, then all of a sudden” comes to mind here. There is an enormous amount of complexity that must be maintained for our current lifestyle to be supported, and we are losing the support for that complexity. That is part of the process of collapse. The ability to extract the resources needed to support our Rube Goldberg economy are getting weaker and weaker. This means that we will have slow, grinding collapse punctuated by violent swings in the economy. Lehman Brothers was just one such violent swing, and I would not be surprised if the next violent swing is the last for BAU. It also appears that we are closer to that next violent swing than not.

          • escravaisaurabr
            escravaisaurabr says:

            garand555,

            When, not if, the Coup D’état to bankrupt the BRIC’s and split Russia into satellites of the West bank cartel (petrodollar) fails, that’s the end for the (US Empire) America’s exorbitant privilege (Charles de Gaulle) as it resulted in an asymmetric financial system where foreigners see themselves supporting American living standards and subsidizing American multinationals.

    • Quitollis says:

      I think that it is obvious that co-operative traits are naturally selected for in so far as they provide some advantage in the competitive struggle for survival. Thus it ultimately comes back to competition. We are always competing in the struggle for survival; we sometimes cooperate in the struggle for survival; we are always competing in the struggle for survival when we co-operate in the struggle for survival. Co-operation is one competitive strategy that sometimes has some advantages, thus humans and some other species are inclined to sometimes co-operate.

      Humans obviously do not always co-operate in the struggle for survival. We also pursue selfish and exclusive objectives and act in the interests of our self, our own family and our clan and with disregard to the interests of other families and clans. Clearly selfishness is also beneficial in the struggle for survival, it helps to maintain the fitness of the breed, otherwise selfish traits would not have evolved, only co-operative traits would have evolved. The very existence of selfish traits is proof that they are advantageous. (Capitalism has ordered society in such a way that our daily competition is on the whole, but not universally, mutually if unequally advantageous.)

      That much, all scientists agree on. What is controversial is whether group selection (natural selection at the level of the fitness of the group) can explain the existence of co-operative traits; indeed how could group selection be accounted for in terms of the natural selection of advantageous genes? The theory of group selection does not imply anything like “Oh wow, co-operation is so much more important than we realised!” It is merely a theory which tries to account for the presence of any co-operation, it is not an argument against non-co-operative competition, or for more co-operation.

      Also, the selfish gene theory that you alluded to, is not an argument against co-operation. It does not say that we always act in the interest of the individual organism, it says that we act such that our genetic package is transmitted to the next generation. The closer related genetically that organisms are, the more evolutionary sense it makes for them to sometimes co-operate, as that way more of their own genes will be transmitted. Thus co-operation is in terms of the family, of the clan, of the colony, in theory and in practice, because that way more of the organisms genes are transmitted.

      Group selection and the selfish gene theories are irrelevant to the question of whether it all ultimately comes down to competition (which all scientists admit) or whether humans should co-operate more or less. Rather they are theories that attempt to account, in competitive terms, for the limited co-operation that does exists along side less co-operative behaviour. So you cannot use group selection theory, or slander selfish gene theory, as a strategy to argue for more co-operation. Both are attempts to explain what is, not to argue for what is not, that it should be.

      Both theories admit both co-operative competition and non-co-operative competition as facts of human behaviour and both theories admit that both kinds of behaviour are advantageous and contribute to our competitiveness in the struggle for survival.

  24. Ed – I am interested in energy issues.
    edpell says:

    When oil hits $30 per barrel shouldn’t ever sane nation in the world buy as much as possible and stock pile it? Suck the Saudis dry at $30 per barrel.

    • garand555 says:

      Only if it can be sucked out of the ground fast enough to produce a surplus that can be stockpiled. It’s not just reserves that are important, it is the rate of flow.

  25. B9K9 says:

    I just spent an enjoyable couple of weeks in the heartland of suspended reality – dog, but I do love BAU.
    Clearly, there is no, none, nada, zilch preparation for what is coming down the pike. But that in itself suggests a clear opportunity to provide what will be in demand: personal defense arms aka guns.

    As to the question of food, I’ve said this before, but Gail censored the comment: cannibalization – it’s what’s on the menu. Only armed, self-organized militias will stand between one becoming dinner vs one procuring dinner.

    Also, nice to see Paul/Willy posting again, but his continual anti-American slant is tiresome. Question: assume Russia and/or China took over the empire – would they not act in the same manner? Are the people who live in those lands somehow different, or are their complaints simply the lamentations of losers?

    Anyway, my suggestion if you want to improve your odds of surviving the looming sh!t-show is to get theeself to a smithy and learn how to cobble together some DIY firearms.

    • Ed – I am interested in energy issues.
      edpell says:

      The Chinese have a 3000 year history of not invading other places/peoples.

      • “The Chinese have a 3000 year history of not invading other places/peoples.”

        You think that China has always occupied all of the territory it now claims? It was one happy kingdom that became a republic, all along?

        They have expanded to contiguous land steadily, whenever they weren’t divided and fighting each other. You think Tibet has always been part of China? The disputed areas they are pushing into India? The Senkaku/Diaoyu Islands, the Spratly Islands? Previously, Vietnam, Korea?

    • If you are referring to the post from Slate you will note that my second comment was exactly along those lines, that the author conveniently neglects to acknowledge that a) all empires have done the same as the US and b) if the Russians or the Chinese or some other country replaced the US that they would behave similarly.

      The author seems to share the belief with many that humans are gentle, peace-loving beasts and that acts of brutality are out of character. That the US actions of recent are somehow inconsistent with the true nature of humanity.

      The author apparently has never studied history which of course is entirely about conflict over scare resources.

      The golden rule should be restated as: ‘Though shalt kill when though is faced with resource scarcity (or just because Though wants more including a second car, a 5th TV, a 5000 calorie a day consumption habit because the survival instinct tells you there is never enough and you never know when the famine is going to hit)’

      In short, the author has not got a clue but he does make a point. People can sense that something cataclysmic is imminent.

      I’d suggest it is like someone feeling an intense pain in their gut, knowing it is more than just a big ol fart wanting to get out, and trying to ignore it for as long as possible.

      • B9K9 says:

        The only people who can sense something cataclysmic is looming are those who have been aware all along. In fact, I will postulate that the total % of the population who has a clue is unchanged throughout history; let us call it the B9K9 maxim.

        Of course, there are terms for these kinds of people, commonly referred to as intellectuals, dissidents, radicals, anarchists, etc. And, by necessity, all states must follow Goebbels (false) dictum: “Truth is the greatest enemy of the State.”

        During my delightful semi-annual sojourn in la-la land (not to be confused with my hometown of La-La land), I dare say nary a soul puts much thought to the complete and utter dependence on all manner of goods shipped over vast sea lanes. Of course, the US navy will always protect its most important asset, so it least has that going for it.

        No, Paul, the only ones who know what’s going on are those reading the reports, receiving the advice and making the decisions, along with a few of us in the peanut gallery. And thank doG for that; the day the common man gets of whiff of what lies in store is the end of our little party.

        • I prefer Wee Willy, or Winky for short. Or I could do like artist formerly known as Prince and simply be referred to as ^%$#@ (my symbol)

          I agree, the masses are still tuning in to the “news” and it is telling them recovery is right around the corner.

          But I do think that a fair number of people are beginning to sense something is profoundly wrong. They see the markets hitting record highs but if you ask the man on the street in the so-called better economies particularly the UK and US, they would say they would likely recognize that there is a massive disconnect.

          The best way I think I can explain this is that there is an epic battle between cognitive dissonance and the reality that is in front of them day after day.

          CG is trying to protect their fragile states of mind and the spin masters who pump out the propaganda, ahm, I mean the “news” are teaming up with CG to reinforce with positive feedback.

          But reality for most is they do not have a job, are dragging around a ball and chain worth of debt, have less money to spend because inflation is not being matched by wage increases.

          They see services being cut, debt piling up, they may not know details but they get a whiff of what is going on in Europe and China and Japan (60 Minutes did that piece on China’s massive ghost towns)

          Add to this the constant bombardment of fear of terrorists/Russians/Iran/blacks/police etc etc…

          And I think a lot of people feel something is very wrong, and that there is no way out.

          The confidence game is starting to become a little thread bare. The PTB understand that are resorting to even more blatant lies to try to keep the game going e.g. 5% growth last quarter.

      • Rodster says:

        Yup, people forget to mention that Russia and China have got to where they are today by coping the Western financial business model. In fact China has used more and bigger tricks than the US to get where they are today.

        • escravaisaurabr
          escravaisaurabr says:

          Rodster,
          China can do these because:
          a) China’s money is Sovereign money (treasury money) instead of dollar that’s credit-money issued by private banking cartel.

          b) China produces more than consumes

  26. Ed – I am interested in energy issues.
    edpell says:

    I have mentioned Jane Goodall’s observations of chimpanzees before but it seems worth repeating. When the group becomes too large a sub group splits off or is split off. The smaller sub group is eventually hunted to extinction by the larger main group. This seems exact the British system for human population control. The hunted down gets masked in law and order veneer but at root it is the same.

    Some estimate that close to a million Americans died of starvation during the depression of the 1930s.

  27. Quitollis says:

    The likelihood that a far leftist government will be elected in Greece on Jan 25 is ‘crashing’ the Euro.

    http://www.telegraph.co.uk/finance/economics/11324916/Euro-crashes-to-nine-year-low-on-Grexit-fears.html

    quote:

    Report that Germany is prepared to let Greece exit the single currency has spooked markets

    The euro tumbled to its lowest level against the dollar in nearly nine years on Sunday night amid mounting fears that Greece could exit the eurozone.

    The sharp slide came as Asian markets accelerated a sell-off sparked on Friday, when Mario Draghi gave his strongest hint ever that the European Central Bank was ready to launch quantitative easing to tackle the threat of deflation.

    A separate, though disputed, report in Der Spiegel on Friday, claimed that Angela Merkel’s government in Germany now believes the eurozone could handle a Greek exit, piling even more pressure on the single currency.

    The German government has since countered that it is confident Greece will stick to the bailout terms set out by the EU and the IMF.

    *

    This interactive chart is very cool, if it will load. I would imagine that Greece will go into a tail dive if they Grexit.

    http://cloud.highcharts.com/embed/ocazuf/5

    • worldofhanuman
      worldofhanuman says:

      Not so fast. TPTB are working overtime to contain it and kick the can once more.
      Out of the blue, the former PM Papandreu will join the election race, probably run on some silly ticket like “center-left with non extremist pedigree” – the MSM is already claiming he can bite ~6% out of other parties preferences, so the “radicals” won’t form majority. The Greeks have had their chance to kick out the squid and start clean years ago, they compromised, now it’s a bit less contagious situation for the eurozone financiners, but still wortwhile not to rock the boat and grexit. That’s why the brand new mission for Mr. Papandreu, well versed global elite servant. Just another day in can kicking, it’s disgusting.

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Thanks! The low value of Euro currencies right now should help the Euro countries in selling their goods. Also, any goods sold by Greece will be really cheap, if its new market crashes. The reverse of course is that imports become hard to afford, except for perhaps oil and other commodities whose prices are crashing.

      Leaving the Euro area may have other ramifications for Greece though. I presume they would have a status similar to say, Sweden or the UK. Part of the European Union, but not in the Eurozone.

  28. Here’s an interesting article that suggests the waiting game to determine the winner of the oil market share at this 50% lower price, may get extended due to something called, ‘hedging’.

    http://in.reuters.com/article/2015/01/05/oil-hedging-idINL1N0UD0P920150105

    ANALYSIS-Revamped US oil hedges may test OPEC’s patience

    “Jan 5 (Reuters) – As a war of nerves between U.S. shale producers and Gulf powerhouses intensifies, OPEC’s biggest members are counting down the months until their upstart rivals lose the one thing shielding them from crashing oil prices – hedges.

    They may need much more patience than they reckon, however, because those hedges are a moving target. Rather than wait for their price insurance to run out, many companies are racing to revamp their policies, cashing in well-placed hedges to increase the number of future barrels hedged, according to industry consultants, bankers and analysts familiar with the deals.”

    This hedging bit got me wondering what would happen if the US govt. decided to guarantee a certain amount of money per barrel to US oil producers irrespective of global oil price. May not make sense on the surface, but we spend a lot on wars, and this is a kind of war for market share, so why not?

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Guaranteeing a price per barrel would make the US government unpopular, because it would make US oil prices higher than elsewhere in the world.

      I presume that you are talking about just oil pumped in the US. Then oil pumped by international companies in other countries, such as Iraq, would still be at a low price. I am not sure that they would be happy. Of course, with production sharing contracts, oil companies don’t get the benefit of higher prices.

      • garand555 says:

        One word: Subsidies. This goes on until the mechanisms that allow subsidies break, and those mechanisms are the USD and finance. Either we hyperinflate the dollar, or we wake up one morning to a totally frozen financial system with capitol controls and the whole lot.

    • Ed – I am interested in energy issues.
      edpell says:

      Or an import duty on foreign oil of say $30 per barrel.

  29. dorji yangka says:

    If we require $40 per barrel (or better $20) to keep the finance afloat, what will happen to economic system of the oil producing countries?
    I guess this declining oil price will test the reserve capacity of the OPEC countries (notably that of Saudi Arabia) and the worthiness of the strategic oil reserves of the OECD countries.

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      I think we are dealing with strains both on financial systems of both the OPEC countries and other countries. You are right that the shortfall of funds at low oil prices would be a problem in many OPEC countries. I don’t think it would be a problem for Saudi Arabia very soon, though.

      I am also concerned about problems with derivatives and securitized debt in the developed economies. Higher interest rates will have a very adverse impact as well. I see the financial system as the weak link going forward. The fact that everything has held together as well as it has so far is comforting, but I am afraid we will start seeing strains in the system this next year. If the dollar stays as high as it is, there are likely to be a lot of emerging market debt defaults.

  30. http://www.bloomberg.com/energy/

    Ck. out these latest oil prices at the link above.

    WTI –1.08 to 51.61
    Brent –.90 to 55.52

    Then take a look at what’s happening in Venezuela care of lower oil prices – hyperinflation! That’s the 3rd country in the past few weeks zerohedge has reported on having hyperinflation. First was a city in Russia, then one in the Balkens and now one in South America.

    http://www.zerohedge.com/news/2015-01-04/now-theres-not-even-soap-maduro-heads-china-save-socialist-utopia-venezuela

    Social media is awash with striking images of #EmptyShelvesInVenezuela (#AnaquelesVaciosEnVenezuela) as the evaporation of basic human staples such as toilet paper has now been hyperinflated to total chaos at warehouses and supermarkets. As President Maduro decries the loss of $100 oil “stability”, vowing to return oil prices to their rightful places (and heads to China for help), lines reach for miles for milk and soap… and the people defy governmental bans on photographing empty market shelves… “We couldn’t find shampoo, so we washed our hair with soap. Now there’s not even soap.”

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      These countries are not able to buy much from the world market. This is part of what holds world “demand” down.

    • “Then take a look at what’s happening in Venezuela care of lower oil prices – hyperinflation! ”

      Venezuela has been having these problems for some time now, they ran out of toilet paper well before the price of oil plunged. The oil price drop is just accelerating a process that was already occurring.

      I think the primary cause is price controls. They tried to force companies to sell goods for less than it cost to import those goods. As well, they do not seem to have implemented any effective form of rationing, and they have issues where aboriginals are allowed to freely travel back and forth between Venezuela and Columbia, so smugglers can load up on $0.10 / gallon gasoline and run it across the border for a profit, and even export toilet paper that was imported from elsewhere.

      Secondarily, the US Government via CIA may be actively working to bring down the regime, so they could be the ones buying up toilet paper, etc just to cause social unrest.

      • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
        Gail Tverberg says:

        Venezuela has been overspending its income from taxes for a long time. Some of its spending is for “worthwhile” causes–oil for Cuba and Haiti, for example. Also, offering things to give the people of Venezuela a higher standard of living than the country can really pay for. This tends to make politicians popular.

        I don’t know about the particular problems now. I know it is popular with voters to put on price controls, because that way most people can in theory afford a product, if it is available. In Atlanta, when there were hurricane outages for gasoline (and we were close to the end of the gasoline pipeline), city officials put strict rules on price gouging, meaning that we could be charged no more than the going rate elsewhere. Since there wasn’t enough gasoline to go around, some people were left out completely–had to stay at home because they couldn’t buy gasoline for several days. If there had been no price controls, the rich people would have gotten the gasoline.

        • “In Atlanta, when there were hurricane outages for gasoline (and we were close to the end of the gasoline pipeline), city officials put strict rules on price gouging, meaning that we could be charged no more than the going rate elsewhere. Since there wasn’t enough gasoline to go around, some people were left out completely–had to stay at home because they couldn’t buy gasoline for several days. If there had been no price controls, the rich people would have gotten the gasoline.”

          If there was no price controls, people could make money buying gasoline out of State and importing it for resale, thus increasing the supply at a higher price. Price controls seem to me to often be a panicked response from politicians who feel the need to “DO SOMETHING!”, rather than a well-thought out policy.

          Did Price Controls and Rationing work well in America during the second world war, and if so, why?

  31. Don Stewart says:

    Dear Gail and All
    Several accusations:
    *promoting communism as opposed to rugged individualism
    *falsely holding up Edo Japan as some ideal
    *generally failing to understand that dog-eats-dog is our future

    I’ll deal with Edo first. Edo certainly had its limitations. The advantage to studying it is that they had solved certain problems: halting environmental degradation and actually restoring the health of the environment; stabilized population; clean water to the cities; effective removal and reuse of human waste; recycling most everything; high level of literacy; continual improvements in processes; elimination of guns; control of the warrior class. While one can find fault with other areas, it is ridiculous to fail to recognize the accomplishments. This is not a hunter-gatherer society, but a relatively recent advanced society using practically no fossil fuels and few metals.

    As regards communism. I will quote from Mobus and Kalton’s Principles of Systems Science. They insert ‘Question Boxes’ which pose questions for the student to think about and propose answers for. One such box:

    ‘Considering the variability and strength of individual motivations, it is easy to see how mechanisms of social control can be broken down. Yet is is also true that we flourish in communities and organize on an unmatched scale and complexity. What characteristics account for the incredible combinatorial potential and proclivities of these human components? Are we individual first and then systems—as in social contract theory, for example—or systemic first and then individual?’

    Then they add:
    ‘Humans appear to have the broadest range of possible strategies to choose from, and there are those who contend that humans have the capacity to invent new strategies under extreme circumstances. Much more research on the capacity of the human brain will be needed to explicate this claim, but it can likely be said that the human brain has achieved a level of strategic thinking that goes far beyond any other animal on this planet.’

    (pages 449 and 450)

    The ‘communism’ I have talked about has been among people who know each other. It is certainly not a way to organize the Soviet Union. I have never seen a family which wasn’t communist. The question is, if global financial capitalism collapses, what is the next step down in terms of complexity. Reluctantly, I have come to the conclusion that it is a small group of people who are working in an economy which is mediated by hormones, particularly oxytocin.

    Mobus and Kalton say that complex adaptive systems must evolve. Which I take to mean that we probably can’t just design the system that we would like to replace the collapsed global financial system. (As much as I would like to be able to Command certain elements of that system to continue to function.) Which leads me to the conclusion that we will go back to the system that Nature designed for us, mediated by hormones. A relative handful of people that we deal with every day, and work with directly.

    Having fallen from a complexity of 100 down to 10, perhaps the system will begin to evolve again and achieve a complexity of 30. Perhaps the achieved complexity will resemble agrarian northwestern Europe of 1600 or Edo Japan of 1850.

    So what about the dog-eat-dog? My experience leads me to believe that a very small group of people can feed themselves, but not much more than that. They simply can’t support a war machine. They may occasionally fight another group, but sustained warfare is not something they can do. The Plains Indians in the US could fight, and sometimes win, battles, but they simply could not sustain warfare….which is why the cavalry always won. Oxytocin has the effect of encouraging us to cooperate within our group, and to be suspicious of those outside our group. So our days might be mostly cooperative, punctuated by violence.

    Behavioral Economics studies have pretty robustly supported the practice of Tit for Tat. Start out cooperating, and retaliate when necessary. As Mobus and Kalton say, humans have an enormous available repertory of behaviors, and we can expect widely varying suites of behaviors as a result. Hope for the best.

    Don Stewart

    • Hope for the best. But assume (and plan for) the very worst.

      Without question this is going to be the most cataclysmic event that has been experienced by humans in our entire history. And there have been a lot of very nasty incidents during the years that we have existed.

      • Rodster says:

        “Without question this is going to be the most cataclysmic event that has been experienced by humans in our entire history”

        It has that potential. The reason I say that is because NEVER before has man boxed himself in with Central Planners on the scale we are witnessing today. Everywhere you look around the world, CP’s have designed a system where you rely on their network and system to live. Sure there’s a few who can do without it and it’s no difference to the IRS knowing that the majority will pay their taxes and there’s a percentage who will cheat the system.

        The system in order to work needs to enslave through it’s complexity the masses in order for it to work. In other words, it’s a Ponzi Scheme. Venezuelans are finding out the hard way what a breakdown in the system is like. Store shelves are empty and people have gone from washing their hair with bathroom soap to not washing their hair because, soap no longer exists. That’s what the CP’s have created.

        So when the system eventually collapses you will witness the fine line between law and order to people becoming so pissed and angry that it will be everyone for themselves on a global scale. Those who have will be overwhelmed by those who don’t have.

        • escravaisaurabr
          escravaisaurabr says:

          What’s happening in Venezuela is not an accident. It’s mainly a combination of 2 things:

          1) Venezuela has to trade their oil in their currency, the Bolívar, and not in dollars.
          And they will be fine…… Just like Wal-Mart
          http://www.zerohedge.com/news/2015-01-04/now-theres-not-even-soap-maduro-heads-china-save-socialist-utopia-venezuela#comment-5622447

          2) I highly recommend the movie below to understand how the problem was created, first, in Japan.
          https://www.youtube.com/watch?v=p5Ac7ap_MAY

          If you want to understand how “Free-Market” capitalism is destroyed, this is it.

          Essentially, Japan stayed on a wartime footing after the war, and directed credit into production of “peacetime goods.” They used a CREDIT WINDOW to control VOLUME of credit money in supply.

          The PATH of this money benefited the people as it was into production. Japan did very well under this system, rising to become the world’s second largest economy and with a very high standard of living.

          The Bank of Japan wanted to break this system, probably under orders from international banksters via BIS. The immense bubble pushed by BOJ made Japan worth more than the continental U.S.

          Credit money was created against Land and Property, typical of this money type. BOJ became a credit pusher, giving any warm body a loan. This pushes land asset classes relative to other classes.
          The U.S, did the same during its housing bubble as FIRE sector (private bank credit) is always associated with land and insurance.

          BOJ purposefully popped the bubble once it was inflated enough, in order to reap the harvest. Debt instruments, with inflated values, remained in place, but former credit as money was being recalled to ledger for destruction, thus collapsing money supply into depression.

          This harvest was necessary to create a crises, which then allowed BOJ to become “INDEPENDENT” which is really CODE FOR being like other western central banks under the BIS. Structural Reform was the “code words” used during the crises in order to get the legal changes desired by BOJ.

          Watch the movie.
          Mefobills

        • Venezuela right?

          Those photos are powerful.

          These things have always happened ‘somewhere else’ so for many people the concept of collapse or war or famine is difficult to comprehend.

          Most of us have never experienced real trauma.

          • Rodster says:

            Yeah, Venezula and they are powerful becuase it just shows the predicament the Central Planners have boxed humanity in. Now imagine a hungry, desperate mob like that looking for food and stumble upon a peaceful community who’s growing their own food when there is no rule of law?

            • “Now imagine a hungry, desperate mob like that looking for food and stumble upon a peaceful community who’s growing their own food when there is no rule of law?”

              Just because the people inside the community don’t rape and murder each other, does not mean they are just going to roll over and die when bandits come along. You are confusing peaceful co-existence within the community, with how those people will respond to external threats.

              Of course, there are some people who are pure pacifists, like Tibetan monks. All they can do is cry, or set themselves on fire in protest.

            • escravaisaurabr
              escravaisaurabr says:

              Rodster
              You should not comment nonsense unless you are paid to spread misinformation.

              Venezuela is under a monetary attack and false scarcity Coup D’état by the Neoliberals.

              Let me give you an example:

              Michael Hudson:
              As of 1976, Argentina had a total foreign debt of $18 million, 17 percent of GDP. The military came in in ’76 with U.S. government support, established a junta. By 1983, the debt had soared to $48 billion–by a factor of seven.
              You had the U.S.-backed military dictatorship that ran the debt up into 1983, but then, in 1989, you had another neoliberal takeover with the Washington Consensus, and they adopted the U.S. dollar as their basic monetary reserves and tied their money supply to the dollar.
              That essentially drove the country into debt because it brought on an economic collapse by 2002.
              So you have a destructive neoliberal government coming in, driving the country into debt, ’cause that’s what neoliberals do.
              http://michael-hudson.com/2014/07/vulture-funds-trump-argentinian-sovereignty/

  32. Quitollis says:

    “The only difference between capitalism and communism is that one is better at burning through the earth’s resources more quickly than the other. Both require infinite growth and neither could be considered even remotely sustainable.”

    W, I agree with you. My point is that playing the lefty saint and harping on ad nauseam about “co-operation” is just pathetic. it fails to address any of the issues implied by the finitude of the world. The fact is that we would be very stupid to keep pretending that we can have a society where everyone works for the benefit of everyone and that we can afford resources and reproduction for everyone. History has proved that to be false. We need to be realistic, that the planet can only support so many people and that we have no alternative but to say to people, “sorry, that is just too bad.” The best that we can hope to do is to support a limited population and to select the best among us for reproduction, so that the fitness of the breed is maintained and improved. That too is a kind of “co-operation” but it has very little in common with the tone of Don’s posts.

    Have you heard of Pentti Linkola? He is a Finnish philosopher who has discussed the social implications of a finite world for some decades.

    http://www.penttilinkola.com/

    “What to do, when a ship carrying a hundred passengers suddenly capsizes and there is only one lifeboat? When the lifeboat is full, those who hate life will try to load it with more people and sink the lot. Those who love and respect life will take the ship’s axe and sever the extra hands that cling to the sides.”

    That too is “co-operation”.

    This is one of his essays.

    Humanflood

    By Pentti Linkola
    Translated by Harri Heinonen and Michael Moynihan

    Introduction by Michael Moynihan.

    Is Pentti Linkola posing the most dangerous thoughts mankind has ever considered? Or is he this planet’s only remaining voice of sanity? Living an ascetic existence as a fisherman in a remote rural region of his frigid homeland, the Finnish philosopher has pondered mankind’s position vis-?-vis the earth it inhabits and dares to utter the unspeakable. In order for the planet to continue living, man – or homo destructivus, as Linkola names him – must be violently thinned to a mere fraction of his current global population. Linkola’s metaphor for the predicament is as follows:

    What to do, when a ship carrying a hundred passengers suddenly capsizes and only one lifeboat, with room for only ten people, has been launched? When the lifeboat is full, those who hate life will try to load it with more people and sink the lot. Those who love and respect life will take the ship’s axe and sever the extra hands that cling to the sides of the boat.

    As time creaks onward, Linkola’s predictions and indictments grow more dire. He has come to realise that extreme situations demand extreme solutions:

    “We still have a chance to be cruel. But if we are not cruel today, all is lost.” The sworn enemy of Christians and Humanists both, Linkola knows that the fate of the earth will never be rescued by those who exalt “tenderness, love and dandelion garlands.” Neither the developed nor under-developed populations of the planet deserve to survive at the expense of the biosphere as a whole. Linkola has urged that millions will starve to death or be promptly slaughtered in genocidal civil wars. Mandatory abortions should be carried out for any female who has more than two offspring. The only countries capable of initiating such draconian measures are those of the West, yet ironically they are the ones most hamstrung by debilitating notions of liberal humanism. As Linkola explains, “The United States symbolises the worst ideologies in the world: growth and freedom.” The realistic solution will be found in the implementation of an eco-fascist regime where brutal battalions of “green police,” having freed their consciences from the “syrup ethics,” are capable of doing whatever is necessary.

    In Finland, Linkola’s books are best-sellers. The rest of the world clearly cannot stomach his brand of medicine, as was evidenced when the Wall Street Journal ran an article on Linkola in 1995. A stack of indignant hate-mail ensued from ostensibly turn-the-other-cheek Christians, loving mothers, and assorted do-gooders. One reader squawked, ‘Sincere advocates of depopulation should set an example for all of us and begin the depopulating with themselves.” Linkola’s reply is far more logical: “If there were a button I could press, I would sacrifice myself without hesitating if it meant millions of people would die.”

    What follows is the major text of Linkola’s to be translated into English. It is a chapter from his 1989 book johdatus 1990-luvun ajatteluun [Introduction to the Thought of the 1990s].

    ***

    What is man? “Oh, what art thou man?” the poets of the good old days used to wonder. Man may be defined in an arbitrary number of ways, but to convey his most fundamental characteristic, he could be described with two words: too much. I’m too much, you’re too much. There’s five billion of us – an absurd, astonishing number, and still increasing? The earth’s biosphere could possibly support a population of five million large mammals of this size, given their food requirements and the offal they produce, in order that they might exist in their own ecological niche, living as one species among many, without discriminating against the richness of other forms of life.

    What meaning is there in these masses, what use do they have? What essential new contribution is brought forth to the world by hundreds of human societies similar to one other, or by the hundreds of identical communities existing within these societies? What sense is there in the fact that every small Finnish town has the same choice of workshops and stores, a similar men’s choir and a similar municipal theatre, all clogging up the earth’s surface with their foundations and asphalt slabs? Would it be any loss to the biosphere – or to humanity itself – if the area of nekoski no longer existed, and instead in its place was an unregulated and diverse mosaic of natural landscape, containing thousands of species and tilting slopes of gnarled, primitive trees mirrored in the shimmering surface of Kuhmojrvi lake? Or would it really be a loss if a small bundle of towns disappeared from the map – Ylivieska, Kuusamo, lahti, Duisburg, Jefremov, Gloucester – and wilderness replaced them? How about Belgium?

    What use do we have with Ylivieska? The question is not ingenious, but it’s relevant. And the only answer isn’t that, perhaps, there is no use for these places – but rather that the people in Ylivieska town have a reason: they live there. I’m not just talking about the suffocation of life due to the population explosion, or that life and the earth’s respiratory rhythm cry out for the productive, metabolic green oases they sorely need everywhere, between the areas razed by man. I also mean that humanity, by squirting and birthing all these teeming, filth-producing multitudes from out of itself, in the process also suffocates and defames its own culture – one in which individuals and communities have to spasmodically search for the “meaning of life” and create an identity for themselves through petty childish arguing.

    I spent a summer once touring Poland by bicycle. It is a lovely country, one where small Catholic children, cute as buttons, almost entirely dressed in silk, turn up around every corner. I read from a travel brochure that in Poland the percentage of people who perished in the Second World War is larger than in any other country – about six million, if my memory doesn’t fail me. From another part of the brochure I calculated that since the end of the war, population growth has compensated for the loss threefold in forty years? On my next trip after that, I went through the most bombed-out city in the world, Dresden. It was terrifying in its ugliness and filth, overstuffed to the point of suffocation – a smoke-filled, polluting nest where the first spontaneous impression was that another vaccination from the sky wouldn’t do any harm. Who misses all those who died in the Second World War? Who misses the twenty million executed by Stalin? Who misses Hitler’s six million Jews? Israel creaks with overcrowdedness; in Asia minor, overpopulation creates struggles for mere square meters of dirt. The cities throughout the world were rebuilt and filled to the brim with people long ago, their churches and monuments restored so that acid rain would have something to eat through. Who misses the unused procreation potential of those killed in the Second World War? Is the world lacking another hundred million people at the moment? Is there a shortage of books, songs, movies, porcelain dogs, vases? Are one billion embodiments of motherly love and one billion sweet silver-haired grandmothers not enough?

    All species have an oversized capacity for reproduction, otherwise they would become extinct in times of crisis due to variations of circumstances. In the end it’s always hunger that enforces a limit on the size of a population. A great many species have self-regulating birth control mechanisms which prevent them from constantly falling into crisis situations and suffering from hunger. In the case of man, however, such mechanisms – when found at all – are only weak and ineffective: for example, the small-scale infanticide practiced in primitive cultures. Throughout its evolutionary development, humankind has defied and outdistanced the hunger line. Man has been a conspicuously extravagant breeder, and decidedly animal-like. Mankind produces especially large litters both in cramped, distressed conditions, as well as among very prosperous segments of the population. Humans reproduce abundantly in the times of peace and particularly abundantly in the aftermath of a war, owing to a peculiar decree of nature.

    It may be said that man’s defensive methods are powerless against hunger controlling his population growth, but his offensive methods for pushing the hunger line out of the way of the swelling population are enormously eminent. Man is extremely expansive – fundamentally so, as a species.

    In the history of mankind we witness Nature’s desperate struggle against an error of her own evolution. An old and previously efficacious method of curtailment, hunger, began to increasingly lose its effectiveness as man’s engineering abilities progressed. Man had wrenched himself loose from his niche and started to grab more and more resources, displacing other forms of life. Then Nature took stock of the situation, found out that she had lost the first round, and changed strategy. She brandished a weapon she hadn’t been able to employ when the enemy had been scattered in numbers, but one which was all the more effective now against the densely proliferating enemy troops. With the aid of microbes – or “infectious diseases” as man calls them, in the parlance of his war propaganda – Nature fought stubbornly for two thousand years against mankind and achieved many brilliant victories. But these triumphs remained localised, and more and more ineluctably took on the flavour of rear-guard actions. Nature wasn’t capable of destroying the echelon of humanity in which scientists and researchers toiled away, and in the meantime they managed to disarm Nature of her arsenal.

    At this point, Nature – no longer possessed of the weapons for attaining victory, yet utterly embittered and still retaining her sense of self-esteem – decided to concede a Pyrrhic victory to man, but only in the most absolute sense of the term. During the entire war, Nature had maintained her peculiar connection to the enemy: they had both shared the same supply sources, they drank from the same springs and ate from the same fields. Regardless of the course of the war, a permanent position of constraint prevailed at this point; for just as much as the enemy had not succeeded in conquering the supply targets for himself, Nature likewise did not possess the capability to take these same targets out of the clutches of humanity. The only option left was the scorched earth policy, which Nature had already tested on a small scale during the microbe-phase of the war, and which she decided to carry through to the bitter end. Nature did not submit to defeat – she called it a draw, but at the price of self-immolation. Man wasn’t, after all, an external, autonomous enemy, but rather her very own tumour. And the fate of a tumour ordains that it must always die along with its host.

    In the case of man – who sits atop the food chain, yet nevertheless ominously lacks the ability to sufficiently restrain his own population growth – it might appear that salvation would lie in the propensity for killing his fellow man. The characteristically human institution of war, with its wholesale massacre of fellow humanoids, would seem to contain a basis for desirable population control – that is, if it hadn’t been portentously thwarted, since there is no human culture where young females take part in war. Thus, even a large decrease in population as a result of war affects only males, and lasts only a very short time in a given generation. The very next generation is up to strength, and by the natural law of the “baby boom” even becomes oversized, as the females are fertilised through the resilience of just a very small number of males. In reality, the evolution of war, while erratic, has actually been even more negative: in the early stages of its development there were more wars of a type that swept away a moderate amount of civilians as well. But by a twist of man’s tragicomic fate, at the very point when the institution of war appeared capable of taking out truly significant shares of fertile females – as was intimated by the bombings of civilians in the Second World War – military technology advanced in such a way that large-scale wars, those with the ability to make substantial demographic impact, became impossible.

    • “My point is that playing the lefty saint and harping on ad nauseam about “co-operation” is just pathetic. it fails to address any of the issues implied by the finitude of the world. The fact is that we would be very stupid to keep pretending that we can have a society where everyone works for the benefit of everyone and that we can afford resources and reproduction for everyone.”

      Are you trying to intentionally misrepresent everything Don has written? My understanding is that Don is mostly writing about creating a stable, sustainable society after collapse, with a clear understanding that the world will only support a few hundred million people, and that the collapse will probably overshoot on the way downwards.

      “We need to be realistic, that the planet can only support so many people and that we have no alternative but to say to people, “sorry, that is just too bad.” The best that we can hope to do is to support a limited population and to select the best among us for reproduction, so that the fitness of the breed is maintained and improved. ”

      Oh, I see, you think there is enough time and resources to completely avoid a collapse and have a controlled wind-down of humanity, along with a eugenics program to boot. Good luck trying to get sufficient support for those ideas. What standards do you propose for “the best among us”?

      • And to add on to that, you think that a wind-down of humanity can be obtained competitively? That your eugenics program can be implemented through competition, rather than co-operation? That your new society, based on competitive ideals, will somehow live sustainably? “Sustainable Capitalism” and “Sustainable Survival of the Fittest” That is quite the ideology you have there. You should write a book.

      • Quitollis says:

        “Are you trying to intentionally misrepresent everything Don has written?… Oh, I see, you think there is enough time and resources to completely avoid a collapse”

        I don’t think that you understood the nuances in the discourse between Don and myself, certainly you don’t understand what I said.

    • Ed – I am interested in energy issues.
      edpell says:

      Linkola is brave to talk about the question.

      The English had this solved the rich owned everything and the poor were used as tenant farmers. The excess poor were driven out, starved, put in the army. I expect the rich will use the same solution globally. Certainly in the U.S. and England and I expect most of the commonwealth.

      • “The English had this solved the rich owned everything and the poor were used as tenant farmers.”

        If you go back before coal mining, the industrial revolution and the agricultural revolution, it was the hierarchy of warriors. The nobility were the ranks of officers, and the serfs were pledged to their local lord. Without the massive surplus energy of coal and oil, maintaining military capabilities required a large quantity of workers to support metal working, war horses, building stonework installations, etc.

        There are many solutions, and they are often arrived at by circumstance, rather than design.

    • To clarify, I was not disagreeing rather I was off on a tangent explaining to the left-wingers who embrace communism while criticizing capitalism and it’s inherent ‘evils’ that they are not really any different.

      As for those who think that post-collapse looks like a jolly adventure where the starving show up at the gate and you welcome them in for a bowl of organic oatmeal and they agree to pitch in on the farm, I completely agree, that is utter nonsense.

      The facts, history and common sense do no support these foolish beliefs.

      As I have suggested earlier, the likely outcome for the pacifists who believe survivors will organize into communes will be slavery, or death.

      I would note that Edo was a one-off and no longer exists. The norm throughout history has always been violence. Brutal, nasty, horrible violence.

      But of course this time will be different

      • “The norm throughout history has always been violence. Brutal, nasty, horrible violence.”

        I suspect this is an exaggeration. In order for the population to remain relatively stable, people have to live to adulthood and reproduce, so there must be some level of stability. Most conflict was on much smaller scales than the wars of the industrial era (outside of Asia). The big trigger, I suspect, was when the weather cycle turned and suddenly there was less food available. Sudden warm period, populations in northern areas explodes. Goes back to cold, suddenly you have germanic barbarians pouring into southern Europe, raiding and pillaging as they go.

        I think the bigger concern without modern technology is disease. Expect 50% of children to die before adulthood from sickness, after the collapse, if there are no more vaccines, antibiotics and other treatments. As a result, those who continue will likely have to go back to 6 to 8 children per family.

        • Of course the history of the world has not been about people constantly wildly racing about hacking each other to pieces for no reason whatsoever. That runs counter to the survival instinct.

          As has been stated many times previously, the violence comes when cooperation is no longer feasible due to diminishing resources.

          And because the human population is always growing we are always running into resource scarcity.

          And when we compete for scarce resources we do not say ‘please suh, can I have some moh’

          No, what we do is crack the guy who has the moh with a club across the head and take it because we understand that he is not going to give us moh when his growing family or growing tribe or growing country needs the moh themselves.

        • I would agree that disease is perhaps as big a threat if not bigger than violence, particularly in the initial stages.

          We will have billions of severely weakened people and no medicines and we will have none of the usual methods of containing pandemics.

          Mother nature bats last as the saying goes, and she is going to hit endless grand slam home runs when the chemists close and the antibiotics run out.

          Rather than the utopian heaven on earth that some envision, this is likely to be hell on earth.

      • Quitollis says:

        I agree with you there W, I think that they are fooling themselves if they think that they can just set up some pacifist commune and extol the virtues of communism or communitarianism or whatever they want to call it. Don is seriously misrepresenting humanity if he thinks that we are naturally that way. But perhaps we should just leave them to it, why should we care?

        I was also trying to get at that we should try to learn some lessons from the present collapse, that infinite economic and population growth is not sustainable. A future society should bear that in mind and implement measures to control the size of the population and to moderate the use of natural resources. It is not enough to say that we are all going to just co-operate for the common good, that needs to be clarified and qualified.

        We might “co-operate” so as to limit the size of the population and to maintain the breed. Apart from that it is up to people what they do, whether they want to join Don’s permaculture commune or to have their own farm and to trade with other people as they see fit. I don’t like all this innuendo that we are somehow not “human” or “moral” if we don’t want to join a pacifist commune.

        And as you say, competition and violence will be inevitable, the pacifists are fooling themselves.

        • “Apart from that it is up to people what they do, whether they want to join Don’s permaculture commune or to have their own farm and to trade with other people as they see fit. ”

          “And as you say, competition and violence will be inevitable, the pacifists are fooling themselves.”

          Good luck, having a farm off by yourself, defending it alone or with a couple family members, 24/7. I’m pretty confident that a larger group of people in a fortified settlement will have much better odds, whether they be communists, or theocrats, or a direct democracy, or feudalists.

          Check out how well being off alone defending a farm with your own gun worked out for white farmers in Zimbabwe, and compare with Mormon Forts in 19th Century midwest America.

          • Quitollis says:

            I didn’t say that I was going to have a farm. I live on a small island and I don’t suppose that the British state will be going anywhere. I won’t get to decide what happens on this island but I am fairly sure that it wont be autonomous pacifist communes.

        • If people prefer to believe that we can all live peacefully post collapse in spite of the fact that we have never done that, I agree, there is no point in pricking the bubble. That will be like heaven coming to earth I suppose, a most wonderful thought.

          However I thought that pointing out that holding such beliefs was more likely to result in your death or enslavement, and that buying a Hilux and mounting a 50 cal on the back, was constructive criticism. Just trying to be helpful as I’d hate to think (if I survive) that anyone was suffering for lack of proper preparation.

    • Thanks for that translated chapter, he could not be more accurate in his assessment of ‘What is Man?’

      Of course nobody wants to hear that message because nobody wants to face the truth.

      We want to believe what the high priests tell us, that we are fundamentally good but a little flawed. Never mind that we have been at each others throats since the beginning of time, that we torture, we genocide (heck in the US there is even a celebration marking genocide. It’s called Thanks Giving!), we murder, we rape.

      In short, there is no act too vile for man. We’ve been know to feed people to animals, or bury them alive in a box full of rats. Dream up the most heinous act imaginable and then google it. I bet you will find references to man having committed the act.

      But of course in spite of all of this, we believe we are by nature, gentle, meek, peace-loving creatures.

      Any idea where one would buy English versions of this author’s books?

  33. Don Stewart says:

    Dear Gail and All
    In a recent comment, I claimed that oxytocin would be the medium of exchange in a post-fossil fuel world, replacing fiat money. I did not think that gold or any physical objects could replace fiat money in the short term. The discussion tended to devolve into arguments about the alleged inherently violent nature of humans, with a few swipes at ‘feeling good’.

    If we look in Mobus and Kalton’s Principles of Systems Science, page 439, we find this:

    ‘Human beings are inherently social, and much of the coordination required in living together is achieved by informal cooperative strategies. But as communities and their enterprises become more complex, they grow beyond the strong familiar face-to-face bonds that make cooperative coordination sufficiently predictable and functional. This is where the dynamic of coordination by formal hierarchy takes root.’

    Now my assumption is that a ‘fast collapse’ will destroy the ability of society to maintain complex organizations, because the collapse will destroy the productive ability of the society. While I hope that some particularly productive enterprises survive, I doubt that we should count on it…except as salvage. So…suppose a fast collapse really does reduce production mostly to what small groups of people, working cooperatively, can produce. Then the situation will be like the first sentence in Mobus and Kalton’s paragraph above. And we know that oxytocin is a key bonding hormone which keeps those production systems functional. I would speculate that perhaps 90 percent of the population will be engaged in primary food production, with 10 percent being specialists of one kind or another, with a few itenerant peddlers facilitating exchange with other communities.

    One can come up with philosophical theories that the cooperation is really just selfish genes talking, because the appearance of cooperation is required in order to survive, but I see all that as distinctions without a difference. At the end of the day, a number of free agents have chosen to cooperate for the common good, and oxytocin has greased the skids.

    Now, assume that the fossil fuels stay gone, but society begins to evolve more complexity again. Then I think that, in the best cases, society begins to look like Edo Japan or northwestern Europe several hundred years ago. If I remember correctly, northwestern Europe was producing 26,000 dietary calories per person per day back then, enough to support more complexity. With more complexity, the opportunity for what we might consider as humanly destructive organizations arises. But if, immediately after the collapse, only 2500 dietary calories are being produced, then humanity simply won’t be able to support those destructive organizations. The most likely trajectory is that population will shrink until the survivors are producing 2500 dietary calories per day.

    One can also look at the likely trajectory in a long, slow catabolic collapse, such as John Michael Greer envisions, but I won’t get into that. Or you can pick some dietary calorie level which seems reasonable to you and make up alternative scenarios. Please remember that, today, we use more fossil fuel calories to produce food than the food contains as dietary calories. And, unless one is following some biological farming practice, the soil is probably in bad shape, and there is little in the way of water management infrastructure.

    Please notice that I take the production of dietary calories per person as a given, based on resources such as soil and water and sunshine and farm infrastructure and knowledge. I do NOT start off by saying that ‘we have to feed 7.2 billion people’. If we don’t produce the calories, they won’t be fed…one way or the other.

    Don Stewart

    • Don;

      This sounds very much in line with my thinking. If the collapse is rapid, and there is no doomsday scenario, then:

      1) The primary challenge is surviving the first year, through the collapse and social disorder, getting the first harvest and surviving the first winter (or dry season if in a tropical region). After that first year, the amount of banditry, cannibalism, etc will have declined to practically zero, since either the bandits will have established a territory, or died out.

      2) Survivors organize into local communities, with 90% of labour going to food production.

      3) If sufficient surplus is available, communities organize into larger units, beyond people who know each other directly. If there is still a lot of turmoil and violence, this will probably more of a feudal society. This will probably look more like gangs than lords in castles. If the area is relatively peaceful, it may be more like a direct democracy.

      4) If there is sufficient surplus available, then City-States will arise, with say between 10,000 and 1,000,000 people under a single governing body. At that point, maybe half of labour is food production, and the rest goes to resource extraction, manufacturing, services and trade.

      The quantity of surplus energy available per capita will likely be the primary factor in determining the maximum amount of complexity attainable. If the rapid collapse occurs, I think it is safe to assume that oil and coal production will reach practically zero, since the only available reserves require far too much complexity to extract; they won’t be extractable with picks and shovels, so 16th Century Europe is likely the pinnacle that future society can obtain.

    • worldofhanuman
      worldofhanuman says:

      Sounds reasonable, but as has been mentioned here numerous times, the demand destruction can be put on steroids in order to preserve the elite’s BAU for few more decades. Most people don’t need cars, don’t need eating out, don’t need so much plastic crap, thousand miles holiday/leisure trips, dog surgeries, deskjokey jobs.. If you sum it all up, easily few dozen% of current energy/resource drain could be simply cut off. Yes it would be “poor” dystopian world, but who cares, the civilization show must go on, and we are not in the driver’s seat.

      • Rodster says:

        “Yes it would be “poor” dystopian world, but who cares, the civilization show must go on, and we are not in the driver’s seat.”

        Well said and I agree. Those behind BAU and who massively profit from it don’t care what blowback effect comes from it when it all collapses. They will be off to their hideaways until the dust settles and start up BAU2.

    • Quitollis says:

      “One can come up with philosophical theories that the cooperation is really just selfish genes talking, because the appearance of cooperation is required in order to survive, but I see all that as distinctions without a difference. At the end of the day, a number of free agents have chosen to cooperate for the common good, and oxytocin has greased the skids.”

      In reality you live in a capitalist society where everyone works for themselves. Maybe you should just get over that and stop trying to shove your communism down everyone’s throat.

      • The only difference between capitalism and communism is that one is better at burning through the earth’s resources more quickly than the other. Both require infinite growth and neither could be considered even remotely sustainable.

  34. Trpaslík z Trpasloje
    Trpaslík z Trpasloje says:

    Reblogged this on Trpasloj and commented:
    Gail Tverberg ze široka na téma aktuálního poklesu cen ropy.

  35. Don Stewart says:

    Dear Gail and All

    Several people continue to insist that human nature is nasty unless the humans are distracted with a constant stream of trinkets from the industrial world. Here are some recent reports.

    Kindness and Generosity Count. While this is a study of intimate relationships, I believe the same holds true of friendships and partnerships. To the extent that our future survival depends on good relationships with those close to us, Kindness and Generosity are important.
    tp://www.businessinsider.com/lasting-relationships-rely-on-2-traits-2014-11ht

    Steven Pinker on the current low level of crime in the US and around the world.
    http://www.slate.com/articles/news_and_politics/foreigners/2014/12/the_world_is_not_falling_apart_the_trend_lines_reveal_an_increasingly_peaceful.html

    History of homicide in the US since 1900. Rising strongly up to election of FDR, then sharp decline. Increase beginning about Nixon, high through the first Bush administration, beginning of sharp decline with election of Bill Clinton. No uptick since the beginning of the Great Recession.
    http://polyticks.com/polyticks/beararms/liars/usa.htm

    What is happening in the West African Ebola area? It seems that aimless young men are the problem. If, in the future, everyone has to work hard to survive, will this be a problem? Note the very low level of homicides in 1900 in the previous chart. In 1900, people mostly worked hard.

    “This place is lawless,” said Mahmoud Kadi, a furniture maker, who like many others reported that crime was soaring because of the inordinate number of teenagers loitering on the streets, with the police distracted by Ebola.

    Don Stewart
    PS Also, Roy Baumeister, a very well know psychologist, has found that a frustrated search for the approval of others is behind a lot of anti-social behavior. None of this proves that a new depression might not trigger violence, but neither does it support that notion.

    • “Several people continue to insist that human nature is nasty unless the humans are distracted with a constant stream of trinkets from the industrial world.”

      I don’t think trinkets are the key. I think for most people, food water and shelter, along with hope for the future, are keys to peaceful co-existence. The trinkets are to keep the infinite growth system going.

      ““This place is lawless,” said Mahmoud Kadi, a furniture maker, who like many others reported that crime was soaring because of the inordinate number of teenagers loitering on the streets, with the police distracted by Ebola.”

      The major exception to my above statement is young men, who for whatever reason (likely high testosterone) are far more likely to commit crimes and cause problems even when all their base needs are met. The key here I think is to ensure full employment, and provide them with purpose and structure. I think this is why militarism and feudalism work so well; young men seem to thrive on structure, purpose, and being kept physically occupied.

      • Don Stewart says:

        Dear Matthew
        Let me begin by referring to a new series of posts by Charles Hugh Smith (for his subscribers) which addresses the issue of poverty. He says:

        ‘charity does not provide paid work. Perversely, it often does the opposite–making people dependent on charity that is at the whim of distant, often-centralized organizations.’

        I agree with that. What young men, in particular, need is work. Whether it is paid or subsistence doesn’t matter much, I think. You will see that, in 1900, there were very few homicides in the US. Most of the young men were engaged in subsistence agriculture. I can tell you that there were plenty of fistfights. Read John Muir’s stories about being a school teacher in Wisconsin before the Civil War. A male teacher had to fight with the biggest boys in the class to get respect. So there was a pecking order, but rarely a killing. While boys also fought over girls, I think that the research on what makes relationships last tells us something different from two bull elks fighting over a willing female.

        Will we be able to make a transition from young men wandering around aimlessly, fed by food stamps and subsidized housing, or going to school for ever lengthening periods of time and piling up student debt, to a situation more like 1900? At the present time, no politician would breath such a heretical notion. But in a collapse, everything may change.

        We might get Mad Max, or we might get 1900. Societal response will probably tip us one way or the other.

        Suppose that we have land reform and the government distributes farmland to families, who build shelters, etc. Then everyone will be working very hard to survive. Cooperations with the neighbors will be essential. Etc., Etc.

        Most likely, in my estimation, is that if collapse is sudden, most urban people simply won’t make it. I think they will be disoriented, like the Irish during the potato famine, and just die before they can get any sort of strategy together…beyond stripping the local grocery store…which will feed them for a day or two. That leaves survivors who know something about survival skills, who will self-organize into mostly cooperative production units. Financial trade will be small and restricted in scope.

        My guess is no better than anyone else’s, but I recoil at confident predictions that all is hopeless.

        Don Stewart

        • Hey Don, I just wanted to drop a line saying that I agree with a lot you say, and find a lot of it thought provoking, and I do follow a lot of your links, and read the stuff on Edo, etc. If I don’t comment, it is because I don’t have any questions or arguments, it’s not that I ignore your posts; I just don’t want to leave a dozen posts per article unnecessarily.

          • Don Stewart says:

            Dear Matthew
            You probably have excellent reasoning.
            *The more of my stuff you read, the more you expose yourself to potential catastrophic error.
            *Repeating something makes you become psychologically wedded to it
            (A car salesman gets you to agree that ‘yes, it’s a beautiful color’, and that considerably increases your chance of buying the car)
            *So, by avoiding comment, you may very well be minimizing errors

            Now…isn’t that a happy thought for so early in the New Year!
            Don

        • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
          Gail Tverberg says:

          Dmitry Orlov talks about the crash of the Soviet Union being hardest on the men who lost their jobs. They had no meaningful lives left. The women who cared for family and gardens were much less affected. Increased alcoholism seemed to be a result.

          • Calista says:

            That’s an excellent point. I wonder two things. 1) Will we see a similar impact here with both men and women struggling emotionally and mentally because so many more women are employed outside of the house than were in the timeframe that the Soviet Union collapsed? Or will the women fall back into their traditional roles and find that emotionally satisfying enough? 2) I wonder why we are not seeing more of an impact of the “men lost their jobs” issue than we are. Most areas where employment has been lost has been in fields with more males employed than females. ie construction, manufacturing, etc. etc. The jobs retained are the lower income, lower paid female jobs ie secretary, customer service, teaching, etc. I am told that the NE portion of the US is particularly hard hit in this manner. Do we have any information on mental health issues there? Suicide rates?

            Or is it like Mr. Orlav says, it isn’t a public obvious thing but one person here and one person there that succumbs to suicide and unless you see data in aggregate it isn’t obvious.

            • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
              Gail Tverberg says:

              I am not sure that I have answers to your questions. I know that a lot of men have found themselves forced to take much lower paying jobs. Others have gone back to school and taken loans to do this. I wonder how many of the loans will ever get paid back.

              If wages get too low for women, women very often have child care or adult care responsibilities at home. It is expensive to push off sun responsibilities onto someone else, so they just quit, rather than take a low paid job. I recently ran into a former teacher who is home schooling her son. When schools are too bad, and wages are too low, staying at home and teaching a person’s own children is an alternative.

              I suppose that there are hard-driven women, especially ones who have forgone having children and perhaps marriage to have a career. They would seem to be most at risk for depression if they lose their jobs. All in all, I still think men will be affected more than women, simply because women have more options for roles at home.

      • escravaisaurabr
        escravaisaurabr says:

        Matthew Krajcik,

        “….peaceful co-existence”

        To whom? Because there is no such thing.

        “key here I think is to ensure full employment”

        Again, to whom? Because there is no such thing, either.

        Wonder why?

        Both are impossible to achieve.

        Anyway, you do have a point about “Feudalism” on the future as a new paradigm. But the person to accept/tolerate it hasn’t born yet.

        • ““….peaceful co-existence”
          To whom? Because there is no such thing.”

          Do you kill neighbours on a daily basis? Is every day of you life filled with some form of violent conflict?

          ‘“key here I think is to ensure full employment”
          Again, to whom? Because there is no such thing, either.’

          You think it is impossible to employ 100% of able bodied males between 18 and 35 years of age, doing physical labor?

          “Both are impossible to achieve.”
          Pretty sure you are wrong.

          “Anyway, you do have a point about “Feudalism” on the future as a new paradigm. But the person to accept/tolerate it hasn’t born yet.”

          Gangs are pretty close to feudalism already, and young men voluntarily join them all the time. Police and military are pretty similar, as well. The officer simply becomes the land owner that pays the non-commissioned soldiers directly, removing the State from the process. The Captain pledges loyalty to a Major, who pledges loyalty to a General, who takes over a State government. I don’t think people are as inflexible as you imagine.

          • “You think it is impossible to employ 100% of able bodied males between 18 and 35 years of age, doing physical labor?”

            The wages from that employment will be spent procreating; creating more humans. The wages will be spent on resource consumption. If full employment of everyone now is possible, and I doubt it, the nature of this thing we call employment renders full employment in the future impossible. That is defining employment as we know it now, where labor entitles one to procreation and resource consumption. Seven billion humans can not continue to expand and consume entitled by the idea of employment. The false premise of the nobleness of the work ethic serves only to mask the rape of the planet. You can have billions of people digging holes then filling them if the alternative is starvation and you have the food to feed them. Is that what you write of?

            The purpose of all employment is growth and consumption both for the employee and employer.

            • “The wages from that employment will be spent procreating; creating more humans.”

              . There is no evidence anywhere that employing people, rather than having them sit at home on food stamps or other social assistance, will cause them to procreate more. There is abundant evidence that employing young men reduces violent crime.

              “The wages will be spent on resource consumption.”

              You are somehow assuming that we are creating something from nothing. If the government or a rich person has money, they consume with it. If they employ a person, and that person consumes with that money, then other than the productive work done by the worker, no new consumption is created. Besides, if the person is currently being given money for nothing, and then you make them do something for that same money, their consumption will be roughly the same.

              ” If full employment of everyone now is possible, and I doubt it, the nature of this thing we call employment renders full employment in the future impossible. ”

              So, if we can employ everyone now, we cannot employ everyone in the future? This seems like nonsense, please clarify. Unless you are a cornucopian that believes in infinite growth, you should be seeing that soon, total energy available to humanity will most likely decrease, and as a result, total consumption will inevitably go down.

              “The purpose of all employment is growth and consumption both for the employee and employer.”

              Yep, those employers sure got rich building the Pyramids, the Great Wall of China, etc. The purpose of employing a person as a business is to provide profit to the employer. There are structures other than business, such as government, religion, science, that exist for reasons other than profit.

              “You can have billions of people digging holes then filling them if the alternative is starvation and you have the food to feed them. Is that what you write of?”

              There are much more productive things they can be doing. For example, if global warming is a real threat, building sea walls along coastal areas would be a great use for large quantities of manual labour. As oil supplies diminish, if there is no new abundant source of energy, more and more manual labour will be needed in food production.

              It seems like the world could use a great number of herdsmen, which can help fight desertification, absorb carbon out of the atmosphere, and feed people while providing people with meaningful employment.

            • . “There is no evidence anywhere that employing people, rather than having them sit at home on food stamps or other social assistance, will cause them to procreate more. There is abundant evidence that employing young men reduces violent crime.”

              Whether from employment or social assistance people need resources to procreate. Many homeless people procreating? You present a false dichotomy that is a conerstone of the work ethic falsehood. Work and enjoy entitled consumption and consumption or dont work and enjoy unentitled procreation and consumption. Is this really the model you are presenting to prove your point?

              “You are somehow assuming that we are creating something from nothing. If the government or a rich person has money, they consume with it. If they employ a person, and that person consumes with that money, then other than the productive work done by the worker, no new consumption is created. Besides, if the person is currently being given money for nothing, and then you make them do something for that same money, their consumption will be roughly the same.”

              Fist of all there is no ‘productive” work. work exists for growth and consumption. Do you think that money is finite, possessed by “government or a rich person”? Money is infinite. It is created at the whim of the central banks. Your premise is absolutely wrong. Absolutely if I create a job and that job is payed with money created from nothing that job creates consumption that would not exist. This is definitive of our predicament, infinite money finite resources. Employment does not create resources it only creates consumption.

              “So, if we can employ everyone now, we cannot employ everyone in the future? This seems like nonsense,”

              More employment more consumption. the faster the resources run out. The faster the resources run out the less chance there is for “full employment”. Are you really saying that if a individual takes a “productive’ job and earns $150,000 a year they will consume less than if the are collecting food stamps?

              “It seems like the world could use a great number of herdsmen, which can help fight desertification, absorb carbon out of the atmosphere, and feed people while providing people with meaningful employment.”

              I agree with this statement, because it moves away from the paradigm of “employment”. It describes a activity where a human could find sustenance in balance with the planet.

              Mathew you have a better mind than these arguments you are making. I believe you have posted you are a petrochemical engineer? More power to you but dont confuse your entitlement to consume beliefs with reality. Who is the one spouting nonsense here? Get back to me when you have a favorite sheep named boo boo.

            • “Work and enjoy entitled consumption and consumption or don’t work and enjoy unentitled procreation and consumption. Is this really the model you are presenting to prove your point?”

              This is the model the western world runs on right now. It is not theory, that is real life.

              “Do you think that money is finite, possessed by “government or a rich person”? Money is infinite. It is created at the whim of the central banks.”

              If there is an economy with $100 in it, and I as government / central bank create $1 out of thin air, that does not mean there can now be 101% consumption. What I have done is devalued the other $100 by 1 percent. Whether you call it inflation, a tax, or theft, I have taken from the savers by reducing the value of their savings.

              “Employment does not create resources it only creates consumption.”

              If I plant a tree, is that only consumption? If I plant and harvest a field of wheat, did I create the resource? Sure, if the employment is outside of the primary sector, it is only consuming energy to transform or consume resources, not create them.

              “More employment more consumption. the faster the resources run out. The faster the resources run out the less chance there is for “full employment”. Are you really saying that if a individual takes a “productive’ job and earns $150,000 a year they will consume less than if the are collecting food stamps?”

              I don’t think there are going to be government work programs that employ millions of unemployed, unskilled young men as manual labourers that are going to be paying $150,000. I’m talking about $10 an hour manual labour jobs, preferably either in producing food, planting trees, reversing desertification, or building infrastructure.

              ” I believe you have posted you are a petrochemical engineer?”

              Nope, definitely someone else.

            • “If there is an economy with $100 in it,”

              In that that $100 is nothing actually it is debt, zero term debt. it is nothing in its essence it has no substance. Its value is solely dependent on the resources that are stolen from the planet.. The “economy” did not create the $100 value resource theft did.

              ” and I as government / central bank create $1 out of thin air, that does not mean there can now be 101% consumption. What I have done is devalued the other $100 by 1 percent. Whether you call it inflation, a tax, or theft, I have taken from the savers by reducing the value of their savings. ”

              The value is not with the money or the savers. The value is with the resources of the planet. The money is is valueless, It is imaginary it can not be can not be devalued as its inherent value is zero. Adding money to the economy increases the rate of depletion of the only thing of value resources. The savers can not be stolen from because the idea of earning is imaginary. Their is no earning. There is only theft of resources from the planet.. There is only one thing getting ripped off thats the resources of the planet.. In the past additional $ added to the economy increased resource theft so all was well. The problems we are experiencing is that the resources are reaching depletion so additional money added to the economy does not result in additional resource theft.

              “If I plant a tree, is that only consumption? ‘

              This is also a expression of a common misconception that money is just energy and can be used for good. Charity is the most common example given. Trees are probably my favorite life form. I like planting trees. There is a hoedad sitting with my other tools. However if drive down to the nursery and purchase a tree with currency whose value is derived from resources stolen from the planet that was delivered to the nursery by truck, nourished with fossil fuel fertilizers, watered with water pumped out of the ground with energy, drive back to my home and plant that tree using food calories derived from fossil fuel and purchased using currency that whose value is derived from resources stolen from the planet without a doubt it is a act of consumption, massive consumption..

              “If I plant and harvest a field of wheat, did I create the resource?”

              In modern agriculture this is a straight conversion of fossil fuel to the energy contained in the food. 10 calories in 1 out.

            • “Adding money to the economy increases the rate of depletion of the only thing of value resources.”

              You think if the government printed ten times more money, consumption would increase 1000%? I think you have a very backwards idea on how money works. Extracting and consuming more oil enabled the United States to borrow and spend more money, moving from gold to gold backed paper to pure paper to digital. Printing the money did not make the oil get extracted and consumed.

              As for the rest of it, you clearly missed the entire discussion being about providing young men with full-time employment doing manual labour. Manual labour meaning with hand tools. People planting many thousands of trees don’t go to the local garden center.

            • “You think if the government printed ten times more money, consumption would increase 1000%?

              Printing $ is a rather vague term. Money is debt . If the goverment allowed a lot of money to enter the economy yes it would result in massive consumption then resource depletion..

              “I think you have a very backwards idea on how money works. Extracting and consuming more oil enabled the United States to borrow and spend more money, moving from gold to gold backed paper to pure paper to digital. Printing the money did not make the oil get extracted and consumed.”

              Exactly right, resource theft created the money.

              Omost all of the money entering the economy now comes from the government. Look at the employment statistics. You may be downstream of it a couple of steps but that is where it comes from. And when that money enters the hands of most people it directly results in consumption. Do you not consume using money? I do.

              “As for the rest of it, you clearly missed the entire discussion being about providing young men with full-time employment doing manual labour. Manual labour meaning with hand tools. People planting many thousands of trees don’t go to the local garden center.”

              So explain it to me, since Im so dense. Where will this armada of trees be produced from? Every tree I planted in the national forest did in fact come from a nursery. depending on terrain I was good for bout 400 a day back when, so many thousands is 1 crew for a day. . What energy will be used in the seedlings growth? where will they be planted? How will they be transported? Where will the food calories for this army of young men of tree planters come from?

              And most important

              Where will the resources be ripped off from the planet to provide the consumption enabled by these tree planters wages?

            • “Exactly right, resource theft created the money.”

              Are you referring to all resource extraction as theft? If so, from whom? Nature? God?

              “Omost all of the money entering the economy now comes from the government. ”

              The United States Economy is about $16 trillion in size, and the government has been running deficits of about $1 trillion per year; when the government runs debts, it borrows new money into existence, so the direct money supply increase should be equal to the deficit. And yet, did the economy grow equal to the size of the deficit? No.

              If the government borrowed another $16 trillion into existence and sent it all out as stimulus checks, do you think that:
              1) total consumption of resources would double
              or
              2) the price of goods would double?

              I think it would be some combination of slightly increased consumption in the short term, and it would take time for the inflation to ripple through the economy, but in the long run I think it might actually reduce consumption, since the prices would increase and once the stimulus money was off in the hands of government and corporations, people would not be able to afford as much stuff at the higher prices.

              Fine, you win, let’s just give people free money to consume without working, why bother trying to replenish renewable resources anyways. Let’s just strip mine the planet as best we can before the collapse.

            • “Are you referring to all resource extraction as theft? If so, from whom? Nature? God?”

              Indeed I am. My words were quite specific. Theft from the planet.

              “If the government borrowed another $16 trillion into existence and sent it all out as stimulus checks, do you think that:
              1) total consumption of resources would double
              or
              2) the price of goods would double?”

              Ill be glad to answer you question although you have answered none of mine.

              Thats $53,333 for every man women and child in the USA. I think that consumption of goods would increase many times more than double and the price of consumer items would increase many more times than double.

              “let’s just give people free money to consume without working, why bother trying to replenish renewable resources anyways. Let’s just strip mine the planet as best we can before the collapse.”

              Why do you insist on putting me in a particular box? I have certainly not expressed the viewpoints above. Your attributing them to me is quite rude and inconsiderate. What is strip mining the planet is consumption. Whether the consumption is well intentioned or hedonistic it is still consumption. Whether the consumption has its root in welfare $ or in debt issued by the fractional reserve banking system via wages its still consumption. People say they care about the planet but they wont give up their consumption. Instead they say their consumption is FOR the planet. You want to plant trees have at it. The season is fast approaching. WA OR ID.

            • Sorry if I missed any of your questions, the only ones I saw seemed rhetorical. Let me know any I missed:

              Do you not consume using money? Yes.
              Where will this armada of trees be produced from? From seedlings, likely grown somewhere in advance.
              What energy will be used in the seedlings growth? Sunshine.
              where will they be planted? In previously deforested areas, or in areas of desert reclamation.
              How will they be transported? Presumably with trucks. Everything must be done with previously accumulated surplus, there is no magic.
              Where will the food calories for this army of young men of tree planters come from? Right now, from existing agriculture. Ideally, from other people working fields and raising flocks/herds of animals without the use of petroleum.
              Where will the resources be ripped off from the planet to provide the consumption enabled by these tree planters wages? I disagree with the assumption that there would be new consumption occurring as a result. The wages would be in lieu of existing social programs, combined with consumption diverted from other government programs.

              When you say “Theft from the planet.” That kind of makes it seem that you are asserting the planet has property rights, and that humans are separate from nature.

              ” I think that consumption of goods would increase many times more than double and the price of consumer items would increase many more times than double.”

              How can people consume more, if the price increases equal to the increase in the money supply? Do you mean consumption right now would increase, but then the higher prices would ripple through, and then consumption will plummet? Does printing money create oil? The only meaningful way more consumption can occur is if more fossil fuels are extracted.

              It seems to me from your responses that you view all attempts at changing our current trajectory are futile. You seem to be stating that all consumption is bad; what are you proposing? If there is no solution, why spend any effort trying to change the outcome?

            • “When you say “Theft from the planet.” That kind of makes it seem that you are asserting the planet has property rights, and that humans are separate from nature.”

              Taking something you have no right to in a manner that is destructive should be a fairly easy concept to understand. How does not condoning disrespect for the planet equivocate separateness? Respect denotes acknowledgment of unity not the other way around..

              “How can people consume more, if the price increases equal to the increase in the money supply?”

              Your scenario had nothing to do with the money supply. Your scenario was that the government mailed out checks for 17 T. The deficit is not the money supply. What we are discussing is your proposal for full employment, a proposal that is far more overreaching in its avocation of centralized government than any welfare program by the way. In your scenario for 17T in the mail which is unrealistic probably hyper inflationary collapse would result.

              Where will this armada of trees be produced from? “From seedlings, likely grown somewhere in advance.”
              This place is called a nursery.

              “The wages would be in lieu of existing social programs, combined with consumption diverted from other government programs.”

              First time I heard of this. Not enough for funds for 100% employment not even a tiny percentage increase.

              “It seems to me from your responses that you view all attempts at changing our current trajectory are futile. You seem to be stating that all consumption is bad; what are you proposing? If there is no solution, why spend any effort trying to change the outcome?”

              Not at all. In fact I stated a very achievable goal for you. You want trees planted plant them. The season is starting soon. You could be planting trees in a few months and be well compensated for it. Instead of talking pie in the sky on the internet, playing the blame game and twisting peoples words you could be planting trees and using your personal life energy toward working toward the planet in a way that you see value in.. I advocate peaceful personal action toward goals that work toward the planet.

        • “peaceful co-existence”

          Correct me if I am wrong but in Star Trek had the people of earth not magically learned to finally live in peaceful co-existence after many thousands of years murdering each other. And was not the central them of the show that the enlightened earthlings flew around the galaxy promoting peace and love, and gallantly opposing those who insisted on murdering and pillaging.

          So peaceful co-existence is most definitely possible! (sarc)

          • “Correct me if I am wrong but in Star Trek had the people of earth not magically learned to finally live in peaceful co-existence after many thousands of years murdering each other.”

            Yes, because they had two wonderful technologies that provided them with endless abundance, so each person was infinitely richer than we are now:
            1) infinite energy, in the form of being able to convert matter into anti-matter, annihilate the anti-matter with matter to release pure energy, and then efficiently harvest and distribute that energy
            2) replicators, which allowed the instantaneous creation of any desired good at no cost to the end user.

    • “Several people continue to insist that human nature is nasty unless the humans are distracted with a constant stream of trinkets from the industrial world. Here are some recent reports.”

      I don’t agree. In spite of trinkets we are no less nasty than ever.

      The US is not fighting any less wars these days in spite of iphones and gaming consoles, in fact the country is fighting endless wars these last couple of decades.

      And Americans for the most part support these wars as evidenced by Bush’s second terms. And Obama’s second term. They are most definitely in support of torture as well as we have seen from recent polls.

      You don’t have to pull the triggers or deliver the lash to be a nasty boy. All you have to do is be complicit.

      When resources run short, kindness and generosity will get you a quick trip to the graveyard.

      Humans are not meek animals.

      We are by far the most dangerous beasts that ever stepped foot on this planet.

      When a gang of hardened, armed, hungry men show up at your gate demanding food, you will see how far kindness and generosity will get you.

      Probably about as far as a new born antelope asking a lion to spare his life.

      There is no room in survival of the fittest for mercy. Predators prey upon weakness.

      And make no mistake, we are predators, and if we smell weakness in a resource scarce situation, the meek individual will not survive.

      Guns and ammo would seem to be the logical way forward for those wanting to make a stand. Of course that does not guarantee survival but it at least gives you a fighting chance when the hard men arrive at the gate.

      • VPK says:

        So much for the myth of “Progress”, social or otherwise!

      • worldofhanuman
        worldofhanuman says:

        The scenarios are numerous.
        However, lets have a doze of short term/mid term reality, shall we.
        The social structure will be likely more or less preserved as long as the following is provided, ableit in not 24/365 smooth availability mode of today, namely, basic food (caloric intake), running water, electricity. There is enough nat gas and coal to run openly despotic societies for next few decades on some (decreased) level of modernity. Now, obviously we can add climatic events and/or pandemics to complicate situation bit more, so there could be huge loss%% of life in short span of years, which e.g. transformed late middle ages or crippled the ascent of E Roman Empire (Byzantinum). We can see revolving waves of revolutions etc. However, the descent will be likely rather long from the vantage point of human timeframe and very unevenly spread across the globe.

        In short, the hard core preppers will not be amused to learn that only one form of nasty government will be exchanged for another clique of power. The billions of people will stay around us for a very long time (50-150yrs), at least till the last piece of global ecosystem is eaten, burned/eroded away.

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      Thanks for the links. The Steven Pinker article especially has a lot of nice charts.

      The Business Insider link I couldn’t get to work. I tried taking off the first part, also searching for the title.

      • Don Stewart says:

        Gail
        I have emailed you the full Business Insider article…Don Stewart

        • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
          Gail Tverberg says:

          Thanks! It is a great article, especially for young people starting relationships. The link that works is

          http://www.businessinsider.com/lasting-relationships-rely-on-2-traits-2014-11

  36. Pingback: Piekolie nieuwsupdate: week 1 | Stichting Peakoil Nederland

  37. Don Stewart says:

    Dear Gail and All
    Quite a few people have written about the supposed human predilection for violence. I have a couple of suggestions.

    First, review the Scientific American interview with Steven Pinker, talking about the very great reduction in violence over the past centuries and past decades.

    http://www.scientificamerican.com/article/history-and-the-decline-of-human-violence/

    Second, think again about the new economics study which identifies accumulated capital as the key driver in productivity. Also ponder my comment that capital can consist either of ‘congealed industrial energy’ or natural living capital.

    Third, ponder the description of an upcoming 2015 Pixar film: ‘The animation studio’s next film is set in the mind of a young girl where five emotions—Anger, Disgust, Fear, Joy and Sadness—try to get along.’

    I would like to propose that Pixar may well be on the right track…humans have the capacity for all these emotions, and success in life centers to a considerable extent in our ability to use them appropriately, and manage them when they are inappropriate. The best management tool is, I think, mindfulness. The poorest management tools involve trying to rearrange the world to suit out emotions (e.g., buying a shiny new Porsche, buying a McMansion by taking on lots of debt, attacking someone to try to assuage our anger).

    We have both a sympathetic nervous system and a parasympathetic nervous system. We respond to both ghrelin and leptin in the management of hunger:
    http://www.ncbi.nlm.nih.gov/pubmed/17212793
    In fact, if you look at biological systems, they are mostly managed by forces which pull in different directions and need balance. We can move the needle either in the wrong way (industrial food and the ghrelin/ leptin balance) or in a more productive way (Pinker on how the world has become more peaceful).

    I suggest that the question of whether the future will be more or less filled with violence than the world of today may depend on our ability to accumulate both built and natural capital…just as our economic system depends on capital accumulation. The link I posted previously which showed Geoff Lawton touring a family farm in Ventura, CA, shows built and natural capital accumulation, including the capital of human relationships. The movie about homesteading in Nebraska, which has been referred to several times, can be examined through the lens of capital, also. Those who went to the treeless plains came thousands of miles through forests. They were unprepared to deal with grasslands with no trees. Instead of log cabins or simple lean-tos, they built sod huts. And later made a generation of Michigan timber barons rich by importing lumber to the plains. But you couldn’t very well haul much lumber in the covered wagon that took you to the high, treeless, plains.

    The difficult transition that I anticipate springs from two sources:
    *Governments see ‘success’ in terms of ‘consumption and taking on debt’, not ‘capital accumulation’. Even when they talk about infrastructure, it is mostly about infrastructure which facilitates consumption. There is very little attention that I can see directed to real capital.
    *Global financial capitalism accumulates capital in a way that is peculiarly dependent on fossil fuels, and is thus not only destructive of the environment but also exposed to Peak Minerals. Which says that global financial capitalism probably won’t survive. Yet global financial capitalism has promoted cooperation through the medium of money, and, I would argue, largely produced Pinker’s observed decline in violence. Our challenge is to transition to the Ventura farm from global financial capitalism.

    One can think of all sorts of problems with the transition: transportation, water, electricity, collapse of industrial agriculture, etc. All this leads me, personally, to be skeptical that 7.2 billion will be able to make the transition. It isn’t so much a question of raw ability, as it is a question of willingness to do what needs to be done. Nevertheless, I am fairly optimistic that those who get about doing what needs to be done will make it through the bottleneck.

    Don Stewart

    • The Jan 2015 National Geographic has a discussion of evidence suggesting that the early male American Indians were extraordinarily aggressive and violent http://press.nationalgeographic.com/2014/12/15/national-geographic-magazine-january-2015/

      • Don Stewart says:

        Dear Robert Wilson
        When Louis and Clark started up the Mississippi around 1805, they took with them the wishes of Thomas Jefferson that the tribes on the plains would stop fighting each other. But when Lewis and Clark returned, they found that many villages were empty, because the former inhabitants were off fighting their enemies. Louis and Clark were, I think, never attacked. So strangers bearing trinkets were reasonably welcome, but those b______s over in the next tribe were to be killed (except for the women, who made good wives).

        If you are looking at it from the standpoint of an individual or family or tribe, you find that there is a place for both cooperation and fighting. You fight when you think you have to, and you cooperate when you can get reciprocity. I read somewhere that among the Aborigines in Australia, the suspicion of strangers was intense. When two people met who did not know each other, they tried to find someone that they knew in common (sort of a 6 Degrees of Separation theory). If they could find a common friend, then they assumed that they could be friends. If they couldn’t find anybody in common, violence was pretty common.

        I grew up in a small town, and in that environment one pretty quickly figures out where the stresses are. When I moved to much larger cities, I found the anonymity of the city quite exhilarating. I only had to rub shoulders with people I chose to rub shoulders with. That freedom is a gift from industrial civilization, where money is the lubricant. If Gail is correct, and money fails, and industrial capitalism implodes, then we are back into the sort of situation I grew up in, and which is somewhat exemplified by the relationships on the Ventura farm. I think it is safe to say that those who cannot adjust and learn the arts of cooperation in a small group have poor prospects in that sort of society.

        Native Americans, for all their fighting amongst the tribes, learned to cooperate to kill large game animals in small groups of hunters. I think the evidence is that the women went about their gathering in groups, also.

        It’s like the Pixar movie. We are managing strong emotions, and things can develop for good or ill.

        Don Stewart

        • In the Jan 1, 2015 National Geographic cover story “The First American”, Glenn Hodges presents evidence to show that the trailblazing Paleo-Americans males of 12000 to 13000 years ago were far more aggressive than the Native Americans of 1800. Was there genetic drift? I claim no expertise.

          • Don Stewart says:

            Dear Robert Wilson
            Behavior is NOT all about genes. Sapolsky makes that point when he shows that humans share most of their genes and many basic biological processes with much more ancient creatures. Why has New York City had two decades of falling crime rates? Pinker makes the point that simplistic cause and effect relationships do not explain the rise and fall of crime rates. Instead, there is a complex environmental and social evolution, and people’s behaviors change in response. Certainly the genetic pool in NYC is not much different than it was 20 years ago.

            …However…there is an interesting hypothesis that lead pollution leads to criminal behavior. And we did get the lead out of the gasoline a couple of decades ago.

            Just as now we have the hypothesis that glyphosate leads to autism, and that half the children born in 20 years may be autistic.

            So…it’s complicated, but genes are not destiny.

            Don Stewart

            • “Behavior is NOT all about genes.”

              For sure, environment and pollution, stress and scarcity are all factors. As well, how children are raised has a significant effect; beating children for discipline, or to an even greater degree having an abusive childhood, seems to significantly alter development and greatly increase the chance of being a violent criminal as an adult.

              Genetics are almost certainly not entirely determined at conception; there was a study recently that when you exercise, there are genetic changes in the muscles. In the one study, they had people pedal a cycle with one leg for 45 minutes per day for I think it was 60 days, and then compared genetic samples from before, and then afterwards in the leg that was exercised and the leg that was not in the same person’s body. If I remember correctly, it changed how those cells handled blood sugar and insulin, among other significant changes.

            • This leads us back to the age-old argument of nature vs nurture.

              However, is the fundamental genetic driver of any species not survival?

              Are our actions not ultimately explained by the competition for limited resources because without those, our fundamental drive will not be satisfied?

              There is no ‘good’ or ‘bad’ only survival.

              It would explain why violence and war can never be stamped out. It would explain why we try to keep up with the Jones Family. It would explain why we never have enough.

              We are trying to survive and surviving means competing. We can compete in many ways (insert fake boobs, wear an Armani suit, study harder, engage in diplomacy, form political alliances) but ultimately if those fail, we resort to violence.

              Throw a piece of beef into the midst of a pack of hungry dogs and see what happens. Are we really any different when all is said and done?

        • escravaisaurabr
          escravaisaurabr says:

          Don Stewart
          Interesting post about your personal experience.

          Anyway, I just quickly browsed through most of the comments and I found there’s too much overanalyzing.

          Once oil and coal decline 30 to 50 percent from the current supply, prepare for chaos that will lead to revolutions and wars.

          Stop overanalyzing. It’s unprecedented what humanity will be facing.

          • “Once oil and coal decline 30 to 50 percent from the current supply, prepare for chaos that will lead to revolutions and wars.”

            I think it depends on how quickly that happens, and if it impacts food and winter heat. I doubt people with full bellies and comfortable shelter are going to start a revolution. It seems that most people need the situation to be pretty bad, and the future equally or more bleak than the present, for them to decide to risk throwing away their lives trying to overthrow the government by force.

            As for wars, I am hopeful nuclear deterrence works and we avoid war on a global scale, since the masses are easily fooled into conventional war.

            The good news is, if we stay alive long enough, we’ll get real-world answers to our questions.

            • escravaisaurabr
              escravaisaurabr says:

              Matthew Krajcik,
              As I said, you don’t get it.

              An interesting debate that took place some years ago between Carl Sagan, the well-known astrophysicist, and Ernst Mayr, the grand old man of American biology. They were debating the possibility of finding intelligent life elsewhere in the universe.

              And Sagan, speaking from the point of view of an astrophysicist, pointed out that there are innumerable planets just like ours. There is no reason they shouldn’t have developed intelligent life.

              Mayr, from the point of view of a biologist, argued that it’s very unlikely that we’ll find any. And his reason was, he said, we have exactly one example: Earth. So let’s take a look at Earth. And what he basically argued is that intelligence is a kind of lethal mutation … you’re just not going to find intelligent life elsewhere, and you probably won’t find it here for very long either because it’s just a lethal mutation …

              He pointed out that if you take a look at biological success, which is essentially measured by how many of us are there, the organisms that do quite well are those that mutate very quickly, like bacteria, or those that are stuck in a fixed ecological niche, like beetles. They do fine. And they may survive the environmental crisis.

              But as you go up the scale of what we call intelligence, they are less and less successful. By the time you get to mammals, there are very few of them as compared with, say, insects.

              If nothing significant is done about it, and pretty quickly, then he will have been correct: human intelligence is indeed a lethal mutation. Maybe some humans will survive, but it will be scattered and nothing like a decent existence, and we’ll take a lot of the rest of the living world along with us.

              http://www.chomsky.info/talks/20100930.htm

            • “But as you go up the scale of what we call intelligence, they are less and less successful. By the time you get to mammals, there are very few of them as compared with, say, insects.”

              There are very few species of large mammals, because we exterminated most of the ones that are not useful to us. Less variety does not mean less success, it means more competition. And not the NFL kind of competition, but the thrive or go extinct kind.

              We do not adapt to our environment like normal animals, we adapt our environment to meet our needs. Whether we will continue to succeed or wipe ourselves out, I guess we’ll find out.

              As for aliens, I think people are way too optimistic on number of planets that can support life, and then way too optimistic on estimates of frequency of life occurring, and then way too optimistic on the frequency of tool-making animals. After all that, they then assume that those species will be able to travel at relativistic speeds or faster than light.

              What if 1 percent of light speed is the practical maximum for a ship full of people? In that case it would take us 50,000 years to get to Kepler 186F, which is supposed to be the most Earth-like planet we have detected. What are the odds the colonists make it and thrive? What are the odds we ever send another ship there? What are the odds the people on that planet ever make it back into the stars? How many people that have enough wealth to pay for a one-way trip for 50,000 years, would be willing to take those kind of risks?

          • Too much time spent on figuring out how to grow food and not enough on how to keeping the hungry out of the vegetable patch.

            I detect a fatal flaw in the strategy.

            • “Too much time spent on figuring out how to grow food and not enough on how to keeping the hungry out of the vegetable patch.”

              I don’t think it would be useful in anyway to spend extensive amounts of time discussing plans for shooting people, or coming up with ways to instill fear in people to keep them away from your property, or talking about how to set up trip mines around your property.

              If you want to learn about firearms, get a license if needed, take a course, spend some time on a range. You’re not going to learn that kind of stuff on the Internet.

              If you want to learn more, go join your nation’s military and get some experience blowing people up in real life, so you’ll be prepared, and maybe even have a network of like-minded individuals when the collapse happens.

            • You could always put up a ‘Private Farm – Do Not Enter – No Starving Hordes Allowed’ sign.

              Somehow I don’t see that being very effective.

            • Calista says:

              Let me see if I follow. You say it is a fatal error to focus on farming or gardening and should instead focus on defensive ability because if I have food someone will kill me for it?

              Am following that right?

              Ok so let’s say that is correct. What happens after I’m killed for my food? The people with the guns eat my food. What happens after that? They don’t know how to manage or use my water system so they get a parasite or they find that I only have grain stored because I grow my veggies fresh year ’round and they don’t know how to do that with the yields they need so they end up malnourished.

              So they have a few of their group die and they move onto the next farmer’s land, kill him and repeat the same exercise. This doesn’t strike me as a long-term winning strategy.

              Maybe they take him hostage instead and make him work for them or teach them how to farm. Right? That would be the better move?

              I can guarantee you two things. 1) They will not learn enough to grow their own food in a season or two and keep from severe malnourishment 2) they will not stay alive long enough for the farmer to finish teaching them that because I guarantee each and every one of them will have a strange illness or an accident over the next year or so if they killed a friend or family member of that farmer or his neighbor.

              So please tell me what the fatal flaw is?

              If instead they come begging and offer to trade labor for shelter and food they’ll learn from that farmer and become part of the family. If they kill for that food, longer-term that is not a winning strategy in my mind.

              And yes, I’m excepting the extremely idiotic gangs in the inner cities with no concept of the time-frame it takes for food to be grown much less how to save seeds, prepare food safely, some herbs for parasites or nutritional deficiencies. (I don’t expect them to travel very far from the cities)

              So please, again, tell me what that fatal flaw is? Have you ever been to farm country? Do you know what a tight-knit community means?

            • Don Stewart says:

              Dear Calista and Wee Willy and All

              I am taking my grandchildren to vist a homesteader not too far from where they live in the City. Part of my purpose is to let them practice the skills which make them employable at Google (creative problem solving, intelligence), part is to get them to think just a little about survival in a tougher world, and part is just the pleasure of going to a nearby, faraway land. The homesteader is a 50ish female, living alone. Not a lot of money. Here is her brief statement:

              ‘My biggest directive is daylight and temperatures, and of course whether it will rain or not. I do not have running hot water and to some extent no running water. What water I have I haul from about 200’ away. I do have electricity although I’m slowly weaning myself from it. I have to read for all the plumbing, electrical, and solar projects I do here…the gardening comes naturally. I have satellite for the computer and a cell phone. I rely on allthe locals here, no exceptions. Most are men and my women support group, while a large group, still don’t understand me. The men think I’m a cowboy for whatever that gets me. I feel like I have a huge industrial infrastructure (I have water and have electricity) but I’m sure it’s relative and especially when folks ask me how long I’ve been living like THIS. My day is filled with reading, writing, building, maintaining, growing, and reaching out to folks who know a helluva lot more than me.

              Think basic…when to take a shower based on the hottest part of the day, where to take a shower based on latent heat or where the runoff can water plants…enough time to see to cook dinner, even down to when the mosquitos come out in highest numbers, or how to keep my stuff from raccoons, ants, bugs of all kinds. I now know exactly and almost to the day how long it will take a pile of straw to attract rodents which then attract the rattlesnakes…that to me is really good information since I am surrounded in my best insulation – straw and styrofoam. I’m shrouded in trees which is something you might not have guessed and that has its benefits in the heat of the summer….I work outside in the summer long days while others are having to be air conditioned. I am currently working on my second and possibly third kitchen because I am weaning myself from my little hotplate to either a propane gas stove or solar oven or cob oven or rocket stove. Multiple function areas are necessary to be able to avoid some of the annoyances of cooking oats’

              Notice her statement about dependence on ALL OF THE LOCALS HERE. I think it is impossible to reconcile the statements about dog eat dog competition with the actual facts of small scale farming and gardening. If outsiders begin to create trouble, I agree with Calista that ‘accidents’ will happen to them.

              Don Stewart

            • Don – now that’s the spirit!

              When she refers to ALL THE LOCALS, are all the locals (and I don’t mean a few here and there I mean all or at least the majority) moving in the direction she is moving?

              Because if most are not then those locals will be a big problem when they have nothing and a few people are self-sufficient with little to spare.

              I continue to see Edo Japan glorified as a utopian civilization, a bright shining light that supposedly exemplifies the true human nature i.e. that we are pacifists at heart rather than brutally violent (but able to suppress this nature when the circumstances permit)

              The problem I think that any anthropologist would have with this research (I have not bothered to read it so cannot comment on specifics but I am sure some anthropologists would challenge the utopian designation of Edo Japan) would be that it is a single instance of a seemingly pacifist civilization; it is anecdotal.

              And as we know, any good scientist would, in attempting to determine if this is our true human nature, study hundreds if not thousands of other communities throughout history and compare them to Edo.

              They would probably use some sort of measure of violence perhaps digging through graves of the dead and determining cause of death and adding up those killed violently, calculating the number of tools of war found per a given population. Things like that.

              Then they would compare those findings with Edo and try to determine if Edo was a fair indication of the nature of societies over time, or if it was an aberration, and that human nature throughout history has been almost exclusively extremely violent marked by continuous wars between communities and nations.

              In short, I wouldn’t put too much faith in the future looking like Edo. The odds are far lower than winning the lottery.

    • Rodster says:

      “When people lose everything and have nothing else to lose, they lose it”

      – Gerald Celente

    • “Quite a few people have written about the supposed human predilection for violence. I have a couple of suggestions.

      First, review the Scientific American interview with Steven Pinker, talking about the very great reduction in violence over the past centuries and past decades.”

      I suspect our age of abundance can be directly linked to declining violence. Scarcity makes parents stressed, which leads to more yelling at and hitting their kids, which causes their development towards more aggression, capacity for violence, how they handle stress and anxiety, etc.

      Less stress due to abundance leads to “better parenting” (subjective when considered in a Darwinian sense if the system is about to collapse) leads to children with less aggression, leads to less violent crime.

    • interguru
      interguru says:

      The reduction of violence Steven Pinker documents is coincident with the era of abundant resources and energy of the last few centuries. I suspect that when resources and energy get tight, that we humans will revert to our earlier violent ways.

      We already have seen what the economic hard times of the great depression produced. The beginning of resource shortages in the last few decades correlates with the increased nastiness of politics worldwide.

    • I agree with earlier comments, if we are indeed ‘getting along’ a little better it is because we have had a 200 year period of relative abundance as a result of tapping into fossil fuel resources.

      For instance, who needs to enslave millions of Africans when we have petrol to do the work? Petrol does not fight back nor run away, it does not eat, and it never gets sick.

      When the oil stops flowing, let’s see how we get along.

      • I talked about collapse with a individual this summer. He said that if collapse occurred he had a plan. He had established a remote camp as remote as he could find. He stated his intention was that if collapse was to occur he would kill anyone that came close to his camp with no words spoken for three years and after that he would leave his camp and see if any sort of society had occurred to participate in. Would he carry out his spoken words? Who knows. While I do not agree with his intentions I understand his logic. At least he was honest enough to express his intentions. There is a lot of people prepared to do the same in their hearts who do not speak of it.

        How can you grow food if the countryside is full of armed hungry people? Are you going to be out in the day uncamouflaged gardening away? Gardening is pretty hard work in a ghilly suit. Sure your security team has the edge they dont have to move. The dilemma is this. There is just too many people and too many guns. Sure the security team will eliminate the threat but there will also be one less gardener. Who wants to run security today? Ten hands raised . Who wants to garden today? No hands raised. If your security team can establish say a two kilometer perimeter it might work but can you feed that team if they are able to look after their own security needs?

        What seems clear is that if fossil fuel ends there will not be enough food to go around. All these exceptional people and not enough food. Except for long pork. If law and order cease then who eats and who starves will be determined by the 300 million firearms in the USA. Perhaps there are communities where the majority of population consists of people better than that who are isolated from the majority. Alaska comes to mind. as place where there is a possibility of eliminating predatory individuals and groups fairly quickly and establishing some sort of society.

        The herd is going to get thinned if collapse occurs, say 99%.. The content of what is left will consist of what the majority of the people competent in combat were. I am not convinced that this majority will be caring individuals. It night or might not be. The street gangs train. The biker gangs train. Religious groups of all flavors train. The military and ex military train.
        If the military and ex military band together it seems clear to me that they will dominate. Intelligence training ability and experience make for superior combat effectiveness. That might be what happens. Military,ex military and their families eat , everyone else, not so much. Whether the military really shares enough commonality to band together post collapse is a question. Putting up with the the nastiness of the military for a couple of years is one thing. Common demographics historically is what has provided cohesiveness. With the criminal gangs there is no question they will band and fight to the last and pull from their demographic pool.

        At some point someone is going to have to grow some food. At some point that will become what everyone is doing and then maybe just maybe some of the more admirable human qualities can emerge. I Imagine that will be measured in decades after collapse not years.

        If there is a god a plague will occur that will spare the blood spilling of human on human. The situation of the human dilemma is quite cruel. Our ability to experience compassion and our inability to achieve a society that practices it. Why so many veterans who put in good service putting a bullet in their head? One thing is clear there is no point obsessing on collapse. My advise is cherish your humanity. If you have a full belly you are blessed. If your body is sound you are blessed. Not all are so lucky.

  38. Quitollis says:

    Bill Vallicella argues that competition is a species of cooperation. He seems to mean lefties when he says “liberals”. To my mind he is a liberal, and he is talking about how constrained ‘competition’ works in a liberal society.

    I would say that cooperation is rather a species of competition as the lefties and liberals will find out once scarcity returns to the West. The world is essentially competitive because it is finite and scarcity always returns. There is never enough to go around in the long term, so we have to struggle for what we can get.

    In fact that is how evolution itself works. Cooperation is an evolutionary (competitive) strategy that presents advantages but always within the constraints imposed by scarcity.

    Unbridled cooperation is an otherworldly mentality, an idealistic pacifist scenario that is detached from how the world really is. “Oh if only the world were different and the whole world could share a Coke in perfect harmony! That would be a real leftist party!”

    Medieval “ethics” actually considered “competitiveness” to be a “sin”. I suspect that people are often unaware of how our thought is still dominated by the dualisms of medieval moral psychology.

    https://www.youtube.com/watch?v=ib-Qiyklq-Q

    http://maverickphilosopher.typepad.com/maverick_philosopher/2012/03/cooperation-and-competition.html

    Liberals tend to oppose cooperation to competition, and vice versa, as if they excluded each other. “We need more cooperation and less competition.” One frequently hears that from liberals. But competition is a form of cooperation. As such, it cannot be opposed to cooperation. One cannot oppose a species to its genus.

    Consider competitive games and sports. The chess player aims to beat his opponent, and he expects his opponent to share this aim: No serious player enjoys beating someone who is not doing his best to beat him. But the competition is predicated upon cooperation and is impossible without it. There are the rules of the game and the various protocols governing behavior at the board. These are agreed upon and respected by the players and they form the cooperative context in which the competition unfolds. We must work together (co-operate) for one of us to emerge the victor. And in this competitive cooperation both of us are benefited.

    Is there any competitive game or sport for which this does not hold? At the Boston Marathon in 1980, a meshuggeneh lady by the name of Rosie Ruiz jumped into the race ahead of the female leaders and before the finish line. She seemed to many to have won the race in the female category. But she was soon disqualified. She wasn’t competing because she wasn’t cooperating. Cooperation is a necessary condition of competition.

    In the business world, competition is fierce indeed. But even here it presupposes cooperation. Fed Ex aims to cut into UPS’ business — but not by assassinating their drivers. If Fed Ex did this, it would be out of business. It would lose favor with the public, and the police and regulatory agencies would be on its case. The refusal to cooperate would make it uncompetitive. ‘Cut throat’ competition does not pay in the long run and makes the ‘cut throat’ uncompetitive.

    If you and I are competing for the same job, are we cooperating with each other? Yes, in the sense that our behavior is rule-governed. We agree to accept the rules and we work together so that the better of us gets the appointment. The prosecution and the defense, though in opposition to each other, must cooperate if the trial is to proceed. And similarly in other cases.

    Is assassination or war a counterexample to my thesis? Suppose two warring factions are ‘competing’ for Lebensraum in a no-holds-barred manner. If this counts as a case of competition, then this may be a counterexample to my thesis. But it is not that clear that the Nazis, say, were competing with the Poles for Lebensraum. This needs further thought. Of course, if the counterexample is judged to be genuine, I can simply restrict my thesis to forms of competition short of all-out annihilatory war. Or I could say that rule-governed competition is a species of cooperation.

    Competition, then, contrary to liberal dogma, is not opposed to cooperation. Moreover, competition is good in that it breeds excellence, a point unappreciated, or insufficiently appreciated, by liberals. This marvellous technology we bloggers use every day — how do our liberal friends think it arose? Do they have any idea why it is so inexpensive? Competition!

    Not only does competition make you better than you would have been without it, it humbles you. It puts you in your place. It assigns you your rightful position in life’s hierarchy. And life is hierarchical. The levellers may not like it but hierarchies have a way of reestablishing themselves.

    • “Competition, then, contrary to liberal dogma, is not opposed to cooperation. ”

      I don’t think your definition of cooperation is in line with most people. You don’t choose to “cooperate” with the other player (unless you are rigging a match) or with the people you are competing against for a job, or against another company.

      In each situation, there is a “higher power”, that has a monopoly on violence. If you cheat at the sport, you will be banned. If you use “cut throat” business tactics, the regulators will get you. If you kill people, you will be executed or at least imprisoned. It is not cooperation with your competitor, it is obedience to authority.

      • Quitollis says:

        “Competition, then, contrary to liberal dogma, is not opposed to cooperation. ”

        Hi Matt, that was Bill Vallicella’s statement but I would probably agree with it, except that I would rather say that Bill supports liberal dogma.

        Co-operate literally means simply to work together, from the late Latin cooperatus, co- together, operate- work.

        I do not think that the presence of regulatory authority is contrary to cooperation (or to limited competition), rather authority often facilitates both. Nor does authority negate consent as the terms of the regulation are agreed in advance.

        According to classical liberal doctrine we all consent to the regulatory terms offered by our society as a part of the social contract. The same goes for football players. Cooperation would be difficult without an agreement on the rules.

        Early British liberal philosophers around the time of the civil war and the rise of parliament asked how law could be justified without an appeal to the divine right of kings, and they concluded that regulatory law is simply agreed to as a part of the social contract so that citizens could then have the freedom to pursue their own prosperity.

        It is a ‘utilitarian’ argument typical of liberalism, we accept authority because of its value for the citizens.

        Liberals see authority as a precondition of freedom. Otherwise you are left with chaos and anarchy, the rule of the jungle rather than co-operation.

        There is a certain dialectical unity to the polar liberal concepts. Authority makes liberty possible, liberty makes authority possible, co-operation makes competition possible, competition makes co-operation possible. I would guess that they are all facets of social “struggle”.

        Liberalism works pretty well on its own terms but it is difficult to see how it will fare under severe pressure once scarcity. The social contract is often under pressure these days, just because of austerity, let alone when people start to stave.

        Liberalism is partly about courtesy and civility (things that I value myself). I would not class myself as a liberal but I think that liberalism has got a lot going for it.

        The nocturnes of Chopin perhaps embody the bourgeois ideal of liberalism best for me, although in truth they probably owe more to the preceding aristocratic culture.

        It would be harsh to judge liberalism when it has likely run its course. The Coke advert video was probably a bit harsh of me.

        • This whole idea of consenting to the social contract and thus agreeing to regulation seems odd. There is no choice to no “agree” to the social contract; there is no practical frontier outside of government control that a person can move to, and if you “break the contract”, you will be punished.

          I suppose professional sports are not true “competition”, since both players/teams are working together to create entertainment for profit.

          To clarify how the words are commonly understood:
          Competition:
          Competition in biology, ecology, and sociology, is a contest between organisms, animals, individuals, groups, etc., for territory, a niche, or a location of resources, for resources and goods, mates, for prestige, recognition, awards, or group or social status, for leadership. Competition is the opposite of cooperation.

          Cooperation:
          Cooperation is the process of groups of organisms working or acting together for their common/mutual benefit, as opposed to working in competition for selfish benefit.

          Social Contract:
          Social contract arguments typically posit that individuals have consented, either explicitly or tacitly, to surrender some of their freedoms and submit to the authority of the ruler or magistrate, in exchange for protection of their remaining rights.

          Tacit:
          implied or indicated (as by an act or by silence) but not actually expressed

          Explicit:
          stated clearly and in detail, leaving no room for confusion or doubt.

          So, if I directly state I do not consent to surrender any of my freedoms, does that mean the social contract no longer applies? There is no mechanism to “opt out”. If you try to do so, violence will be used to bring you back into compliance.

          I suspect what happens when there is scarcity, is that the unit of society will be reduced to the largest unit that is still capable of sustaining itself. Depending on how rapid the decline, there could be overshoot, where things collapse into “every man for himself” situations, but I think that people will re-organize into larger societies, such as city-states. As a group, they will cooperate with each other, while competing with outsiders. When the population/demand falls enough that scarcity is no longer a severe problem, the city-states can co-operate and form a hegemony or a federation.

          • Quitollis says:

            Matt, good definitions, helpful.

            In capitalism, we may compete “for our own benefit” and some companies will lose out but on the whole competition increases efficiency and creates a bigger economy and that is generally “mutually beneficial”, so it is in the end co-operation as well as competition. True, the distribution is not equally beneficial but all do benefit from the economy. Benefits do not have to be equal for co-operation to be mutually beneficial. We all live like kings with all mod cons compared to previous generations, thanks to capitalism, so on the whole it is a co-operative, mutually beneficial project. People can co-operate when in the end no benefit is had at all, if they fail, but they still co-operated, especially if in general mutual, if not equal, benefit will be had, which is true of capitalism.

            We can extend the idea to say that even evolutionary competition is in a sense co-operative, because some may lose out but the species, on the whole, benefits by better adaptation. It is generally beneficial while not universally beneficial. It is like if a group of people co-operate in an adventure, and agree to share all of the spoils, but some die along the way, while foreseeing that possibility, it is still mutually beneficial, in general, even if some lose their lives. I extend the idea of co-operation beyond explicit conscious agreement however, I see it essentially as the behaviour of species, whether it is conscious and thoroughly thought out or not.

            Yes, consent to the social contract is explicit or tacit. The opt out clause is a problem, I agree. But the good thing about capitalism is that you can do what you like, you can start up your own business or your own co-operative if you like, thousands do it, but you cannot force everyone else to do the same, or for everyone else to agree to nationalisation or whatever. If consent means that we have to be able to choose to live in any kind of society that we like, where everyone else joins in the way that we want, then we never consent. I guess that is just how it is.

            People used to say to communists, well if you want to live in a communist society then why don’t you just go to Russia? which I think was a little harsh. But the point is that our options are inevitably limited, and we have to make the best of what is on offer — and liberal societies are generally consensual, even if consent is rarely total and perfect. Most people would not vote to live in a communist society. Communists anticipate the hope that capitalism will eventually go into such a severe crisis that enough people will choose communism, to get capitalism when it is as its worst, so to say, but in general capitalism has continued to increase living standards beyond those enjoyed by any generation in history. The alternative of communism made capitalism more consensual, in the sense that people generally could have chosen the alternative but they generally did not.

            Tacit consent can be taken as implicit or inchoate, in the sense that a lot of people take their society for granted as the way that things just are. They probably never worry about whether they have chosen or whether they have other options. The choice issue is not a problem for them. But as long as people generally benefit from the economy, people will generally be cool with it.

            As I said, I do not class myself as a liberal (it is unsustainable, dysgenic etc.) but I do think that capitalism has on the whole been mutually beneficial.

            • “We all live like kings with all mod cons compared to previous generations, thanks to capitalism,”

              I would replace the word “capitalism” with “fossil fuels”. And we only live better than kings of yore while we have the fossil fuels.

              “you can start up your own business or your own co-operative if you like,”

              Provided the regulations allow for that business, you have sufficient resources to overcome the imposed barriers to entry, and your competitors do not use unfair means to run you out of business.

              “The alternative of communism made capitalism more consensual, in the sense that people generally could have chosen the alternative but they generally did not.”

              You get to choose Pepsi or Coke. You get to choose Republican or Democrat. You get to choose Blue or Red. See, you have so much freedom to choose! If the choices have been selected down to two pre-selected options, and all other choices are removed, is it still a choice?

          • “I suppose professional sports are not true “competition”, since both players/teams are working together to create entertainment for profit.”

            I urge you to attend an NFL combine as a walk on to test this theory. I believe teams hold these in the summer prior to training camp and anyone can simply show up and try out for the team.

            Sports is the best example there is of competition at work, survival of the fittest (the worlds of business, the military and gangsters are also good examples)

            Regardless of the sport, the weak are weeded out starting at a very young age. And the weeding continues and is fiercest when one reaches the pro ranks of any sport.

            One does not obtain a place on a pro sports team without being able to compete at the very highest level.

            Of course, once the team has been chosen the members must cooperate, yet they continue to compete as they take on other teams.

            But then I only borrow from Q who has made the excellent point that cooperation is the side-show to competition.

            If you make the Oakland Raiders football team, you will cooperate with your team mates, but in the back of your mind the real driver is survival i.e. you know that if you fail to perform or you are injured, there are 100 other men chomping at the bit to fill your shoes).

            Survival in the team context of course means a hefty paycheck which means you can obtain a larger share of the world’s finite resources.

            This applies to each and every one of us but is most evident in the world of professional sports. We are all always competing. And sometimes cooperating.

            • bandits101
              bandits says:

              Competing is for times of plenty. Cooperation is for times of hardship and scarcity until self preservation takes over. That’s why in burning buildings the slow, young and females get trampled and pile up at the exits. Later we had religious wars and genocide. If you are going to go to war you had better be well fed and resourced. Famines don’t appear to result in wholesale slaughter, maybe there is local or individual pilfering, that is self preservation. Usually famines result in great die-off’s, as everyone is “in the same boat”, they don’t have the energy or wherewithal to fight. Native wars and battles were mostly about breeding, or even captives for sacrifice.

              What if water is required to grow food and your neighbours appear to have enough for your needs? What if energy is required to grow the food, as in slaves or energy slaves? Would that be self preservation? What if cooperation simply dooms everyone? Conquering to get slaves was also for time of plenty. I think if there is any conquering in the future it will probably be to eat the slaves. Globalization seems to have put us all “in the same boat”. Probably like a doomed submarine with no hope of rescue at the bottom of the ocean, or miners trapped. Running around slaughtering everyone is not going to make a hell of a lot of difference. But if there is some light at the end of the tunnel and surviving means just getting to the next season for example, self preservation can do a lot of damage, ergo The Donner Party if that is a worthwhile example. We can have a lot of fun discussing this but mostly human behaviour is fairly predictable with small numbers but fifty years after WWII, we are still discussing what went on in the NAZI death camps, what it took for prisoners to survive and what motivated the guards and death squads.

            • Interguru says:

              “America is by far the most violent country on earth. It has the most weapons. It’s culture is steeped in violence. Violence is celebrated.”

              Really? Take a trip to Pakistan, Yemen or Sudan

            • Here’s a comparison:

              Violent crime > Gun crime per 100 residents

              Pakistan: Ranked 55th.
              America: Ranked 1st. 8 times more than Pakistan

              When examining violent crime in Pakistan, Yemen, does one include the illegal drone attacks that kill significant numbers of innocent people every year? Or does that stat go under the numbers for domestic violence in America? The research was not clear.

            • Ed – I am interested in energy issues.
              edpell says:

              Law only exist if enforcement exists. Otherwise it is just philosophy or religion. The only thing that limits the actions of the U.S. military are the nuclear weapons of Russia and China. There is no international law.

            • Rodster says:

              And peaceful communities exist if there is a rule of law. When society collapses it’s everyone for themselves. Those who have will be hunted by those who don’t have.

            • That is a simple yet excellent summary of this issue. I would only add that rule of law can only exist if a community is able to police it’s members, and defend against other communities.

              And because communities are always growing outstripping resources, there always have been and always will be conflicts between communities, regardless if they have rule of law or not.

            • Rodster says:

              And peaceful communities exist if there is a rule of law. When society collapses it’s everyone for themselves. Those who have will be hunted by those who don’t have.

            • B9K9 says:

              If we require a 20:1 population reduction to reach any semblance of equilibrium (notwithstanding spent nuke fuel rods), then we can extend that projection to other assets as well. For example, 20:1 reduction in operable cars, 20:1 occupied homes, etc. So, in the near term, there will be plenty of inventory in which to, ahem, cannibalize in order to keep the remaining stock operating.

              However, what is troubling is M1’s comment that conifers make very poor fuel for smoking and preserving meat. Now, that is really going to put a crimp on things, while millions of abandoned homes will present an incredible store of energy, they are all made from douglas fir, which may very well prove to be unsuitable in preserving their late inhabitants for future consumption.

              So, perhaps the solution is salt – like a good ham. Just another reason to live by the coast.

            • Les – Houston, TX
              Les says:

              I wonder where you got those comparisons? For intentional homicides–probably the clearest and most reliable violent crime statistic–the U.S. appears to be ranked 111 compared to Pakistan’s 84, with close to twice the murder rate in the U.S.

              Of course, a more significant comparison for the U.S. would be Canada, which is 170.

              Honduras is the clear “winner” in this comparison with something like 20 times the murder rate seen in the U.S.

              https://en.wikipedia.org/wiki/List_of_countries_by_intentional_homicide_rate

      • But the authority only exists because the players at some point agreed that it should exist. The reason they agree is because establishing rules allows competition to happen.

        If business did not have rules, the game would be destroyed because everyone would be cheating, killing and robbing each other, etc…

        If sports had no agreed authority then the players would be carrying knives onto the pitch and sticking them into each other.

        The participants understand that in order to have competition there need to be rules. Therefore agreements on authority (cooperation) is an expected outcome of competition.

    • Some super myth-busting insights. Thanks for that

      With respect to the rats in the barn consuming and breeding until all the food is gone, I was thinking of a fly in the ointment with respect to the human species.

      Specifically, that the most affluent societies, the ones that can replenish the food in their barns endlessly, are experiencing slowing population growth rates (Japan’s population is actually reducing http://www.zerohedge.com/news/2015-01-02/death-nation-japanese-births-drop-lowest-ever-deaths-hit-all-time-high)

      The behavioral sink theory I do not think explains this because there are places with very high population densities that continue to experience high population growth rates when compared to the countries where population growth is slowing.

      Does anyone have any thoughts on what might be causing the species to sometimes not follow the ‘rats in the barn’ pattern?

      • bandits101
        Bandits says:

        I’ll have a crack………..
        The very high density populations use less resources. The richer, mostly larger countries consume the resources of their own countries and of other countries to support the middles classes (upper, middle, lower). They are the populations that choose to have fewer offspring. The very poor and wealthy continue to reproduce at non sustainable levels.

        The wealthy counties tend to consume the “higher end” products like beef, salmon, tuna, crayfish, caviar, fruit and vegetables out of season, chocolate, ice cream, big screen TV’s, boats and fancy automobiles etc. They are not eating all the grain in the barn but they are consuming the peripherals that allow the grain to be placed in the barn. If the middle classes reproduced at the same rate as the poor and wealthy there certainly wouldn’t be enough to continue in the lifestyle to which they have become accustomed…so to speak.

        A lot has changed over the past one hundred odd years, the ratio of city dwellers to those working in agriculture has flipped completely and we can never go back, or to be a little more precise, reverse the situation again for obvious reasons. The grain in the barn is of course finite, if it is a slow collapse the amount of grain delivered will drop and keep dropping to below population sustainable levels. If the collapse is sudden and catastrophic, we are left with our imaginations as to what transpires.

  39. Rodster says:

    To show how bad a global infinite growth economic system really is in a “finite world”. This according to Zero Hedge, meet Ghost Factories brought to you by….. That’s right, China !

    The same Nation that brought you Ghost Cities. Apparently, they are so scared of any type of slowdown in their economy that they just mfg stuff just to keep their citizens from figuring out something is wrong or “som ting wong”.

    http://www.zerohedge.com/news/2015-01-02/chinas-illusion-prosperity-exposed-forget-ghost-cities-meet-ghost-factories

  40. http://www.theautomaticearth.com/the-meaning-of-your-life-is-other-people/

    I liked this part of an article from the link above, written by Raul Ilargi.

    “Our economic system reflects, and appeals to, the part of our brain that tells us to outdo others, not cooperate with them.

    Of course this is a complex issue, if only because our brains just happen to be made up of different parts. Still, if we are ever to enable the newest part of it, that which makes us human, and sets us apart from our non-human ancestors, from the simplest amoeba to far more advanced primates, to take control, if we are ever to achieve that, we will first have to recognize things for what they are. And then act on that.

    Endless and forever competition from our earliest childhood days all the way to our graves clearly doesn’t seem the way to go. Look around you. It makes us destructive beings. It makes us unkind to each other, and distant from one another. Those are the very things that tear apart the social fabric our very biology says we need. If we don’t make a strong conscious effort to allow our ‘human brain’ to control our ‘animal brain’, we have no chance, we will be lost. Today, what we do is use our human intelligence to amplify the destructive properties of our animal brain.”

    It makes for interesting conjecture as to what part of the brain we really should be setting the rules of society for the best interaction of people and long term health of the planet. We need to start thinking in higher terms or at least consider them post collapse.

    • Stefeun says:

      Stilgar,
      Thanks for this nice article, even though I somewhat disagree with the title: IMO, the meaning of life is to dissipate energy, life is a by-product of the energy flow, nothing more (my opinion only!).

      However, I’ve been worrying about why we are trapped in this destructive competition at all levels, despite our rational brain and all the social rules. My preliminary conclusion is that cooperation needs:
      – stability (which implies a low-energy system), and
      – boundaries (skin of the body, borders of a country,…) with cooperation inside, and competition outside.
      So for a global cooperation, maybe we’d just have to find a global enemy..?

      • Don Stewart says:

        Dear Stefeun
        Let me shift the focus to corporations. Corporations are carefully crafted to promote cooperation inside the skin, with carefully controlled competition inside the skin. For example, the store managers in Wal-Mart compete for promotion to District Manager, but the corporation does not permit cut-throat competition which would help one store at the expense of another store. For example, they will place them a minimum distance apart.

        It is mostly futile to think about France co-operating with China. Neither China nor France are capable of producing very much. Both countries are capable of destroying quite a bit, but not of being creative. Total in France or Fox-Conn in China may be creative, but they are not bound by the geographic boundaries of the country they happen to be headquartered in.

        Global capitalism, dominated by gigantic corporations, is probably more co-operative than the world has ever seen. But the global corporation reduces its employees to atoms. They co-ooperate at work, but not in the neighborhood. All the neighbors do is ‘shopping’, which has no co-operative element.

        Don Stewart

        • Stefeun says:

          Don,
          it’s a very complex topic, as there are many levels interconnected.
          I agree that global capitalism can be considered as the biggest example of cooperation, but then the competition switches from horizontal (a company Vs another company) to vertical (high-ranking Vs low-ranking) and we know who the winners are: the owners of the capital.
          The employees are not really part of the business, they just rent their working-time.

          I don’t remember who said that we currently have communism for the elites and wild liberalism for the rest of us.
          I didn’t say that the “global enemy” was easy to find…

    • Quitollis says:

      Is there any scientific proof to support the claim that competition and cooperation use “different parts of the brain” and that the part responsible for cooperation is “newer” and is what makes us “human”? It sounds like a bizarre thesis that someone has just made up as they went along.

      • Don Stewart says:

        Dear Quitollis

        From Wikipedia:
        Oxytocin (/ˌɒksɨˈtoʊsɪn/; Oxt) is a mammalian neurohypophysial hormone. Produced by the hypothalamus and stored and secreted by the posterior pituitary gland, oxytocin acts primarily as a neuromodulator in the brain.

        Oxytocin plays an important role in the neuroanatomy of intimacy, specifically in sexual reproduction of both sexes, in particular during and after childbirth; its name comes from Greek ὀξύς, oksys “swift” and τόκος, tokos “birth.” It is released in large amounts after distension of the cervix and uterus during labor, facilitating birth, maternal bonding, and, after stimulation of the nipples, lactation. Both childbirth and milk ejection result from positive feedback mechanisms.[3]

        Recent studies have begun to investigate oxytocin’s role in various behaviors, including orgasm, social recognition, pair bonding, anxiety, and maternal behaviors.[4] For this reason, it is sometimes referred to as the “bonding hormone”. There is some evidence that oxytocin promotes ethnocentric behavior, incorporating the trust and empathy of in-groups with their suspicion and rejection of outsiders.[5] Furthermore, genetic differences in the oxytocin receptor gene (OXTR) have been associated with maladaptive social traits such as aggressive behaviour.[6]

        Back to me. Since it is specifically ‘mammalian’, I assume recently evolved.

        Don Stewart

        • Quitollis says:

          Don, we separated from cats and dogs 95 million years ago, oxytocin cannot be what makes us human.

          Oxytocin is involved in family/ group/ national/ species competition as well as in-group cooperation, so it is not true that it is a different part of the brain. There is a sense in which we cooperate in order to compete. They are two facets of the survival struggle. It is all ultimately comes down to competition; cooperation is a competition strategy. The management and workers of a company cooperate in order to compete with those of another. The citizens of a country cooperate to compete with others. People cooperate to counter the threat posed by other species. Humans work with a balance between the two, it would be wrong to say that one is more human than the other. They are both a part of what it is to be human. Too much of either can harm.

          • Don Stewart says:

            Dear Quitollis
            The best lecture I know on the question of ‘unique’ human attributes is by Robert Sapolsky. He gave the lecture at Stanford, and it is recorded on YouTube. It turns out that there is very little that is uniquely human. For example, wolves cooperate in fluid hunting packs. I don’t know if you would call what bees do ‘cooperation’. Sapolsky concluded that humans may be uniquely able to hold two conflicting ideas in mind at the same time. I certainly have not done any research which would allow me to argue that he is right or wrong.

            What I do see is that the oxytocin mediation in a group which is working together is important…and Wikipedia says it is a recent evolutionary development. I would make a qualitative distinction between a short term cooperative effort and a fairly stable pattern of cooperation. A group which works together and achieves something becomes more stable. It does not dissolve at the first sign that ‘every man for himself’ might be a better short term strategy. I think that this sort of stability is important in terms of achieving longer term objectives. And oxytocin plays a role.

            Whether you want to say that it is all about competition is up to you. I would probably say that all of us are fighting against entropy, and sometimes, if we are lucky, form partnerships along the way. Entropy, of course, always wins in the end.

            Don Stewart

            • Quitollis says:

              Interesting stuff Don, thanks.

            • Ed – I am interested in energy issues.
              edpell says:

              Don, germ cells are an unbroken line of life back to its very beginning. Life at least holds its own.

            • Ed – I am interested in energy issues.
              edpell says:

              Don, of course cooperation is pervasive in human life. Parents care for children. Grown children care for aged parents. The clan defends the clan.

              But cooperation has to have limits. I do not cooperate with the lion that wishes to eat me. I do not cooperate with the neighboring clans that wishes to displace my clan. I do not cooperate with wars that seek to enrich the rich at my clans expense.

              The oxytocin programming starts young. Pledge allegiance to the flag, pep rallies, football games, veterans day, national flags all over the place. Military fighter planes flying over the football stadium….

              But interesting accepting being displaced by new comers is also programmed for. No loyalty to self, no loyalty to neighbors, no loyalty coworkers, no loyalty to class, no loyalty to race, no loyalty to creed, no loyalty to national origin, no loyalty to sexual preference is allowed. Loyalty only to the master class and its duly appointed representatives the police, the military, the politicians.

      • Stefeun says:

        Quitollis,
        No, there are many examples of cooperation without any brain, of course.

        I think what Raul Ilargi means is that our neocortex should give us humans the ability to control our behaviour.
        My opinion is that it’s already very difficult to keep control at the individual level, then for an entire population we can expect it to behave like any other species.

        • Quitollis says:

          Stefeun, you are probably right. We often cannot even control our own waistline, yet the global economy is unsurpassed. Capitalism is a marvel in the way that competition allows an entire economy to effectively organise and in a sense to cooperate. It could be said that competition is the best economic cooperation strategy, just as cooperation is often the best competition strategy. We can say what we want about it but it has been a miracle of human prosperity. Of course it has its limits, the same as the world as a whole.

  41. Don Stewart says:

    Dear Gail and All
    You get to vote!

    The link above to the charts showing that German production growth has been due mostly to capital (infrastructure), secondly to current energy use, and not at all to increased labor, can be used to support several different theories.

    Gail Tverberg: Yes, but the infrastructure can’t be operated without oil, and so, as oil disappears in the very near future, all that infrastructure becomes worthless and so production will crash to only what can be produced by labor.

    John Michael Greer: This chart supports my theory of catabolic collapse. It is clearly the infrastructure which keeps things humming. As we have less to spend maintaining that infrastructure, we will see continuing declines in production. Final collapse may take a hundred years.

    Permaculture: Since either Tverberg or Greer is going to turn out to be right, the thing to do is to invest in Natural Capital which is not dependent on the industrial system. Things such as fertile soil and trees and earthworks to manage water. Also human capital such as the skills needed to grow food and make simple tools.

    In order to vote, you stake your future on one of the three. This is called You Bet Your Life.

    Don Stewart

  42. SymbolikGirl says:

    Hi Gail and Everyone,

    I found this article regarding the role of Energy and Oil in economic systems from the standpoint of Thermodynamics. I really enjoyed how it outlines the critical role that they play in the interconnected economies of the world and how sensitive economic systems are to a reduction of energy inputs or EROI.

    http://phys.org/news/2014-12-thermodynamic-analysis-reveals-large-overlooked.html

    • SymbolikGirl says:

      and I just realized that this was posted like three comments above, sorry for the repetition!

      • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
        Gail Tverberg says:

        A little redundancy doesn’t hurt. Thanks!

        • It might be appropriate to mention the late economic thermodynamicist Nicholas Georgescu-Roegen as an excuse to start following posts

          • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
            Gail Tverberg says:

            I have not been a follower of Nicholas Georgescu-Roegen, I am afraid. As I understand the situation, he is talking about second law of thermodynamics to prove that you can’t get more energy out than you put in. In fact, when energy is used, some of it is transformed to heat. Unless cogeneration is used, that heat energy is lost. If that were the only force at work, the world would have long ago have become a dead planet.

            The second law of thermodynamics applies to a closed system. We live in an open system–one that generates dissipative structures like human beings and civilizations to better dissipate the energy that is available. Our ability to stop the process is pretty minimal, I am afraid.

  43. Quitollis says:

    (AGW, agriculture, demographics)

    Some news, agriculture may be more fruitful in more northerly latitudes should global warming take effect. This suggests that northern Europe and Canada may become more hospitable even as southern latitudes become less so. This is some decades in the future however so it will not mitigate the initial population collapse. This could all work out as a major demographic shift to a much lower global population and a relative increase of northern populations compared to more southern. In that sense it would be a reverse demographic effect to Neolithic farming, when Meds expanded into Europe starting 7000 BCE.

    http://sciencenordic.com/global-warming-may-benefit-some-farmers

    quote:

    Danish scientists predict that while global warming will lead to drought and flooding across the world, Danish agriculture may well benefit…

    In many countries agriculture is considered to be seriously threatened by the prospect of climate change, which may lead to drought, flooding and failed harvests…

    According to scientists, other countries in northern latitudes may experience better growing conditions, thanks to increasing temperatures.

    “Temperatures have increased in Canada, where they are currently putting more land under the plough. As a result, cereal is being grown further north and Canadian farmers can barely stop punching the air in excitement over climate change. In other places climate change is causing serious problems,” says Olesen…

    “Another major question is what people, whose food supply is negatively affected by climate change, will do. Will they move northwards? And if so, how will we react? We’re not talking of a hundred years, but around 30-40 years before things start getting really serious,” says Porter.

    Although increasing temperatures may improve Danish cereal growers’ yields, other consequence of climate change may be less fortunate for Danish agriculture.

    A new report from the Danish Meteorological Institute (DMI) predicts that heavy rain and cloudbursts will be more frequent in the future.

    “Obviously, more extreme weather in Denmark will be a nuisance for farmers. A cloudburst can cause serious damage to the harvest,” Pedersen concludes.

  44. Little 'ol me
    Ronald Whitehand says:

    Dear Gail,
    If the decline due to lack of affordable energy is inevitable and as government and business cannot seem to cope with it, then we will need better political and economic systems to be able to manage the new situation. I realise that many of the posts are in part about that but have not seen anyone refer to the work of Martin Whitlock who in his book Human Politics – Human Values seems to have a good ideas that are worth following up.
    Basically it offers a more localised communitarian alternative to the the way things are today. I do not subscribe to all of it and in fact am sceptical about a few of the authors recommendations and analysis. But there does seem to be a light at the end of his tunnel, whereas with the other systems I can only see darkness.

    The book blurb says…..
    Britons “have never had it so good”, declared Harold Macmillan in 1957. Nearly 60 years later the economy is three times as productive, so we should all be three times richer still, and yet people struggle harder and harder to make ends meet. We are living in a transactional economy, in which “productivity” means pushing money round and round the system in pursuit of a marginal profit rather than making and doing the things that have authentic, human value. Governments encourage this because transactional activity is the fastest route to GDP growth. In Human Politics : Human Value Martin Whitlock explains how we got stuck in this political and economic dead-end by targeting the wrong outcomes. The focus on GDP growth, rising house prices, corporate profits and the volume rather than the usefulness of trade has pushed human wants and needs to the margins. He describes the key steps towards a new, collaborative, economic model in which wealth is derived from useful work and flourishing human relationships.

    There is a video of him talking about his work and although he is not the best of public speakers it is the substance that matters. See him here https://www.youtube.com/watch?v=FdjbqWknLlY

    • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
      Gail Tverberg says:

      The problem I see is that we need to have an international economy for oil and gas production. We even need it for most coal production. Without these fossil fuels, it is really hard to transition to some kind of different economy. There are way too many people to support without fossil fuels. This is our big problem.

      • Rodster says:

        That’s the 1000 lb elephant in the room. The entire complex global networked system was built and functions as a result of cheap oil. Trying to switch to an alternative is not easy and next to impossible when you have 7.2 billion mouths to feed.

        The other problem the alternative post oil community doesn’t think about is rule of law. In a post collapse scenario there IS none as it’s every man/woman/child for themselves. That’s why it’s possible the best case scenario is entering another Dark Age if the Big Reset does occur.

  45. Don Stewart says:

    Dear Gail and All
    This new video from Geoff Lawton is a good example of making a system more efficient…rather than less efficient, which is the subject of Gail’s essay.

    http://www.geofflawton.com/fe/76230-from-monoculture-to-permaculture?r=y

    Some things to note:
    *the use of industrial infrastructure such as pumps and pipes and tanks
    *solar PV for pumping water
    *idiotic licensing requirements which impose inefficiency
    *symbiosis between particular elements, such as pigs and rotten apples, chickens and litter
    *keeping money out of the system until high value added products are sold (disintermediation)
    *careful attention to water
    *keeping the soil microbes and predators happy and productive

    Don Stewart
    http://www.geofflawton.com/fe/76230-from-monoculture-to-permaculture?r=y

    • Don Stewart says:

      Also
      See if you can spot the traces of oxytocin at work, facilitating the exchanges.
      Don Stewart

    • Don Stewart says:

      Dear Gail and All
      Also, compare to this new study of labor, capital, and energy as components of GDP:
      http://phys.org/news/2014-12-thermodynamic-analysis-reveals-large-overlooked.html

      Click on the graphs to enlarge them. You will see that the production in Germany has been mostly about the accumulation of capital, with also some contribution from increased energy consumption, with little contribution from labor.

      Compare to the permaculture farm in Ventura. We have some fairly extensive use of industrial capital: the tanks and pumps and pipes and machines . We also have a lot of attention paid to natural capital: the soil food web, coppiced wood used to manage water runoff to make new soil, the chickens and pigs as elements of production, the trees and grasses. (I don’t know if the study above considers natural capital…I doubt it.) The labor, although I am sure they exercise their muscles, is more between the ears than in the muscle.

      The energy is predominately from the sun and gravity. These are not in the model referenced. But there is also probably some grid electricity in the house and creamery. And they use internal combustion vehicles to haul stuff around.

      I would estimate that the farm is similar to Germany. The big productivity factor is the capital (both man made and natural), with energy (both sun and gravity and fossil sunlight) coming in second, and labor as the third component. But in the labor component, it is more about information than it is about using muscle to move mass.

      Don Stewart

      • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
        Gail Tverberg says:

        Thanks! This is a link to a non-PDF version of the article. http://phys.org/news/2014-12-thermodynamic-analysis-reveals-large-overlooked.html

        It would seem to me that capital represents to a significant extent embedded energy. It is hard to make metals or transport wood without fossil fuels. So capital really represents a different form of energy.

        • Stefeun says:

          Yes Gail, Capital is embedded Energy, but also transformed Matter.
          In fact Capital is former Production, if you consider that Production is Matter transformed by Energy. And the level of Production is more or less measured by GDP, ie the “size” of the Economy.

          Actually I was quite surprised by the “findings” exposed in this article, because most of this work has been done long time ago. First of all, regarding the validity of the neoclassical model, the founders themselves did recognize that it was flawed in its very basics.
          Regarding the “output elasticity” that in neoclassical model is set equal to the cost-share (70% for Labor, 25% for Capital and only 5% (to 7-8%?) for Energy), the French economist Gaël Giraud has made an empirical study on 90% of World GDP and shown that hard-data-measured elasticity was 10-12% for Capital and around 60% for Energy (which is coherent with the “one order of magnitude gap” the authors mention in the article).

          As for Labor, there’s a little confusion because an economist would consider it is the amount of the wages (productive only?), while from a physics point of view this Labor is rather mechanical work, no matter if it is made by human or animal muscle or some kind of engine. Labor is also information (deeply connected with energy), no matter if processed by human brains or computers.
          Therefore, we shouldn’t be surprised that our economies tend to reduce Labor (ie wages, that are considered as a cost (while dividends are not)) and increase Production by using powerful machines/computers instead. The machines are Capital and don’t need wages (other than Energy to run, and a little maintenance).

          Our economies, geared according to neoclassical principles, are set to maximize the profit of the owners of the Capital, thus concentrating the wealth and increasing inequalities, not to optimize welfare of the population. Adam Smith’s “Invisible Hand” does NOT redistribute as they pretend.
          So the trend for automation is really deep and prone to get accelerated momentum as robots are able to accomplish more complex tasks (see eg Kurzweil’s Amelia: http://www.kurzweilai.net/step-into-the-future-meet-amelia).

          One big point they seem to miss: if we extrapolate, we’ll have a very efficient production-tool, but nobody left able to afford the products (except using debt-tricks, which is more of a problem in the long term).
          Add to that all kinds of diminishing returns (esp. increasing scarcity of energy and raw materials), and you see it cannot hold for very long time.

          • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
            Gail Tverberg says:

            Thanks! I liked Charles Hugh Smith’s article:
            http://www.oftwominds.com/blogoct14/instability10-14.html

            Capital is mobile; workers generally are not. This generates huge instability.

            • “Capital is mobile; workers generally are not. This generates huge instability.”

              Only as long as energy and commodities are so inexpensive that it is easy to just build a new factory where ever and whenever you want. Even if renewables or nuclear saves us from peak fossil energy collapse, I suspect it will soon stop being economical to keep building new factories.

              The Italian city-states avoided war with each other to a decent extent, mainly by simply deciding each city-state would specialize in certain goods, and not directly competing with each other. Perhaps regional specialization will be a part of the near future for us, as well.

            • Stefeun says:

              Thanks for this very good article I hadn’t seen before.

              Charles Hugh Smith talks about financialized flowing capital, and I see finance as a powerful accelerator of the trends I described.

              He makes another very important point, which is that capital is flowing on a global scale, therefore looking at local indicators is meaningless. I even wonder if many other rules, policies, etc, shouldn’t any longer be set locally, but globally. The situation we have today is that this global finance is frankly becoming the enemy of the peoples, but the fight is unequal: “The advantage of mobility is reserved for capital, and to the relatively limited cohort of workers who can immigrate to other nations to find work.” (albeit I’m not sure that all immigrants consider it as an advantage, rather a necessity).

              “Capital has no loyalty to anything but its own expansion, and the damage it leaves in its wake is of no concern to the owners of capital. (…)
              This financialized globalization of goods, services, credit and currencies continually creates imbalances that fuel a perpetual instability that gradually impoverishes every sector other than global capital, which being mobile, can exploit the imbalances for its own profit.”
              We have created a huge generator of instability and impoverishment, which is even able to re-write the local laws to its advantage. No more Italian city-states, Matthew!

            • “We have created a huge generator of instability and impoverishment, which is even able to re-write the local laws to its advantage. No more Italian city-states, Matthew!”

              You think this current system is going to continue for much longer, then?

            • Stefeun says:

              Matthew,
              No, I think the illness of our current system is much too important to imagine any possible cure. It has already started to collapse slowly, and IMHO will very soon crash completely and very quickly.
              If you consider that almost all that we’re eating and drinking is depending on globally financialized supply-chains, and that in average we have just above one hectare of -mostly dead- soil per capita (arable+forests), I’m not sure that any of us will survive. Add to that the pollutions remaining post collapse (radioactive, chemicals, GMO, …). If ever there’s something “after”, it’ll be totally different and I don’t want to speculate on it.

            • Don Stewart says:

              Stefeun
              I have argued for some time that analyses which begin with countries are most likely just wroing.

              The top 100 corporations and rich people control a majority of the wealth. Not countries. So, rather than speak of ‘Russia’, speak of ‘Rosneft’. Instead of the ‘US’, speak of Apple. Rosneft happens to be more localized than Apple, and that is sometimes an advantage and sometimes a disadvantage (such as right now). But to claim that Apple’s interests are aligned with those of the US is ridiculous.

              If you want to analyze the position of the US government, you would need to look at some metrics such as taxing power and debt and ability to print money and take on more debt, etc. You certainly could not just look at those corporations which currently call some place in the US ‘home’.

              Don Stewart

            • Stefeun says:

              Yes Don, I agree.
              Yet, I tend to think that Russian (and Chinese) governments have more control on their corporations than we have, but maybe I’m wrong. It seems that the West has big difficulty to have Russia playing their game, though (or did I misunderstand the new role of NATO?)

            • Don Stewart says:

              Dear Stefeun
              I’ll admit to being baffled by the actions of people such as Merkel and Obama. Why do they want to prevent Exxon-Mobil from exploiting the oil in the Siberian shelf?

              What I suspect is that both are under the delusion that they are ‘powerful world leaders’. What they actually have is the ability to destroy. Napoleon observed that ‘it is surprising how ineffective military might is in getting anything organized’. So they really can’t accomplish much, but they can sure be destructive.

              Are they as delusional as Hitler was in 1939? As the Japanese military was when it invaded China around 1935?

              They say that Admiral Yamamoto understood that the war was lost when the attack on Pearl Harbor failed to sink two aircraft carriers which were out to sea. But that is a rare bit of foresight, I think. Did the German High Command understand that everything was lost after Stalingrad?

              At any rate, I think elected politicians are the most delusional of all. They have fooled a majority of the people for a sufficient length of time to get to the top of the heap. Surely they are geniuses?

              Don Stewart

          • I think it is a mistake to have a fixed percentage be Labor, Capital or Energy. If tools are capital, then as you invest in better tools, you can have fewer workers consume more energy per worker and increase total output.

            The model is pretty simple, there should be some way to model degradation of the mine, well or soil, track waste heat and pollution, etc.

            Related to other comments on globalization and the article by Charles Hugh Smith, there should be some way to track wasted capital and labor from relocating factories, and the energy siphoned off by taxes, regulations, fees, etc.

            ” if we extrapolate, we’ll have a very efficient production-tool, but nobody left able to afford the products”

            Unless the products become so inexpensive, that people only need to work a couple hours to purchase the material products they desire.

            • Stefeun says:

              Matthew,
              the percentages of elasticity aren’t fixed, they’re the result of calculations from real data (or stupid report of the cost-shares in the case of neoclassical model).

              I agree that the model is simplistic and we should consider also the depletion of resource, the waste and other damages to the environment, but our metric is money, and money is a measure of dissipated energy only, it doesn’t take into account neither the resource (raw matter is for free), nor the waste/pollution.
              If we try to have the businesses to pay for their pollution (chemical treatments, carbon tax,…), they simply tend to move to places where they won’t have to pay such fees.

              As for taxes, they are (or should be) used to provide services to the people, who otherwise would have to pay private entities. In my view taxes aren’t wasted money at all, and a public system is more efficient than private in many sectors, as the money is redistributed directly, without going through the financial sphere that will take its share of it (compare the costs of healthcare in US and EU). Now you can argue that all governments are corporate puppets, but that’s another story.

              One big problem we have is actually that big corporations do not pay taxes, because of the advantage of mobility of the capital, thus increasing the burden on individuals’ shoulders. Big Corp is specialized in escaping, in avoiding any charge or fee, I don’t see how we could get them to pay for their damages (pollutions and depletions), when we aren’t able to suppress the tax-heavens.

      • alturium
        alturium says:

        Hi Don,

        There is a great video of Professor Reiner Kümmel at APSO 2012 (you can also get the slides from APSO 2012 website under speakers):

        https://www.youtube.com/watch?feature=player_detailpage&v=iKYir4MxrgA

        and also at:

        http://www.aspo2012.at/conference-presentations/day2part1/

        • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
          Gail Tverberg says:

          This might be a direct link to his presentation.
          http://www.aspo2012.at/wp-content/uploads/2012/06/Kümmel_aspo2012.pdf

          Our economy is a networked system, with wages depending on output of the system. If the system is generating more and more output over time, wages will tend to rise. If diminishing returns are taking over, real wages will tend to fall over time. This is a major part of the economic system, but not something that Kümmel tries to model.

          Instead, Kümmel is taking a very inadequate model of a piece of the system, and trying to fix it up. This is a step in the right direction, but still leaves out a whole lot, it seems to me.

          It seems like it should be obvious to everyone (except economists) that it takes energy to make “stuff”. It is too bad that people have to spend their time debunking things that would seem to be close to obviously wrong.

  46. Jarle B says:

    The times are changing: In her New Year Speech our “statsminister” (prime minister) said that the oil activity has passed peak, and that we will have to find other things to do…

    • yt75
      yt75 says:

      In Norway ? Would you have some press links about this declaration ?

      • yt75
        yt75 says:

        And happy new year to all by the way.

      • Gail Tverberg – My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
        Gail Tverberg says:

        Norway’s peak in oil production was in 2001, so is some ways her remark is old news, if it is taken as a remark about oil production. What has kept things going is natural gas production, which may have peaked in 2012 (2013 production is down–I haven’t seen 2014 amounts). Also, employment may not have changed much for oil, even with the lower output, because now it takes more drilling on smaller fields to maintain production, thanks to diminishing returns on oil. Also, oil and gas prices are higher than in 2001, helping to keep taxes high as well.

        I think what the prime minister meant is that employment in the petroleum industry (where petroleum is defined as oil+gas) has now passed its peak.

Comments are closed.