COVID-19 and the economy: Where do we go from here?

The COVID-19 story keeps developing. At first, everyone listened to epidemiologists telling us that a great deal of social distancing, and even the closing down of economies, would be helpful. After trying these things, we ended up with a huge number of people out of work and protests everywhere. We discovered the models that were provided were not very predictive. We are also finding that a V-shaped recovery is not possible.

Now, we need to figure out what actions to take next. How vigorously should we be fighting COVID-19? The story is more complex than most people understand. These are some of the issues I see:

[1] The share of COVID-19 cases that can be expected to end in death seems to be much lower than most people expect.

Most people assume that the ratios of deaths to cases by age group, computed using reported cases, such as those included in the Johns Hopkins Database, give a good indication of the chance of death a person faces if a person catches COVID-19. In fact, the cases reported to this database are far from representative of all cases; they tend to be the more severe cases. Cases with no symptoms, or only very slight symptoms, tend to be missed. The result is that ratios calculated directly from this database make people think their risk of death is far higher than it really is.

The US Center for Disease Control has published Planning Scenarios, based on information available on April 29, 2020.* Using this information, the CDC’s best estimate of the number of future deaths per 1000 cases with symptoms is as follows:

Ages 0 – 49    0.5 deaths per 1000 cases with symptoms

Ages 50-64    2.0 deaths per 1000 cases with symptoms

Ages 65+       13.0 deaths per 1000 cases with symptoms

The CDC’s best estimate is that 35% of cases have no symptoms at all. Thus, if we were to include these cases without symptoms in the chart above, the chart would become:

Ages 0-49   0.5 deaths per 1,538 cases (including those without symptoms), or 0.3 deaths per 1000 cases with or without symptoms

Ages 50-64  1.3 deaths per 1000 cases with or without symptoms

Ages 65+    8.5 deaths per 1000 cases with or without symptoms

A recent study of blood samples from 23 different parts of the world came to a similarly low estimate of the number of deaths per 1000 COVID-19 infections. It reported that among people who are less than 70 years old, the number of deaths per 1000 ranged from 0.0 to 2.3 per 1000, with a median of 0.4 deaths per 1000.

The same paper remarks,

COVID-19 seems to affect predominantly the frail, the disadvantaged, and the marginalized – as shown by high rates of infectious burden in nursing homes, homeless shelters, prisons, meat processing plants, and the strong racial/ethnic inequalities against minorities in terms of the cumulative death risk.

[2] There seem to be things we can do ourselves to reduce our personal chance of serious illness or death.

General good health is protective against getting a bad case of COVID-19. Thus, anything that we can do in terms of a good diet and exercise is likely helpful. Staying inside for weeks on end in the hope of preventing exposure to COVID-19 is probably not helpful.

Continued exposure to huge amounts of disinfectants and hand sanitizers is likely not to be helpful either. Our bodies depend on healthy microbiomes, and products such as these adversely affect our microbiomes. They kill good and bad bacteria alike and may leave harmful residues. It is easy to scale back our personal use of these products.

There are recent indications that vitamin D is likely to be protective in reducing both the incidence of COVID-19 and the disease’s severity. Web MD reports:

Several groups of researchers from different countries have found that the sickest patients often have the lowest levels of vitamin D, and that countries with higher death rates had larger numbers of people with vitamin D deficiency than countries with lower death rates.

Experts say healthy blood levels of vitamin D may give people with COVID-19 a survival advantage by helping them avoid cytokine storm, when the immune system overreacts and attacks your body’s own cells and tissues.

While we don’t know for certain that vitamin D is helpful, there is certainly enough circumstantial evidence to suggest that it would likely be worthwhile to raise vitamin D levels to the amount recommended by the National Institute of Health (30 nmol/L or higher). People with dark skin living in areas away from the equator might especially be helped by this strategy, since dark skin reduces vitamin D production.

Masks seem to be helpful in preventing the spread of infection. A person’s own immune system can handle some level of germs. If two people meeting together both wear masks, the combination of masks can perhaps reduce the level of germs to within the amount the immune system can handle. Our immune systems are built to handle a barrage of small attacks by viruses and bacteria. Continued “practice” with relatively low combinations of good and bad bacteria (as occur with masks) will tend to build up our bodies’ natural defenses.

We see dentists and dental hygienists wearing face shields. These shields are readily available over the internet and can be worn with a mask or by themselves. We don’t yet know precisely how much protection they provide, but early models suggest that they can be helpful in two directions: (a) preventing the wearer’s droplets from harming others and (b) reducing the droplet exposure from others. Thus, they may be a worthwhile way to reduce exposure to the virus causing COVID-19, even when others are not wearing masks.

[3] The medical community’s ability to treat COVID-19 cases keeps improving.

There seem to be many small changes that are improving treatment of COVID-19. If patients are having trouble getting enough oxygen, having them lie on their stomachs seems to increase their blood oxygen levels. The cost of this change is pretty much zero, but it keeps people out of the ICU longer.

Originally, planners thought that ventilators would be needed for patients with COVID-19, since ventilators are often used on pneumonia patients. Experience has shown, however, that oxygen plus something like a CPAP machine often works better and is less expensive.**

The simple change of not sending recuperating patients to nursing home-type facilities for the last stages of care has proven helpful, as well. Many of these patients can still infect others, leading to infections in long-term care facilities. Tests to tell whether patients are truly over the disease do not seem to be very accurate.

Last week, it was announced that treatment with an inexpensive common steroid could reduce deaths of people on ventilators by one-third. It could also reduce deaths of those requiring only oxygen treatment by 20%. Using this treatment should significantly reduce deaths, at little cost.

We can expect improvements in treatments to continue as doctors experiment with existing treatments, and as drug companies work on new solutions. Looking at cumulative historical mortality rates tends to overlook the huge learning curve that is taking place, allowing mortality rates to be lower.

[4] More doubts are being raised about quickly finding a vaccine that prevents COVID-19. 

The public would like to think that a vaccine solution is right around the corner. Vaccine promoters such as Anthony Fauci and Bill Gates would like to encourage this belief. Unfortunately, there are quite a few obstacles to getting a vaccine that actually works for any length of time:

(a) Antibodies for coronaviruses tend not to stay around for very long. A recent study suggests that even as soon as eight weeks, a significant share of COVID-19 patients (40% of those without symptoms; 12.9% of those with symptoms) had lost all immunity. A vaccine will likely face this same challenge.

(b) Vaccines may not work against mutations. Beijing is now fighting a new version of COVID-19 that seems to have been imported from Europe in food. Early indications are that people who caught the original Wuhan version of the COVID-19 virus will not be immune to the mutated version imported from Europe.

Vaccines that are currently under development use the Wuhan version of the virus. The catch is that the version of COVID-19 now circulating in the United States, Europe and perhaps elsewhere is mostly not the Wuhan type.

(c) There is a real concern that a vaccine against one version of COVID-19 will make a person’s response to a mutation of COVID-19 worse, rather than better. It has been known for many years that Dengue Fever has this characteristic; it is one of the reasons that there is no vaccine for Dengue Fever. The earlier SARS virus (which is closely related to the COVID-19 virus) has this same issue. Preliminary analysis suggests that the virus causing COVID-19 seems to have this characteristic, as well.

In sum, getting a vaccine that actually works against COVID-19 is likely to be a huge challenge. Instead of expecting a silver bullet in the form of a COVID-19 vaccine, we probably need to be looking for a lot of silver bee-bees that will hold down the impact of the illness. Hopefully, COVID-19 will someday disappear on its own, but we have no assurance of this outcome.

[5] The basic underlying issue that the world economy faces is overshoot, caused by too high a population relative to underlying resources.

When an economy is in overshoot, the big danger is collapse. The characteristics of overshoot leading to collapse include the following:

  • Very great wage disparity; too many people are very poor
  • Declining health, often due to poor nutrition, making people vulnerable to epidemics
  • Increasing use of debt, to make up for inadequate wages and profits
  • Falling commodity prices because too few people can afford these commodities and goods made from these commodities
  • Gluts of commodities, causing farmers to plow under crops and oil to be put into storage

Thus, pandemics are very much to be expected when an economy is in overshoot.

One example of collapse is that following the Black Death (1348-1350) epidemic in Europe. The collapse killed 60% of Europe’s population and dropped Britain’s population from close to 5 million to about 2 million.

Figure 1. Britain’s population, 1200 to 1700. Chart by Bloomberg using Federal Reserve of St. Louis data.

We might say that there was a U-shaped population recovery, which took about 300 years.

A later example that almost led to collapse was the period between 1914 and 1945. This was a period of shrinking international trade, indicating that something was truly wrong. On Figure 2 below, the WSJ calls its measure of international trade the “Trade Openness Index.” The period 1914-1945 is highlighted as being somewhat like today.

Figure 2. The Trade Openness Index is an index based on the average of world imports and exports, divided by world GDP. Chart by Wall Street Journal.

Many of the issues in the 1914-1945 timeframe were coal related. World War I took place when coal depletion became a problem in Britain. The issue at that time was wages that were too low for coal miners because the price of coal would not rise very high. Higher coal prices were needed to offset the impact of depletion, but high coal prices were not affordable by citizens.

The Pandemic of 1918-1919 killed far more people than either World War I or COVID-19.

World War II came about at the time coal depletion became a problem in Germany.

Figure 3. Figure by author describing peak coal timing compared to World War I and World War II.

The problem of inadequate energy resources finally ended when World War II ramped up demand through more debt and through more women entering the labor force for the first time. In response, the US began pumping oil out of the ground at a faster rate. Instead of depending on coal alone, the world began depending on a combination of oil and coal as energy resources. The ratio of population to energy resources was suddenly brought back into balance again, and collapse was averted!

[6] We are now in another period of overshoot of population relative to resources. The critical resource this time is oil. The alternatives we have aren’t suited to fulfilling our most basic need: the growing and transportation of food. They act as add-ons that are lost if oil is lost.

If we look back at Figure 2 above, it shows that since 2008, the world has again fallen into a period of shrinking imports and exports, which is a sign of “not enough energy resources to go around.” We are also experiencing many of the other characteristics of an overshoot economy that I mentioned in Section 5 above.

Figure 4 shows world energy consumption by type of energy through 2019, using recently published data by BP. The “Other” combination in Figure 4 includes nuclear, hydroelectric, wind, solar, and other smaller categories such as geothermal energy, wood pellets, and sawdust burned for fuel.

Figure 4. World energy consumption by fuel, based on BP’s 2020 Statistical Review of World Energy.

Oil has been rising at a steady pace; coal consumption has been close to level since about 2012. Natural gas and “Other” seem to be rising a little faster in the most recent few years.

If we divide by world population, the trend in world energy consumption per capita by type is as follows:

Figure 5. World Per Capita Energy Consumption based on BP’s 2020 Statistical Review of World Energy

Many people would like to think that the various energy sources are substitutable, but this is not really the case, as we approach limits of a finite world.

One catch is that there are very few stand-alone energy resources. Most energy resources only work within a framework provided by other energy sources. Wood that is picked up from the forest floor can work as a stand-alone energy source. Wind can almost be used as a stand-alone energy source, if it is used to power a simple sail boat or a wooden windmill. Water can almost be used as a stand-alone energy source, if it can be made to turn a wooden water wheel.

Coal, when its use was ramped up, enabled the production of both concrete and steel. It allowed modern hydroelectric dams to be built. It allowed steam engines to operate. It truly could be used as a stand-alone energy source. The main obstacle to the extraction of coal was keeping the cost of extraction low enough, so that, even with transportation, buyers could afford to purchase the coal.

Oil, similarly, can be a stand-alone energy solution because it is very flexible, dense, and easily transported. Or it can be paired with other types of less-expensive energy, to make it go further. We can see our dependence on oil by how level energy consumption per capita is in Figure 5 since the early 1980s. Growth in population seems to depend upon the amount of oil available.

As I have mentioned in previous posts, the economy is a self-organizing system. If there isn’t enough of the energy products upon which the economy primarily depends, the system tends to change in very strange ways. Countries become more quarrelsome. People decide to have fewer children or they become more susceptible to pandemics, bringing population more in line with energy resources.

The problem with natural gas and with the electricity products that I have lumped together as “Other” is that they are not really stand-alone products. They cannot grow food or build roads. They cannot power international jets. They cannot build wind turbines or solar panels. They cannot put natural gas pipelines in place. They can only exist in a complex environment which includes oil and perhaps coal (or other cheaper energy products).

We are kidding ourselves if we think we can transition to modern fuels that are low in carbon emissions. Without high prices, oil and coal that are in the ground will tend to stay in the ground permanently. This is the serious obstacle that we are up against. Without oil and coal, natural gas and electricity products will quickly become unusable.

[7] A major problem with COVID-19 related shutdowns is the fact that they lead to very low commodity prices, including oil prices. 

Figure 6. Inflation-adjusted monthly average oil prices through May 2020. Amounts are Brent Spot Oil Prices, as published by the EIA. Inflation adjustment is made using the CPI-Urban Index.

Oil is the primary type of energy used in growing and transporting food. It is used in many essential processes, including in the production of electricity. If its production is to continue, its price must be both high enough for oil producers and low enough for consumers.

The problem that we have been encountering since 2008 (the start of the latest cutback in trade in Figure 2) is that oil prices have been falling too low for producers. Now, in 2020, oil production is beginning to fall. This is happening because producing companies cannot afford to extract oil at current prices; governments of oil exporting countries cannot collect enough taxes at current prices. They hope that by reducing oil supply, prices will rise again.

If extraordinarily low oil prices persist, a calamity similar to the one that “Peak Oilers” have worried about will certainly occur: Oil supply will begin dropping. In fact, the drop will likely be much more rapid than most Peak Oilers have imagined, because the drop will be caused by low prices, rather than the high prices that they imagined would occur.

Amounts which are today shown as “proven reserves” can be expected to disappear because they will not be economic to extract. Governments of oil exporting countries seem likely to be overthrown because tax revenue from oil is their major source of revenue for programs such as food subsidies and jobs programs. When this disappears, governments of oil exporters are forced to cut back, lowering the standard of living of their citizens.

[8] What our strategy should be from now on is not entirely clear.

Of course, one path is straight into collapse, as happened after the Black Death of 1348-1352 (Figure 1). In fact, the carrying capacity of Britain might still be about 2 million. Its current population is about 68 million, so this would represent a population reduction of about 97%.

Other countries would experience substantial population reductions as well. The population decline would reflect many causes of death besides direct deaths from COVID-19; they would reflect the impacts of collapsing governments, inadequate food supply, polluted water supplies, and untreated diseases of many kinds.

If a large share of the population stays hidden in their homes trying to avoid COVID, it seems to me that we are most certainly heading straight into collapse. Supply lines for many kinds of goods and services will be broken. Oil prices and food prices will stay very low. Farmers will plow under crops, trying to raise prices. Gluts of oil will continue to be a problem.

If we try to transition to renewables, this leads directly to collapse as well, as far as I can see. They are not robust enough to stand on their own. Prices of oil and other commodities will fall too low and gluts will occur. Renewables will only last as long as (a) the overall systems can be kept in good repair and (b) governments can support continued subsidies.

The only approach that seems to keep the system going a little longer would seem to be to try to muddle along, despite COVID-19. Open up economies, even if the number of COVID-19 cases is higher and keeps rising. Tell people about the approaches they can use to limit their exposure to the virus, and how they can make their immune systems stronger. Get people started raising their vitamin D levels, so that they perhaps have a better chance of fighting the disease if they get COVID-19.

With this approach, we keep as many people working for as long as possible. Life will go on as close to normal, for as long as it can. We can perhaps put off collapse for a bit longer. We don’t have a lot of options open to us, but this one seems to be the best of a lot of poor options.

Notes:

*The CDC estimates are estimates of future deaths per 1000 cases. Thus, they probably reflect the learning curve that has already taken place. It is unlikely that they reflect the benefit of the new steroid treatment mentioned in Section 3, because this finding occurred after April 29.

**I have been told that disease spread can be a problem when using CPAP machines, however. Using ventilators at very low pressure settings seems also to be a solution.

 

 

 

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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.

2,824 thoughts on “COVID-19 and the economy: Where do we go from here?

  1. Comment on Gail’s comment on growing food. What you say is true. But in reality the actual number of people it takes (or robots) to produce energy and food is small relative to the total population. We are just trapped in an economic system that views the production of these elements in a certain way. We’ve seen that even with a complete world wide economic collapse the lights stayed on and the food kept coming. As long as the energy you can acquire is more than the energy you actually need to survive, surviving is possible. How we acquire that energy might not be that pleasant and the level of survival might not either. Your model should have seen the complete collapse of civilization by now (as you have often pointed out) but it hasn’t happened. The outcomes of Chaotic systems are difficult to predict.

    • I am afraid that you are looking at this problem by counting tops of icebergs. The bottoms of the icebergs are just as essential as the tops that are easy to see.

      This seems to be a common failing of analysts of many types. “Out of sight; out of mind.”

      • Gail, I agree. Perhaps 2% of the US population now produce food. But who produces the fertiliser, the pesticides, that help grow the food? Who produces the machines that plough, sow, and harvest? Who produces the factories that make those machines; who mines the raw materials that feed those factories; and who extracts and refines the energy needed to make all this happen? That is the underside of the iceberg.

        In the Middle Ages, the EROEI for agriculture was probably small: 80% of human energy supported (usually) 100% of the population, so perhaps 1.25. But what is it now? By most calculations, about 0.1; in other words, ten units of energy for one unit of food. That is clearly unsustainable. It is also, and always has been, terminally stupid.

        • It’s still a small number of people or robots. Lists are impressive but you have no numbers to back it up. As a professor of mine once said, “I don’t know anyone who makes anything.”

          Do you? Does Gail? It’s a very small number of people relative to the total population. You just are not getting the point at all. If it were a large number of people, we would fall apart immediately.

          • I agree.

            the falling-apart has been proceeding very slowly, and probably will continue to do so, unless the economic tsunami coming later this year just accelerates it beyond any possible control.

            yes, the % of energy and money (energy tokens) to produce and distribute all the food is fairly low.

            there is plenty of room for the economy to continue to self-organize and increase the flow of energy and money towards food production and distribution, and towards all the tangential subsystems that are required to keep up the food supply, though at some theoretical point in time the economy could be using all of its remaining net (surplus) energy for food supply.

            at least in the first world, this process should be prolonged, not reaching its endgame for a decade or two, or perhaps a year or two if the economic devastation coming late 2020 and into 2021 gets out of control.

          • Actually, I do have the numbers, thanks to a consultancy with Caterpillar. Their “horizon scanners” estimated that 35% to 40% of the US industrial workforce was involved in some way with enabling food production, and almost all of them were essential; that is, if they stopped working, one or more critical components would go missing. Do you know, for example, how much intricate machinery is needed to prevent grain silo explosions? I thought not. Of course, that production does not all go into the food industry, perhaps about 10% of it. But it is necessary, and the other 90% is the iceberg that holds up the rest, by creating the surplus value that keeps the businesses in being. Liebig’s Law of the Minimum strikes again.

            • thanks RF.

              that’s a great reinforcement of one of my main points.

              60% to 65% of the workforce is not involved in food supply, not even tangentially.

              so there is a lot of non-essential work in the world.

              I’m not suggesting that this entire 60% could be discarded by the self-organizing economy and still leave the entire food subsystem intact, but a significant portion of non-essential subsystems could be downsized or eliminated, which would direct the flow of energy and money (energy tokens) more towards food supply.

          • The reason so few people are involved in farming directly now is because of fossil fuels, above all oil. Once oil has gone, sometime this century, I suspect sooner rather than later, there will no mechanised farming, and international trade will fall to almost non-existent levels. That process (fall in international trade) has begun already with the knock-on effects of Covid-19.

            • I think the decline in international trade began as early as 2008. As a percentage of GDP, it started falling. See Figure 2 in this post:

        • Robert, no numbers, off the top of my head.

          I see farming close up and personal, Youtube also has a number of a sites on farming. Modern farming is very efficient, seeds are planted at ideal depth depending on the soil temperature, they are planted at ideal spacing to maximize use of nutrients, the furrow is closed with attention to the soil conditions so as not to compact the lateral soil too much and cause roots to grow in a linear fashion. The machines are accurate to a fraction of an inch.

          The major cost of food appears to be after farming, a guess is packaging and a wild guess discarding less than ideal food to assure high quality. There is also great processing to get “junk” food that tastes good.

          Gardens look like a great deal of work, I have the machinery to plant and run a fairly good sized garden, it is expensive and it is time consuming even then. To keep losses to a minimum requires high fencing, deer like to vary their diet. Were I into gardening I suspect a number of deer would have heart attacks around my garden.

          Also, it does not work every year and things get thin in the following spring. There is a Great Course on Amazon(it was free to Prime) regarding the time of the plagues, fascinating in itself. The presenter claims Lent as a period of fasting encouraged by the Church as the previous years food was running low, necessity was made a virtue. I grew up humble, but proud, we had a large garden, my mom was first generation off the farm and her parents would share eggs, chickens, butchered meat to supplement the garden. From the garden, things ran low about Easter, the good stuff was gone, red beets are forever. It is not romantic when you actually need what you raise.

          Dennis L.

          • Denis, last year I had an unexpected glut of pumpkins and squash, so we were eating a lot of pumpkin soup and other dishes featuring pumpkins last winter. Over time, old pumpkins tend to go rotten and moldy, but amazingly, I still have one beautiful sukunka squash that has survived unscathed since last autumn. So I’m keeping that to see if it’s “mummified” enough to get through another winter.

            On the subject of farm machinery, several rice farmers I know this year took delivery of new rice planting machines that save the farmer even more labor by dispensing fertilizer and weedkiller simultaneously while the seedlings are being planted. I’ve noticed that with the new method, the rice plants grow faster in the first couple of weeks because the fertilizer is concentrated close to the roots, but afterwards the conventionally grown plants gradually catch up.

            Already, one man in my neighborhood has fallen victim to the hazards of new tech by not filling up the fertilizer dispensers correctly. His machine plants four rows and each has its own dispenser. He misunderstood this and only filled one of the dispenser, with the result that only every fourth row of rice seedings was growing normally, while the other three rows were starved of fertilizer and hardly grew at all. This is something that would never have happened if he’d used the conventional technique of broadcasting fertilizer around the field by hand.

        • Quite so: pouring in energy for little return proportionately, and with a complex – global – web of supply services.

          So merely looking at the small number of employees in agriculture is beside the point to a ludicrous degree.

          Moreover, this industrial system has murdered the soil – compaction, degradation, erosion – (the latter two of course being common to agricultural over-exploitation for thousands of years) and with run-off of chemicals poisoned water sources.

          • Xabier, please allow me to give you another story from my days in the US. A company makes tyres. Many different kinds. And maybe 2% of its output is tyres for farm tractors. But it goes bankrupt. No more farm tyres, and soon, no more tractors working on the farms.

            A great opportunity for a startup? But, without the economies of scale provided by that 98%, there is no way said startup could produce farm tyres at a price any farmer could afford. The iceberg has vanished.

            It turns out one type of tyre the old firm made was specialty, custom tyres for Formula One race cars. As any green advocate will tell you, Formula One is a sport that should be shut down tomorrow. It serves no useful purpose; it is a source of noise pollution, chemical pollution, and pointless carbon dioxide. But those custom tyres are very profitable, and since they don’t last very long they are a good money spinner. That income keeps all the other products a little cheaper than they would be otherwise. Abolish that income, and everyone else loses. Maybe loses enough so as to be no longer able to afford, say, tyres for golf carts. So the industry contracts a little more, and we are in a classic death spiral.

            Yes, food production looks like a small industry. But it rests on a huge pyramid of innovation, production and sales, and a vast market for other products whose income supports, among other things, that small food industry. Remove a few key stones, and the pyramid collapses. Remove the pyramid, and we all go hungry.

            • Excellent description of the problem! We need all parts of the self-organized system. We can’t just take some parts out.

              Our system is built on debt. In many ways, it is like a Ponzi Scheme. If we take parts out, there is no way to keep the Ponzi Scheme growing the way it needs to grow. Even keeping the old folks at home, so they won’t get COVID-19, may be enough to topple the already failing system.

          • Economists have been guilty of making a very similar mistake. They equate the share of spending on a particular segment of the economy to its importance to the economy. In fact, originally, the economy was originally built around humans hunting and gathering food. It later expanded to simple agriculture. Food (and fuel for cooking this food) was a very high proportion of these early economies. The only way that the rest of the economy could grow was by the most essential elements of the economy shrinking as a percentage of the total. Thus, the parts of the economy that have been growing have been the least essential portions. These are the ones that shrink back, when energy resources are limited.

    • outcomes are somewhat unpredictable, but there are some certainties.

      infrastructure and complexity have been increasing, and there is an unstoppable diminishing returns on resource extraction. So energy requirements are greater just to produce level economic activity.

      meanwhile, net (surplus) energy is in an unstoppable irreversible decline.

      so complexity must now decrease.

      the food production and distribution subsystem is essential, so it is other subsystems that will have to be downsized or eliminated to give the result of lower complexity while maintaining food supplies.

      food supplies must take a continuously growing % of the remaining energy, and non-essential subsystems therefore will have a shrinking % of the remaining energy (this energy is equated to money which is “energy tokens”).

      unpredictable in general, and yet in some specifics it seems that the downward process has some predictability to it.

        • This reconfiguration (localization / elimination of “luxuries,” many of which are actually bad for us) is the subject of Paul Hanley’s “Eleven,” which I’ve mentioned before. I think he is right about that much, although he doesn’t talk much about the transition. My main objection to Hanley is based on his Baha’i-inspired belief that starvation can eventually be solved (in the future global civilization that Baha’is expect to emerge). In fact, any steps that make food more available will just increase the human population, resulting in a need for more food, and so on in a vicious circle. (Which is how we got to our present situation.)

          • If humankind wants to end starvation we must limit the number of humans. At a minimum no more than two kids per couple. Being in overshoot one kid per couple. Both enforced.

            • Ed,

              I think it may be more than that, the demographics are important, this hints that getting old and being non productive puts one in a precarious position. One size does not fit all, some of us age better than others, unfortunately it does seem in my case even with good health endurance declines.

              Your first sentence is interesting, the question becomes who will be the limiter and who will be the limited. Sensitive questions.

              Dennis L.

          • “My main objection to Hanley is based on his Baha’i-inspired belief that starvation can eventually be solved.” In other words, his religion is a cargo cult. Newsflash: they don’t work.

        • I will agree that as long as there are energy sources to dissipate, new forms of dissipative structures that use that energy will tend to appear. Thus, is seems possible (and even likely) that there will at least some survivors of the current collapse. In fact, there may be multiple groups of people in different parts of the world who are able to find a way forward, despite the big changes taking place.

          I ended my recent post Understanding Our Pandemic-Economy Problem with these paragraphs:

          We can expect to see round after round of business failures and layoffs of employees. Financial systems will become more and more stressed. Pensions are likely to default. Death rates will rise, in part from epidemics of various kinds and in part from growing problems with starvation. In fact, in some poor countries, lower-income citizens are already having difficulty being able to afford adequate food. Eventually we can expect collapsing governments (similar to the collapse of the central government of the Soviet Union) and overthrown governments.

          Longer-term, after this demolition ends, there may be some surviving pieces of economies. These new economies will be much smaller and less dependent upon each other, however. Currencies are likely to be less interchangeable. The remaining people will need to learn to make do with many fewer goods than are available today. It will be a very different world.

      • wELCOME CLARITY. I don’t know whether food can be produced while “other subsystems (are) downsized or eliminated to give the result of lower complexity while maintaining food supplies”. I imagine Gail could point to complexities within the system that would hinder this from working. If this is so, it would be an interesting challenge to look for a way around it.

        • After trying to grow food myself for the last 15 years I would say no.

          • I planted kale, cabbage, and chicory, and something has eaten (et?) most of it. Garlic and eggplant doing ok. Peppers are a little wan. Excepting potatoes (haven’t had good luck with those either—I get out about what I put in), gardens don’t yield a lot of calories.

            • In my experience, potatoes love wood ash! Give them chicken manure, compost and plenty of ash and play them Inca music once a week to remind them of the Andes.

          • Amateurs growing food to live on is out the question. We need professionals. (We can plant just to keep our hand in, and I’m sure if we want to halfway kill ourselves trying, we can do a halfway job that takes all our time and probably makes us sick.) But if governance were set up differently, professionals could train youth to do a fair job. Every student in the world being taught to do it would help some.

            I do like that African’s approach re the unfortunate cat, but he’s a little ahead of his time.

            • “We need professionals.”

              yes.

              above, I was not suggesting that food production and distribution are the only essential subsystems.

              any subsystem that is required to maintain food production and distribution is also essential, so there is a certain level of complexity needed to feed billions of people.

              subsystems like energy (FF), electricity (grid), trains, trucks, highways, chemicals (fertilizer), communication (internet), manufacturing (farm machinery). And some level of government and banking/finance to enable all of that.

              feeding billions requires complexity, but there are lots of subsystems in our complex IC that could be downsized or eliminated in order that energy and money flows more towards food.

              could be mostly eliminated: travel/airlines/hotels, movies/tv/sports/concerts/casinos, “fashion”, hair/makeup, etc.

              and other subsystems can be downsized, in ways like one car per family, smaller houses per family or more people per large house.

              yes, that is called “challenge”.

              and it’s also called lower prosperity and harder lives.

              and any remedies for declining energy are only temporary, perhaps only lasting for a few decades, or even only a few years.

            • just to add two major subsystems that will definitely be downsizing: education and medical.

              higher ed is way too big right now, with far too many useless degrees.

              not only that, but it is NOT essential that most persons achieve literacy. It is all well and good if possible, but education from preschool on up could be downsized significantly.

              and most of the high cost health care methods are NOT essential. Cancer treatment, many big pharma mega priced meds, much “voluntary” surgery etc.

              yes, the average person will die a little bit sooner, but “maximum possible lifespan” is not an essential ingredient to maintaining IC.

            • covidinamonthorayearoradecade

              What I’m gathering from Gail is that even those “frivolous” activities are so networked in that removing them throws the overall system off in unrepairable ways. Time has to be part of of the calculation too. Nothing seems to stand still long enough to manage.

              Still, I can’t see it as that there’s nothing to be done. We are free to self actualize within a self organizing whole. COVID seems to have made a seismic shift in that system that somehow is imperceptible to most. The boiling frog syndrome. Your vision, and mine, of what could be downsized/eliminated are similar.
              ——————
              COVID perhaps acts like an indifferent arbiter. It doesn’t care if it brings on dystopia or some preferred alternative. So ideas like yours mightn’t be something you could impose as much as something that fit’s into the shape which the self organizing system is defining (or that we might somehow have intuited).

              I believe that if we don’t, won’t or can’t see where to fit in down sizing, the chance of a dystopian “solution” increases.

              This all probably a muddle, so please excuse me for that.

            • that is all quite reasonable.

              the entire economic system will continue to self-organize.

              it could collapse as it proceeds through this continuing process, even in 2020, or a little bit longer.

              or it could proceed in ways somewhat along the lines of what I am proposing which of course is a more optimistic type of downsizing.

              mainly I keep thinking that the continuing self-organizing is going to be circling around the essential nature of food production and distribution, and the “frivolous” stuff will be downsized, even though the jobs in all these “frivolous” subsystems are quite important to the workers, and no matter how much people try to maintain the non-essential subsystem in which they might happen to be employed.

            • Studying accounts of hardship in WW1 and 2, I concluded that the vital factor for survival in times of semi-starvation and inadequate rations is usually a little injection of high-quality nutrition in addition to the regular crappy diet.

              That is the value of a home kitchen garden, not full self-sufficiency which is impossible.

              It is remarkable how little people can survive on if they get an occasional high-quality boost.

            • Art leads, what you really mean is that we need professionals that utilize complexity and FF inputs to grow food so the rest of us do not have to work hard and get our hands dirty.

              The old time farmer and family would go out every day and cull weeds though out the farmland. It was dirty, hard work. The old farmers proved that they could feed their families and more through wise application of organic principles, and through diverse agriculture, and of course while having unpolluted, “alive” and fertile soil that was not killed off by chemicals.
              When you say amateurs can’t feed themselves what you are really saying is that amateurs who do not want to put forth the effort cannot feed themselves.

            • Xabier, I like the idea (certainty?) that some high quality nutrition now and then that a backyard garden could produce would make for better survival odds. It’s quite an elegant concept.

              JesseJames,

              I’m quite advanced in age, and have been around well before the explosive takeoff of FF use. Even so, I’ve never seen my elders put their fingers in the ground. In the old days there was a subsistence farmer class, in a near feudal social arrangement. It was most definitely a class-based hierarchy, even though my people lived very simply by today’s standards. It was a very patterned way of life, and everybody “knew their place,” or could live with it. For the somewhat elite, there was a higher level of culture than now. So it is actually that culture and that class structure which provided the food. If everyone were required to grow their own food, a) they would do it very badly, b) it would disrupt order to an unmanageable degree, c) it would drive many to suicide or war. Besides, all the ingredients for growing food are now so stressed that other than with professional efficiency it would be unlikely to succeed.

          • Without industrial agriculture it is impossible to feed 7.8 B. Without chemical fertilizers and a functioning food supply chain, agriculture and artisanal fisheries could feed what, 500 million people?
            To grow some of your own food is feasable, and i tri to do it myself in my large backyard, but there is not many self-suffiicent people on this planet today, as millions of humans were in 1870. Knowledge, techniques, stocks of domestic animals, physical and psychological endurance, etc. have been lost in the meantime.
            In short, the average man of 2020 is a weakling compared to the average man of 1870. And then there’s the problem of why grow anyhting if you are not sure you can defend your granary?

            • Industrial agriculture for sure. But there are some unnecessary damages to land, like removing the cuttings in ploughing. There’s also the lack of storage (although I vaguely remember someone refuting my concept) to allow for excess produce to be widely and easily distribute in emergencies. Then cosmetic standards are another source of industrial waste…
              Many sources of waste have to do with human value systems.

            • “Many sources of waste have to do with human value systems.”
              I agree, but the belief system of IC man is deeply ingrained now. Consumerism was not imposed by law, it was happily chosen by IC man and his values. Besides, it was an inevitability, since growing “forever” is an imperative to our demented financial/economic system. And how do you propose to change the values ​​of 2020 humans? I just see one way to do it: by force, that is, by techno-totalitarism.

        • Low-complexity food source (for now):

          African dude sets up a barbecue with some scrap wood on a public sidewalk in Tuscany and roasts himself up a (stray?) cat. One of the people filming, in a tizzy, yells at him that he seems to have plenty of money to buy cigarettes, so why can’t he buy some bread?

          Cat lives matter!

      • Net surplus energy available is made worse by the amount now required to support growing populations in producer nations. Take Saudi Arabia for example where it is estimated that of the 10Mbbls/d produced only 5Mbbls/d is now available for export.

        • this is somewhat Jeff Brown’s Export Land Model, where countries that export FF gain wealth and then use that wealth to build up their own infrastructure which then requires those countries to use more of their FF resources domestically.

          the endgame is when a country then needs all of its production for internal use.

          probably unforeseen in this model is the OFW insight that as FF resources begin to diminish in quantity and quality, the pressure on prices is downward.

          these lower prices make the situation even worse, and of course this is the actual situation in the world now.

        • I am not sure that in practice it works out precisely the way these theorists say. The amount of oil consumed seems to depend on population as much as anything else. It tends to keep rising, except when the economy is doing very poorly, as it has been since prices fell in 2014. Then it flattens out.

          Oil production tends to be higher when prices are high, and lower when prices are low. If we look at oil consumption by Saudi Arabia and by the overall Middle East as a percentage of oil produced, it tends to move around because of these factors. It does sort of rise, but that is not the only direction it goes. It is nowhere near 50% now.


          It might be better to include natural gas as well as oil, but I still doubt that consumption would be near 50% today.

    • It’s only early days yet…..

      And even so, here in the UK some very basic foodstuffs disappeared and are still either hard or impossible to get hold of.

      Distribution problems, not actual lack of production – so far.

    • Pintada, and indeed anyone who is interested, I tend not to promote it for reasons too eccentric to detail here but drop me a note at collapseharry at gmail dot com and I’ll send you the link tomorrow.

      And bless all of you who made supportive comments – it is much appreciated.

  2. A plug for Charles H. Smith. I subscribe to his Musings Report and find both the main content and the references at the end worthwhile. I am very open minded and am not an advocate for any agenda, looking for answers like the rest of you. Charles had this quote in the latest issue:

    “Society cares for the individual only so far as he is profitable.” Simone de Beauvoir

    This is of concern for those my age as I find I can’t run a four minute mile.

    Dennis L.

    • Of course I don’t know your situation but I believe that a lot of people give up on some types of beneficial physical activity far too early when there are ways to function much better than they do and enjoy better health much further into life.

      In my own case, I am in my early sixties now, but for decades – despite being a sporty guy by inclination – had the usual collection of chronic pain conditions and related signs and symptoms, including spinal arthritis. I thought I mostly had sports-related injuries. I had problems even getting out of bed in the morning. I was bent over like the letter C for two hours every morning. But now, after almost ten years of anti-inflamatory eating, I have graduated from hour-long walks to doing a daily three sets of 80 unweighted squats (in the year 2010, I could not do even a single squat) and have recently started doing 50 meter sprints. At first, I found that my body had literally forgotten how to run but now I can do a set of ten 50 meter sprints and my pace is returning to a degree I could never have expected. I am boggled, simply astonished, by that. I should be in a wheelchair or dead based on my trajectory in my early 50s.

      Why is sprinting or interval work good? Obviously it grows the heart and lungs. So that’s good. But it also stimulates testosterone production. Getting adequate sun also helps us to make use of more of our free (available in the blood stream) testosterone. D3 has a role in preparing receptors to make use of that testosterone. Producing more testoterone helps us to maintain more muscle mass and muscle mass is a very good predictor of the ability to survive or recover from all kinds of illnesses and injuries.

      By the way, the world record for 100 meters outdoor in the over-80 years category is 14.5 seconds! That is pretty damned fast. I have started to think I might have a go at that record when/if the time comes. But my point is not to sprint but just to keep moving. Of course, first, what we eat is one of the great deciding factors in our general health. But once we have that right, the healing can start and function can return even quite late in life.

      • Renoir, the artist:

        ‘People have eyes, hands and feet, but generally they just don’t want to use them’.

        He might have added heads/brains as well, but that’s taken as read I suppose.

        Another thing is that if you are moving about rather than sitting like a sack in a car seat or on a sofa, more observation is required which must be good for brain function I should have thought.

        I find fencing exercises with sharp swords are good exercise, having been luck enough to learn the basics when a boy *(and sharp swords keep one alert as self-injury is always possible!) and Spanish folk dancing is a fantastic work-out – I just make sure no neighbour sees me doing solo jotas……. Gyms are SO boring.

    • Quite so, and that is doubly true of governments in which so many like to place their trust.

      Although of course with governments there is an assumed contract: you pay taxes under coercion, we provide services.

      But why do people want to feel ‘cared for’ by anything or anyone?

      Weakness and delusion, surely.

      Life is harder than that, and one has to steel oneself to face the brutal facts of animal existence.

      As the Havamal puts it: ‘Men die, beasts die, everything dies’. Always go to the Old Norse for the hard truths.

    • Hopefully you have children, Dennis.

      I think a lot of people will soon realize that they are the only true pension…

      Cheers,
      -GBV

  3. the barometer for collapse are oil prices so we are very close to the end remember what happened when oil prices touched negative 37 dollars thanks to lockdowns what will be the next big drop and will we be able to bounce back ?

    • yes, I do remember that awesome day when it dropped to minus $37!

      oh, and it bounced back and now is about plus $40.

      some other black swan could fly in and bring on “the next big drop” but then it could bounce back again.

      I suspect that the price will be somewhat around about $40 through most of 2020 and then drop perhaps into the 30s or 20s as the economic tsunami starts to roll in near the end of the year.

      • my guess more lockdowns will send oil prices even further negative perhaps negative 300 dollars ?

        • no, too many traders were trapped and had to get out of their May oil contracts on April 20 and that sent the price negative.

          I suspect that all of the traders who took big losses have now dropped out, and it shows in the volume of oil contracts which are now much lower than in April.

          painful lesson learned, and I don’t think we’ll see a repeat ever again.

          but who knows?

          anyway, it’s bAU tonight, baby!

  4. the lockdowns and propaganda for the virus are all part of the plan to manage collapse and bring in a fantasy world of “green growth” which “they” thought would kickstart a “a new world order ” of growth and a continuity of the world empire unfortunately this does not compute and the fools plaving this dangerous game will steer the ship directly into the rocks , So to summarise we may a few years left before the real fun begins ELE (extinction level event) .

      • Just a few years left but you still have to work out how you want to go. If you can get some oxy prescriptions then you needn’t die from starvation or a painful illness like cholera.

        Alternatively you can try to farm. There is a nice piece of farmland near me now that has a For Sale sign out the front. This is prime quality farmland by a road. It has water and can grown four crops a year: sugarcane, soy, peanuts, rice is typical. 3200 square meters. $USD 52,000.00.

        I don’t think he really wants to sell because it is too nice a farm and he had the same sign up last year.

        But if I bought it, I would apply the usual local practice here which is to get someone to farm it. We would go 50-50 on the harvest but I would have to pay for the fertilizer. I am told informally that that would leave me 25% of the income. Fertilizers must be expensive.

    • Too bad renewables are not stand alone products. There are also nowhere nearly enough of them.

      Think of Three Gorges Dams. We can’t necessarily depend on them to save us either.

  5. “Crude oil is the world’s most important commodity, but it’s worthless without a refinery turning it into the products that people actually use: gasoline, diesel, jet-fuel and petrochemicals for plastics. And the world’s refining industry today is in pain like never before.

    ““Refining margins are absolutely catastrophic,” Patrick Pouyanne, the head of Europe’s top oil refining group Total SA, told investors last month, echoing a widely held view among executives, traders and analysts.

    “What happens to the oil refining industry at this juncture will have ripple effects across the rest of the energy industry. The multi-billion-dollar plants employ thousands of people and a wave of closures and bankruptcies looms.”

    https://economictimes.indiatimes.com/markets/commodities/news/lost-in-oils-rally-2-trillion-a-year-refining-industry-crisis/articleshow/76794487.cms

    • “Natural gas prices plunged to new lows this week, falling below $1.50/MMBtu, a catastrophically low price for U.S. gas drillers… Global gas demand is expected to fall by 4 percent this year, “largest recorded demand shock” in history, according to the International Energy Agency.

      “Buyers of U.S. LNG are now cancelling shipments at a rapid clip. U.S. LNG exports have declined by more than half compared to pre-pandemic levels.

      ““There would have been too much LNG in the world even without Covid-19,” Ben Chu, a director at Wood Mackenzie’s Genscape service, said in a statement. “Covid-19 has made it worse.””

      https://oilprice.com/Energy/Natural-Gas/Natural-Gas-Price-Plunge-Could-Soon-Lead-To-Shut-Ins.html

      • Low natural gas prices is close to as bad a problem a low oil prices. Chesapeake Energy, the company that recently filed for bankruptcy, was primarily in natural gas.

    • Refineries are part of the supply chain that people don’t understand. They are essential if we are to use any of the oil that comes out of the ground. If the “spread” between “what refined products sell for” and “the wholesale price for buying the oil” falls too low, there is a huge problem. It is this margin that refineries and other parts of the supply chain sell for. We may think that WTI oil prices of around $40 are fairly good, compared to what we have seen previously. But the prices of gasoline, diesel and jet fuel are not staying high enough to support this price level without collapsing quite a few refineries. This leads to lower production of refined products, regardless of the level of imports/exports.

  6. “This Fourth of July, amid the coronavirus pandemic and nationwide Black Lives Matter protests, American patriotism has fallen to its lowest point in nearly 20 years. According to a new poll, less than half of Americans are “extremely proud” to be American.

    “According to Gallup, pride in the U.S. is the lowest it’s been since the analytics company first measured it in 2001.”

    https://www.cbsnews.com/news/american-pride-falls-to-record-low/

  7. “As the U.S. reopens, Americans aren’t much interested in going out and spending.

    “A survey of 2,200 U.S. adults shows how Covid-19 has dramatically changed behavior in the world’s biggest economy, potentially for the long haul. The data flashes warning signs for the recovery, showing waning interest in public events and material things, like appliances and clothes, and a new austerity, expressed through pantry stockpiling and delayed big-ticket purchases.

    “This foreshadows an era of fear and frugality that could push a full economic rebound—one that Washington and Wall Street are banking on—out of reach.”

    https://gulfnews.com/world/americas/fearful-and-frugal–coronavirus-wreaks-havoc-on-americas-psyche-1.1593869289335

    • “Ongoing social distancing will mean that many firms will be smaller or not viable until a vaccine turns up.

      But the economic impact of this crisis will last even once a vaccine prevents Covid-19 doing fresh damage. New research argues that this is because, while no one started 2020 expecting a global pandemic, we’ll all now think another one is around the corner, just as everyone kept predicting another banking crisis after the financial crash.

      “…a more cautious world is not a good one economically… Covid-19, and its effects, are here to stay.”

      https://www.theguardian.com/commentisfree/2020/jul/05/we-might-never-get-over-the-fear-that-the-pandemic-induced

    • Governments thoughtlessly pressed the ‘Pause’ button, little thinking that when they pressed ‘Start’ the good little consumer puppets would act in radically different ways.

      In a way, it does show some rationality and good sense among the public: increasing savings, acting with prudence, stocking up the larder – among the oldest human responses to an uncertain environment.

      Further lock-downs now being imposed can only reinforce this ant-consumerist and consumption message.

      But what next. must they now ban cash and apply zero-rates in order literally to force household consumption each month? Spend it or lose it?

      Make appliances even crappier so that one has to buy replacements more regularly (in fact this may occur anyway as manufacturers cut quality)?

      As revenue from sales taxes and income declines, we can expect general tax rises, which again will be self-defeating, as anxious and uncertain people cling to their cash and grow even more reluctant to spend – and in fact they will have less to spend compared to pre-COVID days.

      Isn’t this a death spiral impossible to pull out of? I should like to proved mistaken: counter arguments please!

      • A modest proposal. Bring three million well-behaved, hard-working Hong Kongers to the UK with their financial assets.

        The economy will boom! The country will grow! And there’ll be a Chinese takeaway on every street corner!

        More important, the Hong Kong people are probably the world’s greatest experts on thrifty living. The native Brits, who have forgotten so much in this respect, could learn a lot from them.

        • Great, another proposal to replace the heritage people of Britain with alien peoples and cultures. But why? Because the banks would like it?

          As to the supposed Chinese thrift, Hong Kong is privately and commercially one of the most indebted places in the world. HKers have no savings and all of their wealth is tied up in their bubble housing. Who will buy that housing when they leave?

          And note well too that more than 20% of housing stock of HK is so-called social housing. That is to say – and people don’t realize this – but Hong Kong has HUGE welfare state of poor, poorly educated and dependency-minded people. They are far from being, even in a large minority, anything that we could call ideal migrants.

          As to the skills that HKers will supposedly bring, they are skills that already exist in Britain. I like the people of HK, I lived there for 12 years, but their problems are not the problems of the British people. Just as the problems of Bangladesh, Syria, Nigeria and so on are not the problems of the British.

          And the prospect of getting good fried rice on every high street is really not the proper benchmark for setting a national border policy.

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