Depletion Thoughts #1 - Sunk Costs and the Endowment Effect

Below the fold is a guest post from Cornelius, who explores the impact that sunk costs have on our social systems. It is first in a series of thought experiments attempting to address issues surrounding resource depletion.

One of my first graduate school textbooks was On Aggression, by Konrad Lorenz. Pages 23-43 describe the familiar phenomenon that a dog will fight harder to keep it's own bone than to take a bone from another dog. This biologic concept is translated into the human sphere in economics under the name of 'endowment effect'.

The Endowment Effect: The value of a good increases when it becomes a part of a persons endowment. The person demands more to give up an object than they would be willing to pay to acquire it.

The endowment effect is related to the financial concepts of 'sunk cost', where people overemphasize the weight of prior decisions, and loss aversion, where people prefer avoiding losses to achieving gains. We all are familiar with how these phenomenon manifest in everyday life. If our portfolio, which has stayed flat for a year suddenly increases from $100,000 to $120,000 in one day, and a week later declines back to $110,000, we feel worse than had it not gone up at all due to the sharpness of decline, despite the fact we are better off. If we order a $70 lobster dinner, but despite becoming full on appetizers and potatoes, are still inclined to eat 'all the lobster' to the point of getting a gut-ache, because it cost so much. Rationally, a 'correct' strategy would be to eat exactly as much lobster as provides the optimal satisfaction - the 'decision' to order the expensive meal is in the past and can no longer be changed. (These and other behavioral economic concepts are outlined in Dan Ariely's "Predictably Irrational")

How does this relate to resource depletion and new social trajectories? Many of our current government decisions (e.g. stimulus plan) are based on the sunk costs associated with our lifestyles. We require food, water, shelter, an appropriate range of temperatures, and a modicum of social interaction. But beyond these minimums, our choices and expenditures are directed towards maintaining what we already own, and the institutional infrastructure we are used to. Put differently, our choices are comprised of fixed and variable components - the fixed are largely biological in nature and the variable are largely cultural.

The cultural component itself has a fixed and variable component - we are still following the social trajectory of the internal combustion engine and related suburbia. There are over 300 million vehicles in the United States. There are over 150,000,000 jobs in the US. There are over 100,000,000 houses in the US. These houses, jobs and vehicles comprise a type of social endowment effect and a barrier to thinking about change. Recent economic research has shown that the endowment effect does not rely on factual ownership per se but is the result of subjective feelings of ownership induced by possession of the object.

Many of my colleagues concerned about sustainability say that all we have to do is go back to a 1960's lifestyle, when our resource footprints were smaller and we were generally happier and healthier - but given what we know about 'giving things up' that we perceive as our own, how can we make this happen with the large increases in built capital over the past 40 years? It seems as long as the weight of current infrastructure predominates, energy and resources will be sucked into the existing physical and emotional sinks. As long as the 300 million vehicles exist, vehicle fuel will be desired to fill them. As long as 6,000 sf mansions house families of 4, heating oil, natural gas and appliances will be supplied to fill them. How can we use increased knowledge of our penchant to overweight what already is into changing what we can one day envision?

Questions to ponder:

- What would we do if all of our vehicles 'vanished' and we had to restructure our basic needs without the sunk cost of automobiles?

-Would the answers to the above question ONLY be implemented IF all our vehicles 'vanished'? Why or why not?

Additional References:

Here is a literature review on the endowment effect, primarily from economics.

Here is a recent article on the endowment effect in the Economist

The Endowment Effect in Chimpanzees

On the one hand, this post is a bit late. Many, many people are losing "endowments" of various sorts every day now--jobs, houses, retirement accounts...This is taking a huge emotional toll on those involved.

On the other hand, the theory presented would be more helpful if it indicated which types and what quantities of negative and positive inducements can prompt people to give up a specific "endowment" such as a car.

If I may be loaned a third hand, I would say that beyond any kind of basic "endowment" effect is the huge effect of massive advertisement industry. The ownership of not just a car but a monster vehicle becomes normalized by the constant bombardment of images of said cars and trucks on TV. I rarely watch myself, but visiting the fam for superbowl, I was again amazed at how many car adds there were. Do people really watch an ad and run out and buy a car?

Maybe not, but cumulatively they lead the populace to think that these metal coffins are legitimate ways to haul our carcases around; that hurtling down a highway at speeds faster than any terrestrial animal can match surrounded by thousands of pounds of metal and commanding dozens or hundreds of horses worth of a natural way of going about our daily business. Imagine how bizarre it would have been a hundred years ago (or any time, really) for someone to hitch up a hundred or more horses to a cart to get pull their body to the next village.

If we could recognize many of our everyday activities as totally bizarre anomalies from any kind of historical perspective, perhaps it would be easier to give them up. But nothing in modern mainstream media invites such a view, quite the opposite. People commonly accuse those who look longingly at simpler forms of living of romanticizing these often hard lives. But nothing has been more incessantly romanticized than our current total-planetary-death-inducing way of life.

Sorry, this turned into something of a rant. Demolish at will.

I agree with your general idea, but I think there is no such thing as a “normal conduit” that would be universally recognized by people from any time. The mentality of a time is a byproduct of the time itself.
People raised with the one horse cart, would find it easy to swap to “hundred of horses” vehicle, in fact it happens every day in poor countries. But one that is used to having a vehicle and is stuck with a horse would call it a totally different thing, namely what comes out of the rear side of the horse… That, I think, is a very important aspect of the above theory.

People grow up adapting to the world as it is, and people expect this world to stay as it is, being unconceivable that it may change. Intellectually they may know that change is coming, but I doubt they will do something about it. And if they are asked to lower their living standards… Forget it.

Hi Ram (or should I say "Hare Rama"??),

I don't think there is any one standard of normal conduct, but the way the wealthiest billion or so people in the world are living today is not normal by any standard that existed in the world just a hundred or so years ago. We need to re-frame the shift as a rejection of the false seduction of modernity and a return to the norms of not-so-long-ago. These include moral norms of caring more about our kids future survival than our (or their) present addictions.

If you frame it as lowering standards, it may well not fly. But people have been successfully marketed everything from pet rocks to Ponzi schemes. Someone should be able to market a life with at least a smidgen of moral integrity, lived in close community, with built-in healthy lifestyles (walking or most places; eating local, organic food, mostly plants, from farmers you know, trust and work with...), in well insulated houses that provide adequate comfort without large continuous inputs of electricity or other energy sources beyond what can be locally generated...

It has been estimated (in Jim Merkel's _Radical Simlicity_) that even at current global population levels, all humans could be living sustainably today at a lifestyle similar to that of the average Parisian in the '50s. If we find the richness in our lives in the music and literature we create and share with loved ones rather than the amount we consume and the distances we fly and drive, we would be raising our living standards, not lowering them.

But if it's framed as "losing something I own" rather than "rediscovering a wonderful, fulfilling way of living we have almost all lost," you're right, we might as well forget it.

Morality doesn't get marketed through ads. It gets marketed through churches. Good luck.

Morality doesn't get marketed through ads. It gets marketed through churches. Good luck.

Was that extreme sarcasm?

Beyond Belief: Enlightenment 2.0
Salk Institute for Biological Studies
October 31 - November 2, 2007
Jonathan Haidt
University of Virginia
October 31, 2007

Jonathan Haidt, an Associate Professor of Psychology at the University of Virginia, studies the emotional basis of moral judgment and political ideology. He received his Ph.D. from the University of Pennsylvania in 1992 and then did post-doctoral research in cultural psychology at the University of Chicago. He was awarded the Templeton Prize in Positive Psychology in 2001 and is the author of The Happiness Hypothesis: Finding Modern Truth in Ancient Wisdom.

Thanks for the link - was not aware of that site. Listened to some of the interview of Sam Harris that is to be found there - I thought his 2 books were great.

I find it difficult to believe that people of "faith" (probably 3/4 of US population) can actually make rational decisions about big issues like PO, GW and human population. Religious people tend to believe that humans are not “animals” and some divine entity will always “provide” for us. Most accept as "true" that there is an after life as defined by their holy men. With all these beliefs that cannot be validated by science, how can we expect the average person to deal with the kinds of scientific analysis and subsequent changes that are needed to produce a long-term, sustainable life style?

Some Christians nowadays have forgotten that Christianity shuns materialism. It is possible to appeal to Christians to consume less. Christians should love God more than the world and that includes loving God more than big cars and big houses that they don't need. As a Christian I look at it this way: If I don't spend a lot of money on fancy houses and cars that I don't need, I could give that money to the needy to glorify God.

Matthew 6:19-20

19"Do not store up for yourselves treasures on earth, where moth and rust destroy, and where thieves break in and steal. 20But store up for yourselves treasures in heaven, where moth and rust do not destroy, and where thieves do not break in and steal.

Matthew 19:21-24

21Jesus answered, "If you want to be perfect, go, sell your possessions and give to the poor, and you will have treasure in heaven. Then come, follow me." 22When the young man heard this, he went away sad, because he had great wealth. 23Then Jesus said to his disciples, "I tell you the truth, it is hard for a rich man to enter the kingdom of heaven. 24Again I tell you, it is easier for a camel to go through the eye of a needle than for a rich man to enter the kingdom of God."

Fabulous lecture.

Thanks for the link.

Hope to watch all the videos with time.

Templeton Prize in Positive Psychology in 2001---

Templeton Prize? A propaganda organization for religion and superstition.

Again I agree with your notion, but disagree with some details. You speak of “norms”, “morality” and other conceptions that are just that: conceptions. The morality of the Middle Ages supported the idea that Heretics where good for the stake.
The morality and norm of times is a product of times, again... It is even possible to have an "ecological" morality or an "animal protection" morality, that is to rigid, to the limit that it begins to be absurd.
I just zapped through “dogtown” where some stray animals where entitle to personal caring that thousands of abandon children would only dream about. Does that mean we should shot abandoned dogs? Hell, no. But care for people as well!

Yes, these are absurd times, and our living is not sustainable. Man has developed technology that can destroy the planet, but has not grown the wisdom to use it. It is doubtful that it ever had it! So it is not a question of going back, but rather of growing up.

It was said many times already: we cannot solve a problem with the same reasoning that created the problem.

And since you introduced the metaphysics I would quote this one:

“The mighty Way declined among the folk
And then came kindness and morality.
When wisdom and intelligence appeared,
They brought with them a great hypocrisy.
The six relations were no more at peace,
So codes were made to regulate our homes.
The fatherland grew dark, confused by strife:
Official loyalty became the style.”
Tao Te Ching

As morality has been brought up I thought I'd share this link.
A rational proof of secular ethics - some very good thinking has gone into this and is well worth a read.

Thanks for the link.

It is rather long so will have to print it out to read later.

But I will, because I believe at the heart of our present problems is a crisis of morality.

"Yes, these are absurd times, and our living is not sustainable. Man has developed technology that can destroy the planet, but has not grown the wisdom to use it. It is doubtful that it ever had it! So it is not a question of going back, but rather of growing up."

Nicely put, indeed. But sometimes growing up means putting away childish things, which to the childish may look like going back. Maturity also implies realizing your limits, including recognizing that some things are too dangerous to handle till you are yet more mature. Einstein had a metaphor about this that I forget. Mine is that we are four year olds wielding a live chainsaw. Putting it down till we are ready to wield it responsibly would be the beginning. But any such suggestion will be met with the spoiled child shouting, "I'm not going back to my primitive, pre-chainsaw days!"

Lao Tzu is my main man. One of my favorite lines is: "The motion of the Tao is return" (or something like that--going from distant memory here, and of course different translations give somewhat different nuances.)


IMO it is not a rant at all, but an insightful and useful commentary that highlights the problem (big problem).

Keep up the "ranting"!!


Excellent rant....I say that because I've been having the same thoughts about cars myself recently, kind of like I want to go up to each driver and ask him/her personally, "ARE YOU CRAZY OR SOMETHING?? Get rid of that metal beast and start walking biking and taking the bus like me!" (I own no car but I live in a couyntry where not owning a car is a viable option although they are plentiful and my friends think my family is "quaint").

What's interesting is that I didn't used to feel that way. Cars seemed "normal" to me although I didn't own one.

I have to say that I have been involved in a similar experience like this before. In the early 90s I became involved in anti-smoking groups way before banning cigarettes in offices and restaurants was the norm. I simply completely changed my way of thinking about second-hand smoke (due partly to personal experience). No longer "normal" but instead "pathological". Like cars now seem to me.

I think there's a big cultural change afoot. Huge numbers of people are about to reject the car. Maybe there will be gas lines or shortages or true poverty involved first, I neither know nor care. But I study and teach culture in my job and I use my own feelings and comments I've heard from friends and family (some in the US) as a barometer too. I'll say this: People are going to walk away from their cars.

In a sense it's already started....Toyota shut down all its assembly lines here but one because of lack of demand last week. Young people haven't been buying cars for years here (in Japan). Here it's called "kuruma banare"---"WITHDRAWING FROM THE CAR". So this movement has a name and it has its early adopters. This is a growing movement, a lasting movement.

I'm not sure people are going to feel like they've given up something, more like they've passed through a phase or a particularly CRAZY FAD and come through ("Goodness, what were we all thinking???") There is already that sense now, I think, about people's general thinking about what has been built and sold and bought and produced.

Car sales peaked here in 1991. And they're half that now but going down more swiftly as of last year. America will have a different but comparable sales graph, with much more extreme peaking and plunging. The Japanese try for moderation and harmony in all things. Americans like their grapplings with Mother Nature straight up.

I'll say this: People are going to walk away from their cars.

Good one ;-)

Interesting BTW that you should use the analogy to smoking, I agree. As recently as this past weekend I sat down for a bite at a restaurant I frequent, given that this is Florida we decided to sit outside. I was struck by two young women who were smoking at the table next to mine and I really had to restrain myself from asking them if they were crazy or something. Not to mention that the smoke which wafted over was quite irritating. All the while there were car and truck ads being shown on the TVs inside. I kept thinking, when are we going to put warning labels on cars and ban their advertising altogether because of their harmful effects? Not soon enough I imagine...

So many threads Nate, where to begin...

Stimulus Package:
Will it work? I'd be amazed if it did, seems to me the best we can hope for is that it will be an effective "Orlov-ian Boondoggle" ( ) but that's o.k. as I've seen no real evidence that "we", collectively, have the ability to successfully plan and then achieve implementation of societal change in a desired direction at this scale. Change happens continuously, but its rarley part of a successful massive scale plan, more the fairly chaotic collective result of a bunch of independent actors each with a different package of goals they are seeking, mixed in with a healthy portion of fate, hap, and chance. And when I say I don't think it will work that comes at 2 levels; First I don't think it will hasten return to "business as usual", and secondly I don't think "business as usual" is sustainable anyway, so, dire as the situation seems to be, and I really do think it is dire, the informing mental state of the Stimulus planners does not concern me much.

The "Halcyon Days" of the 60's:
Well, if your colleagues are now 50 something white male North American or European academics then yep I guess the 60's were pretty cool for a lot of them, even discounting the human tendency to forget the bad and remember the good over the years, for many other races, genders, and classes not so good. A lot depends on who you ask I think. If we go back there do we have to replay the chances of not surviving the Cold War, take back Smallpox, undo the civil rights movement etc. or do we just get back the thicker topsoil, plentiful oil, high grade ores, and loose half the population? Things are a product of the possibilities offered by the conditions at the time it seems to me, then and now.

Lots of cars and McMansions:
Its bass ackwards here Nate: The fuel burning will be stopping because the fuel is going away, not because the things that burn it are. Geology will see to this faster than we could plan to do it your way round, assuming we knew how in the deep sense of the word, which we don't. Unless of course we decide to try and burn all the coal as well, in which case Gaia will sort us out in short order.

The fuel burning will be stopping because the fuel is going away, not because the things that burn it are.

Perhaps the folks will still really want to burn it however - and their desire to do so will impact what choices are made.

Unless of course we decide to try and burn all the coal as well, in which case Gaia will sort us out in short order.

Er, you are seriously quoting this ?!

May be a good time to revisit "Shovelcrats: by Craig Ralston to get back on course.

Imagining what the world would be like if we could design it anew is indeed a delightful and useful thought experiment. However, the imaginary new societies usually require a re-engineering of humanity itself.....the utopian worlds envisioned usually won't work with the same kinds of greedy, short-sighted, diverse, religious, capitalist, etc. (insert your favorite epithet here) people that inhabit our current fouled-up planet and economic system. The real-world transition to a society where people leave their cars behind and start riding bicycles and scooters and over-crowded buses isn't going to happen without a lot of pain and poverty and economic dislocations in our societies.

A part of that sunken cost is is our educational system. They emphasize teaching what has made folks economic successes in the past. The purpose of K-12 education is to prepare people to score high on SAT/ACT. High SAT/ACT scores tell us who would be good teachers and professors. Both society and the children would be better off for an uncertain future if 3/4 of them were directed to apprenticeships on their 14th birthdays. There would be less competition for college which would lower tuition and other costs.
Decades ago Met Life only hired Ivy League graduates to be insurance salesmen because for 100 years their most successful salesmen were Ivy League graduates. Then one day a regional managers gave a sales position who had never attended college. He quickly became the company's best salesman. This caused top management to take a closer look at what made a good salesman and discovered it was the ability to accept no as an answer 39 out of 40 times and keep moving on to the next prospect. All it took was a naturally optimistic personality and had nothing to do with a college education. Preparing folks for the unknown may be impossible. But there are job skills that have been around for centuries because they do very basic adaptable things. Knowing how to use a lathe and a few other machine tools even if there is no electricity around means you can make electricity from a wide range of energy sources. Carpentry and plumbing and glass working and masonry work and ceramics are skills that will be needed whatever the future brings. Knowing the assembly language for a microprocessor may not be needed. Knowing how to preserve foods by canning or smoking or in vinegar or brine may not pay much but when the 18-wheelers don't come to your town anymore your skills could be valuable. But these are not the skills our educational systems are designed to teach.

Many third world countries have large numbers of people with skills; "Carpentry and plumbing and glass working and masonry work and ceramics are skills that will be needed whatever the future brings."
While it is essential to have people with these skills, what sets advanced economies apart is the scientists,engineers, doctors, lawyers, accountants, skills that require a long and specialized education. The US no longer produces half of the worlds manufactured goods because China and India have better carpenters and plumbers, but they are training a lot of scientists and engineers.

Your last sentence uses a pronoun in a way that provides some confusion. I think you are trying to provide a warning - not only has the US given up its position as the world's most productive manufacturing economy, but we are also in danger of slipping even farther behind as countries like China and India use their growing wealth to develop higher education systems that produce skilled doctors, scientists and engineers. Soon there will be little that we can offer them in return for the goods that they have been providing.

Please do not tell me that lawyers and accountants will be our export commodity providers; I am pretty certain that the Chinese are smart enough to recognize them as a product not worth too much investment.

In looking for "solutions" to the financial crisis and energy and resource limitations, we're desperate to "not lose" what we think we have. Having run off a metaphorical cliff, perfectly good advice about how to survive a fall is not considered because the goal is to keep flying. Thus we may expect much flapping of arms.

Nicely put. Was it inspired by similar images in Daniel Quinn's _Ishmael_?

"Don't call me Ishmael"

Actually, I haven't read it. I mostly stopped reading at about age 22 to work out the world for myself from first principles, and have only started again relatively recently to see how the written world of other humans compares to what I came up with in the 3+ decades I was detached from it. I'll check it, thanks.

Age was mentioned up thread and I believe it is an important issue. Those of us who are old have had far wider experiences than younger people. "Going back" is far different than "giving up" something for an unknown. When I was a kid, a neighbor was still using draft horses. So, I wouldn't be upset if Ag has to go this way eventually.

The same thing is true of many other areas. However, I would go balls to the wall with regard to refrigeration and well pumps. As I noted in my Campfire thread a while ago, I have attempted to assure these will continue to be available during my lifetime.

Somehow, an age perspective has to be brought into this discussion.


It is my experience that when things go wrong, most folks' first inpulse is to blame anyone but themselves.

I therefor expect that many folks will believe that things will go back to the 'good ole days' if they can just find the right scapegoat and make them stop messing with their god-given endowment!


I wonder if your experience with using your age and experience of being older works with younger folks.

Its my opinion that when someone says "oh we should listen to our older more experienced people" that they are just bullshitting.

I find that trying to dispense some knowledge or wisdom to the younger generation gets you 'dissed' pretty fast. Their eyes glaze over.

An example. Last harvest my buddy was erecting grain rings on the ground. Storing his soybeans in them at about 17,000 bu/ring.

Rain was forecast and he had an open ring with no tarp on and only half filled.

He brainstormed it and I suggested a solution. He put the two youngest and newest employees to work constructing the means to put a temporary tarp on using my idea of how to engineer it. I was sent to procure the PVC parts. When I returned it was 3 hours til dark and rain clouds were gathering. They had screwed it up massively.

I told them to use the formula for diameter of a circle using pi.
They dropped their tools and first gave me vacant stares, then said they knew how to do it and when I showed them their mistakes they got pissed.

I said" This man can lose over $100,000.00 from spoilage if you screw it up and since you pissed me off I am going home and the brunt of his anger will be on you.

They didn't get it done. They knew they couldn't and completely dismissed me as an old fool. At nite they had to crawl up a fifteen foot mound of soybeans and fight a 60 diameter heavy tarp to save the beans. They got by just barely.

End of story. From that time on I refused to ever work with or near them again. They ask me something now I just walk by. I think they have maybe learned just a little tiny lesson , perhaps.

This is the general attitude of youth today. Ignorance and bad attitudes. Bad manners and lack of respect for those who would teach them.

Airdale-they are real heavy into con games as well since that must have worked for them with their very permissive boomer parents

Our youth will not save us. They are part of our problem.

Amen, Airdale.


Our youth will not save us. They are part of our problem.

I don't buy that, the problem is not our youth, it is that too few of us have the knowledge and the patience to teach them. Maybe part of the problem is your approach?

I have a 13 year old son, he has Asperger's but tests at college level in math.

That didn't happen by accident, I had him finding the diagonal length of our kitchen tiles when he was less than 5 years old. We used a toy frog as the basic unit of measure and I was able to teach him the Pythagorean theorem. Not many years later I had him doing mental calculations such as figuring out the volume of the hypothetical sphere based on the known circumference of our local "Young Circle Park", He had to mentally calculate the radius and then apply it in the formula (4/3 pi) X (R cubed) to find the volume of a sphere. Then I would have him figure out how much different gases at different partial pressures filling that volume would weigh. So he had to know about atomic weights, physics, chemistry etc.. They don't teach those things to 10 and 11 year old's in public school so if I hadn't taught him myself he wouldn't know either.

It’s true that our society does not teach the youth, but then the youth are adapted to this society. When I was young I learned to program computers, because there was nothing better to do with them. Nowadays there is the internet and games, so young people don’t just learn programming the way I did. Different times, different learning.

I was a teatcher for two years, and I really wanted to teach sciences to the students. I tried to do it with passion, emotion, fun… All I got back was disdain. They actually didn’t care, they just wanted the grades.

As for your son, I have a kid with the exact same syndrome. The reasoning/logical/spatial capabilities of these kids are sometimes above the ordinary; most times they are perfectly normal. My wife is worried about the school achievements, while I am not. The social skills are a totally different matter, “we” actually have to learn most things that come instinctive to other people. It’s quite a telling experience, because we have to see the “logic” (or lack of it) of human behavior, while for most people it’s just the way they are.


Airdale's comment was a generalization. You can't take a generalization and apply it to all youth, as your son demonstrates. But my experience, even in the workplace with younger workers, pretty much confirms his assessment. Now I wouldn't say all of them are like that, but in my experience a majority are. Strangely enough, as the economic contraction hit, we've laid off some people. Being our systems architect but not part of management, I had to chuckle when I saw who we kept versus who we let go. Almost every single person we kept was someone who would seek out the advice of those more experienced. Almost every single one we let go was someone who thought he knew better than those around him. And this wasn't on the farm but in a software shop. (Note: I didn't have any direct input into who was laid off, though I'm sure our project manager already knew my thoughts about some of those people.) The strange net result is we are more productive today at about half our previous size than we were then. There's less going back to fix things we shouldn't have to fix and less forced handholding sessions and more focus on getting things done.

In the past, I've hired less experienced/"capable" software engineers because their people skills were better. More confident yet less arrogant at the same time. More confident because they were quite willing to ask for help rather than bullheadedly need to prove that they were intelligent to anyone who would listen.

Sometimes "brilliance" isn't worth it if the personality gives the manager more grief w/r to people issues...

You can't take a generalization and apply it to all youth, as your son demonstrates.

Yes, I agree. However regardless of an individual's natural talents if he or she doesn't have the support of his or her parents, the surrounding community and a society that values knowledge and mutual respect, it is not fair to blame them for their ignorance and poor attitude.

The blame is irrelevant.
The problem already exists: we have a whole generation that was indoctrinated to think it knows best, it is the best and it looks the best. Society worships appearances, youth, irreverence and the adherence to the new, relegating old things to the hall of oblivion.

What I wanted to hint is that your kid, as many others, is for sure having a whole lot of problems in the social area. If he hasn’t learned it already, he will soon find out that he cannot discuss intellectual stuff without being labeled as a “geek” or “nerd”. Apparently the peer pressure is to loath school and just do enough to get by.
The whole school system works (at least in my country) to make believe that the students actually know something. The teachers are pressured to work for the statistics, and the guilt is on them if the results are not within the official goal. The end result is that everybody works for the show, so why wouldn’t the kids believe they know better? They were actually approved without learning much!
I could flunk half a class of 16 years old, just asking them to compute the sine for 90 degrees with their own calculator. Most of my generation will know the answer by heart, but nowadays they cannot even understand the settings of degrees and radians!


I hear you loud and clear. There are so may points you raise, it's tough to single out one.

I had the benefit (luck?) of being educated in a very good school system. When I matriculated, I had an education rivaling what today passes for a bachelors degree.

I would suggest that the push for a college degree is not so much the "new demand" for additional learning but a desperate compensation for the poor quality of K-12 education.

I am a big believer in the "back of the envelope" system. If one understands basic concepts, has a knowledge of basic formulae and has committed certain constants to memory, then most calculations can be done on the back of an envelope, with an accuracy of better than +/-10%.

There was a book published called "The back of the envelope" or something similar. I have tried to find it but it appears to be out of print. It was an excellent source of stimuli for critical thinking.

IIRC, one question was; "What is the volume of an average human?

The process went like this:

- Do humans sink or float? Answer: pretty much neutral
- What is the average weight of a human? Say ~150 lbs, ~68 kg.
- How much does a gallon, litre or cubic foot of water weigh? 10lb, 1 kg, 72 lb

Etc, etc

If one has no understanding of exponential notation or a gut feel for the intended result, then whatever the calculator spits out is fine for most people. Regarding trig, do you even teach the mnemonic "soh cah toa"?

I, like many here, am an autodidact but I'm not saying everyone should be "clever" and I'm not trying to be elitist. I just feel that the education infrastructure, like many others is in serious trouble and that we have yet to suffer the result.

OTOH, if 90% of the population will soon be raising food, perhaps it doesn't matter.


“OTOH, if 90% of the population will soon be raising food, perhaps it doesn't matter.“

Actually, it does matter. I hesitated to continue the thread about “turning back in time”, but I think I will address it anyway.
The question is, what level of knowledge do we maintain? What level of education should we keep or require in a powerdown future?
I believe that we need to keep whatever we can, and then add some more. Because our society did not learn to develop in a more sustainable way, that doesn’t mean it is not possible. Knowledge gained must be preserved, otherwise we will just go back where we started, and repeat the same mistakes all over again.

Imagine that we have a few generations of farmers, and read or write are not considered necessary. Do we end up in a new medieval society? Another dark age? Or maybe we keep knowledge in certain groups: the high priests?

Individual freedom requires learning, reading and discussing.

To me it seems obvious that you cannot characterize a generation based on a few examples. For every boomer in the U. S. A. who in the 60's and 70's was marching against the war and who today is volunteering for environmental groups, there's also a boomer who was just drugged out during his youth and who now owns a McMansion and SUV in the suburbs. I've encountered a number of young people (now in their 20's, not generation X but younger than that) who are well-behaved, focused, and paying attention. Teachers I know in school also say that kids today are better behaved today than they were 10 or 15 years ago.

Probably the idea of "sunk costs" has equal application for each generation. BUT, perhaps young people just because they own less could be the locus of any mass transition to a different, less materialistic culture. They have fewer bones to defend, so to speak. You might want to check out "The Fourth Turning" and "Generations" by Strauss and Howe. They have some interesting things to say about generational interactions. It has a strong American bias but I think that the principles would apply elsewhere.

I recently saw a survey, which was taken first in the 1940s and again in the 1990s. School teachers were asked, on each occasion, what are the three problems that troubled them the most in their classrooms? In the 1940s, the top of the list was chewing gum, talking while standing in line, and not putting the chairs back at the end of the day. In 1992, the top three were drugs, rape and murder.

--Steven A. Rosell et al., Changing Maps: Governing in a World of Rapid Change

Some years back I knew this wealthy wildcatter in Midland, Texas. He was quite a colorful character. He went down to the local Cadillac dealership and wanted to charge a new Cadillac on his credit card. Surprised by this quite unusual request, the dealership called the bank. The bank said to charge the whole damned dealership on his credit card if he wanted to.

He died leaving a considerable fortune to his widow. Some time before her death, she bequeathed everything to her two boys. They immediately slapped her in an old-folks home where she was soon forgotten. Only one granddaughter continued to come visit her. Meanwhile, it was yachts, airplanes and houses in Vail and San Miguel de Allende for the two boys. Needless to say, she died a lonely, bitter and disillusioned old woman.

A mutual friend of ours bemoaned how badly the boys had treated her. Another friend asked: "Well, who was it that raised those boys and taught them to act like that?"

Last week a 93-year-old man froze to death when the utility came to turn off his electricity. It was later revealed he left $600,000 to charity.

If we don't teach our kids morals, who do we think is going to take care of us when we get old and can't take care of ourselves?

Its my opinion that when someone says "oh we should listen to our older more experienced people" that they are just bullshitting.

Ponder this letter to editor from 13 year old Carrie in Scarborough Maine.

"Think of the children you are giving the economy to. How are we supposed to deal with the economic crisis that our elders themselves could not fix? We don’t know what we’re supposed to do. How are we supposed to handle the problems with the economy? Teach us how!"

I wonder if this young "child of the recession" wants the real answer: that the "fast action" amounts to robbing her blind.

We're a year or so into the obvious crash. Maine is still somewhat buffered, but that's only for maybe the next 3 - 6 months until the University, munis and hospitals crash. Yet this "child of the recession" is already calling herself a victim. She's looking to adults for advice and leadership; the very same adults that are destroying her generation and on to preserve their own entitlements. "Where's my entitlement," she's asking.

cfm in Gray, ME

Although it actually began much earlier, my public marker for the beginning of this crash was the July 2007 collapse of two Bear Stearns hedge funds. That event, a paltry $4 and $6 billion loss at that time, became my personal demarcation line between the bad "noise" in the background and the crap actually beginning to hit the fan.

We are now 13 months into the "official" recession and if job losses don't stop by the end of April, we will be inside an economic event, that in terms of job losses, will be worse than any other economic event since the Great Depression. It is my opinion that job losses are not going to abate this year much at all and in fact continue into next year. The coming bankruptcies are going to be breathtaking in their size and scope. And the potential for social upheaval is positively gigantic.

In the midst of this human created financial crisis, sunk costs are simply another anchor that weighs down our collective thinking until it becomes far too late to apply "out of the box" thinking proactively. Instead, by the time society is willing to consider thinking out of the box, we may instead be mired in a mess so deep that we simply cannot escape without serious repercussions. With economic instability will come political instability and social instability.

All of these serve as backdrops upon which to paint a future for humanity even as resource constraints grow tighter, like a noose tightening around our collective necks.

Dryki, there will be no leaders to lead us from the wilderness until we actually pass into the wilderness. As bad as things are right now, we are still on some public path at the edge of some public park. Not until we pass beyond the realms of civility will people really begin to question authority (even authority that has been consistently wrong), and by then the process may be too far gone.

Barack Obama is nothing but business as usual, as his cabinet nominations clearly prove. He has a few years to try to grow out of being a yes-man for the multinationals but I don't expect him to do that. Instead I expect Nader's rhetorical question, asking if he will be a leader for the rest of us or an Uncle Tom for the multinationals, to become a real question. And I expect the real answer is going to disappoint people on a scale not seen in a generation at least.

- What would we do if all of our vehicles 'vanished' and we had to restructure our basic needs without the sunk cost of automobiles?

-Would the answers to the above question ONLY be implemented IF all our vehicles 'vanished'? Why or why not?

I think it's not just the cars that own us. We're also addicted to the ability to rush through our world faster than racehorses without ever tiring; our world moving by in a rhapsodic blur as we alter our coordinates with minor effort of will. This may be a rather strong addiction, it certainly is in me, although a good downhill bicycle run is at least as good in terms of stimulation. I think we would also need to lose the perception of "cars as extension of self", which is to say redefine our self-image away from a need for speed. The immediacy and extent of our volitional control using cars is, IMO, one reason that mass transit suffers. It feels different to the brain to be a passenger. Even the weak, old, and infirm can feel superhuman in terms of sensory input, and to a large extent BE superhuman.

Of course, as all readers of TOD are aware, we have co-evolved our living systems around these superhuman abilities as though they were now intrinsic to us. Getting rid of cars is not simply a materialistic attachment of ownership; it represents a fundamental change in self-image for those who don't spend a lot of time in self-examination, as well as necessitating changes in how and where we live. At this point, cars are more a prosthesis than a possession, and if they were removed we would try to recreate them. Those now alive in developed countries grew up seeing them as an attainable birthright, a source of personal pride, and the ability to drive as a rite of adulthood.

I'm saying that the sunk financial costs of cars per se are not the core issue, although the sunk costs in a nation like the USA which has evolved its very structure around the abilities of these grotesque protheses arguably are close to it. But I think we face nothing less difficult than abandoning part of our collective self-image, and that's a sunk cost indeed. Short of massive self-enlightenment and dematerialism in the short term, (and good luck with that), private cars will probably only go away once so few people can operate them that doing so causes a dangerous level of anger in others at the disparity in perceived relative wealth.

It is a difficult thing, to become less godlike in one's own eyes.

eloiburger, well said!

I would add that the automobile represents not just a superhuman exoskeleton, but a prerequisite for a person to be considered a full-fledged economic participant - a player, if you will. I agree that most people will not give up their car voluntarily.

Errol in Miami

Oh Yeah!! Certainly here in Thailand. The car here attracts the mate to the male, shows the community that you are wealthy and 'someone', gives you big 'face'. I have ridden a motorcycle here by choice for 9 years. You would not believe how many times people have implored me to buy a car.

Oh, and the car (bigger the better), fits nicely in with the superficiality aspect of Thai culture.

Wow. Very very well put.

I think you've summed it right up - vehicular freedom of movement goes beyond the cars themselves because it is a fundimental component of what it means to live in first world civilization. When energy constraints start to take that away, the most likely result will be a mass temper tantrum from a populace for whom anything else isn't just undesirable, but completely unthinkable.

I disagree. People will be too hungry to have temper tantrums. Their cars will have already become virtually useless (they wait in lines for gas, or steal it, borrow it) then drive to the store but the store is not open or it has no food left. Over at LATOC there is a discussion thread about shortages people are noticing at shops. Apparently, these are starting now, at Walmart and the bigger chain stores. So what's the point of a car if the stupid shop isn't providing the goods?

I think people are going to start making do (with difficulty) without a car and only the very richest will have time and energy for temper tantrums.

The change in social endowment might be reflected in people through the Five Stages of Grief; Denial, Anger, Bargaining, Depression, Acceptance. How fast the energy cliff hits will determine how long it takes most people to get through. A sharp dropoff may win quick converts; a slow, undulating drop-off will keep some people in the Denial and Anger stages indefinitely.

I agree the real big-picture problem is the eventual loss of trucking and resulting emptying of the store shelves, but that's a bit further down the doom curve than what we're discussing here, LATOC speculation notwithstanding... You're definitely right that once people are having trouble eating they'll concentrate on that and forget the lack of joy rides. No doubt about it.

However, people do drive other places besides the store, and that's more what's being referred to above. There's likely to be a period in between now and when cars have "already become virtually useless" and the shelves are bare, where we can only drive when we must. Frivolous discretionary car trips will be the first to go. The point raised above is that psychologically, those trips are pretty important to our egos.

Sadly, since the majority of the general public are so completely committed to remaining ignorant about peak oil, they're not going to be able to put this development into context. Their tenacious denial may create a brief period where they're seriously having to curtail their non-essential driving, with no idea why and still totally unwilling to even consider the possibility that the problem is long-term, structural and will get worse. Cue the tantrum.

"What would we do if all of our vehicles 'vanished' and we had to restructure our basic needs without the sunk cost of automobiles?"

That's what happens today, automobiles depreciate very quickly, faster than homes, refrigerators, roads, bridges, factories. In 20 years almost all cars on the road today will have vanished. That's why I am optimistic that as oil vanishes, so will cars burning oil, to be replaced by EV's or mass transit.
Homes are a very different situation, they generally last several generations if not lifetimes, so we have to live with poor town planning,and poor design for a very very long time, although we can do a little home renovation( still more expensive than replacing the car).

- What would we do if all of our vehicles 'vanished' and we had to restructure our basic needs without the sunk cost of automobiles?

-Would the answers to the above question ONLY be implemented IF all our vehicles 'vanished'? Why or why not?

In some places, this is already the modus operandi; there are many carfree areas (fully or partially) around the world. Some evolved that way before the auto, some became that way by conscious choice.

The questions are so hypothetical that I don't see the situation occurring, but I'll play along for the mental exercise.

What would we do? Walk, bike, take the subway, telecommute. Many do this today. Those in the outer suburbs/exurbs would need at least electric hubs on their bikes.

This would only be implemented if vehicles vanished or a global nuclear war created enough EMPs to knock out all the auto electronic systems.

For your term "social endowment", I've been using a slightly different phrase "cultural inertia".

Nate -

Very interesting framing of our biggest problem coping with PO IMO. Great timing: just this morning I traveled down a newly expanded section of freeway (including a very expensive bridge expansion) from Houston to the burbs in Ft. Bend County. For decades Ft. Bend county was (and still may be)THE fastest growing county in the nation. With the exception of HOV lanes there are no provisions for serious mass transport...BAU here in our single-driver car heaven. I'm probably the only one driving down that road today struck by the lack of foresight. In fact, I'm sure many community leaders and politicians can't wait to jump up an take credit.

I'm what they call a TBC down here (Texan By Choice) as opposed to native born. I know the spirit as well as if I were a native son: "You'll only take my gun and car keys from my cold dead hand". The future can look very dark at times...heading for the cliff and pressing down harder on the gas peddle.

I'm one of the old ones here. I was talking with a friend ... the college freshman this year was born in 1990. The only president he/she knows is xxx (put liberal cuss word here) Bush and way back somewhere they might remember Clinton's administration. Maybe the worst thing that has ever happened is the remote died and they had no batteries. IMHO if one lets advertisement run their life and it doesn’t work out for them … TS. I’m not much of a sympathetic psychoanalyst. Dr Phil is not my hero.

Lack of personal transportation will be easy to adapt to compared to lack of lack of truck transport because the average potato travels over 800 miles from farm to table. I don't even know where toilet paper is made but I know it came here in a truck.

Many of the above comments are something like, "All those people will really have a problem adapting because they need to keep their endowment." Well, I only have one person to adapt out of that endowment mentality and I have been working on it for years. So I looked at the situation as best I could without a crystal ball and figured I had to change. And I have. Figuring out how you have to change is different with each person so I will not even suggest how someone else should change. I am quite different than I was 15 years ago. I believe part of the solution is to understand better that we are not separate from nature. It is really quite simple, accept reality, here and now. If we use all the crude oil, we don't have any more so make do without. In our PO case we haven't run out, it will just get too expensive to do much, so make do with what you have. I’m learning how to garden and store food because I think I might need it. No big deal, just garden and store food. If you learn how while you can still run to the store and pick up something, all the better.

There are a lot of new things to think about in different circumstances. A criminal with a gun is easy, just kill him. A hungry man with a hungry family and a gun is not so easy. In a really bad scenario, the worst of Black Swans, this may be the reality we face. There are a lot of things worse than losing one’s present endowment. I personally found my bottom line in Vietnam 1967, in a fetal position, in a very lightly built bunker with rockets landing all around. My motto since then: Happiness is no incoming. A lot of people will find a much lower bottom line in the generations ahead and a SUV and McMansion is trivial IMHO.



A little off topic, but I watched Tora! Tora! Tora! today. It's a historically accurate documentary of the Japanese attack on Pearl Harbor.!_Tora!_Tora!
The attacked was provoked by the U.S. embargo that cut off raw material supplies to Japan. The Japanese army leaders and several political leaders were eventually able to persuade the rest of the leadership to plan and undertake the attack.

Lately I have had recurring thoughts of a major resource war. I see us as vulnerable, especially in a few years when we will not have enough domestic oil to survive should something happen to oil imports. Looking further back at history to WWI, the blockade against Germany resulted in the starvation of 750,000 Germans. Not having gasoline for cars is one thing, but not having fuel for trucks to deliver food is something else.

Anyway, if you are interested in military history, I recommend this movie.

The Chinese and the Koreans must have really cut off their supplies because they killed and raped millions there. Ah yes, the Guamanians were bad beyond believe to the Japanese. Lets see. Those damned Philipeanos. I guess history get re-written every now and then. Sorry bout that...

Ah, yes, those inoffensive Imperial Japanese.  Why would we ever want to bother them?  All they were doing was little things like the Rape of Nanking.

Slaughtering civilians and using them for bayonet practice, things like that.  Nothing that Arabs don't do to Israelis whenever they get the chance... we should have just let it all go, right?  Right?


The modern Left disgusts me.

"the familiar phenomenon that a dog will fight harder to keep it's own bone than to take a bone from another dog."

I wonder...

Just shortly after dawn this morning I woke to find a group of 3 coyotes who had freshly killed a deer just outside our garden fence. A foreleg/shoulder was partially eaten, but they were backing off of it. A pair of our dogs barked from the far side, all within 20 yards of the kitchen window. As our dogs were without any sign of blood or such, I can only presume that the domestic dogs were backing them off their kill.

It really surprised me. It's been a long winter, the air was cold, the snow 12-18 inches deep and frozen fairly solid in it's fitful progression to spring. The coyotes, in contrast, looked quite healthy and large. Larger than the smaller Australian Shepherd cross domestic dogs. Seems an element of trespass can play havoc with the endowment effect.

I toted the carcass far off into the valley, no sense in teaching the coyotes to dine next to house. At least it wasn't the sheep for dinner this time.

just bump it up a bit
About 7,8 years ago a wave of parvo (sp) came rolling thru the dog pop. and hit the fox pop. Last year I heard a fox, and just 20 min. ago I heard another


Your story brings to mind the old parable: is the wolf caught in a foot snare that chews off its own leg to escape brave or a coward? The answer: is just a wolf following its instinct. It can make no other choice. But we are humans. We are capable of acting beyond instinct. A human could choose to stay in the trap and await the hunter with the hope, however slim, of killing him to aid the rest of society. And there’s THE question IMO: will the number of folks willing to sacrifice be sufficient to make a difference?

That percentage may be high in the TOD family. But I work in a rather basic and blue-collar world. That percentage drops very quickly here. And there a lot of “them”.

Collectively we have invested much time in trying to understand the dynamics of oil depletion without ever achieving a non-heuristic quantitative model. "We" still don’t understand it at a universally accepted level. Yet, we will likely retain most of the conventional wisdom and tribal knowledge due to inertia and group-think and without having any better information available. As an appeal to the economists, who should know best to avoid this quandary, this is also a sunk-cost effect. I agree that sunk-cost relates to the "dogged" persistence in people that have invested their own money and ordinarily would show rational behavior if they happened across found money. The field of economics teaches us the fallacious reasoning involved in falling prey to sunk-cost arguments. This becomes problematic because it often leads to emotional rather than rational decision-making. All the past mistakes in theorizing have become “sunk” and the arguments we present provide an alternate and ultimately more realistic view for the path forward. If the emotion gets down to a personal level and each of us has to deal with our own experiences with resource constraints, the rationality of our plight might just hit home, with the sunk-cost and group-think fears cast aside.

... And why didn’t a consensus of economists at universities and other institutions warn that a crisis was on the way?
The field of social psychology provides a possible answer. In his classic 1972 book, “Groupthink,” Irving L. Janis, the Yale psychologist, explained how panels of experts could make colossal mistakes. People on these panels, he said, are forever worrying about their personal relevance and effectiveness, and feel that if they deviate too far from the consensus, they will not be given a serious role. They self-censor personal doubts about the emerging group consensus if they cannot express these doubts in a formal way that conforms with apparent assumptions held by the group.from

So these group-think and sunk-cost arguments are not just isolated to material possessions and lifestyles. It also enters into the realm of understanding and theorizing. Peak oil analysts on TOD have essentially torpedoed years and years of cornucopian analyses generated by the corporate and political establishment. We have yet to see how that end shakes out. How long until they actually seek out fundamental answers?

This has been on my mind as I don't understand why any established economists tread where we engage in useful discussion. Some sort of sunk-cost or group-think ideas have to be the basis for this.

good analysis/comment Web.

The policy point is that one needs to work not merely on the cost-benefit, deterrence, incentive, and police side but also on the formation of preferences side, via moral education, peer culture, community values, and the mobilization of appropriate public opinion, factors that neoclassicists tend to ignore because they take preferences for granted, and their theories provide no analytical framework to conceptualize the ways in which preferences are formed and might be reformed...

The neoclassical positon that preferences are revealed in behavior and hence there is no need to study how they are formed or changed, introduces a major value judgment into neoclassical economic theory that has been often pointed out, and hence is mentioned here largely to complete the record. By arguing that the market best serves people's preferences, "what the individuals want," economists disregard the fact that preferences are to a significant extent socially formed and hence reflect the society's values, culture, and power structure (Boulding 1969; Tisdell 1983; McPhereson 1985). People in Western societies are after consumption and wealth; but is this because they are acquisitive in nature, or because they reflect the values of mature capitalism? True, studies of India and Nigeria by Inkeles and Smith (1974), studies of Kibutzim, and recent expriences in the Soviet Union and Communist China, point to the ubiquitous power of consumer goods. But are they what people want when they have little, and soon move on to "higher" needs, as Maslow suggests, or is there no limit to their desire to use objects, using them also as a substitute for and expression of affection, self-esteem, and self-realization? Indeed, there is considerable evidence that what people consume largely reflects their culture and subcultures, their values and social definitions of the products (Douglas 1979; Thompson 1979). Within the United States, the rise of "voluntary simplicity," especialy in the late 1960s and the 1970s, led people who had more money to consume less, not only proportionately but also absolutely (Elgin and Mitchell 1977; Leonard-Barton 1981).

In short, it seems quite clear that neoclassical economics, and its "consumer sovereignty" assumptions, in effect reflect a value system and a social, economic, and political structure--that of mature capitalism (Hirsch 1976)--rather than human nature. To maintain otherwide, leads those who internalize such a a theory to assume that their buying preferences reveal normatively correct choices, because they made them, presumably on their own, while in effect they are largely culturally bound and conformist.

--Amitai Etzioni, The Moral Dimension: Toward A New Economics

I had not heard of that book - thank you it sounds of interest. I am not an economist and am typically only interested in how it intersects with my field (obscure biology).

It is my viewpoint that under an emergency such as 'no vehicles' leaders and scientists would engineer ingenious plans in order to procure essential goods for the population. Without the vehicles, different best-uses for liquid fuel would be considered and clearly economic growth would go out the window. Gradually, after some initial chaos, it would be my bet that things would settle down and most would be better off without the albatross that we now associate with freedom and basic rights.

Of course 'cars vanishing' will never happen, but Nathan asked me to write several 'thought experiment' essays (on short notice I might add) and it struck me that most of our government decisions will be based on the assumption that our economic trajectory will just be continued in a straight or curved line. Right angles or oxbow shapes can also reap benefits.

It is my view that the decisions made under an emergency such as 'no vehicles' would force leaders, engineers and scientists to come up with the best plans available to procure essential goods for the population...

I'm not sure I'm as optimistic as you. The scenario you speak of is certainly possible, but not a certainty.

I just started reading a book that I find absolutley intriguing: Steven A. Rosell's Changing Maps: Governing in a World of Rapid Change." It posits that we have now entered the "post-modern" era where "the myth of objectivity breaks down."

I wish I knew how to post graphics, because I would scan and post the little flow chart that Rosell uses for illustration. But anyway, it shows modernism fracturing into an array of belief systems. There are two basic categories. First are the recidivists (those who would carry us back to modernism or premodernism), which breaks down into three sub-categories: the Scientific-Rationalists, the Social Traditionalists and the Romantic-Back to Nature enthusiasts.

The second category consists of forward-looking types. Here we also find three sub-categories: Constructivists, Players and Nihilists.

If any of the above-mentioned sub-categories prevails, with the exception of the Nihilists, then I believe your prediction would very likely come true. However, if the Nihilists prevail, then I don't see the "best plans available to procure essential goods for the population" as being in the cards.

So who are these nihilists, whom our author also calls "deconstructionists?" Their credo is this: in the absense of any other truth, the legitimate basis upon which choices can be made is power.

They (the nihilists) have come to the more or less rational conclusion that, if there are a lot of different belief systems out there, and they all claim to be true, its's just possible that none of them is true and that everybody is lying. In the words of one song: "if nothing is true, then the only thing that counts is pleasure and pain." Their conclusion is that, in the postmodern context, the only sensible response is to live for the moment.

--Steven A. Rosell et al., Changing Maps: Governing in a World of Rapid Change

In a comment the other day I called two of the people that Obama has surrounded himself with, Geithner and Summers, "scientist-kings." But after reading Rosell, I believe I was mistaken. For they are not really "scientist-kings" at all, but "nihilist-kings." Granted, they wrap themselves in the robes of the Scientific-rationalists and dub themselves neo-classicists, but in reality there is a great dissimilitude between them and their supposed progenitors, the classiscists of old: Smith, Ricardo, Mills, etc.

Further reading of Etzioni only reinforces this belief:

Neoclassicists each year expose millions of high school and college students to a paradigm that, as Solow (1981) puts it, "underplays the significance of ethical judgments both in its approach to policy and [in] its account of individual and organizational behavior." Neoclassical economic textbooks are replete with statements such as "...the rational thing to do is to try to gain as much value as I can while giving up as little value as I can." (Dyke 1981) And, referring to worker-employer relations: "however, as in any transaction, each side will try to get the most while giving as little as it must." (Ehrenberg and Smith, 1982)

An effort to protect the mono-utility assumption leads to a discussion that equates the Bible and dope as two consumer goods (Kamerschen and Valentine 1981), while Walsh (1970) treats as interchangeable relations to a bottle of booze (Jack Daniels) and to a person (Marina). Gifts are depicted by Alchian and Allen (1977) as "equivalent to a sale at prices lower than the market-clearing price," and children are viewed (Becker 1976) as "durable consumer goods."...

"Economist's way of thinking...involves, in many cases...a sort-of cultivated hard-nosed crassness towards anything that smacks of 'higher things of life.' "...

An empirical study of the educational effects of neoclassical teachings might well show that the students become somewhat more self-oriented and pleasure-seeking than they were before they were so exposed, just as they become more rational in their purchase and investment decisions. Such effects are evident in a series of free-ride experiments conducted by Marwell and Amers (1981). In eleven out of twelve experimental runs most participants did not free ride and contributed from 40 percent to 60 percent of their resources to a public good (the "group pot"). However, a group of economics graduate students contributed only an average of 20 percent. And while the other subjects were motivated by a strong sense of fairness, and a near unanimous definition of what it is (ibid.), economics students refused to define the term, or gave very complex answers, and those who did respond stated that making little or no contribution was fair (ibid.) (These findings could be caused by the way students of a given moral prediection choose their field of study and not merely by its teaching. However, courses do have consequences. A course in professional ethics given in a business school generated a rush of visits by students to the mental health service. Osiel, 1984)...

A paradox arises to the extent that it is true that the market is dependent on normative underpinning (to provide the pre-contractual foundatons such as trust, cooperation, and honesty) which all contractual relations require: The more people accept the neoclassical paradigm as a guide for their behavior, the more the ability to sustain a market economy is undermined. (emphasis his) This holds for all those who engage in transactions without ever-present inspectors, auditors, lawyers, and police: if they do not limit themselves to legitimate (i.e., normative) means of competition out of internalized values, the system will collapse, because the transaction cost of a fully or even highly "policed" system are prohibitive. This holds even more so for the regulators that every market requires. If those whose duty it is to set and to enforce the rules of the game are out to maximize their own profits, a-la-Public Choice, there is no hope for the system. It is our position that they are not so inclined, but neoclassical education may push them in the amoral, anarchic direction.

--Amitai Etzioni, The Moral Dimension: Toward a New Economics

they are not really "scientist-kings" at all, but "nihilist-kings." Granted, they wrap themselves in the robes of the Scientific-rationalists and dub themselves neo-classicists,

DownSouth, it's impossible to keep up with your studies. Here, have you read this, Altemeyer's Authoritarians"? (Free pdf online) That would dovetail nicely with your "nihilist-kings". Sadly, it's an easy read and will only slow you down for a couple of hours.

What, after all is Obama's "pragmatism" than a preference for adhoc solutions. I'll have to read Etzioni before I'd call that "amoral" or "anarchic". In the meantime I'd instead call it "immoral" and "despotic" in that 1) the moral code is that of the neo-liberals and 2) "rule-of-man" instead of "rule-of-law" is entirely "archic" [eg despotic]. I see this happening not only at federal level, but at state (where I focus most) and local. Rules are being developed and laws put in place that contradict other laws - any sense of process overridden - judges go along. The players sense that BAU depends on it and act accordingly. Maybe more than BAU, their whole worldview (WAU); they can't even imagine another way any more. Over at Balkinization there is repeated discussion of whether or not we in US have an "elected dictator", etc.... Ties into Fromm's "Escape from Freedom", how people want to shed their responsibilities. How they prefer submission.

cfm in Gray, ME

Frank Rich does a great job of laying out the whole sordid affair, of how Obama has encapsulated himself in a little bubble with his "Nihilist-Kings," shut off from the public:

Even as President Obama refreshingly took responsibility for having “screwed up,” it’s not clear that he fully understands the huge forces that hit his young administration last week.

The tsunami of populist rage coursing through America is bigger than Daschle’s overdue tax bill, bigger than John Thain’s trash can, bigger than any bailed-out C.E.O.’s bonus. It’s even bigger than the Obama phenomenon itself. It could maim the president’s best-laid plans and what remains of our economy if he doesn’t get in front of the mounting public anger...

There are simply too many major players in the Obama team who are either alumni of the financial bubble’s insiders’ club or of the somnambulant governmental establishment that presided over the catastrophe.

This includes Timothy Geithner, the Treasury secretary. Washington hands repeatedly observe how “lucky” Geithner was to be the first cabinet nominee with an I.R.S. problem, not the second, and therefore get confirmed by Congress while the getting was good. Whether or not this is “lucky” for him, it is hardly lucky for Obama. Geithner should have left ahead of Daschle...

Key players in the Obama economic team beyond Geithner are also tied to Rubin or Citigroup or both, from Larry Summers, the administration’s top economic adviser, to Gary Gensler, the newly named nominee to run the Commodity Futures Trading Commission and a Treasury undersecretary in the Clinton administration. Back then, Summers and Gensler joined hands with Phil Gramm to ward off regulation of the derivative markets that have since brought the banking system to ruin. We must take it on faith that they have subsequently had judgment transplants.

Mind you, this criticism does not come from the the right. They don't get much more liberal than Rich, and he was an avid supporter of Obama. And still is. He, like myself, is just reeling from seeing the way Obama seems to be so hellbent on self-destructing.

We inhabitants of cyberspace are used to seeing this type of criticism, because it's been all over the web for at least a month or so. But this is not coming from the internet. This is the NY Times! That's about as mainstream as it gets.

I, like Rich, wish Obama the best. But if he doesn't pull his head out of his rear pretty damned quick, his days of effectiveness will be over just about as quickly as they started. And that will not only be a trajedy for Obama, but for the American people as well.

And here's another broadside against Obama from the left:

From former federal officials like Robert Reich and Brooksley Born, to Nobel Prize-winning economists like Joseph Stiglitz and Paul Krugman, to business leaders like Leo Hindery, there's no shortage of qualified experts who have challenged market fundamentalism. But they have been barred from an administration focused on ideological purity...

The anecdote highlights how, regardless of election hoopla, Washington is the same one-party town it always has been -- controlled not by Democrats or Republicans, but by Kleptocrats (i.e., thieves). Their ties to money make them the undead zombies in the slash-and-burn horror flick that is American politics: No matter how many times their discredited theologies are stabbed, torched and shot down by verifiable failure, their careers cannot be killed.

By arguing that the market best serves people's preferences, "what the individuals want," economists disregard the fact that preferences are to a significant extent socially formed and hence reflect the society's values, culture, and power structure.

Yes and no, DownSouth. The promotion of "greed is good" and "market" doesn't disregard social formation of preferences, but it is an pseudo-social justification and reinforcement of the current culture. This has been part of an explicit plan for corporate America dating back at least to the Powell Memo.

cfm in Gray, ME

Where were you going with that Powell Memo thing? It's standard Bircher warmed-over-Mein-Kampf stuff.

Great comment, WHT.

How long until they actually seek out fundamental answers?

Using conversation theory, we can make some guesses.

Start with some premises:

  • a new conversation takes time to propagate to the entire network
  • new conversations have to displace existing conversations
  • existing conversations are in part supported by the physical world i.e. "I need a car because my job is a 30 minute drive away"
  • thus, existing conversations will always defend themselves

So, although it's true there is a small network of people preparing for Energy Descent, as a conversation in the network it is growing slowly in large part due to the reasons in this post but also for a few others.

To have a conversation spread more quickly, the physical support that keeps the existing conversations locked into the network must be taken away. People having their car be repossessed is an example of a physical support being removed.

Without these physical supports, the existing conversations have less strength and there is space for a new conversation to propagate across the network.

All that is a fancy way of saying: "(Most) People won't change until they are hit over the head by a 2x4."

Coming from this angle, it is not cynical or defeatist to say that at all. It's simply a result of the analysis, no different than saying a boat drifting with the current will keep drifting unless an outside force acts on it.

Thus, I hereby invent:

The Orlov Axiom

The rate of occurrence and size of boondoggles is directly proportional to the wealth of a society.

And since all great axioms have equally great corollaries:

The Hagens Corollary

Boondoggles happen.

Reminds me of Marvin Harris' work, called "Cultural Materialism." Rings true.

Just the other day a woman passed me and noted that my kids were the only ones who walked to school (not exactly true, but nearly so). She pondered, are we going to change that someday here? I replied that it will change because people will run out of the ability to pay for fuel or we'll have outright shortages.

As much as I have heard people talk about how much they worry about the planet, their kids future, etc., very few of them actually seem to change their behavior much (a few do).

I wait with keen interest...what we happen when they have to change because the material world makes it so?

I'm afraid going back to 1960s level probably won't do it. It looks to me that for the USA to get to anything close of a sustainable standard of living, we'll need to drop back to at least 1941 - a decline in real per capita GDP of about 75%. That puts us about on a par with places like Costa Rica, Uruguay, or Cuba.

It may take many decades to get there, but I am assuming that a decline of at least that much is inevitable and unavoidable. I am hoping that somehow we can at least level off there instead of collapsing all of the way down. Maybe that hope will be in vain, but I can still hope.

What this means is that we - individually and collectively as a society - are going to have a lot of giving up to do. We are simply going to have to learn to get along with a lot less than what we had come to enjoy as a booming consumerist nation.

All of this giving up of things isn't going to be easy. It goes against the grain, as this article explains. The natural inclination is to fight against it, to try to hang on. However, there is some wisdom to be found in several schools of thought (religious or otherwise) to the effect that it is better to do what is counterintuitive, what is against our nature: to willingly and quickly let go of things rather than to expend energy and stress in grabbing on.

The old story of the monkey traps comes to mind. There are people that catch monkeys by tying a jug to a tree and placing food inside. The jug has an opening just big enough for the monkey to reach inside, but too small for the monkey to extract its hand if it is clenching anything in its fist. The monkeys refuse to let go, so they are captured, lose their freedom, and maybe their lives. They would have been better off to just let go.

This doesn't come easily or naturally, it is an attitude and way of living that needs cultivating. It helps greatly to get in the habit of giving up small things even when one doesn't need to. The more one is practiced in giving up things, the easier it becomes to give up even more.

I believe that this is a key survival strategy for the decades of decline that are sure to come. Don't wait until you are absolutely forced to give up things to learn living without them - get ahead of the curve. For example, I could still be driving to work, I don't absolutely HAVE to walk to work now. But I have been walking anyway, I've gone ahead and given up commuting by car before I really had to give it up. This means, at the very least, that I don't have to worry about how I get to work any more, and it has a whole lot of other benefits too - financial, environmental, energy, psychological, social, etc.

At the national level, what this means is that trying to sustain the status quo ("BAU") is counterproductive and doomed to failure. A better strategy would be to identify those few things that are truly important, and to develop a strategy to sustain those, while also to develop a strategy for a progressive and orderly abandonment of things that are of lower importance. This way of setting public policy and conducting our national business is so foreign to the USA that I very much doubt that we'll ever do anything of the sort, unfortunately. This suggests that we'll decline faster and harder, and level off much lower, than we really would have to.

Well stated.

I would add that the best alternative to material consumption is social connection (and better for you and others), with good food and music as secondary alternatives (IMHO).

Best Hopes for Greater Wisdom,


Questions to ponder:

- What would we do if all of our vehicles 'vanished' and we had to restructure our basic needs without the sunk cost of automobiles?

Of course, we--those of us willing and able--would build new automobiles, barring state intervention, actual governmental control of transportation disallowing privately owned vehicles. Any power train will do: gas, diesel, gas- or diesel-electric, battery-electric, fuel cell, alcohol . . .
Presently, I drive a hybrid most of the time, and a 3/4-ton pick up if I have to haul big stuff. The convenience is wonderful but I would like much simpler wheels; rather, something like my old '68 VW bug and its big brother the VW microbus.
Were these to disappear, I still have a bike, outdoor clothing and two legs that will carry me about a mile in 15 minutes, up to about 10 miles. I have neighbors who weathered Katrina with me and my family, and we cooperated well to make life bearable without electricity and water.
The suburban model of residential living will have to go, an idea eleborated well by James Howard Kuntsler in his books and interviews, as in The End of Suburbia (
Models for replacing suburbia can be found in a hefty, marvelous book entitled A Pattern Language (Alexander et al, Oxford, 1977), still in print. see

-Would the answers to the above question ONLY be implemented IF all our vehicles 'vanished'? Why or why not?

There are now pockets were smarter people gravitate, as seen in several cities with good public transportation and a penchant for sustainability. Transition from borrowed to sustainable, if left to occur peacefully, is still going to hurt even if it is voluntary and a critical mass of awareness is reached.
On my end, I am steadily reducing power consumption by planning my trips in detail, using the telephone and on-line sources, working as much as possible at my residence.
Are others?
Yes, maybe 20 percent of those in my circle of friends and family.
Will everyone catch the drift before sharp pain sets in?
Not if history is our guide.

I fear the consequences if we cannot convince everyone of the dire need to get off the juice.

Hi, waveman.

Will everyone catch the drift before sharp pain sets in?

I say "no" and explain my thinking above in a comment in response to WebHubbleTelescope.

Best to be ready with support and (some) answers when they eventually get it. And of course prepare oneself and one's immediate family.

May I make a suggestion to the TOD editors?

I would like to see the equivalent of a set of "sticky-pages" (perhaps linked to in a column on the right or left?) that where links to the various energy related 'theories' or 'laws' that people refer to, e.g.;

"Law of receeding horizons"
"Export Land Model"
"Hyperbolic Discount Function"
"Sunk Costs and the Endowment Effect"

-The intention is twofold;

1. It allows people a quick reference in order to expand their knowledge if this is their first time here.
2. It ensures that any reference to these can be replied to -after quickly reading the section- by people 'on the same page' wrt. their understanding of said theory/law.

I guess it could be done as a Wiki entry for each with a menu link in TOD or erhaps a single "TOD References" wiki page that might be updated by a contributor at the time of submission of an article on a new theory/law...

Regards, Nick.

we would need 50+ 'stickies'...

I'll try and write up a summary post with such concepts that can be linked to when I get some time-my Obama letter was kind of that in any case...

I'm afraid people coming for the first time are going to have a lot of reading to catch up. IMO, theoildrum discussions and essays are mostly 'at the margin', meaning they are on top of a body of knowledge about our situation that is generally understood and accepted and content like above just adds another slightly new color to the tapestry.