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Are We Reaching “Limits to Growth”?
Posted by Gail the Actuary on October 26, 2011 - 11:15am
It looks to me as though 2012 is likely to be a truly awful financial year, with several crises converging:
- Either very high oil prices or recession,
- The US governmental debt limit crisis,
- The Euro crisis,
- The Chinese debt problem,
- Debt deleveraging in the US and elsewhere,
- Further MENA (Middle East/North Africa) political problems, and
- Conflict between need for greater resources and pollution issues.
It seems to me that we may be reaching “Limits to Growth,” as foretold in the book by the same name in 1972. The book modeled the consequences of a rapidly growing world population and finite resource supplies. A wide range of scenarios was tested, but the result in nearly all scenarios was overshoot and collapse, with the timing of collapse typically being in the 2010 to 2075 time period.
The authors of Limits to Growth did not model the full interactions of the system. One element omitted was how debt would impact the system. Another item omitted was how prices for oil and other resources would affect the system.
If a person follows through the expected effects of high oil prices and debt, the financial system would appear to be the most vulnerable part of the system. The financial system would also appear to be what telegraphs problems from one part of the system to another. Unless a solution is found, failure of the financial system could ultimately bring down the whole system.
Background
Newspapers print endless articles about the need for economic growth, and the need for return to economic growth. But if economic growth really takes resources of some sort–coal, or oil or copper, or fresh water to produce goods and services–it stands to reason that at some point, the resources needed for economic growth will run short. This is especially true for resources that are used up when they are burned, like coal and oil.
Besides the issue of inadequate resources, growing pollution can also interfere with economic growth. As the world is filled with more people, and resources become shorter in supply, pollution becomes more of an issue.
Logically, at some point we can expect to run into limits that are impossible to get around. One of these limits may be inadequate funds for investment in extraction of resources.
In the Limits to Growth model, investment is based on a number of factors, including the efficiency of the system (Figure 2). In some respects the efficiency of the system is growing–better technology. But in others, the “efficiency” is getting worse–declining Energy Return on Energy Invested (EROEI) for fossil fuels, and lower ore grades for mined minerals.
How would we know if investment in extraction of resources is inadequate? It seems to me, it would be through relatively flat production and rising prices (or high prices except when the major countries which are large users of the resource are in recession), and this is precisely what we are seeing for oil.
Figure 3 shows that even when all kinds of oil substitutes are included, oil supply has not risen enough to keep oil price flat since the 2003-2004 period.
In my view, what has happened since 2003-2004 is very similar to the effect a person might expect from Liebig’s Law of the Minimum, if oil is a necessary component of the economy, and high oil price signals that too little oil is reaching the system. In agricultural science, Liebig’s Law of the Minimum states that the amount of plant growth is governed not by the total resource available, but by the amount of input of the needed resource in least supply (for example, nitrogen, phosphorous, or potassium). In other words, it isn’t possible to substitute one type of fertilizer for another; similarly, it isn’t possible to substitute one energy product for another in the short term. Instead output contracts, if oil is too high-priced. In a way, this contraction might be seen as a dress rehearsal for the ultimate contraction which Limits to Growth models have suggested will eventually arrive.
I am sure that some would say that oil supply would need to actually decline, for there to be a problem. Since the Limits to Growth model does not look at resource prices, it does not consider this detail. It would seem to me that by the time world oil supply actually declines, the world may already be in a major recession, which does not allow prices to rise high enough to keep production up.
Connection with Debt
What relationship does debt have to the economy?
1. Economic growth enables debt, because in a growing economy, the greater amount of resources available at a later date make it much easier to repay debt with interest. I have shown an illustration of this several times.
The above relationship does not mean that debt would disappear completely in a shrinking economy. There would still be some situations where debt would be used, such as in short term loans to facilitate trade, and in situations where high rates of return can be assured.
2. Additional debt enables GDP to grow more rapidly than it otherwise would, because GDP is a gross measure–a measure of what an economy produces and sells–and having more debt helps in two respects:
a. Additional debt helps the company extracting the resource or doing the manufacturing, by giving the company additional funds to work with–to purchase plant and equipment, or to hire consultants. It doesn’t have to wait and only use accumulated profits to fund new ventures.
b. Additional debt helps the potential buyer of goods, because the buyer can pay for the new item purchased (automobile, refrigerator, or house, for example) over a period of years while using the new product.
But higher oil prices tend to be associated with higher food prices. (See Figure 6, below.) When prices of oil and food rise, consumers (except for those making more money because of higher oil and food prices) tend to cut back on discretionary spending. This cut-back in spending leads to lay-offs and recession in discretionary segments of the economy. Some laid-off workers default on their debts, and businesses scale back their plans for expansion, because of the “bad economy”. As a result, they too need less debt.
So debt works well in a growing economy, but once an economy hits high oil prices and recession, debt works much less well. An economy has positive feed back loops from debt in a growing economy, but once oil limits (in terms of high prices) start to hit, feedback loops work in reverse–consumers and producers see less need for debt, and in fact, may default on past loans. Shrinking debt levels make it increasingly difficult for GDP to grow.
In my post The United States’ 65-Year Debt Bubble, I showed the following figure:
Figure 5 indicates that for the entire period from 1945 to 2007, non-governmental debt was growing more rapidly than GDP, helping to ramp up GDP. The ratio was close to flat for 2007-2008, indicating non-governmental debt grew about a fast as GDP, and has been declining since. Looking at quarterly data, this decline has continued through the second quarter of 2011. This continued deleveraging makes it more difficult for the economy to grow.
If I am right that we are indeed hitting Limits to Growth, I would expect the deleveraging to continue, and would expect it to get worse, as oil supply gets tighter. The reason why oil supply and not some other resource is involved is because oil is the limit (of the many which we might hit) that we hit first. We don’t have good substitutes for oil, except for products already included in Figure 3 above, such as biofuels and coal-to-liquid and gas-to-liquid. While there is plenty of oil in the ground, most of what is left is expensive-to-extract oil, because we removed the cheap-to-extract oil first.
Our problem now is different from our problem of high oil prices in the 1970s, because then our oil shortage was temporary, and we could add new inexpensive supply (Alaska, North Sea, and Mexico). Now we have few options, except expensive ones, which cause problems for economic growth.
Part of the problem with high oil price seems to be related to the fact that high oil price permits low EROEI oil to be produced. In other words, with high price, it makes economic sense to use a high level of resources to extract the oil. These resources include both resources used indirectly, such as for roads and ports and education, as well as direct expenditures. Clearly, it makes no economic sense to extract oil if the amount of energy required for extraction is greater than the amount produced. With high oil price, it appears likely that we are approaching this limit as well.
Prospects for 2012
We are heading into 2012 with many clouds over our heads. Oil supply is still tight, and prices are still high by historical standards. No country expects huge additional oil supply during 2012. We can pretty well guess that we will either have high oil prices or recession throughout 2012.
Many of the problems arising from high oil prices/recession in the 2008-2009 period still have still not gone away. Instead they have been transferred to the governmental sector. What has happened is that with recession, employment dropped, as did taxes collected by governments. At the same time, government expenditures rose, for bank bailouts, stimulus funds, and payments to the unemployed. This is true both in the United States and in many European countries who are importers of oil.
Now conditions are not much better, and are threatening to get worse, because of continued high oil prices. Governments already have high debt loads, but still need to bail out more banks and pay benefits to more unemployed. The United States is supposed to have a plan to solve its debt limits problem by November 23, and vote on it by December 23. Any cutback in benefits to unemployed or layoff of government workers is likely to make the recession worse; raising taxes is likely to have a similar effect. At the same time, there are still problems which have not really been addressed–for example, large amounts of “underwater” commercial property. Defaults on some of these debts are likely to lead to the need for more bank bailouts.
Problems with the Euro have been in the news a lot recently. The adverse factors (particularly high oil prices) causing the PIIGS to have financial difficulty are still in play, so the financial condition of these countries is not likely to improve; more likely it will get worse. It appears to me that the Euro has a high likelihood of “coming apart” in the next year, either partially or completely, because of debt defaults. If countries go back to their pre-Euro currencies, it is not clear that other countries would want to trade with the defaulting countries, except on very disadvantageous terms.
China has been growing in recent years, but a lot of its growth is propped up by debt. Now, it is hitting headwinds–high oil prices, rising coal prices, and lower economic growth in countries that might buy its products. With less growth, China is likely to have debt default problems relating to the debt supporting its recent growth. All of these headwinds suggest that China’s growth rate may be scaled back greatly as well.
There is no guarantee that we are through the governmental problems in the MENA region. Getting rid of one leader does not guarantee that the new government will be a significant improvement over the previous one, so one revolution may be followed by another, or by civil war. The US is pulling out of Iraq, perhaps leading to greater instability there.
MENA countries generally import a significant share of their food, and high oil prices usually lead to high food prices, because oil is used in the growing and transport of food. Because of these issues, we may see more riots in MENA countries, especially if oil/food prices rise further.
We are reaching limits in areas other than oil, and these may be problems as well. Fresh water is an issue that will become increasingly important. Pollution is another area where limits are being reached. Examples include hydraulic fracturing of wells in populated areas and conflict over EPA regulations relating to coal-fired power plants.
Impact of Omission of Debt and Prices in the Limits to Growth Model
Figure 1 clearly shows a tendency toward overshoot and collapse, based on the Limits to Growth model as it was originally created. The original model doesn’t consider the impact of debt or of resource prices. The omission of debt means that the model doesn’t consider the possibility of moving from an “increasing debt” situation to a “decreasing debt” situation. If such a change takes place about the time resource limits hit, a person would expect sharper peaks and faster declines to the modeled variables.
The omission of resource prices means that the model doesn’t pick up the interconnections between high prices for one resource, and a cut back on demand for other resources. We discovered during the 2008-2009 recession that electricity demand dropped at the same time as oil demand. If financial interconnections cause a shortage of one resource to lead to reduced demand for other resources, this may mean that substitution will not will work as well as some hope.
Nothing happens overnight with the world economy, so changes are likely to take place over a period of years, rather than all at once. We can’t know exactly what the future will bring, but the handwriting on the wall is worrisome.
This article was originally posted on Our Finite World.
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Of course, we have already seen a measurable decline in Global Net Exports (GNE) and in Available Net Exports (ANE). ANE = GNE less the Chindia region's combined net oil imports.
Jim Cramer on CNBC this morning: "We will be a big net exporter of energy, even as we import energy from OPEC."
Here is what BP shows for the ratios of US consumption to production (C/P) for 1998 to 2010 for coal, natural gas and oil:
We are just barely self-sufficient in coal, consuming 95% of production in 2010, and a few years ago, we were a net coal importer for a year or two. In 2010, our natural gas consumption exceeded production by 12%, and our oil consumption exceeded production by 155%.
The ultimate problem is too many people. With unlimited population growth, all other resources are ultimately exhausted. Paul Farrell gets it:
An apocalyptic end to world’s biggest bubble
We may find that it's already too late to avoid the population bubble's implosion...
E. Swanson
Nice link, Dog. Scary as hell, and accurate, IMO. From the article:
A watershed moment in my life was when I came to the same conclusions, and soon, also concluded that neither of these things will occur; that our technology/ingenuity will not save us, and that population will increase until it can't. As individuals we may be quite clever; as a collective species, not so. These changes require a level of cooperation that 7 billion humans won't be in a position to muster.
As for 2012, I see many 'gray' swans coming over the horizon. Best hopes that none turn black.
In other words one of the two things we need is something that is totally impossible. Even China's population control is not voluntary. China's One Child Policy
Many places already have fertility rates below the replacement level but most do not. The world population rate is still increasing by about 1.1 percent per year. That comes to almost 80 million people per year.
The author of the piece says that population needs to "level out" at eight billion. I don't think it will ever "level out" at anything and I do not believe it will ever reach eight billion. At any rate eight billion is way, way above the earth's long term carrying capacity. As proof of that all we need to do is look at what we are doing to the earth with only seven billion.
But, when it comes to predicting the future of the earth people have always posited stupid impossible things as the "solution" to all our problems. This article is no exception.
Ron P.
Why do you say that's impossible? Total fertility rate has fallen by 50% in the last 50 years, and about 25% in the last 20 years. Or is this essentially a difference in opinion on what "rapid" means in this context?
There's a good TED talk on these sorts of stats; the change in fertility rate for all countries can be seen between about minutes 4-5.
True, although I think it's worth pointing out that it's not exponential growth. The growth rate has been falling steadily since about 1970, with the number of people added per year roughly flat since 1980, with both measures projected to fall in the coming decades.
If one sees us as up against the wall already, that's probably not going to be thought of as rapid enough change. If one sees the problems we're facing as a multi-decade challenge, though, these are hopeful signs.
Look at the two countries with the largest populations, India and China and you will have your answer. China's one child policy is the farthest thing from "all voluntary". China has the most efficient propaganda machine in the world. They sell their one child policy with billboards, TV ads, newspapers and magazines but they still do not have anything close to an "all voluntary" policy. If, with that massive propaganda machine they could not sell it to their public then no one can.
In the 1970s Indira Gandhi tried to implement a "voluntary" birth control program and was almost thrown out of office because of it.
Do not confuse a decline in fertility caused by the "General Adaptive Syndrome" with anything voluntary.
Ron P.
I doubt that "General Adaptive Syndrome" has much to do with demographic transition as some have argued. GAS has more to do with physiological stress. Given that lower fertility rates and birthrates correlate strongly with better education and increasing relative wealth, it would make no sense to attribute this [demographic transition] to increased stress.
I agree that lower fertility rates are a hopeful sign, especially since this is the trend in virtually all countries regardless of relative wealth, religious or cultural values. Possibly too little too late, but that remains to be seen.
You are right the General Adaptive Syndrome does not have much to do with the demographic transition. That is because they are two entirely different things, one is just not related to the other. The demographic transition is largely a myth. Poor countries like India, Bangladesh and Burma will never undergo anything like a demographic transition. Even China, which is trying to bring its people into the 21st century, are leaving the people way behind. There are demonstrations all over China every day due to social unrest. If there is a demographic transition in China it is leaving most of the people behind.
A demographic transition implies that the the status of the poor is improved, they enter the middle class, have cars and all the things enjoyed by the developed countries. There are just not enough resources in the world for that to happen.
Ron P.
My observation is that as a species we are very clever...too clever for our own good apparently. We are not wise, however.
Funny you should have noticed!
Question Everything where I have been writing about this very thing for years.
Then we are misnamed. Homo sapiens means "wise man". Perhaps we are wise but just not wise enough. ;-)
Ron P.
Philosophicly speaking I see a hirarchy of information. It looks like this
wisdom
knowledge
information
data
A thermometer can handle data. A computer can compile that data into information. Sentinent beeings can understand and refine that information to knowledge. Humans can use knowedge and reach wisdom. But not everyone can reach this goal.
In my youth I read in Proverbs that "the begining of wisdom is to seek wisdom". This statement was very frustrating to me, since it is a tautology. You will not find wisdom, unless you seek it, so off course the begining of wisdom is to seek wisdom. Then one day it occured to me what the guy who first said this may have meant; You wont find wisdom unless you seek it. Or in other words: "Wisdom is an attitude."
If wisdom is an attitude, then humans as a species can not be labeled "wise" or "not wise", since it is up to the individual what attitude they want to have.
I'm afraid that isn't quite right. There is a whole literature of psychology of wisdom. There is also a growing literature on the neuroscience of wisdom. Turns out that, like intelligence and creativity, there is a heritable component in wisdom that psychologists and neurologists are trying to get a handle on. Not everyone is prone to wisdom and not just because they don't have the attitude. The latter is probably more of an effect than a cause.
I work on the evolutionary neurobiology part of this field when I'm not working on energy or computer science!
You can read my working papers here. The first series is the research. The others are more speculative re: implications.
Just when I was thinking that I was the only one to mix some much different field on knowledge altogether.
Can you share some names of people working on the psychology of wisdom? Or suggest some books?
(Not that I particularly trust psychologists to recognize wisdom if it hit them over the head.)
We're not talking about clinical psychologists! Here is a sampling of the reference list you will find in my working papers.
Sternberg, Robert J. (ed.) (1990). Wisdom: Its Nature, Origins, and Development, Cambridge University Press, New York.
Sternberg, Robert J. (2003). Wisdom, Intelligence, and Creativity Synthesized, Cambridge University Press, New York.
Sternberg, Robert J., "Wisdom and its relations to intelligence and creativity", in Sternberg, Robert J. (ed.) (1990a). Wisdom: Its Nature, Origins, and Development, Cambridge University Press, New York.
Gardner, Howard, (1999). Intelligence Reframed: Multiple Intelligences for the 21st Century, Basic Books, New York.
Gilovich, Thomans, Griffin, Dale, & Kahneman (eds), (2002). Heuristics and Biases: The Psychology of Intuitive Judgment, Cambridge University Press, New York.
Gazzaniga, Michael S., (2005). The Ethical Brain, Dana Press, New York.
Geary, David C., (2005). The Origin of Mind: Evolution of Brain, Cognition, and General Intelligence, American Psychological Association, Washington, DC.
Goldberg, Elkhonon, (2001). The Executive Brain: Frontal Lobes and the Civilized Mind, Oxford University Press, New York.
Goldberg, Elkhonon, (2006). The Wisdom Paradox, Gotham Books, New York.
There are many more. Enjoy.
Thanks loads. Is there one you recommend to start with?
Sternberg, Robert J. (ed.) (1990a). Wisdom: Its Nature, Origins, and Development, Cambridge University Press, New York.
Sternberg is a past president of the Psychological Society and one of the premier researchers in intelligence and wisdom in the field.
Great. Thanks again.
Me too, thanks for the link.
I've been recommending this RSA video this past week to a number of people; it gets at our problem of reductionist thinking. You can be really smart about the trees and miss the forest by a country mile. I'm seeing that now everywhere I look in our techno-society. A lot of really bright people staring at their feet and wondering who moved their cheese.
http://www.youtube.com/watch?v=dFs9WO2B8uI
Gardner's "multiple intelligences" concept is anything but accepted in modern differential psychology. It is very flat and more a "wichfull thing" hypothesis that anybody has a special gift in a special are (Bodily-kinesthetic intelligence or Musical intelligence). Recent research has proved that it is mostly wrong. There is a dominant General factor of intelligence "G" which collides heavily with Gardner's concept of a vide variety of independent "intelligences" not interlinkt to each other. Also Sternberg is anything but undisputed by defferential psychologists.
http://en.wikipedia.org/wiki/Theory_of_multiple_intelligences
Thanks for bringing my attention to "differential psychology". I will have to take a closer look. As to the fact that psychologists often disagree with one another is nothing new. There are schools of psychology just like there are schools of economics. What it has always seemed to me is that they are all looking at similar phenomena but from different angles and through different lenses so see differences that they believe make a difference. What I find exciting is the incursion into the field of neurobiology, especially with the new imaging technologies that allow deeper correlational studies re: behavior, cognition, and brain functions. Exciting times. I think that this newer approach will help filter out the differences of opinions that has plagued the scientific endeavors of psychology.
BTW: according to Gardner the G theory definitely does not "collide" with multiple intelligences. And I never claimed Sternberg was undisputed. I said he was a premier researcher. Science is inherently full of disputes!
Not everyone is prone to wisdom
Wisdom reflects the exposure of a neural net to action/reaction data. Thus as a human ages, its neural net gets actions like 'stove is hot' and reaction 'don't grab hot stove' and thus the "wisdom" of 'grabbing hot stove is not wise'.
Now here's where the 'wisdom' gets off track - Propaganda^H^H^H^H^H^H^H^H^HPublic Relations. If the neural net gets bad action/reaction data sets the 'wisdom' will be 'wrong' (or right if you are the one selling the propaganda)
You are confusing wisdom with conditioned learning. They are not one and the same. The kind of learning that takes place to give rise to wisdom is the acquisition of tacit knowledge about complex relations extending over long time scales. It is true that this kind of knowledge has to get reinforcement from success in its uses. But the scale of complexity is orders of magnitude greater than simple conditioning.
You are confusing wisdom with conditioned learning.
Not at all.
If one accepts the idea of "wisdom with age" - how does one become wise with age other than the exposure of said aging neural net to actions/reactions?
Recommend you read a bit of the literature before expressing opinions like this. There is a great deal more to wisdom (and sapience) than conditioned learning over the years. Your opinion tries to trivialize something that is anything but trivial.
"Conditioned learning" as much Do A get B as is reading about the effect B happening when A is done.
Pile enough A|B relationships together and one can start assigning probability of a C|D relationship given similarities to A|B.
If no human being has ever met a space alien - how are humans to 'be wise' about how to interact with such an entity? We can apply our A|B rulesets - but they could be 100% wrong due to a lack of understanding their %|!@ relationships.
I take it you don't do brain science for a living.
What does "Brain Science" have to do with "wisdom"? Mankind seems FAR more interested in making computers take many A|B pairs and employ a weighting system to generate 'for condition C, D should be the expected outcome' - Watson by IBM being a public example. Unless there are credible plans on injecting DNA/robots/chemicals/or whatever into human brains to "create wisdom".
Wisdom: The quality of having experience, knowledge, and good judgment; the quality of being wise.
The soundness of an action or decision with regard to the application of such experience, knowledge, and good judgment.
How are the above two definitions nothing more than a collection of A|B relationships that get expressed as weighted pairs when a new condition of C happens for a determination of D?
Both definitions use the word knowledge - and knowledge can come from "Conditioned learning" or from the experience/observations of others which become coded as A|B pairing.
But do feel free to explain how wisdom is not a collection of relationships of cause|effect that get sorted by probabilities to determine an effect when a new cause shows up.
LOL! That statement alone says it all about your understanding.
Eric, I am a computer scientist with a pub history in simulating neurons, neural networks and brain-like systems that controlled animatic robots.
http://faculty.washington.edu/gmobus/Adaptrode/causal_representation.html
http://faculty.washington.edu/gmobus/ForagingSearch/Foraging.html
for a sampling.
Since you seem so cocksure of your perspective I will not make any further attempt to discuss this topic.
So you are basicly saying that some people are, for neurological reasons, to stupid to be wise? I find that very hard to argue against.
Stupidity (lack of intelligence) is actually not the problem. There are plenty of examples of very clever people who still lack basic good judgment. The lack of wisdom is neurologically based. But just not directly related to intelligence. The Sternberg books (listed above) provide a good explanation of this differentiation between intelligence and wisdom.
I thought the proverb was "Fear of the Lord is the beginning of wisdom."
The idea that fear could have much to do with wisdom always bugged me. Though I guess a kind of prudent caution is very essential to it. Perhaps something is lost in the translation here. Others have claimed that the word is better translated as 'awe.'
Of course, the definition of wisdom is always a bit tricky. Perhaps only the wise can truly define it. But then who decides that they are wise.
Also, I'm not sure knowledge is always relevant when it comes to wisdom. It certainly helps to have some knowledge of some basics. But piling up vast quantities of knowledge may actually get in the way of wisdom, imho. I am put in mind of the Zen master finally granted an audience to a famous professor. The professor immediately started to talk about everything he (thought he) understood about Buddhism. The master offered him tea, and the poured him a cup, but kept pouring after the cup filled to the brim. As the tea started to pour out of the saucer, the professor sputtered, 'Stop, the cup is already full!" To which the master replied, "Your mind is full. Come back when you have emptied it."
Actually, both quotations are found in Proverbs.
Regarding your second paragraph, the conclusion of it is pretty much what I think about it.
Now let me explain how I connect knowledge and wisdom. I happen to have a lot of information in my head in form of a table with two columns; "nation" and "capital city". This is just information, it is not knowledge. If I know that Rome is capital of Italy it don't mean I know any usefull thing at all about the country. Itis just information.
Now let say I move to the country, learn the langauge and culture, get married with a local girl and adapt to the country. Also I study the geography, its history and legal system, how the economic networks operates and its industries and so on. Compiling all this information, I will in time build a large knowledge about the country. But it is still not wisdom.
But say the place get into big problems. Then they hire me to solve the problem. And I take all that knowledge I have and think up a solution that not only work to solve the problem, but also take care of the long term secondary effects. To do that, you need wisdom. In this case, wisdom is to know the knowledge at depth and how all the different parts inter-relates.
So I guess my view on wisom is that it is the ability to put knowledge into use.
I would actually say that wisdom is knowing when NOT to put knowledge to "use."
But maybe I have read the Tao Te Ching too many times? '-)
Consider a non 1611 translation of the Hebew word to say "respect".
Thanks, schoff. That old King James, he just keeps rolling along...
http://www.youtube.com/watch?v=_DZ3_obMXwU
From usage elsewhere the root Yod-Reish-Aleph means fear. Seem to remember that the rest of the sentence was "beginning of knowledge" (Reishit Da'at) rather than wisdom (would be "reshit hohma") but maybe wrong or maybe there are both and can't be bothered to go look it up.
I believe that there are those who are wise, those who believed the message of Limits To Growth, and have planned accordingly. They set their plans in stone, for all to read.
The coming die-off will not be pleasant, but it is the best hope for Planet Earth.
I find point 3 off the mark. It does not work that way. Children will always speak differently from their parents in order to diferentiate themself from them. Thus laguage evolves and change. This is unlikely to happen the same way in all places, an thus new languages come out of dialects. Language are a living thing since it is spoken by living beeings.
The coming die-off will not be pleasant, but it is the best hope for Planet Earth.
Hope?
It's not "hope" at all.
93% of the earth's human population dying off
If it is what is to be, it is what will be. The Earth will go on whether this is to be or not.
But to call it "hope" reveals a lot...about you.
To paraphrase Kafka: "There is hope...but not for us."
Having a wide variety of experiences in dealing with a wide range of humanity - I can say, with confidence, that most are not worthy. I don't view that conclusion as the attitude of an elitist, merely a statement of fact.
Perhaps you should spend some time perusing this website and you will find many who have no place in a new world that exists under a new paradigm.
Some people are recceptive to the truth - others are not. Free will or pre-destination? I can't answer.
"Worthy" of what?
This is bunk. The earth will be chocked up anyway in about 300 million years and "nature" - ore better the Universe - is neither good nore bad, because there is no such concept as good/bad, no sustainibility or anything else in the eternity of it. Every day and everywhere the growing entropy in our system (our Universe) is doing it's work till the inevitable END!
Maybe because of a mass extingtion done by the human race the evology will "produce" a wide varity of new astounishing creatures in the future, which would otherwise have never lifed was it not for our doing! How will you judge that??? How will you judge a 5km dimater asteroid hitting earth. Is this good/not bad because it is done by "nature"?
Do you really believe that Earth is unique? That humans are the only type of their kind in the Universe? That Aliens are not visiting Earth, or perhaps even living amongst us? Mankind is very arrogant - to say the least. The Ancients spoke of a time when the gods lived amongst them. They had advanced astronomical knowledge, mathematics and built structures we can't duplicate today. Archelogogy is full of lies, ignores anything than contradicts "their line" - just as the lie of evolution does.
If you are interested in a different point of view, here is some interesting places to check:
Open SETI
Sphinx Stargate
THE AGES OF URAS
NICAP
Charles Hall and the Tall Whites
Enicar,
I edited your comment,because I found the wording offensive. Please be respectful of other posters.
You did provide some links, so I left these.
"Homo sapiens has the information to know itself for what it is: an Ice Age hunter only half-evolved towards intelligence; clever but seldom wise." -Ronald Wright, in A Short History of Progress.
We have the information, but most of us won't heed it.
We have the information, but most of us won't heed it.
Do we have the information?
Or do we have a set of data that has been doctored or filtered to support one goal?
Sorry if I'm slow but what's the goal? Here I interpreted information to mean the fact that ignoring the consequences of actions seems to be a ubiquitous human trait. Whether there is actual data to support this is arguable I suppose. I think documentation of the hyperbolic discount rate would be one such such component of that data.
Sorry if I'm slow but what's the goal?
It's ok. Its a world wide audience and and in some places its not the acquisition of small green pieces of paper - sometimes the money is coloured differently.
Here I interpreted information to mean the fact that ignoring the consequences of actions seems to be a ubiquitous human trait.
Such is not ubiquitous - TOD has a few posters who ask on many topics 'have you considered the consequences to that action plan?' - thus not EVERY human is guilty of your charge.
One post I wrote (that is not on The Oil Drum) is quite disturbing. Way back in the stone age, humans were wiping out other species. The post is called European Debt Crisis and Sustainability.
Gail, I read your article. I thought you did a good job, well a great job.
That post has been very popular. I didn't submit it to TOD, because I didn't think it was TOD's topic.
More the pity. It's certainly about "energy and our future", guess I'll have to start checking our your site more often.
No greater truth could ever be uttered. Some person might get the relationship between mass & energy and even figure out the constant C2, but can the world control its population increases - no.
Reptiles have the first brain, in mammals the 2nd brain layer has been added and primates, in particular humans have the 3rd added brain layer, the neocortex. But evidently the 3rd is not used collectively as world population increases by 80 million a year. In other words with respect to population, we are no different from any other specie with either the first or 2nd brain layers when met with increasing food sources and lack of predation - it rises.
Consequently we are subject to the same experiences other species face when their populations meet resource constraints. I suppose that will either be a hard blow or a slow reduction, or one followed by the other, but in either case it will be against our collective, base brain drive to increase population.
I'm surprised that you keep saying that, since that view has been disproven time after time here at TOD by different people. You can't possibly have missed it, but in the event I'm wrong about that, please have another look at the data. Wealth and total fertility rates are inversely correlated!
Disproven? You're claiming too much. Yes, there is a correlation between wealth and fertility and yes it may well be causal.
But what does that mean if wealth declines for the majority of people?
What do we expect to happen to wealth? Here we get to the nub. Optimists say that our society is flexible enough to redistribute wealth, counteracting the innate tendency of markets and human social systems to concentrate wealth. Others are sceptical.
"Others are skeptical." Especially the wealthy? '-)
I agree that population is a major issue. Oil is important both in keeping up food supply, and in keeping transportation operating. Indirect impact on the financial system could affect electricity as well.
We have a system that works passably well right now, but it is easy to see how there could be interruptions to it, that would affect food and water supply. Some of this might occur after storms, when governments don't have funds to fix up roads and other infrastructure. Our system is becoming increasingly fragile.
"We have a system that works passably well right now..."
Yeah, kind of like a kitchen where the dishes are piling up in the scullery, the leftovers are shoved in the fridge to get moldy, and the garbage never gets emptied.
Our sinks are getting full...What now? Order a pizza? Sorry, I just think "passably well" is an illusion. We've insulated ourselves from our true condition, especially in the West.
Our system is becoming increasingly fragile.
Is the 'system' fragile or is the 'system' explained as one thing and acts actually as another thus creating a situation where the reactions are based on bad data?
The government certainly does its part in making sure that decisions are made on bad data. They spew out reports saying that fossil fuel use will grow endlessly. They combine data in such a way that it is hard to see how little wind and solar and biofuels are actually contributing. They contribute to the "shale gas" hoopla. It is no wonder people are confused.
One post on this subject that I did not submit to TOD is
New Dept. of Energy Priority-Setting Analysis Seriously Flawed.
The government certainly does its part in making sure that decisions are made on bad data.
If you were to ask me to choose - good data from Government or Corporations - I would choose Corporations over Government.
Because at this stage of the game, large Corporations drive Government more than the other way 'round.
Don't mean to be facetious but debt is only a problem as long as one aims to repay it. Latin America in the 80's is a good example- a lost decade as they went through every contortion to keep honor their debt to the banks. . However, once the debt was written down they went back to the growth path. Argentina post 2001 or Russia post 1998 are other examples.
TPTB will try and have done everything in their power to make sure that people remain debt slaves. However, inevitably the debt will get written off- peacefully or violently. I think in the model the profile of debt will look a lot like some of the other curves- a relentless build up and then a big crash. Greece is the canary in the coal mine.
"However, once the debt was written down they went back to the growth path. Argentina post 2001 or Russia post 1998 are other examples."
It's global this time. Few places to hide.
Actually I think it is fewer places for the lender to hide. Yes it will be global and that is why a relatively insignificant country Greece is causing the debt holders so much concern. Once the periphery of Europe is pierced it is hard to see how the process of debt write off stops and inevitable last stop is the United States.
I think we are in for a mammoth reset moment.
Ja... reset: Greek debt writedown of 50%.
Now all is wonderful in this, the best of all possible worlds!
Craig
"TPTB will try and have done everything in their power to make sure that people remain debt slaves."
Obviously this is what they are fighting over in the EU. False attempts to pretend that they have a plan while they fight like hell to make sure the other guy takes the fall, while protecting themselves. Problem being they are too interconnected and damn well know it. They do not have a plan because one does not exist that leaves everybody standing and whole. If we are creatures of habit then violence will topple governments and banks.
The fact that resources are more constrained, leading to higher prices, especially for oil and food, is what is making all of the debt bubbles pop simultaneously.
It is hard to write off debt in an equitable manner. If a person has just moved into a home, and has made two payments on it, should he be allowed to keep the home, and the debt completely written off? There are others depending on the proceeds of debt. Our pension system depends on debt repayment, for example. There are winners and losers. Our bank balances also depend on banks getting most of the loans repaid to them. I suppose the Federal Reserve could "print" more money for the banks, but it is hard to see international trade continuing as it is today when it is not supported by repayment of debt.
Gail: Excellent article. With regard to your comment, I wonder about the difference between a debt being completely written off, or partly written off. Consider: A person buys a house for 300K. Times get hard, our homeowner can't meet the mortgage, and gets foreclosed upon. The house, due to declining real estate value, is now worth, let's say, 200k and someone else buys it. What happened to the difference between the 300k mortgage and the 200K one? What if the original homeowner could meet the financial obligations of the 200K mortgage? Could/should the lender "eat" the difference? The lender (or someone) is already doing so by selling the foreclosed property for the lower value, yes?
I am quite sure that a "fair" solution dwells within the realm of the abstract.
Right. And the bank or Fannie Mae or Freddie Mac was depending on the income, to fund interest payments or dividend payments, or just to have the money to give back for the deposit. Pension plans depend on mortgage payments. If you lose payments one place, somehow this gets passed on to someone else. Theoretically, the government is supposed to insure bank deposits and pensions, but there is a question of how possible this will be in practice. The government can print money, but who everyone (outside the US) accept it?
As long as the government also controls mandatory "sinks" like taxes/fees there will be a demand for the government 'money'.
But imports may drop to negligible levels.
Such should please the "Free Market" types who like being touched with Adam Smith's "Invisible Hand" - the hand that is only mentioned in the context of Nation to Nation trading.
(And what happens if the Middle East decides the US Dollar is no good for getting Oil? The US has oil to power Ag in the US - but after that, who's in line?)
China and India would like more oil (and cheaper) if they could get it. Saudi Arabia might sell oil to the US, if they could get wheat in return.
I see the bigger issue to be importing replacement parts for oil drilling equipment and for power transmission systems. If we find ourselves without necessary parts for essential activities like oil drilling or energy transmission, we could find ourselves losing our own capacity to pump oil or to transmit electricity.
Or what if we can no longer import computers from China?
I think there are two types of debt
private to private and public to private. The former will be resolved via the normal process of contract law- I don't think anybody gets to stay in the their home and have their debt forgiven. The debt will be extinguished and the asset transferred from borrower to lender. Those lenders who made unsecured loans well they will learn what an unsecured loan is.
The more difficult one to deal with is the public to private.It seems to me that an equitable way to deal with it would be on a per capita basis. The government honors debts to private citizens either directly or indirectly (e.g. holdings via pension funds) for full face amount up to a certain limit and then progressively applies a haircut. Upwards of 90% for the very wealthy.
I think the key issue is bite the bullet and realize the debt is not going to be repaid a 100c on the dollar.
The question I have is, "What is a bank going to do with thousands of homes?" Somehow, the homes have to go back to people--perhaps rented, with bank ownership.
Government that cannot pay their debts are not likely to last. I would look for a different constitution, different borders, and different currency. Maybe we get something from the new government, but we cannot count on getting what we had before.
I thought that many were being demolished?
NAOM
Gail - Nice piece...thanks. Even with my limited grasp of economics it seems the financial system has gamed itself into an even more precarious position than you describe. With derivatives, etc. they appear to have greatly magnified the downside of the risks. Similar to "double down" except in this circumstance the force multipliers are many times greater than 2X.
Even to a geologist the global ripple effects seem obvious. Greece may be a small domino but it only takes a three ounce detonator to set off a ton of dynamite. Given the instantaneous communications connecting all the global economies that one spark could ignite responses faster than the financial institutions/govt can react. I'm sure most have "a plan". But as we know there is the plan and then there's what actually happens.
I think this is the problem. I don't really understand what will happen with all of the derivatives, but it is hard to see that they would help the situation--only make it worse.
Or in the immortal words of Mike Tyson, "Everybody has a plan... until they get punched in the mouth"
Similar to "double down" except in this circumstance the force multipliers are many times greater than 2X.
not 2X, how about X to the n power, where n = number of years past peak?
Thanks, Gail. "We can’t know exactly what the future will bring, but the handwriting on the wall is worrisome."
You're certainly not alone in your concerns:
Martin Weiss’ “7 Major Advance Warnings.”
Following is a list of annual average US (nominal) crude oil prices for 1925 to 1940. During the Thirties Depression, it appears that global demand fell only one year, in 1930, rising thereafter. And there were reportedly three million more cars on the road in the in US in 1937, versus 1929. Of course, China would be to our current predicament as the US was to the Thirties.
After hitting $1.79 in 1931, the average price for the next 9 years was $2.13.
1925: $3.44
1926: $3.50
1927: $2.91
1928: $3.11
1929: $3.67
1930: $2.38
1931: $1.79
1932: $1.82
1933: $1.78
1934: $2.39
1935: $2.13
1936: $2.43
1937: $2.60
1938: $1.90
1939: $2.06
1940: $2.33
Data source: https://www.globalfinancialdata.com/index.html
A scary thing is comparing those great depression price changes compared to our great recession price changes. Back then, the price of oil crashed down and remained down . . . only slowly rising during the great depression. We had the price of oil crash in 2009 . . . yet despite nagging unemployment, oil has more than doubled since the post crash price. Clearly something (oil depletion) is acting on oil prices now that did not happen back then.
The 1931 price was about half of the 1929 price, but note that after 1931, the general price trend, relative to 1931, was up throughout the Thirties, except for 1933. Note that the East Texas Field was discovered in 1930 and at the peak production rate it was capable of meeting something like one-fifth of global demand at the time, but it caused the local oil price in East Texas to fall to as low as ten cents per barrel at one time.
In any case, it appeared that global oil consumption rose throughout the Thirties, after declining in 1930.
Yes, that was another good Paul Farrell post. Over at on The Automatic Earth blog, "Ilargi" and "Stoneleigh" have been saying essentially the same for many months.
July 22 2010: The Big Picture According to TAE - An Updated Primer Guide
"When bubbles reach their maximum extent, they invariably deflate..."
E. Swanson
"Stoneleigh," Dmitry Orlov, and I will be on a panel at the ASPO-USA conference on November 4, so we can compare viewpoints then.
My impression is that she is of the point of view that things would have fallen over of their own weight. I think they would have fallen over, too, but continued economic growth fueled by fossil fuel growth helped keep debt-expansion going as long as it did. My point of view is that it is not just one country that is running into headwinds, it is the whole world, because of the limits we are now reaching because of high oil and food prices. Other limits also play a role as well, of course.
". I think they would have fallen over, too, but continued economic growth fueled by fossil fuel growth helped keep debt-expansion going as long as it did. My point of view is that it is not just one country that is running into headwinds, it is the whole world, because of the limits we are now reaching because of high oil and food prices. Other limits also play a role as well, of course."
My position exactly. I don't understand why so many otherwise-very-smart people find this so hard to understand.
While we may not "know" the future, people can at least consider possible future scenarios and how they would respond so as to be psychologically prepared.
For example:
What if I lost my job?
What if my pay were cut in half?
What if gasoline cost $9 a gallon?
What if I can't afford my medications?
What if a national emergency is declared and things are "locked" down?
What if WWIII looks like it may be starting?
Obviously I'm of the "be materially prepared" school based on my many posts in the past. But, at the very least people can be prepared to the degree that their preparations, both physical and psychological, buy time so as to not be caught up in having to make decisions without full consideration of the implications of their decisions(s).
Todd
I think our family could adapt to the direct cost of $9 a gallon gasoline as long as we kept working. I think the indirect impacts on other costs (e.g. food) might be more than we would expect. Let us hope it doesn't get that high anytime soon.
Much of the world already has ~$9 gasoline due to taxation. But of course - the taxes we pay to ourselves. It would hurt more if we had to send all of that money to oil producers.
the "be materially prepared" school
There is a movement called "The Preppers" (or even The Mormans) if one wishes to get hints on that.
Be careful.
Martin Weiss and others like him have a history of making apocalyptic predictions. He wants you to subscribe to his newsletter. He was making similar predictions in the Fall of 2002 and Spring of 2003. He was predicting a stock market collapse, a banking collapse and a major depression. Instead we had a huge rally from March 2003 to October 2007. His subscribers lost a lot of money when their put options expired worthless.
Another quack is Robert Prechter. At least Martin Weiss has been right about gold. Prechter has been predicting his "grand super cycle depression" since at least the mid-nineties. He has been constantly wrong about almost everything since the crash of 1987 which he famously predicted. He has been top calling gold since at least $350 and oil since at at least $60. He has also for several years predicted a massive rally in US $ which has failed to materialize so far. Prechter is really bizarre. He has attempted to correlate the stock market with popularity of slasher movies like "Kill Bill", Donald Trump's book writing, Michael Jordan's basketball career and sunspots (I am not kidding). It is a wonder he has any subscribers at all!
Ok, but would you as a business person, in charge of making decisions affecting your business, decide what to do based on the overwhelming uncertainty that exists.
I see nothing, nothing at all, that makes me feel like letting loose of cash to invest in anything. Warehousing durable goods like motor oil and car tires for later resale, comes to mind. Not much else and nothing that will help create jobs.
Obama's executive order for optional debt reshuffling from non-recourse to recourse looks like a desperate attempt to put a floor on housing prices. If that were not enough then the idea of executive orders designed to hold Jello on the wall, seems like a path that will lead to ever greater controls. Top it all off with the Pope calling for one world body to control finance. This will likely get way out of hand, as there will be someone somewhere to whom global domination looks feasible, doable, and desirable to them.
"This will likely get way out of hand, as there will be someone somewhere to whom global domination looks feasible, doable, and desirable to them."
Dick Cheney?
My point was that be careful when you make investments solely based on predictions of someone like Weiss or Prechter.
I got your point. I own/operate a small business and see nothing out there that makes any economic sense. Ignore these guys completely. Even a lower and consistent, foreseeable level, of activity would help immensely in making some decisions. Hells bells, my customers say the exact same thing. If they are scared and clueless, how do I make any decisions, based on what they tell me?
This sucks, and far more than normal. People I have done business with for years are struggling, it has gone beyond the reckless ones, whom you expect to suffer in a downturn. It has come down to A) Lack of Debt. B) Deep pockets. I heard about 3 more bankruptcy's this month. This is a slow unrelenting squeeze. I will do nothing (that will help the economy) until I see daylight.
D - I'll use you to point out some stats that many don't realize. I'll assume you're a small business owner = less than 100 employees. 35,000 large business = more than 1,000 employees. 235,000 medium businesses = between 100 and 1,000 employees. 8 MILLION small businesses = less 100 employees.
IOW the vast majority of Americans draw a paycheck from a small business like yours. I think folks have heard that small business creates the majority of new jobs without understanding why. Today most are focused on large corporations and in particular the blunders they've made in recent years. Especially those in the financial sector. But at the end of the day it will take entrepeneurs like you to expand activity and bring unemployment down. And until the systems starts focusing on what small businesses need to see and hear they'll lack the confidence to do so. It's not really that complicated. The vast majority of the "rich" that so many want to soak are not the Wall Street barons. It the small business owners who typically are taxed as individuals and not as corporations. Take income away from these folks and then expect them to hire more workers? Increase their health care costs and expect them to reduce their personal income or lay off some workers to pay for it?
I think the persistent unemployment we have today, despite the economy "being in recovery", might offer a hint to the answer.
Rockman, I agree. Getting 'lumped' in with BIG companies isn't helping us at all. I have gotten 2 or 3 surveys in the last 4 months asking about our hiring intentions. They asked for 4 things that would help me want to hire. I wrote - more sales 4x. There is not some mythical "Pot of Gold" I sit on. In our good years 80% of what we took in went to pay bills. I paid $9-15 an hr. vacations, bonuses, SIMPLE, but health insurance would have added between $1-3 per hour per person. Every expense we have went up with energy, with our prices flat to falling.
I'm wholesale, so when I ask my retail accounts what they think, they need more sales too. It is as simple as that.
Given that people are financially tapped out. Working more for less. Having energy and food eat larger percentages of their discretionary income. I cannot see any reason to even attempt to go back to the level of business we had 5 years ago- It doesn't exist.
My "situation" is the hard, fact truth, and clearly until I "see" a recovery (not be told there is one) it won't change.
The U.S. Census Bureau, Statistics of U.S. Businesses, provides total numbers of businesses and total employees by business size. For 2008, there were close to 27.3 million total firms in the USA. About three quarters of all businesses, around 21.35 million firms, had no payroll.
Non-payroll businesses are usually self-employed individuals running unincorporated business where the business may or may not be the owner's sole source of income. Three quarters of all businesses in the USA are owner-operated with no other employees. The average sales or receipts for these business was $45,678 each.
Using the same source we can look at the data for firms that have payrolls. The data gives us the number of firms, by number of employees. Employees include full and part time workers, executives, officers and paid board members.
Using your criteria for business sizes (small < 100 employees, etc.) for a small business, in 2008 there were about 5.8 million small businesses with about 42.2 million employees. There were 115 thousand medium size businesses with about 23.8 million employees and about 9400 large businesses with almost 54.9 million employees.
In total, 78.7 million people work for medium and large businesses compared to the 42.2 million working for small businesses. Even if you count the possibly 21.35 million owners of the non-payroll firms the total small business employment would be 63 million, still not a majority of workers.
BTW, according to the U.S. Government's Small Business Administration, a small business in the USA is generally defined as one with 500 or fewer employees (manufacturing companies) or $7 million or less in annual sales (non-manufacturing), though their are exceptions to both those figures within specific industries. Using that definition for a small business, then a majority of workers in the USA do work for small businesses.
I am also not sure about your claim that the vast majority of the "rich" are small business owners who are taxed as individuals. In November 2010 Professor Scott Shane of CWRU wrote that average income for sub-chapter S corporations, favored by entrepreneurs, was about $100K per year, but did reach $250K in four industry sectors (including mining). For sole proprietorships the average was about $11,600, though in some business sectors the average exceeded $100K per year.
IIRC there is another survey out there that says the majority of the domestic hiring is done by the small and medium sized enterprises.
There should be no surprise about this, if you are an SME then you are regional or national, and tend to need and only have the scope for domestic hires. If you are a large company, then:
As a result, putting your support and tax breaks into SMEs is likely to have a bigger payoff for the country, particularly exporting SMEs and those with high profitabilities.
It is amazing how far the invention of our economic system has brought us. Now that we have reached or are reaching the limits of our planet to support life however, the systems and methods developed by our parents and grandparents aren’t working any more. There are two possible outcomes I can imagine. One is that we discover another (well, several more, actually) easily exploitable planet(s) to strip mine. The other is that we start running out of stuff. Important stuff, without which life (human life at least) is no longer easy; then no longer comfortable, followed by no longer possible. The first choice is unlikely, so I am expecting the second result. These are really big changes. Some people may have a hard time thinking about them. In general I believe these ideas are strongly resisted but no longer ignorable.
What startles me the most, though, is how many people and for how many years we lived and flourished under this system, oblivious to its flaws. It is my considered opinion that future generations will classify what we call Economics as akin to Alchemy; a pseudo-science that had a few good ideas but got the big picture completely wrong. There will be at least some humans left on this planet after the oil is gone. In time, they will create a civilization. It may be that this coming society will surpass any now known. On the other hand, it may fail suddenly and disappear. But by necessity life will be different from what we know. Our society runs on oil, and can’t endure without a ready supply.
Your illustration of the links between the abstract economic system and the real world situation under these circumstances is accurate. It demonstrates the predicament precisely. Your analysis is not just accurate and clear, however, it is direct and fearless as well. There has been criticism leveled at this forum in the past for espousing this position. One party will point out a looming critical shortage; the other automatically assumes the decline of Industrial Society is equivalent to “Doom”. Most people have a feeling of being in control of their destiny. The loss of this feeling can seem doom-like, I admit. But it’s pretty darn clear that change is coming, and pointing out reality is not the same (well, not necessarily the same) as predicting “Doom”. It depends on your frame of reference. And what side you’re on to begin with.
The problem with civilization collapse is that it may be a one time event. We've already taken the vast majority of easily accessible fossil fuels especially near the most habitable parts of the planet. People may not have the fossil energy available after everything goes to hell for our descendants to pick up the pieces and build anew. It won't be long before the surviving population won't be able to read even basic literature let alone advanced technical documents. It took years before the people in Europe replicated the technology and infrastructure of Rome, could we replicate a 22nm lithographic process for the most advanced Intel processors even 30 years after a collapse of civilization?
It seems pretty ruthless but western or 1st world civilization may be our first and last shot at achieving that level of technical complexity. Perhaps the reality is that for the western / 1st world to survive the rest of the world must be damned. The other choice is to let the entire thing fall over and hope that some day people will be able to live as we once did. In fantasy novels it is a common theme that people remember back in the past to civilization which was significantly more complicated than their own, our descendants may hold what we take for granted as myths and legends.
This is something I have been thinking about. My assessment is that an extended collapse scenario would leave remaining fossil fuels (virtually necessary for the re-industrialization process) in exotic places (polar, deepwater, oil sands etc.). All the "easy" oil would have been depleted. Since the easy oil was a primary catalyst of the industrial expansion, I would imagine that in this case re-industrialization would take a very long time to occur, if at all.
Perhaps a fast, abrupt collapse on the footsteps of the economic collapse is preferable...
The things we need to keep our fossil fuel system going are likely to be fairly complicated, especially now that the easy fossil fuels are most gone. If we want to use pipelines, we need to keep them repaired and above minimum operating level. We will also need replacement parts. We will need to be able to keep drilling in difficult locations, and probably to keep fracking as well.
We will need refineries of some sort, and people to run them. If we want to do "cracking," we will need whatever inputs are needed for this process. It is my understanding that natural gas is often used as an input when cracking long chains to short ones. So we will need a nearby supply of this too.
There might be some coal that could be extracted with less difficulty. But if it is to be transported anywhere, we will need either our current railroad, or a replacement for our current system using a more-available fuel.
I hadn't given much thought to coal; that could be the crutch to get industrialization going again, I suppose as it did the first time around. I think maintaining infrastructure such as the refinery/pipeline/transport paradigm for fossil fuels will become tricky as the product becomes more scarce and services fewer people. Will people condone the building and maintenance of increasingly complex systems if only a small portion of citizens (likely the rich) benefits? If so, then that infrastructure may last through this coming turbulent economic/political climate.
This is, of course, what Richard Duncan argued in his Olduvai theory, i.e., we have one and only one shot at doing it right. Given the complexities/specialized knowledge that has been built into the "system" over generations, it is likely that the vast majority of "information" and skills will be lost. And, there will be no going back.
I'll use myself as an example: I can tell you how to make polymers. I can tell you how to make synthetic rubber (and lots of other things) but I can't tell how to make the equipment that is necessary to make them. I can't tell you how to produce the chemicals that are necessary starting points. So while I have lots of knowledge, it is useless without the ancillary knowledge. I'd add further that the makers of the equipment don't know how to make stainless steel or copper for the motors.
This is why I concentrate upon old time knowledge since it doesn't require a chain of knowledge to work. This is also why I have such well-known books (that's a joke) such as Deerskins to Buckskins by Matt Richards (to make the squeemish puke, you break open the skull and use its brains to tan the hide - brains have a lot of "oil").
Todd
brains to tan the hide
You can also collect oak leaves and boil them to make a tanning liquid or just use a few bags of Lipton Tea if it is a small skin - or you have alot of tea.
In case you are worried about the deer having prions.
And while you still have the pinnacle of technology one might wish to spend here:
http://chla.library.cornell.edu/
Then ponder if you added electricity you could make your Ag better:
http://www.rexresearch.com/agro2/laemstromelcult.pdf
"brains to tan the hide"
That's the way I feel half the time when I post on this site--other posters big brains really tan my sorry hide... :-/
Thanks Gail for the article, and Sponia for going in the right direction among all of these comments.
The problem is not population per se. The high population is a symptom of easy access to energy and food, not a plan or motivation of any type. Human intentions are not all they are purported to be. Most of the time, people do stuff; they have reasons for doing stuff; in that order. When we look at the collective actions of living things, there is one that is common among species that survive over a long term. That one attribute is that the species (individually or collectively or both) contributes more to its future than it consumes in resources.
The problem with human "wisdom" or "problem solving" or "intelligence" is that it manages to overcome any moderating forces against it as long as resources are available. Without moderation, humans are like rust or yeast or bacteria that consume all of their resources until they contaminate the environment enough to stop growing and consuming, with the subsequent/coincident dieoff.
In order to prevent the dieoff, there would need to be some type of moderation mechanism to prevent the population growth in the first place. Any awake fool can look at the population statistics and see that there is no moderation mechanism in place, and regardless of whether the planet can support 1 billion, 3 billion, or 6 billion people, we are looking at a very few iterations of doubling compared to the other species and the life of the planet. Oil has condensed our population growth time frame, but it isn't the problem or the solution to our oblivious humanistic behaviors.
The opposite of consumption is not frugality: it is generosity. When was the last time you heard any "expert" talk about humans giving up something about our consumerism for the sake of the planet, the other species, or even our future selves? Everything is debated in context of "can we afford to pay for it?" or "Will the public support it?"
Evil: any action taken based on unquestioned faith.
Belief doesn't matter: actions do. If belief prevents us from questioning our usefulness to our own future and to all of the factors that allow us to drink, eat and breathe, then that is an evil belief. We MUST question whether our plans and actions are producing sustainable usefulness. Whether the Net Future Usefulness of the human race requires a population reduction to 1 million or an increase to 10 billion, we cannot be serious about how many people are needed or tolerable until we first think about what people are good for (to the planet). Economists would have you believe that consuming is our purpose. Governments would have us believe that patriotism is our purpose. Humanists would have you believe that being good to other humans is our purpose. Someone has to put this all together and ask which are a poorly structured fantasy of perpetual human miracles, and when is it time to stop the fantasy and consider reality's needs and how can humans contribute rather than consume. The numbers are moot otherwise, and most of the purely technical analysis can only handle one generation or so of current culture. Seven generations out will not be driving Humvees to the Wall Street casino to play the Invisible Hand Job. They will either have found sustainability and generosity or they will be dead.
Well auntie, that just about sums it up.
Cheers,
D3PO
Thanks for your thoughts. Many worthwhile ideas!
Quote of the Month!
There is no guarantee that future people will be smarter than us, or smart at all, so as to understand what our current mythology/religion called Economics is logically tied to, be it one analogy (Alchemy) or another (Voodoo).
It has long been understood that "economics" is just another way to decide who "deserves" more and who deserves less.
In the past it was based on birth, blood line and caste.
Modern economics has this nice "The Little Red Hen" assumption that those who work hard get their just rewards.
But then you run into cognitive dissonance when the Voodoo Banker earns millions for pulling a swindle
while the janitor in the banker's office building gets a pittance for his hard work.
The understanding is exemplified when the OWSt 99%'ers realize there is something unfair about the other 1% owning almost everything.
Gail,
At the end of your article you state:
"Nothing happens overnight with the world economy, so changes are likely to take place over a period of years, rather than all at once."
I have to disagree with this. Have you considered the effect of tipping points in complex non-linear systems?
The following paper covers this in detail:
http://www.feasta.org/documents/risk_resilience/Tipping_Point.pdf
It seems to me that we may see gradual changes for a little while longer, but eventually we must experience rapid, chaotic change.
Well tipping points do happen in a very short timespan. The stock market crash of 29 started with two very hard plunges on October 24 and another on October 29. Losses for October were over 16 billion which was an astronomical sum in those days. That was the tipping point but it took three years before the great depression bottomed out.
I think the coming collapse will play out in a similar fashion. There will be several crashes that happen in short order. There will likely be the bursting of the China Bubble, the collapse of Greece and other European nations. Which will come first is hard to say. But then there will be the repercussions of these bursting bubbles. There will be the collapse of most of the world currencies, including the Dollar and the Euro. Then there will be the collapse of globalization. All these things will likely take two or three years to play out.
Ron P.
"All these things will likely take two or three years to play out."
2011-2008 = 3 years...One wonders how much inertia is left in our systems.
Well you are assuming that the banking crisis of 2008 was the tipping point. It was a tipping point but not too great a one. The banks got bailed out by the government and that pushed all the other tipping points down the road a bit.
I am predicting, and I could be wrong as predictors often are, but I am predicting that the bursting of the China Bubble will be the tipping point that starts the collapse ball rolling. And it will take less than three years from that date until the collapse of globalization. And of course the collapse of globalization means the collapse of every government in the world.
Now that leaves the big question: When will the China Bubble burst? Within two years, most likely.
Time cover: The China Bubble
Caption under that title:
We're counting on China's growth to save the world.
Unless its economy blows up first.
Ron P.
Bubbles bursts all the time. If a bubble in China bursts, it will just constitute a slight pause in their march forward. It may not even be worse than putting their growth down from 9-10% to 2-5% for two years. The European crisis will not be a killer either.
What I'm worried about, though, is a swift continuation of the Arabic Spring. I do hope it continues, but that it happens in such a way that oil production isn't compromised too much.
You seem to be having a very difficult time grasping what 'Limits to Growth' actually means, let alone what the consequences are. China and the Chinese are not immune to those consequences as they are part of the overall interconnected global economy. You can only pull so many threads out of a tapestry before it turns into a pile of useless string...
You seem to have a very difficult time grasping that doomsday predictions are a dime a dozen, and never occur. Ask an old person. The world is always ending in 2-3 years.
Don't bother arguing. We've all heard every scenario.
I think you're missing that you only ever get one doomsday prediction coming true, per civilisation. Then no more doomsday predictions, because no more civilisation.
It's one of those circumstances where no news doesn't imply good news.
This isn't about 'Doomsday' predictions!
It's about real physical limits, which once reached, make growth impossible. It's about physics, chemistry and biology...
Cargo cultism and the invisible magic hand, notwithstanding.
Only fools argue against the laws of nature!
Ron talked about "the China bubble". I'm pointing out that a China-specific bubble bursting (in construction, finance, PV production or whatever) will just be a very temporary setback for them.
A global bubble burst due to an irreversible oil crunch may or may not be a different animal altogether. But no Chinese-specific bubble will be a long-term problem for China, as long as they can maintain social stability.
But no Chinese-specific bubble will be a long-term problem for China
I've read that overall capex is more than 50% of the Chinese economy. If all real estate (residential, commercial, industrial) and much of manufacturing is overbuilt, that could go to what, 10% overnight? That would be an enormously difficult crunch to manage.
I read today on an catholic swedish web site that the Vatican is now supporting the idea of a global central bank. IE centralicing economical decisions of the kind national central banks do into one big super bank. As I stated elswhere; this smells like burnt cat.
http://signum.se/pavliga-radet-for-fred-och-rattvisa-stoder-skatt-pa-fin...
You can run it through google translte.
I always saw the idea of a global central bank as a desperate last attempt to save a sinking ship. They will do this. It will get ugly. And it will fail, even if it may look good in the begining.
If you move the deck chairs about on the deck of the Titanic, some people will be able to be convinced the deck chairs are why the ship is listing to one side.
Playing with the money system is what was done at the start of the 20th century as a reaction to the cross of Gold many were nailed to.
Assuming there *IS* trade beyond walking distance - what will replace fiat script?
If we have paper and printing presses and ink, there will be some form of local paper money, but it may not be exchangeable over a wide area. It will not have interest paid for deposits, because it will be declining in value over time.
If we don't have paper and printing presses and ink, we will be working on some sort of a Plan B. I don't know what it will be. Perhaps living in small groups (100 - 150 people), so everyone knows everyone else, and living in more of a "gift economy," where everyone with excesses shares it with the group.
I myself am a recovering catholic, so my opinion is that the Pope will use this as an opportunity to further the churches agenda. Not that this is unique for any organization, I just call it suspect, and pitting the poor against the rich is nothing new either.
"Pope Benedict - Bond Villain." Abie Philbin Bowman- Atheist comedian
For some reason, all of the Catholic countries are the ones in trouble - Ireland, Portugal, Spain, Italy. And all of the countries doing the bailing out are the Protestant nations of Europe, like Germany, the UK, Scandanavia, Holland. The Greeks are neither Catholic nor Protestant -- they're Orthodox, though their system of accounting is not particularly Orthodox.
And essentially what I'm asking: Is this a Vatican plot, to make us really poor, so that we all believe in God again. Headed by the Pope who is the perfect Bond villain.
He has all the elements - the German accent, shadowy Nazi past, a priceless art collection, lives in a huge mansion, drives the Popemobile, and is the head of a secret organzation which is trying to take over the world. And not only that, but like every truly great Bond villain, the public name sounds completely innocent, Pope Benedict XVI, and a real name which is pure evil -- Cardinal Joseph Ratzinger [[said gutterally]]. You can almost hear Sean Connery saying, "You'll never get away with this, Ratzinger". --
Beeing one of those protestant, I have nothing in the vtican to defend. But I am a defender of the truth:
The pope has NO shadowy nazi past. He was a member of Hitler Jugend. It was mandatory at the time, and he went to one assembly. His experience of the nazi world convinced him tht the only hope for the world was the Catholic Church. I don't like the orgnization he leads, but he is not, and have never been, a nazi.
Just yesterday I was reading something Marc Faber said in an interview on CNBC. Something about 5-10 years of postponing the inevitable, which he termed the real "end of all sovereigns"---that is the end of currencies that we know. The Eurozone crisis packages are just one in a series of postponing the inevitable. I guess we all know that. Probably everybody knows that, bankers, politicians, Greeks, everybody.
Darwinian is also basically saying around 5 years or once I think he said 6 years.
It seems like it is a tall order to prepare for this event, whatever kind of form it will take.
I think it will be something like this. Enjoying the breeze on the deck, looking out at the ocean, everything is fine and a good dinner ended with a lovely dessert. Then the passenger---me----looks down at the ticket in my gloved hand. Oh, I had not noticed that before---this ship is the Titanic!
All of us will have that moment in one way or another. Again and again.
But that does not mean we can't be happy and enjoy the lovely music!
Life is a mystery from the beginning, so the crises that we fear so much may actually turn into liberating new frameworks for better relations with each other and the cosmos.
Good to hear from you, pi. I hope you and yours are well.
I have to provide a little room for optimism, by not making the dates too certain. People can't live with anything that is too overwhelmingly negative.
But I agree with you. You will remember, I was the one who put the "Tipping Point" document up on TOD, in serialized form.
Are the Limits to Growth predictions made in 1972 still on track today? Apparently so...
"In an article published in Science titled “Revisiting the Limits to Growth After Peak Oil,” Hall and Day (2009, p. 235) noted that “the values predicted by the limits-to-growth model and actual data for 2008 are very close." These findings are consistent with another study, titled “A Comparison of the Limits of Growth with Thirty Years of Reality” which concluded: “The analysis shows that 30 years of historical data compares favorably with key features… [of the Limits to Growth] "standard run" scenario, which results in collapse of the global system midway through the 21st Century” (Turner, 2008, p 1). To prevent this scenario, the Limits to Growth authors suggested that we must achieve ecological sustainability by 2022 to avoid serious ecological overshoot and population collapse (Meadows, Randers, & Meadows, 2004)." -- from Mills, M. (2012, in press). Evolutionary Psychology and the Prospects for Human Sustainability, The Evolutionary Review.
More discussion re this on my peak oil summary webpage:
http://drmillslmu.com/peakoil.htm
I have corresponded with Dennis Meadows (one of the original authors to "Limits to Growth"). This is a link to one post I did of his more recent work. My impression is that he feels that the actual occurrences are taking place even faster than the base scenario, and that it is too late to do very much. He talks about the need for voluntary population limitation.
Thanks for the link.
Sobering.
It wasn't until I went back and read the Dennis Meadows link that I remembered what I said in my summary of this talk:
This is pretty much equivalent to what I am saying our problem is now.
Gail,
I do not think there is any doubt that it will be the Four Horsemen. This week's Economist provides a cornucopian view of how 7 billion people will be accommodated onthis planet with ease and that somehow natural resources will cope for the endless growth in population. Indeed population growth is slowing such that the interval between the 7 and 8 billionth person will be greater that the interval between the 6 and 7 billion. I wish I were so convinced. No mention of water issues and scant detail of how the food would be provided, let alone the other resources.
Snap back to 1985 and a certain musician made a lot of noise about the starving in Africa. How many are starving now? At every turn our politicians have failed us and the species homo philoprogenitus is on the ascendency.
Only yesterday I read of a fighter in Libya who was returning to his family of 22 children (not a misprint) after the cessation of hostilities. What hope have we with this type of excess.
What chance have we when most religions are positively anti any form of population control. The population control method that will result will be the Rabbit method - expand and collapse due to war,disease, pestilence and starvation.
The Limits to Growth are real and they are about to be applied with vigour very soon indeed and yet few of us give a damn.
All of the issues regarding sustainablity (energy, resource use, pollution) depend on one key parameter. A population that lives within the carrying capacity of the environment.
The worst example of exceeding the carrying capacity is the middle east. Need I say more. Ever been to Dubai.
As ever with Charlie Hall he is right on the money.
Carnot, it seems that the powers to be are more focused on the accompanying shortages versus the population increase.
I hope we see the light before it is too late...
Libya 1980: 7.38 children per woman in average.
Libya 1985: 6.51
Libya 1990: 4.83
Libya 1995: 3.58
Libya 2000: 3.08
Libya 2005: 2.87
Libya 2010: 2.56
Muslim Iran 2010: 1.67 children per woman.
Catholic Italy in 2010: 1.43 children per woman.
Shinto/Buddhist Japan in 2010: 1.36 children per woman
Hindu India in 2010: 2.63 children per woman (down from 4.68 in 1980).
I'm not sure I see the problem.
http://wisdom.unu.edu/wp-content/uploads/2008/08/big-crude-death-rate.gif
Notice the only slight increase of death rates in the developed world.
Let me ask this question to everyone: who here volunteers to sacrifice themselves and make this number go up so that we can have population stability?
That's what I thought.
Global death rate, which had been falling fairly steadily decade over decade, for centuries, now seems to be stalling out at about 8/1000/year. It is predicted to rise in the coming decades even without any catastrophes, just because of demographics--basically aging global baby boomers.
Let's all keep in mind that the top fifth of the global population is using about four fifths of the resources.
So the real 'demographic' problem is the usage of resources by the top fifth.
Force or persuade them (us) to cut our consumption rate by a fourth, and we would have some wiggle room for Africans and others to go through the demographic transition into low birth rates as has happened everywhere else.
That is we would if we hadn't already screwed the pooch in a thousand different ways.
now seems to be stalling out at about 8/1000/year. It is predicted to rise in the coming decades even without any catastrophes, just because of demographics--basically aging global baby boomers.
.8% death rate implies an average lifespan of 125 years. Unless we live a lot longer, the death rate has to go up to about 1.25%.
So concentrate the wealth even more in fewer hands (take away the ability of that top fifth to use so many of those resources)???
I look at these protests and think, if we all had more money, well...wouldn't that just be worse for everyone? People would be buying even more trinkets, cars, boats, atv's, vacations to Mexico, etc...
I think that is probably old stats. The poorer countries are growing much faster than the West and the global GINI is falling. The BRIC countries alone has some 25% of the global GDP.
Economics is not a zero-sum game.
This chart from the UN's department of economic and social affairs shows the problem quite clearly.
The problem is all in Africa, your stats on Libya notwithstanding. A projection of 2.5 billion more people in what are already the poorest countries. The makings of a catastrophe, the like of which has never been seen.
And that's the "medium" scenario, in which population peaks late this century. Have a look at the high fertility scenario in figure 1 of that series. That's the track we're currently on.
Africa is big and empty (by the standards of Asia, Europe and the Americas). But it's also dry and getting drier, and most of its soils are degraded.
There are two ways this can go.
We can have a miraculous outbreak of neighbourly concern among the rich and middle-income countries, along with sudden unprecedented concern of Africa's governing elites for their own people. This seems about as probable as my winning Lotto.
Or the death rate will rise, and rise...
Sure, Africa will be the last continent to go rich and low-fertility, but they are on their way. The fall of Khadaffi is encouraging, as he has been a bad influence, and I think governance is slowly improving. I don't see why they wouldn't be able to cope with those population figures.
You will see the problem soon enough. When Africa explodes the masses will migrate and there will be no stopping them.
I note you have taken some of the best examples.
How About
Nigeria 5.61%
Somalia 6.4%
Sudan 4.6%
Pakistan 3.65%
Yemen 5.48%
Malaysia 2.72%
Nepal 2.95%
Philipines 3.27%
A 2.63% Indian fertility rate is still an expanding population.
What is as important is the consumption during the lifetime.
Water will be the greatest issue, followed by soil degradation.
Malthus will be proven correct.
Those fertility rates are all falling fairly rapidly. And one should note that they have higher death rates than we do as well.
You don't even have to go to the middle east; to see the western hemisphere's worst example of this just look at Haiti, with its deforested hillslopes, polluted water, overpopulated cities, and collapsed agricultural system.
Spot on. The new Easter Island.
I remember reading (can't recall where) that one person in the US has the resource footprint of 11 people in most developing countries.
So that guy with 22 kids plus mom and dad consumes about as much resources as what, a family of four in the USA?
Unless his 22 kids average more than 2 each.
Blockbuster post, Gail. You added the necessary link to a likely affect of how debt based finance interacts with the LTG model and the various postulated feedback loops. Some of the comments were highly incisive and useful as well especially the comment of responses of non linear systems to these loops. The political financial powers know that the debt based house of cards is wavering and if you can't keep the galley slaves pulling on the oars and making their payments, their whole world could collapse and every plan from Brussels to DC is an attempt to prop up the banks and prevent losses to the banks and the bond and equity holders, pension plans, hedge funds etc. All the plans are attempts to privatize the profit and socialize the risks and dump debts onto society and off the bank's books. Will these central banks and financial elites succeed? I suspect this time they will fail and have to suffer losses. If they do again succeed they may find that their own heads may be at risk. If a debt cannot be repaid, it wont be repaid and banks will topple all across the world. The world is over banked and the TBTF banks need to fail to be replaced by new real domestic banks, not international casinos where the taxpayer backstops the house but doesn't share in the profits.
I also have a bit of a quibble that I rarely see criticism of how GDP is calculated inconsistently not only in the US but across the world. It would seem obvious that the US deficit borrowing which counts as + GDP should be subtracted from GDP in all deficit years. That of course would lead to downward GDP revisions for the past decade. For example pulling off this years deficit would drop our GDP from $14.6 Trillion to $13 Trillion or so. It is hard for this writer to stomach the fact that a huge portion of our GDP is financialization, real estate transactions and various financial and insurance and governmental services which of course is paper pushing generating nothing of lasting durable value. We still produce "things" of course but that is now a trivial 9% of the economy and a good portion of that manufacturing is aerospace and defense and armament "things." If you contrast how GDP is calculated for the US with countries that are not top heavy with paper pushers, countries such as the northern European countries and the BRIC countries where manufacturing is a much higher proportion of their economies, economies that produce things for export as well as domestic consumption, then you would find that the US share of world GDP would be lower than commonly assumed. The additional fact that increases the risk to a US collapse is how little the US produces of things that people need in their day to day activities as well as what industry needs in terms of tools, clothing, transportaion, industrial tools, critical minerals and so forth. I now find that even box cutters which brought down 2 airliners in 2001 are almost entirely produced in China. If you add the political system which is held in universal contempt by a huge majority of citizens layered as a pathetic feed back loop to our current predicament, it would seem that all these factors are baked into a cake which is not going to turn out well no matter what is done, no matter what is proposed.Once a system has passed the point of no return, there may not be solutions to avoid decline and collapse. Growth may now be nearing an end as energy becomes ever more scarce and dear, and all those economic assumptions built up since Adam Smith may have to be tossed onto the dung heap of history.
Thanks! I have not really studied the difference in GDP measures. Do you have any good references to recommend?
Gail,
Saw this on Our Finite World but glad it got posted on TOD. I'm glad the editors seem to be recognizing the importance of social/economic side effects of PO and not just the technical issues (though I still appreciate the fine articles in this vein). TOD, IMHO, should be a site where all of the ramifications of PO and peak net energy resulting from it and declining EROI are vetted. So good to see your slant given more air time!
As one of the more pessimistic commentators on the subject I must say that the consequences of the phenomenon you address are still to be sufficiently considered. There are any number of commentators here who recognize that some kind of "crash" is inevitable given the limits we have reached and society's penchant for ignoring them. But how many have given very deep thought to what comes after? How far does the decline go? What kind of society will we end up with? John Michael Greer has, of course, a model of the decline. Others have talked about extinction of mankind. These are essentially two ends of a spectrum of possible scenarios. But I think it is time to have more serious discussions about the future after the effects of growth reversal. We need to have more consideration regarding scenarios based on post-PO, peak fossil fuels in general, continuing decline (and at what rate) of EROI of FFs and likely supplies to society's energy needs from so-called renewables. You and I share the same notion of these alternatives being little more than FF extenders, but more analysis and discussion are warranted.
I would love to see TOD become a clearinghouse for these deliberations because it address the future subsequent to what many here believe, that the peak has already occurred. TOD has brand recognition and a very extensive readership. It (or the Energy Bulletin, perhaps) seems like the logical place to start the broader conversations (esp. since they show up casually on The Drum Beat anyway!) And it would give a new sense of mission to TOD.
For any who are interested, I have been running a series of posts on Question Everything that are, admittedly, very pessimistic for the vast majority of humanity - a worst case scenario but short of extinction(!) - but addressing the ideas of salvaging the genus Homo and preserving some of H. sapiens' hard won knowledge in a form that could be recovered in the distant future. It is not a series anyone should read unless they can actually see that the "crash" can, indeed, lead to the kind of situation posited by William Catton, and described in my review of his book, Bottleneck: Humanity's Impending Impasse. My latest posting contains links to the previous posts in the series.
George
Thanks for the links to your new posts.
I am afraid I can't comment on what TOD will or will not do in the future. If there were a nice continuous stream of posts about non-controversial topics, I think that is what would get published. That is not what the real world supplies, though.
Another thought--if you do have posts you would like considered, send them to me at Gail Tverberg at comcast dot net. I can help fix them into a format where they have a somewhat reasonable chance of being accepted at TOD. I can also run them on Our Finite World, if that seems like the best option.
Gail,
Will be in touch after ASPO is in the rear-view mirror.
George
I'm so tired of politically correct non-controversial topics. We need to rocking the boat a lot more than we are.
TOD has brand recognition and a very extensive readership.
To us, the regular readers this may be something 'we' take as a 'fact'.
But the reality would be seeing the actual numbers - and I doubt TOD is in the top .1% in all but "Websites talking about Oil" category.
The Site Meter (below on the right hand side) give some indication on readership. Another place is Alexa.
Basically, readership spiked during the Gulf Oil spill and, to a lesser extent, after the Fukushima accident. Readership is now down somewhat from what it was, prior to the change to the "four articles a week" format, with content determined by the panel of reviewers (of which I am one). That change took place about Thanksgiving time, a year ago.
But by no means is TOD a "top" site. Darn fine, in the "top" of oil/energy, but not big when compared to others.
TOD staff should take pride that when something happens with "energy" topics - the site is seen as a go-to destination for current info. If readership was not going up when something 'newsworthy' was going on in energy it would be time to close up shop.
Well done Gail I have been thinking along these lines for a while now with everyone going on about population growth and sustainability. Nature and natural cycles will ultimately determine what happens - see a similar article I commented on today before seeing yours where I stated we just need a black plague to come along that will have a much more dramatic affect on populations than ever! http://e360.yale.edu/feature/how_environmental_limits_may_rein_in_soarin...
Weakened populations are subject to illnesses, so that is a possibility. If things go downhill very far, I would expect that tropical diseases like malaria would become more widespread.
Don't worry about that, there is a vaccine for Malaria on the way. Trouble is they haven't come up with an answer for what they will do with all the millions of children they plan to save using it.
NAOM
The Plan - from the Gates Foundation would be GMO food.
Yet, the fossil water + water cycle has other plans.
http://www.activistpost.com/2011/10/world-population-growth-outpacing-wa...
(Hey - remember the flooding in the Dakota's this year? It seems that the dikes that were built with the goal of holding BACK water in "normal" times to raise the fossil water table because large local wells were going dry)
Just because they have a vaccine does not mean they have a cure. It was said about HIV that if the cure was a glass of clean water, millions of infected would be left without it. You would need to get the stuff out. Can be hard.
Limits to immunity?
My guess is, it has a lot more to do with the theory of evolution and beneficial (to the virus) mutations in the viral RNA...
"Creation Science 101" by Roy Zimmerman
http://www.youtube.com/watch?v=uIwiPsgRrOs
For those who have seen this before, I made a few updates, especially near the end.
Consider where we have been on the Hubbert Curve (see curve at http://www.drmillslmu.com/peakoil.htm) for the last 50 years. During that period, there was growth in oil production and a reasonable expectation of continued stable growth for decades to come. Hence it made good business sense for banks to make 30 year loans on housing during that period (especially in the 1950 to 1990 time frame), as there was little risk that a typical loan would default. These 30 year housing loans were very solid investments for decades. However, as we neared peak oil (and surpassed the peak and got onto the downslope of the curve), housing investments and 30 year loans started getting riskier. The implications of where oil production will be in the next 30 years started to get factored into the world economic situation due to higher oil prices. Those higher oil prices caused higher prices for basic necessities and all downstream goods. A combination of higher actual prices for goods and services and a higher awareness of forward looking risks to the economy in the coming decades started triggering growing worldwide unemployment. It may very well be that the rise in oil prices to $147 a barrel triggered higher unemployment and that helped to trigger the subprime and other housing crises, which are now helping to trigger and expose the macro crises of PIIGS, Egypt, Libya, Tunisia, etc, and the food crises too. The banking powers (FED, IMF, ECB, China, etc) have tried with difficulty to address the debt burdens and debt related links to the world economy to preserve the status quo. But structural changes associated with several flavors of resource depletions (for which there are no easy substitutions available) will force changes to the status quo. These changes are first shunted by the government and corporate interests onto the general population with austerity measures and higher government debt levels. As a result there will be higher unemployment and less government services available as we are currently seeing in not only PIIGS, but in China and America too if one has been paying attention to local and regional economic affects.
Looking forward to the coming years, what are the reasonable expectations for housing and all other aspects of the world economy if oil production does decrease as projected by the Hubbert Curve? Is the banking business model of providing 30 year home loans at risk? It would seem so. I have seen reasonable projections that expect oil production to decrease by anywhere from 2 to 5 percent year after year after year (again see http://www.drmillslmu.com/peakoil.htm and scroll down some). Do 30 year home loans (or any long term loans of any type) make good business sense under a 2 percent decrease (year after year after year) in oil production which is the worlds most critical natural resource? Would they make good business sense under a 5 percent decrease (year after year after year)? I think the banks are finally starting to "get it" and so are other smart investors too, and long term credit is tightening as a result.
As an engineer, I like to deal with equations, and it would seem to me that there are some fundamental relationships at work here. When considering the world economy as a whole, the economic relationship of certain aspects of the economy to the production of oil might be quantified by a few approximate linear equations.
I think that credible arguments could be made that the linear equations below are approximately correct and applicable. The equations imply that for any given amount of Oil (X) produced in a given year that there would be corresponding amounts of various outputs (Y) that can be economically supported as a result. From an engineering mindset, it may be more correct to rephrase this to say that "For any given amount of Oil (X) produced in a given year that there would be corresponding amounts of various outputs (Y) that can be ENERGETICALLY supported as a result.
X amount of Oil for the year = Y amount of Total Jobs for the year
X amount of Oil for the year = Y amount of Middle Class Jobs for the year
X amount of Oil for the year = Y amount of Food Produced for the year
X amount of Oil for the year = Y amount of real GDP for the year
These relationships could be approximately extrapolated to other things too such as
X amount of Oil for the year = Y amount of New Clothing for the year
X amount of Oil for the year = Y amount of New Shelter for the year
Please note that money is not a part of these equations. Money is essentially a derivative that has value only due to it's acceptance as collateral for future product or services. With decreasing energy, the value of money can be expected to decrease as well, as there will be less products available. Indeed, the printing of money to support the debt burdens would tend to quicken the decrease in value of money, as when there is more money in the system and less products available, the price of the products would tend to increase. The Crash Course here (http://www.chrismartenson.com/) provides an excellent analysis of debt, money, and energy issues, and is worth viewing several times to really understand and "get it".
So, if oil production does decrease by 2 % per year, do you think that might cause a decrease by 2 % per year in Total Jobs, Middle Class Jobs, Food Produced, GDP, New Clothing, and New Shelter? How would that tend to ripple through an economy? Wouldn't it in fact look a lot like Austerity measures? The evidence of wide spread high unemployment in many countries and economies does suggest that we might be there now. If there was enough energy and resources available to give the people jobs who are currently unemployed and demonstrating in the streets in many places in the world, don't you think that the powers that be would be putting those people to work so that their actions are constructive and stabilizing (and even generating profits for corporations!) instead of letting them be unemployed, protesting, and destabilizing the status quo in places? Money would not seem to be the issue as the Central Banks are creating money in vast quantities right out of thin air with their quantitative easing approach in their attempt to keep sovereign debt loading and banks stable.
On a lay man level, consider that for each typical production job in the world, something is made that must be sent somewhere else. It takes energy to ship that product somewhere, and the energy we use mostly today to do that is oil energy. If oil production is reducing by 2 % per year, wouldn't it be reasonable to expect that jobs will decrease by around 2 % a year, and hence unemployment may increase by near 2 % per year?
The militaries of the world are finally waking up to the systemic nature of the economic crises that are currently being experienced. Several credible military organizations have recently written reports documenting how there may be a need to react to civil unrest in other countries as well as their own in the near years due to oil production decreasing worldwide. Here is a link to various military reports. I would expect that the more recent reports are finally "getting it" and most credible. http://www.energybulletin.net/stories/2010-09-28/energy-security-annotat...
The economy is closely linked with the physical resources that underly it. Looking at the economic system as an engineer would, the resources are inputs to the system, and the outputs are jobs, food, services, finished goods, and a growing population. If one increases the inputs (as was done in general in the years from lets say 1900 to 2000) then one can expect an increase in the outputs and that is exactly what happened in general throughout those years. However, if one decreases the resource inputs, then it would reasonably be expected that there would be a decrease in the outputs. The governments and monetary powers that be can try to recognize this and make tradeoffs and sacrifices to preserve certain aspects of the status quo.
The problem is that humans have tended to be very short sighted and self concerned, possibly in part due to most individuals being unaware of the predicament that we would eventually face collectively on the city, county, state, nation, and world levels. It is only relatively recently that a good understanding of how the economic system truly works has come to light and only a small percentage of the people understand this. Most people are still in the dark on many of the issues, and there is an inertia in the economic system to preserve the status quo. However, it is late in the game and a decrease in the outputs such as with austerity will not be readily welcomed in Greece or elsewhere. Since we have now gotten to the point where serious structural resource issues are rippling through and affecting economies at every level, one would then expect some serious economic and social restructuring to be an output of this process. On almost every level, people will have to try to do more with less.
Let's hope that wisdom and compassion are used to guide most people in how they confront their individual situations. In many ways, a simpler life can be comfortable and maybe even happier in ways.
Please consider that an attempt to convert over to manual labor to replace the loss of oil energy would still result in less of everything even though in theory there could be full employment. At approximately 23,000 man hours of equivalent work being producible from one barrel of oil, just the loss of roughly one percent of world oil production (roughly 900,000 barrels per day) would result in a loss of (900,000 x 23,000) around 20 billion man hours of equivalent work per day. With an 8 hour work day, it would take around 2.5 billion people to do an equivalent amount of work just to make up for a one percent decrease in oil production. If production decreases by 2 percent a year, then in just 2 or 3 years, the amount of work potential missing from the decrease in oil production would overtake the work potentially gained if everyone alive today (including the old and young) were able to contribute an extra 8 hours of labor each and every day. It is interesting to note that even if employment levels were to increase to approach full world wide employment, there could still be less food, less new clothing, less new shelter, and less real GDP if oil can not continue to do the heavy lifting for us as it has in prior decades with all the extra man hours of equivalent work that it has been providing for us.
The farther we go on the downslope of the Hubbert Curve the more obvious the effects will be. In general what we may be experiencing now is a situation where the energy that was expected to be there for growth is not available to us and hence there is high youth unemployment and in general high unemployment in most places. And after some time the energy that was expected to be there for sustaining operations and for repair and maintenance of infrastructure will no longer be available either. As oil production is decreasing, the system will have to figure out ways to keep operating in a degraded mode, always trying to find ways to do more with less. Hopefully, we will not slide all the way back to a mostly agrarian society which was the relatively stable and sustaining business as usual model for thousands of years. The pace of life will slow, and the world will become a much larger place again. But our knowledge of math and science should preserve some things for us. In the long run, maybe we will all end up in a more advanced version of the Swiss Family Robinsons.
I do think that it is very possible that most economies will be transitioning at some point in the future to some flavor of what is called a "command economy". When the current business models no longer work, governments and militaries will likely try to adjust to keep stability and there are aspects of a command economy that do provide more stability in ways. I would think that places like Egypt, Greece, and a few other countries are getting close to the need for command economies. Here is a definition of command economy. http://www.investorwords.com/951/command_economy.html
Many economists seem to be differing on whether the economic system will head towards inflation or deflation. My insight reasons that both inflation and deflation will be occurring but they will happen in differing areas of the economy. Assets that require longer term loans to purchase where there is a forward looking expectation that the debts incurred in today's transactions will be able to be repaid in future years will suffer deflation and falling prices and asset valuations. The reasoning for this is as follows : The Hubbert Curve strongly implies that future real economic activity will be decreasing since there will be less energy available in each successive year, so less will get done in each successive year, which implies that there will be less jobs in each successive year. With less jobs available, and more unemployed people competing for any job openings that do become available, the wages for jobs will be dropping too, as there will be more competition between the unemployed to get any given job. Employers will be able to do price discovery for wages where supply and demand work somewhat in reverse (but not counterintuitively). With a high demand for jobs, and a small supply of jobs, the price (or wage) of jobs goes down! So, with less jobs in the system, and a tendency for there to be less wages paid for existing jobs, we can expect the funds that will be available in future years to repay long term credit to be decreasing. This is a fundamental change for the long term credit business model used in prior years. Prior to peak oil/debt/GDP/water/soil/phosphorous etc, the trends and expectations were that there would be more funds available in future years, and 7 yr. loans for CRE, and 15 and 30 yr. loans for housing made good business sense. Now that we are post peak the long term credit business model is structurally challenged with higher risks of defaults due to an expectation of less wages being available to repay loans.
Inflation can be expected in the price of real/hard assets and commodities that don't require long term credit, especially where basic necessities (BN) are concerned. Discretionary spending will obviously decrease, but BN purchases will be made first. With money printing increasing the funds available, more money will be competing for BN and for real assets where there is immediate value and need. And the Hubbert Curve implies that there will eventually be less supply of BN and real/hard assets, so supply and demand will tend to drive prices up in these areas and cause inflation in them.
One might consider that even if there is a level plateau on the Hubbert Curve that population is still trying to increase and as a result the competition for BN and real/hard assets (for which production has now leveled) increases and that could drive prices up too.
Let's consider the affect that austerity measures and weak economies have had in Egypt, Greece, and Libya in recent years, and what the Hubbert Curve implies about the future. People have gotten out into the streets seeking change, and some change has occurred but it was difficult to obtain. In Egypt and Greece the change was mostly non-violent. A show of force and collective action by the poor and economically disadvantaged has resulted in changes in the leadership for Egypt and for public and world awareness of the push back to austerity in the Greece case. In Libya violence and disruption resulted.
For the people seeking change, typically they want more of everything, they want stronger economies, and they want jobs. Most of the people in those countries might only see the deceptive causality of money, as more money typically means more goods and services. The poor and middle class might think that by leveling the playing field between rich and poor, that things will improve. But the Hubbert Curve strongly implies that at some point there will be structural constraints that result in less goods and services available. Hence, the change that the people in those countries are looking for will be very hard to get. Even in leveling the playing field, with the Hubbert Curve forcing a decrease in goods and services, the people in the streets might not get the change that they seek. They may be better off than they would have been under other conditions, but they may not even recognize that relativity and so they will keep seeking more change. Indeed, I just saw news articles that the people of Egypt are back in the streets as many aren't happy in the changes that have been made so far. But at least Egypt and Greece hasn't been losing infrastructure, as is the case in Libya with the violence and destruction.
As austerity measures kick in around the world, the importance of preserving the infrastructure is paramount. With less energy available, and less goods and services available to do maintenance and repair, losing infrastructure will only exacerbate weak economies and may be very difficult or nearly impossible to replace. Stability is a good thing from most points of view and care must be taken by all interested parties (governments, financiers, militaries, and protestors alike) to not make the situation worse. Actions that might possibly result in loss of infrastructure should be carefully considered. Loss of infrastructure unintentionally, or unexpectedly might only make things worse.
Many sources posit the timeline for events to be in the "coming decades", and the media likes to project various trends in the 2030 or 2050 timeframes. But if we are past peak in any key resources, we could already be on or near a decline rate of 2% year over year. Consider that when we get out onto the part of the Hubbert Curve where the decline in oil production might be at a rate of 2 to 5 percent a year, I think most people don't realize how quickly that becomes troublesome. If there is a corresponding drop in employment and wages of the same percentages, then in 5 short years we could be adding between 10 and 25 percent more unemployment worldwide. What would the countries of America, China, Greece, Egypt, Spain, etc. look like with even just a 10 percent increase in unemployment from the already high unemployment levels everybody already has? It will quickly be impossible to pay back the debts on the book now with decreasing wages underfunding every level (city, county, state, national, international) of funding available to make debt paybacks.
The media and TPTB do make it hard for the general public to assess exactly where we are at. The fact that military studies are signaling possible near term affects in the 2012 to 2015 timeframe that they may have to respond to suggests that they have better information than most, and their outlook is pessimistic. Systemic factors like the struggle in Libya can quickly take 1 to 2 percent of production offline unexpectedly and this could cause a steeper downslope in oil production than even natural depletion.
The economic discussion in the media and various blogs and such often makes reference to "slowing growth" or "soft patches" as either a symptom or part of the problem in national and world economics. But the Hubbert like Curves for oil and other resources will be structurally enforcing contraction (and not growth), year after year after year. "Slowing growth" is a phrase that we may be collectively deceiving ourselves with. Many changes that might slow down or contract various sectors of the world economy can be expected when a comprehensive forward looking economic analysis and risk assessment is done under the constraints of declining inputs. Contraction and austerity affects might be forced by declining inputs or even be forced by an anticipation of soon declining inputs and the affects of contraction would likely be felt across all social classes. Changes to the status quo may become possible/probable in many places.
If there is to be an expected slowdown and contraction, would it at some point be beneficial for the world governments to point that out to the general populations, and to attempt to change the nature of the world economy to favor stability? That might be a better approach than risking a loss of infrastructure in hot resource wars which might only make things worse and exacerbate weak economies, which might negatively affect all social classes. A joint statement from world governments explaining to the people the predicament might have a chance of success of keeping stability and order in a slowing world that only naturally wants to go faster and grow.
As a race, we unknowingly got to this point because that is the nature of all living things. It is natural for all living things to exploit their resources, and to go forth and multiply and have some fun. Reaching the predicament of resource constraints would have occurred irregardless of which political party is in control, or which economic model was used by governments, or which religion is practiced by the people. It is the nature of all living things. The people currently sitting at the top are mostly not to blame for this predicament, as it was going to happen anyway. However, this does not excuse abuse of one's position for anybody that has done that. Fairness is expected by everybody. In support of this point of view, I would like to quote the wisdom of Steve Jobs who recently told the powers that be :
"The axis today is not liberal and conservative, the axis is constructive-destructive" -- Steve Jobs
Indeed, and the axis is not capitalism, socialism, communism, black, white, red, or yellow, Christian, Hindu, Buddhist, etc, etc, either. It is simply in being constructive, and building for the best future we possibly can, with the best information and best analysis possible, and in being reasonable and working in cooperation with each other.
As a race, we have been gifted with the intelligence to see the larger picture. Let's hope that intelligence at the top, middle, and bottom will be used to guide people to being constructive and not destructive in a slowing economy. An appeal to people's intelligence and civic duties, and moral obligations, along with an honest assessment of the likelihood of change across all social classes might be acceptable to most people if they are leveled with and told the truth, and maybe we can engineer a slower paced, more sustainable and renewable society if we try. It won't be easy, but for inspiration, I would like to quote some Chicago lyrics
"Searchin' for an answer, to the question, oh yeah, for our minds. Baby, it's only natural. Good things in life, take a long time".
Here are links to that song. Actually, the lyrics to the whole song would seem apt and applicable under these circumstances.
http://www.metrolyrics.com/ive-been-searchin-so-long-lyrics-chicago.html
http://www.youtube.com/watch?v=E6oXU4l3wJ0
http://www.youtube.com/watch?v=RVCL0kfxa7M (live version)
http://www.youtube.com/watch?v=2Y9VmfKcOYc (different live version)
That's my humble take on things. Thanks for reading.
You have quite a few good ideas. Thanks!
"If there is to be an expected slowdown and contraction, would it at some point be beneficial for the world governments to point that out to the general populations, and to attempt to change the nature of the world economy to favor stability?"
Carter tried that. What we got instead was Raygun, and it all went down hill from there.
Here in my little corner of the World we are blessed with an abundance of freshwater -via Lake Michigan. Our little town has the highest unemployment in the State, and is shrinking. As more and more preople leave, water use is down - which is causing decreasing revenues for the water utility and is the justification for a major increase in rates! You can't win.
Our systems are not made to run with fewer users--or even with scaled back use.
I think Atlanta has had some similar problems. It told people to cut back use, and then needed higher rates because people complied.
Also remember there is 100+ year old infrastructure that needs replacing.
Like the lead pipes that bring the water to the homes.
(or how in some places the sewer pipes are hollow wood logs)
The Limits to Growth scenarios were designed not to prove that there were limits to growth. Instead, they were designed to show the behavior of a system that contained limits (overshoot). The limits were assumed by the model.
I would agree that the LTG model was useful - it showed what overshoot looked like, and showed that overshoot was possible in a model of limited resources.
It did not demonstrate that it was a model of the real world. The model was extremely simple. If memory serves me, at least in the first model resources were unitary: they weren't broken down into minerals, energy, food, or anything like that: just "resources". There wasn't an explict recognition of renewable energy - wind, solar, etc. That's a mighty simple model.
This simplicity, and the exclusion of substitution of non-limited resources for limited resource made the model very, very far from anything that might be expected to model the real world. As the authors said repeatedly, these were scenarios, not forecasts. It was treated as such by the economics community, much to the puzzlement of environmentalists who didn't understand just how limited the model was.
Agreed. The earth is not a closed system with respect to energy. Enough solar energy hits the face of the earth in 1 hour as is used globally in 1 year.
With the basic science of catalytic conversion of water to hydrogen and oxygen using sunlight as an enetgy source (not to be confused with ordinary electrolysis of water) having been solved recently:
http://www.suncatalytix.com/
a hydrogen-based economy is at least conceivable in principle.
Yeah, yeah, and hydrogen is the most abundant element in the universe...
That doesn't mean it is possible for us to access it. Same with most sun hitting the earth.
Heaven's, we are already using some 40% of all the photosynthetic energy produced on earth. How much more do we deserve? And what are we going to use all that energy for? So far we have used it to trash the planet, trigger a great mass extinction, overpopulate the earth...and that was before the effects of global warming really started going.
And you want to supply these mad monkeys with MORE energy? In fact with LIMITLESS energy? ...
The maddest monkeys are those who enable the madness of the rest.
With the basic science of catalytic conversion of water to hydrogen and oxygen using sunlight as an enetgy source (not to be confused with ordinary electrolysis of water) having been solved recently:
'Making Hydrogen' is "solved"?
How about storing it "cheaply"? How about the long term effects of loose H2 on the biosphere?
There is no need to store H2. You can convert it to electricity by passing it through fuel cell.
There cannot be loose H2 in the biosphere. Earth's gravity is not strong enough to hold on to loose H2. Any H2 molecule released in the open will reach escape velocity.
There is no need to store H2 You can convert it to electricity by passing it through fuel cell.
If there is no need to store electricity - why the battery research? Why concerns over oil as a stored energy source?
There cannot be loose H2 in the biosphere.
Unless there is instant transport of H2 from the surface of the Earth to Space - you are wrong.
H2 produced on the surface will be in the biosphere as it goes, over time to space. To avoid the question: What is the interaction with Ozone by denying biosphere interaction either shows ignorance or an attempt to be deceptive.
I used to be a follower of the Techings of the Church of the Hydrogen Economy. I left when I saw the size of the problem.
Hydrogen is a bitch to store. It has, for example, no compression pressure. The hydrogen inside the core of the sun with all that pressure it is exposed to is still in gas form. The atoms are crushed,wich alow the nuclear reactions to take place, but they are still in gas state. Only cold can liquify hydrogen, and it takes lots of cold to do it.
If you could store it in liquid form as in a bottle, energy density per volume is still in line with the best batterys. That is not much. One reason behind this is the low mass density of liquid hydrogen. It is only 5 time as dense as the most heavy gas, for example.
Transport is not easy. Pipes are leaking as swedish prisons the summer of 2007 (that is; a lot). Joints are near impossible to seal without welding. And the gas have an ability to wedge itself in between the grains of the solid metal and pulverize it.
I don't say it is impossible. But there are a lot of thechnology to invent to get this boat to float. And that takes research, wich take funding. I am not sure we have the time.
Jedi,
Transportation seems like a tough application for hydrogen. Conversion to some other hydrocarbon seems much more sensible.
On the other hand, use in stationary applications, such as a utility scale windpower sink, seems possible to me. Apparently The ConocoPhillips Clemens Terminal in Texas has stored hydrogen since the 1980s in a solution-mined salt cavern, like natural gas. Can you see any problems with this?
http://en.wikipedia.org/wiki/Underground_hydrogen_storage
For those who have a salt cave lying around, this is probably a good idea. If you also have a cheap and abundant energy resource in the area, you got energy storage as well!
The problem with this is not that it don't work, because I think it does. The problem is that it can not be implemented everywhere. Motor gasoline can be stored in a plastic bottle.
Sure. As I said, that makes H2 problematic for transportation.
On the other hand, there are a lot of salt caves, depleted oil/gas wells, etc. for storing H2. That works nicely for the kind of utility energy storage that would be mighty handy for solving the intermittency problems of renewables.
This reminds me of climate denialism, Nick. At the time of publication the model was heavily criticised for being too complicated and incorporating too many real-world features like stocks, flows, and feedback delays, meaning that only a computer could solve it. It was an order of magnitude more complex than previous attempts.
I'm not saying that it was you that criticised it for being too complicated. Just that objections that amount to "I don't like the model" weren't and aren't satisfactory.
The model did allow for resource substitution ... at historically justifiable rates, to theoretically justifiable levels. The model did allow for technological growth ... at historically justifiable rates. Renewables were ignored because the expectation was that nuclear power would take over: renewables can only provide trivial amounts of power by comparison, and nuclear was expected to be much cheaper. (And nuclear will still have to expand, if we are to overcome resource dispersion and pollution sink capacity problems.)
Economists of the day more or less totally failed to understand the model, because it is a dynamic one. In the 1970s nearly all practising economists had only been trained in methods of comparative statics. Economists still don't seem to understand control delays: they talk of "the short run" and "the long run" as a poor substitute for a proper quantification of response delays.
The best model is the simplest one that gives adequately precise and accurate results. If this one is too simple, can you point us in the direction of a model that is just complex enough?
The model did allow for resource substitution ... at historically justifiable rates, to theoretically justifiable levels. The model did allow for technological growth ... at historically justifiable rates. Renewables were ignored because the expectation was that nuclear power would take over.
I haven't seen these three elements in the discussions and descriptions I've looked at (I've looked a reasonable number). Do you what the values were? Or, could you point me to a good, specific, source for them?
And speaking of climate denial, there is an article in the latest Physics Today that discusses the need for industrial humanity to immediately enable atmospheric CO2 reductions so that a targeted 2 degree C global temperature rise can be capped (not eliminated or reversed) by century's end. In it they show several model senarios for the effects of delay in beginning these reductions, which must be ever more severe the longer we wait. What floored me was they were suggesting ZERO atmospheric CO2 inputs at some later date this century. As if! If anything, when oil runs low or effectively out, industrious humans will burn the available CO2-rich coal resources even faster. We may find some other ways to cull our numbers beforehand, but climate change and global warming are slowly turning the screws and will likely deliver the coup de grace.
Interesting to see Climate Change become more and more a basic scientific consensus. I even saw an article recently in The Economist with the same perspective.
How long can Fox News continue to operate in their Koch Brothers bubble? Perhaps as long as Rupert is alive...
The model did allow for resource substitution ... at historically justifiable rates, to theoretically justifiable levels. The model did allow for technological growth ... at historically justifiable rates. Renewables were ignored because the expectation was that nuclear power would take over.
Again, as afar as I can tell, these three elements were not in the model. Has anyone seen information on this - whether they were included, and if so what the values were? Or, a good, specific, source for them?
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Other less important thoughts:
At the time of publication the model was heavily criticised for being too complicated and incorporating too many real-world features like stocks, flows, and feedback delays, meaning that only a computer could solve it. It was an order of magnitude more complex than previous attempts.
This doesn't sound right. I believe there were econometrics models in existence at the time that were more complex. I was working on mainframe simulations at the time of comparable complexity, and these were models of much, much smaller and simpler systems.
objections that amount to "I don't like the model" weren't and aren't satisfactory.
I like the model just fine. I simply think that people are misinterpreting a theoretical exercise as a model that was intended to faithfully reflect the existing world.
Climate models do attempt to model the real world - every year they get more and more complex in order to raise "resolution" and do the task more faithfully.
There's a reason the original authors stressed repeatedly that these were scenarios, not forecasts: they were intended to explore a theoretical point, not model the real world. Now, even some of the original authors have gotten carried away, and started to act like this was a forecast that could be expected to predict the real world, and therefore was "testable" against actual results. But...they got carried away, and got unrealistic.
renewables can only provide trivial amounts of power by comparison
I'd guess that wind can provide 5TW pretty easily, and solar could provide far more than the 10-20TW humans capture currently. That seems like enough.
pollution sink capacity problems
I'd say that's confusing resource limit problems with pollution. Saying that pollution uses up an environmental sink is like saying that wearing hob-nail boots on a wood floor uses up the floor's nail absorption capacity - it really doesn't make sense to think of it that way.
The best model is the simplest one that gives adequately precise and accurate results.
First it must be accurate. Then we can try to simplify.
Desdemona considered this question recently: Desdemona at 2: The Environmentalist’s Paradox.
To the consternation of my peers in college, the assessment that current gains in apparent human well being precede future losses through damaging flows of natural capital ("borrowed time") has been something I've brought up repeatedly. Few of them, even the ones that accept the idea of an oil or fossil fuel peak, can accept that this will happen.
Thanks for the link. I follow dd pretty closely, but somehow missed this. Did you notice Gail's prediction at the end of the comments that collapse will happen in 2011. She's got about two months.
Where did I say that?
The last comment on the link is tagged 'Gail'--given your interest in these matters, I assumed that was you. Perhaps I was mistaken. I thought it an impressively ballsy prediction. One that could well still come to pass. My apologies if I mis-attributed the prediction.
I don't agree with you completely on renewables and a few other things, but it sound like we're in pretty close agreement on the economic stuff. Thanks for a great post, here.
Sorry, I am not that Gail. I always comment as either "Gail the Actuary" or "Gail Tverberg".
I doubt that there is a paradox. We have a failure to communicate the exponential function.
It's just the normal road to overshoot. Like the reindeer on St Mathews Island. The deer didn't know when they had passed the point of no return. Life would have appeared to be rosy for the deer well after the tipping point was passed.
Humans and the Earth are no different.
Just to emphasize human destructiveness, read the above cornucopians, they don't see a problem with population, the economy or limits to growth. They say population growth is slowing so we are saved, the market will save the economy, we only have to buy a Prius to save the environment and defeat the limits to growth.
We are most definitely screwed.
Energy prices rise as resource flow plateaus
Profits shrink as energy costs rise
Greater demands on fewer employees
Long term bank loans riskier
Tight money
Lower GDP
Tax revenue decreases
Government debt rises
Monetization of debt
Devaluing of currency
Food costs rise
99ers disenfranchised
Collapse
Excellent overview, Gail, especially with the very current aspects woven in. So much has been commented on above, I'll just remark that I think Figure 5 is actually GDP/Debt.
Philosophicly speaking I see a hirarchy of information. It looks like this
wisdom
knowledge
information
data
A thermometer can handle data. A computer can compile that data into information. Sentinent beeings can understand and refine that information to knowledge. Humans can use knowedge and reach wisdom. But not everyone can reach this goal.
In my youth I read in Proverbs that "the begining of wisdom is to seek wisdom". This statement was very frustrating to me, since it is a tautology. You will not find wisdom, unless you seek it, so off course the begining of wisdom is to seek wisdom. Then one day it occured to me what the guy who first said this may have meant; You wont find wisdom unless you seek it. Or in other words: "Wisdom is an attitude."
If wisdom is an attitude, then humans as a species can not be labeled "wise" or "not wise", since it is up to the individual what attitude they want to have.
[Edit]
Good comments all.My hat is off to Gail as usual;imo she has as good a better a grasp of the implications of debt and resource depletion as anybody.For what it is worth, I agree with her wholeheartedly in just about everything she writes.
Personally I have adopted the pov that a collapse of bau is inevitable, and that it will arrive within the next decade or two at the very latest.
I have accordingly been planning my personal and family affairs so as to be as well prepared as possible for a very rough period that will probably outlast me.
As I see it, it will likely be necessary to hunker down and bunker up and get by without most of the things we buy or take for granted in terms of services purchased.The name of the survival game is going to be a high degree of self reliance;such jobs as accountants, teachers, and social workers now hold are going to disappear for the most part;ditto jobs in retail/ services that depend on discretionary income and a lot of travel.
A local restaurant with customers within walking or biking distance might survive; a fast food joint depending on commuters won't.
If you can't afford to buy physical gold or silver,i suggest that you consider putting a large portion of savings into durable goods that will ALWAYS be needed;a pair of good boots properly stored will still be good many years from now-ditto a hundred pound bag of salt.
The nature of human nature is such that at some point a runaway inflation is inevitable;this is true simply because the last resort, as a practical matter, of a govt in desperate straights, is to simply print money.
My money. such little as I have , is in tools, farm supplies, and durable goods that i will need eventually;and I am seeing these things appreciate far faster than money in any sort of savings account that is safe and liquid.
My time is now mostly being divided between the farm and getting some serious training in human health to back up what I learned in ag college about the health of animals and plants in general.
If these precautions turn out to be unnecessary-well, many or most of us here are paying out thousands a year, for years on end, in insurance premiums,without collecting because we haven't gotten sick.
When you qoute other peoples posts here, please use the blockquote tag. Or at least write some comment on who wrote it first. Can be confusing otherways.
Also, your link didn't work.
<blockquote> stuff </blockquote>
will then look like:
;D
Here's another way to describe the oversimplification of the LTG model: it lacks energy as a discrete component - it only includes "non-renewable resources", which it assumes will become increasingly difficult to extract as limits are reached. In other words, Return On Investment will decrease.
Without an explicit analysis of energy, the model is invalid, as we see in a report of an attempt to add energy as a component here; http://europe.theoildrum.com/node/5145 . It says the following: "in a world with unlimited energy, any chemical compounds useful as a raw material but not as an energy source could be easily obtained "
Energy Return on Energy Invested (EROEI) is a key, foundational element to the energy component of this new model: "The available data on EROEI is very spotty, but it’s such a crucial concept to explain what may happen in the future with energy sources that I believe a model would be inaccurate if it didn’t include it in some way."
This new model assumes that renewable EROEI is low:
"Renewables aren’t used until the end of the 21st century, due to their low EROEI: "
The new model predicts serious problems in the medium term, in large part because renewables don't start to grow in a serious way until 2075, due to their low EROEI.
Wind and solar have high EROEI*, therefore, the energy component of the new model is incorrect, and so is the overall new model.
*Oddly, this model also makes the unrealistic assumption that nuclear fuel will be depleted within the 21st century.
No, I think they are quite convinced that there is enough fissionable material to nuke the entire planet--presumably what you are advocating here.
I'm more enthusiastic about wind and solar, though it looks like nuclear would work, if necessary.
You could claim the business as usual run as incorrect, but to claim the whole model as incorrect is a little premature.
I tried to find out the EROEI for renewables used in the model but couldn't download it as the link for the model has gone bad.
I drilled down through the comments and found this comment by the author of the updated model.
Now I'd like to see what a higher EROEI for renewables would do for the business as usual run starting from 2012. Perhaps you'd like to do the work?
I also found this quote from the author about finances and debt that tie in very nicely to what gail had to say.
I'd suggest contacting the author of the model and rerunning the business as usual scenario using updated renewable EROEI and incorporating Gail's dept considerations.
I think this would be most illuminating.
That's a great question. If you look closely, you'll notice that your quote above was in answer to my question. Again, she said:
"I also did a trial run for Chris Vernon, that asked me a similar question, assuming there was a policy to increase use of renewable electricity, regardless of EROEI, starting on year 2000 (you may think there is such a policy already in place, more or less). The result was a generally better future." (emphasis added)
http://www.theoildrum.com/node/5145/490634
If you look closely at what the author said about debt, I think you'll see that she fundamentally disagrees with Gail about debt:
"The implicit assumption is that the financial industry does not determine the way that the fundamental economy (that produces goods and services) operates, or not for very long periods of time. In other words, there may be speculative bubbles and such, but they don't last long. I think history suggests that this is true."
I think you need to go further and re run the model with the better EROEI of renewable before you draw any conclusions.
You are sort of correct. Splitting out renewable seems to make a difference. I say sort of because we only know vaguely what the new model and new model run suggest. "Generally better" is vague. Not to mention it started 11 years ago with the vague parameter of "increased us of renewable electricity regardless of EROEI"
Second García's model is overly simplistic concerning finance and debt. "The economy in my model is a very simple thing. Prices are assumed to be fixed, and GDP is calculated by simply adding the value in dollars for each economic sector (agriculture, industry and services). Financial industry is simply not part at all of the model. "
Need I remind you what you said about this model being overly simplistic just a few paragraphs above.
This is a very important point. And the whole point of Gail's article above.
Yes, García's model is simplistic concerning finance and debt. There's no question that they can be important. It would be nice to further develop her model, especially by including prices and deemphasizing E-ROI (which doesn't really tell us much about capex allocation).
On the other hand, Gail's basic idea is circular: she argues that the world's financial infrastructure will be harmed by the physical energy fundamentals - she has to provide evidence for a failure in those fundamentals before she can argue that a failing financial infrastructure will in turn cause really serious problems. In other words, García is correct - the physical fundamentals are more important.
García's model is definitely very simplistic with respect to financial aspects. I have had correspondence with her regarding this. Everything I can see says that fixing the model up would move the date when limits are reached up, and make the declines quicker.
On the other hand, price allocation is not currently included either.
Price allocation increases supply, reduces consumption, and causes substitution of alternative sources.
For instance, in the US production is rising, consumption is falling, and vehicle efficiency is rising.
http://www.countercurrents.org/salmony301011.htm