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Page added on September 14, 2016
“Peak Oil” – the Real Cause of the Growing Social Inequality in the US
In a recent article on the Huffington Post, Stan Sorscher reports the graph above and asks the question of what could have happened in the early 1970s that changed everything.
Impressive, but what caused this “something” that happened in the early 1970s? According to Sorscher,
X marks the spot. In this case, “X” is our choice of national values. We abandoned traditional American values that built a great and prosperous nation.
Unfortunately, this is a classic case of an explanation that doesn’t explain anything. Why did the American people decide to abandon traditional American values just at that specific moment in time?
In reality, the turning point of that time has been known for a long time. The first to notice it were Harry Bluestone and Bennet Harrison with their 1988 book “The Great U-turn: Corporate Restructuring And The Polarizing Of America.” They noted that a lot of economic parameters had completely reversed their historical trends in the early 1970s, including the overall inequality measured in terms of the Gini coefficient. For nearly a century, the US society had been moving toward a higher degree of equality. From the early 1970s, the trend changed direction, bringing the US to an inequality level similar to that of the average South-American countries.
So, what was that “something” that changed everything in the early 1970s? Nobody really knows for sure, but at least there was a major measurable change that took place in 1970: peak oil in the US. (image below, from Wikipedia).
It was a true asteroid that hit the US economy and that changed a lot of things. Possibly the most important change was that the US ceased to be an oil exporter and became an oil importer. That change was “user transparent,” in the sense that the Americans who were filling up the tanks of their cars didn’t know where the oil that had produced their gasoline was coming from (and mostly didn’t even care). But the change implied a major transfer of capital from the US to foreign producers, while a large part of it returned to the US in the form of investments. It was the “petrodollar recycling” phenomenon that mainly affected the financial system; all that money never really trickled down to the poorer sections of the US society. That may well explain the increasing inequality trend that started in the early 1970s.
But, if the oil peak of 1970 explains the inequality trends, shouldn’t the new reversal of the trend – the “shale oil revolution” change everything again? Perhaps surprisingly, there is some evidence that this may be the case.
The data from the World Bank indicate that the Gini coefficient for the US has peaked in 2006 and has remained constant, or slightly declining, ever since. Again, that makes some sense; one wouldn’t have expected a return to the low inequality values of the 1960s since the great shale oil boom didn’t transform the US into an oil exporter. At present, with the recent peaking of the Bakken field, it looks like that the good times of half a century ago will never return.
All this would require a lot of work to be better quantified and proven. But it is not a surprise that our life depends so much and so deeply on the production of that vital black liquid that we call “crude oil”. And with the probable downturn of the US production that seems to be starting right now, we are going to see more, and more radical, changes in our society. What these changes will be, we have to see, but it is hard to think that they will be for better equality.
36 Comments on "“Peak Oil” – the Real Cause of the Growing Social Inequality in the US"
claman on Wed, 14th Sep 2016 5:47 pm
Some of us thinks that fully automated factories are the main reason for low class americans unemployment.
The same “fully automated factories” will soon start extreme unemployment in the developing countries.
Here on PO we don’t discuss “fully automated production” very much, but that is where the unemploytment factor lies.
The unequility factor is build upon automation, standartation and every thing that turns human work into big data.
Peakoil or not – people are going to lose their jobs if they are not prepared for the changes that are coming.
Some are, some are not.
Cloggie on Wed, 14th Sep 2016 5:52 pm
How about this scenario:
Basic income + gardening are going to be big for the “low class people”, as you call them.
The part of human history where people needed an employer to tell them what to do all day, is rather insignificant. 240 years perhaps.
claman on Wed, 14th Sep 2016 6:05 pm
Clogg, Tell that to the people of Bangladesh, Nigeria and maybe every citizen in a mayor city around the world.
Unemployment without access to fertile land is going to be the normal, not the option.
claman on Wed, 14th Sep 2016 6:17 pm
clogg : What i am saying is that eventually , there will be a huge distance between those who understand and appreciate how society works, and those who couldn’t care less.
Apneaman on Wed, 14th Sep 2016 6:36 pm
“Those who say capitalism isn’t working for us have entirely missed the point of capitalism.”
Anonymous?
Apneaman on Wed, 14th Sep 2016 6:41 pm
Deconstructing Median Income Bullshit
“When I learned yesterday, 55 days before the 2016 election, that the Census Bureau and the White House had announced an historic leap in real (inflation-adjusted) median household income, my bullshit detector went into the red, went right off the scale and then ceased functioning. I’ll have to get a new one”
“Look at that jump! The biggest since 1967 when record keeping began.
How fucking likely is that?”
“The second knock is that Census moved the goal posts.
Ah, make the data look better by doing the measurement differently. The usual move.
Starting in 2013 with a partial phase-in, which was fully implemented in 2014, Census changed the questions and the methods in calculating household income.”
http://www.declineoftheempire.com/2016/09/deconstructing-median-income-bullshit.html
claman on Wed, 14th Sep 2016 6:42 pm
Cool Apne , for once we agree 🙂
claman on Wed, 14th Sep 2016 7:15 pm
Ap, “Those who say capitalism isn’t working for us have entirely missed the point of capitalism.”
In other words, do our current incomes give us more freedom to buy the things we want rather than the things we need.
I, my self am not bye anything that I don’t absolutely need and so is my life style in general – unless of course it can be proved to be other wise.
I believe an african from a poorer sub-Sahara district would disagree
Apneaman on Wed, 14th Sep 2016 7:54 pm
claman, the many millions of people who claim they are dyed in the wool capitalists then bitch and moan that they exported “our” jobs simply do not understand capitalism. You don’t own your job when you work for an employer. They own the job and can do whatever they like with it. That’s how capitalism is designed to work. It’s about accumulating capital and nothing else. Between the capitalists job owners exporting “their” jobs to other countries and automation many white peoples services are no longer needed and that will continue to grow, yet they cling to the myth like a security blanket. Can’t let go of the ideology that has abandon them forever. Your $GOD$ don’t need you anymore, so go OD accidentally or on purpose. And the overlords and the ones with their heads still above water can’t stand to look at the neo have nots – you remind them that their beloved system is failing and that they could be next.
I argued that given bleakness of living in the horror show that the modern-day America has become, suicide is actually a rational option for many people. For a large and growing segment of the population, there truly is no hope. I’m less surprised by the rise in the suicide rate than the fact that it isn’t even higher than it is. I’m more amazed at what makes people go on in this vicious, hellish, Social Darwinist dystopia.
Furthermore, I argued that this was by design. I argued that eliminationism is an intentional, albeit unstated, policy of the ruling class of this country. From their perspective, it really would be more convenient, all things considered, if the excess population, would, you know, just sort of take care of themselves and not cause too much bother on their way out.
http://hipcrimevocab.com/2016/09/08/the-dying-americans-2/
claman on Wed, 14th Sep 2016 8:10 pm
Apne, poverty is a state of mind. And that state of mind is allways related to your neighbour’s riches compared to your own.
claman on Wed, 14th Sep 2016 8:35 pm
Things might be bad to day, but take a look at this
http://www.american-pictures.com/gallery/
What makes ordinary americans life so misserable to day is their addiction to carbon-hydrates that again nourish their yeast fungus infections.
claman on Wed, 14th Sep 2016 8:59 pm
Apne said: “It’s about accumulating capital and nothing else.”
And what’s in it for the workers if not the money?
The Capital and the workers are one big cooperating monster that has only one goal, and that is to find the last resource in this whole world and exploit it to the last drop.
The fucking workers keep the whole shit working.
makati1 on Wed, 14th Sep 2016 9:08 pm
claman, “…poverty is a state of mind.” tell that to those who worry daily about food, shelter and their health and family, not what the ‘neighbors’ have. You are aware that there are some 50 million in America that are under the poverty level.
You know, the level that allows them to live. The millions that have no home. That rely on food stamps to eat. The millions of kids who go to bed hungry every night. Or maybe you just want to ignore such ‘facts’? You may have more difficulty ignoring them when YOU are one of those below the poverty line.
claman on Wed, 14th Sep 2016 9:23 pm
Mak, the american workers killed their own unions. The unions that could have saved their lifestyle.
But no.. they believed the Reagan narrative that unions were bad. And here they are to day, with out a spokesman. without an organisation, with out a common goal.
To days middle class has bought their own ticket to the lower class.
Go Speed Racer on Wed, 14th Sep 2016 9:25 pm
LOL. The real reason for growing social inequality, is that a whole bunch of former middle class turned into fat retarded tattoo’d meth-heads in monster trucks. Turned into those Republican Trump voters on Welfare and snap cards. Just like cancer, not curable.
Go Speed Racer on Wed, 14th Sep 2016 9:30 pm
Hello Sleep Apneaman. Sometimes when the bullshit meter pegs and stops working, it is still ok. It just needs a new 9 Volt battery. Remove the 4 screws and back cover comes off. Alkaline will last you longer.
claman on Wed, 14th Sep 2016 9:33 pm
GSR, To be very precise, The american workers killed their own organisations. And now they are begging Trump to do something about it.
It is a pity that Sanders is not the presidential type, otherwise I like him.
JuanP on Wed, 14th Sep 2016 9:59 pm
“I argued that given bleakness of living in the horror show that the modern-day America has become, suicide is actually a rational option for many people. For a large and growing segment of the population, there truly is no hope. I’m less surprised by the rise in the suicide rate than the fact that it isn’t even higher than it is. I’m more amazed at what makes people go on in this vicious, hellish, Social Darwinist dystopia.”
I am amazed, too! It is one of the things that make me realize how little I have in common with the people around me. I struggle with the fact that I belong to the same species; I find myself emotionally and intellectually incapable of accepting the fact. That is why I consider myself a sui generis individual rather than a human animal.
claman on Wed, 14th Sep 2016 10:00 pm
GSR , it’s really nice that the poor in america can afford a lavish lifestyle with meth and monster trucks – and tattoos.
“LOL. The real reason for growing social inequality, is that a whole bunch of former middle class turned into fat retarded tattoo’d meth-heads in monster trucks. “
claman on Wed, 14th Sep 2016 10:39 pm
Juan, you made your choice about not having children. This is the bad side about it.
I don’t know how to comfort you, but I do feel with you. I have some nice grand children and that is a great comfort to me.
Juan : I’m a bit of a bastard and please don’t be offended, but the feelings you got are not just your own, we are a lot who are at about the same place as you just described. Please listen to “The Moody Blues”:
https://www.youtube.com/watch?v=XEx1C9O7lVk
Apneaman on Wed, 14th Sep 2016 10:41 pm
claman, are you saying excessive simple carbohydrates, like white flour & sugar are bad for you? I don’t believe you. Growing up in the 70’s all my breakfast cereals said right on the box they were part of a healthy diet – Captain Crunch and Tony the Tiger care about kids and so does Count Chocula. Those cereals were low fat, nutritious, packed with energy and magically delicious. It’s dietary fat that in the root of all evil – everyone knows that. That’s what they told us and there is simply no way our corporate state overlords would lie to us for any reason.
Sugar industry paid scientists for favourable research, documents reveal
Harvard study in 1960s cast doubt on sugar’s role in heart disease, pointing finger at fat
“In 1964, the group now known as the Sugar Association internally discussed a campaign to address “negative attitudes toward sugar” after studies began emerging linking sugar with heart disease, according to documents dug up from public archives. The following year the group approved “Project 226,” which entailed paying Harvard researchers today’s equivalent of $48,900 US for an article reviewing the scientific literature, supplying materials they wanted reviewed, and receiving drafts of the article.
The resulting article published in 1967 concluded there was “no doubt” that reducing cholesterol and saturated fat was the only dietary intervention needed to prevent heart disease. The researchers overstated the consistency of the literature on fat and cholesterol, while downplaying studies on sugar, according to the analysis.”
http://www.cbc.ca/news/health/sugar-harvard-conspiracy-1.3759582
The fallacies of the lipid hypothesis.
http://www.ncbi.nlm.nih.gov/pubmed/18615352
The lipid hypothesis
“In simplistic terms the lipid hypothesis is as follows:
a) cholesterol and/or fat in the diet leads to cholesterol and/or fat in the blood;
b) cholesterol and/or fat in the blood causes plaque formation in the arteries and, consequently, heart disease; and, therefore
c) cholesterol and/or fat in the diet causes heart disease.
Sounds simple enough, but problem is there is no hard science behind it. There is a bit of weak, but not fully convincing science that purports to prove a. Less science yet that proves b. Yet we’re all to believe a leads to b and, therefore, causes c.
One scientifically verified fact disproves the whole lot: only about half the people who have heart attacks have elevated cholesterol levels.”
https://proteinpower.com/drmike/2005/07/17/the-lipid-hypothesis/
makati1 on Wed, 14th Sep 2016 10:42 pm
JuanP, the suicide rate is going to continue to climb in America as more and more see behind the curtain and realize they are fucked. At this point, there is no hope for America and little more for the other Western countries. Perhaps the East can pull off the change they are working toward. We shall see.
makati1 on Wed, 14th Sep 2016 10:49 pm
Claman, how can you be ‘comforted’ by grandchildren that will most likely suffer a very difficult, brutish and short life? Sounds selfish to me.
I too have grand kids, 12 to be exact, and I do not envy their future, if they have one. I also have a few great grands that will suffer even more. One of the worst things a person can do today is bring more kids into this doomed world.
And doomed it is, in so many ways. Today’s adults have lived thru the best that will ever be and it is receding quickly into the rear view mirror, never to return.
Apneaman on Wed, 14th Sep 2016 10:59 pm
Mak the entire industrialized world is committing CO2icide. It’s more like a murder CO2icide actually since millions who have not really contributed and the soon to be born are getting done as well. If we don’t all get nuked then by 2050 at least a billion will be gone and none are going to see the next century. PhD conservation biologist Guy McPherson is still claiming we will be done by 2030. Sounds a little early to me, but at least there’s hope.
claman on Wed, 14th Sep 2016 11:01 pm
juan, I hope it helped a little.
Life is pretty hard when you think unbiased about it.
What ever you think you are not alone.
Apneaman on Wed, 14th Sep 2016 11:07 pm
The corporate state says-THANK YOU FOR YOUR SERVICE
Mom who was sent 1 cent after soldier son’s suicide getting Memorial Cross
Soldier Justin Stark, 22, killed himself after serving a 7-month deployment in Afghanistan. The Memorial Cross shows the military finally recognizes his death as service-related.
“The government had already sparked outrage after it sent Stark a cheque for 1 cent in “release pay” for her dead son in February 2014 — prompting then-defence minister Rob Nicholson to apologize for what he called “insensitive bureaucratic screw-up.”
https://www.thestar.com/news/canada/2016/09/14/mom-who-was-sent-1-cent-after-soldier-sons-suicide-getting-memorial-cross.html
claman on Wed, 14th Sep 2016 11:28 pm
Juan I hear you “It is one of the things that make me realize how little I have in common with the people around me. I struggle with the fact that I belong to the same species; I find myself emotionally and intellectually incapable of accepting the fact. That is why I consider myself a sui generis individual rather than a human animal.”
Maybe you are just the first of a new kind of human species that the world has not seen before, and some where there is another with the same mindset.
Clogg is a communist and is therefor limited in his thoughts, Mak has decided that china is better no matter what. Davy tries with all his heart to make sense of all the mess in this forum.
Please juan, We are all here because we don’t know the truth, but we want to talk about it anyway
joe on Thu, 15th Sep 2016 1:11 am
Many things happened in the 1970s. Abandoning Bretton Woods, dropping the gold standard, demise of the British Commonwealth, rise of the EEC and common market, defeat in Vietnam and so cost of war being born by American people, creation of the petrodollar etc.
Much of this required that wages had to stagnate and profits allowed to accrue to business, it was called stagflation, petrodollars was the answer.
Ever since, workers have suffered the debasement of the value of their labour, its come to the point that we now make nothing in the ‘services’ economy and pay ourselves in ever greater rolls of toilet paper aka, fiat money as compensation for our lost indutrial power, to keep the American dream alive.
Interest rates are the cuffs of this sick game and its end is near. Too many superstates exist to challange the dollar so its depressing rates causing the rich to suffer the diminution of their fat pensions and bank accounts etc and its knock on is to limit the greed effect as capital investment projects yeild less profit, with this we see gluts.
In this game every time we raise rates to boost investment and raise oil profits, our global competition lowers its currency or even its rates to improve demand, its become a game of begger thy neighbour.
Its China, stupid!
Cloggie on Thu, 15th Sep 2016 3:08 am
If “peak oil” was responsible for growing inequality in the US, something similar should have happened in Europe, because peak oil is a global phenomena.
But it didn’t.
Hence “peak oil” can’t be the real reason.
What is the reason: welfare state.
Why doesn’t the US have a European style welfare state?
Let’s listen to Harvard:
http://scholar.harvard.edu/files/glaeser/files/why_doesnt_the_u.s._have_a_european-style_welfare_state.pdf
European countries are much more generous to the poor relative to the US level of generosity. Economic models suggest that redistribution is a function of the variance and skewness of the pre-tax income distribution, the volatility of income (perhaps because of trade shocks), the social costs of taxation and the expected income mobility of the median voter. None of these factors appear to explain the differences between the US and Europe. Instead, the differences appear to be the result of racial heterogeneity in the US and American political institutions. Racial animosity in the US makes redistribution to the poor, who are disproportionately black, unappealing to many voters.
Bingo. A welfare state can only exist within a group of high inner trust level. In “melting pot” USA, no such trust level exists. A European style welfare state would mean that the non-whites would be consuming every last tax dollar. The US can’t afford a European style welfare state because far too many people would apply for a free lunch.
“Isn’t mass immigration wonderful?” (this message was offered to you by George Soros Open Society Fund).
https://youtu.be/NzspsovNvII
Go Speed Racer on Thu, 15th Sep 2016 3:22 am
ACADEMIC SCHOLAR WITH CIGAR EXPLAINS
WHY YOU SHOULD VOTE FOR TRUMP:
https://www.youtube.com/watch?v=ETsYTIZREaM
regardingpo on Thu, 15th Sep 2016 3:37 am
Claman, are you “comforted” by the fact that your grandchildren will live in a decaying world, with things getting worse each day, probably witnessing at least one doomsday scenario?
What an evil and selfish person you are.
brough on Thu, 15th Sep 2016 4:01 am
For you guys living in the US you need to look at the UK as a working model in progress. A nation that looks to be exhibiting all the synptoms of thermodynamic decay. Since the UK became a net importer of oil and natural gas in about 2000 the country has slowly produced/consumed less energy both electricity and oil for transport. Everybody in the country knows that social inequality is growing which led to the Brexit vote. The latest numbers from the Office for National Statistics (ONS) for May to July this year showed an increase in employment of 38,000 but a reduction in average wages od 0.16%. The UK is slowing slipping into a peasant based economy. A trend I expect to continue until de-industrialisation is complete. It appears social and financial equlity can only be achieved by leveraging human labour by the application of fossil fuels and in particular oil which has the highest energy density.
Davy on Thu, 15th Sep 2016 6:09 am
Another circle jerk anti-American evening of peoples from nations that have foggy mirrors they can’t see their true selves in. They see what they want to see and it is bogus. Wipe that mirror clean and see your true ugliness because it is there. Let me see only one American in the bunch and he is the board comedian. Makati1 is a pseudo hate-American so we will disqualify him as a grotesque. Things are bad here sure but please spare me the drama. People make there bed and carry on. So many people talking about us and most have never been here or for very long. So much jealousy and hate when every one of your countries is dumbass and I can easily prove it if I wanted to waste my time. Many of your circle jerks have never been here and only know us from books and TV. It is a big country of 300MIL plus which makes for diversity. I have been quiet lately with the anti-Americanism but I will say something when your play turns to a decadent orgy.
noobtube on Thu, 15th Sep 2016 3:21 pm
The old and ignorant and fat and self entitled believe in ‘Murika.
‘Murika was always about HATE and GREED and DESTRUCTION and EXPLOITATION and WAR.
It was an experiment in pure capitalism. And, it will be shown to be a failure.
‘Murika is not a nation. It is a failing business.
Solarity on Fri, 16th Sep 2016 1:26 am
“…what could have happened in the early 1970s that changed everything?”
Indicates how short on facts are the writers at, and the overall quality of Puff Host. They are the miscreants who are doomed to repeat history.
makati1 on Fri, 16th Sep 2016 2:18 am
noobtube, we agree on your description. What some here do not understand is how much their “exceptional” 4% country is hated around the world. No excuses possible for them. Their past is catching up to them and their future will be much worse than they believe. There is no hope for America, only pain and suffering as they fall down the ladder to levels not seen there in 400 years.