[Alcassin]

$this->bbcode_second_pass_quote('MrBill', 'T')hanks for the clarification. So it really has zero to do with capitalism, as it is ultimately consumption that causes scarcity, and not unlimited growth to feed the beast.

[MrBill]

You seem to want to fight a battle based on ideology, in which case you have come to the wrong place. That battle has already been fought and the free-market won over the centrally planned economy.

No communist country exists anymore that has not accepted the free-market economy, simply because it is superior at allocating goods & services more efficiently. The free-market economy is so superior that it has delivered the highest living standards for the greatest number of people in the history of the world. The only reason we can afford to consume non-essential items is because the free-market has already taken care of all of our basic needs.

There really would not be much to talk about if we were not faced with post peak oil resource depletion. And that is what I am interested to talk about. Please spare me the lectures on the evils of capitalism or consumption.

The source of consumption is of course an expanding population. No matter how frugally you live, or force others to live, you cannot have negative consumption. Every person who is alive consumes everyday until they die. It is not ideology. It is a fact!

Also, do not confuse labor and know-how or intangible assets with energy. They are not the same. Yes, you can substitute some for one or the other, but the value of your Casio or your Rolex does not come down to the difference in energy consumption, but due to craftsmanship which is labor combined with knowledge. Craftsmen have been producing intricate works of art and mechanical precision long before the internal combustion engine was developed. In fact without their collective skills it would not have been possible in the first place.

If you want to sit there and tell me that we need land to grow crops. That we need food to go to work. The we need energy to move products from A to B. And that without energy none of that would be possible. It is like, no shit, Dick Tracey!

But petroleum is not the only source of energy. It is an important part of our current energy mix needed to run this economy. The transition to another economy using either less energy or another energy mix or both will mean lower living standards. Not more debt. Excess unemployed labor will not be able to borrow to keep consuming in an environment of lower living standards and higher real prices for all basic necessities stemming from less energy and the remaining energy that is more expensive. But neither are they likely just to starve to death. That would be too convenient for the rest of us.

If you have less energy and more surplus labor you substitute labor for energy. Look at the developing world. In parts of sub-Sahara Africa they are farming using Stone Age technology. Not because they are unaware that other technology exists, but because they lack access to that technology.

The future will contain communities of production clustered around sources of reliable, renewable energy like hydro, nuclear, solar, bio-mass, geo-thermal, etc. The farther you get away from those sources of energy the more backward will outlying societies be and will have to rely on more draught power and more human effort.

Stationary sources of power, like coal while it lasts, will power rail. We built railways around the world in Colonial times and they can be built again. The only reason they have gone out of fashion is because of the automobile. That and the fact that uneducated criminals and tinpot dictators in their infinte wisdom decided to tear up the tracks to use the rails and ties for other purposes!

Once the age of the automobile is gone we will revert to what is tried and tested. The same for ships, boats and barges. They can be made to run on almost anything and they carry more freight with less energy than trucks. Manufactured goods will be delivered to central warehouses located on rail or water and then distributed by foot, by horse and cart and by any other means. Again, you have to look at the developing world.

Will this new age suck compared to what we are used to? Of course! But what is unsustainable is be definition going to end sooner rather than later. Once the marginal cost of exploring, drilling, extracting, transporting, refining and distributing petroleum exceeds the marginal economic benefit of using petroleum then the age of petroleum will be over.

In other words when the EROEI is less than 1:1. Then we will move onto the next available alternative no matter how imperfect a substitute it is. There will be no other choice. We can hope that some future technology will mitigate that painful transition to a new equilibrium, but we cannot count on it.

And with 10 billion people I really do not have a philosophical problem with poverty. The free-market has already lifted hundreds of millions of the poor out of poverty. That they want to jump back into bed and reproduce like rats is hard to stop. If the world population would have stabilized at 3 billion then we probably would have no poverty in the world today. But it did not, so we have 6.7 billion, 700 million added in the past 7-years alone. 700 million is larger than the population of the EU and USA combined. Plus many of those 700 million, along with billions of others, were born in places that cannot support them in environmental terms or any other terms.

Did I decide they should be born? No. I would not have made that mistake. Now you tell me that I have to bridge the information divide, provide food, clothing and shelter, and give every child a laptop? Give me a break! If we have not solved those social problems in the age of plenty then we are not going to solve them on the backside of post peak oil resource depletion, and as you point out falling GDP.

We had our chance and we blew it! Now some of us will salvage what we can. Is it fair? Did anyone say it would be?

[Alcassin]

Thank you for your very long answer

$this->bbcode_second_pass_quote('MrBill', 'Y')ou seem to want to fight a battle based on ideology, in which case you have come to the wrong place. That battle has already been fought and the free-market won over the centrally planned economy.

[bshirt]

$this->bbcode_second_pass_quote('MrBill', '
')No thanks. Central planning is the worst solution to a problem like peak oil. I trust 1000+ firms working on a solution versus a government finding the solution to post peak oil depletion.

If there is a solution? If not, central planning will just make a bad situation worse!

[MrBill]

First of all, we are probably not too far apart on many issues, and as I said, my interest lies in 'depletion economics' and not in arguing about idealogy.

Free school lunches? Great. I guess that is what a successful country that manages its resources properly might see as an enlightened policy. Now implement it in the developing world?

Mexico? Railways? NAFTA? Please, the 'Spanish Catholic' politicians have been keeping their countrymen poor and ignorant just like the Spanish colonialist taught them. The ruling elite has been raping PEMEX since 1936-39. Not managing their resources for the furure like, say, Norway.

Why is Canada not as poor as Mexico? In fact, why is the USA not as poor? Geography? ; - )

Two excellent books I can recommend are Guns, Germs and Steel and The Wealth and Poverty of Nations that speak directly about the causes of wealth and poverty as opposed to their symptoms.

You're right about 1913, and subsequently in the 1920's no one saw the Depression coming. However, I guess there were enough storm clouds on the horizon that many did in fact see the Second War in 1939 coming. But these are just details. The Second War started in 1918 with the signing of the Treaty of Versailles that bankrupted Germany for France's benefit. The rest is history as they say.

No, I do not see anything 'good' coming out of post peak oil depletion? More like ripping open the beaver dam to get after the hybernating beaver in one big orgy rather than selectively harvesting them in a sustainable manner.

Did the sunset of neo-colonial powers in Africa unleashed pent up talent, creativity and innovation after their independence? No. They have turned successful turn of the last century cities into unliveable Hell holes. Not all development is for the better.

Listen, thanks. Gotta go, but lets talk soon. cheers.

[Alcassin]

Mr Bill I just bought The Wealth and Poverty of Nations written by Landes and I've already read Collapse by Jared Diamond. (I'm doing my homework).
Neverhteless I read some books with contrary opinions. So I think we can continue our discussion in near future.

Landes come up with the thesis that every major revolution (so economic growth) in production was created by more input of energy. But conclusion he made is too optimistic I think - he just says that limits of growth are very far. Well in times of Adam Smith they were very far, now I think we are very close. Anyway, he is not economist but still his optimism boils in last chapter.

In my opinion some new economic schools will be in place in few years, also revision and pluralism in economy will be needed - that one is proposed by e.g. Post-Autistic Economy

I see that huge demand of products (thus demand for economic growth) is built upon two factors:
1. Population growth itself.
2. homo oeconomicus thesis - that human being has unlimited wants to cover (this creates greed of consumerist culture and is killing planet as planet is limited and cannot cover unlimited wants).

Meadows shows that we are living high beyond capacity of Earth creating pollution, and draining more from planet. This leads to overfishing, losing forests, water shortages and so on.
I still think that economy can be ultimately zero sum game:
1. We keep standard of living per capita by decreasing population.
2. We keep population and decrease standard of living.

[MrBill]

I think that The Wealth and Poverty of Nations, along with Guns, Germs & Steel as well as Collapse are good starting points in this discussion, but not the last word.

You will find they need to be optimistic at the end of their analysis because they have an important message to deliver and outright doom and gloom is not very popular. I don't think a few positive sentences change the overall thrust of the books though.

You are right that we are dealing with many other problems like climate change; habitat destruction and the extinction of species; collapsing fish and marine stocks; soil erosion and salination; and the demands that over-population place on the resources of a finite planet; as well as others simultaneously against the prospect of less net energy to deal with these problems in the future.

I do not think we need new economic schools of thought to deal with these problems. What we need to do is abandon the tried and tired ideas that have been found not to work. And there are many of those that still enjoy a popular currency because collectively many of us are still looking for an easy answer to these problems that does not entail sacrafice or changing our behavior. I am here to tell you that such a path does not exisit and it is waste of time to try to develop new economic theories in search of such a solution.

I have used this example before and I will use it again to illustrate my point. If you have a forest, and on average it takes 70 years to grow a tree to maturity, then your total allowable cut per season is one-seventieth of the size of the forest, combined with re-planting each tree that is harvested, if you want to sustainably manage that forest. There is no economic model in the world that says you can harvest trees faster than that or save money by not re-planting the trees that you cut down. That becomes exploitation of a resource not good stewardship. Just like there is no economic law that states you can afford to provide for ever more people on a fixed, given amount of finite resources such as a forest.

If petroleum is an important part of your overall energy mix, and if it is a limited, non-renewable resource then any growth built on that given energy mix will by definition disappear forever once that petroleum is gone. What you replace it with is another matter. If you have another reliable substitute, fine. If not, then tough luck. The living standards based on access to that cheap, abundant source of energy will fall. And that energy will not be available to help mitigate the economic problems of those other resource depletion problems either.

I have also said this before, but it is worth repeating because there are still many here that simply are unable or unwilling to accept that the basic laws of supply and demand do not, nor have they ever, meant that you can increase supply indefinitely by increasing price. That is simply wrong. Price is for the most part there to limit demand. New supply can only come online in so far as it is physically available. A marginal increase in supply of farmland is possible if grain prices are high due to demand, but high prices cannot materialize an increase supply in petroleum if it does not exist.

However, high prices can lead to the search of alternatives, if they exist, and there is no guarantee made by anyone that an alternative is as good or as efficient as the original. But if no alternative exists then you are just SOL. I hope I never have to say that again, but then that really would be too optimistic around here! ; - )

Also, if nominal GDP falls, it falls. It will contract to that point where it finds a new equilibrium based on the new inputs land, labor, technology, energy and know how. If that new equilibrium does not include a petroluem substitute, or even fish, for example, then you will have exactly what you would expect and that is falling living standards and/or population contraction.

No amount of hand wringing is going to stop that or bring back the energy that we wasted or the species that we made extinct. And we certainly do not need any new economic models to explain what happened. Demand exceeded sustainable supply or as Jarred Diamond would say 'the carrying capacity of our closed system.'

And a new currency, even one based on energy units, is not going to reverse the consumption caused by unsustainble population increases and existing lifestyles. Again back to your forest. You can only harvest one-seventieth of your trees. It matters little whether you count them one by one or simply assign a monetary value to each. That is just accounting. If you cut twice as many this year, then you need to cut half as much next year until you make up that deficit. If you decide to cut 98.57% of the trees in the first year, you have to wait 69 years to cut the remaining trees before starting again.

That is a lot of rambling. But I am going to be away for a week, so thanks for bringing this thread back to life. Take care and have a nice weekend. Cheers.

[LoneSnark]

$this->bbcode_second_pass_quote('', 'F')urther economic growth is impossible with declining energy.

[cube]

$this->bbcode_second_pass_quote('LoneSnark', '.')..Between 1978 and 1996 the United States population more than doubled, the economy trippled, the number of miles driven exploded, but oil consumption did not increase a single barrel. In fact, from 1978 to 1983 oil consumption fell 21% before rising back to 1978 levels in 1996.

Who would dare argue Americans were poorer in 1996 than they were in 1978?
...

[Alcassin]

$this->bbcode_second_pass_quote('', 'M')rBill, you spent too much time arguing with Alcassin when all you needed to do was refer him to history. Between 1978 and 1996 the United States population more than doubled, the economy trippled, the number of miles driven exploded, but oil consumption did not increase a single barrel. In fact, from 1978 to 1983 oil consumption fell 21% before rising back to 1978 levels in 1996.

Who would dare argue Americans were poorer in 1996 than they were in 1978?

[MrBill]

LoneSnark wrote:
$this->bbcode_second_pass_quote('', 'M')rBill, you spent too much time arguing with Alcassin when all you needed to do was refer him to history. Between 1978 and 1996 the United States population more than doubled, the economy trippled, the number of miles driven exploded, but oil consumption did not increase a single barrel. In fact, from 1978 to 1983 oil consumption fell 21% before rising back to 1978 levels in 1996.

[LoneSnark]

$this->bbcode_second_pass_quote('', 't')he problem is that China and India have started to use the oil in large quantities.

[MrBill]

LoneSnark, you are a man emoung boys! But careful, peak oil is a geological fact and not an economical problem to be 'solved'. Plus I put zero confidence in current socio-political structures to deal with post peak oil resource depletion in the first place! I like your posts, but you need to read a lot of stuff that has already been logged ahead of you. In the meantime, welcome, it is a pleasure to see your perspective here. Cheers. MrBill

[LoneSnark]

It is nice to be welcome. And I am merely presenting my belief as to how the world has, does, and will work.

It is purely an opinion when I state it, being about the future, but I have 100% confidence in current socio-political structures dealing with the geologic fact of peak production (whenever that is reached). All that remains to be answered is now much pain will be involved in dealing with it, which is entirely up to how the Government responds to the situation. If they respond as they did in the 1970s then there will shortages, recession, inflation, and other dislocations. If they respond as they did in either 1980 or 2005 then we will avoid shortages, recession, and inflation.

[Doly]

$this->bbcode_second_pass_quote('LoneSnark', 'I') have 100% confidence in current socio-political structures dealing with the geologic fact of peak production (whenever that is reached).

[MrBill]

Thanks for that excellent link, Doly!
$this->bbcode_second_pass_quote('', 'T')he optimists believe that economic growth can and will continue. The pessimists believe either that it will not do so or that it must not if we are to avoid the destruction of the environment. I think we have to try to marry what makes sense in these opposing visions. It is vital for hopes of peace and freedom that we sustain the positive-sum world economy. But it is no less vital to tackle the environmental and resource challenges the economy has thrown up. This is going to be hard. The condition for success is successful investment in human ingenuity. Without it, dark days will come. That has never been truer than it is today.

[LoneSnark]

Ahh, the middle-way argument. Yes, in the question of whether to save the patients life or kill him, we have opted to merely leave them to die.

[Scactha]

$this->bbcode_second_pass_quote('LoneSnark', 'A')hh, the middle-way argument. Yes, in the question of whether to save the patients life or kill him, we have opted to merely leave them to die.

[TheDude]

$this->bbcode_second_pass_quote('Scactha', '')$this->bbcode_second_pass_quote('LoneSnark', 'A')hh, the middle-way argument. Yes, in the question of whether to save the patients life or kill him, we have opted to merely leave them to die.

[cube]

$this->bbcode_second_pass_quote('Doly', '')$this->bbcode_second_pass_quote('LoneSnark', 'I') have 100% confidence in current socio-political structures dealing with the geologic fact of peak production (whenever that is reached).