Consumption Dwarfs Population as Main Environmental Threat
It’s the great taboo, I hear many environmentalists say. Population growth is the driving force behind our wrecking of the planet, but we are afraid to discuss it.
It sounds like a no-brainer. More people must inevitably be bad for the environment, taking more resources and causing more pollution, driving the planet ever farther beyond its carrying capacity. But hold on. This is a terribly convenient argument — “over-consumers” in rich countries can blame “over-breeders” in distant lands for the state of the planet. But what are the facts?
Winston Warfield:
This is a good read. I’m fed up with the over-population alarmists, who unfortunately make up a good proportion of green theorists. There’s a direct link between them and white supremacists’ anti-immigrant hysteria, whose world views see the U.S. surrounded by over-breeding ant colonies of brown-skinned insects. Yesterday I read with disgust one such theorist’s blog, James Howard Kunstler, whose writings are generally valuable (“The Long Emergency”, “World Made by Hand”, etc.), but who advocates draconian immigration exclusion policies, based in part on preservation of what he calls “what’s left of American culture”. This is shorthand for “white people’s culture”. White supremacy is alive and flourishing in the ecology and “pwogwessive” movements, but this is of course not new. He also never misses a chance to insult Muslims by painting them with the “insane lunatic” brush, and reserves special bile for Palestinians. This kind of ideological coexistance of intelligent, radical analysis on one front (ecology), and visceral race hostility is definitely out there for those willing to look.
7 July 2010, 8:22 amMarcilla Elizabeth Smith:
I recall one of the “Oh, shit!” moments in my life being when Dr. Billings was talking about over-population to our undergraduate Political Theory class. He asked us to think about the images that came to mind when we thought of the term “over-population.” He supposed (correctly, in my case) that we might be tempted to think of pot-bellied children living in mud huts in developing nations eating rice. He then asked us to consider whether the Earth could support more people like that, or more people like us =-O
Somewhat related, I just want to post about a blow to Orlando Food not Bombs who has just had the 11th Circuit rule in favor of a City ordinance that would seek to keep us from sharing food at Lake Eola Park. I say “seek”, because to Anarchists, the State is just another obstacle to overcome.
The rules require advocates to obtain a permit for feedings of 25 or more people, and only two feedings a year are allowed in a given park. The City Council adopted the ordinance in 2006 after businesses and residents downtown complained that the feedings drew crowds of vagrants who caused problems outside the park.
More at http://www.orlandosentinel.com/news/local/breakingnews/os-homeless-feeding-ruling-20100706,0,6452468.story
And it ain’t even been a week since I got off probation…
7 July 2010, 10:21 amHenry:
Excellent animated presentation:
Econopocalypse: the Marxist animated whiteboard explanation
Crises of Capitalism
http://www.boingboing.net/2010/07/04/econopocalypse-the-m.html
http://www.youtube.com/watch?v=qOP2V_np2c0
See also this wonderful chart:
http://www.ritholtz.com/blog/2009/06/7-factors-that-led-to-crisis/
7 July 2010, 1:30 pmCurt:
Henry,
7 July 2010, 3:59 pmSuperb Link.
One thing that I can not understand is how can it be possible after all the things that you have posted is how there could even be one person in America let alone the US military that is not already a Marxist at least in a broad sense.
Are they waiting for the last sherrif to become disillusioned with US style economics before they come out of the closet.
Henry:
Capitalism is dead, but we still dance with the corpse
By Joe Bageant
July 07, 2010 “Information Clearing House” — As an Anglo European white guy from a very long line of white guys, I want to thank all the brown, black, yellow and red people for a marvelous three-century joy ride. During the past 300 years of the industrial age, as Europeans, and later as Americans, we have managed to consume infinitely more than we ever produced, thanks to colonialism, crooked deals with despotic potentates and good old gunboats and grapeshot. Yes, we have lived, and still live, extravagant lifestyles far above the rest of you. And so, my sincere thanks to all of you folks around the world working in sweatshops, or living on two bucks a day, even though you sit on vast oil deposits. And to those outside my window here in Mexico this morning, the two guys pruning the retired gringo’s hedges with what look like pocket knives, I say, keep up the good work. It’s the world’s cheap labor guys like you — the black, brown and yellow folks who take it up the shorts — who make capitalism look like it actually works. So keep on humping. Remember: We’ve got predator drones.
After twelve generations of lavish living at the expense of the rest of the world, it is understandable that citizens of the so-called developed countries have come to consider it quite normal. In fact, Americans expect it to become plusher in the future, increasingly chocked with techno gadgetry, whiz bang processed foodstuffs, automobiles, entertainments, inordinately large living spaces — forever.
More:
http://www.informationclearinghouse.info/article25894.htm
7 July 2010, 5:25 pmeoinmonkey:
“Moreover, most of the extra consumption has been in rich countries that have long since given up adding substantial numbers to their population.”
8 July 2010, 4:48 amI dont disagree with the guys thesis about the need for less consumption, far from it, but how does this account for the threefold increase in the size of the US population since 1945? Clearly its not all accounted for by increased birth rates, but by whatever means it was achieved, those 300 million people are all Americans now, with corespondingly American consumption habits, are they not?
tochigi:
@Winston Warfield:
8 July 2010, 6:11 ami stopped reading JHK during the Israeli war crimes in Lebanon in 2006. he once again displayed his disgusting racism toward all Muslims and Arabs. i should have known after the 2003 US/UK war crimes in Iraq, and his pre/post comments.
Stan:
On consumption habits, the ‘population’ argument doesn’t work in the US either, for the same reasons. Too general to account for social stratification, weather and terrain differences, et al.
Does the footprint go up when someone immigrates to the US. If they’ve come from Oaxaca, probably so. So it’s still based on a migration caused by economic inequality and an imperial system.
And that general population surge has been based not on increased fecundity (which hasn’t biologically changed), but industrial ag, which was to support industrial development and capitalist growth.
Global Population is a deracinated number that makes Haitians and Americans the same thing. It obscures complexity. It reduces a vast and complicated reality to headcounts. It ignores social systems.
It’s great for whipping up anti-immigrant campaigns, though, or promoting involuntary sterilization, or paying the salaries of NGO officials and various professional “activists,” or writing scary books, or for getting privileged people to cluck their tongues at coffee klatches about the brown breeders.
8 July 2010, 7:19 amHenry:
BP, Trilateral Commission, Goldman Sachs, and the Rockefellers, oh my!
The Trilateral Commission and BP
http://www.youtube.com/watch?v=LtmMHlWvHEw
8 July 2010, 7:45 pmld:
Of course I agree that crude — or perhaps worse, sophisticated — demographic determinism is hogwash, for all the reasons stated here, as well as some others. But unless it’s contextualized properly, to claim that the fundamental problem is “overconsumption” in the wealthy metropoles is itself analytically inadequate. To put it (maybe too) bluntly, in a capitalist socio-economic formation, consumption is a dependent variable, a byproduct of the capital accumulation process. To blithely say that “overconsumption” is the culprit is a grotesque and misleading oversimplification, because it makes it sound like the individual purchasing decisions of greedy households afflicted with “affluenza” is what is driving the capital-accumulation-out-of-control train. It also recapitulates the bourgeois myth of the “sovereign” consumer, and thereby promotes the bogus idea that green consumerism (sans a revolution in the mode of production) will get us out of the mess we’re in — a very comforting notion indeed to the privileged of the wealthy metropoles, when all is said and done.
8 July 2010, 11:31 pmRhisiart Gwilym:
Generally speaking, i think that it’s always a good idea to treat Fred Pearce as the Daniel Yergin of the overpopulation debate: like Yergin on energy, Pearce is consistently wrong about overpopulation, but always much cherished by the corporate mainstream Western media and the gics* whose power-agendas they serve so invariably. Discount him with extreme prejudice.
Having said that, I’m all for: Frugality-with-sufficiency, everywhere; equality of all people, both within and between nations; the annihilation of racism and racist policies in all their various poisonous guises; and on: All the simple, easy — yet seemingly unattainable — socialist policies, which are so impossible for us in our mass societies to make happen, yet which just seem to come naturally to gatherer-hunter societies, what with such things being bred into our evolutionary heritage as a cooperative social species.
I’m afraid, though, that the brute, basic fact is that the Earth — or Mother Gaia, as I prefer to call her, whether or not you care to see her as a sentient, teleological entity — isn’t going to allow hom sap to bloom grossly beyond her natural carrying-capacity for our species within her global ecosystem (whatever that may turn out to be), and will put a stop to our current overpopulation, whatever we do or don’t do.
Whatever our right global population is, I’d give you good odds that it’s a lot less than our current numbers. These, I think, are only sustained by the brief, aberrant, Single Giant Pulse Event of industrial ‘civilisation’, now entering its ebbing phase as the energy crunch comes on unstoppably, and therefore scheduled inexorably to take our numbers down with it as it fades. As industrialism ebbs because of its inevitable precipitation of Peak Everything (most crucially amongst the once-only planetary endowment of non-renewable commodities such as, for example, metals), so too will our population level.
Huge numbers of humans, all thirsting after the ‘good’ life ‘enjoyed’ by North Americans and Europeans was never going to work anyway, even if our ghastly, obese, infantilised lifestyle had even been a good idea in the first place.
As Dmitry Orlov put it recently (I’m paraphrasing from memory): It was beyond our capabilities to control our numbers when they were on the way up, and it will prove to be beyond us to control them on their chaotic way down. This has happened to us, and will continue to happen to us, as fate. For many years, I saw how easy — technically — it is to control our numbers, and to cherish the Earth with sophisticated care, so that every human alive gets a fair, if modest, share of the good life, whilst showing meticulous reverence to the living Earth. But I no longer have any hope that we will actually do these easy things. Vulcan’s could maybe, but Hom. Sap can’t. Technically easy, but psychologically we’re not up to it, alas!
In any case, though, I reckon that anyone who thinks that our numbers are going to stay up this high, let alone grow some more (even if by some weird contortion of imagination you could see that as a good idea), is just living in delusionland.
Just one old bloke’s hunch; no more than that. But backed by seventy years of observation, pondering and intuition.
* GICs: Gangsters-In-Charge; the WealthPowerStatus-mafias who sit at the top of all mass societies: the self-appointing, self-perpetuating ruling ‘elites’. The term gangsters is meant literally: violent, lying, bribing, fraudulent, mass-murderous, deceit- and delusion-filled, kleptocratic criminals. WPS should be seen as +the+ ultimate addictive in human experience, making sociopathic criminals of all who become addicted to it: a considerable main source of human woe. Incidentally, WPS is a triune entity, like ice-water-steam: whenever you have one aspect, the other two are always right there as well, automatically, when you want them.
9 July 2010, 6:52 amStan:
I agree with you ld, though I think there is a fair amount of left dogma in what you point out.
The “overconsumption” argument only rings that bell if you’ve been reading your Bakunin or your Marx.
To the average person, this is not merely arcane, it’s unintelligible.
I say “dogma,” because many lefty thinkers are discounting consumption from what I believe is a mechanical account of actual capitalism, which has for some years now in the metropoles been driven by demand-production (consumption stimulus) to offset the falling rate of profit and overproduction. It’s been part of the life support mechanism for continued accumulation, and the threefold (temporary) solution has been (1) more primitive accumulation (plunder), (2) more credit (traps) for metropolitan consumers to finance the extra consumption, and (3) sacking the commons and the public sphere.
There is a whole advertizing industry that exists parasitically on this desperate need (on the part of capitalists) to create “demand.” The result has been the creation of a cyborg society in the ‘burbs, but that’s another story.
I think this is crisis capitalism, chronic not cyclical, and that it has us squarely in the latest and probably last stage of global imperialism: exterminism.
Reminding the consumers of the first world of their profligacy is important, because when that profligacy is no longer possible, they will look for someone to blame. “Population” fits the bill nicely, mapping directly onto metropolitan racism, orientalism, xenophobia. The last thing we need to do, when the metropoitans see the headlight on the locomotive bearing down on them is to tell them, that train right there is “population.”
Population is an outcome of something, and it’s not merely fecundity, so my vote goes with social organization. So it’s an inaccurate category by its omissions; and it’s a dangerous one based on popular perceptions.
No one is arguing that there is no carrying capacity limit (though there is no way to determine it). There is also no acceptable way to use policy to “control population,” for fairly obvious reasons.
(Black folk, for example, have an entirely different reaction to the “population” issue than white “progressives.” There is not nearly the depth of amnesia about the “progressive” eugenics movement or the long list of involuntary sterilizations. They have seen what happens when the privileged hatch schemes to “make history turn out right.”)
Revolution in your neighborhood will look different than revolution in mine. The day of the cookie-cutter solution is past. That’s why my knee will continue to jerk every time this “population problem” shows up. Because right now, in the world we live in, given the dominant metropoitan episteme, raising the issue as “population” does NOT stimulate the culture to think about mode-of-production. It gives them permission to stand by while starvation, war, dislocation, and disease wipe out those distant breeders.
The world capitalist system has gone down the road to a “divison of labor” in which there are consumer nations and producer nations that are required to complete the “virtuous cycle.” Think China and the US, and their inability to let one another go in their dance of death.
The consumption issue does matter, even if it’s not framed in marxian terms. It matters, because it is part of the equation theoretically imo, but it also matters, because there we cannot discount ethics — the personal ethic of conservation and re-use is absolutely important to encourage — and because reducing consumption is an essential part of the offer of redemption to the frightened, angry, unhappy consumer society. Reduced consumption may not figure into the theoretical account, but it is one major key to unlocking the chains of consumer-society unhappiness.
9 July 2010, 7:50 amld:
Stan, I figured my contribution would come off as overly orthodox. I’d like to think that’s because of the time constraints under which I wrote it, rather than my being doctrinaire
I basically agree with everything you wrote in your follow-up. I definitely agree that while accumulation may be the dog and household consumption (including its debt-financed version) the tail, a CRITIQUE of the prevailing forms of household consumption in the overdeveloped world — the perpetual anomie it induces, the way in which makes people dependent on wage/salaried labor, on asset bubbles, on the credit treadmill, etcetera — is an utterly useful political strategy for getting us where we want to go.
Bear in mind, though, that no matter how unsustainable are the lifestyle patterns of the First World middle/working classes, the “overconsumption” discourse will be used against them in the years of austerity to come… not to rescue the biosphere from collapse, not to create a little more footprint space for the billions of the Global South, but to rationalize the continued redistribution of wealth upwards.
All for now, gotta run.
9 July 2010, 10:13 amMarcilla Elizabeth Smith:
I won’t give exact figures (since they’d be inaccurate anyway), but using data from the Fed and the World Bank (hey, gotta make them useful for something). I calculated that if some force could somehow institute automatic, immediate income redistribution in the US, every US household would make ~$150,000 per year (based on 2008 figures). If there was asset redistribution, every household would have their savings account credited to reach over a half million dollars. Every white dude, every single mother in the inner city, every teen living and working the streets because she’s transgendered.
Naturally, these averages would be less when averaged over the planet where we know billions of people live on less than $2 per day. But how about a world where every human gets ~$10,000 per year? That kind of output exists right now (adjusted for US-level Purchasing Power Parity). A family of four living in the US would have $40,000 a year. The same would go for a family of four living in rural Asia.
That may not sound like a lot, but efficiency can make a huge difference. My partner and I actually live off ~$20,000. We use public transportation (which is fairly shitty in Orlando compared to lots of places) and we don’t have cable (don’t want it, either – we threw out our TV’s). But we have a 2BR duplex we rent that’s centrally air-conditioned and conveniently located between the downtown business and shopping district. We have broadband internet, cell phones, and a washer and dryer. Also, we’re Vegan. It really isn’t too much to ask, in my mind, for the peace of mind knowing that whether we’re living beyond the carrying capacity of the Earth or not, we don’t feel that we’re taking more than our fair share from someone else (except, obviously, the possibility of generations to come/not come).
And call me an optimist, but I believe what equates to $10,000 worth of “stuff” nowadays could seem like nothing in a (hopefully not-so-distant) future where greater collective efficiency has been achieved. And please don’t misunderstand and think I’m talking about techno-optimism, I’m talking about the vast amounts of labor and other resources devoted to soul-sucking activities like war-making, law enforcement, profiteering, financial wrangling, spying, disinformation, international bullying, etc. Like Stan, I believe the radical lies in social organization. I know it as Anarchism – the elimination of all hierarchical power dynamics as inherently exploitive. Some may think of it as pure communism or direct democracy. I understand the buzz word being tossed around the recent US Social Forum was “horizontalism.” Personally, I’m not married to words or labels. As long as the process is local, bottom-up, consensus, non-hierarchical, I am committed to a faith in the outcome, regardless of any prior personal thoughts.
9 July 2010, 10:38 amCurt:
What do you mean by the mechanical account of capitalism?
9 July 2010, 12:51 pmJack:
Amazing number of words in our culture to say the unacceptable essential truth of the matter: machine culture is a big mistake. Industrialism is a big mistake. Machine-based, petro-energized, resource-devouring, environment-destroying, finance-pumped-and enslaving industrialism is a big mistake. And it really is too damned late to stop it. The bus already drove off the cliff, like those cartoon-characters that keep walking in the air until they look and see where they are.
Is there a solution? No, there is no “solution.” Do you see any country actually applying the brakes in any meaningful way? Of course, not. It’s out of paradigm. Solutions at a collective or global level. No. Solutions at a micro or individual level. Yes, temporarily, and to some extent.
9 July 2010, 4:05 pmCurt:
This is what I learned about consumption yesterday. to move the express train between Frankfurt and Paris takes as much electricity as 10 households use in one year. Is that a bargin? 10 households does not seem like much. Not only does the train carry passengers between Frankfurt and Paris it also makes some stops along the way.
11 July 2010, 4:07 amI wonder how much electricity the train would use if it had a top speed of 160 kmh or 200 kmh instead of 320 kmh. Of course if the trip takes longer some of the passengers between Frankfurt and Paris would then choose to fly insead. But what if flying was rationed, and the top speed of the train was lowered to 160 or 200 would more business get done by phone or email?
I have never been a businessman how much of the travel done by such people is really neccessary? How did businesses manage to thrive during the first half of the 20th century?
The shipping of food long distances also comes in for a lot of critisim here. What would take more energy the shipping of a ton of fresh sweet peppers from Hungary to the Netherlands or making the jars that the peppers are usually canned in before they are shipped? If the weight of the peppers is reduced by the weight of the jars and the liquid in the jars but a refrigoration unit is needed how much electricity will be saved?
Curt:
Oh and another thing. This one is maybe more important. Juan Cole reports that the German government plans to have it electrical needs be meet by 100% renewable sources by the year 2050. I am a bit emabarassed that I did not report that. I could say that I was to wraped up in the drama of the world cup to notice if anyone wants to give me a hard time about that.
11 July 2010, 4:36 amIn anycase I have to ask is it fair for the Germans to make a plan for only the Germans? Many people here are saying all soulutions have to be local. Well is a plan that is for Germany that would actually work local enough? I look at it from the other direction. If Germany’s plan incudes using electrical power from solar units in north Africa is it ethical for the Germans to make a plan that does not include the electrical needs of the Africans who are helping to power German industry? Would a plan the requires each adult German to work 40 hours a week to maintain thier current life style and require each African to work 10 or 15 hours a week to get a subsistance wage be an ethical plan? Would a plan like that not look quite a bit like the deal that the American Indians were offered to move on to the reservations? Now how would that reservation plan have worked if the US government had actually kept their part of the bargin? Is welfare inherintaly destructive of human charachter as conservatives and libertarians would have us believe? I wonder how well Buddhists would adapt to conditions in which they did not have to work or work only a very little to have their basic material needs meet? Still maybe the social destruction comes about from the inequality of conditions. But maybe the inequality of conditions is one of pure perception. Maybe if people were indoctrinated differently the Euopeans would be enraged that they had to work 40 hours a week for things that are really not worth much and others only have to work 1/3 or 1/4 as many hours.
Maybe some people on both sides would be enraged and some wuold be delighted.
If the desires were balanced some people could move from Europe to Africa and some from Africa to Europe. If and if and if because naturally there are langurage differnces, education differences, and even climatic differences that would be difficult for people to adjust too.
My own opinion is that the German plan has to be expaned to include all of the EU and Africa too.
(Boer) Tom:
@Marcilla Elizabeth Smith
I think you are confusing money with what it can buy. I’ll put it another way: in the early 70s, west Africa had industrialised agriculture; that disappeared with the oil crises. It was experienced as an increase in prices (fuel for transport is heavily subsidised in Nigeria). Part of this (I suspect) is a result of neo-liberalism: poor countries did (and do) not have the capital necessary for liquidation to afford fuels, or if they did/do, arrangements are made that they don’t use it that way (at least not on the level of the west), and only state concentrations of capital could allow for such usage, therefore another reason for privatisation – poor people aren’t to enjoy such relative luxuries.
What allows for our cell-phones? Arguably genocide in Congo-Kinshasa, courtesy of Paul Kagame and Romeo Dallaire, to the tune of 5-6 million (look up coltan). What allows for our relatively cheap food? The green revolution (with its attendant destruction of topsoils), the overfishing of the oceans, etc. Supply and demand. The system gives us a huge supply now, by destroying the material basis of future supply. The internet as it exists is becoming one of the big available energy users – I believe it is at around 1% of the total present human consumption. And of course, dryers suck energy like crazy – you are trying to heat up water, which has a huge specific heat capacity. If you hang your clothes outside to dry (or inside), you save a huge amount of energy.
@Curt
11 July 2010, 12:22 pmWhat causes money to have its value (let’s ignore marketing for now)? Arguably something must exist for money to represent. It takes (available) energy to create such things. That’s being used up. It takes minerals (in relatively pure form, e.g. as may be found in the ground) to make things. That’s being used up. Where do you get these things, or from whom? From people who effectively cannot prevent you.
Henry:
Re: What causes money to have its value (let’s ignore marketing for now)? Arguably something must exist for money to represent. It takes (available) energy to create such things. That’s being used up. It takes minerals (in relatively pure form, e.g. as may be found in the ground) to make things. That’s being used up. Where do you get these things, or from whom? From people who effectively cannot prevent you.
============
In countries that are sovereign in their currency–issue fiat money–which is non-convertible to specie, the money has no intrinsic value at all. Modern money is comparable to keeping score–cyber-figures on cyber-spreadsheetsl It is actually tax-driven money. You must pay taxes, therefore you must have the money, and to get it you have to do something that is buyable by the government and by extension in the private sector. In such a system, the tax money is not “needed” by the government, since it is the monopoly issuer; it is used, firstly to legitimize the money and drive the economy, and secondly, taxing removes jobs, so that government can buy them back, and thirdly, it is used to “cool” an economy.
See:
Fiscal Sustainability Teach-In & The Deficit: Nine Myths We Can’t Afford
http://www.dailykos.com/story/2010/4/30/862369/-Fiscal-Sustainability-Teach-In-t-Afford
11 July 2010, 6:03 pmHenry:
Understanding central bank operations
http://bilbo.economicoutlook.net/blog/?p=9392#more-9392
11 July 2010, 6:08 pmHenry:
The interesting part is that with sovereign non-convertible currencies, the deficit is an accounting number, and it equals the savings in the private sector. Large deficits are not a problem in countries with a sovereign currency, so long as the ‘debt” is in its currency. The Euro countries surrendered their sovereignty and are not monopoly issuers of their currency.
11 July 2010, 8:31 pmThey are in the same position as US states: they are users of the currency and must earn it to pay it back. It was very stupid of them to surrender this sovereignty, and it shows how mysterious this money thing can be when it is reified in people’s mind on the one hand, and when it is wrapped in ideologies on the other. A fiat currency can work for good or ill–it all depends on the public purpose defined. In the case of the US, what is being ramped-up of course is a monstrous military, and a massive power transfer to the banks. Not very good public purpose, thanks to the venality and ignorance of our government. As Michael Hudson has explained, the classical economists wanted to do the opposite of what neoliberal economics does: tax the rentier or “free” income and not labor. Another issue, of course, is the finiteness of resources, environmental equilibrium, etc. All these should be part of an intelligent discussion of the public purpose in connection with an adequate understanding of fiscal policy and modern money operations; too bad it isn’t. We are being ruined by idiotic politics, criminalized economic behavior, and a complicit media. The problem with “democracy” is that it doesn’t work in the context of immense urban populations. Mere majority vote does not ensure intelligent decisions, adequate to reality. The modern world is starving for universally accepted principles that in fact correspond to reality and not to greed or wishful thinking.
Marcilla Elizabeth Smith:
@(Boer) Tom
It’s not so much confusion as recognizing a Capitalist “reality”, even as I am a Socialist. Money is our mathematical shorthand for equating any two things of value because of its (relative) fungibility. Obviously this Capitalist reality does not have 100% congruence in material reality, but find me a grant to study this further and I’ll try to come back with better measures
In the meantime, them’s the best numbers I got. I tried to be clear that it was merely an attempt at a rough, ballpark sketch. Nonetheless, I did use Purchasing Power Parity to try to make some kind of adjustment for the relative ability to acquire goods and services in the US.
@Henry
I’m not sure that what you and (Boer)Tom are saying is incompatible. US currency nay not be backed by gold or any other material, but I’ve never heard of anyone trying to trade them in for “the full faith and credit of the United States.” If people made a collective decision to stop trading things like “bread” and “electricity” for them, they’d be virtually worthless and useless (which is where you brought in about the taxes). I agree that it’s all very stupid and misunderstood, which is why I disagree with your conclusion that currency – particularly fiat – can work for good. Maybe as a stop-gap measure within the current context or maybe amongst a race of alien robots which value mathematical precision above logic and logic above feelings, but I think we’re straying pretty far off topic if we go there
And @(Boer)Tom: are you currently in SA? What’s up with this “Abahlali baseMjondolo”?
12 July 2010, 1:14 pm(Boer) Tom:
@Henry
Let what you say be, about fiscal policy and central bank operations. What happens when the goods that get traded are halved? Is that not inflation (at least ‘in the wings’)? This has nothing to do with intrinsic value, but rather what can empirically be obtained for a given sum. You either have materials for production in a market, or do not. To some extent, you can obtain material through seizing them into a market (Congo-Kinshasa and coltan), or not. Let’s say that the fiscal policies that you are advocating lead to a growing (in real terms) economy. What does that mean? It means you are generally consuming resources at a faster rate. Perhaps your system might get rid of the extra money (avoid inflation – the debts being paid despite a shortage of raw materials), or perhaps not (potential inflation).
Let’s look at it another way. Wealthy US households have huge sums of money, with which they are speculating right now. Were that money given to poor households (destruction of debt and the remainder given for the poorer households’ spending), the demand for many physical products would increase, right? To some extent that would spur on more production, but that would lead to facing the resource shortage – when you don’t have supply, the price might have a short upward transient, but then down-the-pipeline production must cease, and price discovery must also (sooner or later) cease, or cease to be a concern for the majority of the previously dependent population, as the prices are too high.
If your suggestions do lead to economic growth, there go the final resources – your suggestions would still be dependent on physical materials to grow/sustain the economy, but because they grow/sustain the economy, they destroy the basis for growing/sustaining the economy.
12 July 2010, 2:12 pm(Boer) Tom:
@Marcilla Elizabeth Smith
No, I’m an expat, but I’ll give you some links/references on them and others:
Basically, what I understand is that this group had set up an effective community infrastructure in the ‘Kennedy Road’ shanty town outside Durban, and had gotten the (super-corrupt and violent) city government to stop treating them like vermin (their city councilor had told them to shit in bags, so many were using a nearby river, as the long drops had filled – HIV orphans were even digging through the filled long-drops – pit toilets – for worms to eat) and had achieved several other victories, then the ANC sent in some thugs and brutalised and drove out the most politically active. The best piece I’ve found on it yet is Richard Pithouse’s “Coffin for the Councillor” – a summary is available here – I cannot find the original.
Other references/links:
12 July 2010, 9:08 pmZabalaza
From a previous anarchist formation, there’s an old respected comrade from back when, called Lucien van der Walt – if you have academic access, google scholar anything by him
Also the Abahlali website and the “Center for a civil society” organisation at UKZN has good links…
Henry:
Well, money and bank operations are what they are. They do not of themselves imply a given public purpose. That is the province of philosophy and politics. I don’t see why–in principle–you couldn’t have a fiat currency operating with credit as a public utility and serving a more rational and ecologically sensitive public purpose than we do at present. The only ” logical-moral” consequence of fiat money, it seems to me, is that the government is responsible for full employment. That simply accompanies the very reason for taxes in a fiat context. And it is achievable in principle. (see “Understanding Modern Money,” by Randall Wray). Anyway, it’s not that a currency in itself can work for the good–that was not well-expressed on my part–but rather that it can work within the context either of bad or good public purpose. It does not determine that purpose. Conversely, it’s not as if an asset-backed currency leads ipso facto to good public purpose either. It implies its own pros and cons. All the major economic gyrations in the 19th and 20th century took place in the context of asset-backed convertible currencies. One of the difficulties at present is that the government is operating with a non-convertible floating currency as if it were constrained in the same way as if were an asset-backed currency. Myths and mental habits die hard, and moreover, it is in the interest of Wall St. to maintain the confusion so they can keep enriching themselves and concentrating their power. See the latest article (“We have been here before …”) at Bill Mitchell’s blog for a very good discussion of the recent economic past: http://bilbo.economicoutlook.net/blog/
12 July 2010, 9:51 pm(Boer) Tom:
@Hwnry
13 July 2010, 9:21 amI’m not talking about ‘for good’ or ‘for bad’ – in your suggestion, if you have full employment, for some period, is there gross inflation (in case there is any confusion, a normalized rate of price increase) or not? If there isn’t, I’d have to assume that production has kept up – in the final analysis, every currency is asset-backed, so you have to replace assets (even garbage for sale, such as our high-tech toys) as they get consumed (by the consumer – consumer goods in this analysis are assets). Production gradually destroys the material basis of production, and eventually, that must lead to inflation.
(Boer) Tom:
More on Abahlali and the ANC’s violence against them.
13 July 2010, 9:12 pmHenry:
Re: if you have full employment, for some period, is there gross inflation
Not necessarily. To simplify, taxes serve to remove currency or purchasing power, therefore to prevent inflation.
Fiat currencies, properly conceived, are not asset-backed, any more than the points used to score football games are.
Industrial production, as practiced today, certainly tends to exhaust non-renewable resources. That has nothing to do with the currency. It also tends to destroy nature, period. In my view, modern industry is suicidal, and that is something no money system of itself can cure. What people do externalizes what people think and are. Anyway, unless you are for killing two-thirds of humanity, industry is currently necessary to survive. Try unplugging the electricity and the machinery needed to power New York for two weeks. It would spell chaos and death. We have become the sorcerer’s apprentice, or we have sealed the faustian bargain. This has ineluctable consequences.
14 July 2010, 1:21 pmld:
Another freebie academic article which may be of interest:
“Consuming the Planet to Excess”
14 July 2010, 5:48 pmhttp://tcs.sagepub.com/content/27/2-3/191
(Boer) Tom:
@Henry
14 July 2010, 9:14 pmOK, I think I understand. Interesting – do you suggest using taxation as a means of partial deindustrialisation/decapitalisation by destroying money? If there is no money being destroyed, the taxation merely delays inflation. I’m doubtful of the ability/willingness of states to behave morally in general, and that counts more strongly when there’s opposition to such schemes from the powerful populations. But certainly interesting. Thanks.
purple:
We have already reached the inflection point in terms of population growth. By the end of our lifetimes it will be an old story and people will be wondering what all the fuss was about. Competition for labor will be fierce. Japan is the future in terms of population.
15 July 2010, 2:45 amCurt:
purple methane black toast red dawn setting sun it looks to me like we will soon be done. Hell is the likely future in terms of earths population.
15 July 2010, 10:57 amMarcilla Elizabeth Smith:
@Tom(Boer) Much, much thanks =-)
@Henry I recognize many of your references as sounding like they are straight out of the “teach-in” video I had previously seen. I am concerned that you may be under the impression that this is the last word on Left-wing financial theory. I’m also disappointed that my comment about a mathematically-oriented race of alien robots may have been misunderstood, and perhaps was even off-putting. I want to be clear that my position here is not one of disputing the technical aspects of what you are saying. I am asking if you will first consider the broader context before delving into (what I would consider) the minutiae. I had wanted to avoid the “money” question since it strays off-topic, but as the moderators continue to post these comments, I will attempt to sally forth.
Money can be seen as a tool without normative value (could be used for either benefit or harm). I am not disputing this. Instead, I’m asking, “is it *smart*” IOW, is it our best option. Finance is no more the economy than money is the things which it can by. Similarly, your speedometer is no more your tachometer than your velocity is the distance one has traveled. The issue here is abstraction, not in the sense of a rambling polemic in an Anarchist zine, but rather in the mathematical sense. The one thing is an abstraction of the other because it’s value is derivative, IOW, it’s value is derived from the value of something else. In this sense, a decision by a treasury or central bank to make a currency fiat is in no way an absolute last word on the basis of that currency’s value. You make the comparison to points in a sporting competition. The comparison is apt, so please follow it to its logical conclusion: the points have “value” only so long as there is faith in the referees assigning them. If they are dolled out too frequently, too infrequently, or arbitrarily, it will reduce their value as a reliable source of information to the spectators (including the player-spectators).
To further extend the analogy, we constitute the player-spectators in the game of the “economy” where information is exchanged and stored in a point system called “money.” But now considering how thoroughly difficult it is for humans to do even the simple math that a “give away” calculator can perform almost instantaneously, and comparing it with the truly remarkable capacity for humans to make rough estimations by cursory inspection, then pass information via social cues and natural language processing, why in the world would we subjugate our social interactions in the economy to our mathematical capacity, rather than the other way around?
The last question is rhetorical, the real question is the ask for consideration =-)
@purple, I’m not sure I understand you. It sounds as though you are saying that due to population decline, there is a coming labor shortage?
15 July 2010, 11:47 amHenry:
The best intro. to all this is here:
http://moslereconomics.com/mandatory-readings/
————————–
@ Marcilla
“The comparison is apt, so please follow it to its logical conclusion: the points have “value” only so long as there is faith in the referees assigning them.”
Well, in a fiat currency, the value is a function of its legality–taxation.
“I am concerned that you may be under the impression that this is the last word on Left-wing financial theory”
Modern monetary theory doesn’t purport to be left-wing financial theory. It is largely an explanation of de facto monetary operations in countries that are fiat currency issuers.
You may find this article interesting (Bill Mitchell is also a permaculturist).
Modern Monetary Theory – a personal note
http://bilbo.economicoutlook.net/blog/?p=10600
15 July 2010, 1:37 pmHenry:
Re: “The comparison is apt, so please follow it to its logical conclusion: the points have “value” only so long as there is faith in the referees assigning them. If they are dolled out too frequently, too infrequently, or arbitrarily, it will reduce their value as a reliable source of information to the spectators (including the player-spectators).”
Points are not issued or removed by the referee. They are an accounting mechanism. You “get” a point when you score a goal. The referee is there to ensure that people play by the rules, to the extent possible. A goal would be removed only if it were accomplished “fraudulently” or “illegally,” and if the player were caught doing it.
15 July 2010, 3:13 pmMarcilla Elizabeth Smith:
Henry, I’ve asked you implicitly, then explicitly to consider context. I’ve also tried to be very clear that I’m not interested in debating technicalities with you. I feel annoyed, quite honestly. If I’m going to engage in a dialogue, I need to believe I am being shown respect, because I am not the least bit interested in engaging in some kind of “I can prove I’m right and make you say ‘uncle’” contest, although I recognize these are quite popular on teh intertubez. I’ll have to ask you to understand if I need to let my previous statements stand without further comment at this point.
15 July 2010, 4:14 pmHenry:
@eoinmonkey
Re: “I dont disagree with the guys thesis about the need for less consumption, far from it, but how does this account for the threefold increase in the size of the US population since 1945?”
Your question interested me, and here is what a little digging revealed:
——————————
The American population more than tripled during the 20th century—a growth rate of about 1.3% a year—from about 76 million in 1900 to 281 million in 2000. It reached the 200 million mark in 1967, and the 300 million mark on October 17, 2006.[12][13] Currently, population growth is fastest among minorities as a whole, and according to the Census Bureau’s estimation for 2005, 45% of American children under the age of 5 belonged to minority groups.[14] The Census Bureau reported that minorities accounted for 48.6% of the children born in the U.S. between July 2008 and July 2009.[15]
Hispanic and Latino Americans accounted for almost half (1.4 million) of the national population growth of 2.9 million between July 1, 2005, and July 1, 2006.[16] Immigrants and their U.S.-born descendants are expected to provide most of the U.S. population gains in the decades ahead.[17] Since the liberalization of immigration policy in 1965,[18] the number of first-generation immigrants living in the United States has quadrupled,[19] from 9.6 million in 1970 to about 38 million in 2007.[20] Almost 97% of residents of the 10 largest American cities in 1900 were non-Hispanic whites.[21] In 2006, non-Hispanic whites were the minority in thirty-five of the fifty largest cities.[22]
http://en.wikipedia.org/wiki/Demographics_of_the_United_States
———————————–
The Census Bureau’s latest population projections illustrate the future size and composition of the United States, by age, sex, race, and Hispanic origin, under three assumptions about fertility, life expectancy, and net immigration:
Fertility in the middle series was assumed to remain almost constant, near the current fertility level of about 2.1 births per woman. For the low and high assumptions, levels of 1.9 and 2.6 births per woman were used, respectively.
Life expectancy is projected in the middle series to increase from 76.0 years in 1993 to 82.6 years in 2050. In 2050, life expectancy in the low assumption would be 75.3 years and in the high assumption would be 87.5 years.
Net immigration for the middle series remains constant at 880,000 per year. A wide range between the high (1,370,000) and low (350,000) net immigration figures reflects uncertainty concerning the future flow of immigrants.
The U.S. population is growing larger.
Based on the middle-series projections, the Nation’s population is projected to increase to 392 million by 2050 — more than a 50 percent increase from the 1990 population size. During the 1990′s, the population is projected to grow by 27 million, a 10.8 percent increase. This assumes that fertility, mortality, and net immigration would continue to reflect recent trends. Only during the 1950′s were more people added to the Nation’s population than are projected to be added during the 1990′s. Using the lowest assumptions, the population would grow slowly, peak at 293 million by 2030, then gradually decline. Conversely, the highest series projects the population to increase quite steadily over the next several decades, more than doubling its 1990 size by the middle of the next century…
The two major components driving the population growth are fertility (births) and net immigration. In the middle series, the number of births is projected to decrease slightly as the century ends and then increase progressively throughout the projection period. After 2011, the number of births each year would exceed the highest annual number of births ever achieved in the United States.
Almost one-third of the current population growth is caused by net immigration. By 2000, the Nation’s population is pro-jected to be 8 million larger than it would have been if there were no net immigration after July 1, 1992. By 2050, this difference would increase to 82 million. In fact, about 86 percent of the population growth during the year 2050 may be due to the effects of post-1992 net immigration.
http://www.census.gov/population/www/pop-profile/natproj.html
—————————————-
Immigration numbers
History shows the U.S. has traditionally allowed relatively small numbers to immigrate, thus allowing for decades of assimilation. After the peak of about 8.7 million in the first decade of the 20th century (the “great wave”), numbers went steadily down. Immigration averaged only 195,000 per year from 1921 through 1970!40
It is helpful to put current immigration statistics in perspective. With the change in immigration law in 1965, mass immigration levels have drifted upward from 250,000 per year to over 1 million per year. In other words, in one year we accept a number equal to what we formerly took in five years; in two years what took a decade, etc. In response to such concerns a national bipartisan committee headed by the late Barbara Jordan concluded that the numbers should be reduced.45, 46, 47 A recently released RAND report41 recommends that the level be reduced.
It is interesting to see how this plays out in the real world. According to journalist Roy Beck, in California it is necessary to construct a new classroom every hour of the day, 24 hours per day 365 days of the year to accommodate immigrant children. The financial cost is borne by native households, who according to a National Academy of Science report, pay an additional $1200 per year in taxes because of mass immigration.42 Even so, the primary concern to environmentalists and Sierra Club members is the tremendous environmental impact that will be incurred as a consequence of continued U.S. population growth.
http://www.susps.org/overview/numbers.html
—————————————-
The milestone is a reminder that the United States remains a remarkable demographic specimen, 230 years old (since the Declaration of Independence) and still in a growth spurt.
Behind only China and India, it is the planet’s third most populous nation. For a rich, highly developed country, it is anomalously fertile, with a population that is increasing briskly, in sharp contrast to anemic growth or decline in Western Europe and Japan…
“When we hit 100 million, it was a celebration of America’s might in the world,” said Dowell Myers, a professor of urban planning and demography at the University of Southern California. “When we hit 200 million, we were solidifying our position. But at 300 million, we are beginning to be crushed under the weight of our own quality-of-life degradation.”
One reason for anxiety may be that U.S. population growth is fueled in large measure by immigrants and their children, a circumstance that increasingly worries native-born Americans and makes politicians jumpy, especially four weeks before an election.
Immigrants, legal and illegal, account for about 40 percent of population growth. Immigration is also an important reason the “natural increase” in the population — excess of births over deaths — is significantly higher in the United States compared with Europe or Japan. Hispanics from Latin America, by far the largest share of recent immigrants, are driving the natural increase here. On average, Hispanic women have one more child than non-Hispanic white women.
http://www.washingtonpost.com/wp-dyn/content/article/2006/10/11/AR2006101101730.html
15 July 2010, 4:27 pmHenry:
Marcilla,
Sorry if you’ve felt slighted. Not my intention at all. Probably I don’t understand the point you’re trying to make. Anyway, the context I’ve had in mind is the one we actually live in, and i try my best to understand how it works. It may be that you are interested in other possible contexts–at present ideal–and how things could work in them. In that case, we were talking past each other.
In the example of points in a game, the comparison serves a real purpose. You asked me to follow it to its logical conclusion. I thought I did so when I said the value of a fiat currency derived from its legal imposition via taxation. You say that is quibbling over minutae, but in fact it is the crucial point. Thus, if you live in the US, you must pay taxes, and the only thing acceptable for that purpose is dollars. You can buy your neighbor’s car for anything you both agree on, but for tax purposes only dollars will do. It may be that you are not interested in how modern money works in the US or England or Japan, for example. But as I say, I probably have missed what it is you are actually interested in clarifying, and I may very well not be competent to contribute to that endeavor.
16 July 2010, 5:52 pmHenry:
Re: “…why in the world would we subjugate our social interactions in the economy to our mathematical capacity, rather than the other way around?”
Back in this thread [http://www.feralscholar.org/blog/index.php/2010/06/28/manifesto-of-the-garden-party/]
I said a little something about quantity, but I don’t think it was interesting to the participants, since no one comment further. Perhaps that was more germane to what you are trying to say. I think most of us who comment on this blog are far from being “believers” in the current technologically drunk civilization, “progress,” “money,” and so on. Most of us would probably like a less technologically dependent existence, closer to nature, a smaller community of shared values, and the like. Difficult to achieve nowadays.
16 July 2010, 6:07 pmHenry:
The Great Crisis and the American Response
The global abatement of the inflationary climate of the past three decades, combined with continuing financial instability, helped to promote the worldwide holding of U.S. dollar reserves as a cushion against financial instability outside the United States, with the result that, for the United States itself, this was a period of remarkable price stability and reasonably stable economic expansion.
For the most part, the economics profession viewed these events as a story of central bank credibility, fiscal probity, and accelerating technological change coupled with changing demands on the labor market, creating a model of self?stabilizing free markets and hands?off policy makers motivated by doing the right thing—what Senior Scholar James K. Galbraith calls “the grand illusion of the Great Moderation.” A dissenting line of criticism focused on the stagnation of real wages, the growth of deficits in trade and the current account, and the search for new markets. This view implied that a crisis would occur, but that it would result from a rejection of U.S. financial hegemony and a crash of the dollar, with the euro and the European Union (EU) the ostensible beneficiaries.
A third line of argument was articulated by two figures with substantially different perspectives on the Keynesian tradition: Wynne Godley and Hyman P. Minsky. Galbraith discusses the approaches of these Levy distinguished scholars, including Godley’s correlation of government surpluses and private debt accumulation and Minsky’s financial stability hypothesis, as well as their influence on the responses of the larger economic community.
Galbraith himself argues the fundamental illusion of viewing the U.S. economy through the free-market prism of deregulation, privatization, and a benevolent government operating mainly through monetary stabilization. The real sources of American economic power, he says, lie with those who manage and control the public?private sectors—especially the public institutions in those sectors—and who often have a political agenda in hand. Galbraith calls this the predator state: a state that is not intent upon restructuring the rules in any idealistic way but upon using the existing institutions as a device for political patronage on a grand scale. And it is closely aligned with deregulation.
http://www.levyinstitute.org/publications/?docid=1257
19 July 2010, 12:17 pmHenry:
Calling All Future-Eaters
By Chris Hedges
July 19, 2010 “Truthdig” — The human species during its brief time on Earth has exhibited a remarkable capacity to kill itself off. The Cro-Magnons dispatched the gentler Neanderthals. The conquistadors, with the help of smallpox, decimated the native populations in the Americas. Modern industrial warfare in the 20th century took at least 100 million lives, most of them civilians. And now we sit passive and dumb as corporations and the leaders of industrialized nations ensure that climate change will accelerate to levels that could mean the extinction of our species. Homo sapiens, as the biologist Tim Flannery points out, are the “future-eaters.”
In the past when civilizations went belly up through greed, mismanagement and the exhaustion of natural resources, human beings migrated somewhere else to pillage anew. But this time the game is over. There is nowhere else to go. The industrialized nations spent the last century seizing half the planet and dominating most of the other half. We giddily exhausted our natural capital, especially fossil fuel, to engage in an orgy of consumption and waste that poisoned the Earth and attacked the ecosystem on which human life depends. It was quite a party if you were a member of the industrialized elite. But it was pretty stupid.
Collapse this time around will be global. We will disintegrate together. And there is no way out.
More:
http://www.truthdig.com/report/item/calling_all_future-eaters_20100719/
19 July 2010, 5:26 pmHenry:
Max Keiser interviews Paul Craig Roberts on the process converting the US to a third world country.
http://maxkeiser.com/watch/on-the-edge/episode-63-16-july-2010-guest-dr-paul-craig-roberts/
19 July 2010, 6:30 pmMarcilla Elizabeth Smith:
Well, Henry, if you’re gonna go and be all congenial-like…
First, I went back and read the part to which I believe you are referring on the Garden Party thread. I think I agree with what you are saying, which I guess if I try to summarize it, I’d say: “if they can measure it, it counts, if not, they toss it out.” Which, if I read you correctly, you go on to say basically leads to quantity for the sake of quantity with no check on underlying purposes (which are usually, if not always qualitative in nature). It is like the old saw about asking if one *can* do something without also asking if one *should*.
Imma hafta try on the explanation again in a minute as I am getting a headache =-( But I have an eye appointment on Thursday, assuming I can find the insurance cards =-S
20 July 2010, 12:08 pmFranz:
An Ominous Drilling Sign for the Truth
March 2nd, 2010
By Robert Singer
The year is 2010 and to anyone not in denial, the industrialized nations have entered the greatest calamity the world has ever known:
35 Million Americans on Food Stamps: 12 Percent of U.S. Population on Food Stamps Highest Since Records Kept in 1969, and that’s before the Obama administration announced a planned three-year budget freeze on government discretionary spending. (My Budget 360)
18 Million empty houses in the United States and 39 million Americans who are no longer working or looking for work, and that’s before Federal Reserve finishes rewriting the rules of American “capitalism” as US Housing, the Automobile Industry and the American Dream are dismantled. (The 31-Year-Old in Charge of Dismantling G.M., David E. Sanger)
“There are now well over 150 million Americans who feel stress over these things on a consistent basis. Over 60 percent of Americans now live paycheck to paycheck.” (The Economic Elite vs. People of the USA, David DeGraw)
So then, why is President Obama going back on his word and drilling holes in the earth?
The Interior Department under Barack Obama offered for sale more acres of dry-land drilling on public lands than the Bush Administration had at the same point in 2008.
An economy in a state of rigor mortis doesn’t need oil to lubricate an engine that blew up on October 29, 2008, and our way of life won’t come back if the oil industry creates a handful of jobs or we reduce our dependence on foreign oil.
Drill, Drill, Drill didn’t make environmental sense in 1973 or 2008
In 1973, America’s solution to the Arab oil embargo and long gas lines wasn’t mass transit, high mileage cars or alternative energy, it was the 800 mile Trans-Alaska Pipeline through some of the most pristine country in Alaska.
Then in 2008, in response to $5.00/gallon gasoline, Americans agreed to give up their last Arctic Wilderness and do more offshore drilling.
Despite the fact that the oil companies and the U.S. Energy Information Administration (EIA), an independent statistical agency within the Department of Energy, estimated that new oil from ANWR would have only a negligible impact on the world price of oil. The EIA projection for oil production in the ANWR would amount to 0.4 to 1.2 percent of total world oil consumption in 2030, assuming the U.S. congress approved legislation to drill, back in 2008.
Drill, Drill, Drill hasn’t made economic sense for at least the last 20 years!
Matt Simmons an investment banker, considered to be a mover and shaker in the oil industry thinks he, “spent his career in the wrong kind of barrels.”
[From a presentation by Matt Simmons at the 2004 Offshore Technology Conference [1]]
It will take 16 trillion dollars to replace the production we now have on line and add to it by 2030. Oil or another form of energy is an indispensable requisite for life as we know it.
But over the past 20 years, oil has been a terrible investment. A 15% return on investment (ROI) is what one expects to get from a building. Oil’s ROI has largely been less than 15%. Scotch returns 50% ROI, wine returns 15%.
Why has oil given such a lousy return?
Because spot energy pricing, where oil is bought and sold like a commodity has destroyed long term value for the oil industry. Spot markets make all contracts short term, so no one is looking out for the future.
“The not-so-invisible hand of JP Morgan Chase is guilty of the ongoing intentional, not accidental, great crime of manipulating the spot markets, lower, not higher as you would expect. So you could, prior to 2008, ‘save money and live better’ while at the same time pollute the environment.” (Silver, But No Silver Lining)
[End of the Matt Simmons Presentation]
More:
http://www.thepeoplesvoice.org/TPV3/Voices.php/2010/03/02/an-ominous-drilling-sign-for-the-truth
24 July 2010, 10:52 pmHenry:
I just found this:
———
A Kindergarten guide to modern monetary theory
Prepared by Frank Ashe
Presented to the Institute of Actuaries of Australia
5th Financial Services Forum
13 – 14 May 2010
Sydney
http://mq.academia.edu/FrankAshe/Papers
Abstract
A short guide to modern monetary theory is given. The approach is kept as simple as possible to highlight the logical coherence of the system of fiat money and its differences from a gold-standard theory of money. The role of the government is central to this discussion. Many common ideas concerning money, which are holdovers from a gold standard, do not hold under a fiat system and this has implications for financial systems.
Keywords: money, gold standard, credit, modern monetary theory, fiat money
When reading about modern monetary theory I suggest the following procedure:
25 July 2010, 1:18 am• Forget who you are.
• Forget what you think of government – good or bad – unless you are going to be able to get rid of government (that is, establish pure communism) you are stuck with it.
• Forget what you think of social policy – you may hate the unemployed or you may feel compassion – forget all emotions.
• Forget what nation you live in – it doesn’t matter.
• Forget all prior economic concepts and training (if any).
• Then just try to understand what you read.
Bill Mitchell
Marcilla Elizabeth Smith:
Henry,
Let me try to break down what I am saying with regard to the “points in a football game” analogy. First, let me make sure we are clear about the labeling. I assume the following:
- points = dollars in fiat currency
- winning team = richer people
- losing team = poorer people
- referee = authority (government, but perhaps also banks, et al)
So, the referee can assign points virtually unconstrained by material reality. I say the referee assigns them because I think we would agree that the points no more jump onto the board spontaneously than dollars spring in and out of our wallets without some human agency. And herein lies the rub, I am saying: this human factor cannot be eliminated in material reality, so also must be considered in any descriptive model that hopes to have use-value. Also, it is ultimately this human factor which makes the use of money less than ideal at best, and likely just plain unsustainable. Let me be clear: I am *not* claiming monetary systems are unsustainable because there is some physical or mathematical limit on the amount of money that can be created in a fiat system.
So the referee is assigning points based on touchdowns, field goals, etc in the same way that merit is the supposed basis of wages and earnings. But let’s scale up that football game so that instead of a few dozen players and a handful of officials, it’s now layer upon layer of officiating bureaucracy and hundreds of millions of players on who knows how many teams. And let’s throw in a revolving door through which individuals go back and forth between the winning teams and the officiating bureaucracy. Then let’s iterate this scenario over a few hundred years. Doesn’t it only make sense that the officials are going to heavily favor the teams they know they are going to go back and play for? Even in football-as-played there are many instances when people feel an official has made a bad call or even been paid off. Now raise the stakes that much more and give the system time to normalize this behavior and what do you get? My hope is that it will be an audience who decides to leave the stadium and demand a refund
26 July 2010, 6:53 amStan:
Hot damn!
26 July 2010, 3:27 pmHenry:
I’m not really interested in this sort of discussion. My posts on modern monetary theory have been in the interest of exposing to this readership a group of writers whose explanations of how this current system actually works seems accurate to me. I already mentioned I was not interested in discussing here whether the system is good or bad or indifferent, sustainable or unsustainable. That is a separate issue. Perhaps others who read and study this material may be interested in discussing these things with you.
I’ve already mentioned that in any case I also broadly agree with probably all readers of this blog that the current system is unsustainable. Most of us don’t believe in industrial “progress” Most of us would probably prefer not to “play this game” as it is currently played.
26 July 2010, 6:55 pmMarcilla Elizabeth Smith:
Ok, point taken, Henry. And I did stray into the sustainability issue.
Where I was starting, however, had to do with a mechanistic description or model. Before you had said that sporting officials do not determine points, which is a conclusion that could be drawn from reading a rulebook, but prolly not from watching the game. Similarly, while a top-down or designer-side view of the monetary system may be able to “show” ways that fiat currency “works”, it doesn’t mean that observation of a monetary system actually operating in material reality actually works the way it was designed or even redesigned. Hardly anything ever does (if you happen to be a tinkerer/DIYer, I’m sure this requires no further explanation). The idea that debt in a fiat system is not self-destructive or that fungible currency can be discussed while removing the normative quality is possible, sure, but I don’t see how it’s meaningful. For myself, I need to deal with how things actually are, not how things were originally intended to be, or something. Unless the literal removal of humans from the monetary system is the goal (and certainly this may occur in the sense of a species extinction event if we continue to try to use money in solving our problems), I don’t see the purpose in removing the human factor from our models of how systems operate.
27 July 2010, 8:19 amHenry:
Marcilla,
Yes, cheating is a big problem. You may find Warren Mosler’s proposals interesting [http://moslereconomics.com/proposals/].
Also:
Industrial capitalism always has been a hybrid, a symbiosis with its feudal legacy of absentee property ownership, oligarchic finance and public debts rather than the government acting as net creditor. The essence of feudalism was extractive, not productive. Their common denominator of the economic doctrines of Adam Smith, David Ricardo, John Stuart Mill, and the last great classical economist, Marx, was to view rent and interest as inherently extractive, not productive. That is why feudal realms created industrial capitalism as State Policy in the first place – if only to increase its war-making powers. The question must now be raised as to whether only socialism can complete the historical task that classical political economy set out for itself – the ideal that Progressive Era individualists hoped that American capitalism might be able bring about without having to take the radical step of shedding its legacy of commercial banking indebting property and monopoly ownership of infrastructure that rightly should be in the public domain. This was the great debate of a century ago. It needs to be revived today. [http://michael-hudson.com/2009/02/finance-capitalism-hits-a-wall-the-oligarchs’-escape-plan-–-at-the-treasury’s-expense/]
Michael Hudson on compound interest:
http://michael-hudson.com/2007/08/why-the-“miracle-of-compound-interest”-leads-to-financial-crises/
http://michael-hudson.com/2004/01/the-mathematical-economics-of-compound-rates-of-interest-a-four-thousand-year-overview-part-i/
As you probably know, Aristotle critiqued the idea that money could of itself be fruitful, so that interest is essentially an injustice. There are certain exceptions, of course. All the great religions deplored usury.
28 July 2010, 11:45 pmHenry:
Another important aspect of the matter:
“This article addresses claims made by Weber, Schumpeter, and
Sombart concerning the importance of double-entry bookkeeping.
They argue that accounting played a key technical role in enhancing
rationality and furthering the development of capitalist methods of
production. The history of accounting methods and practices from
the Middle Ages to the 19th century is surveyed in order to evaluate
these arguments. Two important dimensions of accounting are dis-
cussed: the rhetorical and the technical. The argument is that, as
rhetoric, accounting must be understood as an attempt to convince
some audience of the legitimacy of business ventures. Goody’s anal-
ysis of writing and literacy is applied to the development of account-
ing as a technique. As a practical method, double-entry bookkeep-
ing appears to have increased “rationality,” but the rhetorical side
of double entry is also critical. The conclusion is that the signifi-
cance of double-entry bookkeeping can be appreciated only if its
rhetorical and technical aspects are considered…
Accounting as a rhetorical device has been increasingly couched in a
vocabulary of rationality. Accounts no longer need to reproduce Cice-
ronian rhetoric, adhere to Aristotelian models of justice, or make appeals
to God, in order to establish the legitimacy of a set of transactions.
Double entry has achieved its own legitimacy. As the embodiment of
rationality, it can be used to legitimate decisions and transactions without
reference to other systems of meaning. This change occurred in the con-
text of the spread of literacy and numeracy, which fundamentally
changed audiences’ expectations and interpretations of texts in a way
that enhanced the autonomous legitimacy of accounts. Today, norms
of rationality govern business decision making. They also govern the
descriptions and justifications of decisions. Accounts are a way to display
the rationality of decisions and thus enhance their legitimacy. They help
to demonstrate that alternatives were considered, trade-offs were made,
and potential outcomes compared. Business accounts, as a “rhetoric of
numbers,” engender legitimacy because they document the rationality of
decisions in an age when that form of rationality is legitimate.
Accounts, like the more recent decision trees and cost-benefit ratios,
are often more important as justifications for decisions already made than
as tools to make rational decisions. Rationality has become a compelling
institutionalized creation myth for decisions…
Cultural forms like double-entry accounts are not exclusively rhetori-
cal. One must be sensitive to the historical and cultural context in order
to determine their rhetorical and technical significance. Throughout its
history, the double-entry method has played a crucial rhetorical role in
legitimating an expanding capitalist economic system. I t has also played
a technical role: altering the conceptual categories used to interpret busi-
ness and to make decisions. In the past, accounting has been underesti-
mated by social scientists-and understood one-dimensionally-as a
technique for making rational decisions. We believe that accounting is
both more important and interesting than that and deserves closer atten-
tion from sociologists. In the contemporary world, it is especially impor-
tant to understand the symbolic power of technique and how it structures
cognitive categories.”
Accounting for Rationality: Double-Entry Bookkeeping and the Rhetoric of
Economic Rationality
http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.120.337&rep=rep1&type=pdf
28 July 2010, 11:56 pmm.c.:
An Op-Ed in yesterday’s LA Times caught my eye. Japan has a low per capita rate of carbon emmisions; in addition to low unemployment(5%), low or lowest income inequality, healthcare for all, one of the world’s leading exporters, high life expectancy, low infant mortality, at the top in math & literacy, low crime,(low)incarceration, (low)homicides, and (low)drug use. This puts Japan in somwhat rarified air compared with the other members of the G-20. I also happen to like their beer and Sake too.
30 July 2010, 12:38 pmHenry:
Tuesday, July 27, 2010
Towards a Libertarian/Austrian Modern Money Theory
By L. Randall Wray
For reasons that I cannot fathom, the most vehement critics of Modern Money Theory (MMT) are the wingnut libertarians and Austrians (and, please, I use the term wingnut with some affection for our fellow fringe travellers). Any time there is an MMT post on this blog, or over at New Deal, Naked Capitalism, or the Huff, the comments are dominated by conspiracy theorists, haters of government, goldbugs, and victims of alien probings who are certain that MMT-ers are united in their effort to ramp up government until it consumes the entire economy. So let us try to mend fences.
First, on one level, MMT is a description of the way a sovereign currency works. Love it or hate it, our sovereign government spends by crediting bank accounts. Over the past 20 years, MMT has investigated, analyzed, and documented the sordid operational details. We can lecture for hours on the balance sheet manipulations involving the Treasury, the Fed, the primary security dealers, the special depositories, and the regular private banks every time the Treasury buys a notepad from OfficeMax. We did the work, so you do not have to do it. And believe me, you do not want to do it. You can skip directly to the conclusion: “Yes, government spends by crediting bank accounts, taxes by debiting them, and sells bonds to provide an interest-earning substitute to low-earning reserves. Q.E.D.”
Read more:
http://neweconomicperspectives.blogspot.com/2010/07/towards-libertarianaustrian-modern.html
31 July 2010, 12:06 pmMarcilla Elizabeth Smith:
Thanks for the six articles, but can we try to simplify this discussion rather than taking it in more directions considering it is nearly a month later?
If I may offer to take my own advice, let me try to distill what I see as one remaining issue: the idea that fiat currency can be used by a State in this “cyber-scorecard” way whereby they print up as much as they want and it is neither good nor bad, just a tool. Forgive me if I have misunderstood your point. Assuming this is the case, let me just ask how (in such a system) hyper-inflation is to be avoided?
3 August 2010, 10:12 amHenry:
‘True sovereigns’ immune from eurozone contagion
By Steven Major
Published: August 16 2010 19:09 | Last updated: August 16 2010 19:09
There are plenty of doomsayers who think it is only a matter of time before the sovereign risk crisis spreads from the eurozone to other countries, including the US, UK and Japan.
This is not going to happen in my view. That is because the obsession with public debt ratios fails to distinguish between different levels of sovereignty. The US, UK and others can maintain high public debt ratios for longer, especially given the amount of deleveraging being carried out by the private sector.
Not all sovereigns are the same. The US, UK, Japan and Canada are examples of what I call “true sovereigns”. For these countries there is zero default risk. Investors should not worry about credit fundamentals, as they will always receive their coupons and original investment on redemption.
A “true sovereign” can issue freely in its own currency, has full taxing power over the population and ultimately, if required, can create more of its own money. None of this means that true sovereigns can afford to be profligate, far from it, but it does mean there is no externally imposed timetable on fiscal retrenchment.
Investors in the “true sovereigns’” should worry about the level of interest rates and inflation, but not about credit risk. These factors, rather than the level of supply, will be the most critical in determining bond yields.
More:
http://www.ft.com/cms/s/0/e8a3cc8c-a958-11df-a6f2-00144feabdc0.html
17 August 2010, 2:08 pmMichael Anderson:
I found this article in the Eugene, OR paper this A.M. A couple of quotes from it make me think that the powers-that-be are betting on catastrophe:
http://special.registerguard.com/turin/2010/nov/16/scientists-propose-one-way-trips-to-mars/
Schulze-Makuch and Paul Davies, a physicist at Arizona State University, argue that humans must begin colonizing another planet as a hedge against a catastrophe on Earth. They believe the one-way trips could start in two decades.
“You would send a little bit older folks, around 60 or something like that,” Schulze-Makuch said, bringing to mind the aging heroes who saved the day in the movie “Space Cowboys.”
Seems like a cross between “Methuselah’s Children”, and “The Martian Chronicles”—the predictive linguistics are unsettling.
16 November 2010, 1:19 pm