Archive | February, 2011
The American Economy is Grinding to a Halt
7 FebRichard Heinberg is posting drafts from his new book in progress, The End of Growth (New Society Publishers). “The Sound of Air Escaping” explains why the American economy is grinding to a halt, with little chance of continuing forward on its present path. He observes:
During the 1930s, industrialized countries were in the early stages of their shift from an agrarian coal-based rural economy to an electrified, oil-based, urban economy—a shift that required enormous infrastructure investments (in new highways, airports, dams, and power lines) that would ultimately pay off handsomely for a nation on the verge of realizing a consumer utopia. All that was needed to initiate the building of that infrastructure was credit—grease for the wheels of commerce. Government got those wheels rolling by taking on debt, with private companies increasingly taking up the lead after World War II. The expansion that occurred from the 1950s through 2000, as that infrastructure was built out and put to use, easily justified the government pump-priming that initiated the process. Interest payments on the government debt could be paid through growth of the tax base.
Now is different. … both the U.S. and the world as a whole have passed a fundamental crossroads characterized by increasing scarcity of energy and crucial minerals. Because of this, strategies of growth that worked spectacularly well in the mid-to-late 20th century—via various forms of business and technological development—have reached a point of diminishing returns.
He concludes:
If the Keynesian remedy doesn’t cure the ailment but merely extends the suffering (while increasing government debt to truly toxic levels), the medicine of austerity may have such severe side effects that it could kill the patient outright. Both sides—left and right, the socialists and free-marketers—assume and hope to the point of desperation that their prescription will result in a rapid return to continuous economic growth and low unemployment. … that hope is futile.
There is no “silver bullet,” no magic solution that will turn back the clock to an era of abundant resources and easy growth. For now, all that governments can do is buy time through further deficit spending—ideally, using that time to build infrastructure that will continue to function in the coming era of reduced flows of energy and resources. Meanwhile, we must all find ways to come out from under a burden of debt that will otherwise crush us. The inherent contradiction within this prescription is obvious but unavoidable.
The entire chapter is online as MuseLetter #224; you can also download a PDF (214 KB).
Under Construction
4 FebWe just started building this joint, so bear with us while we creating something out of nothing. Feel free to leave suggestions in the comments.
Thanks,
Bill (aka kubla) & Charlie
Walk Like an Egyptian: Protest the Fat Cats
4 FebWriting in The Nation, Johann Hari spells out this fantasy:
Imagine a parallel universe where the Great Crash of 2008 was followed by a Tea Party of a very different kind. Enraged citizens gather in every city, week after week—to demand the government finally regulate the behavior of corporations and the superrich, and force them to start paying taxes. The protesters shut down the shops and offices of the companies that have most aggressively ripped off the country. The swelling movement is made up of everyone from teenagers to pensioners. They surround branches of the banks that caused this crash and force them to close, with banners saying, You Caused This Crisis. Now YOU Pay.
And he goes on to point out that it has happened:
This may sound like a fantasy—but it has all happened. The name of this parallel universe is Britain. As recently as this past fall, people here were asking the same questions liberal Americans have been glumly contemplating: Why is everyone being so passive? Why are we letting ourselves be ripped off? Why are people staying in their homes watching their flat-screens while our politicians strip away services so they can fatten the superrich even more?
And so a dozen British citizens decided to start protesting against Vodaphone, which had managed to to gull the government into forgiving £5 billion in taxes:
That first protest grabbed a little media attention—and then the next day, in a different city, three other Vodafone stores were shut down in the northern city of Leeds, by unconnected protests. UK Uncut realized this could be replicated across the country. So the group set up a Twitter account and a website, where members announced there would be a national day of protest the following Saturday. They urged anybody who wanted to organize a protest to e-mail them so it could be added to a Google map. Britain’s most prominent tweeters, such as actor Stephen Fry, joined in.
Could this happen in the USofA?
Peak Oil and Financial Decline
1 FebThe Nation has posted a video by James Howard Kunstler on Peak Oil and Our Financial Decline:
From the description of the video:
Kunstler suggests that “cheap abundant energy” has facilitated ever-increasing industrialization for centuries. But now that society is in a period of self-destructive capital accumulation, he expects debt to increase as abundance in energy drops. The tremendous amount of accumulated debt, “a by-product of cheap abundant energy,” will mean that in the future governments will be less able to make investments in socially-beneficial programs.
He also criticizes the US environmental movement for shying away from the problem of energy. The movement is unable to talk about walkable neighborhoods, smaller cities or investing in rail or water transit, an “intellectual failure of the culture to have a coherent conversation from people who ought to be leading” such a conversation.
Truth and Traditions 