In it he asks what are the fundamental reasons behind the ongoing economic crisis, arguing persuasively that the role of ecological limits like peak oil cannot be ignored as inhibiting growth both in the long term as well as the short.  However, what Richard lacks is an integrated analysis of the social limits to growth, especially the power of social movements all over the globe working against this system of capitalism.

Without a deep appreciation for the rights of poor and exploited people, it is easy to make mistakes, as I believe Richard does in this essay with regards to immigration, for example.  Further, without seeing the big picture of people’s resistance to capitalism and yearning for a new, non-growth, sustainable world, it is easy to lose hope.  And in these difficult times, hope is our most important natural resource. [alex]

Temporary Recession or the End of Growth?

Everyone agrees: our economy is sick. The inescapable symptoms include declines in consumer spending and consumer confidence, together with a contraction of international trade and available credit. Add a collapse in real estate values and carnage in the automotive and airline industries and the picture looks grim indeed.

But why are both the U.S. economy and the larger global economy ailing? Among the mainstream media, world leaders, and America’s economists-in-chief (Treasury Secretary Geithner and Federal Reserve Chairman Bernanke) there is near-unanimity of opinion: these recent troubles are primarily due to a combination of bad real estate loans and poor regulation of financial derivatives.

This is the Conventional Diagnosis. If it is correct, then the treatment for our economic malady might logically include heavy doses of bailout money for beleaguered financial institutions, mortgage lenders, and car companies; better regulation of derivatives and futures markets; and stimulus programs to jumpstart consumer spending.

But what if this diagnosis is fundamentally flawed? The metaphor needs no belaboring: we all know that tragedy can result from a doctor’s misreading of symptoms, mistaking one disease for another.

Something similar holds for our national and global economic infirmity. If we don’t understand why the world’s industrial and financial metabolism is seizing up, we are unlikely to apply the right medicine and could end up making matters much worse than they would otherwise be.

To be sure: the Conventional Diagnosis is clearly at least partly right. The causal connections between subprime mortgage loans and the crises at Fannie Mae, Freddie Mac, and Lehman Brothers have been thoroughly explored and are well known. Clearly, over the past few years, speculative bubbles in real estate and the financial industry were blown up to colossal dimensions, and their bursting was inevitable. It is hard to disagree with the words of Australian Prime Minister Kevin Rudd, in his July 25 essay in the Sydney Morning Herald: “The roots of the crisis lie in the preceding decade of excess. In it the world enjoyed an extraordinary boom…However, as we later learnt, the global boom was built in large part…on a house of cards. First, in many Western countries the boom was created on a pile of debt held by consumers, corporations and some governments. As the global financier George Soros put it: ‘For 25 years [the West] has been consuming more than we have been producing…living beyond our means.’” (1)

But is this as far as we need look to get to the root of the continuing global economic meltdown?

A case can be made that dire events having to do with real estate, the derivatives markets, and the auto and airline industries were themselves merely symptoms of an even deeper, systemic dysfunction that spells the end of economic growth as we have known it.

In short, I am suggesting an Alternative Diagnosis. This explanation for the economic crisis is not for the faint of heart because, if correct, it implies that the patient is far sicker than even the most pessimistic economists are telling us. But if it is correct, then by ignoring it we risk even greater peril.

Economic Growth, The Financial Crisis, and Peak Oil

For several years, a swelling subculture of commentators (which includes the present author) has been forecasting a financial crash, basing this prognosis on the assessment that global oil production was about to peak. (2) Our reasoning went like this:

Continual increases in population and consumption cannot continue forever on a finite planet. This is an axiomatic observation with which everyone familiar with the mathematics of compounded arithmetic growth must agree, even if they hedge their agreement with vague references to “substitutability” and “demographic transitions.” (3)

This axiomatic limit to growth means that the rapid expansion in both population and per-capita consumption of resources that has occurred over the past century or two must cease at some particular time. But when is this likely to occur?

The unfairly maligned Limits to Growth studies, published first in 1972 with periodic updates since, have attempted to answer the question with analysis of resource availability and depletion, and multiple scenarios for future population growth and consumption rates. The most pessimistic scenario in 1972 suggested an end of world economic growth around 2015. (4)

But there may be a simpler way of forecasting growth’s demise.

Energy is the ultimate enabler of growth (again, this is axiomatic: physics and biology both tell us that without energy nothing happens). Industrial expansion throughout the past two centuries has in every instance been based on increased energy consumption.(5) More specifically, industrialism has been inextricably tied to the availability and consumption of cheap energy from coal and oil (and more recently, natural gas). However, fossil fuels are by their very nature depleting, non-renewable resources. Therefore (according to the Peak Oil thesis), the eventual inability to continue increasing supplies of cheap fossil energy will likely lead to a cessation of economic growth in general, unless alternative energy sources and efficiency of energy use can be deployed rapidly and to a sufficient degree. (6)

Of the three conventional fossil fuels, oil is arguably the most economically vital, since it supplies 95 percent of all transport energy. Further, petroleum is the fuel with which we are likely to encounter supply problems soonest, because global petroleum discoveries have been declining for decades, and most oil producing countries are already seeing production declines. (7)

So, by this logic, the end of economic growth (as conventionally defined) is inevitable, and Peak Oil is the likely trigger.

Why would Peak Oil lead not just to problems for the transport industry, but a more general economic and financial crisis? During the past century growth has become institutionalized in the very sinews of our economic system. Every city and business wants to grow. This is understandable merely in terms of human nature: nearly everyone wants a competitive advantage over someone else, and growth provides the opportunity to achieve it. But there is also a financial survival motive at work: without growth, businesses and governments are unable to service their debt. And debt has become endemic to the industrial system. During the past couple of decades, the financial services industry has grown faster than any other sector of the American economy, even outpacing the rise in health care expenditures, accounting for a third of all growth in the U.S. economy. From 1990 to the present, the ratio of debt-to-GDP expanded from 165 percent to over 350 percent. In essence, the present welfare of the economy rests on debt, and the collateral for that debt consists of a wager that next year’s levels of production and consumption will be higher than this year’s.

Given that growth cannot continue on a finite planet, this wager, and its embodiment in the institutions of finance, can be said to constitute history’s greatest Ponzi scheme. We have justified present borrowing with the irrational belief that perpetual growth is possible, necessary, and inevitable. In effect we have borrowed from future generations so that we could gamble away their capital today.

Until recently, the Peak Oil argument has been framed as a forecast: the inevitable decline in world petroleum production, whenever it occurs, will kill growth. But here is where forecast becomes diagnosis: during the period from 2005 to 2008, energy stopped growing and oil prices rose to record levels. By July of 2008, the price of a barrel of oil was nudging close to $150—half again higher than any previous petroleum price in inflation-adjusted terms—and the global economy was beginning to topple. The auto and airline industries shuddered; ordinary consumers had trouble buying gasoline for their commute to work while still paying their mortgages. Consumer spending began to decline. By September the economic crisis was also a financial crisis, as banks trembled and imploded. (8)

Given how much is at stake, it is important to evaluate the two diagnoses on the basis of facts, not preconceptions.

It is unnecessary to examine evidence supporting or refuting the Conventional Diagnosis, because its validity is not in doubt—as a partial explanation for what is occurring. The question is whether it is a sufficient explanation, and hence an adequate basis for designing a successful response.

What’s the evidence favoring the Alternative? A good place to begin is with a recent paper by economist James Hamilton of the University of California, San Diego, titled “Causes and Consequences of the Oil Shock of 2007-08,” which discusses oil prices and economic impacts with clarity, logic, and numbers, explaining how and why the economic crash is related to the oil price shock of 2008. (9)

Hamilton starts by citing previous studies showing a tight correlation between oil price spikes and recessions. On the basis of this correlation, every attentive economist should have forecast a steep recession for 2008. “Indeed,” writes Hamilton, “the relation could account for the entire downturn of 2007-08…If one could have known in advance what happened to oil prices during 2007-08, and if one had used the historically estimated relation [between price rise and economic impact]…one would have been able to predict the level of real GDP for both of 2008:Q3 and 2008:Q4 quite accurately.”

Again, this is not to ignore the role of the financial and real estate sectors in the ongoing global economic meltdown. But in the Alternative Diagnosis the collapse of the housing and derivatives markets is seen as amplifying a signal ultimately emanating from a failure to increase the rate of supply of depleting resources. Hamilton again: “At a minimum it is clear that something other than housing deteriorated to turn slow growth into a recession. That something, in my mind, includes the collapse in automobile purchases, slowdown in overall consumption spending, and deteriorating consumer sentiment, in which the oil shock was indisputably a contributing factor.”

Moreover, Hamilton notes that there was “an interaction effect between the oil shock and the problems in housing.” That is, in many metropolitan areas, house prices in 2007 were still rising in the zip codes closest to urban centers but already falling fast in zip codes where commutes were long. (10)

Why Did the Oil Price Spike?

Those who espouse the Conventional Diagnosis for our ongoing economic collapse might agree that there was some element of causal correlation between the oil price spike and the recession, but they would deny that the price spike itself had anything to do with resource limits, because (they say) it was caused mostly by speculation in the oil futures market, and had little to do with fundamentals of supply and demand.

In this, the Conventional Diagnosis once again has some basis in reality. Speculation in oil futures during the period in question almost certainly helped drive oil prices higher than was justified by fundamentals. But why were investors buying oil futures? Was the mania for oil contracts just another bubble, like the dot.com stock frenzy of the late ’90s or the real estate boom of 2003 to 2006?

During the period from 2005 to mid-2008, demand for oil was growing, especially in China (which went from being self-sufficient in oil in 1995 to being the world’s second-foremost importer, after the U.S., by 2006). But the global supply of oil was essentially stagnant: monthly production figures for crude oil bounced around within a fairly narrow band between 72 and 75 million barrels per day. As prices rose, production figures barely budged in response. There was every indication that all oil producers were pumping flat-out: even the Saudis appeared to be rushing to capitalize on the price bonanza.

Thus a good argument can be made that speculation in oil futures was merely magnifying price moves that were inevitable on the basis of the fundamentals of supply and demand. James Hamilton (in his publication previously cited) puts it this way: “With hindsight, it is hard to deny that the price rose too high in July 2008, and that this miscalculation was influenced in part by the flow of investment dollars into commodity futures contracts. It is worth emphasizing, however, that the two key ingredients needed to make such a story coherent—a low price elasticity of demand, and the failure of physical production to increase—are the same key elements of a fundamentals-based explanation of the same phenomenon. I therefore conclude that these two factors, rather than speculation per se, should be construed as the primary cause of the oil shock of 2007-08.”

Aftermath of the Peak

There is also controversy over to what degree troubles in the automobile, trucking, and airline industries should be attributed to the oil price spike or the economic crash. Of course, if the Alternative Diagnosis is correct, the latter two events are causally related in any case. However, it may be helpful to review the situation.

Everyone knows that GM and Chrysler went bankrupt this year because U.S. car sales cratered. The current forecast is for sales of about 10.3 million vehicles in the U.S. for 2009, down from last year’s 13.2 million and 16.1 million in 2007. U.S. car sales have not been this low since the 1970s. Sales of light trucks, the most profitable vehicles, took the biggest hit during 2008, as fuel prices soared and car buyers avoided gas-guzzlers. It was at this point that the auto companies really began feeling the pain.

The airline industry’s ills are summarized in a recent GAO document: “After 2 years of profits, the U.S. passenger airline industry lost $4.3 billion in the first 3 quarters of 2008 [as jet fuel prices climbed]. Collectively, U.S. airlines reduced domestic capacity, as measured by the number of seats flown, by about 9 percent from the fourth quarter of 2007 to the fourth quarter of 2008…To reduce capacity, airlines reduced the overall number of active aircraft in their fleets by 18 percent…Airlines also collectively reduced their workforces by about 28,000, or nearly 7 percent, from the end of 2007 to the end of 2008…The contraction of the U.S. airline industry in 2008 reduced airport revenues, passengers’ access to the national aviation system, and revenues for the Trust Fund.”(11)

For the trucking industry, fuel accounts for nearly 40 percent of total operational costs. In 2007, as diesel prices rose, carriers began losing money and added fuel price surcharges; meanwhile the volume of freight began falling. After July 2008, as oil prices crashed, tonnage continued to decline. Overall, the cumulative decrease in loads for flatbed, tanker, and dry vans ranged between 15 percent and 20 percent just in the period from June to December 2008. (12)

This last set of statistics raises a couple of questions crucial to understanding the Alternative Diagnosis: Why, if global oil production had just peaked, did petroleum prices fall in the last five months of 2008? And, if oil prices were a major factor in the economic crisis, why didn’t the economy begin to turn around after the prices softened?

Why Did Oil Prices Fall?

And Why Didn’t Lower Oil Prices Lead to a Quick Recovery?

The Peak Oil thesis predicts that, as world oil production reaches its maximum level and begins to decline, the price of oil will rise dramatically. But it also forecasts a dramatic increase in the volatility of prices.

The argument goes as follows. As oil becomes scarce, its price will rise until it begins to undermine economic activity in general. Economic contraction will then result in substantially reduced demand for oil, which will in turn cause its price to fall temporarily. Then one of two things will happen: either (a) the economy will begin to recover, stoking renewed oil demand, leading again to high prices which will again undermine economic activity; or (b), if the economy does not quickly recover, petroleum production will gradually fall due to depletion until spare production capacity (created by lower demand) is wiped out, leading again to higher prices and even more economic contraction. In both cases, oil prices remain volatile and the economy contracts.

This scenario corresponds very closely with the reality that is unfolding, though it remains to be seen whether situation (a) or (b) will ensue.

Over the past three years, oil prices rose and fell more dramatically than would have been the case if it had not been for widespread speculation in oil futures. Nevertheless, the general direction of prices—way up, then way down, then part-way back up—is entirely consistent with the Peak Oil thesis and the Alternative Diagnosis.

Why has the economy not quickly recovered, given that oil prices are now only half what they were in July 2008? Again, Peak Oil is not the only cause of the current economic crisis. Enormous bubbles in the real estate and finance sectors constituted accidents waiting to happen, and the implosion of those bubbles has created a serious credit crisis (as well as solvency and looming currency crises) that will likely take several years to resolve even if energy supplies don’t pose a problem.

But now the potential for renewed high oil prices acts as a ceiling for economic recovery. Whenever the economy does appear to show renewed signs of life (as has happened in May-July this year, with stock values rebounding and the general pace of economic contraction slowing somewhat), oil prices will take off again as oil speculators anticipate a recovery of demand. Indeed, oil prices have rebounded from $30 in January to nearly $70 currently, provoking widespread concern that high energy prices could nip recovery in the bud.(14)

A barrel of oil from newly developed sources costs in the neighborhood of $60 to produce, now that all of the cheaper prospects have been exploited: finding new oilfields today usually means drilling under miles of ocean water, or in politically unstable nations where equipment and personnel are at high risk. (15) So as soon as consumers demand more oil, the price will have to stay noticeably above that figure in order to provide the incentive for producers to drill.

Volatile oil prices hurt on the upside, but they also hurt on the downside. The oil price collapse of August-December 2008, plus the worsening credit crisis, caused a dramatic contraction in oil industry investment, leading to the cancellation of about $150 billion worth of new oil production projects—whose potential productive capacity will be required to offset declines in existing oilfields if world oil production is to remain stable. (16) This means that even if demand remains low, production capacity will almost certainly decline to meet those demand levels, causing oil prices to rise again in real terms at some point, perhaps two or three years from now. Volatile petroleum prices also hurt the development of alternative energy, as was shown during the past few months when falling oil prices led to financial troubles for ethanol manufacturers. (17)

One way or another, growth will be highly problematic if not unachievable.

Big Picture Diagnosis: Continuing the Trail of Logic

At this point in the discussion many readers will be wondering why alternative energy sources and efficiency measures cannot be deployed to solve the Peak Oil crisis. After all, as petroleum becomes more expensive, ethanol, biodiesel, and electric cars all start to look more attractive both to producers and consumers. Won’t the magic of the market intervene to render oil shortages irrelevant to future growth?

It is impossible in the context of this discussion to provide a detailed explanation of why the market probably cannot solve the Peak Oil problem. Such an explanation requires a discussion of energy evaluation criteria, and an analysis of many individual energy alternatives on the basis of those criteria. I have offered brief overviews of this subject previously and a much longer one is in press. (18)

My summary conclusions in this regard are as follows.

About 85 percent of our current energy is derived from three primary sources—oil, natural gas, and coal—that are non-renewable, whose price is likely to trend sharply higher over the next years and decades leading to severe shortages, and whose environmental impacts are unacceptable. While these sources historically have had very high economic value, we cannot rely on them in the future; indeed, the longer the transition to alternative energy sources is delayed, the more difficult that transition will be unless some practical mix of alternative energy systems can be identified that will have superior economic and environmental characteristics.

But identifying such a mix is harder than one might initially think. Each energy source has highly specific characteristics. In fact, it has been the characteristics of our present energy sources (principally oil, coal, and natural gas) that have enabled the building of an urbanized society with high mobility, large population, and high economic growth rates. Surveying the available alternative energy sources for criteria such as energy density, environmental impacts, reliance on depleting raw materials, intermittency versus constancy of supply, and the percentage of energy returned on the energy invested in energy production, none currently appears capable of perpetuating this kind of society.

Moreover, national energy systems are expensive and slow to develop. Energy efficiency likewise requires investment, and further incremental investments in efficiency tend to yield diminishing returns over time, since it is impossible to perform work with zero energy input. Where is there the will or ability to muster sufficient investment capital for deployment of alternative energy sources and efficiency measures on the scale needed?

While there are many successful alternative energy production installations around the world (ranging from small home-scale photovoltaic systems to large “farms” of three-megawatt wind turbines), there are very few modern industrial nations that now get the bulk of their energy from sources other than oil, coal, and natural gas. One example is Sweden, which obtains most of its energy from nuclear and hydropower. Another is Iceland, which benefits from unusually large domestic geothermal resources not found in most other countries. Even for these two nations, the situation is complex: the construction of the infrastructure for their power plants mostly relied on fossil fuels for the mining of the ores and raw materials, for materials processing, for transportation, for the manufacturing of components, for the mining of uranium, for construction energy, and so on. Thus a meaningful energy transition away from fossil fuels is still a matter of theory and wishful thinking, not reality.

My conclusion from a careful survey of energy alternatives, then, is that there is little likelihood that either conventional fossil fuels or alternative energy sources can be counted on to provide the amount and quality of energy that will be needed to sustain economic growth—or even current levels of economic activity—during the remainder of this century. (19)

But the problem extends beyond oil and other fossil fuels: the world’s fresh water resources are strained to the point that billions of people may soon find themselves with only precarious access to water for drinking and irrigation. Biodiversity is declining rapidly. We are losing 24 billion tons of topsoil each year to erosion. And many economically significant minerals—from antimony to zinc—are depleting quickly, requiring the mining of ever lower-grade ores in ever more remote locations. Thus the Peak Oil crisis is really just the leading edge of a broader Peak Everything dilemma.

In essence, humanity faces an entirely predictable peril: our population has been growing dramatically for the past 200 years (expanding from under one billion to nearly seven billion), while our per-capita consumption of resources has also grown. For any species, this is virtually the definition of biological success. And yet all of this has taken place in the context of a finite planet with fixed stores of non-renewable resources (fossil fuels and minerals), a limited ability to regenerate renewable resources (forests, fish, fresh water, and topsoil), and a limited ability to absorb industrial wastes (including carbon dioxide). If we step back and look at the industrial period from a broad historical perspective that is informed by an appreciation of ecological limits, it is hard to avoid the conclusion that we are today living at the end of a relatively brief pulse—a 200-year rapid expansionary phase enabled by a temporary energy subsidy (in the form of cheap fossil fuels) that will inevitably be followed by an even more rapid and dramatic contraction as those fuels deplete.

The winding down of this historic growth-contraction pulse doesn’t necessarily mean the end of the world, but it does mean the end of a certain kind of economy. One way or another, humanity must return to a more normal pattern of existence characterized by reliance on immediate solar income (via crops, wind, or the direct conversion of sunlight to electricity) rather than stored ancient sunlight.

This is not to say that the remainder of the 21^st century must consist of a collapse of industrialism, a die-off of most of the human population, and a return by the survivors to a way of life essentially identical to that of 16^th century peasants or indigenous hunter-gatherers. It is possible instead to imagine acceptable and even inviting ways in which humanity could adapt to ecological limits while further developing cultural richness, scientific understanding, and quality of life (more of this below).

But however it is negotiated, the transition will spell an end to economic growth in the conventional sense. And that transition appears to have begun.

How Do We Know Which Diagnosis Is Correct?

If the patient is an individual human and the cause of distress is uncertain, more diagnostic tests can be prescribed. But to what sorts of blood tests, x-rays, and CAT scans can we subject the national or global economy?

In a sense, the tests have already been done. During the past few decades thousands of scientific surveys of natural resources, biodiversity, and ecosystems have showed increasing rates of depletion and decline. (20) The continuing increase in human population, pollution, and consumption are likewise well documented. This information formed the basis for the Limits to Growth studies, previously mentioned, which use computer modeling to show how current trends are likely play out—and most resulting scenarios show them leading to an end of economic growth and a collapse of industrial output some time in the early 21^st century.

Why are the results of such diagnostic tests not universally accepted as a challenge to expectations of continued growth? Primarily because their conclusion runs counter to the beliefs and proclamations of most economists, who maintain that there are no practical limits to growth. They deny that resource constraints provide an eventual cap on production and consumption. And so their diagnostic efforts tend to ignore environmental factors in favor of easily measured internal features of the human economy such as money supply, consumer confidence, interest rates, and price indices.

Ecologist Charles Hall, among many others, has argued that the discipline of economics, as currently practiced, does not constitute a science, since it proceeds primarily on the basis of correlative logic rather than through the building of knowledge by a continuous, rigorous process of proposing and testing hypotheses. (21) While economics uses complex terminology and mathematics, as science does, its basic assertions about the world—such as the principle of infinite substitutability, which holds that for any resource that becomes scarce, the market will find a substitute—are not subjected to careful experimental examination. (It is worth noting that Hall and others have made the effort to lay the conceptual foundations for a new economics based on scientific principles and methods, which they call “biophysical economics.” (22)

Moreover, mainstream economists failed on the whole to foresee the current crash. There was no consistent or concerted effort on the part of Secretaries of the Treasury, Federal Reserve Chairmen, or “Nobel” prize-winning economists to warn policy makers or the general public that, sometime in the early 21^st century, the global economy would begin to come apart at the seams. (23) One might think that this predictive failure—the inability to foresee so historically significant an event as the rapid contraction of nearly the entire global economy, entailing the failure of some of the world’s largest banks and manufacturing companies—would cause mainstream economists to stop and re-examine their fundamental premises. But there is little evidence to suggest that this is occurring.

At the risk of repetition: physical scientists from several disciplines have indeed foreseen an end to economic growth in the early 21^st century, and have warned policy makers and the general public on many occasions.

Whom should we believe?

The specifics of the Alternative Diagnosis are falsifiable. If economic activity were to rebound above 2007 levels, or if oil production were to rise above the July 2008 high-water mark, then the attribution of the current economic crisis to resource-tied limits to growth may be considered at least partly disproven. However, even if these things were to occur, the underlying reasoning behind the Alternative Diagnosis might still be correct. If the world oil production peak is delayed until, let us say, 2015 or 2020, and if another—this time bottomless—global economic crash results then, the ultimate outcome will be essentially the same. But if, meanwhile, the Alternative Diagnosis were to be taken seriously and acted upon, the consequences of doing so would be beneficial: a decade would have been spent preparing for the event.

Could the Alternative Diagnosis be altogether wrong? That is, might conventional economists be right in thinking that growth can continue forever? It is often said that anything is possible, but some things are clearly much more possible than others. The perpetual growth of human population and consumption within the confines of a finite planet seems like a very long shot indeed, especially since warning signs are everywhere apparent that ecological limits are already being reached and surpassed. (24)

What Not to Do: Prescribe Punishingly Expensive Placebos

If the physical scientists who warn about limits to growth are right, confronting the global economic meltdown implies far more than merely getting the banks and mortgage lenders back on their feet. Indeed, in that case we face a fundamental change in our economy as significant as the advent of the industrial revolution. We are at a historic inflection point—the ending of decades of expansion and the beginning of an inevitable period of contraction that will continue until humanity is once again living within the limits of Earth’s regenerative systems.

But there are few signs that policy makers understand any of this. Their thinking appears to be shaped primarily by mainstream economists’ assurances that growth can and must continue into the indefinite future, and that the economic contraction the world is currently experiencing is only temporary–a problem that can and must be solved.

Still, the problem is not a minor one in the eyes of economists and policy makers. Consider the gargantuan size of the Treasury and Federal Reserve bailouts and stimulus packages that have been deployed in the possibly futile attempt to end contraction and restart growth. According to the special inspector general of the U.S. government’s Troubled Asset Relief Program (TARP), in remarks submitted to the House Committee on Oversight and Government Reform on July 21, $23.7 trillion have been committed in “total potential federal government support.” This is expensive medicine indeed. It takes a moment to even begin to comprehend the enormity of the figure. It represents about half of annual world GDP, and is over three times the total amount spent by the U.S. government, in inflation-adjusted dollars, on all wars combined, from 1776 to the present. It is nearly fifty times the cost of the New Deal.

Other nations, including Britain, China, and Germany have committed to paying for stimulus packages and bailouts that, while much smaller in absolute terms, represent an impressive (or should we say frightful?) share of national GDP.

If the Alternative Diagnosis is valid, none of this will work in the end, because existing financial institutions—with their basis in debt and interest and their requirements for constant expansion—cannot be made to function in a context where energy and resource constraints impose effective caps on manufacturing and transport.

Are the bailouts and stimulus packages working? Much evidence suggests that they are not, except in limited ways. In the U.S., unemployment continues to increase, while real estate values continue to fall. And most of the reputed “green shoots” in the economy so far sighted amount merely to an arguably temporary decline in the rate of contraction. For example, the home price index released July 28 of this year showed that in May, seasonally adjusted prices fell just 0.16 percent from the previous month. That represents an annual rate of decline of a little under 2 percent, which is a substantial improvement over the annualized rate of more than 20 percent that prevailed from September 2008 through March of 2009. Many commentators seized upon this news as a sign of an imminent turnaround. Nevertheless, new home sales are down from 1.4 million per year in 2005 to 350,000 per year today, and house prices are down 50 percent from the bubble peak and still declining in most places. Moreover, manufacturing is still shrinking, small businesses are in trouble, there are still significant danger signs on the horizon, including a new round of mortgage resets, a likely dive in commercial real estate values, and the looming reality that toxic assets at the center of the banking crisis have yet to be dealt with. (25)

President Obama has made the argument that bailouts are justified to stabilize the system long enough so that leaders can make fundamental changes to institutions and regulations, enabling the economy to then go forward healthier and more immune to similar crises in the future. But there is little to suggest that the kinds of systemic changes that are actually needed (ones that would enable the economy to function during a prolonged period of contraction) are under way or even contemplated. Meanwhile, as growth-based institutions are temporarily propped up, the ultimate scale of the damage is likely only to increase: when the inevitable collapse of those institutions does come, the consequences will likely be even worse because so much capital will have been squandered in attempting to salvage them.

In using up non-renewable resources like metals, minerals, and fossil fuels, we have stolen from future generations. Now in effect we are stealing from those generations the financial wherewithal that could have been used to build a bridge to a sustainable economy. The construction of a renewable energy infrastructure (including not only generating capacity, but distribution and storage infrastructure, as well as post-petroleum transport and agriculture systems) will require enormous investments and decades of work. Where will the investment capital come from if governments are already buried in debt? If we have committed nearly $24 trillion to propping up an old economy with no real survival prospects, what’s left with which to finance the new one?

If the current prescription for our economic malady is wrong-headed, the same is true of many proposed cures for our energy problems. According to the Conventional Diagnosis, today’s high oil prices are due to speculation; the cure must therefore lie in the tighter regulation of oil futures trading (which may be a good idea, though it doesn’t get to the heart of the problem), while providing more opportunities to oil companies to explore for domestic oil (even though the likely production rates from currently off-limits reserves would be relatively paltry, and would have a negligible effect on oil prices). In fact, though, investing further in fossil fuel energy systems (including “clean coal” technology) will yield declining returns, given that the highest quality resources have already been used up; meanwhile, doing so takes investment capital away from the development of renewable energy, which we will have to rely on increasingly as fossil fuels deplete. (26)

What is required but is still utterly lacking is a fundamental recognition that circumstances have changed: what worked decades ago will not work now.

What To Do: Adapt to the New Reality

If the Alternative Diagnosis is correct, there will be no easy fix for the current economic breakdown. Some illnesses are not curable; they require that we simply adapt and make the best of our new situation.

If humanity has indeed embarked upon the contraction phase of the industrial pulse, we should assume that ahead of us lie much lower average income levels (for nearly everyone in the wealthy nations, and for high wage earners in poorer nations); different employment opportunities (fewer jobs in sales, marketing, and finance; more in basic production); and more costly energy, transport, and food. Further, we should assume that key aspects of our economic system that are inextricably tied to the need for future growth will cease to work in this new context.

Rather than attempting to prop up banks and insurance companies with trillions in bailouts, it would probably be better simply to let them fail, however nasty the short-term consequences, since they will fail anyway sooner or later. The sooner they are replaced with institutions that serve essential functions within a contracting economy, the better off we will all be.

Meanwhile the thought-leaders in society, especially the President, must begin breaking the news—in understandable and measured ways—that growth isn’t returning and that the world has entered a new and unprecedented economic phase, but that we can all survive and thrive in this challenging transitional period if we apply ourselves and work together. At the heart of this general re-education must be a public and institutional acknowledgment of three basic rules of sustainability: growth in population cannot be sustained; the ongoing extraction of non-renewable resources cannot be sustained; and the use of renewable resources is sustainable only if it proceeds at rates below those of natural replenishment.

Without cheap energy, global trade cannot increase. This doesn’t mean that trade will disappear, only that economic incentives will inexorably shift as transport costs rise, favoring local production for local consumption. But this may be a nice way of putting it: if and when fuel shortages arise, fragile globe-spanning systems of provisioning could be disrupted, with dire effects for consumers cut off from sources of necessary products. Thus a high priority must be placed on the building of community resilience through the preferential local sourcing of necessities and the maintenance of larger regional inventories—especially of food and fuel. (28)

It currently takes an average of 8.5 calories of energy from oil and natural gas to produce each calorie of food energy. Without cheap fuel for agriculture, farm production will plummet and farmers will go bankrupt—unless proactive efforts are undertaken to reform agriculture to reduce its reliance on fossil fuels. (29)

Obviously, alternative energy sources and energy efficiency strategies must be high priorities, and must be subjects of intensive research using a carefully chosen spectrum of criteria. The best candidates will have to be funded robustly even while fossil fuels are still relatively cheap: the build-out time for the renewable energy infrastructure will inevitably be measured in decades and so we must begin the process now rather than waiting for market forces to lead the way.

In the face of credit and (potential) currency crises, new ways of financing such projects will be needed. Given that our current monetary and financial systems are founded on the need for growth, we will require new ways of creating money and new ways of issuing credit. Considerable thought has gone into finding solutions to this problem, and some communities are already experimenting with local capital co-ops, alternative currencies, and no-interest banks. (30)

With oil becoming increasingly expensive in real terms, we will need more efficient ways of getting people and goods around. Our first priority in this regard must be to reduce the need for transport with better urban planning and re-localized production systems. But where transport is needed, rail and light rail will probably be preferable to cars and trucks. (31)

We will also need a revolution in the built environment to minimize the need for heating, cooling, and artificial lighting in all our homes and public buildings. This revolution is already under way, but is currently moving far too slowly due to the inertia of established interests in the construction industry. (32)

These projects will need more than local credit and money; they will also require skilled workers. There will be a call not just for installers of solar panels and home insulation: millions of new food producers and builders of low-energy infrastructure will be needed as well. A broad range of new opportunities could open up to replace vanishing jobs in marketing and finance—if there is cheap training available at local community colleges.

It is worth noting that the $23.7 trillion recently committed for U.S. bailouts and loan guarantees represents about $80,000 for each man, woman, and child in America. A level of investment even a substantial fraction that size could pay for all needed job training while ensuring universal provision of basic necessities during the transition. What would we be getting for our money? A collective sense that, in a time of crisis, no one is being left behind. Without the feeling of cooperative buy-in that such a safety net would help engender, similar to what was achieved with the New Deal but on an even larger scale, economic contraction could devolve into a horrific fight over the scraps of the waning industrial period.

However contentious, the population question must be addressed. All problems that have to do with resources are harder to solve when there are more people needing those resources. The U.S. must encourage smaller families and must establish an immigration policy consistent with a no-growth population target. This has foreign policy implications: we must help other nations succeed with their own economic transitions so that their citizens do not need to emigrate to survive. (33)

If economic growth ceases to be an achievable goal, society will have to find better ways of measuring success. Economists must shift from assessing well-being with the blunt instrument of GDP, and begin paying more attention to indices of human and social capital in areas such as education, health, and cultural achievements. This redefinition of growth and progress has already begun in some quarters, but for the most part has yet to be taken up by governments. (34)

A case can be made that after all this is done the end result will be a more satisfying way of life for the vast majority of citizens—offering more of a sense of community, more of a connection with the natural world, more satisfying work, and a healthier environment. Studies have repeatedly shown that higher levels of consumption do not translate to elevated levels of satisfaction with life. (35) This means that if “progress” can be thought of in terms of happiness, rather than a constantly accelerating process of extracting raw materials and turning them into products that themselves quickly become waste, then progress can certainly continue. In any case, “selling” this enormous and unprecedented project to the general public will require emphasizing its benefits. Several organizations are already exploring the messaging and public relations aspects of the transition. (36) But those in charge need to understand that looking on the bright side doesn’t mean promising what can’t be delivered—such as a return to the days of growth and thoughtless consumption.

Can We? Will We?

It is important to state the implications of all this as plainly as possible. If the Alternative Diagnosis is correct, there will be no full economic “recovery”—not this year, or the next, or five or ten years from now. There may be temporary rebounds that take us back to some fraction of peak economic activity, but these will be only brief respites.

We have entered a new economic era in which the former rules no longer apply. Low interest rates and government spending no longer translate to incentives for borrowing and job production. Cheap energy won’t appear just because there is demand for it. Substitutes for essential resources will in most cases not be found. Over all, the economy will continue to shrink in fits and starts until it can be maintained by the energy and material resources that Earth can supply on ongoing basis.

This is of course very difficult news. It is analogous to being told by your physician that you have contracted a systemic, potentially fatal disease that cannot be cured, but only managed; and managing it means you must make profound lifestyle changes.

Some readers may note that climate change has not figured prominently in this discussion. It is clearly, after all, the worst environmental catastrophe in human history. Indeed, its consequences could be far worse than the mere destruction of national economies: hundreds of millions of people and millions of other species could be imperiled. The reason for the relatively limited discussion of climate here is that (assuming the Alternative Diagnosis is correct) it is not climate change that has proven to be the most immediate limit to economic growth, but resource depletion. However, while there is not as yet general agreement on the point, climate change itself and the needed steps to minimize it both constitute limits to growth, just as resource depletion does. Moreover, if we fail to successfully manage the inevitable process of economic contraction that will characterize the coming decades, there will be no hope of mounting an organized and coherent response to climate change—a response consisting of efforts both to reduce climate impacts and to adapt to them. It is important to note, though, that the measures advocated here (including the development of renewable energy sources and energy efficiency, a rapid reduction of reliance on fossil fuels in transport and agriculture, and the stabilization of population levels) are among the steps that will help most to reduce carbon emissions.

Is this essay likely to change the thinking and actions of policy makers? Unfortunately, that is unlikely. Their belief in the possibility and necessity of continued growth is pervasive, and the notion that growth may no longer be possible is unthinkable. But the Alternative Diagnosis must be a matter of record. This essay, composed by a mere journalist, in many ways represents the thinking of thousands of physical scientists working over the past several decades on issues having to do with population, resources, pollution, and biodiversity. Ignoring the diagnosis itself—whether as articulated here or as implied in tens of thousands of scientific papers—may waste our last chance to avert a complete collapse, not just of the economy, but of civility and organized human existence. It may risk a historic discontinuity with qualitative antecedents in the fall of the Roman and Mayan civilizations. (37) But there is no true precedent for what may be in store, because those earlier examples of collapse affected geographically bounded societies whose influence on their environments was also bounded. Today’s civilization is global, and its fate, Earth’s fate, and humanity’s fate are inextricably tied.

But even if policy makers continue to ignore warnings such as this, individuals and communities can take heed and begin the process of building resilience, and of detaching themselves from reliance on fossil fuels and institutions that are inextricably tied to the perpetual growth machine. We cannot sit passively by as world leaders squander opportunites to awaken and adapt to growth limits. We can make changes in our own lives, and we can join with our neighbors. And we can let policy makers know we disapprove of their allegiance to the status quo, but that there are other options.

Is it too late to begin a managed transition to a post-fossil fuel society? Perhaps. But we will not know unless we try. And if we are to make that effort, we must begin by acknowledging one simple, stark reality: growth as we have known it can no longer be our goal.

Notes

1. “Pain on the Road to Recovery”. (http://www.smh.com.au/national/pain-on-the-road-to-recovery-20090724-dw6q.html?page=-1).

2. Here, for example, are a few relevant excerpts from the present author’s book The Party’s Over: Oil, War and the Fate of Industrial Societies (Gabriola Island, BC: New Society, 2003): “Our current financial system was designed during a period of consistent growth in available energy, with its designers operating under the assumption that continued economic growth was both inevitable and desirable. This ideology of growth has become embodied in systemic financial structures requiring growth…Until now, this loose linkage between a financial system predicated upon the perpetual growth of the money supply, and an economy growing year by year because of an increasing availability of energy and other resources, has worked reasonably well—with a few notable exceptions, such as the Great Depression… However, [when global oil production peaks] the financial system may not respond so rationally…This might predictably trigger a financial crisis…”

3. See Albert Bartlett, “Arithmetic, Population and Energy” (lecture transcript). (http//www.globalpublicmedia.com/transcripts/645).

4. Donella H. Meadows, Dennis L. Meadows, Jorgen Randers, and William W. Behrens III, Limits to Growth (New York: Universe Books, 1972); Donella H. Meadows, Dennis L. Meadows, and Jorgen Randers, Beyond the Limits (Post Mills, VT: Chelsea Green, 1992); Donella H. Meadows, Dennis L. Meadows, and Jorgen Randers, Limits to Growth: The 30 Year Update (White River Junction, VT: Chelsea Green, 2003). See also the recent CSIRO study, “A Comparison of the Limits to Growth with Thirty Years of Reality” (2009) (http://www.csiro.au/files/files/plje.pdf).

5. See, for example, Robert U. Ayers and Benjamin Warr, The Economic Growth Engine: How Energy and Work Drive Material Prosperity (Cambridge, UK: Edward Elgar Publishing, 2005); and Robert Barro and Xavier Sala-i-Martin, Economic Growth (Cambridge, MA: MIT Press, 2003) (http://www.bookrags.com/research/economic-growth-and-energy-consumpt-mee-01/).

6. See Richard Heinberg, The Party’s Over: Oil, War and the Fate of Industrial Societies (2003, 2005); Powerdown: Options and Actions for a PostCarbon World (2004); and The Oil Depletion Protocol: A Plan to Avert Oil Wars, Terrorism, and Economic Collapse (2006); as well as books by Kenneth Deffeyes, Colin Campbell, and Matthew Simmons; and websites www.theoildrum.com and www.energybulletin.net. The Association for the Study of Peak Oil organizes international conferences to study issues related to oil and gas depletion (www.peakoil.net and www.aspo-usa.com), and the U.S. chapter of ASPO publishes a weekly survey of relevant news, “Peak Oil Review,” compiled by former CIA analyst Tom Whipple. At the annual Association for the Study of Peak Oil conference in Cork, Ireland, in September 2007, former U.S. Energy Secretary, James Schlesinger, said: “Conceptually the battle is over. The peakists have won. We’re all peakists now.” See also Steve Connor, “Warning: Oil supplies are running out fast,” The Independent, August 3, 2009 (http://www.independent.co.uk/news/science/warning-oil-supplies-are-running-out-fast-1766585.html).

7. The declining rate of discovery of new oilfields, and the list of past-peak oil producing countries, are widely documented; e.g.: Roger D. Blanchard, The Future of Global Oil Production: Facts, Figures, Trends and Projections by Region (Jefferson, NC: McFarlane and Co., 2005).

8. A May 4, 2009 report from Raymond James Associates (“Stat of the Week”) argued that world oil production peaked in July 2008 (http://blogs.wsj.com/environmentalcapital/2009/05/04/peak-oil-global-oil-productions-peaked-analyst-says/). In a subsequent interview, Marshall Adkins, author of the report, suggested that most knowledgeable players within the petroleum industry now accept the Peak Oil thesis in some form, whether or not they acknowledge it publicly (http://www.aspousa.org/index.php/2009/07/interview-with-marshall-adkins/).

9. Brookings Papers on Economic Activity, March 2009 http://eepurl.com/cSPu.

10. See Joe Cortright, “Driven to the Brink: How the Gas Price Spike Popped the Housing Bubble and Devalued the Suburbs,” Discussion paper, CEOs for Cities, 2008 (http://www.ceosforcities.org/).

11. U.S. Government Accountability Office, “Commercial Aviation: Airline Industry Contraction Due to Volatile Fuel Prices and Falling Demand Affects Airports, Passengers, and Federal Government Revenues,” April 21, 2009 (http://www.gao.gov/products/GAO-09-393). For a detailed discussion of the likely future impacts of high oil prices and oil shortages on the airline industry, see Charles Schlumberger, “The Oil Price Spike of 2008: The Result of Speculation or an Early Indicator of a Major and Growing Future Challenge to the Airline Industry?” Annals of Air and Space Law, Vol. XXXIV, [2009], McGill University (http://www.globalpublicmedia.com/the_oil_price_spike_of_2008).

12. American Trucking Association (http://www.truckline.com/Pages/Home.aspx).

13. This scenario is implied in Robert L. Hirsch, Roger Bezdek, and Robert Wendling, “Peaking of World Oil Production: Impacts, Mitigation and Risk Management” (U.S. Department of Energy: 2005): “As peaking is approached, liquid fuel prices and price volatility will increase dramatically…” (http://www.netl.doe.gov/publications/others/pdf/Oil_Peaking_NETL.pdf).

14. See, for example, “Troubling Signs That Oil Prices Could Hamper Recovery,” Wall Street 24/7, May 8, 2009 (http://247wallst.com/2009/05/08/troubling-signs-that-oil-prices-could-hamper-recovery/)

15. See, for example, James Herron, “Low Oil Prices, Credit Woes Could Spell Trouble for UK North Sea,” Rigzone, November 14, 2008 (http://www.rigzone.com/news/article.asp?a_id=69507).

16. Jad Mouawad, “Big Oil Projects Put in Jeopardy by Fall in Prices,” New York Times, December 15, 2008 (http://www.nytimes.com/2008/12/16/business/16oil.html).

17. See David R. Baker, “Low oil prices take wind out of renewable fuels,” San Francisco Chronicle, October 27, 2008 (http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/10/26/MNSK13NNK4.DTL).

18. See The Party’s Over, Chapter 4; Powerdown, Chapter 4; The Oil Depletion Protocol, pages 23-31. A longer treatment of the subject, tentatively titled Energy Limits to Growth, will be published by International Forum on Globalization and Post Carbon Institute in September.

19. This conclusion is echoed in, for example, Ted Trainer, Renewable Energy Cannot Sustain a Consumer Society (Dordrecht, The Netherlands: Springer, 2007); and (with some reservations), David J. C. McKay, Sustainable Energy Without the Hot Air (Cambridge, UK: UIK Cambridge, 2008), (www.withouthotair.com).

20. Just one example, from a press release April 20, 1998 describing the results of a poll commissioned by the American Museum of Natural History: “The American Museum of Natural History announced today results of a nationwide survey titled Biodiversity in the Next Millennium, developed by the Museum in conjunction with Louis Harris and Associates, Inc. The survey reveals that seven out of ten biologists believe that we are in the midst of a mass extinction of living things, and that this loss of species will pose a major threat to human existence in the next century.”

21. Charles A. S. Hall and Kent A. Klitgaard, International Journal of Transdisciplinary Research, Vol. 1, No. 1 (2006) (http://www.peakoil.net/files/the%20need%20for%20a%20new%20biophysical-based%20paradigm%20in%20economics%20….pdf) “The Need for a New, Biophysical-Based Paradigm in Economics for the Second Half of the Age of Oil,”, Charles A. S. Hall, D. Lindenberger, R. Kummell, T. Kroeger and W. Eichorn, “The Need to Reintegrate the Natural Sciences with Economics.” Bioscience 51:663-673, 2001 (http://web.mac.com/biophysicalecon/iWeb/Site/Downloads_files/Hall_2001_NeedtoReintegrate.pdf).

22. Cutler J. Cleveland, “Biophysical Economics,” The Encyclopedia of Earth (http://www.eoearth.org/article/Biophysical_economics). See also the related field of Ecological Economics, especially the books of Herman Daly, including Toward a Steady State Economy (New York: Freeman, 1973); and, with Joshua Farley, Ecological Economics: Principles and Applications (Washington: Island Press, 2004).

23. The quotation marks around the Nobel name are justified because the Nobel family has never acknowledged economics as a science: the so-called “Nobel prize in economics” is awarded by a Swedish Bank.

24. See The Millennium Ecosystem Assessment (http://www.millenniumassessment.org/en/index.aspx).

25. See, for example, J. S. Kim, “Irrational Exuberance of the Green Shoots,” July 24, 2009 (http://seekingalpha.com/article/151101-irrational-exuberance-of-the-green-shoots).
26. See Richard Heinberg, Blackout: Coal, Climate and the Last Energy Crisis (Gabriola Island, BC: New Society, 2009), pages 137-143, 145-168.

27. The opinion that banks and insurance companies should be allowed to fail rather than being bailed out was voiced by many knowledgeable observers throughout late 2008 and early 2009. See for example Ambrose Evans-Pritchard, “Let banks fail, says Nobel economist Joseph Stiglitz,” London Daily Telegraph, Feb. 2, 2009 (http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/4424418/Let-banks-fail-says-Nobel-economist-Joseph-Stiglitz.html).

28. See Jeff Rubin, Why Your World Is About to Get a Whole Lot Smaller: Oil and the End of Globalization. (New York: Random
House, 2009).

29. See Richard Heinberg and Michael Bomford, “The Food and Farming Transition” (Sebastopol, CA: Post Carbon Institute, 2009) (http://postcarbon.org/food).

30. See Bernard Lietaer, “White Paper on All the Options for Managing a Systemic Bank Crisis” (http://www.lietaer.com/images/White_Paper_on_Systemic_Banking_Crises_final.pdf). JAK in Sweden is a cooperative, member-owned bank that operates without interest (http://en.wikipedia.org/wiki/JAK_members_bank).

31. See Richard Gilbert and Anthony Perl, Transport Revolutions: Moving People and Freight Without Oil (Gabriola Island, BC: New Society, 2009).

32. The Passivhaus Institute pioneers construction methods that reduce energy input to buildings in many cases to zero. Roughly 20,000 Passivhauses have been built in Europe, only about 12 in the U.S. (http://www.passivehouse.us/)

33. See websites of Population Media Center (http://www.populationmedia.org/issues/), and SUSPS (http://www.susps.org/overview/immigration.html).

34. The organization Redefining Progress has developed a Genuine Progress Indicator (GPI) that incorporates many such indices ( http://www.rprogress.org/sustainability_indicators/genuine_progress_indicator.htm).

35. See, for example, “Understanding Human Happiness and Well-Being,” The Sustainable Scale Project (http://www.sustainablescale.org/AttractiveSolutions/UnderstandingHumanHappinessandWellBeing.aspx).

36. The burgeoning Transition Town movement (www.transitiontowns.org/) proceeds from the premise that “life can be better without fossil fuels.” YES! Magazine (www.yesmagazine.org) is a publication of the Positive Futures Network and highlights examples of low-impact ways of living that bring personal and social benefits. And the Simple Living Network (www.simpleliving.net/) provides “resources, tools, examples and contacts for conscious, simple, healthy and restorative living.”

37. See Jared Diamond, Collapse How Societies Choose to Fail or Succeed (New York: Viking, 2005); Joseph Tainter, The Collapse of Complex Societies (Cambridge, UK: Cambridge University Press, 1988); and John Michael Greer, The Long Descent (Gabriola Island, BC: New Society, 2008).

Richard Heinberg is a Senior Fellow of the Post Carbon Institute and author of five books on resource depletion and societal responses to the energy problem. www.richardheinberg.com, www.postcarbon.org.

pictures taken from EnergyBulletin.

Despite the economic crisis, the ultra-rich seem to be making off quite well, even increasing their incomes while the rest of us worry about unemployment, foreclosure, and bankruptcy.

Crooks and Liars recently posted an article, “Richest 400 Americans See Incomes Double, Tax Rates Halved,” which has the latest statistics on income inequality, but to fully understand the widening gap between rich and poor, check out the following essay from David DeGraw.

How long will we permit this to go on? [alex]

The Richest 1% Have Captured America’s Wealth — What’s It Going to Take to Get It Back?

By David DeGraw / February 19, 2010

Originally published by Alternet. Recovered from The Rag Blog.

“The war against working people should be understood to be a real war… Specifically in the U.S., which happens to have a highly class-conscious business class… And they have long seen themselves as fighting a bitter class war, except they don’t want anybody else to know about it.” — Noam Chomsky

As a record amount of U.S. citizens are struggling to get by, many of the largest corporations are experiencing record-breaking profits, and CEOs are receiving record-breaking bonuses. How could this be happening, how did we get to this point?

The Economic Elite have escalated their attack on U.S. workers over the past few years; however, this attack began to build intensity in the 1970s. In 1970, CEOs made $25 for every $1 the average worker made. Due to technological advancements, production and profit levels exploded from 1970-2000. With the lion’s share of increased profits going to the CEO’s, this pay ratio dramatically rose to $90 for CEOs to $1 for the average worker.

As ridiculous as that seems, an in-depth study in 2004 on the explosion of CEO pay revealed that, including stock options and other benefits, CEO pay is more accurately $500 to $1.

Paul Buchheit, from DePaul University, revealed, “From 1980 to 2006 the richest 1% of America tripled their after-tax percentage of our nation’s total income, while the bottom 90% have seen their share drop over 20%.” Robert Freeman added, “Between 2002 and 2006, it was even worse: an astounding three-quarters of all the economy’s growth was captured by the top 1%.”

Due to this, the United States already had the highest inequality of wealth in the industrialized world prior to the financial crisis. Since the crisis, which has hit the average worker much harder than CEOs, the gap between the top one percent and the remaining 99% of the U.S. population has grown to a record high. The economic top one percent of the population now owns over 70% of all financial assets, an all time record.

As mentioned before, just look at the first full year of the crisis when workers lost an average of 25 percent off their 401k. During the same time period, the wealth of the 400 richest Americans increased by $30 billion, bringing their total combined wealth to $1.57 trillion, which is more than the combined net worth of 50% of the US population. Just to make this point clear, 400 people have more wealth than 155 million people combined.

Meanwhile, 2009 was a record-breaking year for Wall Street bonuses, as firms issued $150 billion to their executives. 100% of these bonuses are a direct result of our tax dollars, so if we used this money to create jobs, instead of giving them to a handful of top executives, we could have paid an annual salary of $30,000 to 5 million people.

So while U.S. workers are now working more hours and have become dramatically more productive and profitable, our pay is actually declining and all the dramatic increases in wealth are going straight into the pockets of the Economic Elite.

If our income had kept pace with compensation distribution rates established in the early 1970s, we would all be making at least three times as much as we are currently making. How different would your life be if you were making $120,000 a year, instead of $40,000?

So it should come as no surprise to see that we now have the highest inequality of wealth in the industrialized world and the highest inequality of wealth in our nation’s history. The backbone of America, a hard working middle class that has made our country a world leader, has been devastated.

Now that we have a better understanding of how our income has been suppressed over the past 40 years, let’s take a look at how the economy has been designed to take the limited money we receive and put it into the hands of the Economic Elite as well.

Costs of living

Other than in the workplace, in almost all our costs of living the system is now blatantly rigged against us. Let’s take a look at it, starting out with our tax system.

In total, the average U.S. citizen is forced to give up approximately 30% of our income in taxes. This tax system is now strategically designed to flow straight into the hands of the Economic Elite. A huge percentage of our tax dollars ultimately end up in their pockets. The past decade proves that — whether it’s the Republicans or the Democrats running the government — our tax money is not going into our community, it is going into the pockets of the billionaires who have bought off both parties — it is obscene.

For an example of how this system flows to the Economic Elite, just look at the Wall Street “bailout.” The real size of the bailout is estimated to be $14 trillion — and could end up costing trillions more than that. By now you are probably also sick of hearing about the bailout, but stop and think about this for a moment. Do you comprehend how much $14 trillion is?

What could be accomplished with this money is almost beyond common comprehension.

And this is just the tip of the iceberg that has hit us. On top of the trillions given to the Wall Street elite, we already have a record $12.3 trillion in national debt — and we now have to pay $500 billion in interest to the Economic Elite on this debt every year, yet another way they are milking us dry. When you add in unfunded liabilities owed, like social security payments, we actually owe a stunning $74 trillion. That adds up to a debt of $242,000 for every man, woman and child in America.

Trillions more, 25% of taxpayer dollars allocated to military spending, goes unaccounted for every year, not to mention the billions spent on overcharging and outright fraud. During the War on Terror, the Economic Elite have used our tax money to build a private army that has more soldiers deployed than the U.S. military — a congressional study revealed that 69% of the “U.S.” fighting forces deployed throughout the world in our name are in fact private mercenaries, 80% of them are foreign nationals.

Private contractors regularly get paid three to five times more than our soldiers, and have been repeatedly caught overcharging and committing fraud on a massive scale. A congressional investigation revealed this and strongly recommended that we seize wasting tax dollars on these private military contractors. However, under Obama, there has actually been a drastic increase in total tax dollars spent on them.

In 2009, just over $1 trillion tax dollars were spent on the military, it’s safe to say that at least $350 billion of that was needlessly wasted.

When you research our tax system you see an unprecedented level of waste and fraud rampant throughout most expenditures. Our tax system is a national disaster of epic proportions. It is literally an organized criminal operation that continues to rob us in broad daylight, with zero accountability.

Politicians and mainstream “news” outlets will not tell you this, but most every serious economist knows that due to so much theft and debt created in the tax system, the only way to fix things, other than stopping the theft and seizing the trillions that have been stolen, will be for the government to cut important social funding and drastically raise our taxes.

Other than the record national debt, many states are running record deficits and are barreling toward economic disaster, raising the likelihood of higher taxes, more government layoffs and deep cuts in services. Our nation’s biggest state economies, like California and New York, are the ones in most trouble.

To merely say that things will not be improving economically is to be a delusional optimist. The truth that you will not hear: we have been hit by an economic deathblow and the United States lay in ruins.

It’s not just this criminal tax system; the theft is now built into all our costs of living.

Trillions more in our spending on food and fuel has been stolen due to fraudulent stock transactions and overcharging. Just 10 years ago, in 2000, American families paid 7% of our income on food and fuel. We now pay 20%.

This drastic increase is primarily driven by fraudulent market manipulation that drives up stock prices. Congress uncovered this in 2006; as part of the Enron investigation they found that companies manipulated the oil market to create major spikes in stock values, and then they didn’t do anything about it — nothing to see here, just move on.

As mentioned before, we have the most expensive health care system in the world and we are forced to pay twice as much as other countries, and the overall care we get in return ranks 37th in the world. On average, U.S. citizens are now paying a record high 8% of their income on medical care.

Part of the reason why foreclosure rates are so high is because the percentage of income Americans pay on their housing has risen to 34%.

So for these basic necessities — taxes, food, fuel, shelter and medical bills — we have already lost 92% of our limited income. Then factor in ever-increasing interest rates on credit cards, student loans, rising prices for cable, internet, phone, bank fees, etc., etc., etc. We are being robbed and gouged in all costs of living, in every aspect of our life. No wonder bankruptcies are skyrocketing and the number of people suffering from psychological depression has reached an epidemic level.

The American worker is screwed over every step of the way, and it all starts with the explosion in the cost of a college education. This is one of the Economic Elite’s most devastating weapons. To have any chance of succeeding in this economy, it is commonly believed that you must attend the best college possible. With the rising costs involved, today’s students are graduating with record levels of debt from student loans.

At the same time, the unemployment rate among recent college graduates has risen higher than the national average, and those that do find work are making significantly less than they expected to make. This combination of extreme debt and reduced pay has crippled an entire generation right from the start and has put them in a vicious cycle of spiraling debt that they will struggle with for the rest of their lives. The most recent college graduates are now known as a “lost generation.”

The American dream has turned into a nightmare. The economic system is a sophisticated prison cell; the indentured servant is now an indebted wage slave; whips and chains have evolved into debts.

“There are two ways to conquer and enslave a nation. One is by sword. The other is by debt.” — John Adams

Concealing national wealth

“Liberty in the concrete signifies release from the impact of particular oppressive forces; emancipation from something once taken as a normal part of human life but now experienced as bondage… Today, it signifies liberation from material insecurity and from the coercions and repressions that prevent multitudes from participation in the vast cultural resources that are at hand.” — John Dewey

When you take the time to research and analyze the wealth that has gone to the economic top one percent, you begin to realize just how much we have been robbed. Trillions upon trillions of dollars that could make the lives of all hard working Americans much easier have been strategically funneled into the coffers of the Economic Elite. The denial of wealth is the key to the Economic Elite’s power. An entire generation of massive wealth creation has been strategically withheld from 99% of the U.S. population.

The U.S. public doesn’t have any understanding of how much wealth has been generated and concentrated into the hands of the Economic Elite over the past 40 years; there is no historical frame of reference. This withholding of wealth is truly the greatest crime against humanity in the history of civilization.

What could be done with all the money that has been hoarded by the Economic Elite is extraordinary!

Let’s consider what we could do with the money that has been stolen from us? On top of what should be our average six-figure yearly income, we could have:

• Free health care for every American,
• A free 4 bedroom home for every American family,
• 5% tax rate for 99% of Americans,
• Drastically improved public education and free college for all,
• Significantly improved public transportation and infrastructure,

The list goes on…

This is not some far-fetched fantasy. These are all things that Franklin D. Roosevelt talked about doing in the 1940′s, long before the explosion of wealth creation in our technologically advanced global economy. The money for all this is already there, stashed into the claws of the Economic Elite.

The denial of wealth to the masses is the key to the Economic Elite’s power. Outside of outdated and obsolete economic models and theories — and incredibly short-sighted greed — there is no reason why all this money should be kept in the hands of a few, at the immense suffering and expense of the many.

If Americans could just understand how much wealth is being withheld from us, we would have a massive uprising and the Economic Elite would be swept away, into the history books alongside the evil despots of the past.

[This is Part II of David DeGraw's report, "The Economic Elite vs. People of the USA," originally published at Amped Status. Click here for Part I. Read more of David McGraw's writing here.]

© 2010 Amped Status

Source / Amped Status / AlterNet

This brief overview of the military, food, health care, etc. industries suggests ways to completely transform and down-scale the economy, which would actually make us all richer. Worth the read! -alex]

We Can Produce Less and Consume More

by Don Fitz

Originally published by ZNet, July 15, 2009.

A major gulf between environmental and social justice activists is “stuff.”  Environmentalists (or at least serious ones) say “less.”  Social justice organizers have the habit of saying “more.”

This divisive question cuts to the edge of the sort of society we want to build.  Deep greens envision a world with much less stuff.  A great outline is Annie Leonard’s The Story of Stuff. [1]  An excess of human-produced objects destroys species habitat, poisons communities with toxins, depletes oil and intensifies climate change.

Social justice activists, however, have devoted centuries to denouncing capitalism as placing fetters on the expansion of production.  Whether the struggle is against racism, for labor rights, or resistance to imperialism, the cry is for the oppressed to have a much bigger piece of the pie.

In response to the current economic crisis, a near-unanimous chorus sings “There must be a stimulus package.”  There is considerable debate over the size of the stimulus and what should be stimulated but not a whimper asking whether growth is really a good idea.  It is a rare Michael Moore suggesting that auto plants should not produce autos, but rather solar panels and windmills for a society without privately owned cars. [2]  It is even more rare to hear suggestions that auto plants should manufacture less and that unemployment could be resolved by shortening the work week.

A shorter work week is not exactly of the top of most environmental agendas.  In fact, environmentalists often shoot themselves in the foot when they call for “sacrifices” from those who have already done more than their fair share of doing without.

Production and consumption: A broken connection

These conceptual problems stem from progressives using corporate economic frameworks.  The error is believing that there is a connection between the amount of production and the amount of consumption.  The common misperception is that an increase in consumption requires increased production, and, conversely, a fall in production means there will be less available to consume.

Accepting corporate economics, environmentalists make the false conclusion that if CO2 levels are to drop, then people must consume less.  Social justice activists mistakenly believe that putting people back to work and providing basic necessities for all requires an increase in production.  Neither of these are true.  The greatest decrease in CO2 levels would come with a change in production and requires no personal sacrifice.  Increasing production would not guarantee enough jobs; but, changing production could.

The mistake in economic thinking is hardly surprising since there was a direct link between production and consumption during more than 99% of human history.  In pre-capitalist societies, if people wanted more, they produced more of what they wanted.  This characterized the first few centuries of capitalism.

But between WWI and WWII, something happened that could only be considered a problem within the capitalist mode of production: Industry had the ability to produce enough to satisfy everyone’s basic needs.  The first capitalists to realize this were aghast.

Jeffrey Kaplan chronicles their dismay at the discovery “that the industrial capacity for turning out goods seemed to be increasing at a pace greater than people’s sense that they needed them.” [3] Though a tiny handful of business leaders thought that America should switch to a four hour workday, most concluded that such leisure could breed radicalism and that a failure to increase production would threaten profits.

In 1929 President Herbert Hoover’s Committee on Recent Economic Changes announced the growing corporate consensus that capitalism could best survive by creating artificial needs. The Committee gleefully announced that “Economically we have a boundless field before us; that there are new wants which will make way endlessly for newer wants, as fast as they are satisfied.” [4]
Having grown up in a world of planned obsolescence, most of us have spent our lives watching each new generation of consumer items last for a shorter period of time than the previous one. We grumble, complain and treat decreasing durability and increasing gadgetry as laws of economic nature which are beyond our control.

Capitalism has shown that it is possible to steadily increase the amount of production (about 2-3% annually) with little to no increase in meaningful consumption.  The word “meaningful” is key in understanding whether consumption goes up, goes down, or stagnates.  If a stove is manufactured to last 10 years instead of 50 years, a couple may purchase 5 stoves instead of 1 during a 50 year marriage.  This is an increase in consumption in only the most non-meaningful way.  In the world of real people, as opposed to the fantasy world of economists, there has actually been a slight decrease in meaningful consumption.  There were four times when the couple was without a stove.

Is it possible to decrease production while increasing consumption?

Since the end of WWII, there has been a fantastic increase in production with very little increase in consumption of basic needs and zero increase in personal happiness.  It is easy to miss the flip size of this: Due to the massive overproduction of the damaging and the useless, it is now possible to reduce production while consumption stays the same or even increases. This can be done by (a) producing more durable items, (b) producing different items, (c) changing the relationship between production and society [such as urban redesign] and most often (d) doing some combination of (a), (b) and (c).

The ability to produce less and consume more resolves the contradiction between environmental and social justice activism.  Both should focus on “production-side environmentalism” or what is produced rather than “consumption-side environmentalism” or what people purchase. If we produce what people need, there is no reason to urge anyone to “Buy this instead of that.”

The most harmful aspects the economy are on the production side where consumer choices have minimal impact. [5] Arguing whether choices of consumers reduce environmental destruction by 0.2% or 2% is debating whether they are trivial or frivolous. Individual life style changes cannot even approach the 80% reduction in CO2 emissions needed to prevent the tipping point of climate change.

In contrast, changes in production can have an enormous impact on every aspect of the environment. Examining monstrous economic waste reveals that a very rapid decrease to 50% of current levels of production could occur simultaneous with an increase in consumption.  Once that it achieved, we can enter a second phase of reducing production to 30%, 20% or perhaps 10% of current levels while continuing to improve the quality of people’s lives.

By reducing and fundamentally changing entire areas of production, it is possible to reduce the overall mass of stuff while having zero effect on meaningful consumption.  Dramatically reducing production would profoundly reduce CO2 emissions, extend the use of available oil by centuries, and eliminate human expansion into species habitat.  If people working at and living near manufacturing facilities were the ones making decisions about production, it would become possible to eliminate toxins that poison humans and other species.

Let’s take a look at how that could happen in a few sectors of the economy.

Militarism

Just how do you “consume” militarism?  Does it mean that you have increased “security?”  Is it the ability to preserve your life, home and community?

Expanding US military production will not increase the consumption of security.  It would make us less secure (meaning decreased consumption). The only way to increase the consumption of security is by halting the US assault on peoples throughout the world.

Additionally, the military is the only sector of the economy where emissions of green-house gases (GHG) can be reduced by greater than 100%.  This is because militarism is the only type of economic activity whose primary purpose is destruction.

When a road is bombed in Serbia, energy is used to rebuild it.  Energy usage translates to the emission of GHG, primarily carbon dioxide (CO2).  When a home is leveled in Afghanistan, reconstruction requires energy.  Every hospital brought down and every person maimed in Iraq means CO2 emissions during the treatment of patients and construction of new treatment facilities.

Military production is unique. If it were halted, GHG emissions would be reduced by an amount equal to (a) GHG emitted from repairing what the military bombed, plus (b) GHG produced during its regular activities of building bases, using weapons and transporting troops and equipment.

Though the official figure for the military budget is $623 billion, the War Resistors League [6] calculates total military-related spending at $1,118 billion by including NASA, Department of Energy nukes, vet benefits and interest on past military debts. Another $110 billion should be tacked on for extra spending on the war in Iraq.

The gross domestic product (GDP) is $13,246.6 billion. [7]  Putting these together leads to an estimate that just under a tenth of the US economy is military-related spending:

[$1,188B + $110B] / $13,246.6B = 9.80%

This only accounts for military sales to the Pentagon.  Since US arms manufacturers are major providers for regimes throughout the world, military spending actually accounts for considerably more than 10% of the GDP.  Steve Martinot estimates that “The military is connected and conjoined to roughly 50% of all economic activity in the US.” [8]

Militarism may contribute more than any other sector of the economy to oil depletion, creation of toxins and habitat destruction.  Yet, the one area of the economy where a greater than 100% reduction in greenhouse gases is possible is the area least likely to be discussed in connection with climate change. Clearly, reducing military (including nuclear) production would increase consumption by (a) providing more security and (b) destroying less infrastructure.

The food industry

When the 21st century began, obesity outpaced hunger. [9]  In the current world, hunger has nothing to do with either the quantity of food produced or the size of the food industry.  Increasing the size of the food industry would (a) increase corporate profits and (b) increase obesity with its related problems such as diabetes, blood pressure and heart disease.  Increasing the quantity of food produced would do nothing to end starvation, which is caused by overpricing and non-distribution of food.

Food is the most basic necessity. It illustrates what “decreasing production” of an industrial sector means.  It does not mean decreasing the amount of the commodity produced.  The “production of food” encompasses the labor and other inputs that go into what Americans eat, including:

·  huge agricultural equipment, its manufacture, and the oil to operate it;
·  chemical fertilizers and pesticides, research to create them, and everything to transport and store them;
·  genetically engineered seed, its research, and Monsanto’s legal team and seed police which perpetrate criminal trespass to steal plant samples;
·  the entire chain of food processing and packaging (up to 99% of the cost of some products);
·  transportation of 1400 miles from “farm to fork” for the average morsel of food;
·  manufacture of trucks, boats, planes, roads and docks to transport food;
·  advertising in order to manufacture the desire to eat garbage masquerading as food, and,
·  growing 8 to 10 times as much grain to produce a pound of beef protein as would be contained in the grain itself.

Adding these together means that it could be possible to produce as much or more food than America currently consumes with less than 10% of the economic energy that currently goes into agro-industry.  A dramatic overhaul of production would increase consumption by (a) increasing the quality (nutrition) of food we eat, and (b) increasing the consumption of healthy living by decreasing obesity-related disorders.

Clothing (and appliances)

Until the last few decades consumer goods were designed to last.  Post-WWI corporations faced the dilemma that increasing the durability of products would mean that people would have what they needed with little reason to purchase more.  By the post WWII period, planned obsolescence had slammed clothing, appliances and household items full force.

When I speak on global warming, I like to wear a blue corduroy shirt I bought when I was 17.  It still has all the fuzzy nap between ridges, even though corduroy I bought in the 1980s and 1990s has long since fallen apart. In 2009, I turned 61.  That proves beyond a doubt that, in 1965, clothing manufacturers knew how to produce corduroy that would last for 44 years. Every piece of corduroy that falls apart sooner than that does so by design.

People of my generation and older can tell dozens of stories of things that “used to last” — shoes, dishes, coffee pots, desks, furniture, everything bought for the home or office. The most vile form of commoditization is the disposable bag, bottle, cup, plate, and camera designed to be used a single time and then spend centuries contaminating groundwater or choking distant aquatic life.

This is one reason that trying to guilt trip people into “buying less to save the planet” is pointless. How much we buy is determined less by environmental awareness and more by product durability and what we are forced to purchase to keep a job and to survive.

Business is not immune to the ever-decreasing durability that plagues consumers.  Computers and computer software suck capital from industry as they drain family budgets with their out-of-date-by-design formatting.

Take all the useless junk that people are persuaded that they need, add it to those useful goods with a premeditated plan to fall apart, and ask “How much manufacturing is truly needed for the consumer goods that make for a quality life?”  Production could decrease by at least 70% with zero decrease in the quality of life and the increase in mental health that would come from knowing that you probably don’t have to fix or buy something tomorrow.

Shelter

Current standards for urban planning anticipate that 2% of US buildings will be replaced every year. [10]  That means the average house is expected to last 50 years.  Does that make a 50 year old home an old building?  Many European buildings went up 500 years ago.  That proves that 500 years ago architects knew how to design buildings that would last for 500 years.

Architects should be able to replicate that in the 21st century.  Or maybe the problem isn’t individual architects, but a building sector pushing to have each generation of homes constructed to worse standards than the generation before.

The construction industry has gleefully joined the agro-food complex and consumer goods manufacturers in intentionally undermining the use value of what they produce.  After I spoke about global warming at an area high school, the principal privately challenged my figure that US buildings are designed to last 50 years.  “I went to a city council meeting last week,” he told me.  “And they were approving construction of a new government building that the architect said would last 20 years.”

“And did the architect promise it would be covered with eco-gadgets?” I wanted to know.

“Solar panels.  Double-flush toilets.  It would have everything.”

The amount of energy saved with green gadgets is lost many times over by erecting new buildings when existing ones will do fine.  What could be more absurd than building mountains of new eco-homes when existing homes are being made empty by foreclosures?

Imagine a “green building” plan that said …

1. No building could go up unless there was an absence of unused comparable building space within 50 miles; and,
2. Any new building would have to be constructed to a 500 year standard.

It should be obvious that if buildings were constructed to last 10 times as long we would need one tenth as many new buildings.  There is no reason that we should not be able to ensure a home for every family (increase in consumption) at the same time there is less construction (decrease in production).

Single payer health care

What does “consumption” of health care mean?  If it means getting endless tests, surgery and pills that make you sicker, then increased production is required to increase the consumption of health care.  But if we define “consumption” of health care to mean having better health, then increased consumption can only occur with a huge decrease in the health care industry.

The life expectancy in the US is 78.0 years.  The life expectancy in Cuba is 78.0 years.  The annual cost of health care in Cuba is $193 per person.  The cost of health care in the US is over 20 times as much, over $4500 per person per year. A reasonable American could conclude that when s/he spends $100 on health care, less than $5 goes to keeping her/him healthy and over $95 goes to the cancerous growth of the sickness industry. [11]

This suggests that the US could decrease health care costs by 90% and still spend twice as much per person as does Cuba.  Just how could the US make such incredibly deep cuts in the cost of “medical production” without damaging (and even improving) the quality of health care?

·  Eliminate health insurance companies.  The insurance industry alone soaks up at least 30% and possibly 50% of US health care costs [12]
·  Focus on community preventive care rather than hospital care.  Hospitals are necessary for many emergency treatments. Childbirth and locked mental health wards are examples of what the industry has medicalized in pursuit of profit.
·  Eliminate most medications.  Require physicians to document that available non-medication treatments have been exhausted prior to writing a scrip.  I dumped my last primary care physician after he started yelling at me for refusing to take meds for blood pressure (which is now under control by changes in diet and exercise).
·  Replace most specialists with neighborhood primary care physicians.  Everyone living in a US city should be able to reach a primary care physician by walking or cycling for less than 15 minutes.  The fact that the medical establishment cannot conceptualize this shows its contempt for preventive care.

Increasing the production of health care means bloating the profits of the insurance industry, hospital complexes, equipment manufacturers and drug pushers.  Such increased production would not make Americans healthier. That can only happen by totally redesigning health care into a much smaller system than it is now.

Transportation

Increasing the production of cars will not increase the speed with which people arrive at where they need to go. More cars means more roads, more distance between destination points, and more time spent traveling.

Nevertheless, the automobile industry would have us believe that improving transportation means putting more cars on the road.  Corporate environmentalists nod in agreement, accepting the car culture as an Act of God but wishing it would be based on hybrid, electric or hydrogen cars. Shallow green plans to cope with transportation are consistently devoid of any thought of reducing the production of cars.

A deep green approach to transportation would focus on eliminating at least 95% of privately owned cars in American cities. Such a plan might look something like this:

·  Redesign cities to rebirth local businesses so that people can make 80% of their trips by walking or cycling.
·  Ensure that frequent and cheap mass transit allows for people to use it for 80% of other trips.
·  Establish car-sharing or ride-sharing for the 4% of trips remaining.
·  Only after the above are adopted, eliminate parking spaces except for emergency, construction and car-shared vehicles.

Would this increase or decrease the “consumption” of a transportation system?  Orthodox economists would insist that it would not be increasing consumption because people would not be driving in ever-increasing circles. This rigid mindset fails to realize that transportation means getting from point A to point B, or from all the points A to all the points B you need to get to. The more that destination points are spread apart by urban sprawl and the more that roads are choked with cars, even “green” cars, the longer and more miserable transportation is.  Despite what economists might tell you, this is increased consumption of agony, not increased consumption of transportation.

If people can get to all the where-they-need-to-go’s quicker, easier and in a more healthy way, their consumption of transportation can go up while the production of cars plummets.

Not necessarily a good thing to do

Just because you have the ability to so something does not necessarily mean that it is a good thing to do. As a society, 21st century American has the ability to simultaneously decrease production and increase consumption. While this is a beginning step, it does not mean that it is a path that need be long followed.

It should be possible to rapidly reduce US production by 50% while the average person would have the ability to consume more.  If getting serious about addressing climate change and related catastrophes became the norm and if reducing production were to be seen as a virtue, people might think, “Now that shirts last four times as long and only cost a little more, I can afford to have 80 shirts instead of 30.  But do I really need 80 shirts?” [13]

Once production for human need replaces production for corporate profit, it becomes possible to reconnect production and consumption.  When people again produce what they need, reducing what they consume means less would be produced.

Multiply 80 shirts by a thousand commodities and hundreds of millions of consumers and we have Phase 2 of the reduction of production.  Phase 1 is the reduction of production with an increase of consumption.  Phase 2 is an intensified reduction of consumption based on a reduction of consumption and an improvement in the quality of life.  Is it realistic to imagine reducing production to 30%, 20% or even 10% of current levels?

Phase 2: Less production, less consumption and a better life

Militarism. With the US having a military budget greater than the rest of the world combined, 800 military bases on which the sun never sets, and enough nuclear weapons to disintegrate every person many times over, it could reduce its spending by over 90% with zero threat to national security. A Phase 1 reduction in military production by 90% would be accompanied by spending some of that money at home in useful areas of the economy and some abroad to repair the damage done.  Phase 2 reduction would begin if people asked, “If we are already providing the basic necessities of life with other economic changes, instead of using military savings to produce additional goods, why don’t we produced nothing extra at all and use the savings to reduce the work week?” [14]

Food. There might be as much as a 90% drop in food inputs by reducing transportation, pesticides, fertilizers, equipment, processing, packaging, genetic contamination and meat.  As people watch this happen with no decrease in the quantity but a huge increase in the quality of food, the stage will be set for Phase 2. Wes Jackson, Stan Cox and their colleagues at The Land Institute have provided brilliant guidelines for developing hybrid lines of perennial food plants that would reduce the amount of land tilled, leading to less erosion and less land being needed for food production. Add this to the expansion of numerous techniques of organic and indigenous farming throughout the world to yield continuous ways to reduce agricultural inputs. [15]

Consumer goods. Core to the concept of increasing consumption while decreasing production is requiring consumer goods to be manufactured to standards of life expectancies that are many times what they are now. During Phase 1, people could well see their work week getting shorter while they accumulate even more stuff than they have now. Railing against people for personal accumulation does little good for many reasons, one of which is if one person buys less, then another person (or a government, a business or a bank) buys or invests more.  It is only when production as a whole drops that reductions in personal consumption can lead to further drops in production.  In this context, people might well decide to share tools and washing machines and children might enjoy clothes passed down from older siblings, which, multiplied millions of times intensify the downward trend in production.

Construction. When we ask how many centuries instead of how many decades a new building should last, it is also time to start thinking about the second phase of decelerating construction.  The question for that phase is: If we focus on retrofitting existing structures, how close to zero new construction can we get?  How do we modify what we already have to create housing collectives, co-housing communities and urban ejidos?  In a post-market economy, new social relationships in living would become the dominant factor in architecture.  More dense living and a smaller space per person would be the sine qua non of deep green urban redesign.

Transportation. The great transportation contradiction is that the more people who own cars, the longer it takes to get from points A to points B.  As mentioned, increased car ownership increases the distance between destination points as well as obviously putting more cars on the road.  The drive can take a dive only if people can get there without four wheels.  Phase 1 of transportation reformulation means designing communities for walking and biking in order to reduce car ownership.  Phase 2 begins when people collectively identify needs that can be met without their going anywhere.  For example, imagine food warehouses replacing supermarkets.  Households combine electronic grocery lists into a neighborhood order that the warehouse delivers and is then disaggregated by neighbors.  Instead of thousands of cars each filling a massive parking lot, a few dozen delivery trucks fill orders.

Health care. A big reason for bad health care is the industry organizing itself separate and apart from communities.  If neighborhood health centers were to replace distant offices, insurance companies, quick fixes, drugs, hospitals and overpaid specialists, people could then ask how else they could chip away at the sickness business while improving the quality of their lives.  Though redesigning neighborhoods so people can walk to their doctor and kick soda machines out of schools is a part of this, changes can be much bigger.  Communities could ask: How can a neighborhood share the care of severely disabled people rather than constructing more nursing homes and treatment centers with three shifts per day and a management team that answers to insurance companies?

Barriers

Webster’s defines misanthrope as “one who hates or mistrusts all people.” Sincere environmentalists often border on misanthropy when they claim that “the problem is people” and prescribe “sacrifice” or “doing without” as solutions for ecological catastrophe.

Social justice activists can throw up an equivalent roadblock to progressive unity when they support proposals for endless economic growth.  The greatest barrier to coping with climate change, peak oil, toxins and habitat destruction is the total mass of production.  This mass is increasing; its increase vastly outpaces any real or imagined increase in consumption; and its increase is made worse by peddling green gadgets.

This eco-gadget pseudo-solution has expanded to the point that it is itself a major barrier.  The shallow green quest for perpetual motion machines fuels the corporate myth that technology can solve crises of an over-technologized society.  It diverts attention from examining why a social system would require an irrational increase in the production of objects when there are already far too many.

We cannot respond to every industry that should be abolished, shrunk, or changed to producing durable goods by saying “Let them build solar panels.”

·  If we replaced every weapons factory and every nuke with solar panel factories…
·  If we replaced every health insurance building and every drug company with solar panel factories…
·  If we replaced every auto plant with solar panel factories…
·  If solar panel production made up for the lowered quantity of production that manufacturing durable goods would cause…
·  If solar panel production made up for the decline in construction that building homes to last for 500 years would cause…

If we actually created that many solar panels and put them on our houses, we would all be cremated by the amount of heat generated.

At some point, we need to recognize that we just do not need to produce so much.  The point of enough stuff was reached about 75 years ago and we have been witnessing geometrically increasing obsolescence ever since.

We have the ability to cut back on production while providing for everyone’s needs.  This should be the beginning point of socially aware environmentalism.  It should be central to environmental social justice.

Don Fitz is editor of Synthesis/Regeneration: A Magazine of Green Social Thought, which is published for members of the Green Party USA.  He can be contacted at fitzdon@aol.com

Notes

1. Free online at http://www.storyofstuff.com/

2. http://michaelmoore.com/words/message/index.php?id=248

3. Kaplan, J. (May/June, 2008). The gospel of consumption: And the better future we left behind. Orion Magazine. http://www.orionmagazine.org/index.php/articles/article/2962

4. Kaplan p. 2

5. Fitz, D. Energy, environment and exhortationism.  Synthesis/Regeneration: A Magazine of Green Social Thought.  No. 49, Spring, 2009, 21-25.
6. www.warresistors.org <http://www.warresistors.org>

7. Bureau of Economic Analysis, the US Department of Commerce http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm (Table 3)

8. Martinot, S. Militarism and global warming. Synthesis/Regeneration: A Magazine of Green Social Thought. No. 42, Winter, 2007, p. 16.

9. Popkin, B.M. (September 2007). The world is fat. Scientific American, 297 (3), 88-95.

10. Kutscher, C.F. (Ed.) Tackling climate change in the U.S.: Potential carbon emissions reduction from energy efficiency and renewable energy by 2030.  American Solar Energy Society, 2007. www.ases.org/climate <http://www.ases.org/climate>  change

11. Dresang, L.T., Brebrick, L., Murray, D., Shallue, A., & Sullivan-Vedder, L., 2005. Family medicine in Cuba: Community-oriented primary care and complementary and alternative medicine. Journal of the American Board of Family Medicine, 18 (4), 297-303.

12. Lindorff, Dave http://counterpunch.com/lindorff06242009.html

13. While there could be a 90% or greater reduction in several economic sectors, economies of scale may mean that a much smaller drop in basic industry could be achieved, perhaps meaning that less than a 90% overall decrease would occur.

14. If militarism accounts for 11% of the GDP and it were reduced to 1% of the current GDP, that would be a reduction of the GDP by 10%. That could translate to 10% more goods being produced or it could translate to a reduction of the 40-hour work week to 36 hours, or it could translate to 5% more goods being produced and shipped abroad as reparations for US war crimes simultaneous with a 5% decrease in the work week to 38 hours.

15. Cox, S. Sick planet: Corporate food and medicine. Ann Arbor: Pluto Press, 2008.  Glover, J.D., Cox, C.M., & Reganold, J.P., August, 2007. Future farming: A return to roots? Scientific American, 297 (2), 82-89.

Lately i've become convinced that hope is our greatest ally in working for a better world. If this article doesn't inspire you, look at what's happening in Iran at this moment. - alex]

Look on the Bright Side

Richard Heinberg

Originally published by Post Carbon Institute, June 5, 2009.

Recently I’ve begun compiling a list of things to be cheerful about. Here are some items that should bring a smile to any environmentalist’s lips:

• World energy consumption is declining. That’s right: oil consumption is down, coal consumption is down, and the IEA is projecting world electricity consumption to decline by 3.5 percent this year. I’m sure it’s possible to find a few countries where energy use is still growing, but for the US, China, and most of the European countries that is no longer the case. A small army of writers and activists, including me, has been arguing for years now that the world should voluntarily reduce its energy consumption, because current rates of use are unsustainable for various reasons including the fact that fossil fuels are depleting. Yes, we should build renewable energy capacity, but replacing the energy from fossil fuels will be an enormous job, and we can make that job less daunting by reducing our overall energy appetite. Done.
• CO₂ emissions are falling. This follows from the previous point. I’m still waiting for confirmation from direct NOAA measurements of CO2 in the atmosphere, but it stands to reason that if world oil and coal consumption is declining, then carbon emissions must be doing so as well. The economic crisis has accomplished what the Kyoto Protocol couldn’t. Hooray!
• Consumption of goods is falling. Every environmentalist I know spends a good deal of her time railing both publicly and privately against consumerism. We in the industrialized countries use way too much stuff — because that stuff is made from depleting natural resources (both renewable and non-renewable) and the Earth is running out of fresh water, topsoil, lithium, indium, zinc, antimony…the list is long. Books have been written trying to convince people to simplify their lives and use less, films have been produced and shown on PBS, and support groups have formed to help families kick the habit, but still the consumer juggernaut has continued — until now. This particular dragon may not be slain, but it’s cowering in its den.
• Globalization is in reverse (global trade is shrinking). Back in the early 1990s, when globalization was a new word, an organization of brilliant activists formed the International Forum on Globalization (IFG) to educate the public about the costs and dangers of this accelerating trend. Corporations were off-shoring their production and pollution, ruining manufacturing communities in formerly industrial rich nations while ruthlessly exploiting cheap labor in less-industrialized poor countries. IFG was able to change the public discourse about globalization enough to stall the expansion of the World Trade Organization, but still world trade continued to mushroom. Not any more. China’s and Japan’s exports are way down, as is the US trade deficit.
• The number of vehicle miles traveled (VMT) is falling. For decades the number of total miles traveled by all cars and trucks on US roads has relentlessly increased. This was a powerful argument for building more roads. People bought more cars and drove them further; trucks restocked factories and stores at an ever-growing pace; and delivery vans brought more packages to consumers who shopped from home. All of this driving entailed more tires, pavement, and fuel — and more environmental damage. Over the past few months the VMT number has declined substantially and continually, to a greater extent than has been the case since records started being kept. That’s welcome news.
• There are fewer cars on the road. People are junking old cars faster than new ones are being purchased. In the US, where there are now more cars on the road than there are licensed drivers, this represents an extraordinary shift in a very long-standing trend. In her wonderful book Divorce Your Car, Katie Alvord detailed the extraordinary environmental costs of widespread automobile use. Evidently her book didn’t stem the tide: it was published in the year 2000, and millions of new cars hit the pavement in the following years. But now the world’s auto manufacturers are desperately trying to steer clear of looming bankruptcy, simply because people aren’t buying. In fact, in the first four months of 2009, more bicycles were sold in the US than cars and trucks put together (over 2.55 million bicycles were purchased, compared to fewer than 2.4 million cars and trucks). How utterly cool.
• The world’s over-leveraged, debt-based financial system is failing. Growth in consumption is killing the planet, but arguing against economic growth is made difficult by the fact that most of the world’s currencies are essentially loaned into existence, and those loans must be repaid with interest. Thus if the economy isn’t growing, and therefore if more loans aren’t being made, thus causing more money to be created, the result will be a cascading series of defaults and foreclosures that will ruin the entire system. It’s not a sustainable system given the fact that the world’s resources (the ultimate basis for all economic activity) are finite; and, as the proponents of Ecological and Biophysical Economics have been saying for years, it’s a system that needs to be replaced with one that can still function in a condition of steady or contracting consumption rates. While that sustainable alternative is not yet being discussed by government leaders, at least they are being forced to consider (if not yet publicly) the possibility that the existing system has serious problems and that it may need a thorough overhaul. That’s a good thing.
• Gardening is going gonzo. According to the New York Times (“College Interns Getting Back to Land,” May 25) thousands of college students are doing summer internships on farms this year. Meanwhile seed companies are having a hard time keeping up with demand, as home gardeners put in an unusually high number of veggie gardens. Urban farmer Will Allen predicts that there will be 8 million new gardeners this year, and the number of new gardens is expected to increase 20 to 40 percent this season. Since world oil production has peaked, there is going to be less oil available in the future to fuel industrial agriculture, so we are going to need more gardens, more small farms, and more farmers. Never mind the motives of all these students and home gardeners — few of them have ever heard of Peak Oil, and many of the gardeners are probably just worried whether they can afford to keep the pantry full next winter; nevertheless, they’re doing the right thing. And that’s something to applaud.

[T]he items outlined above suggest that we’ve turned a corner. It’s no longer a matter of nature “eventually” providing checks on humanity’s boisterous expansionism. That’s starting to happen. And it’s not yet due to climate change: yes, we are indeed seeing potentially catastrophic impacts in terms of melting glaciers and so on, but those by themselves have not tempered the economic juggernaut. Instead, it is resource depletion that has begun to slow the freight train of industrialism. Over the past two or three years, high energy prices burst the bubble of unsupportable property prices and pulled the rug out from beneath the teetering financial derivatives market.

That’s what the whole Peak Oil discussion has really been about. It’s an attempt to identify the key resource whose scarcity will tip the global economy from growth to contraction.

Okay, my point is this: we have reached the inevitable turning point. The growth trance that has gripped the world for the past several decades is in the process of ending. Even if we get short periods of economic growth, that growth will be in the context of a significantly contracted economy and will only be temporary in any case, as Peak Oil and other resource constraints will quickly damper increasing economic activity. Gradually, as “recovery” gets put off for another month, another year, another few years, people may begin to realize that the expansionary phase of the era of cheap energy is finished. There are of course no guarantees that the public and their business and political leaders will indeed finally “get it,” because the urge to hang onto the growth illusion will be very strong indeed. But if the misery persists, there’s at least a chance that understanding will finally dawn in the collective mind of our species — the understanding that we must get out ahead of nature’s checks and deliberately reduce the scale of the human enterprise in ways that maximize the prospects of both present and future generations.

But all won’t automatically come to that conclusion on their own. A fundamental change in our comprehension of the human condition will depend on more and more public intellectuals articulating the message of deliberate adaptation to limits, so that the general populace has the necessary conceptual tools with which to mentally process their new circumstances. We will also need far more people working on practical elements of the transition. Those will be ongoing needs — a growth opportunity, if you will pardon the irony, for smart and articulate young people interested in making a difference. And they’ll be most successful if they find ways of framing needed behavior and attitudinal changes in ways that are attractive and inviting — as the Transition Initiatives so brilliantly do.

So in that sense, when I say “Look on the bright side,” no irony or sarcasm is intended.

My favorite solution: “Neighborhood watch instead of neighborhood watch TV.” [alex]

Prepare for the Best

A guide to surviving — and thriving in — Philadelphia’s new green future.

by Paul Glover

Published: Jan 28, 2009
CityPaper

The Dark Season closes around Philadelphia. Wolves howl, “Tough times coming!” Young professionals with good jobs study budget cuts, watch stocks flail. Career bureaucrats are laid off; college students wonder who’s hiring. Old-timers remember when Philadelphia staggered through the terrible Depression years without jobs or dollars, while crime and hunger rose. Some districts here never escaped that Depression — they’re still choosing between heating and eating.

As usual, the future will be different. Philadelphia’s responses to global warming and market cooling, high fuel and food prices, health unsurance, mortgages, student debt and war will decide whether our future here becomes vastly better or vastly worse. Whether we’re the Next Great City or Next Great Medieval Village. Imagine Philadelphia with one-tenth the oil and natural gas.

But to hell with tragedy. Let’s quit dreading news. Take the Rocky road. There are Philadelphia solutions for every Philadelphia problem.

Imagine instead that, 20 years from now, Philadelphia’s green economy enables everyone to work a few hours creatively daily, then relax with family and friends to enjoy top-quality local, healthy food. To enjoy clean low-cost warm housing, clean and safe transport, high-quality handcrafted clothes and household goods. To enjoy creating and playing together, growing up and growing old in supportive neighborhoods where everyone is valuable. And to do this while replenishing rather than depleting the planet. Pretty wild, right?

Entirely realistic. Not a pipe dream. And more practical than cynical. The tools, skills and wealth exist.

Mayor Michael Nutter foresees we’ll become the “Greenest City in the United States.” So it’s common-sensible to ask, “What are the tools of such a future?” “What jobs will be created?” “Who has the money?” “Where are the leaders?” “How will Philadelphia look?” “What can we learn from other cities?”

Some of the proposals sketched here can be easily ridiculed, because they disturb comfortable work habits, ancient traditions and sacred hierarchies. Yet they open more doors than are closing. They help us get ready for the green economy, and get there first. Big changes are coming so we might as well enjoy the ride. You have good ideas, too — bring ‘em on.

As President Barack Obama says, “Change comes not from the top down, but from the bottom up.” Philadelphia’s chronic miseries suggest that primary dependence on legislators, regulators, police, prisons, bankers and industry won’t save us. They’re essential partners, but the people who will best help us are us. As stocks and dollars decay, most new jobs will be created by neither Wall Street nor government. We and our friends and neighbors will start community enterprises; co-operatives for food, fuel, housing and health; build and install simple green technologies to dramatically cut household costs. Then we can have fun. Music, sex, breakfast. Music, sex, lunch. Music, sex, dinner.

Amid the worst daily news, thousands of Philadelphia organizations and businesses, block captains, landlords, homeowners and tenants are already setting the table for an urban feast. Many know they are part of a movement seldom noted by media; others work alone. Some take big bites of this future; others nibble. Several take large risks; others go slow. Rather than stare at gloom, they fix it. They see a future that works.

The trumpets and drums of Philadelphia’s green symphony are its boldest groups and businesses. They set the pace for rebuilding the entire city toward balance with nature. While all green actions are celebrated, here are some Philly “Best of Future” nominations. For more details, see greenjobsphilly.org/future.html.

Challenges: Like an army camped far from its sources of supply, Philadelphia trucks food from hundreds and thousands of miles away, especially in winter. Costs of harvest, processing and distribution rise, raising prices. Fertile soils were scraped bare. Thousands are hungry here. Relax, though, we’re not riding a spoon to the mouth of doom. An urban food army is marching.

Next steps: Philadelphia has 40,000 vacant lots. Their best use is now for growing fruits, berries and veggies. Same with many of our 700 abandoned factories: These are prime sites for vertical and roof farms, hydroponics, aquaculture, mushrooms. Plant the parks, too. Greenhouses extend seasons. Land breathes again when abandoned parking lots are depaved. Edible landscaping blooms meals. Edible community centers process neighborhood yields. Fallen leaves stay in neighborhoods to become new soil. Feeding kitchen scraps to worms (vermiculture) builds the food of food.

Local heroes: Mill Creek Urban Farm, Greensgrow, Weaver’s Way Co-Op Farm, City Harvest, Youth 4 Good, Philadelphia Orchard Project, Neighborhood Gardens Association, Philadelphia Urban Farm Network, Farm to City, edible landscapers, Philadelphia School and Community IPM Partnership, Henry George School, Philadelphia’s greenhouses, Community Supported Agriculture.

World champions: Beijing grows all its vegetables within 60 miles. TerraCycle manufactures organic soil. Guerrilla Gardeners throw seed bombs. Sites: cityfarmer.org, urbanagriculture-news.com, spinfarming.com. Books: Food Not Lawns, The Ruth Stout No-Work Garden Book, The Complete Book of Edible Landscaping. Keywords: depaving, urban land reform, solar envelope zoning.

Big picture: Philadelphia can become a giant orchard and year-round garden, housing and reliably feeding more people than live here today.

Challenges: Within 20 years Philadelphia businesses, homes and agencies that waste energy will close. Philadelphia Gas Works CEO Thomas Knudson recently declared that natural gas is a “transitional fuel” beyond which this city must evolve. The price of coal tripled last year. PECO rates will leap within two years. Electric shut-offs rise. So we’ll rebuild Philadelphia rather than fade.

Next steps: Establish independent neighborhood utilities with wind, passive solar and micro-geothermal. Employ thousands to build and install these. Employ multitudes more to manufacture and install insulation made with newsprint and fly ash (a residue of coal combustion). We’ll get free winter warmth from 500,000 solar windowbox heaters. District heating and cogeneration reduce fuel need. Municipal utilities reduce grid costs. Tree shade reduces cooling costs: Plant a million.

Local heroes: Energy Coordinating Agency, Bio-Neighbors Sustainable Homes, Roofscapes, Philadelphia Green, Philly Tree People, Urban Tree Connection, green contractors. Harold Finegan’s gym needs no fossil fuel for heating and cooling.

World champions: American Council for an Energy-Efficient Economy, Rocky Mountain Institute, Sacramento Municipal Utility District. Book: Toolbox for Sustainable City Living: A Do-It Ourselves Guide.

Big picture: Philadelphia can function even better with one-tenth the fossil fuel. Our lives will be more secure.

Challenges: Absentee ownership and unemployment discourage repair and foster blight. Gentrification, foreclosure and taxes pressure humble homes. More middle class become homeless daily. Whether rowhouse or condo, homes won’t be affordable unless massively insulated. And hey, river wards, both ocean and sewage, are rising. ‘

Next steps: Renters become homeowners through right-of-first-refusal (landlords offer sale first to renters) and sweat equity credits (renters swap community work for houses). Enforce law requiring absentee owners to have local agents. Shift to Land Value Taxation, which places tax burden on land rather than homes. Equitable development is a legal movement that‘ prevents gentrification through restraints and incentives. Enforce the Community Reinvestment Act, which requires lending in low-income neighborhoods (not sub-prime) and prohibits racial lending. Cease evictions based on dishonest loans. Evict shady lenders. As heating bills rise we’ll move underground, because deep dirt is the best insulation. Not just elites to bunkers (Bill Gates lives inside a hillside), but all of us into pleasant, sunlit ecolonies. Big solar windows catch winter heat. Amend building codes for green innovation.

Local heroes: Hundreds of local organizations fight for and finance affordable neighborhoods. Women’s Opportunity Resource Center, Women’s Community Revitalization Project, Philadelphia Housing Task Force, Community Land Trust Corp., Project H.O.M.E., People’s Emergency Center, African-American Business & Residents Association, Henry George School, Habitat for Humanity, Green Roof Philadelphia, Ray of Hope Project, churches. Major underground buildings in Philadelphia include Franklin Court Museum, Wilma Theater, Penn Center shops.

World champions: Germany requires R70 insulation — three times tighter than the typical U.S. home — in new buildings. National Community Reinvestment Coalition, United for a Fair Economy, Earthships, Boston City Life/Vida Urbana, Equitable Development Toolkit, Shelterforce. Book: The Earth-Sheltered House: An Architect’s Sketchbook.

Big picture: Everyone living in Philadelphia in 50 years will be living in earth shelters. Green means we’ll all be comfortable. No behind left chill.

Challenges: Corporate insurers raise costs, limit choices, resist paying. They block reform legislation. Premiums rise beyond the reach of millions. ‘ Taxes rise to cover city employee benefits and indigent care. Thousands of Philadelphians are stuck in jobs they dislike, to keep insurance. ‘ Philadelphia’s 140,000 uninsured avoid care and die earlier, or go bankrupt paying more. Medicaid’s waiting list grows. Hospitals close; free clinics lose staff. Toxic air and chemicals, junk food and lack of exercise cause much disease. Grassroots action will heal city and citizens.

Next steps: While pushing for universal health care (less bureaucracy, lower cost, free choice), gaps can be filled by genuinely nonprofit regional self-financing systems. Fraternal benefit societies and member-owned co-op health plans create independent safety nets and preventive care clinics. Medical centers can barter, accept Philadelphia MediCash.

Local heroes: Thousands of holistic and allopathic healers, Health Care for All Philadelphia, Catholic Worker Free Clinic, Esperanza Health Center, Congreso de Latinos Unidos, Planned Parenthood, Philadelphia Urban Solutions, Philadelphia Community Acupuncture, Philadelphia FIGHT, Philadelphia Health Care Center, PhilaHealthia, Children’s Hospital of Philadelphia, Shriners Hospital for Children. Dozens more at philllyhealthinfo.org.

World champions: Mutual Health Organizations, Ugandan Health Cooperative, Ithaca Health Alliance, Dr. Patch Adams, Healthcare-NOW!, Book: Health Democracy.

Big picture: When sickness is big business, free healing requires insurrection.

Paul Glover teaches metropolitan ecology and green jobs at Temple University. He is founder of the Philadelphia Orchard Project (POP), Ithaca HOURS local currency, Citizen Planners of Los Angeles and other groups. He is the author of Green Jobs Philly, Health Democracy and Hometown Money. More information at paulglover.org.

Challenges: Extreme capitalism and extreme socialism trample humanity. Lack of cash and credit kills businesses, jobs and homes. Some folks still have lots of money, but most of us have less. Dollar power dwindles because dollars are backed by less than nothing: rusting industry and $10 trillion debt. So we’ll print real money — neighborhood currencies — backed by real people.

Next steps: Mutual enterprise systems (neither Wall Street nor Red Square) celebrate the spirit of regional enterprise when it serves community and nature. They applaud innovations — public and private and personal — that meet real needs. Local trading credits based on local land, skills, time and tools refresh the economy. Poverty is lack of networks more than lack of dollars, and Philadelphia has thousands of networks — business, professional, technical, fraternal, neighborhood, church, union, electoral, senior, youth, racial, sexual, athletic, hobby, family, friends. Woven together they’re a powerful base of regional trust, trade and wealth. Take your pick of neighborhood and sector currencies. Cities may not issue them but may accept them for taxes.

Local heroes: Philadelphia’s 83 credit unions, Valley Green Bank, e3bank, Equal Dollars, barter exchanges and gift economy, Philadelphia Regional and Independent Stock Exchange, Philadelphia Fund for Ecological Living (PhilaFEL).

World champions: Ithaca HOURS, Berkshares, LETS, Time Banking, National Federation of Community Development Credit Unions, Permaculture Credit Union, Grameen Bank microlending, Kiva, Robin Hood Ventures.

Big picture: Dollars control people; local currency connects people.

Challenges: Millions are spent to sanitize polluted river water and pump it to homes. Then we poop into it. Storm drains carry sewage and garbage back to rivers. Sewage treatment does not remove all pharmaceuticals. Old chemical tanks poison groundwater. Sinkholes undermine houses. Bottled-water scam drains local economy. Climate change brings frequent flood and/or drought. ‘ But new technologies will protect our liquid assets.

Next steps: Amend code to permit filtered graywater yard use, and waterless compost toilets. Install watersaving devices. Collect rainwater in rooftop tanks, barrels and swales. Plant xeriscapes. Depave driveways and abandoned parking lots. Start Progressive Street Reclamation, converting least-used streets and alleys to playgrounds and gardens.

Local heroes: Philadelphia Water Department taxes pavement, rewards depaving, distributes rain barrels. Friends of the Wissahickon installs compost toilets in the park. These convert turds into clean, sweet-smelling garden soil.

World champions: Swedes collect urine from apartment houses, store it six months, then use as fertilizer (EcoSanRes). Mexicans collect urine from city hall and schools to fertilize fields (TepozEco). Zimbabweans plant fruit trees atop privy muck (ArborLoo). Book: The Humanure Handbook.

Big picture: Clean water is becoming more valuable than gold. Nobody shits on gold.

Challenges: Philadelphia’s rail system was ripped out for cars, which clog streets and slow emergency response. Cars smash, kill, maim. They inhale paychecks and taxes, exhale rotten air. They compel war for oil. We’ll become stronger and sexier as pedaling bipeds.

Next steps: To risk your life for your country, ride a bike. Hop on the bus. Revive street rail with ultralight passenger cars. Restore regional freight routes. Raise transit funds with local gasoline tax. Make pathways for bicycles, rollerblades, skateboards, Segways, scooters and wheelchairs. Restore canals. Zone for mixed use, to reduce travel needs. Live near your work. Employ multitudes making mosaic sidewalks. Convert paving to playgrounds.

Local heroes: PhillyCarShare, Bike Share Philadelphia, Bicycle Coalition of Greater Philadelphia, Neighborhood Bike Works and Bike Church, Critical Mass bike rides, bike shops, Delaware Valley Association of Rail Passengers, Pennsylvania Transit Coalition, PenTrans. Even SEPTA: Trains are clunky and late, but they’re there.

World champions: Carfree Cities conferences, carfree.com, World Naked Bike Ride, Urban Ecology.

Big picture: The first cities rebuilt for proximity rather than speed will win this race.

Challenges: Philadelphia has lost 400,000 manufacturing jobs in 50 years. Now we import stuff once made here. Today, millions of American jobs depend on servicing bad things rather than good things. Car crashes are 8 percent of the GDP. How many jobs would end if criminals went on strike? What jobs would be lost if people ate healthy fresh food and exercised? What if we were content with what we owned?‘ We’ll advance from jobs managing damage to jobs creating a beautiful city worthy of beautiful children.

Next steps: All skills can rotate greenward. Philadelphia needs at least 100,000 green-collar jobs to rebuild, retrofit, plant, harvest, manufacture and repair the homes and tools of the future. Arts and healing arts are green jobs, too.

Local heroes: Sustainable Business Network of Greater Philadelphia, American Cities Foundation, Penn Future, Ray of Hope Project. Green Jobs Philly, Neighborhood Environmental Action Team, Green Labor Administration, several City Council members.

World champions: Blue Green Alliance (enviros and unions united), Green for All, Apollo Alliance, D.C. Greenworks, Sustainable South Bronx.

Big picture: We’ll develop new definitions of career, success; build green safety nets.

Challenges: America has been outstanding at pouring concrete, going fast and throwing things away. But high costs of raw materials, manufacture and trucking are causing consumers to quit consuming for the sake of consumption. Our Next Great Economy will sell more of durable value. We’ll all have enough.

Next steps: Regional manufacture will resume as transport costs grow. Top niches will be basics: housing, energy, clothing, housewares. Orchards and gardens and food processing. Holistic healing will grow. Likewise, handcrafts. Everything energy-efficient.

Local heroes: Sustainable Business Network, Buy Local Philly, White Dog Café, Provenance Architecturals, Re-Store, flea markets, farmers markets, materials exchanges, repair shops, recycling.

World champions: Socially Responsible Investing. ‘Magazines: Green Business Journal, Adbusters. ‘Site: storyofstuff.org.

Big picture: Smart money invests to raise all boats.

Challenges: Many bureaucrats trained in obsolete systems resist change, defend their turf. City’s health insurers and pensions drag city down.

Next steps: Government welcomes grassroots innovators by passing laws facilitating greening of economy and neighborhoods: urban land reform, urban agriculture, sanitation and water codes, building codes. When urgent change is resisted, citizens underthrow the government.

Local heroes: Delaware Valley Regional Planning Commission, PWD, streets guys who dig on rainy nights.

World champions: City of Curitiba, Brazil, encourages experimentation and welcomes mistakes. Magazines: Governing, Planners Network.

Big picture: Good government takes risks, makes change easy. “Make no little plans” —Daniel Burnham.

Challenges: Whenever people are hungry, cold or fearful due to unemployment, crime rises. Isolated resentment becomes street protest or riot. Racism flares. Taxpayers cannot hire enough police to escape chaos. Public safety is secured by creating safety nets for food, fuel, housing and health care.

Next steps: Jobs fight crime. Decriminalize marijuana locally. Hire ex-offenders. Neighborhood watch instead of neighborhood watch TV.

Local heroes: Block captains, Men United for a Better Philadelphia, Ray of Hope Project, City Harvest, People Against Recidivism.

World champions: Time Dollar Youth Court, Rainbow Police. Book: Defensible Space.

Big picture: People who are respected, loved and secure do not kill. ‘

Challenges: Curriculums are less relevant to getting jobs or fixing society. Forty-five percent of Philadelphia high-schoolers drop out. Students are graded like eggs.

Next steps: Respectfully teaching skills of neighborhood management will make learning fun. Teach creativity rather than consumerism.

Local heroes: Thousands of dedicated teachers, Neighborhood Enterprise Schoolteachers, magnet schools, Waldorf School. Newspaper: The Notebook.

World champions: Paolo Freire; free university education in Europe.

Big picture: Loving learning is the first lesson.

Challenges: Media that’s cynical about grassroots power features crime and celebrities.

Next steps: Empower average people to make music, art, dance, theater. Revive street-corner singing. Bring back vaudeville. Parachute clowns into parks.

Local heroes: Mural Arts Program, Raices Culturales Latinoamericanas, Spiral Q Puppet Theater, 373 groups listed at philaculture.org. Locally made homecrafts. Philadelphia’s 2,800 murals feature children, heroes, nature.

World champions: El Sistema (Venezuela) makes barrio kids into maestros.

Big picture: Everyone is a creative genius. Good culture releases that power and beauty.

Whether you’re a student, job seeker, employee or retiree, there are thousands of ways to connect to Philadelphia’s green movement. You’re the one we’ve been waiting for. Check the ever-growing list of local green-jobs Web sites (start with greenjobsphilly.org/future.html). Visit local green businesses and groups. Time to bring those murals to life.

Paul Glover teaches metropolitan ecology and green jobs at Temple University. He is founder of the Philadelphia Orchard Project (POP), Ithaca HOURS local currency, Citizen Planners of Los Angeles and other groups. He is the author of Green Jobs Philly, Health Democracy and Hometown Money. More information at paulglover.org.

As more and more workers fill the unemployment rolls, it’s time to ask: where will future jobs come from?  While government and corporate bigshots plan yet another “economic stimulus” and bailout of the banks, what long-term jobs can we realistically create right now?

Lots of answers present themselves if we look through the lens of peak oil, and start replacing our oil-based economy with a people-based economy. Instead of relying on greenhouse gas-producing fossil fuels, we can tap into the power of human labor, which happens to be our greatest renewable resource.

Certainly there is a need to employ millions to weatherize homes and build and install solar panels and wind turbines (which Obama may address), but there is also a huge need to re-tool Detroit automakers to STOP producing gas-guzzling individual cars, and start making buses, trains and other forms of public transit. Bicycles are also desperately needed, so we need workers to build them and more to repair them too.

We also need lots more doctors and nurses if we make health care universally available, and social workers and therapists to help deal with the psychological trauma our population has suffered from militarism and soulless consumerism.  Since many of these jobs require education and training, we need to hire lots more teachers, and we also need education to be a lot more affordable to so more people can access these kinds of careers.

Perhaps the largest gains in the job sector can be achieved by shifting food production away from mega-scale agribusinesses and fossil-fuel intensive monoculture and factory farms, towards community-based, local, organic, family farming and free-range livestock raising.  By breaking up the huge corporate farms into family-size and community-size plots, we can repopulate rural America (and stop suburban sprawl), produce better, healthier food, respect animal rights, and create millions of new landowners.  Simultaneously we can follow the example of Cuba and turn our blighted inner-cities into gardens, by utilizing permaculture and organic community-run agriculture, which would reduce crime and poverty in our decaying urban areas, bring quality food to places currently plagued by malnutrition, and create millions upon millions of rewarding and meaningful jobs.

How will we finance it?  Simple.  Disassemble the huge financial firms and multinational corporate banks whose greed caused this economic crisis and create thousands of local banks and credit unions, run by people in the community (even more jobs!)  Taxing the rich would help a lot too, and we can cut tons of wasteful government spending on things like the wars in the Middle East, excessive prisons, and nuclear, biological and chemical weapons.  The money is right there, we just need to redirect it to things that actually help people instead of killing them.

This of course requires a revolutionary change in the economic and political structure of the United States, which means average people like you and me having control over the decisions affecting our lives, instead of remaining at the whim of wealthy elites who in the current crisis have shown themselves unable to run a lemonade stand, let alone the global economy.

[alex]

Deluge of layoffs hits U.S. economy

January 27, 2009

Los Angeles Times

By Jerry Hirsch and Maura Reynolds

Email Picture

Scott Olson, Getty Images

A worker walks between Caterpillar earth-moving equipment at a road construction site near Joliet, Ill. The company has announced that it will cut nearly 20,000 jobs as the recession reduces demand for its products.

Companies including Home Depot, Caterpillar, Pfizer and Sprint plan to cut nearly 60,000 jobs, adding urgency to the need to agree on a stimulus plan.

U.S. companies slashed nearly 60,000 jobs Monday, adding impetus to the Obama administration’s efforts to reach agreement on a plan to pump $825 billion into the economy over a two-year period.

But it’s unclear whether even that massive influx of funding and tax cuts would be enough to get companies hiring again in the near term.

The cuts by firms including Caterpillar, General Motors, Texas Instruments, Home Depot, Sprint Nextel and Pfizer brought the total of jobs shed so far this month to 187,550, more than November or December and well over double the number of January 2008, according to employment firm Challenger, Gray & Christmas Inc.

Analysts believe that Obama’s strategy of pouring money into state and local governments could prevent layoffs and furloughs of public sector employees, including teachers, police officers and other government workers.

Economists have estimated that the plan will protect or create 3 million to 4 million jobs in the next two years.

But the U.S. economy lost 2.6 million jobs last year and could lose 2 million more during the first half of this year.

The stimulus plan “is as much psychological, to get people to think that even if we’re in a recession, it’s going to be temporary so I don’t have to lay people off,” said Gus Faucher of Moody’s Economy.com. “It’s designed to provide a psychological boost.”

But that won’t be much help getting disparate companies such as earth-moving equipment maker Caterpillar Inc., computer software designer Microsoft Corp. and home improvement retailer Home Depot Corp. motivated to stop cutting and start hiring, analysts said.

Caterpillar, which said Monday that it would fire 5,000 workers on top of 15,000 in job reductions previously disclosed, needs to see signs that industrial production is stirring, such as increased prices for minerals, metals, energy and other commodities, said Kristin Kubacki, an analyst with Avondale Partners in St. Louis.

When that happens, Kubacki said, the company will be able to sell its heavy equipment for use in digging mines and in oil and gas exploration. Even then, however, Caterpillar dealers will need to sell an extensive inventory of already built backhoes, excavators and other equipment before it ramps up production.

The Obama stimulus plan would also fund easy-to-implement renovation projects that would generate jobs for currently idled construction workers, and lead to new orders for hard-hit manufacturing companies that provide building supplies and other raw materials. But that won’t be big enough to help Caterpillar.

“Equipment right now is plentiful,” Kubacki said. “It’s a long road for that money to reach the factory floor at Caterpillar.”

Home Depot said Monday that it would cut about 2% of its workforce, or 7,000 jobs, and close about four dozen specialty stores, including all of its Expo Design Center stores.

It would probably take a big increase in consumer confidence before the struggling retailer would start hiring again in any numbers, said Ken Goldstein, an economist with the Conference Board in New York.

“What we need to see is the consumer starting to spend money again. About the only thing you see Home Depot selling right now is duct tape, and that’s not good,” Goldstein said.

Microsoft, which said Thursday that it would slash as many as 5,000 jobs over the next 18 months, its first mass layoff, will be anticipating more technology spending.

“They’ll be looking for a bottoming in the semiconductor market, because that’s what goes inside computers,” said Brendan Barnicle, an analyst at Pacific Crest Securities in Portland, Ore. That will be an indicator of higher computer sales and thus more need for Microsoft’s core product, software.

At the same time, Microsoft executives will be watching for any lift in information technology investment by business, figuring that the Redmond, Wash., giant will increase sales once companies start to replace computers.

The stimulus program probably would help people who have lost their jobs by extending unemployment benefits and increasing funding for food stamps.

In addition to government spending, the stimulus plan includes business tax incentives that would permit companies with losses in 2008 to offset them by getting refunds on taxes paid over the previous five years — a provision, known as a “carryback,” that currently applies only to the previous two years.

Companies would also be able to get tax breaks for some capital expenditures and accelerate the depreciation of others.

Economists say tax incentives of that sort are not as “stimulative” as direct government spending but are important because they can take effect quickly. And if they help restore business confidence in the short run and save some more jobs, so much the better.

“We believe that the stimulus package can keep the employment floor about 2 million higher than it otherwise would have been, and prevent the unemployment rate from breaching 10%,” said Nigel Gault, chief U.S. economist at IHS-Global Insight in Lexington, Mass.

To succeed, the package would need to do all that and more.

Employment reductions over the last year have pushed the nation’s jobless rate up to 7.2% in December, compared with 4.9% in December 2007.

Goldstein of the Conference Board believes that the jobless rate could approach 9% by the end of this year, fueled by the cutbacks announced Monday and future losses.

Drug maker Pfizer Inc., which announced that it would acquire rival Wyeth for $68 billion, also said Monday that it would cut about 8,000 jobs from its current workforce. Once the companies are merged, thousands more will lose their jobs.

Sprint Nextel Corp. said it would eliminate 8,000 jobs by the end of March. Texas Instruments Inc. said it would dump 3,400 positions. And General Motors Corp. said it would cut shifts in the second quarter at plants in Ohio and Michigan, eliminating about 2,000 jobs, and decrease production at other plants in the U.S. and Canada.

Past downturns indicate that job losses will continue for at least six months after the recession bottoms out, UCLA economist Edward Leamer said. Recessions — defined by an extended decline in gross domestic product — typically hit their low point in the third quarter of the downturn, but the job losses continue for at least another two quarters, Leamer said.

Companies will see sales pick up and stop firing workers, but they won’t do much hiring until they have seen several quarters of revenue growth, he said.

Memo to the President-elect on Energy Realism and the Green New Deal

MuseLetter 200
December 2008 by Richard Heinberg

Executive Summary

Our continued national dependence on fossil fuels is creating a crippling vulnerability to both long-term fuel scarcity and catastrophic climate change.

The current economic crisis requires substantial national policy shifts and enormous new government injections of capital into the economy. This provides an opportunity for a project whose scope would otherwise be inconceivable: a large-scale, coordinated energy transition away from fossil fuels and toward renewable energy.

This project must happen immediately; indeed, it may already be too late. We have already left behind the era of cheap and plentiful fossil fuels, with a permanent decline of global oil production likely underway within three years. Moreover, the latest research tells us we have less than eight years to bring carbon emissions under control if we hope to avoid catastrophic climate change. Lacking this larger frame of understanding and action, a mere shift away from foreign oil dependence will fail to meet the challenge at hand.

The energy transition must not be limited to building wind turbines and solar panels. It must include the thorough redesign of our economic and societal infrastructure, which today is utterly dependent on cheap fossil fuels. It must address not only our transportation system and our electricity grid, but also our food system and our building stock.

Our 21st century nation’s dependence on 20th century fossil fuels is the greatest threat we face, far more so than the current financial crisis. A coordinated, comprehensive transition to an economy that is no longer dependent on hydrocarbon fuels and no longer emits climate-changing levels of carbon—a Post Carbon Energy Transition—will be the Obama Administration’s greatest opportunity to lead the nation on a path toward sustainable prosperity.

Overview: Need and Scope

As a new Administration prepares to take the reins of power, America’s economy is descending into a recession or, quite possibly, a depression. Deepening economic turmoil is generating an assortment of urgent priorities for the national leadership. Among economists there is widespread discussion of the need for an economic stimulus package of historic proportions to create jobs and spur more production and consumption.

Meanwhile, a more profound crisis has been silently gathering for decades, and is now reaching a point of no return. This crisis issues from our reliance on fossil fuels, and it manifests as the twin dilemmas of fossil fuel depletion and climate change.

Fossil fuels define the modern era. Their concentrated, inexpensive energy has generated unprecedented economic benefits, enabling Americans to enjoy cheap food, cheap travel, and cheap manufactured goods made from and with petrochemicals. But our unbridled consumption of fossil fuels has brought us to the current crisis, where we face both the imminent decline of our most important energy source and the very real possibility of catastrophic global climate change.

These two challenges highlight the hidden costs of our still-growing dependence on oil, coal, and natural gas—costs that may do far more than merely drive the economy into a depression.

Fossil fuel depletion and climate change present threats of a scale unprecedented in human history. Failure to address them will risk an economic collapse from which no recovery is possible, as well as environmental calamity of apocalyptic dimensions. Moreover, the impacts we face are not decades away; they are immediately threatening. It is no overstatement to say that if we in this nation—and soon, the entire human family—cannot agree upon and undertake a deliberate, proactive transition away from fossil fuels beginning immediately, we may forfeit our last realistic opportunity to avoid global economic and environmental collapse.

As the world’s top oil consumer and economic power, it is incumbent upon the United States to lead the way out of this crisis. A wide range of far-reaching policies and initiatives—touching every aspect of modern society from transportation and electricity to food and housing—is needed worldwide to ensure a peaceful and equitable energy transition. This global effort must begin here and now with a national plan to reduce energy consumption, develop renewable energy sources, and reconfigure our fossil fuel-dependent infrastructure.

By taking up a de-carbonized renewal of America’s transport, electricity, food, and housing systems, the new Administration can address a number of problems simultaneously: climate change, economic contraction and unemployment, environmental destruction, resource depletion, geopolitical competition for control of energy, balance of trade deficits, the threat of hunger, and more.

The energy transition plan must not be merely a wish list of good ideas, but a prioritized, staged program with robust funding and hard yet realistic targets.

Further, it must be presented to the American people in a compelling way: public education on a massive scale will be required to help ordinary citizens understand what is at stake and how sacrifices undertaken now can build a better world tomorrow.

Despite the need for public buy-in, the purpose of this document is not to outline a program that will be an easy “sell” from a political standpoint; rather, its intent is to set forth what is actually needed in order to save America and the world from economic and environmental collapse—and what is needed may not be easy or palatable. Somehow the necessary must be reconciled with the possible, but it is the empirical requirements for survival that are ultimately decisive. It will be the task of leaders at all levels of government to mold political realities to fit those requirements.

The current financial calamity is appearing at perhaps the last historic moment when action to avert climate catastrophe has a chance of succeeding. Crisis is nearly always an opportunity for someone or something. In the current instance, economic crisis affords the opportunity for bold action of a kind and on a scale that would otherwise seem unacceptable.

The Problem

The fossil-fueled economy
Something both wonderful and terrible has happened in the past two centuries. As a people, we have become more mobile. We now spend only a small portion of our incomes on food, and only a tiny proportion of us need to bother ourselves with growing it. Our shopping malls have become filled with a dizzying array of products, many of them imported from around the world.

These are just some of the gifts of fossil fuels—concentrated energy sources that have proven both cheap and abundant.

But claiming these gifts has led us to build a societal infrastructure that is designed for, and utterly dependent on, plentiful oil, coal, and natural gas.

We have built cars and trucks, and an extensive network of highways on which they travel. We have built passenger aircraft that are swift and safe, and airports in practically all medium and large cities.

We have configured our food system to take advantage of these fuels by mechanizing production, by using petrochemicals to fertilize crops and kill weeds and pests—and then by transporting food ever further distances to centralized processing and storage centers and finally to giant supermarkets intended to be accessed almost exclusively by private automobile.

We heat our homes with fossil fuels, and we have designed our homes around automobiles, setting aside a large portion of interior space to enclose them in garages. We have built countless neighborhoods through and to which no one is expected to travel by any mode other than by car. We define the functionality of our cities by the highways that connect their neighborhoods and suburbs.

We have built an electric grid system to supply power for every aspect of commerce and daily life—from communication to entertainment to food refrigeration. This essential system depends on fossil fuels for two-thirds of its energy.

In short, we have become systemically dependent on cheap fossil fuels. And in this systemic dependency lie acute vulnerabilities.

Fossil fuel depletion

It may be too soon to speak of the end of fossil fuels altogether, but we have unquestionably reached the end of an era.

It is increasingly clear that global oil production growth is stalling, with permanent decline likely underway by 2012. The petroleum price spike of 2008, in which the cost of a barrel of oil rose to $147, was a warning of what is to come. The International Energy Agency (IEA) World Energy Outlook 2008 report released in November concluded:

Current global trends in energy supply and consumption are patently unsustainable,…the sources of oil to meet rising demand, the cost of producing it and the prices that consumers will need to pay for it…[are all now] extremely uncertain.

The report’s Executive Summary points out that nearly all future world oil production growth depends on supplies from OPEC, and ends with the unequivocal judgment that “the era of cheap oil is over,” warning member nations that, “the time to act is now.”

We have tended to think of coal as being so abundant that supply constraints will not appear for many decades or even centuries. Yet a 2007 report by the National Academy of Sciences concluded:

Present [official US] estimates of coal reserves are based upon methods that have not been reviewed or revised since their inception in 1974, and much of the input data were compiled in the early 1970s. Recent programs to assess reserves in limited areas using updated methods indicate that only a small fraction of previously estimated reserves are actually minable reserves.

A 2007 report from an energy research body established by members of the German Parliament, suggests that production of coal in the US may reach its maximum level as early as 2030, after which it will decline as high-quality resources are exhausted. With such limited supplies, and in the absence of commercially viable carbon sequestration—which is still at least 25 years away and has its own set of challenges regarding energy efficiency and scalability— coal is neither an economically nor environmentally sustainable solution for our future energy needs.

Production of “conventional” natural gas in North America is declining, but recent technical advances have enabled the industry to extract substantial new quantities of this fuel from low-porosity reservoirs. We are now hearing assurances from some of the companies producing such “unconventional” gas that the nation has over a hundred years’ worth of the resource. However, rapid depletion rates in new gas wells force the industry to pursue ever-higher drilling rates (drilling rates are today three times what they were a decade ago), suggesting this resource may be much more short-lived.

There are also economic problems with shifting to natural gas. The low amount of energy returned on the energy invested in unconventional gas infrastructure and drilling efforts suggests that further production growth will be achievable only with very high natural gas prices, and that much of the resource theoretically available will never be produced no matter how high the market price goes. Liquefied natural gas (LNG) imports are a poor long-term alternative, given growing global demand for the fuel, significant gas import dependency in Europe, and reports of shipments being diverted en route to higher bidding ports.

Altogether, over the course of a few generations we have depleted what nature generated throughout tens of millions of years. We have picked the low-hanging fruit. We must plan and prepare for the end of fossil fuels now, while we still have a relative abundance of energy with which to build the alternative energy infrastructure that we will soon need.

Climate change

In the process of burning fossil fuels, we are releasing gases into the atmosphere that are changing the global climate, and thus reducing the survival prospects of future generations.

New data always seem to outdistance previous forecasts: the north polar icecap is melting much faster than projected, and thawing arctic permafrost is already releasing unexpectedly large quantities of methane, a greenhouse gas 20 times more powerful than carbon dioxide.

In other words, the level of atmospheric carbon dioxide believed only a few years ago to be “safe”—in that it would not trigger catastrophic climate change—seems already to be making some of the predicted worst-case impacts a reality.

Leading climate scientist James Hansen of NASA, among others, is now advocating the adoption of 350 parts per million of atmospheric carbon dioxide as the global target for climate protection efforts. The current level, however, is approximately 387 ppm. We are already beyond the threshold.

This means that, if humankind is to avoid catastrophic climate change, we must being reducing fossil fuel carbon emissions immediately, and bring them virtually to zero before mid-century.

The financial crisis

Ostensibly, the ongoing credit crunch is the result of a subprime mortgage fiasco plus the leveraging of debt through financial instruments so sophisticated that virtually no one who purchased them understood their risk.

However, the fact that world oil production was essentially stagnant during the years 2005-2008 (leading up to price spike of 2008) should not be overlooked as a contributor to the economic meltdown. Previously, the growth of financial capital could be supported by the energy-based growth of the real national and global economy. But as energy prices soared—crippling the airline and auto industries and raising costs for farmers, manufacturers, and shippers—the financial balloon suddenly began to deflate.

Unfortunately, connections between energy and economic activity are often overlooked: energy is widely regarded as merely a component of the economy, whereas in fact the entire economy crucially depends upon energy. If energy supplies are cut off, economic activity halts; and without energy growth, economic growth becomes problematic if not impossible.

Paradoxically, now that the global economy is contracting, investment in future oil, coal, and gas production projects is dwindling. At the same time, investment in renewable energy projects is also falling away. This virtually guarantees future energy shortages.

The cruel result is that as soon as the economy begins to grow once again, energy supply limits and skyrocketing energy prices will nip recovery in the bud.

Therefore it would be self-defeating for the new Administration to put the energy transition on the back burner while giving full attention to the immediate financial crisis. The financial crisis must be addressed by pursuing an energy transition.

Similarities to, and differences from, the 1970s

The current energy and economic crises carry unmistakable and disturbing echoes of the 1970s. In 1977, President Carter addressed the nation, telling Americans that,

With the exception of preventing war, this is the greatest challenge our country will face during our lifetimes . . . We simply must balance our demand for energy with our rapidly shrinking resources. By acting now, we can control our future instead of letting the future control us . . . The most important thing about these proposals is that the alternative may be a national catastrophe. Further delay can affect our strength and our power as a nation . . . This difficult effort will be the “moral equivalent of war”—except that we will be uniting our efforts to build and not destroy.

In retrospect, his speeches were a courageous effort to prepare the nation for the inevitable decline in fossil fuel production, which now looms, and to avert geopolitical conflict over remaining supplies. Had we followed the course that President Carter recommended, America might not be so vulnerable today.

But Carter lost the 1980 election to Ronald Reagan, who promised a sacrifice-free return to prosperity. All politicians understandably regard this as a cautionary tale when considering any bold effort to reduce America’s dependence on fossil fuels. Nevertheless, there are reasons that the situation today is different.

First, the energy crisis isn’t going away this time. In the 1980s, the nation could turn to recently discovered giant oilfields on Alaska’s North Slope and the world had gained access to abundant, high-quality crude oil from the North Sea. Today there are few new frontiers available for exploration. Oil from the planet’s polar regions (including ANWR) will be costly to produce and slow to arrive. Crucially, these new supplies will probably be insufficient to make up for worsening production declines from existing oilfields.

Second, the economic crisis is worse this time. While the oil shocks of the 1970s and the costs of the Vietnam War forced the U.S. to repudiate the gold standard and resulted in several years of low or negative growth, the economic calamity currently engulfing the world is leading historians to look further back to the 1930s or the 19th century for precedents. Many economists have concluded that interest rate adjustments and a $700 billion bailout package will not be enough to forestall a depression. Something bold must be done—and it must involve government spending on a grand scale that has the effect of massive job creation. Today the question is not, Can our leaders afford to be bold? It is rather, Can they afford not to?

Finally, there simply is no longer a “business as usual” option for our energy future. According to the IEA, trillions of dollars of new investment will be needed for exploration and the implementation of new extraction technologies if fossil fuel production is to continue satisfying growing demand for the next two decades (for the world as a whole, over $26 trillion will be required in year-2007 dollars for the period 2007-2030). On the other hand, trillions will also be needed to build a renewable energy infrastructure.

The difference is that the former solution would be temporary: fossil fuels are finite and depleting resources. We will still face scarcity even after paying the enormous cost of finding and developing the last of the world’s oil and gas fields and coal mines. Renewables, on the other hand, can power society indefinitely. In either case most of the needed investment should come not from government, but from the private sector. However, government’s role will be decisive in setting the course through leadership, coordination, regulation, and investment.

The current financial crisis forces the conclusion that America cannot have it both ways. Either we direct public investment toward developing expensive, low-grade fossil fuels (such as tar sands, oil shale, and shale gas) in a vain effort to maintain growth in our fossil-fuel dependent economy, or we direct investment toward building the renewable energy infrastructure of the future.

If the 1970s were an early warning, today is the final moment for action. We will have no third chance at the energy transition.

The Solution

The obvious answer to fossil fuel depletion and climate change is to simply substitute alternative energy sources for oil, natural gas, and coal.

However, this solution quickly bogs down on two fronts. First, there are no alternative energy sources (renewable or otherwise) capable of supplying energy as cheaply and in such abundance as fossil fuels currently yield, in the time that we need them to come online. Second, we have designed and built the infrastructure of our transport, electricity, food, and heating systems to suit the unique characteristics of oil, natural gas, and coal; changing to different energy sources will require the redesign of many aspects of those systems.

The energy transition cannot be accomplished with a minor retrofit of existing energy infrastructure. Just as the fossil fuel economy of today systemically and comprehensively differs from the agrarian economy of 1800, the post-fossil fuel economy of 2050 will profoundly differ from all that we are familiar with now. This difference will be reflected in urban design and land use patterns, food systems, manufacturing and distribution networks, the job market, transportation systems, health care, tourism, and more.

It could be argued that these changes will occur in some fashion whether we plan for them or not, that it is only necessary to wait for the market price of fossil fuels to reflect scarcity, with higher costs forcing society to adapt. However, lack of planning will result in a transition that is chaotic, painful, destructive, and perhaps (if the worst climate forecasts are realized), unsurvivable. As a recent study for the U.S. Department of Energy showed, such a passive approach to the problem would lead to “social, economic, and political costs” of “unprecedented” scope. Once again: bold action is required.

We need to reduce our overall energy consumption, and restructure our economy to run primarily on renewable energy—and the federal government must lead the way. This energy transition should have five components: a massive shift to renewable energy, and a retrofitting of the four key systems of electricity, transportation, food, and buildings.

1. Make a massive and immediate shift to renewable energy

The development of alternative energy sources must obviously be a cornerstone of any plan to reduce our national reliance on conventional fossil fuels. However, many alternatives being discussed—including nuclear power, industrial-scale biofuels, and low-grade fossil fuels such as oil shale and tar sands—suffer from serious drawbacks, including low energy profit ratios, high environmental impacts, or a limited resource base.

Renewable energy sources such as wind, solar, and advanced geo thermal clearly represent the long-term solution to the nation’s and the world’s energy problems. However, in many cases these require further research and evaluation. For example, research is needed into new energy storage technologies, as well as new photovoltaic materials and processes, and new geothermal and tidal power technologies. While much of this could be accomplished by the private sector, the economic crisis is likely to delay or undercut needed funding, increasing the need for government support.

The U.S. Department of Energy should be tasked with undertaking a rapid but thorough assessment of available alternative energy production technologies using a carefully mapped set of consistent criteria. This assessment should be formatted in a way that helps states and communities, as well as the federal government, make practical planning and investment decisions.

Given the immediacy of this need, Post Carbon Institute, in collaboration with the International Forum on Globalization, is currently undertaking a preliminary comparative review of alternative energy sources, using criteria including energy profit ratio, environmental impacts, scalability, and materials requirements. That publication will be available by February 2009.

2. Electrify the transportation system

America’s sunk investment in highways, airports, cars, buses, trucks, and aircraft is enormous. However, this is a transport system that is completely dependent on oil. It will be significantly handicapped by higher fuel prices, and devastated by actual fuel shortages.

The electrification of road-based vehicles will help; however, this strategy will require about two decades to fully deploy, given that the average passenger vehicle has a useful lifetime of 15 years. Meanwhile, road repair and tire manufacturing will continue to depend upon petroleum products, unless alternative materials can be found.

Even if it is electrified, a ground transport system consisting of trucks and private automobiles is inherently energy intensive compared to public transit alternatives like bus and rail, and non-motorized alternatives like bicycling and walking. The building and widening of highways must come to a halt, and the bulk of federal transportation funding must be transferred to support for electrified and non-motorized infrastructure and services. This overall shift of transport investments and priorities will require comprehensive planning and coordination at all levels of government.

There are few if any good options for maintaining the airline and air freight industries without cheap fossil fuels. While some amount of air travel is likely to persist throughout the transition, its cost will inevitably and persistently rise, and the airline industry will contract accordingly. Increasingly, high-speed electric rail connections between major cities will become the lower-cost option, but the national high speed rail network is still in its infancy. Meanwhile, the existing fleet of private automobiles must be put to use more efficiently through carpooling, car-sharing, and ride-sharing networks coordinated primarily at the local level, but supported by federal policy and funding.

3. Rebuild the electricity grid

Nearly all experts on the U.S. electricity grid agree that the system is approaching crisis and desperately needs a substantial overhaul. Electricity demand has been growing at over one percent per year due to rising population and an explosion in the numbers and types of electronic devices now considered essential, but power generation capacity has not kept up. Meanwhile our transmission networks rely on 100- year-old technology and high-voltage trunk lines that were installed in the 1950s and ’60s. It is a fragile and extremely inefficient infrastructure, and managers of the system anticipate widespread blackouts in the near future.

What is needed is not merely an enhancement of the existing system with more of the same technology. New generating capacity must come from renewable sources, many of which are intermittent and are likely to be sited far from existing power lines. The transmission system must support distributed generation, as well as robust two-way communications, advanced sensors, and distributed computers to improve the efficiency, reliability, and safety of power delivery and use.

Regional utility companies are already beginning to invest in renewables and “smart grid” upgrades, but the work is going much too slowly to avert looming power supply problems. Moreover, the credit crunch will likely slow the work that is currently under way.

Therefore the federal government must step in to set goals and standards and provide public investment capital. This effort must not favor commercial utilities over municipal power districts; indeed, the devolution of control over power systems to the community level should be encouraged, as decentralized power systems are likely to be more resilient in the face of now-inevitable power disruptions.

4. De-carbonize and relocalize the food system

Our national industrial food system performs spectacularly well at producing cheap, abundant food using minimal human labor. However, it is overwhelmingly dependent upon oil and natural gas for tractor fuel, fertilizer, pesticides, herbicides, and the transport of farm inputs and outputs. Moreover, the current food system is responsible for over 20 percent of all greenhouse gases introduced into the atmosphere from human activities in the U.S.

This situation is patently unsustainable. As fuel prices rise, farmers will go bankrupt and food prices will skyrocket. As the global climate becomes destabilized, crops will wither. Unless America undertakes a coordinated, planned redesign of its food system to eliminate dependence on fossil fuels, the future looks bleak. Famine, which formerly was an unwelcome but unavoidable fact of life in agrarian societies, could make a comeback even here in the wealthy U.S.

New farming methods, new farmers, and a re-localization of production and distribution are all required. These in turn will require land reform, educational and financial support for new farmers, and the creation of local food processing and storage centers.

Post Carbon Institute, in collaboration with the Soil Association of Great Britain, is producing a report (forthcoming in early 2009) on “The Food and Agriculture Transition,” highlighting the context, issues, and possible strategies in detail.

5. Retrofit the building stock for energy efficiency and energy production.

Most Americans live in homes that require heat during the winter months, and most of those homes are inadequately insulated by modern standards. Natural gas heats most of the nation’s homes, with a majority in the Northeast heated by oil. Buildings in the South and Southwest require air conditioning during summer months. Fuel shortages, power outages, and energy price hikes could bring not just discomfort, but a massive increase in mortality from cold and heat.

The technology already exists to increase energy efficiency in both new and existing buildings. Germany has successfully pioneered the “Passive House” standard that dramatically reduces the energy required for heating and cooling; the European Union is considering adopting it as a building standard by 2012. In this country organizations like Affordable Comfort Incorporated (ACI) have been doing important work along similar lines for decades, and both the US Conference of Mayors and the American Institute of Architects have adopted the 2030 Challenge to set a nationwide carbon-neutral standard for all new buildings by 2030.

Throughout America, millions of buildings can and must be superinsulated and, in as many instances as possible, provided with alternative heat sources (passive solar, geothermal, or district heating).

However, the widespread deployment of existing knowledge and experience to retrofit millions of American homes and public buildings will require investment as well as trained workers. Once again, the potential exists for the creation of millions of jobs—as Van Jones has discussed in his proposals for a Clean Energy Corps. But funding, new regulations, and education are needed.

Requirements for an Energy Transition

1. Investment and capitalization

Clearly, enormous amounts of investment capital will need to be mobilized to accomplish the energy transition. The promise of $150 billion to be spent on renewable energy over the course of the next ten years is a welcome beginning; however, it must be seen merely as a small component of the entire transition program. As noted, much of the needed investment can eventually come from the private sector, but since the private sector is currently contracting economically this puts the onus back on government.

How can enough capital be deployed? The current practice of deficit spending may not be sustainable in the context of a faltering global economy, as there may be limited demand for U.S. government IOUs.

Other options for creating the needed capital should be explored, such as direct money creation through government spending. While this practice might have adverse implications for the value of the dollar, it is constitutional and has historical precedents during the Kennedy and Lincoln presidencies.

2. Coordination

The energy transition will be complex and comprehensive, and its various strategies will be mutually impacting. For example, efforts to redirect transport away from highways and toward rail service will need to be coordinated with manufacturers, farmers, retailers, and employers.

Therefore, within every government department considerable effort will need to be spent coordinating that department’s overall efforts with the energy transition.

The coordination process could be aided substantially by the creation of an office, tied to no existing Department, specifically tasked with tracking and managing the energy transition, and with helping existing Departments work together toward the common goal.

3. Carbon and energy policy

Worldwide, there has already been much discussion of, and some experimentation with, policies to discourage fossil fuel use and encourage the transition to renewable energy sources. More exploration of such policy options is needed.

The carbon Cap-and-Trade scheme that was deployed in the European Union, in which fossil fuel companies were automatically awarded carbon credits, has tended merely to push high-polluting jobs to poorer nations, while enriching bankers with trading commissions and rewarding established polluters.

The auctioning of all carbon credits, so that existing polluters must buy them, would be a clear improvement on that system. Cap-and-Dividend or Cap-and-Share programs would go further still by promoting social equity, with the proceeds from carbon credit auctions going directly to the public to offset the impact of rising energy costs.

As Al Gore has suggested, carbon taxes could raise government revenue to pay for the energy transition and discourage fossil fuel consumption while replacing payroll taxes—thus adding minimally or not at all to the tax burden of citizens.

However, all such systems assume a market for fossil fuels in which severe resource scarcity plays little or no role. In fact, scarcity may partially undermine carbon trade, share, or dividend systems (no oil company would need to buy carbon credits if the supply of oil is shrinking as fast as yearly caps would otherwise mandate), while resulting in extreme price volatility that would overwhelm both individual consumers and entire industries. Under a carbon tax system, falling oil production would translate to falling government tax revenues.

A policy solution to the depletion-led scarcity dilemma might be a fuel quota rationing system administered so that the total number of quotas issued declines annually. Such a system, called Tradable Energy Quotas (TEQs), is being studied in Britain. In it, quotas of carbon or specific fossil fuels (e.g., gasoline) would be issued electronically to all adults yearly, with the information stored on a magnetic card swiped at the point of fuel purchase. Each year the total quantity of quotas would be reduced to conform either with carbon reduction targets or declining fuel availability. Consumers could sell extra quotas or purchase them as needed, with the market price reflecting aggregate supply and demand. Each consumer would thus have an immediate interest in conserving fuel. Allowances could be made for low-income citizens with temporary need for more quotas as they get rid of older cars and insulate homes.

Policy tools to directly support the deployment of renewable energy sources, such as Renewable Portfolio Standards (RPS) and Feed-in Tariffs, should also be reviewed for effectiveness, comparing existing case studies. In general, Feed-in Tariffs, in which government guarantees a price for electricity generated from renewable sources, appear to succeed in harnessing entrepreneurial zeal to the energy transition.

Innovative financing policies like California’s AB 811 could help cities provide low-interest loans to homeowners for renewable energy.

Meanwhile, laws and incentives affecting the food system (including food safety laws and farm subsidies) will need to be reconsidered so as to provide preferential support for small-scale, local, low-input producers.

4. Education

The energy transition will result in the creation of many millions of new jobs and careers. While President-elect Obama called for the creation of five million green-collar jobs, the energy transition will in fact demand something on the order of a ten-fold increase in that goal. However, these new jobs and careers will require skill sets largely different from those currently being imparted by our educational system.

Because they are inexpensive, numerous, and widely dispersed, community colleges could play a central role in preparing workers for new opportunities in sustainable food production, renewable energy installation, grid rebuilding, rail expansion, public transport construction, and home energy retrofitting.

In order for community colleges to fill this new role, teacher training and curriculum development on a grand scale will be needed, ideally organized and coordinated at the national level through the Department of Education.

This reorientation of curriculum should begin with gardening programs in all grade schools and increased course emphasis on topics related to energy and conservation.

5. Public messaging

The successful management of a project of the scope outlined here will require public buy-in at every stage and level, and this in turn will depend upon the use of language and images to continually underscore what is at stake, to focus attention on immediate and long-range goals, and to foster a spirit of cooperation and willing sacrifice. This in itself is no small task in a nation that is politically divided and that has come to regard consumerism as patriotic.

As in the New Deal and World War II, business leaders, advertising agencies and even Hollywood must be enlisted in the effort—indeed, this high-level cooperation must be seen as a quid pro quo for the Federal government’s enormous efforts to salvage the economy by bailing out banks and corporations.

President-elect Obama built his campaign around grassroots organization and the empowerment of individuals to take ownership of a movement. The energy transition could similarly benefit from a sophisticated, interactive, web-based program to inspire individual and group action by providing tools and resources for reduction of fossil fuel dependence.

Tax breaks could be offered to businesses, churches, and other groups that develop personal action teams. Civic programs, such as a mayors’ challenge, could also play a significant role. Grassroots initiatives, such as the international Transition Towns movement, could lead the way toward voluntary community efforts to end fossil fuel dependency.

6. Planned decentralism

During the Franklin Roosevelt Administration, advisors engaged in a healthy debate about whether the New Deal should consist solely of a top-down imposition of new bureaucratic programs, or whether it should also, or primarily, seek to build healthy local communities and regions with the autonomy to design their own development strategies. Arthur Morgan was perhaps the primary decentralist intellectual of the period, but the movement—which traces back to Thomas Jefferson—included southern agrarians as well.

In the present instance, decentralist ideas and strategies must be taken even more seriously than was the case in the 1930s, if only because the end of cheap energy will inevitably entail a reduction in Americans’ mobility, and a re-localization of production and consumption.

This emphasis on decentralism could translate to the creation of programs designed at the sub-federal level that promote increasing regional self-sufficiency in food, manufacturing, and energy production.

7. Challenging goals and targets

The energy transition cannot be accomplished in four years or eight: the construction of our existing fossil fuel-based societal infrastructure required a century, and its replacement will take three or four decades at a bare minimum. What can and must be accomplished in a single administration is the essential change of direction—the beginning of a process of renewal that can persist through other administrations to its ultimate fruition.

This sense of embarking on a journey with a long arc of collective struggle toward an eventual goal can best be maintained through specific time-based targets for reducing carbon emissions, reducing fuel consumption, building renewable energy generation capacity, improving public transit systems and constructing new ones, producing more local low-fuel food, and retrofitting buildings for high energy efficiency. A series of challenging yet feasible annual and four-year targets should be set at the beginning of the transition process, with the ultimate goal—complete freedom from fossil fuel dependency—to be achieved by 2050. Future Administrations will be in positions to adjust strategies toward the realization of that goal, but the goal itself must remain irrevocable through bipartisan consensus.

Targets can be extended through every sector, from individuals to schools, government, and businesses. The Federal government should take the lead by setting targets for all federal buildings, departments, and employees.

Achievement of annual targets should be cause for public celebration, mutual congratulation, and a refocusing of effort on the long-term goal.

Conclusion

What is being suggested in this proposal is of such enormous scope that its intended audience may initially be inclined to dismiss it out of hand. However, the authors have not exaggerated likely costs of inaction, nor have we overstated the critical need for comprehensive changes in interconnected societal systems that now depend upon an unmaintainable flow of cheap fossil fuels.

Nevertheless, we have perhaps not adequately stated the benefits of pursuing this program. By ending our national addiction to fossil fuels, we can shrink this country’s need to police energy-rich areas of the world and foster international peace, while saving hundreds of billions of dollars annually through reduced military budgets. We can save hundreds of billions more by creating a food system that substantially reduces massive health problems such as obesity, cancer, and asthma. We can dramatically curtail environmental pollution, most of which results directly or indirectly from fossil fuel use. We can help Americans become more skilled and more self-reliant, and more prone to volunteer in community-based programs—and they will be happier as a consequence. We can reduce our nation’s political divisions by calling forth qualities of character prized by both liberals (concern for the welfare of others) and conservatives (local autonomy and self-sufficiency).

In the end, what is accomplished by this enormous collective effort will be not merely the reversal of a historic economic and environmental calamity, or even the rebuilding of the nation’s infrastructure, but the revival of a civilization—and the creation of a sustainable foundation for the accomplishments of future generations.

Also note that I strongly disagree with his recommendation to abandon politics – he’s right that politicians are swine but i think he’s wrong in overlooking people’s ability to build a resistance movement that can make real changes to our society, despite politicians best efforts to derail it.  So with that, enjoy the article! [alex]

Closing the ‘Collapse Gap’: the USSR was better prepared for collapse than the US

Good evening, ladies and gentlemen. I am not an expert or a scholar or an activist. I am more of an eye-witness. I watched the Soviet Union collapse, and I have tried to put my observations into a concise message. I will leave it up to you to decide just how urgent a message it is.

My talk tonight is about the lack of collapse-preparedness here in the United States. I will compare it with the situation in the Soviet Union, prior to its collapse. The rhetorical device I am going to use is the “Collapse Gap” – to go along with the Nuclear Gap, and the Space Gap, and various other superpower gaps that were fashionable during the Cold War.

Slide [2] The subject of economic collapse is generally a sad one. But I am an optimistic, cheerful sort of person, and I believe that, with a bit of preparation, such events can be taken in stride. As you can probably surmise, I am actually rather keen on observing economic collapses. Perhaps when I am really old, all collapses will start looking the same to me, but I am not at that point yet.

And this next one certainly has me intrigued. From what I’ve seen and read, it seems that there is a fair chance that the U.S. economy will collapse sometime within the foreseeable future. It also would seem that we won’t be particularly well-prepared for it. As things stand, the U.S. economy is poised to perform something like a disappearing act. And so I am eager to put my observations of the Soviet collapse to good use.

Slide [3] I anticipate that some people will react rather badly to having their country compared to the USSR. I would like to assure you that the Soviet people would have reacted similarly, had the United States collapsed first. Feelings aside, here are two 20th century superpowers, who wanted more or less the same things – things like technological progress, economic growth, full employment, and world domination – but they disagreed about the methods. And they obtained similar results – each had a good run, intimidated the whole planet, and kept the other scared. Each eventually went bankrupt.

Slide [4] The USA and the USSR were evenly matched in many categories, but let me just mention four.

The Soviet manned space program is alive and well under Russian management, and now offers first-ever space charters. The Americans have been hitching rides on the Soyuz while their remaining spaceships sit in the shop.

The arms race has not produced a clear winner, and that is excellent news, because Mutual Assured Destruction remains in effect. Russia still has more nuclear warheads than the US, and has supersonic cruise missile technology that can penetrate any missile shield, especially a nonexistent one.

The Jails Race once showed the Soviets with a decisive lead, thanks to their innovative GULAG program. But they gradually fell behind, and in the end the Jails Race has been won by the Americans, with the highest percentage of people in jail ever.

The Hated Evil Empire Race is also finally being won by the Americans. It’s easy now that they don’t have anyone to compete against.

Slide [5] Continuing with our list of superpower similarities, many of the problems that sunk the Soviet Union are now endangering the United States as well. Such as a huge, well-equipped, very expensive military, with no clear mission, bogged down in fighting Muslim insurgents. Such as energy shortfalls linked to peaking oil production. Such as a persistently unfavorable trade balance, resulting in runaway foreign debt. Add to that a delusional self-image, an inflexible ideology, and an unresponsive political system.

Slide [6] An economic collapse is amazing to observe, and very interesting if described accurately and in detail. A general description tends to fall short of the mark, but let me try. An economic arrangement can continue for quite some time after it becomes untenable, through sheer inertia. But at some point a tide of broken promises and invalidated assumptions sweeps it all out to sea. One such untenable arrangement rests on the notion that it is possible to perpetually borrow more and more money from abroad, to pay for more and more energy imports, while the price of these imports continues to double every few years. Free money with which to buy energy equals free energy, and free energy does not occur in nature. This must therefore be a transient condition. When the flow of energy snaps back toward equilibrium, much of the US economy will be forced to shut down.

Slide [7] I’ve described what happened to Russia in some detail in one of my articles, which is available on SurvivingPeakOil.com. I don’t see why what happens to the United States should be entirely dissimilar, at least in general terms. The specifics will be different, and we will get to them in a moment. We should certainly expect shortages of fuel, food, medicine, and countless consumer items, outages of electricity, gas, and water, breakdowns in transportation systems and other infrastructure, hyperinflation, widespread shutdowns and mass layoffs, along with a lot of despair, confusion, violence, and lawlessness. We definitely should not expect any grand rescue plans, innovative technology programs, or miracles of social cohesion.

Slide [8] When faced with such developments, some people are quick to realize what it is they have to do to survive, and start doing these things, generally without anyone’s permission. A sort of economy emerges, completely informal, and often semi-criminal. It revolves around liquidating, and recycling, the remains of the old economy. It is based on direct access to resources, and the threat of force, rather than ownership or legal authority. People who have a problem with this way of doing things, quickly find themselves out of the game.

These are the generalities. Now let’s look at some specifics.

Slide [9] One important element of collapse-preparedness is making sure that you don’t need a functioning economy to keep a roof over your head. In the Soviet Union, all housing belonged to the government, which made it available directly to the people. Since all housing was also built by the government, it was only built in places that the government could service using public transportation. After the collapse, almost everyone managed to keep their place.

In the United States, very few people own their place of residence free and clear, and even they need an income to pay real estate taxes. People without an income face homelessness. When the economy collapses, very few people will continue to have an income, so homelessness will become rampant. Add to that the car-dependent nature of most suburbs, and what you will get is mass migrations of homeless people toward city centers.

Slide [10] Soviet public transportation was more or less all there was, but there was plenty of it. There were also a few private cars, but so few that gasoline rationing and shortages were mostly inconsequential. All of this public infrastructure was designed to be almost infinitely maintainable, and continued to run even as the rest of the economy collapsed.

The population of the United States is almost entirely car-dependent, and relies on markets that control oil import, refining, and distribution. They also rely on continuous public investment in road construction and repair. The cars themselves require a steady stream of imported parts, and are not designed to last very long. When these intricately interconnected systems stop functioning, much of the population will find itself stranded.

Slide [11] Economic collapse affects public sector employment almost as much as private sector employment, eventually. Because government bureaucracies tend to be slow to act, they collapse more slowly. Also, because state-owned enterprises tend to be inefficient, and stockpile inventory, there is plenty of it left over, for the employees to take home, and use in barter. Most Soviet employment was in the public sector, and this gave people some time to think of what to do next.

Private enterprises tend to be much more efficient at many things. Such laying off their people, shutting their doors, and liquidating their assets. Since most employment in the United States is in the private sector, we should expect the transition to permanent unemployment to be quite abrupt for most people.

Slide [12] When confronting hardship, people usually fall back on their families for support. The Soviet Union experienced chronic housing shortages, which often resulted in three generations living together under one roof. This didn’t make them happy, but at least they were used to each other. The usual expectation was that they would stick it out together, come what may.

In the United States, families tend to be atomized, spread out over several states. They sometimes have trouble tolerating each other when they come together for Thanksgiving, or Christmas, even during the best of times. They might find it difficult to get along, in bad times. There is already too much loneliness in this country, and I doubt that economic collapse will cure it.

Slide [13] To keep evil at bay, Americans require money. In an economic collapse, there is usually hyperinflation, which wipes out savings. There is also rampant unemployment, which wipes out incomes. The result is a population that is largely penniless.

In the Soviet Union, very little could be obtained for money. It was treated as tokens rather than as wealth, and was shared among friends. Many things – housing and transportation among them – were either free or almost free.

Slide [14] Soviet consumer products were always an object of derision – refrigerators that kept the house warm – and the food, and so on. You’d be lucky if you got one at all, and it would be up to you to make it work once you got it home. But once you got it to work, it would become a priceless family heirloom, handed down from generation to generation, sturdy, and almost infinitely maintainable.

In the United States, you often hear that something “is not worth fixing.” This is enough to make a Russian see red. I once heard of an elderly Russian who became irate when a hardware store in Boston wouldn’t sell him replacement bedsprings: “People are throwing away perfectly good mattresses, how am I supposed to fix them?”

Economic collapse tends to shut down both local production and imports, and so it is vitally important that anything you own wears out slowly, and that you can fix it yourself if it breaks. Soviet-made stuff generally wore incredibly hard. The Chinese-made stuff you can get around here – much less so.

Slide [15] The Soviet agricultural sector was notoriously inefficient. Many people grew and gathered their own food even in relatively prosperous times. There were food warehouses in every city, stocked according to a government allocation scheme. There were very few restaurants, and most families cooked and ate at home. Shopping was rather labor-intensive, and involved carrying heavy loads. Sometimes it resembled hunting – stalking that elusive piece of meat lurking behind some store counter. So the people were well-prepared for what came next.

In the United States, most people get their food from a supermarket, which is supplied from far away using refrigerated diesel trucks. Many people don’t even bother to shop and just eat fast food. When people do cook, they rarely cook from scratch. This is all very unhealthy, and the effect on the nation’s girth, is visible, clear across the parking lot. A lot of the people, who just waddle to and from their cars, seem unprepared for what comes next. If they suddenly had to start living like the Russians, they would blow out their knees.

Slide [16] The Soviet government threw resources at immunization programs, infectious disease control, and basic care. It directly operated a system of state-owned clinics, hospitals, and sanatoriums. People with fatal ailments or chronic conditions often had reason to complain, and had to pay for private care – if they had the money.

In the United States, medicine is for profit. People seems to think nothing of this fact. There are really very few fields of endeavor to which Americans would deny the profit motive. The problem is, once the economy is removed, so is the profit, along with the services it once helped to motivate.

Slide [17] The Soviet education system was generally quite excellent. It produced an overwhelmingly literate population and many great specialists. The education was free at all levels, but higher education sometimes paid a stipend, and often provided room and board. The educational system held together quite well after the economy collapsed. The problem was that the graduates had no jobs to look forward to upon graduation. Many of them lost their way.

The higher education system in the United States is good at many things – government and industrial research, team sports, vocational training… Primary and secondary education fails to achieve in 12 years what Soviet schools generally achieved in 8. The massive scale and expense of maintaining these institutions is likely to prove too much for the post-collapse environment. Illiteracy is already a problem in the United States, and we should expect it to get a lot worse.

Slide [18] The Soviet Union did not need to import energy. The production and distribution system faltered, but never collapsed. Price controls kept the lights on even as hyperinflation raged.

The term “market failure” seems to fit the energy situation in the United States. Free markets develop some pernicious characteristics when there are shortages of key commodities. During World War II, the United States government understood this, and successfully rationed many things, from gasoline to bicycle parts. But that was a long time ago. Since then, the inviolability of free markets has become an article of faith.

Slide [19] My conclusion is that the Soviet Union was much better-prepared for economic collapse than the United States is.

I have left out two important superpower asymmetries, because they don’t have anything to do with collapse-preparedness. Some countries are simply luckier than others. But I will mention them, for the sake of completeness.

In terms of racial and ethnic composition, the United States resembles Yugoslavia more than it resembles Russia, so we shouldn’t expect it to be as peaceful as Russia was, following the collapse. Ethnically mixed societies are fragile and have a tendency to explode.

In terms of religion, the Soviet Union was relatively free of apocalyptic doomsday cults. Very few people there wished for a planet-sized atomic fireball to herald the second coming of their savior. This was indeed a blessing.

Slide [20] One area in which I cannot discern any Collapse Gap is national politics. The ideologies may be different, but the blind adherence to them couldn’t be more similar.

It is certainly more fun to watch two Capitalist parties go at each other than just having the one Communist party to vote for. The things they fight over in public are generally symbolic little tokens of social policy, chosen for ease of public posturing. The Communist party offered just one bitter pill. The two Capitalist parties offer a choice of two placebos. The latest innovation is the photo finish election, where each party buys 50% of the vote, and the result is pulled out of statistical noise, like a rabbit out of a hat.

The American way of dealing with dissent and with protest is certainly more advanced: why imprison dissidents when you can just let them shout into the wind to their heart’s content?

The American approach to bookkeeping is more subtle and nuanced than the Soviet. Why make a state secret of some statistic, when you can just distort it, in obscure ways? Here’s a simple example: inflation is “controlled” by substituting hamburger for steak, in order to minimize increases to Social Security payments.

Slide [21] Many people expend a lot of energy protesting against their irresponsible, unresponsive government. It seems like a terrible waste of time, considering how ineffectual their protests are. Is it enough of a consolation for them to be able to read about their efforts in the foreign press? I think that they would feel better if they tuned out the politicians, the way the politicians tune them out. It’s as easy as turning off the television set. If they try it, they will probably observe that nothing about their lives has changed, nothing at all, except maybe their mood has improved. They might also find that they have more time and energy to devote to more important things.

Slide [22] I will now sketch out some approaches, realistic and otherwise, to closing the Collapse Gap. My little list of approaches might seem a bit glib, but keep in mind that this is a very difficult problem. In fact, it’s important to keep in mind that not all problems have solutions. I can promise you that we will not solve this problem tonight. What I will try to do is to shed some light on it from several angles.

Slide [23] Many people rail against the unresponsiveness and irresponsibility of the government. They often say things like “What is needed is…” plus the name of some big, successful government project from the glorious past – the Marshall Plan, the Manhattan Project, the Apollo program. But there is nothing in the history books about a government preparing for collapse. Gorbachev’s “Perestroika” is an example of a government trying to avert or delay collapse. It probably helped speed it along.

Slide [24] There are some things that I would like the government to take care of in preparation for collapse. I am particularly concerned about all the radioactive and toxic installations, stockpiles, and dumps. Future generations are unlikely to able to control them, especially if global warming puts them underwater. There is enough of this muck sitting around to kill off most of us. I am also worried about soldiers getting stranded overseas – abandoning one’s soldiers is among the most shameful things a country can do. Overseas military bases should be dismantled, and the troops repatriated. I’d like to see the huge prison population whittled away in a controlled manner, ahead of time, instead of in a chaotic general amnesty. Lastly, I think that this farce with debts that will never be repaid, has gone on long enough. Wiping the slate clean will give society time to readjust. So, you see, I am not asking for any miracles. Although, if any of these things do get done, I would consider it a miracle.

Slide [25] A private sector solution is not impossible; just very, very unlikely. Certain Soviet state enterprises were basically states within states. They controlled what amounted to an entire economic system, and could go on even without the larger economy. They kept to this arrangement even after they were privatized. They drove Western management consultants mad, with their endless kindergartens, retirement homes, laundries, and free clinics. These weren’t part of their core competency, you see. They needed to divest and to streamline their operations. The Western management gurus overlooked the most important thing: the core competency of these enterprises lay in their ability to survive economic collapse. Maybe the young geniuses at Google can wrap their heads around this one, but I doubt that their stockholders will.

Slide [26] It’s important to understand that the Soviet Union achieved collapse-preparedness inadvertently, and not because of the success of some crash program. Economic collapse has a way of turning economic negatives into positives. The last thing we want is a perfectly functioning, growing, prosperous economy that suddenly collapses one day, and leaves everybody in the lurch. It is not necessary for us to embrace the tenets of command economy and central planning to match the Soviet lackluster performance in this area. We have our own methods, that are working almost as well. I call them “boondoggles.” They are solutions to problems that cause more problems than they solve.

Just look around you, and you will see boondoggles sprouting up everywhere, in every field of endeavor: we have military boondoggles like Iraq, financial boondoggles like the doomed retirement system, medical boondoggles like private health insurance, legal boondoggles like the intellectual property system. The combined weight of all these boondoggles is slowly but surely pushing us all down. If it pushes us down far enough, then economic collapse, when it arrives, will be like falling out of a ground floor window. We just have to help this process along, or at least not interfere with it. So if somebody comes to you and says “I want to make a boondoggle that runs on hydrogen” – by all means encourage him! It’s not as good as a boondoggle that burns money directly, but it’s a step in the right direction.

Slide [27] Certain types of mainstream economic behavior are not prudent on a personal level, and are also counterproductive to bridging the Collapse Gap. Any behavior that might result in continued economic growth and prosperity is counterproductive: the higher you jump, the harder you land. It is traumatic to go from having a big retirement fund to having no retirement fund because of a market crash. It is also traumatic to go from a high income to little or no income. If, on top of that, you have kept yourself incredibly busy, and suddenly have nothing to do, then you will really be in rough shape.

Economic collapse is about the worst possible time for someone to suffer a nervous breakdown, yet this is what often happens. The people who are most at risk psychologically are successful middle-aged men. When their career is suddenly over, their savings are gone, and their property worthless, much of their sense of self-worth is gone as well. They tend to drink themselves to death and commit suicide in disproportionate numbers. Since they tend to be the most experienced and capable people, this is a staggering loss to society.

If the economy, and your place within it, is really important to you, you will be really hurt when it goes away. You can cultivate an attitude of studied indifference, but it has to be more than just a conceit. You have to develop the lifestyle and the habits and the physical stamina to back it up. It takes a lot of creativity and effort to put together a fulfilling existence on the margins of society. After the collapse, these margins may turn out to be some of the best places to live.

Slide [28] I hope that I didn’t make it sound as if the Soviet collapse was a walk in the park, because it was really quite awful in many ways. The point that I do want to stress is that when this economy collapses, it is bound to be much worse. Another point I would like to stress is that collapse here is likely to be permanent. The factors that allowed Russia and the other former Soviet republics to recover are not present here.

In spite of all this, I believe that in every age and circumstance, people can sometimes find not just a means and a reason to survive, but enlightenment, fulfillment, and freedom. If we can find them even after the economy collapses, then why not start looking for them now?

Thank you.

http://www.energybulletin.net/node/2325

Foster is pushing a kind of “Green Marxism” – in fact the Monthly Review as a whole is beginning to focus quite a bit on energy and ecology in its critiques of US empire.

The approach is good – peak oil is examined with calm as an inevitable geological event, “alternative” energy sources like tar sands and ethanol are shown in their true nasty colors, and the reader is presented with the option of allowing the government to continue to assault those unfortunate enough to be born on top of oil reserves, or to work for a new humane world.

However, one place this critique falls short is in (explicitly or implicitly) propagating the notion that awareness of Peak Oil by neo-conservatives in the halls of power is what prompted aggression against Afghanistan, Iraq or Venezuela, and labeling this a “new energy imperialism.”

Unfortunately the capitalist system is far more complex and multi-faceted than that, and the neo-cons, like all US elites, are just tools existing to serve the interests of US corporations and the Pentagon, which they are doing quite well by continuing the same old foreign policy of trying to control the oil-rich Middle East (by force if necessary – with the added bonus of trillions of dollars of contracts for the military-industrial complex). If only it were as easy as pinning our problems on the ideas in the heads of those in power, all we’d need to do to end the crisis would be to put someone with better ideas in power! Sorry, it’s not gonna work like that.

The “energy imperialism” we see today as the US gears up for war with Iran is nothing “new” at all; it’s the exact same system that toppled Mossadegh in 1953, that provided tanks, planes and chemical weapons to both sides of the Iran-Iraq war throughout the 80s, and that has been pouring billions of dollars of military aid into Israel to act as regional policeman for 60 years.

The only thing that’s new is that the system is beginning to fail, and the US is having a much harder time maintaining its dominance over the Persian Gulf region, relying on brute force and direct occupation, and even that isn’t working for them anymore.

What we face is not a “new energy imperialism” but an old energy imperialism, newly being beaten. I see peak oil as a major catalyst in the inevitable crumbling of the US empire, and an immense opportunity for all who desire peace, justice or human rights. [alex]

Peak Oil and Energy Imperialism

by John Bellamy Foster

Originally published by Monthly Review. July/August 2008.

The rise in overt militarism and imperialism at the outset of the twenty-first century can plausibly be attributed largely to attempts by the dominant interests of the world economy to gain control over diminishing world oil supplies.1 Beginning in 1998 a series of strategic energy initiatives were launched in national security circles in the United States in response to: (1) the crossing of the 50 percent threshold in U.S. importation of foreign oil; (2) the disappearance of spare world oil production capacity; (3) concentration of an increasing percentage of all remaining conventional oil resources in the Persian Gulf; and (4) looming fears of peak oil.

The response of the vested interests to this world oil supply crisis was to construct what Michael Klare in Blood and Oil has called a global “strategy of maximum extraction.”2 This required that the United States as the hegemonic power, with the backing of the other leading capitalist states, seek to extend its control over world oil reserves with the object of boosting production. Seen in this light, the invasion and occupation of Afghanistan (the geopolitical doorway to Western access to Caspian Sea Basin oil and natural gas) following the 9/11 attacks, the 2003 invasion of Iraq, the rapid expansion of U.S. military activities in the Gulf of Guinea in Africa (where Washington sees itself as in competition with Beijing), and the increased threats now directed at Iran and Venezuela—all signal the rise of a dangerous new era of energy imperialism.

The Geopolitics of Oil

In April 1998 the United States for the first time imported the majority of the petroleum it consumed. The crossing of this threshold pointed to a very rapid growth in U.S. foreign oil dependency. At the same time fears that the world would soon reach peak oil production became increasingly prominent, assuming a high profile behind the scenes in establishment discussions. A key event was the publication in Scientific American in March 1998of “The End of Cheap Oil” by retired oil industry geologists Colin J. Campbell and Jean H. Laherrère. “The End of Cheap Oil” predicted that world oil production would peak “probably within 10 years.” The Campbell and Laherrère article and the question of peak oil immediately drew the attention of the International Energy Agency (IEA), the OECD’s energy organization, in its World Energy Outlook of 1998. The IEA claimed that even adopting the pessimists’ assumptions on the real extent of world oil reserves and the existence of a bell-shaped production curve (but without the sharp oil price hike suggested by Campbell), its own long-term supply model “would not peak until around 2008–2009.” Employing the IEA’s own assumptions on reserves, moreover, would push the peak back around a decade further.3 This, however, was still far from distant. The peaking of United Kingdom North Sea oil production in 1999 (Norwegian production peaked two years later) added a still greater sense of urgency.

Matthew Simmons, CEO of the Houston-based energy investmentbanking firm Simmons and Company International and a member of the National Petroleum Council and the Council on Foreign Relations, published an article in Middle East Insight in 1999 in which he emphasized the “far faster” depletion of major oil fields arising from high-extraction technology. Rather than extending the life of oil fields as previously supposed, the introduction of this technology most likely accelerated their depletion. Referring to oil fields “brought into production since 1970,” Simmons noted that “almost all of these new fields have already reached peak production and are now experiencing rapid rates of decline…fAnd when the stable base of old, but giant, fields also starts to deplete,” he asked, “what will this do to the world’s average depletion rate?”4

In 2000 Simmons’s concerns regarding diminishing oil supply led to his becoming an energy advisor for George W. Bush’s presidential campaign. As he recounted it in a February 2008 interview, he had “pulled aside” Bush’s “first cousin” in early March 2000 to tell him of an earlier conversation he had had with an assistant to Secretary of Energy Bill Richardson, who had been sent to examine the spare oil production capacity of the OPEC countries. As Simmons reported to Bush’s cousin:

I said, “When you have someone who is the head of U.S. oil policy call you and [say ‘shit!’] about five times in 20 seconds, this is so much worse than what they’ve warned us about.” I said, “Between now and the election, if this all breaks out and Bush is misinformed, he can mispronounce every head of state in the world, but this, this will sink you.” And that dragged me into helping create the comprehensive energy plan put forth by Bush when he was running.5

Simmons was a member of the Bush-Cheney Energy Transition Advisory Committee, advising on the growing oil constraints. His 2005 book, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, arguing that the Saudi oil production peak was imminent, has become one of the most influential works propounding the peak oil notion.6

The Energy Information Administration (EIA) of the U.S. Department of Energy conducted a full assessment of the peak oil issue as early as July 2000, considering a number of scenarios. As opposed to those who saw the peak occurring “as early as 2004” the EIA concluded that “world conventional oil production may increase two decades or more before it begins to decline.” The analysis itself, however, was not altogether reassuring to the vested interests, since it suggested that a world oil peak could be reached as early as 2021.7

These concerns with regard to world oil supply that began to penetrate the corridors of power in the 1998–2001 period led to a wide-ranging debate within the inner circles in the United States about the nature of the oil extraction problem and the strategic means with which to alleviate it. This was increasingly integrated with wider issues on the expansion of the U.S. empire raised by groups such as the Project for a New American Century.8

In July 1998 the Center for Strategic and International Studies (CSIS) launched its “Strategic Energy Initiative,” at the urging of former chairman of the Senate Armed Services Committee Sam Nunn and former secretary of defense (and former secretary of energy) James R. Schlesinger. In November 2000, the Strategic Energy Initiative issued a three volume report, The Geopolitics of Energy into the 21st Century, with Nunn and Schlesinger as cochairs. It stressed that the Persian Gulf would have to expand its energy production “by almost 80 percent during 2000–2020” in the face of rising demand and declining oil production elsewhere in the world in order to meet world energy needs.

The question of a world oil peak in the decade 2000–10 was also examined, focusing on the arguments of Campbell and Laherrère and Simmons. The CSIS Strategic Energy Initiative officially rejected the notion that the world oil peak would be reached as early as 2010. Nevertheless, its report took the peak oil issue extremely seriously. As the “only superpower” the United States, it declared, had “special responsibilities for preserving worldwide energy supply” and “open access” to the world’s oil. Underscored throughout the report was the necessity of finding ways to increase oil exports from Iraq and Iran both then under U.S. economic sanctions.9

In 2001 the James Baker III Institute for Public Policy of Rice University and the Council on Foreign Relations cosponsored a study of Strategic Energy Policy Challenges for the 21st Century, chaired by energy analyst Edward L. Morse. Task force members included both oil optimists, such as Morse and Daniel Yergin of Cambridge Energy Research Associates, and oil pessimists such as peak oil proponent Simmons. The Baker Institute/Council on Foreign Relations report emphasized the adequacy of world oil reserves for decades to come but argued that world oil was facing “tight supply” due to “underinvestment” in new production capacity and “volatile states.” Excess capacity had been “wiped out,” falling to “negligible” amounts, partly due to oil producing countries devoting oil revenues to social projects rather than to investment in new production capacity.

In this situation, the Baker Institute/Council on Foreign Relations report pointed out that Iraq had emerged as a key “swing producer” of oil, operating well below capacity, and in the previous year “turning its taps on and off when it has felt such action was in its strategic interests to do so.” This presented a growing danger to the world capitalist economy, which included the “possibility that Saddam Hussein may remove Iraqi oil from the market for an extended period.” Indeed, “Iraqi reserves,” the Strategic Energy Policy report emphasized, “represent a major asset that can quickly add capacity to world oil markets and inject a more competitive tenor to oil trade.” Investment in the enhancement of Iraqi oil production capacity was essential. The problem was what to do about Saddam Hussein.

Overall, the Baker Institute/Council on Foreign Relations report emphasized, the stakes were exceedingly high, since there was a danger that oil price increases and supply shortages would make “the United States appear more similar to a poor developing country.”

The answer was for the Western powers led by the United States to play a more direct role in the development of world oil resources. This would be coupled with replacement of the current political economy of oil dominated by national oil companies, which had arisen with the growth of “resource nationalism” in the third world, with one in which the multinational oil corporations centered in the advanced capitalist economies once again took charge of reserves and investments.10

These reports by national security analysts on strategic energy policy were followed in May 2001 by the White House release of its National Energy Policy, issued under the direction of Vice President Dick Cheney. It too emphasized the need for U.S. petroleum security, noting that total U.S. oil production had fallen 39 percent below its 1970 peak and that U.S. reliance on foreign oil imports could increase to almost two-thirds of its total gasoline and heating oil consumption by 2020. President Bush warned in May 2001 that dependence on foreign crude oil put U.S. “national energy security” in the hands of “foreign nations, some of whom do not share our interests.”

In terms of the long-term world oil supply outlook, the U.S. Department of Energy’s International Energy Outlook in 2001 projected the need for a doubling of Persian Gulf oil production over 1999 levels by 2020 in order to meet expected world demand. This optimistic forecast could not possibly be fulfilled, however, without massive investment in an expansion of capacity in the Persian Gulf of a kind that key states, such as Iraq and Iran, and even Saudi Arabia, seemed unlikely to undertake. Iraqi crude oil production in 2001 was 31 percent less than in 1979, while Iran’s had fallen by about 37 percent since 1976. Both nations were viewed as underproducing due to underinvestment and the effects of sanctions. The IEA estimated that Persian Gulf states would have to invest over half a trillion dollars on new equipment and technology for oil production capacity expansion by 2030 in order to meet projected oil production levels.11

U.S. national security and energy analysts as well as energy corporations and the Bush administration had thus arrived at the conclusion by spring 2001 that, while substantial oil reserves still existed, capacity was extremely tight, presaging a series of oil price shocks. Only a vast increase of oil production in the Persian Gulf as a whole could prevent an enormous gap emerging between oil production and demand over the next two decades. Behind all of this lay the specter of peak oil production.

Rather than try to solve the problem on the demand side by lessening consumption, the Bush administration turned, as had all other administrations before it, to the military as the ultimate guarantor. As Michael Klare wrote in his Blood and Oil:

In the months before and after 9/11, the Bush administration fashioned a comprehensive strategy for American domination of the Persian Gulf and the procurement of ever-increasing quantities of petroleum. It is unlikely that this strategy was ever formalized in a single, all-encompassing White House document. Rather, the administration adopted a series of policies that together formed a blueprint for political, economic, and military action in the Gulf. This approach—I call it the strategy of maximum extraction—was aimed primarily at boosting the oil output of the major Gulf producers. But since the sought-after increases could be doomed by instability and conflict in the region, the strategy also entailed increased military intervention.12

Militarily the issue was one of shoring up Saudi Arabia in the face of growing signs of instability, carrying out regime change in Iraq, and exerting maximum pressure on Iran. Key figures in the Bush administration such as Donald Rumsfeld and Paul Wolfowitz had been pushing for an invasion of Iraq even before the election. Once the September 2001 attacks occurred, the “War on Terrorism” led to the invasion first of Afghanistan, giving the United States a geopolitical doorway (and pipeline route) to Central Asia and the Caspian Sea Basin, followed by the invasion in 2003 of Iraq. From the standpoint of the geopolitics of oil, Saddam Hussein’s removal and the occupation of Iraq was seen as enhancing the security of Middle East oil, presenting the possibility of a big boost in Iraqi oil production, and providing a staging ground for increased U.S. military, political, and economic dominance of the Gulf. U.S. strategic control of the Middle East and its oil was viewed as the key to establishing the basis of a “new American century.”

As former Federal Reserve Board Chairman Alan Greenspan, the top U.S. economic official throughout this period, stated in his book The Age of Turbulence in 2007: “I am saddened that it is politically inconvenient to acknowledge what everyone knows: that the Iraq war is largely about oil.” The U.S. invasion of Iraq, Greenspan claimed, needed to be seen against the background of previous Western military interventions aimed at securing the oil of the region, for example: “the reaction, to and reversal of, Mossadeq’s nationalization of Anglo-Iranian oil in 1951 [resulting in the CIA’s overthrow of Iranian Prime Minister Mossadeq and the installation of the Shah in 1953] and the aborted effort by Britain and France to reverse Nasser’s takeover of the key Suez Canal link for oil flows to Europe in 1956.” The U.S. intervention in Iraq and its increased military role in the Middle East was, for Greenspan—the leading spokesperson for financial capital in the 1990s and early 2000s—justified by the fact that “world growth over the next quarter century at rates commensurate with the past quarter century will require between one-fourth and two-fifths more oil than we use today.” And this vast increase in oil production needed to come largely from the Persian Gulf, where two-thirds of the world’s reserves and hence most of its capacity for increased extraction was located.13

Although the Bush administration criticized Greenspan’s statement, the centrality of oil in the occupation of Iraq was not something that it could easily deny. In a September 13, 2007, prime time television speech, Bush declared that if the United States were to pull out of Iraq “extremists could control a key part of the global energy supply.”14

Peak Oil: A Global Turning Point?

In the five years that have elapsed since the United States invaded Iraq the world oil supply problem has drastically worsened. Estimates of the potential for increased Iraqi oil production made prior to the war had suggested that Iraq free of sanctions could potentially increase its crude oil production within a decade from its previous 1979 high of 3.5 million barrels a day (mb/d) to 6 or even 10 mb/d.15 Instead, Iraq’s average annual oil production in 2007 had fallen to 13 percent below its 2001 level, having declined from 2.4 to 2.1 mb/d. Oil production in the Persian Gulf as a whole increased by 2.4 mb/d on average between 2001 and 2005 and then dropped by 4 percent in 2005–07, along with the stagnation of world oil production as a whole.16

At the time U.S. troops reached Baghdad peak oil was already a specter looming over the globe. Today it is present in all establishment discussions of the world oil issue. Peak oil is not the same as running out of oil. Rather it simply means the peaking and subsequent terminal decline of oil production, as determined primarily by geological and technological factors. The extraction of oil from any given oil well typically takes the form of a symmetrical, bell-shaped curve with extraction steadily rising, e.g., by 2 percent a year, until a peak is reached when about half of the accessible oil has been extracted. Since oil production for an entire country is simply a product of the aggregation of individual wells, national oil production can be expected to take the form of a bell-shaped curve as well. Geologists have become adept at estimating the point at which a peak in national production will occur. These methods were pioneered in the 1950s by oil geologist M. King Hubbert, who achieved fame for successfully predicting the U.S. oil peak in 1970. The eventual peak in oil production is therefore sometimes known as “Hubbert’s peak.”

Peak oil is generally viewed in terms of the peaking of conventional crude oil supplies on which the main estimates of oil reserves are based. There are also unconventional sources of oil that can be produced at much greater cost and with a much lower energy returned on energy invested (EROEI) ratio. These include heavy oil, petroleum derived from oil sand, and shale oil. As the price of oil rises some of these sources become more exploitable, but also at much greater cost—monetarily and to the environment. It is estimated that it takes an equivalent of two out of three barrels of oil produced to pay for the energy and other costs associated with extracting oil from the tar sands in Alberta. It requires one billion cubic feet of natural gas to generate one million barrels of synthetic oil from oil sands. Two tons of sand must be mined to get one barrel of oil. Oil sand mining also requires vast quantities of water, producing two and a half gallons of toxic liquid waste for every barrel of oil extracted. This liquid waste is stored in enormous and rapidly expanding “tailing ponds.” The economic and environmental costs are thus prohibitive. Peak oil therefore inevitably signals the end of cheap oil.17

A key part of the argument on peak oil is the fact that discoveries of oil fields worldwide peaked in the 1960s, while the average size of new discoveries has also declined over time. Those who argue that peak oil is imminent insist that estimates of proven reserves are commonly exaggerated for political reasons, and that actual retrievable reserves may be considerably less. The conventional notion that there are forty years of crude oil production remaining at current rates of output is seen as misleading, since it exaggerates the reserves in the ground and downplays the fact that the economy requires that oil demand and production levels increase. Peak oil analysts therefore focus on production levels rather than reserves.

The peak oil crisis is more sharply defined than the more general crisis in energy, since not only is petroleum the most protean fuel, but it is also the preeminent liquid fuel in transportation, for which there is no easy substitute in the quantities needed. Therefore more than two-thirds of U.S. oil demand is in the form of gasoline and petrodiesel consumption by cars and trucks. An imminent peak in conventional oil thus strikes at the lifeblood of the existing capitalist economy. It presents the possibility of a drastic economic dislocation and slowdown.18

The peak oil debate, which has often been fierce over the past decade, has now narrowed down to two basic positions. One of these is that of “early peakers” (usually seen as peak oil proponents proper). These analysts argue that peak oil will probably be reached by 2010–12, and may have already been reached in 2005–06. The alternative position, represented by “late peakers,” is that the world oil peak will not be reached until 2020 or 2030.19 Hence, there is a growing consensus that peak oil is or will soon be a reality. The chief question now is how soon, and whether it is already upon us.

An added consideration is whether world oil production will face a classic bell-shaped curve, culminating in a slender, rounded peak, to be followed quickly by a decline (within what can be viewed as a symmetrical curve)—or whether production will rise to a plateau and then stay there for a while, before declining. In fact, world oil supply appears already to have reached a plateau over the last three years at the level of 85 mb/d. This therefore has lent credence to the notion that this is the form the peak will initially take.

Chart 1 shows world oil production/supply from 1970 to 2007. “Oil” according to the IEA (and the EIA, which has adopted an almost identical approach) is defined to include “all liquid fuels and is accounted at the product level. Sources include natural gas liquids and condensates, refinery processing gains, and the production of conventional and unconventional oil.” Conventional or crude oil is readily processed oil “produced from underground hydrocarbon reservoirs by means of production wells.” Unconventional oil is derived from other processes, such as liquefied natural gas, oil sands, oil shales, coal-to-liquid, biofuels, “and/or [other fuel that]…needs additional processing to produce synthetic crude.”20 The lower line in chart 1, labeled “crude oil production,” refers simply to production of conventional oil. The higher line, labeled “world oil supply,” also includes unconventional sources plus net refinery processing gains (losses). The “crude oil production” line shows a very slight dip in 2005–07, reflecting the fact that crude oil production fell from an average of 73.8 mb/d in 2005 to 73.3 mb/d in 2007. The “world oil supply” line, however, remains level at about 85 mb/d due to a compensating rise in unconventional sources over the same period, resulting in what appears to be a more definite plateau.

Explaining that a plateau is the most likely initial outcome at the world level, Richard Heinberg, a leading peak oil proponent, writes:

Why the plateau? Oil production is constrained by economic conditions (in an economic downturn, demand for oil falls off), as well as by political events such as war and revolutions. In addition, the shape of the production curve is modified by the increasing availability of unconventional petroleum sources (including heavy oil, natural gas plant liquids, and tar sands), as well as new extraction technologies. The combined effect of all of these factors is to cushion the peak and lengthen the decline curve.21

The notion that a partly geological-technical, partly political-economic, plateau is emerging has now become the dominant view in the industry. In November 2007 the Wall Street Journal reported:

a growing number of oil-industry chieftains are endorsing an idea long deemed fringe: The world is approaching a practical limit to the number of barrels of crude oil that can be pumped every day….The near adherents [to the peak oil view]—who range from senior Western oil-company executives to current and former officials of the major world exporting countries—don’t believe that the global oil tank is at the half-empty point. But they share the belief that a global production ceiling is coming for other reasons: restricted access to oil fields, spiraling costs and increasingly complex oil-field geology. This will create a production plateau, not a peak, they contend, with oil output remaining relatively constant rather than rising or falling.

The Wall Street Journal article referred to the estimates of Cambridge Energy Research Associates, asserting that the peak will not be reached until 2030 and that it will manifest itself at first as an “undulating plateau.” But the Journal article also took seriously the views of Simmons, who pointed out that, due to declining production in old fields, an increased average daily oil production equivalent to ten times current Alaskan production was needed “just to stay even.” Indeed, “at the furthest out,” he suggested, the crisis associated with the world peak in conventional oil production would be reached “in 2008 to 2012.” Echoing many of the same worries, some oil executives have raised the specter of an oil supply ceiling of 100 million barrels (conventional and unconventional), with petroleum supply likely falling short of expected demand within a decade or less.22

Given the appearance of a world oil production plateau at present, and with oil supply seemingly stuck at the 85 mb/d level, it is not surprising that some analysts believe that peak oil has already been reached. Thus Simmons and Texas oil billionaire T. Boone Pickens have both raised the question of whether the peak was reached in 2005. While the Energy Watch Group in Germany, which includes both scientists and members of the German parliament, contends that “world oil production…peaked in 2006.”23

Publicly of course the peak oil problem has often been characterized by establishment sources and the media as a “fringe issue.” Yet over the past decade the question has been pursued systematically with increasing concern within the highest echelons of capitalist society: within both states and corporations.24 In February 2005 the U.S. Department of Energy released a major report that it had commissioned entitled Peaking of World Oil Production: Impacts, Mitigation, and Risk Management. The project leader was Robert L. Hirsch of Science Applications International Corporation. Hirsch had formerly occupied executive positions in the U.S. Atomic Energy Commission, Exxon, and ARCO. The Hirsch report concluded that peak oil was a little over two decades away or nearer. “Even the most optimistic forecasts,” it stated, “suggest that world oil peaking will occur in less than 25 years.” The main emphasis of the Hirsch report commissioned by the Department of Energy, however, was on the issue of the massive transformations that would be needed in the economy, and particularly transportation, in order to mitigate the harmful effects of the end of cheap oil. The enormous problem of converting virtually the entire stock of U.S. cars, trucks, and aircraft in just a quarter-century (at most) was viewed as presenting intractable difficulties.25

In October 2005, Hirsch wrote an analysis for Bulletin of the Atlantic Council of the United States on “The Inevitable Peaking of World Oil Production.” He declared there that, “previous energy transitions (wood to coal, coal to oil, etc.) were gradual and evolutionary; oil peaking will be abrupt and revolutionary. The world has never faced a problem like this. Without massive mitigation at least a decade before the fact, the problem will be pervasive and long lasting.”26

Similarly, the U.S. Army released a major report of its own in September 2005 stating:

The doubling of oil prices from 2003–2005 is not an anomaly, but a picture of the future. Oil production is approaching its peak; low growth in availability can be expected for the next 5 to 10 years. As worldwide petroleum production peaks, geopolitics and market economics will cause even more significant price increases and security risks. One can only speculate at the outcome from this scenario as world petroleum production declines.27

Indeed, by 2005 there was little doubt in ruling circles about the likelihood of serious oil shortages and that peak oil was on its way soon or sooner. In its 2005 World Energy Outlook the IEA raised the issue of Simmons’s claims in Twilight in the Desert that Saudi Arabia’s super-giant Ghawar oil field, the largest in the world, “could,” in the IEA’s words, “be close to reaching its peak if it has not already done so.” Likewise the U.S. Department of Energy, which had initially rejected Simmons’s assessment, backtracked between 2004 and 2006, degrading its projection of Saudi oil production in 2025 by 33 percent.28

In February 2007 the U.S. Government Accountability Office (GAO) released a seventy-five-page report on Crude Oil pointedly subtitled: Uncertainty about Future Oil Supply Makes It Important to Develop a Strategy for Addressing a Peak and Decline in Oil Production. It argued that almost all studies had shown that a world oil peak would occur sometime before 2040 and that U.S. federal agencies had not yet begun to address the issue of the national preparedness necessary to face this impending emergency. For the GAO the threat of a major oil shortfall was worsened by the political risks primarily associated with four countries, accounting for almost one-third of world (conventional) reserves: Iran, Iraq, Nigeria, and Venezuela. The fact that Venezuela contained “almost 90 percent of the world’s proven extra-heavy oil reserves” made it all the more noteworthy that it constituted a significant “political risk” from Washington’s standpoint.29

In April 2008, Jeroen van der Ver, CEO of Royal Dutch Shell, pronounced that “we wouldn’t be surprised if this [easy] oil would peak somewhere in the next ten years.” Due to a combination of factors including production shortfalls and a declining dollar, oil in May 2008 reached over $135 a barrel (it averaged $66 in 2006 and $72 in 2007). The same month Goldman Sachs shocked world capital markets by coming out with an assessment that oil prices could rise to as much as $200 a barrel in the next two years. Western oil interests were particularly distressed that the first production from Kazakhstan’s Kashagan oil field (considered the largest oil deposit in the world outside the Middle East) was eight years behind schedule due in part to waters frozen half the year. By May 2008 the IEA, according to analysts for the New York Times, was preparing to reduce its forecast of world oil production for 2030 from its earlier forecasts of 116 mb/d to no more than 100 mb/d.30

It was alarm about gasoline prices and national energy security (and no doubt the specter of a world oil peak) that induced the Bush administration in 2006 to take a more aggressive stance in promoting corn-based ethanol production as a fuel substitute. In 2007, 20 percent of U.S. corn production was devoted to ethanol to fuel automobiles. The price of grain spiked worldwide partly as a result. As environmentalist Lester R. Brown wrote in his Plan B 3.0: “Suddenly the world is facing a moral and political issue that has no precedent: Should we use grain to fuel cars or to feed people?…The market says, Let’s fuel the cars.”31

The New Energy Imperialism

The response in U.S. national security circles to the apparent oil production plateau, the disappearance of surplus oil production capacity, and growing fears of peak oil was swift. In October 2005 the CSIS issued another report, this time on Changing Risks in Global Oil Supply and Demand, written by Anthony Cordesmam (long-time national security analyst for the U.S. Department of Defense, now holder of Arleigh A. Burke Chair in Strategy at CSIS) and Khalid R. Al-Rodhan (a strategic analyst specializing in Gulf issues). Cordesman and Al-Rodhan quoted the IEA’s prediction in its 2004 World Energy Outlook that global oil production would not “peak before 2030 if the necessary investments are made.” Rather the immediate problem was “lagging investment” in the Middle East. Still, peak oil issues were not to be entirely discounted. Thus Cordesman and Al-Rodhan noted that, “Some analysts have questioned the [Saudi] Kingdom’s ability to meet sudden surges in demand because of its lack of spare production capacity, and others—like Matthew Simmons—have estimated that Saudi production may be moving towards a period of sustained decline.”

“Stability in petroleum exporting regions,” Cordesman and Al-Rodhan added, “is tenuous at best. Algeria, Iran, and Iraq all present immediate security problems, but recent experience has shown that exporting countries in Africa, the Caspian Sea, and South America are no more stable than the Gulf. There has been pipeline sabotage in Nigeria, labor strikes in Venezuela, alleged corruption in Russia, and civil unrest in Uzbekistan and other FSU [Former Soviet Union] states.”32

Even more central than the CSIS study was a 2006 Council on Foreign Relations report, chaired by former CIA Director John Deutch and Schlesinger, entitled, National Security Consequences of U.S. Oil Dependency. The Deutch and Schlesinger report zeroed in on inadequate oil production capacity, with OPEC no longer having the surplus capacity with which to keep prices under control. Production from existing conventional oil fields throughout the world was “declining, on average, about 5 percent per year (roughly 4.3 million barrels per day), and thus even sustaining current levels of consumption” would be enormously difficult. Moreover, “the depletion of conventional sources, especially those close to the major markets in the United States, Western Europe, and Asia, means that the production and transport of oil will become even more dependent on an infrastructure that is already vulnerable.” Major energy suppliers like Russia, Iran, and Venezuela were using oil to pursue domestic and geopolitical goals, rather than reinvesting the oil proceeds. Saudi Arabia, Iraq, Iran, and West Africa were all centers of instability. China was trying to “lock up” oil supplies in Africa, the Caspian Sea, and elsewhere.

Although the Deutch and Schlesinger report discussed some demand-side measures to reduce U.S. consumption and oil dependency, it stressed expanding the role of the U.S. military in securing oil supplies. Thus the report declared that “the United States should expect and support a strong military posture [in the Persian Gulf in particular] that permits suitably rapid deployment to the region, if required…Any nation (or subnational group) that contemplates violence on any scale must take into account the possibility of U.S. preemption, intervention, or retaliation.”33

No less significant was an April 2007 “policy report” issued by the James A. Baker III Institute for Public Policy on “The Changing Role of National Oil Companies in International Energy Markets.”Emphasizing that national oil companies now controlled 77 percent of the world’s total reserves, whereas Western multinational oil companies controlled a mere 10 percent, it contended that this was the key issue in managing the current world oil supply problem. “If the United States were able to wish into existence a world that would favor its terms of trade and superpower status,” the Baker Institute went so far as to declare,

all NOCs [national oil corporations] would be privatized, foreign investors would be treated the same as local companies and OPEC would be disbanded, allowing free trade and competitive markets to deliver energy that is needed worldwide at prices determined solely by the market. But it is hard to imagine why major oil producing countries would agree to that….In light of this reality, the United States will have to accept the existence of NOCs as a fact of life but should encourage steps to make their activities more businesslike, transparent and—to the extent possible—free of onerous government interference.

Above all the U.S. imperial objective should be to “break up” wherever possible “the monopoly power of oil producers” and their use of their oil resources to pursue national goals other than purely commercial ones. The chief example of such state interference in oil production, the Baker Institute report stated, was Venezuela under the leadership of Hugo Chávez. Not only had the Bolivarian Revolution prioritized “the government’s national development policy” and “social and cultural investment” over “commercial development strategy,” it had also used oil as an instrument of “foreign policy activism.” This could be seen in its geopolitically motivated agreements with Bolivia, Ecuador, Nicaragua, and the Caribbean nations. Another case of the geostrategic wielding of oil power was Iran, which had threatened that it “could block the vital oil transitway, the Strait of Hormuz,” if faced with a U.S. military attack. One critical danger that the United States needed to guard against was a “hostile” alliance between major oil producing/consuming states, such as Russia, China, Iran, and the Central Asian states. Another key consideration in the geopolitics of tough oil, the Baker Institute underscored, was the continuing political instability in Iraq. Despite Washington’s attempts to stabilize that country, political unrest and war continued, preventing the oil exploration of Iraq’s Western desert.34

The tightening oil situation has prompted the rapid on the ground growth of U.S. energy imperialism, beyond the continuing Iraq and Afghan wars. The security of Saudi Arabia remains an overriding focus. Washington’s plans for a massive expansion of investment and production in Saudi Arabia, which according to the U.S. Department of Energy needs to double its oil output by 2030, depends on the feudal kingdom remaining in place. Meanwhile, there is rising social tension, emanating from the vastly unequal distribution of the country’s oil revenues. Ninety percent of private sector jobs go to foreigners. The sexes are entirely segregated. The repressive structure of the society conceals massive popular resentment. Any destabilization of the society would likely prompt U.S. military intervention. As James Howard Kunstler has written in The Long Emergency, “a desperate superpower might feel it has no choice except to attempt to control the largest remaining oil fields on the planet at any cost”—particularly if faced by growing rivalry from other states.35

The United States has sought to counter the possibility of an energy alliance between Russia, China, Iran, and Central Asian oil states by expanding its military bases in Afghanistan and Central Asia, notably its Manas air base in Kyrgyzstan on the border of oil-rich Kazakhstan.

Threats of U.S. “preemptive” military intervention directed at Iran meanwhile have been continuous, based on its alleged attempts to acquire nuclear weapons through the aggressive pursuit of nuclear energy, and its “interference” in Iraq. Iran’s pursuit of nuclear power, as a 2007 study published in the Proceedings of the National Academy of Sciences has confirmed, is due to an oil export decline rate of 10–12 percent, arising from the growth of domestic energy demand plus a high rate of oil field depletion and a lack of investment growth in expanded capacity. This led to Iran’s recent inability to meet its OPEC oil export quota. The current trend points to the likelihood of Iranian petroleum exports falling to zero by 2014–15. From the standpoint of Western energy and national security analysts, Iran’s government and its national oil corporation have adopted the monopolistic policy of underinvesting in oil, deliberating slowing its production in expectation of continually rising prices, thereby holding back on the lifeblood of the world economy.36

During the last few years the U.S. military has dramatically increased its bases and operations in Africa, particularly in the Gulf of Guinea. The United States expects to get 20 percent of its oil imports from Africa by 2010, and 25 percent by 2015. The U.S. military set up a separate Africa Command in 2007 to govern all U.S. military operations in Africa (outside Egypt). Washington sees itself as in direct competition with Beijing over African oil—a competition that it perceives not simply in economic but also military-strategic terms.37

U.S. ruling interests also have increased their threats directed at Venezuela, Ecuador, Bolivia, and other Latin American states, accusing them of “resource nationalism” and presenting them as dangers to U.S. national security. Washington has made one attempt after another to unseat Venezuela’s democratically elected president Hugo Chávez and to overthrow Venezuela’s Bolivarian Revolution, with the clear object of regime change. This has included stepping up its massive military intervention in Colombia and backing the Colombian military and its intrusions into neighboring countries. In 2006 the U.S. Southern Command conducted an internal study, declaring that Venezuela, Bolivia, Ecuador, and conceivably even Mexico (which was then facing elections with a possible populist outcome) offered serious dangers to U.S. energy security. “Pending any favorable changes to the investment climate,” it declared, “the prospects for long-term energy production in Venezuela, Ecuador and Mexico are currently at risk.” The military threat was obvious.38

All of this is in accord with the history of capitalism, and the response of declining hegemons to global forces largely outside their control. The new energy imperialism of the United States is already leading to expanding wars, which could become truly global, as Washington attempts to safeguard the existing capitalist economy and to stave off its own hegemonic decline. As Simmons has warned, “If we don’t create a solution to the enormous potential gap between our inherent demand for energy and the availability of energy we will have the nastiest and last war we’ll ever fight. I mean a literal war.”39
In January 2008 Carlos Pascual, vice president of the Brookings Institution and former director of the Bush administration’s Office of Reconstruction and Stabilization, released an analysis of “The Geopolitics of Energy” that highlighted U.S. capitalism’s de facto dependence on oil production in “Saudi Arabia, Russia, Iran, Iraq, Venezuela, Nigeria, and Kazakhstan”—all posing major security threats. “Due to commercial disputes, local instability, or ideology, Russia, Venezuela, Iran, Nigeria and Iraq are not investing in new long-term production capacity.” This then was both an economic and a military problem for Washington.40

Especially disturbing in this new phase of energy imperialism is the lack of resistance from populations within central capitalist countries themselves. Thus left-liberal publications in the wealthy nations often play on the prejudices of their readers (who are buffeted by rising gasoline prices), encouraging them to support oil imperialism designed to safeguard Western capitalism. David Litvin, writing on “Oil, Gas and Imperialism” in 2006 for the Guardian in London, claimed that “the inevitability of modern energy imperialism needs to be recognized.” Threats from Russia, OPEC, Venezuela, and Bolivia were highlighted. The United States invaded Iraq, we were told, partly for “oil security.” Clearly sympathizing with that form of energy imperialism that “involves consumer states launching political or military” interventions “to secure supplies,” Litvin concluded: “Energy imperialism is here to stay, and efforts should [therefore] focus on making it a more benign force.”41

Likewise Joshua Kurlantzick, a contributing writer for Mother Jones,wrote a piece entitled “Put a Tyrant in Your Tank” for the May–June 2008 issue of that magazine which attributed oil supply problems to national oil companies, and argued—referring to the Baker Institute report on “The Changing Role of National Oil Companies”—that oil would be better safeguarded if placed in the hands of multinational oil companies as of old. The latter, readers were told, “may cozy up to nasty regimes…but they are at least obligated to respond to public criticism.” Kurlantzick presented repeated criticisms of Hugo Chávez in Venezuela for his “resource nationalism,” going so far as to compare Venezuela to Burma and Russia, as “authoritarian and corrupt,” citing a study from the neoconservative, largely U.S. government-funded, Freedom House. The Mother Jones article also gave credence to the 2006 internal study conducted by the Pentagon’s Southern Command, pinpointing the national security dangers to the United States of resource nationalism in Venezuela, Bolivia, and Ecuador. Other petrostates that were subjected to sharp criticism were Iran, Russia, Kazakhstan, Nigeria, and Libya. Chinese state oil corporations were targeted for their aggressiveness in pursuing oil around the world and for their lack of environmental concerns. U.S. energy imperialism was thus seen as justified even by the putatively progressive Mother Jones—with hope and confidence being placed mainly in big oil and the Pentagon.42

Planetary Conflagration?

The supreme irony of the peak oil crisis of course is that the world is rapidly proceeding down the path of climate change from the burning of fossil fuels, threatening within a matter of decades human civilization and life on the planet. Unless carbon dioxide emissions from the consumption of such fuels are drastically reduced, a global catastrophe awaits. For environmentalists peak oil is therefore not a tragedy in itself since the crucial challenge facing humanity at present is weaning the world from excessive dependence on fossil fuels. The breaking of the solar energy budget that hydrocarbons allowed has generated a biospheric rift, which if not rapidly addressed will close off the future.43

Yet, heavy levels of fossil fuel, and particularly petroleum, consumption are built into the structure of the present world capitalist economy. The immediate response of the system to the end of easy oil has been therefore to turn to a new energy imperialism—a strategy of maximum extraction by any means possible: with the object of placating what Rachel Carson once called “the gods of profit and production.”44 This, however, presents the threat of multiple global conflagrations: global warming, peak oil, rapidly rising world hunger (resulting in part from growing biofuel production), and nuclear war—all in order to secure a system geared to growing inequality.

In the face of the immense perils now facing life on the planet, the world desperately needs to take a new direction; toward communal well-being and global justice: a socialism for the planet. The immense danger now facing the human species, it should be understood, is not due principally to the constraints of the natural environment, whether geological or climatic, but arises from a deranged social system wheeling out of control, and more specifically, U.S. imperialism. This is the challenge of our time.

Notes
1. Influential mainstream political analyst (and former Nixon White House strategist) Kevin Philips has recently argued that oil in the Middle East and elsewhere has emerged as perhaps the single most important strategic (non-monetary) factor in “the Global Crisis of American Capitalism,” and is closely tied up with the world’s need to shift to a “new energy regime.” See Phillips, Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism (New York: Viking, 2008), 124–27. Indeed, the struggle to control world oil can be seen as the centerpiece of the new geopolitics of U.S. empire, designed at the same time to combat the decline of U.S. hegemony. See John Bellamy Foster, “A Warning to Africa: The New U.S. Imperial Grand Strategy,” Monthly Review 58, no. 2 (June 2006): 1–12.
2. Michael T. Klare, Blood and Oil (New York: Henry Holt, 2004), 82.
3. Colin J. Campbell and Jean H. Laherrère, “The End of Cheap Oil,” Scientific American (March 1998): 78–83; International Energy Agency, World Energy Outlook, 1998 (Paris: OECD, 1998), 94–103.
4. Matthew R. Simmons, “Has Technology Created $10 Oil?,” Middle East Insight (May–June 1999), 37, 39.
5. Matthew R. Simmons, “An Oil Man Reconsiders the Future of Black Gold,” Good Magazine, February 11, 2008. The insert in square brackets in the quote is in original.
6. Matthew R. Simmons, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy (Hoboken, New Jersey: John Wiley and Sons, 2005).
7. John Wood and Gary Long, “Long Term World Oil Supply (A Resource Base/Production Path Analysis),” Energy Information Administration, U.S. Department of Energy, July 28, 2000.
8. See Klare, Blood and Oil, 13–14.
9. Sam Nunn and James R. Schlesinger, cochairs, The Geopolitics of Energy into the 21st Century, 3 volumes (Washington, D.C.: Center for Strategic and International Studies, November 2000), vol. 1, xvi–xxiii; vol. 2, 30–31; vol. 3, 19.
10. Edward L. Morse, chair, Strategic Energy Policy Challenges for the 21st Century, cosponsored by the James A. Baker III Institute for Public Policy of Rice University and the Council on Foreign Relations (Washington, D.C: Council on Foreign Relations Press, April 2001), 3–17, 29, 43–47, 84–85, 98; see also Edward L. Morse, “A New Political Economy of Oil?,” Journal of International Affairs 53, no. 1 (Fall 1999), 1–29.
11. White House, National Energy Policy (Cheney report), May 2001, http://www.whitehouse.gov/energy/National-Energy-Policy.pdf, 1–13, 8–4.; Department of Energy, Energy Information Administration, International Economic Outlook,2001, http://www.eia.doe.gov/oiaf/archive/ieo01/pdf/0484(2001).pdf, 240; International Petroleum Outlook, April 2008, tables 4.1b and 4.1d; Klare, Blood and Oil, 15, 79–81.
12. Klare, Blood and Oil, 82–83.
13. Alan Greenspan, The Age of Turbulence (London: Penguin, 2007), 462–63.
14. James A. Baker Institute for Public Policy, “The Changing Role of National Oil Companies in International Markets,” Baker Institute Policy Report, no. 35 (April 2007), http://www.bakerinstitute.org/publications/BI_PolicyReport_35.pdf, 1, 10–12, 17–19.
15. Fareed Muhamedi and Raad Alkadiri, “Washington Makes It’s Case for War,” Middle East Report, no. 224 (Autumn 2002), 5; John Bellamy Foster, Naked Imperialism (New York: Monthly Review Press, 2006), 92.
16. U.S. Department of Energy, Energy Information Administration, International Petroleum Monthly, April 2008, tables 4.1b and 4.1d.
17. Richard Heinberg, The Party’s Over (Garbiola Island, B.C: New Society Publishers, 2005), 127–28; Michael Klare, Rising Powers, Shrinking Planet (New York: Henry Holt, 2008), 41; Greenpeace, “Stop the Tar Sands/Water Polluton,” http://www.greenpeace
.org/canada/en/campaigns/tarsands/threats/water-pollution.
18. Energy Watch Group, Crude Oil: The Supply Outlook, October 2007, 33–34.
19. The distinction between “early” and “late” peakers is to be found in Richard Heinberg, The Oil Depletion Protocol (Garbiola Island, B.C: New Society Publishers, 2006), 17–23. For some representative works from the “early peaker” perspective see Kenneth S. Deffeyes, Hubbert’s Peak (Princeton: Princeton University Press, 2001); David Goodstein, Out of Gas (New York: W. W. Norton, 2004); and Heinberg, The Party’s Over. Cambridge Energy Research Associates is the leading independent representative of the “late peaker” view. See http://www.cera.com/aspx/cda/public1/home/home.aspx.
20. International Energy Agency, World Energy Outlook, 1998, 83–84. The increased prominence of unconventional oil has recently led to increasing references to “liquids” as opposed to “oil” as such in Department of Energy reports. See Michael T. Klare, “Beyond the Age of Petroleum,” The Nation, October 25, 2007.
21. Richard Heinberg, Power Down (Gabriola Island, B.C.: New Society Publishers, 2004), 35; James Howard Kunstler, The Long Emergency (New York: Atlantic Monthly Press, 2005), 67–68. In an important paper on the implications of peak oil for global warming, Pushker Kharecha and James Hansen of NASA’s Goddard Institute for Space Studies and the Columbia University Earth Institute provide a graph (in one scenario) of a plateau in oil-based CO2 emissions, stretching from approximately 2016 to 2036. Pushker A. Kharecha and James E. Hansen, “Implications of ‘Peak Oil’ for Atmospheric CO2 and Climate,” Global Biogeochemistry (2008, in press), figure 3.
22. “Oil Officials See Limit Looming on Production,” Wall Street Journal, November 11, 2007; Klare, Beyond the Age of Petroleum.”
23. Phillips, Bad Money, 130–31, 153; Energy Watch Group, Crude Oil: The Supply Outlook, October 2007, 71.
24. Phillips sees this descrepancy between the analysis at the top and public statements in Washington as due in large part to a desire to keep from the public the view that the U.S. system is itself peaking. See Phillips, Bad Money, 127.
25. Robert L. Hirsch, project leader, Peaking of World Oil Production: Impacts, Mitigation, and Risk Management, U.S. Department of Energy, February 2005, 13, 23–25. A different and more official position was issued by the EIA in 2004–2005 in the form of a presentation on “When Will World Oil Production Peak” by EIA administrator Guy Caruso at the 10th Annual Oil and Gas Conference, Kuala Lumpar, Malaysia, June 13, 2005. The central scenario, however, estimated the world oil peak occurring in 2044, a figure too out of line with all other studies to be considered credible. See http://www.eia.doe.gov/neic/speeches/Caruso061305.pdf.
26. Robert L. Hirsh, “The Inevitable Peaking of World Oil Production,” Bulletin of the Atlantic Council of the United States 16, no. 2 (October 2005): 8.
27. Daniel F. Fournier and Eileen T. Westervelt, U.S Army Engineer Research and Development Center, U.S. Army Corps of Engineers, Energy Trends and their Implications for U.S. Army Installations, September 2005, vii.
28. International Energy Agency, World Energy Outlook, 2005 (Paris: OECD, 2005), 510-12; Simmons, Twilight in the Desert, 170–79; Klare, Rising Powers, Shrinking Planet, 38.
29. United States Government Accountability Office, Crude Oil: Uncertainty about Future Oil Supply Makes It Important to Develop a Strategy for Addressing a Peak and Decline in Oil Production, February 28, 2007, 4, 20–22, 35–38.
30. Bloomberg.com, “Goldman’s Murti Says Oil ‘Likely’ to Reach a $150–$200 (Update 5),” May 6, 2008; “The Cassandra of Oil Prices,” New York Times, May 21, 2008; ; Klare, Rising Powers, Shrinking Planet, 121–22; Joroen van der Veer (interview), “Royal Dutch Shell CEO on the End of ‘Easy Oil’,”; “Not Enough Oil is Lament of BP, Exxon on Spending (Update 1),” Bloomberg.com, May 19, 2008; Mike Nizz, “Market Faces a Disturbing Oil Forecast,” The Lede (New York Times blog), May 22, 2008.
31. Lester R. Brown, Plan B 3.0 (New York: W. W. Norton, 2008), 41; Fred Magdoff, “The World Food Crisis,” Monthly Review 60, no. 1 (May 2008): 1–15, and “The Political Economy and Ecology of Agrofuels,” in this issue.
32. Anthony H. Cordesman and Khalid R. Al-Rodhan, The Changing Risks in Global Oil Supply and Demand, Center for Strategic and International Studies, October 3, 2005 (first working draft), 8, 13–19, 55–59, 79, 83.
33. John Deutsch and James R. Schlesinger, chairs, National Security Consequences of U.S. Oil Dependence, Council on Foreign Relations, 2006, http://www.cfr.org/publication/11683/, 3, 16–30, 48–56.
34. James A. Baker III Institute for Public Policy of Rice University, “The Changing Role of National Oil Companies in International Oil Markets,” Baker Institute Policy Report, no. 35 (April 2007), http://bakerinstitute.org/publications/BI_PolicyReport_35.pdf, 1, 10–12, 17–19.
35. Kunstler, The Long Emergency, 76–84; Baker Institute, “Changing Role of National Oil Companies,” 12.
36. Roger Stern, “The Iranian Petroleum Crisis and the United States National Security,” Proceedings of the National Academy of Sciences 104, no. 1 (January 2, 2007): 377–82.
37. Foster, “A Warning to Africa”; Michael Watts, “The Empire of Oil: Capitalist Dispossession and the New Scramble for Africa,” Monthly Review 58, no. 4 (September 2006), 1–17; Klare, Rising Powers, Shrinking Planet, 146–76.
38. “U.S. Military Sees Oil Nationalism Spectre,” Financial Times, June 26, 2006; Council on Foreign Relations, “The Return of Resource Nationalism,” August 13, 2007; Eva Golinger, Bush vs. Chávez (New York: Monthly Review Press, 2008).
39. Simmons, “An Oil Man Reconsiders the Future of Black Gold.”
40. Carlos Pascual, “The Geopolitics of Energy,” Brookings Institution, January 2008, http://www.cfr.org/publication/15342/brookings.html, 3–4.
41. Daniel Litvin, The Guardian (UK), “Oil, Gas and Imperialism,” January 4, 2006.
42. Joshua Kurlantzick, “Put a Tyrant in Your Tank,” Mother Jones 33, no. 3 (May–June 2008), 38–42, 88–89.
43. See Richard Heinberg’s excellent chapter on “Bridging Peak Oil and Climate Change Activism” in his Peak Everything (Gabriola Island: New Society Publishers, 2008), 141–57. On the concept of a biospheric rift see Brett Clark and Richard York, “Carbon Metabolism: Global Capitalism, Climate Change, and the Biospheric Rift,” Theory & Society 34, no. 4 (2005): 391–428. In their paper on peak oil and global warming, Kharecha and Hansen present a baseline atmospheric carbon stabailizaton scenario in which oil-based CO2 emissions peak by 2016, due principally to the “peaking” of world oil production (mediated by economic and social as well as geological factors). If such a peak were to occur, they argue, it would facilitate the stabilization of atmospheric carbon at (or below) what scientists increasingly consider to be the maximum safe level of 450 parts per million (associated with a rise in global average temperature of around 2°C above pre-industrial). But stabilization of atmospheric CO2 at this level would also require that CO2 emissions from coal-fired power plants peak by 2025 and that coal-fired plants without sequestration be phased out completely “before mid-century.” Pusher and Kharecha, “Implications of ‘Peak Oil’ for Atmospheric CO2 and Climate.”
44. Rachel Carson, Lost Woods (Boston: Beacon Press, 1998), 210.

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