Everyone in the media wants to be the one with the big scoop, the earth-shattering shocker that will turn everything you thought you knew upside down. It’s easy to do it, too – all you have to do is make up your own numbers, and you can support any asinine proposition you like!
As if Paul Ryan and his cohorts ever had a monopoly on Making Stuff Up. Just look what this guy did, just this morning:
The peak oil guys are like the guys who didn’t like the Cold War ending in the late 1980s. They keep looking for more evidence, but they are finding it harder and harder to define that peak oil is here. We’re about to see North Dakota become a bigger producer of oil than Alaska. There is oil wherever people are putting holes in the ground.
I knew something had to be wrong! Those peak oil alarmists, in their typical silly fashion, have completely ignored North Dakota and of course the Brazilian pre-salt finds, and if only those wacky environmentalists would just get a grip and let us poke more holes in our own backyard, why, crude oil would simply come gushing up from the ground, every single time! Forget engineering shortcuts in deep water; if those big oil companies really wanted to cut costs, they would just fire all their geologists. And wouldn’t you know it, but his prediction of a sell-off has already been validated. I’ve never seen it happen so fast. I mean, what else could explain the price of West Texas Intermediate crude spiking back up nearly $4 in the course of just a few hours this afternoon to get back to the $90 level (still $10 below most other international benchmark crudes)?
Here, watch me do it now:
The media guys are like the guys who didn’t like democracy in the United States ending in 2000. They keep looking for more evidence, but they are finding it harder and harder to define that the Supreme Court actually allowed unlimited corporate donations and anonymous attack ads to usurp the power of an informed electorate. We’re about to see North Dakota become a more influential ideological breeding ground than our institutions of higher learning. There is a success story for capitalism wherever pundits are putting their heads in the ground.
Hmm, wait a second…
Of course, it’s not really surprising to see pundits and market “analysts” staking out ground as naysayers, now that the idea of a peak and eventual decline in worldwide oil production has slowly percolated its way into mainstream thought. There’s always a quick buck to be made in saying something stupid.
“What are you sayin’…we can’t grow the pie higher no more?”
“One can say that the nagual accounts for creativity,” he said finally and looked at me piercingly. ”The nagual is the only part of us that can create.”
He remained quiet, looking at me. I felt he was definitely leading me into an area I had wished he would elucidate further. He had said that the tonal did not create anything, but only witnessed and assessed. I asked him to explain the fact that we create superb structures and machines.
“That’s not creativity,” he said. “That’s only molding. We can mold anything with our hands, personally or in conjunction with the hands of other tonals. A group of tonals can mold anything, superb structures as you say.”
You’ve probably been taught that the “invisible hand” of a “free market” is the most “efficient” way of generating the largest amount of wealth for the largest number of people, and that those who don’t participate in the system are “lazy welfare queens.” It would be best if you disabused yourself of these notions.
I’ll repeat here a thought experiment I’ve mentioned to a number of people over the last day or two: imagine a world in which all labor is automated (and note that you don’t have to get all the way there for the conclusions of the experiment to hold true). The requirement for less intensive human labor should, in theory, ease the burden on everyone. But under a system of dog-eat-dog capitalism, where all wealth must be considered “earned” through engagement in the labor market, and where virtually all jobs are eliminated by ever-increasing automation, the only ones who stand to gain are the oligarchs who own the machines, pulling the strings at the top. The entire economy would reorient itself to serve only the needs of those elites. Do you suppose we might be headed in this general direction? And if so, should we continue full speed ahead? Or should we at the very least pause and consider what the purpose of employment really is, whether it is an end in itself or simply a means to an actual end, that of improved general welfare at the median of society?
Consider this one: if you want economic stimulus through job creation, the most effective way to do so might be something like this:
WASHINGTON—In an effort to boost the economy and promote job growth, representatives from the newly revived Works Progress Administration announced Thursday their plan to dismantle, piece by piece, the 3.25 million cubic yards of concrete forming the Hoover Dam, and then immediately rebuild it. “This is a vital initiative,” said WPA director Ted Doogan, who was appointed last week. “Systematically tearing down such a massive edifice will create at least 25,000 jobs over the next five years. And then reassembling it, using all the same pieces in the exact same configuration, will employ another 25,000 workers. America is back.” Other public works projects currently underway include the bulldozing of libraries, the burning of national forests, and the defacing of public murals, which will be followed by a massive plan to rebuild libraries, revive national forests, and repaint public murals.
Efficiency at its finest, no?
If you happen to be among the lucky ones whose work hasn’t yet been outsourced, automated, or otherwise eliminated, if you are among those who would object to the idea of providing a guaranteed minimum livable income to all citizens, you might ask yourself a few questions: could a robot do your job? How about someone in Bangladesh? Does your work really require any “skills” outside of formatting Excel spreadsheets and keeping an Outlook inbox neat and tidy? Do you have to work with your hands? When was the last time you had to use any aspect of your “higher” education? Is there any creativity or artistry involved on a day-to-day basis? How many times per week, or even per day, do you find yourself unable to engage in the activities from which you truly derive some pleasure or passion because you must instead act in a way that serves a corporate interest that does not concern you directly? And finally, does your work create any real, lasting wealth, or are you one of the multitudes involved in transforming fossil fuels into garbage?
Now, let’s step back for just a moment. I don’t mean to suggest that all jobs are worthless, or that the idea that anyone who does one deserves no more wealth than someone who does literally nothing except sit on the couch watching reruns of Family Guy. I do mean to suggest, however, that such a person in many cases creates the same aggregate value as someone who works day in and day out, and in some cases more value (considering the number of business models predicated on the creation of negative value and the outsourcing of unpaid externalities). And considering any of the above criteria, can you really honestly say to yourself that someone not engaged in this activity does not have the right to a decent standard of living? What about those who are entirely able and willing to contribute to the creation of value for society in some way, but whose entreaties to do so are rejected by the ruthless inefficiencies of the corporate economy? Do they deserve hot meals? Is it really a better economic model to force someone to “earn” her keep serving poison to the masses at Burger King than to simply pay her to stay at home doing nothing?
Oh, whoops, this one is proprietary! Another great example of how large corporations create positive wealth for society at large, no? Ah, well, at least you can still watch it on YouTube…
Let’s return briefly to the idea of negative externalities, and how much of our economic system is oriented around encouraging people to take jobs that promote them, at the expense of the public’s general welfare. Externalities are a lot more important than most economists assume. In many cases, they are the very heart of the matter, the basic reason why one choice is better or worse than another (and remember, kids: economics is about making good choices, not just about maximizing profit for the corporation). Most economic analysis either ignores externalities entirely or at the very most treats them as some kind of side consideration, perhaps shifting around some prices but too difficult to bother including in any economic model. But consider the following claim, some variation of which we’ve seen from a number of related vested interests:
“Continuing to burn coal creates more jobs than solar or wind power because it maintains the need for coal miners.”
And why is it that the dirtiest fuel creates this particular economic “benefit”? Precisely because it requires continual depletion of a non-renewable resource! Now, you try and tell me there is any real value in maintaining these jobs for their own sake. So we don’t even need to consider how our present economic system treats any of the other externalities of coal burning, and there are many, all of which “add” value to the economy in the form of jobs (in the health care and environmental remediation sectors) and an increase in the GDP through their management, to the extent that they are managed. Just the very nature of the activity is, in itself, a negative externality to society as a whole: it permanently destroys a resource for all time, making the next round of coal that much harder to find and burn. And there are still those out there who believe the game we’re playing isn’t rigged to make bad choices?
Now how about this one: Michael Vick. The man gets paid bajillions. What value has he created? He has tortured dogs, but even setting aside that negative value, let’s consider just what it is that he does that enables him to “earn” his keep: he’s good at tossing around a dead pig. What value does that create? Well, for one thing, it inspires many television viewers to get piss-drunk and gorge themselves on nachos while living vicariously through a machismo colloseum spectacle. What a great example for the children! And another type of value he creates: by getting more people to tune in through his display of athletic prowess, he creates lots of revenue for advertisers. You know, those corporate parasites who make their living by turning the very premise of free-market capitalism on its head: convincing people to buy products that won’t benefit them through misrepresentation and manipulation in lieu of the “information” that is supposed to be the greatest asset to the perfectly rational economic human consumer.
The list goes on. Ke$ha. Charles Koch. Lloyd Blankfein. T. Boone Pickens. R.J. Reynolds. Coca-Cola. The entire prison industry. All of them, making fortunes by taking advantage of unpaid externalities that vastly outweigh any positive benefit to society. For every instance you can find of a millionaire or billionaire who has transformed civilization for the better, I can come up with ten examples of those who make their fortunes by turning fossil fuels into garbage. At some point, we have to ask ourselves: where does it all end?
Real Wealth? It’s Gone Daddy Gone…
I’ll go ahead and end this one on a positive note: you only live once, so stop worrying about it and go do something you really enjoy! I myself am going to go make some art, and create something of real value.
I must admit, I’m a bit confused. How do automobile enthusiasts square their love of four-wheeled travel, possible only thanks to the largest public works project in history, and arising from a desire to maintain rapid cross-continental military dominance, with the professed libertarian ethic supposedly underlying their arguments, that the government ought not to interfere on behalf of matters of the public good? Certainly, the social isolation of the solo commute makes sense given the harrowed place of the individual in their ideal society. But let’s face it: it takes a lot of work to make it all happen. There are no accidents here, other than the thousands that litter the freeways every day; the default option, given a withdrawal of government support, is not cars and roads, but rather nothing at all. Yet somehow, many true believers still seem drawn to the purported neutrality of the automobile option, as if believing that the Eisenhower Interstate Highway System arose naturally based upon its merits in a free market.
Sometimes I have to wonder if those who advocate taking humanity along such a regression curve have ever really bothered to expose their own arguments to any scrutiny. Here I am talking both about conservatives who espouse status quo apologism as if current living patterns and disparities in wealth arose from some presumptive natural system of ethics rather than massive government intervention, and also leftist do-nothing “doomers” who put the cart before the horse in arguing that the best way to protect the living planet is a massive die-off or worldwide degeneration of living standards to abject poverty for living humans. Strangely, these two groups, of such divergent political philosophies, seem to have found some common ground of late: they both seem to think it would be best if we stopped trying to make life better for people and instead let everything just come crashing down. This validation of the “horseshoe theory” of politics helps us make sense of the current popularity of deflationary, minimal-interventionist, “Austrian”-style economics. After all, it is a system that offers no way out, and both sides are essentially arguing that we ought to get used to wading through smog and feces instead of trying to build a future life that is livable by getting interested in technologies like solar panels and high-speed rail. High speed in general is the antithesis of an ethic that believes most in grinding progress to an absolute halt.
High Speed Nothings
While the selection of transportation systems is far less than automatic, and their deterioration absent continual reinvestment and replacement far more so, perhaps most automatic of all seems to be our acceptance of the idea that “Americans have a love affair with the automobile.” Providing transportation for the public, rather than merely publicly funded systems that serve the private motorist, strikes us as morally wrong; why, the idea itself is downright socialist! Or as Chris Christie and his ideological kin might say, “You can have my Lexus, when you pry my cold, dead body out of the pool of twisted metal it will become should it be struck by a semi truck!” Are we really that sworn over to asphalt and rubber instead of sidewalks and cold steel rails for any practical reason, or is it just something we find important in order to feed a fantasy? After all, in the nation enamored of a Tea Party aesthetic (as in, get your grubby government paws out of my pocket, except for the highways, the military-industrial complex, and my Medicare-subsidized scooter), communal mobility strikes us as an insult; it offends the sensibilities that favor some macho notion of the lone cowboy or the lone gunman, the individual stalwart against some kind of creeping communitarianism.
Or, to put it more bluntly, without big cars, big suburban roadways, and lots of big open spaces in between, it’s a lot harder to get away from minorities who live in cities and therefore to insulate and protect ourselves from the idea that we might actually owe some debt to society at large for our affluence.
Were things always so black and white?
So, what exactly is the point of refusing solutions to problems upon which most all (reasonable) people can agree, such as the ever-increasing scarcity and cost of petroleum-based fuels, the social and environmental pollution of automobile culture, or the isolation and ghettoization of urban spaces? The simplest explanation is often that those who stand for the status quo have their own dogs in the fight. I’m not much for conspiracies myself, but they certainly aren’t unprecedented. Take, for instance, the great highway robberies of the 1940′s and 50′s: it’s been well established that the transformation of American cities from transit- to car-based spaces, from mixed-use developments to suburbia unsurvivable sans automobile, was no accident, but bore the particular mark of interests invested in particular forms of mobility. Unless, of course, you work for the Cato Institute, but therein lies another dog: it exists only thanks to funding from, and in order to replicate and justify the ideology of, the oil billionaire Koch brothers. And given the continuing prominence of the auto and oil lobbies in public policymaking and electioneering, it should be no surprise that their beneficiaries in the halls of government choose the long and difficult road of collapsitarianism, rather than the easier path of choosing to adequately build out technologies of tomorrow to serve broader public interests and more sustainable, less isolated styles of development.
It would, of course, be too easy to just sit back and complain. Is it really enough, after all, to just identify the source of the problem? To do so would simply replicate the behavior described above. The problem isn’t really the immense staying power of lobbies, as every major industry has them. The problem is really that we give their arguments so much credence, and that as a result, the level of discussion of policies as a means to solve problems remains superficial. Mull this one, for instance: the “debate” over use of Canada’s tar sands is not really one at all, but merely ships passing in the night. Are ”Oil creates jobs!” (all industries do, though, so it’s really a non-point) or “Hundreds of millions of Americans depend on cars!” (a bit of a scarecrow, that, as it’s not the only way to get you there) really responses to “Mining tar sands devastates the local environment and First Nation communities, and exacerbates anthropogenic climate change”? Neither side really does much to deny the validity of the other’s point. But from a bird’s-eye view, it is possible to see that there really are some answers out there, and that there is no ideologically neutral choice in the menu of options supposedly handed to us by The Powers That Be. Rather than accept ideologically loaded points at their face value, then, and in turn act as if economic development and protection of basic environmental and health standards were inherently at odds with each other, we might instead ask ourselves not merely “what is the best way to continue doing what we do today?” but instead, ”what are the systems that might serve both of these perceived needs?” In such a manner we might go about finding real answers.
As the legendary philosopher Yogi Berra famously said, making predictions is tough, especially about the future. Always in motion, the future is, and hard to see, obscured as it is as by a dense fog. Especially difficult to see are those changes that will occur in the future to radically displace old ways of living, which improve upon them not merely in increments but as utterly transformative and novel concepts. One reason we might fail to see some of these changes coming is that they might not occur until the new concept crosses some critical threshold, and therefore ensuing changes would be impossible to predict merely by looking at past trends. In the case of energy, for instance, we might not see solar photovoltaics taken seriously until, slowly at first but just as surely, market by market, the cost and performance of PV systems becomes dramatically superior to old, cumbersome, and polluting technologies. But once they reach that point, the shift in their favor might be so rapid that the current focus on “integration” of new technologies might utterly vanish, as present systems become entirely obsolete.
One of the most important concepts to understand about the relationship between price and production in any system is the notion of economies of scale. That is to say, as the production volume of any given product increases, the unit cost of production decreases in proportion, barring such intervening factors as disruptions in trading or supply scarcity. The improvements in cost as well as performance derive from a combination of technological and process improvements, supply chain efficiencies, and increased competition as more different players become involved in the manufacturing of a given product. One of the best and most famous examples of economies of scale is of course Moore’s Law, a theory developed around the middle of the twentieth century that accurately forecast the growth in performance for transistors and was later applied to data storage and semiconductors. The same trends can be observed in other areas as well, including noncomputing uses of semiconductor materials:
Here comes the sun?
Of course, don’t get me wrong: these kinds of changes don’t happen automatically, and it is fallacious to assume that nascent but potentially transformative industries must arise from some kind of “natural” free market or purely individual choice in order to have meaningful effects, as if to deny the role that group dynamics and cooperation have played in the prior evolution of humanity or of any other species. For instance, in 1950, the very idea of space travel itself seemed outlandish to almost any casual observer, and nobody imagined that within a few short decades we would be sending people and satellites into orbit with a great deal of regularity, let alone that free market dynamics alone would support such an insane proposition. There is no denying that space exploration has radically shifted many aspects of the way we live, and yet it is only today that we are even beginning to see the private sector talk about taking on the largest share of the burden for continuing to advance the technology. So, even setting aside the question of whether we are continuing to subsidize old technologies, particularly by ignoring their environmental consequences (yes), still, we should not use the existence of some future singularity or grid parity, whatever you like to call it, as an excuse to avoid making good policy choices that nurture those technologies we can already see today as being the source of radically transformative paradigm shifts in the future.
The biggest problem I have with predictions, especially those made with the kind of sure-minded confidence you tend to find in the area of energy and natural resources (have a look at some of the claims floating around the blogosphere if you don’t believe me), is that nobody can possibly anticipate the truly transformative changes that will reshape the way we live, that will replace old systems to such an extent that new patterns based on new systems become utterly impossible to predict. How could anyone, for instance, have anticipated the rise of the iPhone without knowing about cellular phones, or predicted the wild success of Google, Wikipedia and Facebook without knowledge of the Internet? Futurists have taken to referring to such dramatic uncertainties as singularities, akin to the the center of a black hole: you know something is going on back there, but you can’t see it, and the laws under which it operates are so different from those to which we are accustomed that making predictions about its behavior is an exercise in futility.
However, even while past performance is no guarantee of future results, there are still a few points we can extrapolate from history in this area. To me, asking how we can make tomorrow’s technologies fit in with our existing systems, like the electric grid or an oil-based economy, is like asking how to make the Internet compatible with telegraph wire. We shouldn’t be asking how to improve upon existing technologies and systems; we should be asking ourselves, “What are the technologies and systems we need?“ When DARPA developed the first primitive computer networks, its researchers and engineers weren’t worried about problems with integrating the new systems with existing room-sized mainframes and vacuum tubes; they were thinking about new possibilities and concepts that couldn’t even possibly be imagined in the absence of the system they were creating. And even they could never have imagined how big of a game-changer they were really creating.
I believe most observers, and especially those who foresee nothing but doom and gloom as the outcome of predicaments such as the peaking and decline of fossil fuel production, are stuck in a rut of thinking about technologies like solar photovoltaics and energy storage as merely poor substitutes, as last-ditch efforts to save ourselves from an otherwise inevitable economic collapse. Such projections fail to give new technologies proper credit for being better than the old ones, and in so doing they consign us to continued enslavement to the dinosaur technologies, as if they had magical properties and could never be supplanted by something newer and better. We should move past thinking about getting “beyond fossil fuels” and start thinking instead about how to get beyond the beyond.
Hence why, while I cannot and do not intend to deny the facts of our predicament today, I still believe the greatest failure in humanity’s energy crisis is a failure of the imagination. We’ll never get anywhere with that kind of can’t-do attitude.
Greetings from the future, Earthlings. Ah, there is still so much left for you to learn!
Freedom isn’t free, at least not freedom from imported oil dependence. Someone has to pay for the alternatives. But whom?
The answer, if we base our decisions about which alternatives to pursue on incomplete information, without understanding their true costs and long-term impacts, is that all of us will pay the price. And that’s exactly what the profiteers had in mind, which is why, even today, the members of America’s Natural Gas Alliance have done little to correct the media myths about what is really cheap and what is really expensive. Quite to the contrary, producers continue to purchase ad space on the front page of the New York Times, repeating the story that “technological advances” have suddenly made ninety years of gas available, thereby allowing utilities, policymakers, and the public at large to indefinitely put off the more difficult work of finding resources that won’t run out and irreparably damage the planet’s life and ecosystems. They know full well that energy transitions take time, and that it is impossible to respond immediately to volatility in the market by bringing new projects online – just look at the time it has taken to get the Cape Wind project off the ground. If we choose to increase our dependence on natural gas today, we are stuck with that decision tomorrow, even if the costs rise dramatically – and we won’t have built out the capacity needed to manufacture replacements. The conventional wisdom is that abundant gas is pricing the real alternative, renewable energy, out of the market. “Energy in Depth,” indeed: if we get in so deep, where exactly does the “transition” part come into play?
What gets less attention than the (artificially) low price is that all that technology doesn’t come cheap. The real winners in the horizontal drilling and fracking boom aren’t the gas producers like XTO, Chesapeake, and Range Resources, which helps to explain why these gas-leveraged companies keep selling off acres to companies with deeper pockets like Exxon, Chevron, and CNOOC. The real winners are the oilfield services providers: companies like Halliburton and Schlumberger who hold the intellectual property rights, equipment and expertise required to coerce oil and gas from difficult-and-expensive-to-develop shales. Counterintuitively, the larger base of reserves potentially available in shale and other low-grade resources, like bituminous sands and ultra-deepwater oil, doesn’t really help to alleviate scarcity because the higher costs of technology required to develop those resources must ultimately be passed on to the consumer at large. As resource economist Peter Odell put it, you don’t run out of resources, you run into them. Unfortunately, thanks to the PR blitz from the fossil fuels industry, it’s taken the mass media a while to make the connection between rising costs to producers and rising costs to consumers. So we are stuck with the myth of cheap and abundant natural gas, the supposed “alternative to fossil fuels” that is, in fact, a fossil fuel itself.
Can you connect the dots?
If you follow the statements made by executives of major gas producing companies, you’ll notice that lately, the narrative has changed a bit. No longer is anyone under the illusion that natural gas is a low-cost panacea; instead, they emphasize an ongoing transition to “liquids-rich plays,” like the Eagle Ford Shale in Texas and the Bakken Shale in North Dakota. The idea here is that, even though heavily gas-leveraged companies know they cannot recover the costs of development at today’s prices, perhaps some of that cost can be offset by drilling for oil instead, given the higher price for the commodity.
So how has that transition from shale gas to shale oil been working out? As it turns out, not so hot. Producers are fast discovering what they should have already known: the price of oil is high for a reason, and producing it is not as simple as just poking holes in the ground. The easy oil is gone, and you can’t offset the cost of producing expensive gas by simply shifting production to expensive oil instead. So once the attempt to displace costs to another profit center, in the form of difficult and expensive oil, fails, to whom does the hot potato of high production costs get passed next? The answer, as noted above, is quite clear at this point. Sooner or later, we will all pay the price for our poor judgment.
It’s just a matter of time before all this blows up in our faces.
It’s not just rare earths that are getting noticeably rarer these days. The coppers and silvers seem to be in scarce supply, too, but it’s not because we traded in all our chips to “go green.”
Before we get deeper into that, though, a new year always calls for predictions. After all, here in the tubes, we’re always on the lookout for the trend spotters, those who know about the “next big thing” before it happens - and where would we be if we had no basis for determing whose end-of-the-world forecast turns out to be most accurate? Just as importantly, we need to provide ammunition to the cornucopian crowd, so that they can point out just how off base our predictions were (like they did with Limits to Growth, remember?) and thereby prove that business-as-usual can (and should!) continue indefinitely.
I predict, therefore, that in 2011, the U.S. federal government will continue to exempt hydraulic fracturing from its environmental protections, passing the buck back down to cash-strapped and understaffed state enforcement agencies to contend with the outsized interests of the fossil fuel business, even as evidence will continue to mount that improper management of flowback fluids from fracturing operations constitute a hazard to residents in major drilling areas. In 2011, regional fuel shortages of the type we saw in 2010, like the UK’s periodic Gas Balancing Alerts and the regional diesel outages we saw in China, will become more pronounced and longer-lasting as aging infrastructure is strained and producers struggle to keep up output in old giant oil and gas fields (I won’t bother making a prediction about prices because that’s like trying to predict the behavior of hamsters on crystal meth). And in 2011, you’ll hear even more than you did last year about how shortages of rare earth metals, and maybe a few other things too, are of “mounting concern” to the political and media classes, especially as such shortages pertain to the “clean energy economy.” The implicit message will be that the included technologies are “unreliable” and therefore we needn’t worry about transitioning off our transition fuel because did I mention natural gas is cheap and super abundant? This message brought to you by ExxonMobil.
I can pretty much guarantee your Congresspersons won’t get too worked up about rare earths, though. After all, they have it a lot better than a good chunk of their constituents: they have jobs, and very likely other engagements to which they can return if they lose their seats. So they probably aren’t going to get too worried about a hike in the price of a flat-screen TV, and especially not the price of thin-film solar panels that probably didn’t interest them in the first place. They might be more concerned about the effects on gasoline prices if material shortages crimped the catalytic cracking capacity of our oil refineries, assuming they understand there would be any effect at all. But what really gets their goat is the thought of paying a few more pennies to China for materials used in military technology, never mind that they were asleep at the helm for fifteen years while the U.S. already came to depend on China for these materials. It’s worth mentioning that if current trends continue in the zinc market, we might also be paying China a few more pennies for pennies too – in fact, some analysts believe we are just a few years off the from the peak of global zinc production. Not bad for a base metal, huh?
In any case, what seems to be causing a lot more angst than the steady disappearance of the world’s high-grade mineral deposits is the steady growth of negative digits in our imaginary beanpile. Now, I don’t mean to diminish it (the beanpile) by means of some claim that all wealth is imaginary or even a stale critique of a “fiat currency” system. From where I stand, it doesn’t matter much in the long run what exchange medium is used, or whether growth in nominal terms (GDP) continues or whether the supply of money increases or decreases, other than effects on the distribution (not the total quantity) of real wealth. Gold sitting in a vault won’t be anymore helpful than cash in a mattress if things get bad enough that our real wealth (things like cities, vehicles, farms, oilfields and power plants) reach some entropic state wherein they are no longer useful, right? Unless I’m missing something – but it seems to me that gold itself has no utility other than as decoration (probably the not the first thing on your mind in that situation) or possibly roofing (although thatching will probably be easier). If you ever want to witness an amusing display of mental gymnastics, get a gold standard true believer to explain her view of economics to you – just make sure you have an escape route planned beforehand, as they tend to be on the longwinded side.
Not a very nutritious diet for growing an economy…perhaps next time we should try real beans instead?
Most economists and politicians making decisions on such matters in this country, like most members of the general public, do not have a clear grasp of the relationship between natural capital and real wealth beyond simple monetary value. Instead, the physical economy is subsumed by a larger myth that lies somewhere between Manifest Destiny and the American Dream. When white settlers first began to occupy the New World, an abundance of natural wealth seemed to lie in all directions. Armed with the confidence of Divine Providence, they set about their sacred task of bringing light into the wilderness: thus were the Eastern forests cleared, the coalfields of Pennsylvania and hematite ores of Minnesota depleted, the oilfields of Texas squeezed dry, the sands of New Mexico stripped of radioactive isotopes, the wild stocks of North Atlantic cod and Pacific Northwest salmon trawled up, the fossil lakes of the Midwest poured into the oceans, the mangroves of Florida cleared for exurbs, the waters permafracked in the name of “energy independence.” Wait, what was that last part? Independence – from what? From whom? Can it be true that the ”magic of the market” is unable make resources simply appear out of thin air after all – at least not where we can get to them? Might our destiny not be so manifest in the end? Best to distract ourselves from the possibility of having our myths shattered; instead, let us split hairs over the inability to precisely pin down dates and definitions of “peak oil” and the like, as if, nits safely picked, we have proved the theory that “ingenuity” can indeed substitute for finite resources. Also, it would be reassuring if we could go back and see what’s been said over the past few years to find some horribly off-base predictions, since if a critic is wrong once, it means we must be right. That’ll show those “peakists!”
Of course the depletion of our natural wealth cannot be unrelated to the mess of debt we’re in, even if the “peak stuff” story is complicated by external political and economic factors from time to time. Do you feel as if you’ve been asked to do more for less lately? The story is the same in the workplace as in our extractive industries: the easy work is over, and the low-hanging fruit is gone. The size of the rock from which we must mine the same amount of money – excuse me, the same amount of wealth, as these concepts should not be confused – has increased. You’re going to have to work harder for your zinc from now on.
