The Partitioned National Brain

If you read the kooks that I read on a regular basis, such writers as Dmitry Orlov, James Howard Kunstler, Gail Tverberg, Richard Heinberg, Craig Dilworth, Herman Daly, Glenn Greenwald and the whack-jobs at Zerohedge, you may have noticed an odd convergence.  To wit, the "Libertarian" sites, such as Zerohedge (where the Comment Cowboys [h/t: Dan D]) include a posse of anti-Semitic ravers) are now beginning to quote freely from the liberal "environmentalists" in the list above.

This is very interesting to me, but then it would be, wouldn't it?  This is an indication that we are now moving beyond the old Left-Right dichotomies, where a conservative viewpoint automatically needed to reject any argument from a tree-hugger as wooly-headed nonsense.  I suspect this is because the Doom & Gloom sites, such as the dissidents at Zerohedge and numerous other places, are beginning to see that it isn't just "environmentalism" that is the problem, but the far more serious issue of energy paucity and energy unaffordability which has crushed the American economy and the economies of the Western industrial world.

So now Zerohedge is beginning to publish essays by James Howard Kunstler, the Clusterfuck Man himself, and the coiner of the phrase "the psychology of previous investment," by which Kunstler explains the otherwise inexplicable obsession of the American economy in continuing to invest in the doomed suburban world which cannot be sustained as Peak Oil exacts its terrible price of unrelenting high energy costs.  Pretty soon I expect Zerohedge will discover Dmitry Orlov and Gail Tverberg, who are quantitative in ways that Kunstler is not; Monsieur Clusterfook is a master at the snarky, Mencken-esque turn of phrase he uses to skewer the fat, dumb, video-addicts of the American Booboisie, but he is not a real numbers man.

I can add a new stylist to the committee:  John Michael Greer, with whom I was not previously familiar until I began reading Not the Future We Ordered, which is about the end times for the great "Myth of Progress" made possible by the one-time legacy of abundant fossil fuels on which modern societies engorged themselves for the last three hundred years.  Greer writes from the viewpoint of social psychology.  It is only natural that human beings are having a very hard time coming to terms with the modern maladies of overpopulation, resource scarcity, food insecurity and climate change, all of which are interrelated in diabolical ways.  We all grew up believing that things "would always get better," and now, suddenly so it seems, that fantasy has been destroyed, and there's nothing to put in its place.

That's a very difficult transition for the "Collective Unconscious."  Greer, in very simple terms, asks a question which I've alluded to numerous times in my "Mr. Krugman's Science" posts.  I liked it so much I figured out how to "bookmark" the pixels I want to save on my Kindle.  Here it is:

"The question that has rarely been asked since 2008, and needs to be asked, is why events of a kind that normally produce ordinary recessions [ref: dishonest banking, a housing bubble] have spawned something so much more serious, protracted, and resistant to solutions this time around.  A glance at the business pages of any newspaper of record will show conditions that are nearly unparalleled in living memory.  Several European nations have plunged in a few years from prosperity to a level of economic crisis in which a third or more of the labour force has no jobs and the national government is struggling to avoid defaulting on its debt.  In the United States, cities are declaring bankruptcy and laying off their firefighters and police forces, while state governments are tearing up thousands of miles of paved roads and replacing the paving with gravel, because they can no longer afford the cost of annual maintenance.  These are not the signs of an ordinary downturn in the business cycle. Bring peak oil into the picture and the severity of the crisis is easily explained."

Greer goes on to point out that oil production plateaued in 2004, and prices of petroleum began their inexorable rise.  I used Mr. Krugman's Science as simply a counterpoint to this much deeper insight into the nature of our malaise.  Paul Krugman himself is a boring and very conventional thinker with nothing to offer in terms of the relevant discourse, but he stands in for the Establishment viewpoint: it's a "bump in the road" which is amenable to Keynesian tinkering; we could be living the life of Riley again if we would just get off this "savage austerity" jag.

Probably not.  So the Great Partition in the National Brain: our alienation from nature, brought about by our habit of mediating our existences through electronic imagery, has made us, as a society, incapable of seeing that we remain dependent on the physical world for our survival and prosperity. We overworked Mother Nature; she's plumb wore out, and we don't want to face that, so we engage in delusions of money-printing and "policy arguments," and distract ourselves with temporary crises like NSA spying or gay marriage or "immigration reform."  President Obama now wants to make climate change the "signature issue" of his second term.  No, he doesn't.  He doesn't really want to get into what that would really mean for the way we actually live, but it will make for some nice "legacy" sound bites.

All of these issues have a sell-by date stamped prominently on their covers.  The real issue is the Economy and its plight in an age of resource scarcity.  That problem is not going away.  It's going to change everything.  Thoreau made Economy chapter one in his book, and he meant it in the broadest possible sense: the means by which humans engage with the world in order to survive.

Richard Heinberg's The End of Growth

I've been reading Richard Heinberg's latest book, The End of Growth, which follows up where his book Peak Everything left off. Increasingly, it seems to me that we've turned a corner in our economic reality. Whereas before the arguments were monopolized, on the one hand, by the liberal Keynesians, who contended the path to growth, and thus full employment, was a robust participation by the federal government through spending to take up the slack in private demand; and on the other, by the Austrians and other "conservatives" who are convinced that government is the problem, and that big public debts are the precursors to runaway inflation, the "Deep Economics" of people like Heinberg (building on seminal work by Herman Daly and his Steady State Economics of the 1970's, along with all the brilliant books by Barry Commoner, which analyzed the thermodynamics of our energy predicament), Heinberg et al. proceed as if there is a physical environment involved in economic reality. Pretty wild, huh? I think so too.

I think that small lacuna, the absence of context, is what drives me a little nuts about liberal economists such as Paul Krugman. His personal style, grandiose as it is, grates somewhat, but it's his (apparently) unexamined belief that "growth in GDP," regardless of its composition, that makes me question whether there is really much of a difference between a "liberal" economist such as Krugman or Brad DeLong (on the faculty at John Yoo University) and a conservative. They all want the same thing, I guess: the return of the American consumer economy with unemployment at a nice, healthy 5%, growth at 4% of GDP, just like the good old days. They are only arguing about how to get there - should the federal government increase its existing deficit of around $1.5 trillion (and 43% of its total budget) to something along the lines of $2.5 trillion? Krugman & Co. say yes, because they're convinced the medium-term growth in the economy will allow the economy to fill in the difference with tax revenues in the longer term. The conservatives say this is folly, not because they don't believe in growth, but because the federal government will "crowd out" private investment or "over regulate."

Although I write about it from time to time, I don't really care whether the United States increases its budget deficits. The interest rates it pays on Treasury debt are, for the time being, dirt cheap, and the effect on servicing costs of the national debt (that $8 trillion or so that is truly "public," that is, not one of the intragovernmental trust funds or bonds owned by the Treasury's alter ego, the Federal Reserve) are not a big deal - now. But I actually don't care because it's pretty obvious we're never going to get near paying off the national debt anyway because that would require true growth in the economy, and that is not going to happen. So pile it on: a deadbeat with room on his credit limit may as well take things up to the max before he goes belly up.

What Heinberg & his ilk point out (Dmitry Orlov is very good on these same points) is that actual growth in an economy (as opposed to monetary and fiscal games, which the United States substitutes for productive activity) requires energy. We don't often think about the congruence of energy and economic growth because we've been distracted by people getting rich writing credit default swaps, which seem to require only household alternating current plugged into a computer. But at the macroeconomic level, an increase in wealth (meaning, an increase in the overall well-being of the general populace in terms of maintaining their vital heat through eating and shelter) requires a real interaction between the human race and the planet we live on. Fundamentally, this is because we are ourselves carbon-based life forms dependent on physical processes for survival; while it's confusing at times because of all the virtual avatars we now substitute for our actual selves, facebook and Twitter, by themselves, are not something you can eat. The way we effect the interaction between Homo sapiens and Earth is through the use of energy.

We are now entering an era of permanent shortage in the cheap liquid fuels on which modern civilization has been built, and everything is going to change as a result. In the United States, for example, liquid fuels (primarily gasoline) are used for 90% of the passenger miles traveled by Americans. Petroleum inputs are used in virtually everything, but most critically in order to carry on agribusiness. Our consumer society depends on long-range transportation of goods through the global economy to their Big Box destinations. At a point past Peak Oil (which has already happened), then the whole system begins to wobble, as the price of oil goes up, the fear of shortages begins to drive future prices, as the uncertainty of long-haul restocking begins to weigh on the decisions whether to expand existing business, et cetera. As Dmitry Orlov has demonstrated through a careful thought experiment, the ride down from Peak Oil is not a smooth descent, but a chaotic, bumpy ride, as various negative feedbacks begin to interact. More or less the way the world increasingly seems to be these days, in other words. We're just not always aware of the Man Behind the Curtain, imagining it's all because of one political "policy" decision or another. Things will become increasingly clear over the next decade, that's for sure.

As I say: an interesting read.

Dmitry Orlov's "Reinventing Collapse"

It's certainly worth reading, this new book by Peak Oil theorist and "collapse" thinker (he pointedly disavows the titles "expert" or "activist") Dmitry Orlov, a native-born Russian who witnessed first-hand the economic collapse of the Soviet Union in the late eighties and early nineties. The précis might be stated this way: the Soviet situation at the end of the USSR and the current American situation are strikingly similar. Overextended, bloated militaries; foreign wars gone wrong (Soviet: Afghanistan; American: Iraq, Afghanistan); crushing foreign debt; a declining currency; an unresponsive, incompetent central bureaucracy, etc. Add to these preconditions the looming crisis of Peak Oil, and you have an American economy set up for disaster.

Orlov's background is scientific, in engineering and computers, and he writes in a droll, frequently hilarious deadpan style about modern America. There is nothing malicious in the sometimes unfavorable comparisons he draws between the old Soviet Union and the USA, but he makes clear that there were definitely superior aspects to Soviet life which Americans, for ideological reasons, are incapable of seeing. Nevertheless, I don't think he wrote the book to settle any old scores or out of resentment, not at all. He seems like a man incapable of envy or even of much caring who has the upper hand.

The precipitating event for America's collapse (and he means this literally) is Peak Oil and its consequences. He sees the USA returning to an agrarian, atavistic society intent mainly on sheer physical survival. Orlov contends that in some ways the USA is less prepared for such a fall than the old USSR. For one main reason, the USSR was far less dependent on the private auto as a means of transportation, whereas the United States is practically helpless without it. Soviet housing and medical care were provided by the government, so that when hyperinflation hit, and the ruble became worthless, the residents were not turned out into the street or denied health care. Obviously, neither of these situations obtains in the USA. Those who do not own their own "shelter" and some modicum of arable land (at least 1,000 square feet) when disaster hits are likely to become homeless nomads.

Orlov, in common with other Peak Oil theorists I've read (such as James Kunstler), denies that "technological" fixes can save us from this future. No combination of renewable energy or conservation will rescue us. Sometimes their insistence upon disaster suggests to me that Peak Oil is cultist, in some ways, a kind of End Times dystopia, and their revulsion with the look and feel of modern America lies at the base of a destructive fantasy.

But Peak Oil is not like Y2K or waiting for the Hale-Bopp comet. If you go over to theoildrum.com and noodle around, you'll discover there's an awful lot to what Orlov is saying. For instance, the depletion rate for oil worldwide exceeds the rate of new discoveries coming on line by a factor of four. The depletion rate is defined as the downward trend of production of existing fields (as pressure is lost over time and water intrudes, the rate of extraction from a field goes downhill) plus the growth in demand. Currently, the world's oil fields are producing about 85 million barrels per day, and everyone except Saudi Arabia is pumping full-out. Some of the exporters we depend on are going to start hoarding their own supply because their fields are playing out (Mexico, e.g.). Demand at least equals supply. We're in an unstable equilibrium, and the U.S. takes a way disproportionate 20 million barrels a day, 14 million imported. The United States hit its own peak in 1970, and the Peakies say the world hit one in mid-2005. There are new fields which could be drilled, in Iraq, off the coasts of the USA and Brazil, in Alaska. The problem is that new fields are no match for the depletion rate even under best case scenarios. We're going to steadily lose ground. All that new discoveries can do is retard the onset of shortages.

None of this sounds much like Y2K, much as we would like it to. Neither does the realization that oil costs 5 times as much per barrel now as it did when Bush took office.

You know, I have to confess something here. Dmitry Orlov, while I was reading his book? He didn't seem hysterical at all. Thing is, he seemed really, really smart. He's given up the idea of motivating people to do anything, if he ever entertained the notion, because he can't see it happening. Anything which might work is politically impossible. One of those paradoxes, like the slow-as-molasses response to global warming. How can things which are crucial to survival be politically impossible?

Ken Deffeyes, the Princeton geologist and author of Hubbert's Peak - The Impending Oil Shortage Crisis, does something which Orlov does not do; he places the problem on some sort of time line. At oil's current price, fluctuating at about $130 per barrel, about 6-1/2% of the world's total domestic product is being consumed in buying petroleum. His estimate is that at $300 per barrel and about 15%, the world's economies will go into shutdown. Extrapolating from recent price rises, this might happen in 6 to 24 months. $300 per barrel oil translates to about $12 per gallon gasoline. A car with a 15 gallon tank would cost $180 for a fill-up. If you're driving a Lincoln Navigator or an Escalade and getting 15 mpg, it will cost you $12 to drive 15 miles, or 80 cents a mile. A 45 mpg Prius will allow you to drive 15 miles for four bucks. Those prices do sound crippling, and it's important to remember that if you consider the myriad applications of petroleum in agriculture and manufacturing, the cost increases are incorporated nearly everywhere you look.

The question forming in my mind is not how could this happen here, but the more ominous: why won't it? Probably what gives Peak Oil and the idea of impending disaster its air of unreality is the official silence and the lack of concern in the popular media. No blockbuster movies (okay, Road Warrior), no documentaries, no speeches by President Bush other than the occasional reference to our "addiction." How could something this dire be potentially this close with a "gas tax holiday" for the summer as the only official reaction? Dmitry would have a droll response; personally, I think mine will be to find a nice level lot with a high water table.

Paul Krugman Joins Peak Oil Cult

It's interesting to see that Paul Krugman, ace economist of the New York Times opinion pages, has lent his stately name to the Peak Oil Theorists. For those not already intimately familiar with this concept, "peak oil" (or Peak Oil) is that theory that holds that a moment comes when the practically accessible supply of crude oil is 50% depleted. It can happen in a country, as it did in the United States in about 1971. Or-- and here's the Big Oily Enchilada --it can happen in the world. After peak, the world's supply becomes progressively more difficult to recover. Maybe it happened in 2006; maybe this year; maybe 2011, but soon, and for the rest of your life. Peak Oil guys should be forgiven their current delirium at their new-found credibility; after all, they have often been treated with the same disdain as those claiming to have been proctologically examined in an alien saucer.

No, with oil currently cresting at $125/barrel, up from $20/barrel only seven years ago (coinciding with the start of the Bush years), their heyday has arrived. They even have a society for true believers, the Association for the Study of Peak Oil (ASPO - although I think they should take two letters for Association (As) and add "Theory" to the acronym, so you get ASSPOT - more colorful). ASPO meets on a regular basis and wallows joyfully in the bad news - we're running out of oil! Their arch-nemeses are the Cornucopian nut jobs, like the late Julian Simon, who advance such ideas as the "creamy nougat" center of the Earth, that we sit atop a vast ocean of oil just beneath - well, way beneath - the surface. If I remember my geometry right, Earth ought to have a diameter of about 8,000 miles, so if we can learn to drill down on a radius of 4,000 miles we can reach any interior point beneath the surface. I've never quite understood how Cornucopians could logically posit the infinite supply of anything on what is, after all, a finite planet. It seems to violate one of those Basic Laws. The Basic Law of Reason, perhaps.

I don't have any geological reports lying about my house, so I lack an independent basis for judging. Peak Oil Theorists (POT Smokers?) and conservatives, as Krugman points out, are at loggerheads over the issue. Conservatives want to argue that their beloved free market system is being gamed by speculators, who ordinarily would be among their Robber Baron heroes. The whole idea of being a modern Conservative is that you get to cheat while receiving the adulation of a meretricious society. As long as you wear a flag lapel pin, as I've said before, you can bet against the dollar, hope homeowners are thrown out on the street so your short-play on the subprime market works, and still be considered more patriotic than a guy like Barack Obama, who, after all, is named Barack Obama. That's because this country is really, really stupid and superficial.

I think I'm digressing. So the conservatives want, nay need, to believe there's plenty of oil and it's just those guys with the goatees and head scarves who are incomprehensibly refusing to pump it out of their "elephant" fields (another swell ASPO term), along with the aforementioned greed-heads who are buying commodities futures on NYMEX. The ingratitude! We sold the Arabs fancy radar planes, we let them buy our banks -- where's the frigging oil, Abdullah? But is the Ghawar field in Saudi Arabia still an elephant? Is it more rhino size now? ASSPOTS have wet dreams in which they see the Ghawar sputtering, crashing (their preferred term), as the Saudis furiously (and clandestinely) pump vast amounts of seawater into the wells to force the remaining dregs out. Bush, siding of course with the Conservatives, as always, as he is congenitally programmed, does what he can to importune the Saudis to pump more oil - hugging them, kissing them, holding hands with eighty year old men wearing bath robes -- begging them. Still, they won't pump more.

Because they can't pump more? ASSPOTS, you see, have a vested interest in the total failure and breakdown of a car-glutted society, with its mindless salients of suburban cracker box houses, its mini-malls, its chain motels, its fast food joints. You know -- America. For the ASSPOTS, oil shortages represent the tool, the wedge with which they'll pry this mess apart. It is why an ASSPOT such as the Clusterfuck Man, Jim Kunstler, impatiently dismisses any talk of a substitute form of independent travel, such as an electric car, even though the Israelis are in the process of building an electric grid based on renewable energy to power just such a system. The whole thing needs to fall apart.

And for the Conservatives: the whole thing needs to hold together, because they are making so much money. The super wealthy financial manipulators want oil to be expensive, because it's another place to make money; but not so expensive that the system begins to break down. They can't believe that members of their own tribe would be so selfish as to subject ordinary Americans to an unsustainable burden, just to get rich faster. The Conservatives think just like the Saudis -- the American consumer needs to have the life squeezed out of him slowly, gradually, occasionally allowing him to breathe through a price reprieve. Sort of like a boa constrictor working on his evening's supper.