Wednesday, 21 March 2012

Growthiness, growthiness, the grossest gift that I possess

We are in a very tricky situation, economically speaking. Not just globally but also here in Jersey. The foreseeable and inevitable clamp down of the UK on LVCR will shortly lead to more job losses locally. Today’s UK budget may also clamp down on those who hold their properties etc in companies to avoid personal taxation, the administering of which is one of the legs of our finance industry stool.

Globally, we have probably arrived at the point where further economic growth as prescribed by Finance Minister Ozouf, Economic development Minister Maclean, Osborne, Obama etc is not just unlikely but should be recognised as very undesirable.

Economies are limited by the availability of cheap, easily and economically available energy. Here’s a graph of oil prices in “real” dollar equivalents (click image for a larger version).

oil prices

As you can see, adjusting for inflation, we are at round about the same real price that oil got to during the peak of the 1970's oil shock. Clearly it shows that we are at or beyond a similar situation to the 1970s when the oil price shock first manifested which was regarded as the first event since the Great Depression to have a persistent economic effect. It was associated with (coming soon after) the stock market crash of 73-74.

Some measures of well-being reckon that, at least in the developed world, human well-being peaked in the 1970s and has been declining more or less ever since. This was one of the themes behind Life on Mars where Sam Tyler finally chose to go back to the 70s rather than stay in the here and now.

Study the graph and what it shows about the world and why future growth is so unlikely that those who blindly continue to prescribe and work towards trying to engender it, should just get real and tell everybody that they are trying to chase a mirage.

We are at, or past, peak oil. New reserves being found are not keeping up with the demand. The giant oil fields (such as those in Saudi Arabia) found in the past are declining fast already and it now takes more and more energy to get each barrel up from the depths. EROEI (Energy Returned On Energy Invested) is the reason.

From Wikipedia (although there is naturally some argument about the figures):

"when oil was originally discovered, it took on average one barrel of oil to find, extract, and process about 100 barrels of oil. That ratio has declined steadily over the last century to about three barrels gained for one barrel used up in the U.S. (and about ten for one in Saudi Arabia)"

Some people believe that there will always be more to find if we just drill deeper or go further out to sea - they are sort of correct, but the view is not sensible. There is no point. As the EROEI falls to approach one barrel of oil needed to extract one barrel of oil, the benefit approaches zero and the carbon footprint of net usable extracted energy approaches infinity!

Things are going to go rapidly downhill unless you all start ignoring the Geoff Cook's and the Ozouf's and the Osborne's and their functionally insane belief that "growth" will be our saviour - start paying more attention to those talking about a genuinely sustainable strategy.

At the root of all the problems we have, and those problems yet to manifest fully, is one word -  growth. The superstar of the ecological economics movement, Herman Daly, has pointed out that economies have an optimum size. When they are small and the world is empty and the resources available to them are large compared with the demand, then growth has really beneficial effects at making people better off by generating wealth and employment etc. When an economy continues growing, however, a point is reached when the available space to expand into and the availability of economically extractable resources starts to peak, then plateau and eventually starts to decline. This peaking is the moment when the graph of benefits versus further growth starts to decline too – further economic growth leads to decreasing benefits. Daly himself somewhat clumsily calls this increasing “illth”.

We are at this point now. Further conventional economic growth, of the type which has worked well for us in the past, will not achieve the same results as all the conventionally educated experts and economists still expect – in fact it would achieve exactly the opposite. The more “they” try to restart growth in the global economy, the worse will be the eventual effects. One of the problems with conventional economics is it does not discriminate between desirable outcomes, such as increasing health and contentment and undesirable outcomes, when it measures the overall success or growth in an economy. Anything that generates money is counted as “good”.

An economy that has to spend a lot on the military because they are fighting a war or preparing for one as an eventuality, or has to expand spending on medicine and health care because the population is increasingly unhealthy can appear, by conventional measures, to be economically healthy whereas the economy of a peaceful, healthy, contented population not so wedded to ever increasing purchases of material goods to provide consumer satisfaction could appear as if it was flat-lining. Which society would you prefer to live in, though?

People may think these ideas are a recent invention but they have actually been part of the evolution of economic thought almost since the beginning. Even that darling of hard line right wingers Adam Smith - who wrote “The Wealth of Nations” – was aware of the ultimate limits to growth, but his ideas have been cherry picked for centuries. He theorised and observed that people trading in free markets leads to production of the right quantities of commodities, division of labour, increasing wages, and an upward spiral of economic growth. But he also recognized a limit to economic growth. He predicted that in the long run, population growth would push wages down, natural resources would become increasingly scarce, and division of labour would approach the limits of its effectiveness.

Other famous economic names were aware of the limits to growth too:

John Maynard Keynes, one of the most influential economists of the twentieth century, currently enjoying  a bit more popularity, after the Milton Friedman type policies of the past few decades start to look a bit "tired" now as the economic system faces collapse,  also considered the day when society could focus on ends (happiness and wellbeing, for example) rather than means (economic growth and individual pursuit of profit).
He wrote:
...that avarice is a vice, that the exaction of usury is a misdemeanour, and the love of money is detestable… We shall once more value ends above means and prefer the good to the useful.
The day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems - the problems of life and of human relations, of creation and behaviour and religion.
John Stuart Mill, pioneer of economics and one of the most gifted philosophers and scholars of the 19th century, also anticipated the transition from economic growth to a "stationary state." In his Principles of Political Economy, he wrote:
...the increase of wealth is not boundless. The end of growth leads to a stationary state. The stationary state of capital and wealth… would be a very considerable improvement on our present condition.
...a stationary condition of capital and population implies no stationary state of human improvement. There would be as much scope as ever for all kinds of mental culture, and moral and social progress; as much room for improving the art of living, and much more likelihood of it being improved, when minds ceased to be engrossed by the art of getting on."
The problem is that the cherry picking of the great economists’ thoughts has had the effect of only publicising that part of their work that supports unrestrained expansionism. It has been promoted by those who seek to accumulate ever greater wealth and personal power – in short, greed – without them seeming to understand the inherent limits to that way of being. As Simon and Garfunkle, in “The Boxer”, sung –
“a man hears what he wants to hear and disregards the rest”

More recently than those old time economists I mentioned, Bobby Kennedy expressed the basic ideas behind sustainable or ecological economics ideas on 18 March 1968, in an address to the University of Kansas at the height of the Vietnam war. This speech has just resurfaced, thanks to Youtube.   

So, why did I call this post “growthiness, growthiness”? It’s a reference to the Ken Dodd song “happiness”. In it he never once mentions getting a new IPad or the FTSE hitting 10,000!

We’ve all led ourselves to believe that happiness and contentment is largely achievable with continued economic growth. The idea is hard wired into the minds of most politicians, businessmen, civil servants, classical economists. It permeates the very fabric of human society. People who question it are sidelined or ignored by the powers that be, as if the vast majority are all operating under post hypnotic suggestions to avoid considering the very obvious and exponentiating flaws in the dream.

The advertising and P.R. industries that first mushroomed in the 1950s, as psychologists inspired by Edward Bernays started to consolidate how to really influence people by exploiting their inner unconscious fears and desires, are largely responsible for the hypnotic suggestions we have been swamped with that make unending growth and the consumer lifestyle it promises seem desirable, indeed “the way”.

It’s time to wake up.


Sunday, 4 March 2012

Guinea pig power

Gaia Vince, who writes the blog Wandering Gaia,  finished a very long globetrot last year. Here’s her video celebrating guinea-pig poo power.  The enterprising people featured are from Pachacamac, Peru and they run a cuy (guinea pig) farm.  Peruvians like to eat cuys but, as anyone who has kept guinea pigs knows, they create (for their size) a lot of waste matter. What on earth could one do with it all?
Gaia interviews the splendidly named (and hatted) Ulises (pronounced Ulysses) Moreno about their methane producing biodigester unit which produces gas for cooking and lighting.

Of course, it’s not just guinea-pig waste that can be used to anaerobically generate methane for cooking, lighting or electricity. Almost any organic material will do, from lawn clippings to last night’s chips. Here’s a video about a Nebraskan farmer who raises pigs and soy beans, generates electricity from the biogas then finally feeds the digested material back into the land as free fertiliser. What is stopping Jersey cattle farmers from doing something similar? Not a lot, apart from the up-front cost of the equipment and the necessary can-do spirit. Perhaps, if our Finance/Economic Development Ministers are looking for a sustainable economic project to invest in Planet Jersey’s future, they might consider something like this.
Nebraska soybean Checkoff farmers

Biodigesters are really simple and there are tons of Youtube videos of people who have made their own domestic devices to get a lot of benefit from their organic waste. Here’s a link below to just one but don’t just click on the play button – instead double click on the YouTube logo in the bottom right of the window to go directly to the relevant YouTube page. Click on the multiple links on the right hand side for many more devices and approaches.