Slow Money

Put your money where your food is, affirm the Slow Money Principles.

The Slow Money Principles

In order to enhance food security, food safety and food access; improve nutrition and health; promote cultural, ecological and economic diversity; and accelerate the transition from an economy based on extraction and consumption to an economy based on preservation and restoration, we do hereby affirm the following Principles:

I. We must bring money back down to earth.

II. There is such a thing as money that is too fast, companies that are too big, finance that is too complex. Therefore, we must slow our money down — not all of it, of course, but enough to matter.

III. The 20th Century was the era of Buy Low/Sell High and Wealth Now/Philanthropy Later—what one venture capitalist called “the largest legal accumulation of wealth in history.” The 21st Century will be the era of nurture capital, built around principles of carrying capacity, care of the commons, sense of place and non-violence.

IV. We must learn to invest as if food, farms and fertility mattered. We must connect investors to the places where they live, creating vital relationships and new sources of capital for small food enterprises.

V. Let us celebrate the new generation of entrepreneurs, consumers and investors who are showing the way from Making A Killing to Making a Living.

VI. Paul Newman said, “I just happen to think that in life we need to be a little like the farmer who puts back into the soil what he takes out.” Recognizing the wisdom of these words, let us begin rebuilding our economy from the ground up, asking:

* What would the world be like if we invested 50% of our assets within 50 miles of where we live?
* What if there were a new generation of companies that gave away 50% of their profits?
* What if there were 50% more organic matter in our soil 50 years from now?

Towards a more Resilient and Robust Economy

Nassim Taleb’s take on a ecologically resilient Capitalism 2.0

1. What is fragile should break early while it is still small. Nothing should ever become too big to fail. Evolution in economic life helps those with the maximum amount of hidden risks – and hence the most fragile – become the biggest.

2. No socialisation of losses and privatisation of gains. Whatever may need to be bailed out should be nationalised; whatever does not need a bail-out should be free, small and risk-bearing. We have managed to combine the worst of capitalism and socialism. In France in the 1980s, the socialists took over the banks. In the US in the 2000s, the banks took over the government. This is surreal.

3. People who were driving a school bus blindfolded (and crashed it) should never be given a new bus. The economics establishment (universities, regulators, central bankers, government officials, various organisations staffed with economists) lost its legitimacy with the failure of the system. It is irresponsible and foolish to put our trust in the ability of such experts to get us out of this mess. Instead, find the smart people whose hands are clean.

4. Do not let someone making an “incentive” bonus manage a nuclear plant – or your financial risks. Odds are he would cut every corner on safety to show “profits” while claiming to be “conservative”. Bonuses do not accommodate the hidden risks of blow-ups. It is the asymmetry of the bonus system that got us here. No incentives without disincentives: capitalism is about rewards and punishments, not just rewards.

5. Counter-balance complexity with simplicity. Complexity from globalisation and highly networked economic life needs to be countered by simplicity in financial products. The complex economy is already a form of leverage: the leverage of efficiency. Such systems survive thanks to slack and redundancy; adding debt produces wild and dangerous gyrations and leaves no room for error. Capitalism cannot avoid fads and bubbles: equity bubbles (as in 2000) have proved to be mild; debt bubbles are vicious.

6. Do not give children sticks of dynamite, even if they come with a warning. Complex derivatives need to be banned because nobody understands them and few are rational enough to know it. Citizens must be protected from themselves, from bankers selling them “hedging” products, and from gullible regulators who listen to economic theorists.

7. Only Ponzi schemes should depend on confidence. Governments should never need to “restore confidence”. Cascading rumours are a product of complex systems. Governments cannot stop the rumours. Simply, we need to be in a position to shrug off rumours, be robust in the face of them.

8. Do not give an addict more drugs if he has withdrawal pains. Using leverage to cure the problems of too much leverage is not homeopathy, it is denial. The debt crisis is not a temporary problem, it is a structural one. We need rehab.

9. Citizens should not depend on financial assets or fallible “expert” advice for their retirement. Economic life should be definancialised. We should learn not to use markets as storehouses of value: they do not harbour the certainties that normal citizens require. Citizens should experience anxiety about their own businesses (which they control), not their investments (which they do not control).

10. Make an omelette with the broken eggs. Finally, this crisis cannot be fixed with makeshift repairs, no more than a boat with a rotten hull can be fixed with ad-hoc patches. We need to rebuild the hull with new (stronger) materials; we will have to remake the system before it does so itself. Let us move voluntarily into Capitalism 2.0 by helping what needs to be broken break on its own, converting debt into equity, marginalising the economics and business school establishments, shutting down the “Nobel” in economics, banning leveraged buyouts, putting bankers where they belong, clawing back the bonuses of those who got us here, and teaching people to navigate a world with fewer certainties.

Then we will see an economic life closer to our biological environment: smaller companies, richer ecology, no leverage. A world in which entrepreneurs, not bankers, take the risks and companies are born and die every day without making the news.

In other words, a place more resistant to black swans.

Strip-mining the Middle Class

The economy is out of balance, heavily weighted to a service sector, especially the financial sector which creates no new wealth, but merely transforms and transfers it. With stagnation in the median wage, and an historic imbalance in income distribution skewed to the top few percent, with the banks levying de facto taxation and inefficiency on the economy as a function of that income transfer, there should be little wonder that the growth of real GDP is sluggish in relation to new debt.

Or as Joe Klein so colorfully phrased it, the elite have been strip-mining the middle class in America for the past thirty years.

Great article from JESSE’S CAFÉ AMÉRICAIN on our unsustainable monetary and economic system.  It brings to mind Joseph Tainter’s axiom that the collapse of a complex society occurs when the returns on a societies investment in complexity turn negative.

A Storyline of Global Collapse

In referring in my title here to “A Failed System” I do not of course mean that capitalism as a system is in any sense at an end. Rather I mean by “failed system” a global economic and social order that increasingly exhibits a fatal contradiction between reality and reason—to the point, in our time, where it threatens not only human welfare but also the continuation of most sentient forms of life on the planet. Three critical contradictions make up the contemporary world crisis emanating from capitalist development: (1) the current Great Financial Crisis and stagnation/depression; (2) the growing threat of planetary ecological collapse; and (3) the emergence of global imperial instability associated with shifting world hegemony and the struggle for resources

If you’re looking for the deep underlying narratives that can help bring clarity to the current unsettled state of our world, then this essay by John Foster is an excellent starting point.  Be forewarned that this is not an easy read and somewhat technical in it’s historical summary of economic theory, however if deeper understanding is your goal, reading this essay is well worth the effort.

The Laws of Societal, Economic, and Ecological Collapse

Once you’ve followed the intellectual trail of resource limits in a closed ecosystem, potential Liebig minimums, phantom carrying capacity, and the concept of ecological overshoot you eventually come to accept the inevitability of a global economic, societal, and ecological collapse.  At that point thoughts of sustainability are trumped by the ecological need for resilience in the face of industrial decline, and the mind turns to questions of how soon and how severe.

No one attempts to answer these questions with more rigor and insight than John Michael Greer.  In his most recent book, The Ecotechnic Future, Greer draws on both historical precedent and the science of ecology to sketch a possible post collapse future.  He predicts that the modern industrial age of abundance based on 500-million years of photosynthesis (i.e. fossil fuels) will end in a matter of years. From there the next human ecological sere will likely be a decades long age of industrial scarcity in which we attempt to maintain the myth of infinite growth and technical progress in a age of declining non-renewable resources.  As those myths die a natural death humanity will enter the next sere, a century or more of a salvage society whose economy will be based on mining the artifacts of the   industrial age.  An age in which we recycle and capture the embodied energy of an age of abundance and massive waste.  Based on the ecological principle of succession and the second law of thermodynamics, all of these sere’s will be R-selected and ultimately unsustainable.  If we are fortunate, the climax sere following the salvage society will be a K-selected Ecotechnic sere, an ecologically balanced and fully sustainable society.

According to Greer these sere’s are merely generalized stages and the actual reality is likely to be “complex, messy, and idiosyncratic”, and seasoned with the chaos  of depopulation, mass migration, political and cultural disintegration, and disruptive ecological change.

Although I tend to agree with Greer’s vision of ecological succession as a general path towards a more sustainable future, I’m not convinced that the drama will play out over a period of several centuries.  The parallels with the decline of the Roman Empire (and other collapsed societies) are compelling, however the differences in the level of complexity, interconnectedness, reliance on non-renewable resources, and ecological devastation between then and today are vast.  I do not envision an apocalyptic future nor do I envision the long stair step decline described so eloquently by Greer.  I suspect the  actual future will be somewhere firmly in the middle and far more messy than a long slow descent would imply.

In the spirit of prediction is which everyone is bound to be at least a little wrong, I propose the following laws of collapse as additional fodder for discussion.

THE PRIMARY LAW OF SOCIETAL, ECONOMIC, AND ECOLOGICAL COLLAPSE

The severity of collapse will be equal and opposite to the level of complexity and environmental degradation that preceded it.

COROLLARIES TO THE PRIMARY LAW OF COLLAPSE

1. The level of reliance on non-renewable resources or phantom carrying capacity further increases the severity of collapse in proportion to the level of reliance on those resources
2. The velocity of collapse is a function of the number of single points of failure and potential Liebig minima embedded into the levels of complexity achieved prior to collapse
3. Catastrophic collapse is possible only when the number of cascading points of failure reach a critical mass far exceeding a society’s ability to cope on even a temporary basis.

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Cap & Trade versus Fee & Dividend

Jim Hansen makes a reasoned case for a Fee & Dividend approach to carbon emissions as opposed to a Cap & Trade scheme which opens the door to political and special interest “gaming”, as well as the new financial “casino” and Wall Street revenue stream created for carbon credits/offsets.

For the record, neither plan is really a “tax”, they just provide price signals for true free market choices by internalizing the externalized costs of depletion and pollution that are currently dumped free of charge on the planet, taxpayers, and all of humanity.  Although it promotes both objectives, Hansen’s plan is more about accelerating the transition to  a renewable energy economy than it is about climate change.

You can download Hansen’s essay here.

Avoiding Societal, Economic, and Ecological Collapse

“A society has collapsed when it displays a rapid, significant loss of an established level of sociopolitical complexity.” – The Collapse of Complex Societies – Joseph Tainter

“Any society that displays broad increases in most measures of capital production coupled with signs of serious depletion of key resources is a potential candidate for catabolic collapse.” – The Long Descent – John Michael Greer

“By collapse, I mean a drastic decrease in human population size and/or political/economic/social complexity, over a considerable area, for an extended time.” – Collapse- How Societies Choose to Fail or Succeed – Jared Diamond

“When irrupting populations surpass … available carrying capacity, the ensuing crash [collapse] may occur by different means among humans, animals, or plants …these differences do not affect the basic principle:  die-off is the sequel to overshoot [of carrying capacity].” – Overshoot – The Ecological Basis of Revolutionary Change – William Catton

“Collapse is not an attractive future.  The rapid decline of population and economy to levels that can be supported by the natural systems of the globe will no doubt be accompanied by failing health, conflict, ecological devastation, and gross inequalities.” – Limits to Growth – The 30 Year Update – Meadows, et al

Peak Oil, near economic meltdown, species loss, growing food insecurity, rising sea levels, jobless recoveries, decades long stagnant wages – is the United States and the industrialized world heading toward collapse? — has it already begun?  Can we avoid our own ecological suicide and and abandon the folly of infinite growth on a finite planet?  This post attempts to catalog different theories of collapse and various solutions proffered for it’s avoidance.

Theories of Collapse – Anthropological, Ecological, and Sociological

That civilizations rise and fall is historically (Rome, the Mayan, Easter Island, the Anasazi, etc.) evident.  The question for today’s global industrialized society is why.   Can we collectively see our own collapse on the horizon, and can it be avoided?

Joseph Tainter gives us a view of societal collapse based on a theory of diminishing marginal returns in complexity.  According to Tainter societies invest in complexity (agriculture, government bureaucracy, militarism, monetary and market systems, infrastructure, etc.) as a solution to problems.  Initially those investments have a high return and the society flourishes, but as that society grows and it and it’s problems (most of which are self induced) becomes more complex, the marginal returns on those investments fall and eventually turn negative.  As returns turn negative, and problems and stresses (resource limits, environmental degradation, competing societies, etc.) continue or emerge, the society is no longer able to cope and eventually succumbs to collapse.  The resulting collapse leads to a decline in complexity and after much turmoil and suffering, the eventual return of positive marginal returns.  In effect, Tainter’s theory of “peak complexity” leaves us in a kind of catch 22 in which we are hard wired to seek solutions which doom us to endless cycles of success and failure.

Tainter's Model of Complexity and the Law of Marginal Returns

In his book the The Long Descent, John Michael Greer builds on Tainter’s work with a model based on perspectives from human ecology. His theory of catabolic collapse is based on the interplay of the core elements of resources, capital, waste, and production.  In a human society where new capital derived from production C(p) is equal to or greater than the sum of the waste from production W(p) and the  waste from capital W(c) [called maintenance production M(p)] and the replenishment rate of resources r(R) is greater than the depletion rate of resources d(R) is sustainable.  However, a human society whose new capital from production is less than maintenance production [W(p) + W(c)] and whose depletion rate of resources d(R) is greater than it’s replenishment rate r(R) of resources, is subject to catabolic collapse.  According to Greer, catabolic collapse is a self-reinforcing process in which C(p) approaches zero and the lion’s share of a societies capital is converted to waste.

Jared Diamond (Collapse) sees societal collapse as the result of an unintentional ecological suicide (eco-cide) in which  growing consumption and population eventually push up against natural ecological limits.  As a society strains the limits of it’s natural resources, it either causes a decline (deforestation, top soil erosion, etc.) in the carrying capacity of the those resources, or by operating on the edge without any margin of safety succumbs to a drought or other stress the societies organic carrying capacity.

William Catton (Overshoot) takes a global, ecological and very contemporary view based on human carrying capacity.  Catton see’s humanity much like the yeast in a vat of crushed grapes, wildly consuming the sugar content of the mash until the sugar is depleted or the yeast succumbs to by-products of that consumption (alcohol).  In our case, the “sugar” is millions of years of solar energy converted by photosynthesis and geology into apparently vast stores of fossil fuel.  Catton asserts that fossil fuels (oil, natural gas, coal) combined with technology, amounts to nothing more than a “phantom” carrying capacity, and when these nonrenewable and energy dense natural resources reach their peak extraction rates and begin to decline, today’s industrial and global society will suffer a catastrophic collapse.  The following chart overlays global population with my estimate of the Earth’s organic (relying only on renewable resources) carrying capacity. The difference between the global population and the organic carrying capacity is Catton’s Phantom Carrying Capacity (labeled as Trust Fund Carrying Capacity).  If Catton’s theory is correct, some 5-billion lives hang by the thread of these depleting fossil fuel resources.

Phantom (Trust Fund) Carrying Capacity

Avoiding Collapse – Possible Solutions

“A framing premise of this paper is that the sustainability dilemma is not merely an ecological or technical or economic crisis as is usually assumed, but rather it is a crisis rooted in fundamental human nature. More specifically, it is a crisis of human evolutionary success – indeed, we have reached the point where our success is killing us!” – Is Humanity Fatally Successful? – William Rees

Limits to Growth, The Thirty Year Update – A Systems Theory Approach

In The Limits to Growth – The 30-Year Update, the authors describe the results of a systems theory model [World3] that was used to generate “broad sweep” future scenarios using the following key global metrics:

• natural resources
• food
• population
• pollution
• industrial output
• life expectancy
• consumer goods per person
• food per person
• services per person
• human welfare index
• human ecological footprint

Nearly every scenario modeled by the authors lead to an overshoot of the earth’s carrying capacity resulting in a collapse in population and human welfare.  Only one scenario’s underlying assumptions were successful in avoiding collapse and only if the assumptions used for the basis of the model were implemented in time.  The three critical assumptions in that scenario included:

1. All couples limit their family size to 2 children and have access to effective birth control technologies
2. A fixed goal of industrial output per capita (i.e. a steady-state economy)
3. The development  and investment in powerful technologies for pollution abatement, land yield enhancement, land protection and nonrenewable resources (assuming 20 years for full implementation)

When this model was run with a start date of 2002:

“The population leveled off at less than 8 billion people, who remained at their desired standard of living throughout the century.  Their life expectancy is high…per capita services grow to 50% above year 2000 levels.  By the end of the century there is sufficient food for everyone.  Pollution peaks and falls before it causes irreversible damage.  Nonrenewable resources deplete so slowly that nearly 50% of the original endowment is still present in 2100.”

To see the effect of start date on the scenario the author’s ran the same model with start dates of 1982 and 2022.  As you would expect the 1982 model results in a lower ultimate population, improved life expectancy, and a higher standard of living.  However, if action is delayed until 2022, resource and pollution problems reach an unmanageable level and it is too late to avoid decline and collapse.

However grim the outlook, at it’s writing, the authors held out hope that collapse could be averted.  Factoring in a margin for error in the model and the passing of eight years, one might conclude that we now have anywhere from zero to less than two decades before we pass a point of no return.

Post Carbon Institute – The New Real Deal
In the New Real Deal, the Post Carbon Institute outlines a plan to transition the industrial world to a post fossil fuel economy.  To be fair this is not a prescription to avoid collapse but more of a plan to minimize the impact of the inevitable industrial decline due to the depletion of fossil fuels.  The key elements of the plan include:

1. Make a massive and immediate shift to renewable energy
2. Electrify the transportation system
3. Rebuild the electricity grid
4. De-carbonize and relocalize the food system
5. Retrofit the building stock for energy efficiency and energy production

The focus of this comprehensive post carbon plan is consistent with the third assumption of The Limits to Growth scenario discussed above.

From a Failed Growth Economy to a Steady-State Economy — Herman Daly – An Economic Policy Approach to Avoiding Collapse
At the bi-annual conference of The United States Society for Ecological Economics in June of 2009, Herman Daly was honored for his many contributions to the field of ecological economics.  During his acceptance speech, in which he vilified the religion of growth hardwired into mainstream economic thought, he offered ten policy proposals directed at transitioning us to a sustainable steady-state economy and by implication, saving us from our own “ecological suicide”.

1. Use a Cap-Auction-Trade system for basic resources – Caps would limit biophysical scale by quotas on depletion or pollution, whichever is more limiting. Auctioning the quotas would capture scarcity rents for equitable redistribution. Trade would allow efficient allocation to highest uses. This policy has the advantage of transparency. It would limit  the amount and rate of depletion and pollution that the economy can be allowed to impose on the ecosystem. Caps are quotas or limits to the throughput of basic resources, especially fossil fuels. The quota would typically be applied at the input end because depletion is more spatially concentrated than pollution and hence easier to monitor. The resulting higher price of basic resources would promote more economical use at each upstream stage of production.
2. Institute Ecological Tax Reform (as an alternative or supplement to cap-auction-trade)
   Shift the tax base from a tax on value added (labor and capital)  to a tax on “that to which value is added”, namely the entropic throughput of resources extracted from nature (depletion), and returned to nature (pollution). This internalizes external costs as well as raises revenue more equitably. It prices the scarce but previously un-priced contribution of nature. The value added by labor and capital is something we want to encourage, so stop taxing it. Depletion and pollution are things we want to discourage, so tax them.
3. Limit the Range of Inequality in Income (establish a minimum income and a maximum income)
   Without aggregate growth poverty reduction requires redistribution. Complete equality is unfair; unlimited inequality is unfair. Seek fair limits to the range of inequality. The civil service, the military, and the university manage with a range of inequality of a factor of 15 or 20. Corporate America has a range of 500 or more. Many industrial nations are below 25. Could we not limit the range to, say, 100, and see how it works? People who have reached the limit could either work for nothing at the margin if they enjoy their work, or devote their extra time to hobbies or public service. The demand left unmet by those at the top will be filled by those who are below the maximum. A sense of community necessary for democracy is hard to maintain across the vast income differences current in the US. Rich and poor separated by a factor of 500 become almost different species. The main justification for such differences has been that they stimulate growth, which will one day make everyone rich. This may have had superficial plausibility in an empty (resource abundant) world, but in our full world (resource limited) it is a fairy tale.
4. Free up the Length of the Working Day, Week, and Year
   Allow greater freedom for part-time or personal work. Full-time external employment for all is hard (impossible) to provide without growth. Other industrial countries have much longer vacations and maternity leaves than the US.  For the Classical Economists (versus today’s neo-classical economists) the length of the working day was a key variable by which the worker balanced the marginal disutility of labor with the marginal utility of income and of leisure so as to maximize enjoyment of life. Under industrialism the length of the working day became a parameter rather than a variable. We need to make it more of a variable subject to choice by the worker. And we should stop biasing the labor–leisure choice by advertising to stimulate more consumption and more labor to pay for it. Advertising should no longer be treated as a tax deductible ordinary expense of production.
5. Re-regulate International Commerce
   Move away from free trade, free capital mobility and globalization, and adopt compensating tariffs not to protect inefficient firms, but to protect efficient national policies of cost internalization from standards-lowering competition. We cannot integrate with the global economy and at the same time have higher wages, environmental standards, and social safety nets greater than the rest of the world. Trade and capital mobility must be balanced and fair, not deregulated or “free”.
6. Reduce and amend the authority of the International Monetary Fund, World Bank, and the World Trade Organization
   Transition to something like Keynes’ original plan for a multilateral payments clearing union, charging penalty rates on surplus as well as deficit balances. This arrangement would seek balance on current account, and avoid large foreign debts and capital account transfers. For example, under Keynes’ plan the US would pay a penalty charge to the clearing union for its large deficit with the rest of the world, and China would also pay a similar penalty for its surplus. Both sides of the imbalance would be pressured to balance their current accounts by financial penalties, and if need be by exchange rate adjustments relative to the clearing account unit, called the bancor by Keynes. The bancor would serve as world reserve currency, a privilege that should not be enjoyed by any national currency. The IMF preaches free trade based on comparative advantage, and has done so for a long time. More recently the IMF-WB-WTO have started preaching the gospel of globalization, which, in addition to free trade, means free capital mobility internationally. The classical comparative advantage argument, however, explicitly assumes international capital immobility! When confronted with this contradiction the IMF waves its hands, suggests that you might be a xenophobe, and changes the subject. The IMF-WB-WTO contradict themselves in service to the interests of transnational corporations. International capital mobility, coupled with free trade, allows corporations to escape from national regulation in the public interest, playing one nation off against another. Since there is no global government they are in effect uncontrolled. The nearest thing we have to a global government (IMF-WB-WTO) has shown no interest in regulating transnational capital for the common good.
7. Move to 100% Reserve Requirements instead of Fractional Reserve Banking.
   This would put control of the money supply in hands of the government rather than private banks, which would no longer be able to create money out of nothing and lend it at interest. All quasi-bank financial institutions should be brought under this rule, regulated as commercial banks subject to 100% reserve requirements. Banks would earn their profit by financial intermediation only, lending savers’ money for them (charging a loan rate higher than the rate paid to savings account depositors) and providing checking, safekeeping, and other services. With 100% reserves every dollar loaned would be a dollar previously saved, re-establishing the classical balance between abstinence and investment. The government can pay its expenses by issuing more non interest-bearing fiat money to make up for the eliminated bank-created, interest-bearing money. However, it can only do this up to a strict limit imposed by inflation. If the government issues more money than the public wants to hold, the public will trade it for goods, driving the price level up. As soon as the price index begins to rise the government must print less and/or tax more. Thus a policy of maintaining a constant price index would govern the internal value of the dollar.
8. Stop treating the Scarce as if it were Non-scarce, but also stop treating the Non-scarce as if it were Scarce.
   Enclose the remaining commons of rival natural capital (e.g. atmosphere, electromagnetic spectrum, public lands) in public trusts, and price it by a cap-auction–trade system, or by taxes, while freeing from private enclosure and prices the non-rival commonwealth of knowledge and information. Knowledge, unlike throughput, is not divided in the sharing, but multiplied. Once knowledge exists, the opportunity cost of sharing it is zero and its allocative price should be zero. International development aid should more and more take the form of freely and actively shared knowledge, along with small grants, and less and less the form of large interest-bearing loans. Sharing knowledge costs little, does not create un-repayable debts, and it increases the productivity of the truly rival and scarce factors of production. Existing knowledge is the most important input to the production of new knowledge, and keeping it artificially scarce and expensive is perverse. Patent monopolies (aka “intellectual property rights”) should be given for fewer “inventions”, and for fewer years. Costs of production of new knowledge should, more and more, be publicly financed and then the knowledge freely shared.
9. Stabilize Population
   Work toward a balance in which births plus in- migrants equals deaths plus out-migrants. This is controversial and difficult, but as a start contraception should be made available for voluntary use everywhere.  Support voluntary family planning, and enforcement of reasonable immigration laws, democratically enacted in spite of the cheap labor lobby.
10. Reform how we measure and manage national well-being
    Separate GDP into a cost account and a benefits account. Compare them at the margin, stop throughput growth when marginal costs equal or exceed marginal benefits. In addition to this objective approach, recognize the importance of the subjective studies that show that, beyond a threshold, further GDP growth does not increase self-evaluated happiness. Beyond a level already reached in many countries GDP growth delivers no more happiness, but continues to generate resource depletion and pollution. At a minimum we must not just assume that GDP growth is “economic growth”, but prove it. And start by trying to refute the mountain of contrary evidence.

Daly concedes that these policy prescriptions are radical, but also offers that they are amenable to gradual application.  The question is whether we have the luxury of time.  If the Limits to Growth model is anywhere near correct we have no more than about twenty years and that assumes that we start a coordinated and global effort immediately.  If we take climate change as a example of our ability to take action on a global scale, it has been more than 20 years since we first recognized the problem and we have yet to forge and began to implement an integrated global plan of action.

Given that the prescriptions to avoid or mitigate collapse offered by the authors of the Limits to Growth, the Post Carbon Institute’s New Real Deal, and Daly’s Steady State Economy are orders of magnitude more disruptive and contentious as those proposed to combat climate change, the prospects for any meaningful and timely action are near zero.

In all likelihood, change will only come in the face of crisis as we begin  to stair step down the uncertain and painful face of collapse.  By then we will have crossed the threshold from the possibility of averting collapse over to the unstable ground of mitigating the effects of the fall.  The signs that growth is no longer economic and that we have entered Tainter’s zone of negative marginal returns are all around us.  Couple that with resource depletion rates that exceed replenishment rates and we have met Greer’s criteria for Catabolic Collapse.  Add Peak Oil to the mix and we are in the early stages of the collapse of Catton’s “Phantom Carrying Capacity”.

Even in the context of crisis and decline, all the “solutions” discussed in this post are still  valid, however their value will diminish with the passing of time as resources and capital become increasing dear, our choices begin to narrow, and vested interests continue the fight to retain advantages that are destined to slip away.

Whether our future turns in the direction of Cormac McCarthy’s The Road, the more hopeful but still difficult direction of Howard Kunstler’s World Made by Hand, or a more sustainable future anchored in renewable energy, re-localized agriculture, with higher levels of satisfaction, and with much lower levels of consumption will depend on the choices that we make.

Truth Telling

“All of humanity is in peril, if each one of us does not dare, now and henceforth, always to tell only the truth and all the truth, and do so promptly – right now.” – Buckminster Fuller

How many times have I been told, “Keep it positive! Emphasize solutions!” Yet I can’t tell you how often I’ve sat down with an activist whose latest policy paper is all about solutions, and in heart-to-heart conversation they reveal that they don’t really think our species has much of a chance of avoiding major catastrophe, maybe even extinction.  It’s a tough balance. If you tell the truth to a fault, you don’t get invited to policy seminars, and politicians avoid you like the plague. If you sugar coat the message, you have to live with the knowledge that the vast majority of people on our planet have almost no awareness of what is about to happen to them, and you aren’t telling them. – Trying to Save the World – Richard Heinberg

I started posting to this blog in March of 2007.  It’s been as much a journey as a journal and my posts have been the cairns left on the trail of my search for meaning and truth.  The direction of my search has been open-ended, non-directional, and often both troubling and unexpected.  I changed the name of the blog from “The Sustainable Home” to “Sustainable Dwelling” as my vision expanded and my subject matter broadened in scope and reach.

As a result of one my posts, I was asked to make a presentation this summer to the International Association of Public Participation about making sustainable decisions in the context of the four pillars of sustainability.  In preparation, I was compelled to look back on my journey and ask if I really “knew” anything.  Would I be able to humbly “tell the truth” or fail and spew forth some grossly ego-contaminated version of pseudo truth?  As a result,  this blog has been mostly silent as I struggled to  resolve and make peace with what I’ve written and what I’ve learned, including my readings of others who have walked a similar path.

Much like the journey of this blog, the process of preparing the presentation became it’s own journey and I began to question the mythical foundations of humanity and how they shape our actions and beliefs.  How simple things like canvas shopping bags, electric cars, buying local, and recycling give us a false and comforting sense of “going green” that masks the imminent peril of our ecological overshoot.

In the end, my presentation – my humble attempt at the truth, would attempt to ask and answer two questions:

1. Can humanity achieve a sustainable balance within our closed ecosystem, or have we reached the point where that vision is just another example of the hubris of human exceptionalism?
2. Is it time to switch our focus from sustainability to one of resilience in the face of societal collapse and industrial decline?

I’ve posted a copy of the presentation including the speaker notes on SlideShare.net.  You can find it here.

Is a warning about the future a prediction of doom or a call to follow a different path?

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Hubris and Ecological Retribution

I’ve spent the last month painting and re-roofing the house and enjoying the slow emergence of spring in the rockies as the aspen grove turned a vibrant green.  I’ve also been watching the bear market rally in stocks as less bad news leads investors to believe that the fed can induce another debt bubble of false prosperity and growth.  So as the rain falls and temperatures hover in the low 40’s, I’m inspired to comment on the symbolism of the GM bankruptcy.  Amid all the chatter about “Government Motors” I was struck by Dan Neil’s (the L.A. Times) view of the larger lesson within our nation’s largest bankruptcy.

“This is the lesson of GM’s bankruptcy, and it has little to do with market share and miles per gallon.  It’s a rebuff of the notion of exceptionalism.

Any organization that fails to sufficiently safeguard its means of self-correction and reform, that forsakes long-term investment for short-term gain, that piles up debt year after year, will eventually fail, no matter how grand its history, or noble its purpose.  If you don’t feel a tingle of national mortality in all of this, you’re not paying attention.”

Neil doesn’t go beyond the “tingle of national mortality”, but it is no secret that the U.S. is technically bankrupt and avoids default only because of our reserve currency status and foreign purchases of our growing debt.  But the inevitable decline of the American empire only begins to describe Neil’s “rebuff of exceptionalism”.

American hubris, our excessive pride in our specialness or “exceptionalism” was born in ernest as we exited victorious from WWII.  With the rest of the  world’s industrial capacity lying in ruin,  GM and corporate america dominated the world industrial stage and American quickly transformed its vast war economy and productive capacity into a consumer economy that would eventually lead us onto a treadmill of crushing debt.  Post war retail analyst Victor Le Beau best describes the reasoning that would lead to America’s 5% of the world population consuming 30% of the world’s resources.

“Our enormously productive [war] economy…demands that we make consumption our way of life, that we convert the buying and use of goods into rituals, that we seek our spiritual satisfaction, our ego satisfaction, in consumption…. We need things consumed, burned up, replaced and discarded at an ever-accelerating rate.”

Such reasoning rested on the post war belief that American ingenuity and the miracle of science and technology would overcome any limits and endless growth would lead us to a utopian future.  In his forward to William Catton’s “Overshoot”,  Stewart Udall posits the exact date that America’s post war euphoria jumped the Happy Day’s shark.

“It is easy to fix the exact date when our euphoria reached a zenith.  It was the July week in 1969 when the astronauts walked on the moon.  We celebrated this triumph with a mixture of awe and self-congratulation.  President Nixon proclaimed that it was “the greatest week since the creation of the earth.”  A NASA official opined that the feat demonstrated we were “masters of the universe.”  This proves that we can do what ever we decide to do,  Americans concluded from this climax event.”

However the 70’s would mark the first cracks in our shinning edifice of hubris.  Domestic oil production would peak in 1970 and OPEC would give us the first taste of our dangerous dependency on oil.  Honda and Toyota quality and fuel efficiency would begin to threaten the supremacy of GM.  Reacting to the costs of our failed adventure in Vietnam, Nixon would take us off the gold standard and set the stage for massive deficit spending.  Real incomes would begin to decline, saving and thrift would lose favor and combine with debt and two income families in an attempt to keep the consumer economy  alive and growing.  Our post war euphoria would be replaced with the lament, “If we can put a man on the moon, why can’t we ….”

President Carter attempted to raise the issue of limits and lead us in direction of conservation and renewable energy, but Fed Chairman Paul Volcker’s war on Nixon’s policy induced inflation set the stage for Reagan’s promise of a return to post war euphoria.  Reagan delivered with a “deficits don’t matter” war on the evil empire and launched a 20-year bull market built on a phantom foundation of deregulation, easy credit, and a mountain of government and private debt.  As W added more to the national debt than all previous presidents combined, our national house of cards collapsed in a pool of financial sector greed and overreach.

As GM attempts to pull itself from the ashes of bankruptcy and politicians around the world promise the oxymoron of “sustainable” growth, nearly 7-billion humans are still mostly blind to the reality of ecological limits and harsh retribution of overshoot and collapse.  This is the ultimate hubris—the hubris of human exceptionalism.

“The whole human enterprise is a machine without brakes, for there are no indications that the world’s political leaders will deal with the realities until catastrophes occur.  The rich countries are using resources with extravagant disregard for the next generation; and poor countries appear to incapable of acting to curb the population increases that are erasing their hope for a better future.  In such a world, declarations and manifestos which ignore the imperatives of the limits of growth are empty exercises.  All the available evidence says we have already passed a point of no return, and tragic human convulsions are at hand.” – Stewart Udall, Charles Conconi, and David Osterhout,  The Energy Balloon

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Footprints, Limits, and Human Carrying Capacity

Lately, I’ve been thinking about footprints.  I live in the Rocky Mountains near the Pike National Forest and often hike or ride my horse in the forest.  Counting my wife and neighbors about a dozen of us tramp through the woods on a regular basis.  We mostly followed faint game trails that over the years have become miles of well established two foot wide tracks through the Ponderosa, Lodgepole and Aspen environments of the adjacent public lands.

In the grand scheme of things, it’s a relatively small footprint.  A slight loss of carbon sink and still too faint to cause any erosion damage.  Judging by the animal prints and scat, it’s safe to say that that the local fauna also make frequent use of our primitive highway system.  Still, however faint, our impact is still visible, clear evidence of our small tribes foot and hoof fall on the local flora.

Out of the forest, back in the neighborhood, our footprint grows ever larger.  Our homes cast their own footprint on the land.  The roads that serve those homes cast an exponentially larger footprint.  In Colorado, the electricity that serves those homes casts a carbon footprint of 1.8 lbs per kwhr and most of us contribute addition carbon with propane furnaces and supplemental wood heating.  We do a bit better with water.  We draw water from shallow wells that tap into the first water flowing out of the eastern slope of the continental divide and we return 85% of the that water to the local aquifer through our septic systems.   When you factor in some of our 100 mile round trip commutes to Denver and the vast global supply chain that delivers pineapples to our households in mid winter, you begin to just get a glimmer of the immense footprint that our small mountain tribe casts upon the world.

The concept of “footprint” used as a way to measure humanity’s impact on the earth first gained traction in the 1990’s when Rees and Wackernagel introduced the idea of “ecological footprint”.  The ecological footprint was and is an attempt to quantify the amount of land required to supply the world’s population with what they consume.  Recently we have added “carbon footprint” and “water footprint” to our lexicon ecological metrics.

Footprints are a very helpful way to visualize environmental impacts. In essence they are direct or indirect references to limits or to the concept of limits.  They help me to frame my mountain tribe and it’s forest tracks within the context of the 6.7 billion human inhabitants of earth hell-bent for growth and the pursuit of happiness in a closed and limited eco-system.

One way to think about limits is through the concept of carrying capacity.  For example, the carrying capacity of a biological species in a closed environment like an island is the population size of the species the environment can be sustained indefinitely, given the food, water and other natural resources available.  The concept of human carrying capacity is a bit more complex since one has to factor in the possibility of leveraging technology to increase the earth’s carrying capacity.  You also have to consider the equal possibility of unintentionally leveraging technology to decrease the earth’s carrying capacity.  Since the free market does not see any “carrying capacity price signals”, technological impacts on organic or natural carrying capacity tend to be skewed toward the negative.  William Catton, author of “Overshoot: The Ecological Basis of Revolutionary Change”, defines human carrying capacity not just in terms of population but also in terms of humanity’s “load” on the environment.

[Human] Carrying capacity needs to be understood as the maximum load an environment can permanently support (i.e., without reduction of its ability to support future generations), with load referring not just to the number of users of an environment but to the total demands they make upon it. For human societies, as for populations of other species, the relation of load to carrying capacity is crucial in shaping our future. Public comprehension of the concepts of carrying capacity and load is both vague and inadequate, and the need to correct these deficiencies is urgent.

When load comes to exceed carrying capacity, the overload inexorably causes environmental damage; then the reduced carrying capacity leads to load reduction (i.e., a crash). – William Catton

In the world of flora and fauna, a species will sometimes stumble upon an environment rich in nutrients creating a large and temporary surplus in carrying capacity.  The usual result is a sharp increase in population leading to an overshoot and a deficit in carrying capacity.  Tragically, this causes both a sharp degradation of carrying capacity and a total population collapse.

Whether humanity will suffer the same fate is subject to debate.  Some predict extinction while others believe that technology will continue to keep us safely in a state of carrying capacity surplus.  While either extreme is possible, I think the truth will end up somewhere north of extinction.

Our greatest danger today is that we rely too little on natural or organic carrying capacity and too much on borrowed or specious carrying capacity.  To use a quasi-mathematical formula:

Human Carrying Capacity = Organic Carrying Capacity + Specious Carrying Capacity

where (in simplest of terms),

Organic Carrying Capacity is a function of:

• the biosphere
• surface water and hydrologic cycle
• the atmosphere
• solar irradiation
• top soil

and, the Specious or Borrowed (from the past) Carrying Capacity is a function of non-renewable resources such as:

• fossil fuels
• minerals
• groundwater from slow recharge aquifers

In the case of human carrying capacity, both categories are acted on by technology and our economic systems of finance and trade.  The population explosion starting with the industrial revolution was made possible by the massive technological leveraging of non-renewable resources to create a temporary and specious carrying capacity surplus. The same technological advances caused and continue to cause a concurrent and accelerating degradation of our organic carrying capacity.  As a result, human carrying capacity now rests on an unsustainable house of cards.

As our total population and standard of consumption(load) have taken us back into a condition of carrying capacity deficit and we are now on the brink of collapse.  The tipping point will depend on Liebig’s Law which states that “whatever necessity is least abundantly available in an environment sets the environment’s carrying capacity”.

In our case, the Liebig trigger could be the peaking of oil production, food or water limitations, or a myriad of environmental ills that continue to further degrade organic carrying capacity.  It may even be systemic breakdown in our economy – call it “peak debt”.

Whatever the initial trigger, the question is how we will react.  Will we recognize it for what it is and navigate our way to a new state of equilibrium and balance, or frantically cling to “growth” as we compete for resources in a race to extinction?

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