³ÉÈËÂÛ̳

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I've heard it said that for the whole world to enjoy the same standard of living as Britain, we'd need 3 planets in order to supply enough natural resources to support the lifestyle.

As the above story of water shortages proves, there just aren't enough natural resources to go round....

Paul,

if they are hiring out rooms by the hour then there's another slightly less salubrious word for your "hotel", indicating that it accommodates a profession even older than brick-making and journalism!

Paul,

Well if you need some more assistance in conjoining Economics and the Environment (and you find you have a bit of time on your hands) it might be worth thumbing through the works of Georgescu-Roegen. Economists seem to have done their best to silence (or ignore) the most portent of critics (G-R, Schumpeter and Soddy to name but a few).

Fortunately G-R's protege, Daly is still alive (and willing to do interviews?):

Another Malthusian doomfest ?

Alternatively -

"We now have in our handsreally, in our librariesthe technology to feed, clothe, and supply energy to an ever-growing population for the next seven billion years." (Simon along The State of Humanity: Steadily Improving 1995[9])

couldn't our MP's rent their living accomodation 'by the hour' ?

No.5. superiorsnapshot

Steady on old chap, there is a recession on you know.

This Simon fellow "was the primary proponent of the cornucopian belief in endless benefits from resources and unlimited population growth empowered by technological progress. His works are often cited by libertarians"

Seing as "libertarianizationalism" got us into this mess, it's unlikey their cornucopian beliefs will get us out.

Personally, I'm determined to be grumpy for as long as all the indebtedness remains unpaid, and/or for as long as unemployment keeps rising.....

Points taken, at least Simon was an optimist - a rare species these days. ( But then I guess that Yangste river dolphin was rare too, and we know what happened to it ! )

Methinks mess caused by irrational belief in rationalism !! so maybe isms in general should be feared. Rest assured I too am grumpy, in debt and unpaid, but not ready to put pencils up nose, pants on head and wibble yet..............

P.S. Rio Tinto press release today reckons half of China's iron ore mines are in mothballs, as they are now importing cheaper ore. Markets work in mysterious ways their wonders to perform.

#5 Happy Snapper,

Doh, of course! There was me looking for the source of abundant (limitless) energy and resources in a tangible technological solution, when all along it's been hiding in the library.

Alas mankind has deluded himself that he has been getting increasingly smarter, when perhaps the reverse is true. The knowledge economy is a sham. Intellectual high-grading is the result:



Truly ground breaking innovations such as steam, coal and oil have all yielded enormous benefits in "real productivity" increases, and yet were (by today's standards) discovered and pioneered by comparatively little investment (in terms of time, money, intellectual investment, or even natural resources themselves i.e. the food, energy, water etc. consumed by the inventors). By comparison, we now have multi-billion dollar prototype electric cars, and they ain't much to write home about. How much more resources must we pish down the drain, hoping and praying that one day well make a sizeable breakthrough?

Hawkeye's wager for the 21st Century: show me a means of powering long distance flight for safe human transport that is not using an oil based fuel, and then maybe I will grant you the courtesy of a less sarcastic riposte.

Paul,

I fully approve of your choice of accomodation from both a license fee payers point of view and from an engagement in investigative journalism in its truest and most vlauable form point of view..... I am not sure I really want to see your receipts from a place that charges by the hour anyway.....nice....

I may be interested in where Robert Peston stays and his expenses for example...³ÉÈËÂÛ̳ take note ...freedom of information act:)

Expenses obsession aside, thoroughly approve of the subject matter, nice to see someone investigating the presence of elephants in the global economic room for a change.

Anyone who wants to buy into a global economic model based on year on year growth ad infinitum should visit Shizuishan I suspect.

All this 'stuff' does not make us happy anyway, our desire for it is hardwired into us from a time when it took a great deal of human labour just to feed ourselves. Apply those same desires unchecked, encouraged even by the current system and mix them with the huge advances in industrialisation and efficiency and what do you ultimately get?

You get a world populated by 20 Billion with every spare piece of good land turned to farming and the rest for factories and mines and extraction pits, landfills full of rotting food and plastic tat, other infrastructure or accomodation that all looks the same (but is efficient).

Kind of defeats the object of being here in the first place don't you think?

Humankind needs to 'grow up' a bit is all..anybody fancy hazarding a guess how that will happen though?

Will it be through sensible management of ourselves and our desires globally perhaps?

Or

Externaly forced upon us when we reach some kind of environmental, economic or some other humanitarian tipping point.

We know the answer don't we?

Depressing isn't it!

I could be wrong though and I keep tryin to do everything I can to make sure that I am wrong, hopelessly ineffective as my efforts may be it makes me feel better, I just wish more people would try it.

Ho hum

Jericoa

~9

Yep, technology aint what it used to be. I'll do my future posts by scrawling on parchment and sending them by runner in forked stick to beeb.

you are doing something useful so deserve expenses. much more than the bloated executive pay and pension crowd and the ludicrous presenters.

#9

Helium Airship with the balloon coated in solar cells for power supplemented by fuel cell driven turbo props.

You never said it had to be fast..

What do I win ?

#13

Not a bad effort! Fast it won't be, but I did say safe:



Back to the parchment me thinks.

#11

Don't get me wrong. Technology is amazingly cool! Look at how we can snipe at each other over the Internet into the early hours of the night if we wanted to. But ultimately, most of it is completely pointless. It serves no constructive use except to fuel excessive consumption. For Traditional Economists, excessive consumption should be kept in check by a decrease in marginal utility. But as post #10 explains we've somehow overridden the safety brakes.

And what has facilitated this excessive consumption come from, not from technological innovation, but preposterous debt. To quote from Soddy:

"Debts are subject to the laws of mathematics rather than physics. Unlike wealth, which is subject to the laws of thermodynamics, debts do not rot with old age and are not consumed in the process of living. On the contrary, they grow at so much per cent per annum, by the well-known mathematical laws of simple and compound interest."

#14

Do you really not know the difference between hydrogen and helium?

Back to basic science lessons me thinks!

Back on post to some of you...behavioural economics is not the answer by the way...behaviour is the answer..pure and simple. When will you guys realise that economic theory is not the same as the economy.

The economy is a reflection of the underlying human operating system of the time, it is not the operating system itself. Economists advising us how to sort out the economy is a bit like asking historians to prevent WW2 after it happened.

No.15. Jericoa, and "the underlying human operating system"

The trouble is, each country has its own operating system. If we try to sort out Britain with sensible policies, other countries would jump in and attempt to out-compete us. Typically, foreign countries try to lure away our talent and businesses by offering a lower tax regime abroad.

For example - to sort out the potential bad debts of British banks, we should tell the banks to reclassify all their bad loans as intangible assets and then write them off on a straight line basis over the next 10 to 20 years. We would lend the banks enough liquidity to keep them alive, but they wouldn't have enough funds to offer large scale lending. We would then subject the banks' profits to high levels of corporation tax to pay for the cost of welfare payments during the recession. Any remaining profits would then be used to pay back the government's bail-out loans.

The trouble is, our banks would not be able to afford to pay a dividend, which would make it hard for them to raise more capital on the equity markets. Any foreign banks who are not overindebted would be able to out-compete our banks, as they'd possess more liquidity at a lower cost, and we would lose our banking industry in the long run. Britain's banking and insurance industry was one of the few export trade surpluses we had.

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#16 tweedy

I agree completely, I dont see any unilateral easy way out of this based on the current economic and indeed 'human operating' model, especially for the Uk which has become hugely reliant on the 'inbalances' within the global economy just to pay our way! We would starve and freeze to death within months in the winter if forced to live within the means contained within our borders!

There is no magic bullet.

I am toying with the idea that a sensible realistic long term strategy may be a more agressive focus on 'general self sufficiency within national / cultural borders'. To in effect create a 'level playing field for 'basic human needs'. We have the technology to achieve that now with the correct investment and if we can provide it the potential for conflict will be reduced and we can still make and trade other 'non essential' goods.

For this country it would mean (for example) a far more agressive policy of renewable and nuclear energy combined with (much more controvercially) some kind of policy on population control and encouragement for more low level agricultural activity.

The long term unemployed should be given a small allotment in my view, they can grow (or sell) their own produce on a micro scale, that is just one very simple cost effective idea (in my opinion) that would make us a little more self sufficient as a nation, give an underclass, many of whom in an ever technologically efficient society will never have work, something positive to do on that they will get real benefits from.


It is that kind of thinking I would like to see taken up and positively debated in the media but it is outside of the current school of economic teaching and thought which seems to be focussing on propping up the model that now appears to be failing and which does not have long term future in its current form as can be seen in Paul's article.

It is not easy but I jiust feel humanity is not asking the right questions and therefore will not get the right answers to move on from where we are at the moment. We should be able to use the power of the current economic model as a transition to move to different way but nobody seems to be looking at it in that light.

It is also worth noting that the cash rich countries will be in a much better position to move towards that kind of world than we are.


Jericoa

No.18. Jericoa

I think your ideas are interesting, and I agree there is no magic bullet.

This is most definately a crisis, rather than simply just another recession. Given time, the gravity of the crisis will force governments to think about the basic necessities of life (such as food, energy, utilities, transport, housing etc).

Crises come in waves; the decline never plays out in a straight line, there are rallies and upticks along the way. At present, the crisis is only showing up as a recession, with many commentators now trying to talk up consumer confidence by saying "the pace of decline is slowing, which is the same thing as an improvement".....

Studies of post-war banking crises have shown that, on average, the economy keeps shrinking for around 2 years, unemployment increases for around 5 years, with house prices falling for around 6 years. However, these studies were of economies that were in difficulty despite the rest of the world experiencing economic growth. Today we have the whole world facing economic contraction, with the world's biggest economy (USA) in financial difficulty, and the world's biggest exporter (Germany) contracting sharply, the world's second biggest economy (Japan) with an over burdened welfare system, then there's the small matter of Eire, Spain, and Italy being loose at the seams, not to mention Eastern Europe, and the the price of oil being lower than required to ensure order in Russia and the Middle East (the price of oil is increasing as the dollar depreciates).

~17

So I'm on to the beebs cunning plan eh ??!!

The rise and fall of the consumnivores.

Aha, mainstream journalism is capable of truly appeciating the intertwined aspects of economics, energy and the environment. Erik Zencey's article in the NY Times provides a lucid introduction:

#19

''Today we have the whole world facing economic contraction, with the world's biggest economy (USA) in financial difficulty, and the world's biggest exporter (Germany) contracting sharply, the world's second biggest economy (Japan) with an over burdened welfare system, then there's the small matter of Eire, Spain, and Italy being loose at the seams, not to mention Eastern Europe, and the the price of oil being lower than required to ensure order in Russia and the Middle East (the price of oil is increasing as the dollar depreciates). ''

I think that is quite a powerful summary you write there and also just reason as to why it is important to be looking outside the parameters of the existing model. The existing model is well..just too dangerous!

I don't pretend for an instant that I have the answers but i am willing to put ideas forward. What I find most frustrating is that the debate in the media is confined within the parameters of the incumbent socio economic model, debated by those who have made a career from that model.

Those who have anything to say outside that model gets protrayed as being 'outside credibility'. That I feel is very dangerous, we do need a bit of vision outside of the current thinking to debate at least (even if it is later amended or thrown out).

Since the collapse of communism as an ideal there has been no real mainstrem debate along idealistic lines. I dont miss communism I do miss the debate and the ideas and vision that came out of that conflict of ideals.

I am not religious but that does not mean there are not useful things in those texts, one thing keeps coming back to me 'where there is no vision the people perish'... Old Testament.

Where is the vision in the world for us to move onto something else, it is surely time to be at least thinking about it!

Jericoa

I am really interested in the Chinese story and whether they truly decouple from the debt-driven Western consumer and whether they can open up their home markets and whether they can redistribute wealth across their continents. And yet, I cant get QE out of sight - I dont understand why the BoE finacial reports are not incoporating the accounts of the vehicle they are using to buy gilts and bonds under the APF - they say its because they have 'no economic' interest because the Treasury are indemnifying the losses. But hang on - arent the assets being purchased under BoE management with central bank funny money? Where do we get the valuations for the assets, if not through the BoE accounts? Who owns the purchased gilts if its not the BoE?

I thought it was Ava Gardner who said of Melbourne that it was the ideal place to make a film about the end of the world (Nevil Shute's "On The Beach") - has Shizuistan (where the dogs come from?) thought of a twinning scheme?

And while they're at it, how about twinning with Copsa Mica in Roumania and Bhopal in India?

21


Soddy has taken science of thermodynamics ( Newtonian ) and axioms of mathematics as irrefutable laws of nature, rather than conventions agreed by communities. This idealism let him take his own biased percepts as a mirror of things in themselves - Soddy has fallen into the same idealist prat trap as Thomas Malthus before him. This locked him into a logical closed loop with familiar eschatological outcomes.



Economics and science and technology are all subject to revision by the people who make them. The world hasn't ended, humans have an inate and unique ability to adapt their culture to fit the environment as found.Put simply comunities change their behaviour before oblivion ( so far ! ) takes place. E.g. Post credit crunch we can still buy our necessaries at Tesco with our credit card and I don't see this changing soon. However our foreign holiday may cost more due to a rebalancing of the economy effecting exchange rates.

Likewise the Chinese will no doubt take action on environmental concerns as a result of their own community pressure, or that brought to bear from overseas. I think we are at the start of this - e.g Obama's emissions statements yesterday will ultimately have implications beyond the USA's own borders.

Soddy's balanced banking suggestions are there for any institution to adopt if they so wish. Few have done so I suspect because it would block the risk taking behaviour required for future development. Yes not all risk is bad !

PS Anybody got any suggestions for Mason's next stop on the world tour of merde !

A relevent discussion of adaptibility, Asian growth and infinite American consumption can be found here :

#25

You're probably going to use some words I don't understand to destroy my arguments, but I thought I'd have a go:

"Put simply comunities change their behaviour before oblivion (so far!)" Well, some do. Our ideas about this are obviously slightly biased seeing as we're all descended from communities that haven't been obliterated in the sense that we're a continuation of them. But there's is a lot of evidence of huge communities being wiped out owing to their own activities and failure to adapt to the new conditions they created, especially in the Americas.

"unique ability to adapt their culture to fit the environment as found". I think this is also only true to an extent. All organisms adapt to their natural environment or die. The great "success" of humans has been an ability to break free, to an extent, of the limits that the natural environment imposes by creating new man-made environments more immediately suitable for our ends. Much like the social insects, but on a scale orders of magnitude greater and more complex.

#25

I don't disagree that science has a habit of re-writing itself (I have fond memories of James Burke's The Day the Universe changed too). Newtonian physics is a map of reality, it is not a description of how the real world actually works (e.g. objects do not compute their own gravitational attraction by doing the math!). This is not to say however that it isn't useful in achieving certain problem solving tasks, such as putting a man on the moon. Under certain conditions, it is sufficiently close an approximation that it is fit for purpose. So to say the map is not the territory and should be burned is to destroy your only hope of finding your way home.

Whether Soddy has made the mistake of confusing one for the other, I can't judge yet as I'm waiting for my copy of Wealth, Virtual Wealth & Debt to arrive (a highly apt title for our times). However, if he uses conceptual or mathematical models (such as stocks and flows for energy, natural resources etc.) then why should this be flawed, as long as he treats them as models?

It appears that the major point of contention between us is about whether or not (or when?) there could be an enforced limit to economic growth. My understanding of Soddy's thesis is as follows:

- Real economic wealth is the ability to do constructive work, and is therefore a function of energy consumption (and not technological progress per se)
- Virtual wealth (as measured in money) has a tendency to expand out of kilter with real wealth. This is facilitated by the excessive use of debt - a claim on future work, therefore future energy consumption.

If the ability to generate energy (net energy) becomes more and more difficult in the future (i.e. through depletion of highly efficient natural resources), and we have major debts (claims on future energy use that cannot be honoured), then surely a major crisis looms.

Perhaps Pascal's wager is the inspiration behind my concerns. Lack of evidence that we will have a problem is not the same as evidence that there will not be a problem (post #27 expands on this).

As for your point that the individual banks could have chosen to apply 100% reserves, then I refer you to the Tragedy of the Commmons:



Hooray for "All for one and none for all"

28

Yes thanks for clarifying but I think there is a fallacy here :

energy is equated to work done, i.e. force x distance as per newton, and so can only apply to physical stuff. No matter how you describe it this holds.

debt ( money ) is purely a description of a promise to be performed sometime in the future. i.e. not a physical bit of stuff. As such it is subject to redescription ( QE, inflation, bankruptcy, death etc. )

as such Soddy equates apples with pears

#29

It appears that we both agree that energy is tangible, whereas debt / money is intangible. If my understanding is right, then it is Soddy who is accusing the Economic canon of confusing apples (tangibles) with pears (intangibles).

As I see it there are 3 main variables (factors) of interest here:

1) Energy: which can be put to constructive work (farming, irrigation, transporation, medicine etc.)
2) Real wealth: the rights or (physical) ability to expend this energy (i.e. purchasing power)
3) Virtual wealth: a belief that you posses real wealth (i.e. fiat money / debt)

The big challenge is to fully substantiate that energy/work equates to real wealth/purchasing power. If we take that as the initial assumption of the thesis, then the key distinction is between real wealth (tangible) and virtual wealth (intangible).

Traditional economics assumes that transactions are valuing real assets, and therefore the market value IS the real value (i.e. virtual wealth is in line with real wealth - therefore money and debts are tangible). Indeed capitalism conditions us into thinking that money & debt are real (i.e. it is enforced through law).

Whereas Soddy states the two are capable of diverging wildly. As you say, moeny is subject to rediscription. If the debts exceed the real value of the assets then inflation is inevitable.

The irony is, that in pursuing a highly materialist (tangible) culture, we have actually created a fictitious (intangible) concept called money.

~30

Spot on.

If communitees start to recognise the contingency of money, and the instability of the metaphysical construct it supports then there could really be chaos !