Copenhagen & Economic Growth - You Can't Have Both

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21

To JAG, Mike, and others:
One can point a finger at any individual cause and claim that it is “the problem”, but the situation at hand has many facets and is highly complex.

First, technology is the solution. And it is possible. A mobilization of resources would enable a sutainable model of civilization to emerge in time. Additionally, oil just isn’t going to disappear. There will still be accessible oil, but it will not be as easy as it always has been to mine and refine.

Second, capitalism will not fail. Capitalism cannot fail. The idea of capitalism is not something that simply dies, despite what any practictioner of economcis or finance would have you think. Capitalism is an ideal of free market economics. Free market economics also cannot fail. Capitalism / free market economics is a theory like socialism. Socialism cannot just die. If you disagree with this statement, I challenge you to read the literature and redefine your terminology. See von Mises, Hayek, Rothbard et al. What can fail is a fractional reserve banking and our debt-based fiat money system. In the past decade, what we have seen happen in the international financial system has not been a failure of capitalism. It has been a failure of government and of interventionism.

When considering a technology-based solution to the climate issue, what prevents a solution is population and, accordingly, scale. Although there is not a definitive field for planetology, the Earth as a planet can only support a certain level of human life given current levels of technolgoy. The fact that poverty exists today is evidence to the fact that we have surpassed the population capacity of Earth. This claim is debatable, as one could argue that government interventionalism has prevented the equal distribution of capital and chained the economic forces of free markets, or that technology could feed everyone on the planet. As Dr. Martenson and numerous other scientists have pointed out, scaling up technology to account for the entire human civilization of the planet will take decades and vast resources that lack the infrastructure, capital and energy to utilize.

Considering Washington’s love of interventionism, I wouldn’t be surprised if military technologies exist that allow the utilization of resources more sustainable than oil. Keep in mind that Western oil companies, or Western-supporting governments, control most of the world’s oil reserves, and a continued societal dependence on oil as a national resource is currently profitable. As long as those companies make money, the tax proceeds from them are funnelled into US treasuries. If the US transitioned to alternative energy with all possible speed, then it surely would have lost its superpower status years ago, along with the financial funding to maintain its empire.  

Regardless, the solution is not to continue down this path. What is needed is a paradigm shift from consumer based growth economies to sustainability. And yes, the sustainable growth is an oxymoron, but sustainable development is achievable. Granted, you may use some fossil-fuel based equipment or technology, but the outcome will be a sustainable community.

22

To JAG, Mike, and others:
One can point a finger at any individual cause and claim that it is “the problem”, but the situation at hand has many facets and is highly complex.

First, technology is the solution. And it is possible. A mobilization of resources would enable a sutainable model of civilization to emerge in time. Additionally, oil just isn’t going to disappear. There will still be accessible oil, but it will not be as easy as it always has been to mine and refine.

Second, capitalism will not fail. Capitalism cannot fail. The idea of capitalism is not something that simply dies, despite what any practictioner of economcis or finance would have you think. Capitalism is an ideal of free market economics. Free market economics also cannot fail. Capitalism / free market economics is a theory like socialism. Socialism cannot just die. If you disagree with this statement, I challenge you to read the literature and redefine your terminology. See von Mises, Hayek, Rothbard et al. What can fail is a fractional reserve banking and our debt-based fiat money system. In the past decade, what we have seen happen in the international financial system has not been a failure of capitalism. It has been a failure of government and of interventionism.

When considering a technology-based solution to the climate issue, what prevents a solution is population and, accordingly, scale. Although there is not a definitive field for planetology, the Earth as a planet can only support a certain level of human life given current levels of technolgoy. The fact that poverty exists today is evidence to the fact that we have surpassed the population capacity of Earth. This claim is debatable, as one could argue that government interventionalism has prevented the equal distribution of capital and chained the economic forces of free markets, or that technology could feed everyone on the planet. As Dr. Martenson and numerous other scientists have pointed out, scaling up technology to account for the entire human civilization of the planet will take decades and vast resources that lack the infrastructure, capital and energy to utilize.

Considering Washington’s love of interventionism, I wouldn’t be surprised if military technologies exist that allow the utilization of resources more sustainable than oil. Keep in mind that Western oil companies, or Western-supporting governments, control most of the world’s oil reserves, and a continued societal dependence on oil as a national resource is currently profitable. As long as those companies make money, the tax proceeds from them are funnelled into US treasuries. If the US transitioned to alternative energy with all possible speed, then it surely would have lost its superpower status years ago, along with the financial funding to maintain its empire.  

Regardless, the solution is not to continue down this path. What is needed is a paradigm shift from consumer based growth economies to sustainability. And yes, the sustainable growth is an oxymoron, but sustainable development is achievable. Granted, you may use some fossil-fuel based equipment or technology, but the outcome will be a sustainable community.

23

I’m constantly amazed at the number of people on this site who worry about their wealth… especially after (presumably) doing the Crash Course! Discussing free markets and globalisation is completely irrelevant now, the only topic that should be in your head is how to survive.
If you still have wealth, at this time in history, then SPEND IT!!!

I would buy fencing and water tanks before I’d buy gold… inedible!  And don’t think I’m just mouthing off here, we have spent every last penny we ever owned getting ready for the collapse.

People with gold and no skills will just be part of the dieoff…

Mike

24

Mike

I always enjoy your posts. You’re a very smart guy and definitely very well informed, but I find your confidence in your ability to divine the future to be nothing short of breathtaking.

The amazement is mutual!

Best

Greg

25

“First, technology is the solution.”
No it isn’t.  I used to believe this too, but now I’m a lot wiser…  I used to believe it so much, I built a solar powered house and all… technology is merely clever use of RESOURCES and ENERGY. So only technologies that use little energy and few resources will now survive!

“Additionally, oil just isn’t going to disappear.”

No one here has said that…  but with barely more than half used up, it skyrocketed to $147 a barrel and triggered the (admittedly inevitable) crisis last year…  Once oil was that dear, EVERYTHING ELSE went up, not least food, but every other commodity known to man which depends on oil for its extraction and/or manufacture.  That this is hard for you to understand doesn’t surprise me, it took me a couple of years before the penny dropped, but I didn’t have all the help available to you HERE!!

“I wouldn’t be surprised if military technologies exist that allow the utilization of resources more sustainable than oil.”

Would you care to elaborate…  because I’d like to know what those are!  If you search through Peak Oil threads on this site, you will discover several links to papers showing the military is VERY concerned about Peak Oil.

I can’t be bothered debating the end of Capitalism, because it will happen whether you want to believe it won’t or not!  Capitalism is about CAPITAL… and without CAPITAL, where is Capitalism?

And of course Socialism will always be with us…  that’s more or less how we always lived; as a society, NOT an economy…

26

Shopping at a certain big box store I picked up a bag of Empire apples and noticed that another bin had Empire’s for a few cents less.  Upon closer inspection I was surprised to see that the less expensive apples were a product of Romania!  NYS is one of the largest apple production states in the USA (Washington State is #1).  The higher priced apples were from NYS – from a large grove not 20 miles from the said store. 
The problem is not capitalism.  In the above real example producers and buyers operated by the rules of commerce given the varibles to work with. I believe that one problem are the folks who muck around with our money systems.  The artificial dollar value impedes or skews the best use of resources that is at the heart of a free market system. Money value is controlled by what amounts to a monopoly by central governments.  Money value is a commodity as much as the goods and services in play.

27

Mike,
Go to Google and search for Aurora aircraft. Also search for TR3B. The results you find are interesting, to say the least. While I don’t profess to believe in them, I don’t discount them outright as fiction.

I do not disagree with your assessment of technology and energy use. My thoughts are the same, although my language differs from yours.

Additionally, I understand the fundamentals of the commodity markets and the effect of inceases in the price of oil on the system. My point is that at any point in the system, most technologies are replacable by technologies not dependent on oil. You can replace an oil-consuming truck or train for an electric one, that may be powered by solar or wind power. You can replace plastic containers or boxes with recyclable materials. That recycling can be processed by renewable energy sources. Some aspects of this chain require oil, yes, but those increases can be offset by a realization of how many facets of our lives can shift to renewable energy dependency, rather than oil dependency.

There will always be capital. I don’t know what your definition of capital is, but capital is simply a factor of production used to create a good. No matter what our economy depends on, there will always be capital, whether its a piece of clothing, a husk of wheat, or a barrel of oil. Given a sustainable economic system, capital may expand to include wind, water and sunlight, in which case it will indeed be relatively infinite. Until we strip this planet of every single resource and by those means destroy our civilization.

And socialism need not exist, although if often does due to human nature and the inherent tendency of governments to tend towards interventionism. Once again, I challenge you to read the literature: Hayek’s Road to Serfdom or, if you have more time, von Mises’ Human Action.

28

[quote=Amanda V]
Has any body ever suggested an alternative money model - as opposed to debt based money system ?

Or would it be so simple it would not be a “model”  ?   How did the system work before the fractional reserve banking debt based money system ? 

And, how would the banks even operate if they were not able to lend out the money deposited to them ?

Does anybody have any ideas about any of this as I have not actually seen a discussion about a "solution"anywhere.

Thanks

[/quote]You might want to take a peak over at Nate’s site, he has a freedom plan that is well thought out, I’m still reading it.

29

“My point is that at any point in the system, most technologies are replacable by technologies not dependent on oil. You can replace an oil-consuming truck or train for an electric one, that may be powered by solar or wind power.”
You just don’t get it rht…  There is virtually NOTHING that is not dependant on oil…  and THAT is exactly my point.  Just try building an electric train without oil (or coal for that matter)  Then just think of the millions of miles of copper wires you’d have to string out along abandoned roads now turned into railways to power electric locos…?  Because you see, it also takes a lot of other ever getting scarcer (and expensive) resources.

I’ve mentioned many times how the building of 1.5 million 2GW wind turbines required to generate just 30% of the global electric load by 2020 would necessitate the DOUBLING of global steel production, consuming the ENTIRE concrete production of the worls, a thirty fold increase in glass fiber production, half the coal, and nearly half the copper…

Now if you can’t see a problem just there…  well I give up!

30

 

Mike,

If you have no money then how do you pay the taxes on your property?

I don’t know about OZ but here in the US if you don’t  pay the property tax the county will take your property.

Ken

31

Sorry Ken, what I meant to say is we have no money stashed away in the bank or invested in anything…  except what we own outright, our house, land, and livestock…
We live on $200 a week which is more than enough to pay what we call rates, ~$1000 a year.  We also still run a car on that, and I look forward to the collapse so that we no longer will be expected to have a car, releasing even more funds for “fun stuff” like buying chocolates!  Tongue out

Mike

32

I would urge those who are not familiar with David C. Korten, author of “When Corporations Rule the World,” “The Great Turning: From Empire to Earth Community” and “Agenda for a New Economy.” He argues that corporate consolidation is merely one manifestation of what he calls “Empire”: the organization of society through hierachy and violence  that has largely held sway for the past 5,000 years. These works wove all the threads together for me.

33

This page? http://economicedge.blogspot.com/2009/12/freedoms-vision-outline.html

Too many CAPITAL LETTERS and text in italic for my liking. Still, sounds nice, but he assumes people are smarter than they really are… “Only two things are infinite, the universe and human stupidity, and I’m not sure about the former.” - Albert Einstein  (Not sure where that one comes from, there’s too many hits on Google, but I agree…)

Samuel

34

What will we use for money after fiat is gone - at least for a few years?
Gold is rare and can not be easily duplicated.  It is also way to valuable to buy a loaf of bread.  Gold is good for the big stuff then you need lesser value metals or things that reflect real sweat to create.  Silver is good below gold, but even it becomes to valuable for small purchases.  And old silver dime approaches $2 in today money.  In 1950 the actual silver in a dime was only worth about 4 cents.  Silver would zoom if it again become monetary.  If you use $25 as the value of silver on a monetary basis and you reduce the coin value to 40% of silver then an ounce of silver would have monetary value of $62.50 and a dime would be $6.25 in today’s money.  If you make the value of the silver to close to the coins monetary value you risk coins going out of circulation and into the melting pot on any up swing in the metal price.  It costs money to create coins and they do wear out.  So the mint does need to earn a profit.

England was on the gold standard for 300 years and the inflation/deflation chart looks like a normal read out of a heart.  Prices advanced about 25% followed by a recession and a drop back to the starting point with this repeated every few decades.  The point is silver and gold will still wobble in value.

We had a nickel that was actually made out of nickel and a penny made out of copper that shrank in size over the years.  While in Russia I bought a Russian penny that is over 200 years old.  It weighs as much as 2 or 3 silver dollars and reflected a close to true value in copper.  I was told that a 100 Ruble note would buy 8 cows so go figure what 1/10,000 of that was worth.  I guess 1,250 of these big copper penneys would weigh 200 pounds.  That is over $600 at todays copper price so not that far off of todays value of a cow.  Not bad at retaining its value from Cathereen the Greats time till now.  Of course people did not have the standard of living we have now and most Russians probable did not earn 100 Rubles in a year.  In a pinch a big copper penny could be hammered into something useful.

I favor a monetary board totally seperate from the Federal, State, and Local governments and the banks.  This independent elected board would issue the money and be free of all political constrants from the operating governments.  In fact operating government officials and employees would be forbidden to even talk to them.

We could use any assortment of tangible assets to back the money such as grain, cotton, farm land, forests, apartment blocks, shopping malls ect. in addition to gold and silver which are probable not abundant enough to fill the total monetary needs of the nation.  To some degree this monetary board could also work as a commodity price equalization board buying corn when it is cheep and selling it when it is high replacing the value nest with copper, cotton or what ever is in surplus.  A fall out of that would be famine prevention.

All kinds of crazy stuff has been used as money over the years including big round stones with holes in them in the Yap Islands.  After a few years of moving these heavy stones around  when they were spent the Yap citizens reached a point where they just left them where they lay and everybody in the community knew who owned each stone.  When someone spent a stone for a couple pigs everybody knew the stone had a new owner.  Several men left in a double dug out canoe and went to the stone money island and hewed out a new stone to increase the money supply.  On the way back they got in a storm and feared for their lives.  They dumped the stone into the ocean to increase their odds of survival.  Luckly, they did survive, and lived to testify that a valuable chunk of money was in fact in existance at the bottom of the ocean.  Everybody agreed that it existed and was there so the money supply was increased.  Some lucky Yap Island citizen owns that stone and can freely trade it for anothers pigs or what ever.  This story is from Milton Freedman’s book MONEY.

Keep it simple and out of the governments hands and it will work!

35

I second Richard’s recommendation about reading Korten’s work. He does an excellent job of analyzing what has gotten us to where we are. If you are only going to read one, I suggest his latest work “Agenda for a New Economy”. His analysis of where we are and how we got here in “The Great Turning” is excellent although I think his recommended solutions fall short. I think he does a better job of where we need to go now in the “Agenda for a New Economy”  
I don’t agree with all he says, but I do think his work is the most thought provoking I’ve read recently

Jim

36
I favor a monetary board totally seperate from the Federal, State, and Local governments and the banks.  This independent elected board would issue the money and be free of all political constrants from the operating governments.  In fact operating government officials and employees would be forbidden to even talk to them.
Why have a "monetary board" at all.  There is no need to limit money creation to any one entity.  If it's all based on metal content anyone could create the money. Perhaps you have some type of auditing board to insure competing currencies aren't being debased, kind of like auditing of public companies now.  If it's an elected board then it's not the following:
Keep it simple and out of the governments hands and it will work!
Besides, the amount of silver/gold/other if used as a anchor for money makes no difference.  In todays society few would select using coins for money anyway, just as many do not use cash today.  Electronic tracking of money would work just as it does today.  The only important thing is that if you wanted to change your electronic currency into physical metal, you could.
A fall out of that would be famine prevention.
Money should never have any side effects.  That is not it's purpose, when you start trying to do things like "prevent famine" with your money supply you end up with the same situation we are in today.  After all the FED and our current fiat money was put into place to help stop business cycles, prevent unemployment, etc.

 

37

rhare,
You’ve hit on the real problem (or at least one of them). If we had true supply and demand working without government manipulating, stimulating, regulating, and bailing out failed entities things would work much more smoothly. When you take away someone’s ability to fail, you’ll get well…exactly what we’ve got right now, a big mess.

Chris, your insight in this schitzo situation is invaluable.

38

I’ve written in the forum of this website several times before concerning Ludwig von Mises’ Human Action, and I will not stop recommending it as a must-read for anybody who wants to intelligently discuss anything economic. Human Action is the definitive work concerning what economics is. And don’t disregard these words, economics is widely misunderstood by the public, including those who frequent this website. Very often people mislabel economic terms, or use the wrong terminology, or argue over a subject (i.e. capitalism) without a full understanding of the meaning of this field.
That is because in this day and age, academic institutions, the media and governments have specifically frustrated an attempt to fully comprehend economics by making the subject appear extremely dull, uninteresting and unpopular. Additionally, economists tend to be very boring, uninteresting people, constantly full of negativity on world events. Economists also tend to lack the marketing expertise that current governments command, so they are unable and unwilling to attempt to capture complex economic concepts into catch phrases like “quantitative easing” or “jobless recovery”. However, economists are simply rational and logical to the extreme, and most modern cultures lack this fervent rationalism. 

There is an explicit difference between capitalism and totalitarianism - they are opposites. Similar to contemporary definitions of the political right and left, which von Mises, himself, despises, but I will use in this context to illustrate a point, capitalism and totalitarianism form the poles in the scale of economic freedom. There is a method behind how economies function and how systems of government interact with and interfere with local, national and global economies. These fields are called praxeology and catallactics, and form the underpinning of free market, classical liberal economic theory. In this day and age, this economic theory is referred to as Austrian, and it is contrasted by Keynesian, but the differences are marked and simple. 

Austrian economics is the study of economics as a science and field of knowledge. It is contrasted by Keynesian economics, which is the economic policy of government interventionalism and its effects on free markets. 

At some 900 pages of verbose, often thick economic theory, Human Action is a difficult read. If you pick up this book with the intention to finish it, it will take some effort to push through all 900 pages. Regardless, if you want a full and complete understanding and one hell of a sound perspective on how the world works, then read this book. It will be worth your time.

39

Mike,
Your tone is so inflammatory it’s hard to discuss this with you, because you don’t seem willing to discuss facts and opinions, just to tell me that I’m wrong. 

Even more, I find it strange that you live in Australia, a resource-rich country that sits on a lot of mineral wealth, much of it still untapped, yet you still have an almost conspiracy theorist, American-like paranoia and fear of complete global collapse and worldwide destruction. 

When Peak Oil begins to affect the world economy, the necessary steps will be taken by leading firms to switch their energy bases to alternative energy. Communities already powered by alternative energy will become centers of further alternative energy development. There exist carbon neutral communities or sustainable communities that are off grid. There also exist houses that are off-grid and completely sustainable. More of these projects are quickly coming online.

While you are correct that they will not come online quickly enough to prevent global fallout and pockets of chaos and instability, the entire world will not suffer from massive destruction, short of extraterrestrial or galactic cataclysms. Areas most set for complete societal collapse are the United Kingdom, Japan and the United States. As I wrote above, population and the underinvestment in agriculture will play a major role. Although governments have massively skewed the free market, free market forces are more powerful than governments, and will force a realignment of investment capital into agriculture and shift society’s attention towards the necessity of sustainability, most critically in terms of population. 

Personally, my attitude is positive and optimistic, as well as entrepreneurial and opportunistic. As long as man exists on this planet, there will be society, for man in civilization must depend on fellow man in order to create growth or sustain prosperity. Perhaps in some regions, society will crumble, and I have no doubt there will be localized war, perhaps numerous localized wars, but on our march towards a global civilization and a realization of planetary consciousness, an attitude of apocalypse will only set us back and does nothing to positively contribute to society.

These views are my own and I am not attempting to force them upon anybody. 

Cheers, and Happy New Year. 

Welcome 2010, it has much in store.

Haerdt

40

I think that the whole idea that our problems stem form government manipulation of markets is an illusion – it only seems that way on the surface. Behind the government regulation is the vast manipulative system (a very natural progression in hindsight) concocted by our so called free enterprise/capitalist system that has seized control of of our entire economic system for the benefit of the few who both overtly and covertly control our economy including the monetary system and the government. Some call this a system of  “corporatocracy”. The Capitalist system left to free wheel without strict regulation spins out of control making it our master rather than serving our needs.
According to David Korten in his book Agenda for a New Economy summarizes Adam Smith’s plan for free market systems as follows:

  1. Buyers and sellers must be too small to influence the market place

  2. Complete information must be available to all participants, and there can be no trade secrets

  3. Sellers must bear the full cost of the products they sell and incorporate them into the sales price

  4. Investment capital must remain within national borders and trade between countries must be balanced

  5. Saving must be invested in the creation of productive capital rather than in speculative trading

Korten goes on to say that Smith was in favor of local market economies run by small entrepreneurs and that he would take offense at being associated with anything resembling our current definition of Capitalism.

My point being that it looks to me that whether we like it or not, (I hope) we are headed towards Smith’s vision of an economic system that will benefit us all rather than the few – and allow us all to step off the corporate treadmill

Jim