That season is upon us when we gorge ourselves with feasts and try to outdo one another with gift giving. This coming Thursday thousands of ‘shoppers’/‘consumers’ will camp out overnight to be first in line for real bargains in what has become known as “Black Friday”, meaning retailers hope to get into the black ink on their books by this ritual of acquiring more mostly useless stuff. There is a sad irony about this. What, on the surface, seems a burst of finding happiness following the American way of life, is, in fact, simply accelerating the consumption of now precious resources in a frenetic gasp to preserve our God-given right to hedonic pleasure. And over the years there has actually been a feedback loop that has been increasing the number of shoppers in lines on that day. We are getting poorer with each passing year. As a result, more people find they really need to find bargains in order to keep up the charade of ability to afford all that gift giving. This year I have actually talked to several people who are going to try to take advantage of the Black Friday bargains in order to get things for themselves that they feel they really need. Otherwise, they wouldn't be able to afford them during the rest of the year. Those kinds of products don't generally go on sale after the holidays because they can be sold all year around. I guess marketers have discovered that lowering the prices on these items (like refrigerators or furniture) during the holiday shopping season will bring more customers into the stores and their overall sales will go up.
Americans are by far the worst when it comes to gluttony, I think. But many parts of the developed world are really not that far behind. The American way of life has long been the model of what capitalism produces in the way of lifestyle possibilities for so many people around the world. When immigrants get to these shores they very quickly adopt the consumption habits of non-immigrants, at least as soon as they can afford to. For certain their children have no problem adopting this consumption-based culture. The people of developing nations are busy as we speak attempting to have what are to them luxuries, that we take for granted, and see their societies one day having the same stuff at affordable prices. And, of course, their governments do nothing to persuade them otherwise. Quite the contrary.
This season the happy news is that we are awash in oil and natural gas. And by 2025 or so America will be energy independent. That is cause for joy. Except that when you actually do the numbers you find that the cost in energy to get all of this non-conventional fuel is substantially higher than generally acknowledged. Another great irony is that we probably will be energy independent but only because the current supposed glut will evaporate and drive prices (in dollars) sky high so that demand will drop precipitously. Ergo we will buy quite a lot less fuel, and only for absolutely essential (cost is no object) needs. Ah well, economists who know how to interpret a conventional balance sheet and income statement have not yet realized that the same kind of accounting process that produced those instruments should be used on energy units so you could see that we are no longer in the black in energy terms. Indeed our energy costs are rapidly approaching our gross energy gains (e.g. the recent supposed increase in oil and gas extractions). It turns out that fracking and extracting tar sands oil takes considerable energy. Moreover the production dynamics of fracked wells, both gas and oil, are such that they tend to produce higher volumes than conventional wells, at first. And then the volumes fall much more rapidly with a total volume often less than the presumed recoverable reserves numbers suggested. The glut of gas, for instance, has led to a lower price on the market. But how much of that glut is due to the early rapid production curves wherein the growth in drilling has been in hydrofracking plays (shale). Even now operators are shutting down wells and not increasing their activities in new drilling. Why? Could it be that they are already discovering that the marginal costs are greater than the marginal revenues? Could profits be falling or at least not growing? Only those companies will know from the impact it will ultimately create on their standard accounting books. Meanwhile they will do whatever they can to keep up appearances and preserve their cash flows. So the real news here isn't really happy after all.
What is marring this holiday season, however, is the so-called “fiscal cliff”, the automatic kick-in of actions that resulted from Congress's (the super committee) inability to find a compromise on a package of spending cuts and tax increases aimed at slowing down the growing deficit. As of right now, the posturing on both sides is leading most business leaders to have such a sense of uncertainty, and a consequent dread of the business climate going forward, that they are continuing to sit on cash and failing to hire workers. Or so the story goes.
There is a lot of uncertainty in what is ahead of this country. But for that matter this applies to the whole world. There isn't a country in the world, not China, not India, not Germany, where there isn't a great deal of uncertainty about the future. Some countries, mostly northern European, seem stable at the present, but they have been buffered by central European economies that until recently seemed in much better shape. Once the bite is taken out of Germany, and it will with the destabilization of the Eurozone, even those countries will start feeling the pinch. This is especially true since the North Sea oil production has gone into steep decline.
The claim is that if the country goes over the cliff (and nothing is done to fix the matter soon afterward) that it will push the US economy into another recession. That is kind of funny since there are plenty of people who don't believe we ever really got out of the 2009 recession. Recessions are defined by growth (or non-growth) in Gross Domestic Product (GDP). It turns out that after Hurricane Sandy GDP will rise due to spending increases on repairs. The way the government figures GDP (basically just counting things that look like incomes) and fails to take into account costs, the official reports would seem to show that the economy has been growing, even if only weakly. Look deeper and not so much. Economic wealth is the net of income minus costs. Standards of living go up when wealth increases, for sure, but not just when income seems to go up.
Getting back to the holidays and consumer spending. The country and the world will breathe a sigh of relief if the Christmas shopping season puts retailers in the black. If they report record numbers of shoppers and sales you can bet the media will be all happy and joyful to report the economy is growing again. What nobody will probably report is the increased costs that the retailers will bear to get those sales. They won't be reporting yearly profits for a while yet and that is the numbers we need to really see.
But I will cheer if the season produces poor results. I'm nearly sure it won't, but I wish it would. That's right. I wish that the economy would not be touted as growing again. I wish that, in fact, it would continue to shrink. The sooner people understand that growth is not coming back the sooner they may start to pay attention to reality. It isn't that I want people to be out of work and not have incomes to support themselves. But I have made several suggestions as to how to handle a transition to a non-profit, contracting economy in which the unemployed could be employed doing useful (really useful) work rebuilding our soils and establishing localized secure food production. There is still a chance that we could lessen the harm that will befall civilizations by doing this. We still have an opportunity to fund such an effort by first taxing the wealthy at a rate that would preserve the government's ability to keep offering sucker bond investors those borrowing instruments. The government would also have to nationalize the energy business to make this work. That's right. You heard me. The government would have to take over the extraction of fossil fuels and management of the power grid in order to coordinate the proper channeling of resources to support the transition to a contracting economy with the least pain. While they are at it they should also nationalize the rail systems and most distance transportation. Local governments would be responsible for the management of local agricultural lands. Of course, permaculture is the way to accomplish this. Unfortunately not all lands are optimal for sufficient local production. So the transition must include moving people out of those areas and into areas where local food production could support them.
But then that always raises the elephant in the room, of course. The population has to also be managed. And by that I mean it has to stop growing and start shrinking. No easy choice, but absolutely necessary to make the rest of it work. I've already written extensively about this, so I won't rehash the problem and solutions here. Just take note that it has to be done.
In the end, of course, none of this will be done. The US government won't take on the responsibility for managing de-growth. The ideological libertarians would freak out beyond belief and the ideological progressives would probably do so as well. They solidly buy into capitalism as the means to make progress and they deeply believe in progress as the route to salvation for all humanity. The political middle is clueless and mindless as well so look for no rational response there. In short the so-called political will to do anything that would actually matter is not just not there. It seems hell bent on doing nothing.
And that brings me round to the ‘death wish’. You and I know that humanity, and especially the portion that occupies the North American continent is not likely to do anything along those lines. Indeed humanity seems to want to commit suicide! There are any number of smart people who actually do get the nature of exponential growth and diminishment of natural resources, especially fossil fuel energy. But they have not shown any inclination to think the problems through to their logical conclusions. Whether they are afraid to do so or just really don't have the wisdom to do so is not clear. The point is they won't act in a sufficiently timely fashion as to affect the kinds of changes needed. The rest of the crowd clearly do not have the wherewithal to do that kind of thinking. They don't want to even try. The fact that nearly half of the people in the United States don't even understand evolution well enough to realize it isn't a question of belief should show us that there is a fundamental intellectual deficit in this country.
But, as I said, that deficit is actually a global phenomenon. People around the world who clamor for what the Americans have had and don't actually bother to look at how negatively those possessions have affected the American psyche, are just as guilty. Materialism and consumerism, wrought by various forms of capitalism is killing our species and many others to boot. And almost no one seems to care.
Of course the really big picture is that this is just the cycle of species evolution. A species comes into being because it is more fit than its predecessor in some environment. It continues to evolve through, for example, genetic drift as the environment changes gradually. But then one day the environment is too different and new selection criteria obtain. The species cannot adapt fast enough to continue being sufficiently fit and then it goes out of existence. For humans, who did all of the creating of our current environment, this was a self-inflicted destiny. So perhaps what we witness in the human proclivity to not recognize the dangers is, in fact, a kind of death wish built into the species, just as senescence is built into cells and tissues. We Homo sapiens were meant to die. Since we created the conditions under which we have become unfit it is only natural that we are the agents of failure to somehow adapt.
PS. Based on what I have seen so far, after the election, I don't think President Obama will be saving us either.