Question Everything

Implications of Sapient Governance 6

Solutions

Could a national (global) end user sales tax stem the emissions of carbon dioxide and reduce our uses of fossil fuels?

Say the word 'tax' today and most people cringe. People have always been tax averse and generally for good reason. Governments too often have had a bad record when it comes to smart use of tax revenues. For most of history taxes supported wars as much as infrastructure. And even in the latter case waste and corruption continues to be exposed at all levels of government, strengthening the general public's distaste with paying taxes. They, in some cases rightly, think their money is being frittered away or lining some fat cat's pockets. I don't really blame folk for this sentiment. But the solution isn't to reduce taxes as Grover Norquist wants. The solution is to install a hierarchical system of controls that ensure the appropriate uses of tax dollars. You might need auditors auditing the auditors, but that is effectively what living tissue does to stay alive! It's nature's way.

Assuming that we had a sapient governance system in place, one that would spend wisely, how could we best contribute to running that governance system? How do we fund it?

I actually like the direction being taken by the FairTax act. It is a national (USA) sales tax that would replace the income tax, with its myriad loop holes and exceptions. The sales tax is simple, involves no income forms, and has elements of progressivity in it that protect low income folk from paying disproportionately more. There is a lot of interest in this notion, but it is hard to imagine the foxes guarding the hen house (Congress and K-Street) deciding that a really fair approach to paying taxes should be implemented.

A sales tax is a consumption tax. And that is why I like the direction.

Consider what is being taxed. According to my money = energy^* claim all economic activity is consuming energy and since most of that comes from fossil fuels it is producing CO₂ emissions. If you now put a tax on buying stuff that people are going to use, consume, you just might make them think twice about that.

I would favor a very small tax on basic levels of essentials, food, clothing, housing where the price level of these items indicates how much energy went into producing them. But above a certain price level items, objects, services should be considered to have a certain luxury value and be taxed accordingly. So you can buy a basic cup of coffee, for say $1.00, but if you want to drink a latte ($2.50) you will pay a tax, say $0.63 (25%). If you want a flavoring ($2.80 price) the tax goes up to, say, $0.70 at that rate.

OK, maybe latte's aren't really what some might call luxuries, but they are pricey by most people's budgets. But I think there are things all of us would agree are luxury items that go beyond basic needs. If you track back over the energy needed to produce most luxury items you will find it took considerably more energy to produce than the equivalent non-luxury version (if there is one). So I would think a luxury premium on top of the sales tax for the item's price might not be inappropriate.

While the FairTax is a move in what seems to me to be the right direction, it doesn't quite go far enough, especially in terms of taxation on businesses. Here is the objective: tax consumption at all stages of the economy (somewhat like a value added tax, but different!) in order to account for all energy consumption and CO₂, not just that used up by households. Businesses buy equipment, rent building space, etc. These capital goods get used up, as reflected by the depreciation expense now allowed on business income statements. That means that energy was expended once before and, assuming the business wants to continue it will need energy expended again in the future (also for maintenance).

Businesses also purchase raw materials and energy to directly produce the products or services to be bought by some customers. But these are not used up as such (this is where value added taxes have some similarity) so they should not be taxed when bought by the business. In a sense, then, business and households would work about the same way. Pay a sales tax only on the things you use up (and don't forget houses and cars do get used up). Pay a tax for the service of having wastage removed. Pay an extra tax if you insist on using up high end versions. But don't pay a tax on anything that simply passes through and sold to someone else (who pays the tax). This basic idea would seem to avoid the danger of cascading taxes where some products might end up doubly or triply taxed at different stages of production.

This is why I call it an end user tax as opposed to a straight sales tax. Only the end user of a good or service pays the purchase tax.

Now if this were done carefully we could structure the tax rate to correspond with the use of energy from fossil fuels or include a surtax on carbon content. Most economists who write opinions about the best way to drive CO₂ emissions down favor a carbon tax over a cap-and-trade market. The revenues from the carbon component of the end user tax could be used to fund alternative energy infrastructure build out.

Then there are categories of goods and services in which there are no 'ordinary' versions. Yachts, diamond rings, etc. are truly luxury items that serve no purpose other than vanity. I guess I am anti-classist enough to think those items should be super-taxed. Add a premium on this category of goods and services so that those who want them really have to WANT them. These aren't really sin taxes, as such. Well, OK, they are. I just would avoid the use of that term to describe them in polite company. Revenue from these premiums could go to a form of negative income tax for those below the poverty level. A sort of enforced charitable giving! Call it the Robin Hood premium.

There are a lot of benefits from a sales tax that our society needs badly right now. Most important is the idea that a sales tax would encourage saving. People would tend to buy just what they really need and can afford, putting the rest in savings or investments. This is pretty close to my idea of what banks should be — depositories for wealth produced in prior periods. Think about it given the current liquidity crisis. If the banks had real assets based on savings they would actually have something to loan out when truly needed. Instead they have been borrowing against the future production of wealth. They are just like today's consumer who borrows a bundle to buy that giant flat panel TV on the belief that he will be getting a raise real soon. We can see how that philosophy is working out.

^* Energy available to do useful work (EATDUW) not just raw energy!

Implications of a Sapient Governance, 5

Hurdles

Switching from competition to cooperation

According to legend, the great engine of a free market system is competition. Competition drives down prices and drives up quality. Indeed, as I pointed out here competition is evolution's way of producing greater complexity and organization in the biosphere. So competition is a good thing. Right?

Of course, it depends.

In an ecosystem, competition is the order of the day with a few exceptions. Ecosystems are the milieu in which organisms, populations, continue to evolve and seek fitness within niches. There are any number of symbiotic relationships, certainly, but in such open systems (they have borders with other kinds of ecosystems and the terrain is forever shifting on various time scales) new species invade, predators and prey dance, and some conspecifics compete for food and mates, while others form social groups that compete with other species and groups for niche dominance. It is a mixed bag of competition and cooperation, with competition the predominant mode.

Competition is good for driving evolution up to a point. But it is bad once evolution has produced something like an 'end product'. Bodies of mature individuals, as another example of a biological system, could not long endure if competition were the predominant mode of operations. Competition is active during development, when cell types and tissues jostle for post ion in the developing embryo. Unlike an ecosystem where the choreography is often chaotic, developmental competitive processes are tuned to produce the same results in form with some variation due to environmental influences. Growth, too, is the major activity from conception through childhood's end. But eventually the growth comes to an end and the competition does too. The tissues settle into cooperative processes that define good health. The body enters an extended period of steady-state in which energy flows through doing maintenance work and materials cycle through providing structural replacements as needed.

The human social milieu, today, is very much more like an ecosystem. And that has been a good thing from the standpoint of evolution of culture and social organization. Though billions of people, over the last ten thousand years or more, have suffered and died after living abject miserable lives, the nuggets of progress, of knowledge, of technology, that evolved have positioned humanity for a new mode of existence. It may be that it is time to become like an individual, a unified entity. The conception of a new social order based on the value of human consciousness and implemented in sapient governance should be followed by a development process where some early, orchestrated competition leads to a unified body of humanity.

The world is a whole. It is not so much a set of nations, or ethnic groups, or races. It is not just humanity existing by itself but within the Ecos in which humanity is just one entity. And that entity needs to learn to cooperate with the rest of nature. It is a system in which the parts must adapt to one another to achieve continued existence. And mankind must learn to live without competition as the primary mode of operation.

Living systems don't achieve cooperation among the parts in the sense that each molecule, say, 'wants' to be nice to all the other molecules. Cooperation is achieved through coordination in hierarchical control. Operational processes are regulated to prevent getting out of line. And even the regulatory loops are regulated! We've been moving in this direction for some time, in spite of the antiquated, and woefully out of touch with nature, thinking of libertarianism. The current banking crisis was in part enabled by the lack of regulation, either by adequate laws or by agencies doing what they were supposed to do. It is time to recognize that our human societies are natural systems and will achieve the same kind of stability that living systems have if we follow nature's design.

This will be a conceptual hurdle, particularly hard for the economic-savvy intelligentsia to get over. We have been told, generation after generation, that it is competition that makes our economy great. There was truth to that as long as we were evolving culturally. But we have reached the inflection point where growth and competition can no longer serve as a means for improvement. We're there for the most part. From here on out, improvement must come from sapient governance. And that improvement will be like the individual learning and adapting. Our bodies do not grow, nor do tissues compete as we continue to learn throughout life. There is some competition between synapses as our brains undergo alterations during learning. But it is orchestrated competition, not a free for all. So too mankind as an entity will learn and adapt as a whole. New knowledge will be discovered. New technologies will be developed. But not by the old version of the free market and capitalism. It will be intentional, rational, and sapient.

Next up - money, banking, and finance (rather long)

Talk about some needed changes! This week has demonstrated the sheer idiocy that constitutes our beliefs about the economy, markets, capitalism, banking, and many other aspects of our modern lives. I am continually amazed, for example, at the news outlets who continue to bring their talking head experts in to analyze the situation with the financial system melt-down and the proposed bail-out. None of these guys and gals got anything right in the lead-up to the crisis. Why would you turn to them now for sage wisdom?

I at least understand why the government turns to the very people who got us into this mess for help. They simply don't know what else to do. The members of our government are stuck in ideology. Even the Democrats believe in markets and capitalism and growth. And most of all, not one of them can think systemically. They really have no idea how the plateau of oil production of the last three years is actually at the bottom of this whole mess.

In the last episode I covered the need for rethinking the entire political process and the basis of our governance design. I indicated that there needs to be an integration of the economic system — essentially the operation-level organization of civilization — with the governmental aspects of social governance. With this crisis in banking and Wall Street almost everyone is now saying that some form of regulation is necessary to keep markets (and players) honest. HELLO! The economy is the life blood of civilization. How could you ever think that the governance structures were only meant to keep people from beating up on each other. Our US government has been in continuous evolution toward more and more involvement in regulation in the markets since day one. It has to be because that is the natural progression (see my series on Sapient governance starting on the July 20 blog).

So given the call for a reorganization of government along the lines suggested in the prior blog, I want to go into greater depth regarding the role of money as a token of energy, wealth production as physical work, banking as storage of excess energy, and finance as ways to invest in future energy flow. I've discussed this here. Government should be designed to regulate, in the sense of tactical and logistical coordination, these functions.

Money

Reflecting back on my March 25 blog, "What is money, really?, I have suggested that the real meaning of money is that it represents energy available to do useful work. I outlined, there, several implications from thinking about money in this way. Now is time to parse these ideas more finely.

In order to grasp the significance of money as a token of potential work we need to understand what is meant by 'useful' work. It all starts with physiology. Omnivores, like us, eat food to gain new raw materials, atoms, that are needed to maintain our bodies. But we also get energy from that food. Everything that goes on in our bodies, including our thinking, is based on energy being available to drive the processes. Our bodies, actually our cells, contain all of the knowledge needed to guide the flows of energy to the appropriate processes. That knowledge is embodied in the structures of living cells. That is what is inherited in our DNA. One form of useful work, in physiology, is defined to be that which maintains the structures - fights the ravages of entropy. This self maintaining is known as autopoiesis. Another form of useful work is when energy is routed to our muscles so that we can move and, ultimately, obtain more food. That is, we use energy to get more energy. Third, while still immature and body size is small, energy is routed into building more new structure, to growing. Once the body attains its natural size, however, it stops growing and all energy is for maintenance and motion. The body does useful work by maintaining itself and by moving itself to gain more energy.

Not all work is useful. When things go wrong in the body or brain people can expend energy that does nothing to maintain the structure or get more energy. The general term for this is disease.

In the economy useful work can be defined very similarly. Work processes have structures that represent knowledge of how to use energy for a purpose, to produce something that has value. Work needs to be done to preserve the structure — think about maintenance of a home or factory. Then work is done to produce the product or service. Energy is expended.

To be precise about the term 'useful' we have to examine the value placed on the product or service. As I have written about before, there are basically four things that you can do as work. First you can produce a product or procedure that increases the availability of usable energy in the future, either what you do helps increase the production of new energy, for example you build a fire place or an oil well, or it increases the efficiency with which you already use energy, for example you build a crowbar or a computer-controlled robot to weld joints in cars. In both of these instances the usefulness of the work is measured by how much extra energy is then available for more work in the future.

The third form of useful work is simply maintaining what you already have. Work to maintain the infrastructure, for example, is useful.

Or you can use the energy to do work which results in entertainment or relaxation. Toys and movies are examples. Every human needs periods of recreation in order to do more efficient work in the future. So in one sense, such products and services can be regarded as useful indirectly and over a longer time scale. That is, if done in moderation. There comes a point at which playing can go to excess. The human mind does not want to be bored. And if not occupied with useful work (as defined here) it will resort to looking for stimulation in play. It's the way mammals are built. Children play as preparation for social activities as adults. Adults play to recreate (maintenance). Done in appropriate circumstances it is actually useful work. A similar argument applies to esthetics. A beautiful painting or poem can do for the mind what playing football does for the body.

But in a society where so many mechanical slaves, expending nearly 60 times as much energy as we do ourselves, perform most of our work for us, and do it in short order, what are we supposed to do with our time? We play. It's a double whammy to our energy resources and atmosphere in that our energy slaves are burning huge amounts of fossil fuels and at the same time leave us with little to keep us occupied so that we end up burning even more entertaining ourselves.

We now end up expending a lot of energy doing not strictly useful work. How we expend our energy now is mostly convenience and play. If the former is geared toward work to make tools then we are all better off. But that simply is no longer the case. It is pretty hard to argue that a service job like flipping hamburgers is doing useful work. Even if it involves a more convenient food source for the customer, it not only isn't necessary, it actually ends up making that customer worse off, health wise.

If money were defined strictly as being based on energy available to do useful work, and we were clear about what we mean by 'useful', then it should be obvious that modern society is wasting a lot of energy on non-useful work. How many of us can say we are contributing, directly or indirectly, to the increase in energy available to do useful work? I'd like to believe that when I teach computer science, I am preparing students to go out and do useful work. But if their minds are put to producing an endless procession of games or iPods, I can't really justify that to myself.

What has happened in our society is that money, which once long ago actually represented some value in the sense of useful work, has now been so dissociated from the underlying concept of trading tokens for useful work. Money has come to be a free-floating object-of-value in its own right. People no longer work to be doing something particularly useful. They work for money. They think in terms of money. They value in terms of money. And that, among other such deficits in how to think about work, is why no one really knows what anything is worth or why we are in the current crisis.

An immediate fix is to recognize the relationship between money as token and energy available to do useful work. This means recognizing too that useful work relates to increasing or at least maintaining the energy flow itself. Everything else is just throwing money and energy away. The solution is to establish an energy standard for money units. Not just any energy of course. We need to measure the amount of net energy available to do useful work and then establish an amount of actual cash money to be put in circulation to reflect that measure. This is essentially like the gold standard in that it puts a precise value on each unit of paper/computer currency. But unlike the gold standard, this standard fixes the value of paper currency to the real physical currency of work. It establishes a firm foundation for say what something is worth. Psychologically it restores confidence in the paper currency. And, since the laws of physics obtain everywhere on the planet, it is the basis for a stable international trade medium.

This proposal differs from previous energy-based notions of money. In older versions an attempt was made to account for the energy expended in producing a good or service as a basis for valuation. That is, the energy standard for money was associated with energy already used up. The theory was that capital value was related to how much work went into producing the capital. But this raised all sorts of difficulties in comparing values between, for instance, efficiently vs. inefficiently produced capital goods. It was hard to assign a price based on aggregated and averaged energy consumption. In basing money value on energy available the emphasis is on potential rather than realized. If a work process is inefficient and wants to compete it will find its costs will be higher and so its profit margins lower.

In an economy where coordination at the tactical and logistical level is integrated into governmental functions having a monetary standard is critical. The only way overall efficiencies and optimizations can be accomplished is if we can measure process parameters accurately. No form of regulation will work if the measures of performance are distorted by free-floating fiat money. So fixing the energy value of money should be a top priority in developing a rational/sapient social system.

Banking

Banks are storehouses of wealth. But if money now represents available energy, then what a bank holds is the excess of energy that has yet to be put to use.

The concept of storing energy for future use, in case of disaster or to support future expansion, is very old. It is, in fact, one of the first outcomes of the agricultural revolution. Granaries were established and managed in order to store excess foodstuffs when times were good. Humans were wise enough to realize that overproduction could be used in subsequent time periods if future harvests went badly. Similarly, once money became the medium of exchange, money could be kept in a bank, under guard, to be used in the future. The more efficiently a farmer or tradesman was in doing useful work, the more excess accumulated and needed to be stored.

Somewhere along the line, still back in the granary days, a smart granary manager realized that some of the stored seed could be loaned out to newly starting farmers to start their farms. Since a granary is a collective storage facility, the seeds would come as a portion of everyone's contribution and so no one farmer would shoulder the whole risk if the newcomer failed. Seemed like a reasonable plan. And, of course, while human populations were expanding, it was. Of course, you couldn't loan out seed to too many new farmers. There had to be a limit. And it was expected that the new farmer would pay back all the seed borrowed, plus put in his contribution to the future. It was probably the case that the granary manager took his wages out in seed, so he made a bit of a profit off the transaction. Most of the time the scheme probably worked.

But if a terrible crop blight or other disaster befell the farmers, and they needed all of their stored grain to get through to the next season, then things might have gotten pretty dicey. The manager couldn't give them all of their seed because he had loaned some out to the new farmer(s). At such times everybody took it on the chin.

In this simple example of the origin of banking, it is clear that what is stored is energy. The grain seeds were also food. And what the farmers were doing was hedging against future bad times. The same is basically true for early banks with money deposits. They were accumulations of tokens that could, at least in theory, be traded for the underlying goods that represented useful work. Houses, horses, food, all forms of energy tools and energy could be 'bought' with the money. But money was a lot easier to store than houses, horses and food. This worked because societies had gotten sufficiently complex and large and with plenty of specialization. It became possible to generally be able to convert money tokens into something truly useful.

But, just like the new farmer getting a loan to start a farm, new tradesmen needed to have a way to get started in business. Borrowing money from a banker was little different from borrowing seed from the granary. Likewise paying it back with some extra translated quite naturally. In ancient times, there was a fairly widespread belief that paying back a fair amount of extra was alright, but that managers and bankers should not expect too much extra. Fair was fair.

But loaning is also risky. What if the new businessman fails? Somewhere along the line some bright bulb realized that perhaps it wasn't untoward to charge a small premium for the risk associated with loaning. After all, if the money wasn't paid back, the original depositors might get angry. This seemed reasonable, and as long as the amount of the premium (insurance really) was just enough to, in aggregate, cover actual losses then it too was fair.

Enter in human nature. Let's face it, we are all just a little greedy. We are wired to want to accumulate more than we need. After all that is our insurance. It is why farmers started growing more than they would actually be able to eat in the first place. Businessmen and bankers are no different. Suppose that they made a small 'profit' from these premiums, or from the price they charged customers relative to their costs? As long as the amount per transaction isn't too much, they end up accumulating a personal buffer similar to the communal ones. They then put that buffer into a bank!

Now if you are a banker and you are responsible for someone else's money you would think you could charge a fee to execute that responsibility. And so they did. But with the advent of people putting profits into savings, a new thought arose. A banker could be better positioned to make loans (which now produced profits) if he had even more assets in the hold. One crafty way to attract deposits would be to actually pay people to keep their profits in your bank! And we are off to the modern form of banking. Pay the depositors a small interest, charge the borrowers a larger interest and pocket the difference. What a perfect scheme.

Let's pause for a moment to consider what is actually happening. The banker is providing a service for which he should be duly rewarded. Energy, in the form of money tokens, are being conserved and mostly available if the depositor wants to withdraw. As inducement to keep money in the bank, the depositor is receiving a kind of reward, more energy than he put in in the first place. In order for this to actually work, however, the new businessmen who borrowed money had to actually succeed and do useful work that made everyone better off (so they would pay money to buy the product or service). In other words, it only worked if the economy was growing.

Now come down to modern times and see what banking (and I use the term very generically at this point) has turned into. First note that the modern citizen, in the West anyway, is now a consumer, not just a producer of excess energy! Consumers' jobs are to buy things and use them up. They buy houses, horses (well maybe not so much these days), and food. But they don't necessarily work at jobs that produce more usable energy. They don't always receive as much money for their energy expended as they would like. But still to fulfill their role as consumers they need to be able to buy all that stuff and a lot more besides. Solution: borrow the money from the bankers and promise to pay back that and some more, too often a lot more.

But it gets even more peculiar. Whereas once, long ago, a banker would be prudent and loan out just enough to get the new guy started and keep enough to make sure that all of his depositors would have something to withdraw if necessary (in other words the sum of the loans still amounted to a very small fraction of the total deposits), today bankers are actually encouraged to loan out substantial fractions of their deposits.

More to the point, the purpose of loaning money today is so that consumers can consume regardless of what they add to the energy economy. We have gotten to the point of believing that economic good is realized in growth and the only way to sustain that growth is for everybody to consume. That way there are always new businessmen succeeding and needing to continue to borrow money to expand. We have forgotten the true meaning of our wealth and how to conserve it. What we do today is borrow energy now with the expectation that there will be even more energy available tomorrow!

This modern belief in magic came about because we managed to tap into the biggest bank of all — the buried treasure of fossil fuels. Earth stored this concentrated energy that had been built up by millions of years of photosynthesis being buried and cooked. I actually think that this has been a boon to humanity in that it allowed a rapid development of technological civilization. And with this kind of civilization every human being could, in principle, have a comfortable, productive life.

Unfortunately, since we humans have a tendency toward largeness. We interpreted this access to excess energy as winning the lottery rather than prudent borrowing. We tended toward large families and larger shelters/houses. We tended toward trinkets and toys. We were not wise.

Finance

In the context of the modern banking system we have overdone the fractional reserve concept. We have created a class of money that does not represent energy available to do useful work. It is worthless paper, but the illusion of worth could be maintained as long as the production of net available energy continued upward. But since the energy return on energy invested (EROI) has been trending downward, starting sometime in the middle of the last century, the illusion has been gradually coming apart. For the last thirty years the financial sector has had to create a continuing stream of creative instruments to hide this fact from the public. Of course they really didn't know why they had to be so creative. Perhaps they chalked it off to competition (for what?), or maybe they really believed their own myth about money being the ALL of wealth (thanks in part to the Chicago school). But whatever they were thinking, they turned increasingly to instruments that looked like investment, but were nothing more than a Ponzi scheme.

Once, when manufacturing was the basis of wealth production in this country, people could buy shares of the company to provide capital for investment in solid assets. But then a market was created so that stock holders could trade or buy and sell shares, basically to provide liquidity. As the energy backing of money became less and less understood, however, such markets turned into money making machines in their own right. People started thinking about making money on the rise and fall of stock values rather than as investments in wealth production and maintenance. The markets became a gambling machine with winners and losers. It became a game.

Venture capital (VC) too became a game. Capitalists pooled their resources to fund new startups. They became a kind of bank in this sense. But as high tech companies began to show successes in creating new technologies, particularly in the computer and communications realms, this too became a game. VCs began playing with the notion that they were funding risky innovations. Some, indeed most, of the new startups should probably never have been attempted (I speak from personal experience!) But as Moore's Law drove the costs to manufacture digital electronics down, and supported higher densities of functions on silicon, and as the wonder of software malleability created incredible developments, we got drunk with the excitement of new technologies that could potentially transform the world. VCs started funding anything that moved. They expected huge returns on their investments to cover the risks. For every nine ventures that failed, one would succeed wildly, but that meant they had to demand huge returns from that one to cover the losses from the failures. At first this might have seemed completely rational. But the notion of huge returns was contagious. As other kinds of financiers and Wall Street brokers noted the profits from ventures like these, they coveted similar kinds of returns. Greed took over. And within short order any kind of asset might be considered as a basis for high returns — even homes. What we are witnessing now is the result of a long and grubby trend to turn larger and larger profits on investments, or perceived investments. Even home owners have been caught up in the greed. Now viewing their residence as a great investment in the sense that its value would always go up, they have become huge risk takers, borrowing mortgage money in excess, heavily leveraging themselves, on the bet that when they sold they would make big bucks.

We are a country of highly leveraged individuals, companies, and governments (state and federal). We've borrowed against an assumed future of greater wealth but have forgotten where wealth comes from in the real world. And now, with the peak of oil production and a severe downturn in the production of net energy available to do useful work, the Ponzi scheme comes to an end. A few fat cats got money-rich from the scheme. The vast majority of people are going to be very poor. The amount of energy available determines how much wealth producing work can be done. Not the amount of dollar bills in circulation.

The fundamentals of economic activity are not that complex. Once we realize that economics means doing work that results in maintaining the structures of civilization and not endless growth we will be able to comprehend how it works. What needs to be accounted for in the economic system is the energy available to do useful work. That means, in turn, understanding what is really useful work. Once we grasp that we can do no more than what energy is available we will stop thinking that growth is the objective now. We will, if we can muster enough wisdom, find some way to reduce our population level to what can be sustained with equitable distribution of the wealth we can maintain. But as long as we insist that the old framework for thinking about economics is the right one, we are doomed to make the same mistakes until there is no one left to insist that we have a right to over consume. And there may be no one left at all.

Once we grapple with creating an energy standard for money we need to redesign the whole banking system to fulfill its original purpose. We need to focus on savings, that is banking excess energy production, if there is any, against future uncertainty. We need to understand that we should reserve loans for purposes of investment in development and maintenance, definitely not growth. Finally, we need a governance structure that acts to coordinate the flows of energy (money) in a manner appropriate to these objectives.

Let's start with politics and governance

If you are coming into the middle of this series you should go here to read from the beginning.

The political process in the US is broken beyond repair. Each election cycle gets more and more bizarre in terms of the candidates that rise to the top, the things they are saying, the things they fail to say, and most importantly, the way the general public and media respond to them. I simply can't believe it has come to something like Sarah Palin's nomination for Vice President. I'm sure she is a perfectly fine person (well I will take it for granted anyway) but VP? Don't get me started.

I knew we were headed for trouble when George W. Bush got the Republican nomination in 2000. I knew something was going on behind the scenes that was Machiavellian. Karl Rove and the neo-con cabal were, of course, manipulating the process and had the near perfect puppet to front for them. Compassionate conservative my backside!

I claim it is broken beyond repair because it seems to me the rift between conservatives and liberals (nominally Republicans and Democrats) has gotten so wide it reminds me of the condition of a marriage just before one or both partners file for divorce. Everything today is partisan. The voting records show that ideology trumps reason in the Congress. And the few examples of so-called bipartisanism turn out to look like Joe Lieberman. A wolf in sheep's clothing.

Even independents are adrift. It used to be that you could be an independent and vote for whichever candidate seemed to have the best platform; you could at least believe you were making a rational decision. Now, for myself anyway, I am voting for the least worst! The old hold your nose and push the button. Believe me, I like Obama. I used to like McCain, back in 1999 and up to this cycle when he started saying and doing bizarre things. But I don't like the idea that a youngster who is good with rhetoric, has an appealing smile and talks of hope and change, while some of his positions are completely untenable could be the best the Democrats could do. But, for a different set of reasons, I would have been dismayed about Hillary too.

Answer this. Do any of the politicians or candidates currently 'running' the country or running for running the country know what they are doing? The very fact that someone wants to be president in the current state of the world shows a certain lack of judgment! Fools rush in, and all of that. This country, and by extension of its power, the world, is in really big trouble. The evidence that no one has a clue about how the world really works or what needs to be done is so blatant that it amazes me that anyone is caught up in the merriment of supporting candidates. Did you watch the political party conventions? Rome was burning but they sure seemed to enjoy themselves.

Another reason I say politics is broken beyond repair is that the polarity pulling ideological enemies into fortified camps is so strong that it cannot end but in battle. We've seen it already. The stalemates in Congress with a slight majority (now) of Democrats in the House and a meaningless majority in the Senate. What real business is getting done? No one from either party is not without some substantial blame here. The Republicans may have faulty theories and bad manners, but the Democrats are spineless and permissive.

What is a politician's number one priority in life these days? Serving the people? Not by a long shot. The number one priority is to get re-elected so you can serve the people. The ends justify the means, right? Except the ends never come. The politicians are so wrapped up in what it takes to get re-elected that every decision they make, every vote they make, every move they make has one overriding concern: how will it get them re-elected?

It takes money to get re-elected in this day of 24/7 media. Special interests have lots of money. You know the rest of this story. K-Street rules and probably always will, until the end of civilization breaks up that game.

But my biggest single complaint, if you will, about the political process is that it completely misses the real issues. Who among our leaders and politicians are talking about strategic plans for the US? Or for the world, for that matter. We are in an age lacking in vision. The best thing Bush could come up with was going back to the Moon, or Mars, even while he knew we could never afford such an effort. His strategic vision got no further than a war on terror. That actually isn't even a strategic issue if you think about it (and read my posts on hierarchical control theory). Who else has a vision? Al Gore has a defensive vision regarding global warming, one that is limited to the idea that we need to keep things the same as they've always been. He now has a vision for getting our electrical generation off of fossil fuels in ten years. Gore comes as close to a 'visionary' on the political front as anyone. I can't help but wonder if we might not be having more substantive conversations about energy and the climate had he become president, but we will never know. Even so, Gore's vision is still about how to preserve the world as we think it has always been. It isn't enough. It isn't even right. The world will be different in the future. The key strategic questions remain. What kind of world do we want? and what kind of world can we have (feasibly)? If we want more of the same as we've had then we are guaranteed to not have our wish. Evolution rules.

Who among our leaders and politicians is speaking about what the world could be like in 100 years? Who dreams of a harmonious and sustainable civilization where every human being has an opportunity to fulfill their intellectual and emotional potentials? All we hear today is talk of how we are going to make it through tomorrow without having to change. Everybody just assumes that since the prior two centuries have seen dramatic progress in material wealth, technology, and growth that the future will be just the same only more. We have lost our capacity to dream realistic dreams and formulate plans to accomplish them. What a pity.

One of the main reasons we have a broken and unfixable political process, and failures of governance as a result, is this. Our so-called leaders do not possess demonstrable wisdom and most are uneducated in areas of knowledge that are most critical for our world. Virtually none of them are or have been working scientists. Few have any kind of background in physics, math, biology (medicine doesn't count by the way) or any of the engineering disciplines. Of course a scientific education and practice is not enough. If one only has a single discipline and then gets into politics they are likely to view the world and its problems through a single lens. Better would be a history of multi-disciplinary experience. Wisdom is associated with a broad, generalist, knowledge gained over a lifetime. An ability to see relationships based on analogies between disciplines is essential. A scientifically astute mind with the capacity to see the big picture (and I mean really big picture) is what is needed in statesmanship today. A leader needs to understand the details of how the world works, including how humans work, yet at the same time be able to envision how things could work. I just don't see this in any of the leaders today or the candidates to lead tomorrow.

A quick example will suffice perhaps. Obama keeps telling us what we need to achieve in the way of carbon dioxide emissions. To his credit he gets his information from the science community on the numbers. But then he goes on to talk about cap-and-trade market mechanisms that are almost certainly bound to fail to achieve any meaningful results in time to prevent catastrophe. Many scientists and a few economists favor a carbon tax. I will be blogging about this idea in the near future, actually the notion of a progressive sales tax with a carbon premium. But also, Obama keeps mentioning clean coal and nuclear. Clean coal is laughable. Carbon capture and sequestration is not only not proven to be effective, it is very energy intensive to capture CO² and pump it down a hole. The net energy gain from burning coal and relying on CCS is greatly reduced from just burning the coal. We would have to build soemthing like twice as many coal-based electrical generating plants to compensate for the loss of energy needed to do CSS. Then we will be using up the coal twice as fast as estimated today. Peak coal not far behind. Still Obama talks about it. Finally, he talks about the investment in R&D in energy that he will support if elected. One thing I realized some time ago is that when a politician really doesn't have a clue about what is feasible and practical he or she will simply claim they will throw significant amounts of money at research. As if that is a real action plan. The money, of course, will go to special interests in the end. We know how pork barrel works.

Why is a smart and well meaning guy (I presume) like Obama unable to really address what needs to be done to accomplish these seemingly (but ultimately futile) objective? Or he has to imply that some policy, like cap-and-trade, will do the job. The answer is that he doesn't really know what he doesn't know. He is a lawyer, not a scientist. He looks at the world and its problems as a lawyer would look at them. The problems are cases that if you just come up with the right argument you can win. Or the evidence counts for how you can frame it, not for any ultimate truth value. Worse yet, the majority of advisers around him are also lawyers.

Lawyers and politics have pretty much been the mainstay of American politics (in some other parts of the world it is still generals and armies with the biggest political clout and that certainly has its own problems.) Many lawyers actually decided to pursue the law because that was a ticket into the political game. It has been this way because once, not long ago, the major problems politicians and governors had to solve were of ownership and rights. A dispute over who owns what is a legal matter to be resolved using legalistic reasoning. But what are the problems we face today? Many of them still have aspects of ownership and rights associated with them, so they still need legalistic input. But the majority of the most pressing issues have a scientific and technical basis. First you have to have people who truly understand the basic issues (the list starts with global warming, energy, water, soils, ... and goes on and on). People who are capable of actually understanding (and I don't just mean 'knowing about') the physical, chemical, biological significance should be in the driver seat, asking lawyers for legal advice as needed. I earnestly feel that every national leader, perhaps every leader, should at a minimum have had calculus and statistics in college. There comes a way of looking at the nature of processes and trends that helps you understand things like rates of change and stochastics that are absolutely essential for someone to claim they understand how things work. If the majority of world leaders involved in negotiations for how to solve the carbon emissions problem were schooled in calculus-based physics and statistics, I guarantee you we'd have had something far stronger than the Kyoto Protocol and it would have been ratified by every nation. Imagine a president of the US able to look at the data and reports and being able to picture the dramatic effects of exponential change. George Bush doesn't even grasp the concept of change, let alone velocity or acceleration.

So what do we do differently to start healing the political and leadership problems of the US and, in turn, the world? We need a new conceptualization of governance and economics that is based on systems thinking and incorporates sapient hierarchical control. Just as an animal's body has 'learned' to operate as an integrated whole in a relative steady-state stream of throughput, we need our societal body to function cooperatively. We achieve that by designing an operational level that works in accordance with the principles of ecological economics, augmented with the energy = money principle, a coordination level where logistical regulations can work to optimize the flow through of resources and minimize our wastes to what nature can handle and where tactical methods will keep us in balance with the natural systems in our Ecos. Most of all we need a true strategic level that is capable of envisioning a better, more human future for us all, and has the ability to set priorities and goals accordingly. Nothing like this exists quite yet.

We need a new constitutional convention with a new purpose and a vision of the future (with threats and opportunities clarified). We need this convention to be attended by personages with scientific credentials (including those earned by work if not schooling), cross-disciplinary experience, and most of all, demonstrated wisdom. These will be the more mature members of society. Anyone younger than 50 could not have had the breadth of life experience, even if they have native sapience. We need to devise something beyond representative democracy with universal suffrage. We have bad leaders today because a significant proportion of the population are incapable of exercising critical thinking skills. No one who cannot demonstrate good judgment in multiple facets of life should be allowed to vote. We don't let anyone younger than 18 vote because we don't think they are competent - seems self evident doesn't' it? But now I think there is ample evidence that many adults are not competent either. Ask a potential voter why s/he likes a candidate. If they answer that they like the way s/he looks, they don't get to vote!

A new constitution with a more enlightened view of governance, especially informed by hierarchical control theory, would put in place a workable government for the new scientific and technological age. It could more clearly establish the coordination role of government in the economic world. It would establish a unified view of what kind of environment will support the pursuit of human happiness and fulfilled potential. It would focus on what is truly good for human beings as they really are, not assuming some ideal of human nature that is not even close to reality (remember rational agency theory in economics?)

We should institute a search for wise persons as described above who would be willing to participate in discussions of sapient governance and a constitution suitable for providing the specifications of such.

The Constitution of the US is a working document and it was developed in a different age with different background knowledge and different ideas about the future. It isn't a holy writ. It isn't written in stone. And it isn't the last word on how to wisely govern. Given the situation of our age, the knowledge we now have about how the world really works, the knowledge of human nature, the technological tools in our hands, and most of all the tremendous threats we face, it is time to consider a new way of looking at how we organize and operate. This isn't just an American thing either. We need a constitutional form that is universal and will help unify all of humanity as a species living on our one planet in harmony with the Ecos.

We need people to recognize that the world has radically changed and will change even more in the near term. We need them to rise up with voices that don't say 'save us oh leader', but say 'we demand wisdom and truth'. We need a revolution of thought and conscience. A new Enlightenment and a new vision of the future.

What do we do?

When I started this blog it was with the thought that by publishing some of the questions that I have pursued about the way the world seems to be working, it would spur thinking. Possibly, I thought, if others were either asking the same or similar questions, we would be able to pool our thinking about the answers and possibly contribute something to the global discourse about how to solve the significant problems we have created. While there have been a few of you making comments and suggestions, and I have received numerous private e-mails on postings, the hoped for public dialog hasn't emerged.

So I have offered a few 'suggestions' in the form of visions of solutions I have thought about. That has gotten a bit more response, at least privately. But the question prodding just hasn't generated a steady stream of ideas as I had hoped. Now world events are racing ahead at a pace that surprises me. The recent melt-down of the financial markets in the US and many other countries is, I think, the trigger event that will bring the whole of developed civilization to its knees. As I wrote last time, the tie between the debt financed economy and the diminishing of net energy available to do useful work (NEATDUW) is at the core of everything else humans pursue. The 'bailout' plan that is being evolved in negotiations between the administration, the Fed, and Congress, as I write this, will turn out to be a panic-based, and probably ill-informed, reaction that misses the true underlying facts of what drives an economy. It will, I suspect, ultimately fail for any number of proximate causal reasons. But the ultimate cause of failure will be that we simply didn't understand the true nature of economic work and the flow of energy.

With this blog posting I am thinking of a new tactic. I have been asking these kinds of fundamental questions for many years now. Perhaps not surprisingly I have formulated a few answers that suggest possible ways to address the problems. Unfortunately, the answers I have come up with are not the ones most people want to hear. And their stark contrast with the answers you hear coming from the current presidential candidates are even greater.

I will not tell you bull shit. You may not like what you read here. You may, almost certainly, think I must be wrong, or naive in my assertions. But if you've read prior blogs and understood the basis of these questions you should at least be able to see the internal consistency of my arguments and action proposals. At some point, when some set of events convinces you that those in charge now really don't know what they are doing, when things get bad enough, perhaps some of you will consider these ideas in that light. Perhaps you will come to understand that humanity has made a large number of judgmental errors over the millennia and we are now going to pay the price for the gapping lack of wisdom. As I have stated before, human beings are clever, but only poorly wise, for the most part. The few wise persons who have pointed out the errors of our ways have been ignored or marginalized by an overwhelming population of foolish, even though very 'smart' people. I just hope enough people are smart enough to realize that what is needed for the future of our kind is wisdom, far more than cleverness.

In the next, who knows how many, blogs I intend to share with you the answers to my questions in the form of actions that we should be taking to actually solve the problems and salvage (not save) humanity and a semblance of civilization. I will share a vision. This vision is born of a holistic view of human nature, energy flow and its role in economics, evolution, and what I strongly feel mankind's place in the Ecos needs to be for a truly sustainable future. The latter does not mean preserving a constant, unchanging system. Evolution is always at play. But it means maintaining a system that allows the evolution of greater complexity and organization as the future unfolds.

I strongly feel it is too late to talk about solutions (like energy and global warming) that will preserve our societies as they are now. We will not be able to talk about raising the material living standards of billions of people because we are all going to be extremely poor in the not-too-distant future. What we need to be discussing is the actions we can take to preserve our dignity as a species. We need to be discussing actions that will minimize the damage to the Ecos, damage that is already well under way and will worsen the more we delay. We need to be discussing actions that will allow us to power down civilization with the least possible suffering.

I have no crystal ball so I can't predict exactly when events will occur or how soon things will get out of hand. Indeed, it may be years before the drastic effects of peak oil will be felt. This is especially true if the current financial crises leads to global depression and demand destruction for oil. That will, of course, only mean that the slide will be slightly prolonged. But a slide it will still be. What we are witnessing is, I believe, a chaotic system being driven to a bifurcation point by a constantly increasing parameter (population). The process will jump to a new strange attractor — a phase transition perhaps. During such times chaotic systems earn their names. Chaos prevails in the vernacular sense.

As always I hope I am wrong completely. I hope I turn out to be the fool. I hope that some clever genius somewhere has figured out how to do a real cold fusion process that can scale up quickly and replace all fossil fuels with direct electricity and hydrogen energy carrier. But in case I am not wrong, what follows are some things I think we need to do.

Current events - What is going on in the financial markets???

I posted this comment (the parts in italics) on the Oil Drum this morning. Read Gail's post and then scroll down if you want to read the comments, or just read below for mine. Below I try to expand on some of these points for clarification and in light of previous posts in this blog.

I wrote:

1. ALL economic activity is work in the physical sense.

   I have pointed this out before. Even mental work is due to the electrochemical activity in the brain, which consumes energy. Nothing, at all, happens without energy being used up.

2. ALL work requires the flow of energy from a high potential source, through the work process, to a low potential sink.

   The amount of work that can be done in a specific time frame depends on the 'quality' of the energy. The most significant quality parameter is the potential difference between the source and the sink (temperature in heat engines, voltage in electrical systems, etc.) High potential differences drive more work per unit time. Natural gas and oil have the highest quality of energy relative to other forms. In addition, oil and its distillate products are easily portable and can be stored reasonably safely. Coal is sufficiently high quality with respect to stationary heat engines (e.g. generating electricity).

3. The guidance of energy flow through the work process requires knowledge (of the process and its control model) and information regarding the energy potential available.

   Knowledge is an internal stable structure that represents the pathways through which energy should be routed in a work process. Knowledge includes efficiency dynamics. My whole vision of hierarchical control and its guidance of work has been covered here. Information, in real-time, is used to adjust the flows based on dynamic needs and desired results.

4. In the economy money acts as an information token representing the availability of energy to do work at the micro level.

   Monetary tokens (dollars, yen) originally worked well to represent energy available to do work (this differs from the idea of emergy — embodied energy — which asserts cost in energy for production of assets, which is energy expended vs. energy available). A holder of dollars would exchange them for an asset. This signaled the system to route more energy to the work process (company) to make more of that asset. The work process simply turns around and buys more energy from its sources (e.g. electricity and labor).

5. Monetary policies have been crafted to disconnect the meaning of money as energy available to do useful work; money is now a commodity a-la Friedman. Money no longer serves as a measure of available energy. Though its flow, counter to actual energy flow, still acts to guide presumptive energy flow.

   The gold standard basis for money was by no means a perfect approach. But it did have the effect of standardizing the measure of monetary value. Exchange was based on an agreed upon standard. Its problem lay with the fact that gold is a totally arbitrary value basis. It has no connection to work and hence actual wealth production. Energy, on the other hand, has the advantage of being directly related to the work process. The relationship between joules required, efficiency of the process, and the work obtained are directly measurable values. An inefficient process that uses more joules per unit of output will result in higher cost products. That, in turn, provides a motive for increasing efficiency. Put another way, in a market economy based on energy costs, there will be an efficient price mechanism to direct energy flow to the more efficient processes. That, at least, is one thing neoclassical economics got right.

   After taking money off of the gold standard (Nixon) and following Milton Friedman's policy recommendations, money began to lose its connection with real work. It became possible to create the illusions of wealth production without really producing anything. Much of the service industries that arose during the last third of the 20th century, and the jobs within them, produce nothing more than paper (or obesity!). Energy is being expended but no real assets are being produced.

6. Fractional reserve banking, loaning some portion of an account to a borrower on the idea that the borrower will use that money as if there were energy to do useful work (unconsciously of course) and produce some additional wealth worked as long as net energy (ERoEI) was increasing over time.

   Belief that tomorrow would find higher production than today is at the heart of borrowing. As long as there was, indeed, more production, because there was more energy, to cover both principle and interest, well and good. And as long as interest was kept low - after all, what does it mean to pay energy for energy(?) - then this system tended to work. Also, as long as real assets were the result of the borrowing, it made sense. But in energy contraction the basic assumptions no longer hold.

7. Until at least the 1970s net energy had been increasing over time, hence the credit system worked because the debt could, in theory, be paid back in a subsequent time period due to the net increase in wealth-production potential.
8. With the advent of production of harder to obtain (lower ERoEI) oil, net energy gain started to decline (creating the top deflection in the peak curve). As net energy gain started to decline it became increasingly difficult to have an increase in wealth-production capacity -- it became harder to repay loans.
9. Since money value had been de coupled from energy available to do work the signal that loans would be harder to pay back was lost.
10. Sometime between the end of the 70' and into the 80's we found it necessary to continue what amounts to a re-financing scheme, chasing more debt to cover previous debt (note: this is also tied to incomes as evidenced in the growing need for two or more wage earners per household and a lot of corporate merger activities, etc.).
11. In order to generate caches of money to appear as if wealth was being created, market manipulations and speculation took on its own life. 'Sophisticated' schemes (slights of hand) have been invented to keep the illusion that wealth is being created -- now defined in monetary terms rather than hard assets with fixed values. But the wealth is just marks on paper (or registers in a computer memory). Real wealth has been in decline, e.g. the infrastructure decay.
12. With the peak of oil production (or plateau) the total net energy available to do work is starting its downward slide. All borrowing against a future when there would be more, not less, energy is futile. There is no PHYSICAL way that those loans can be paid back. All financial schemes that are based on debt being repaid are doomed to failure. The First Law of Thermodynamics is rather clear on this account. You cannot create energy out of nothing.

We humans are a smug bunch. We actually think that money is some social construct that has meaning beyond a physical reality. We've operated on that assumption and now the piper will be paid.

None of the financial geniuses that currently spout their theories are able to explain what is happening. They cannot predict what will come next. They talk about a "bottom" for this or that market. But there is no bottom as long as net energy is in decline. When total energy really starts to decline (post-peak oil) the s**t will really hit the fan.

Here are some prior blogs where I discuss some of these ideas in greater depth.

• What is wealth?
• What are savings?
• Can a change in perspective on money, wealth, etc. save our world?"
• What is useful work?
• How does hierarchical control theory help us?
• What would life be like in an energy-based economy?
• Does it feel like we're waiting for the hammer to fall?
• How might we face economic contraction?
• Rethinking capitalism and banking

Is there such a thing as cultural illness?

Mental illness is recognized as a real illness these days. It covers a wide variety of brain malfunctions, some affecting cognitive processes and others affecting emotional states. No one seriously questions the causes of such maladies as having organic roots; something in the brain is not functioning properly.

What many people don't fully appreciate is that a brain malfunction in one region can have deleterious effects on other, otherwise healthy, parts of the brain. Untreated, an otherwise minor mental illness can lead to greater problems and brain malfunctions in other regions.

I was thinking about mental illness while reading Dan Goleman's book, Social Intelligence in which he explores what mal-behaviors can result from imbalances, say, in the dopamine (reward) systems or with other neurotransmitters associated with emotions and social cognizance. It started me wondering about society in general and then the thought that any dynamic adaptive system can suffer malfunctions in specific sub-systems that might spread to the rest of the whole system. Why not cultures?

What drives this idea home, for me, is that observations of the American culture, or at least the predominant themes in this culture, display behaviors and mores that are so obviously maladaptive with regard to the long-term viability of the society. And American behavior, as a country, is having a negative impact on the rest of the world. To other cultures we look schizophrenic or even psychopathic!

It seems to me also, like the depressive mind, we are in a downward spiral. If my hypothesis about sapience, or its lack, is correct, then there is no way to stop the negative process once it gets going. People not being wise enough to recognize what is happening are themselves succumbing to the trends toward destruction. As I have written, for example, about the fallacy of profit motive and greed being good, it is still the case that the vast majority of Americans buy into this meme and are out to try to maximize their own income regardless of any realistic view of how their efforts contribute to the good of society. They just want the money because our culture values personal enrichment. And since the only way to acquire more wealth is by competing with and too often cheating our fellow humans (not to mention rape and pillage nature), so be it.

The values people hold are never examined in light of wisdom. Hardly anyone (except the more sapient) questions these values. They are, indeed, touted, especially by the arch conservatives, as being good moral positions. "God wanted me to be rich! If there are a lot of poor people, well that is what God wanted too. Or it's their own fault for not having any gumption or initiative. Self-reliance, that is what God meant us to be."

The brain is a system of extraordinarily complex sub-systems that work to balance one another. Moods set the tone, but need to change in light of external circumstances. Hormones and neuromodulators cycle in flux allowing the brain states to match the demands from the world. When something goes wrong it results in an imbalance, or a blockage, and that causes the individual to behave in ways inappropriate to the circumstances. We all experience brief stints of imbalances, say when you are feeling down even when you are attending a party. In such a complex system you can't expect absolute perfection 100% of the time. But even if things get a little out of synch for a short time, the brain is resilient under normal circumstances (e.g. no disease) and you are soon back in balance.

In chronic mental illness the balance doesn't re-establish without intervention, as a rule. Something has gone wrong organically and some sub-system cannot cope for that reason. I am beginning to view society in a similar way. A society of reasonably sapient individuals, or at least with a majority of reasonably sapient individuals, should be able to re-establish balance in the cultural milieu. Wise reflection on notions like 'greed-is-good' and drives the economy ought to be able to put a break on the runaway effects and, hence, the downward spiral of destruction. But it doesn't appear to be happening in America. Maybe it is somewhere else, but not here. The current presidential campaign offers ample evidence that we are a sick society. Right when we have so much at stake, not only for ourselves but for the world, we are stuck talking about moose shooting and being close to Russia as preparation for international relations. It is madness of the worst kind.

And even though the Obama campaign has its heart in the right place, it seems incapable of thwarting the effects of the McCain (or should I say Palin) campaign's outright lies and deceits. Perhaps a third of the people in this country are listening avidly to Palin and would vote for that ticket today. One third support Obama, but most of the strength of that support is motivated by hatred of the neo-con agenda. That isn't a positive thing. It isn't on the basis of careful consideration and wise choice. It is emotional.

And then about one third are undecided! That is what confounds me most. That someone could be undecided between the two parties at this point is astounding. I could understand such undecided sentiments in the 2000 election when a self-proclaimed compassionate conservative (with a miniscule public record) ran against a stiff-seeming intellectual. Independents seemed to have to parse their separate views more finely to come to a decision (indeed in the early part of the republican primaries, when the old John McCain was running against GW Bush, I thought I saw a potential for a close call in the general election if McCain won the nomination; I never once thought Bush had potential or was telling the truth because I had lived in Texas for a while when he was governor!) But in this election the contrast could not be more stark. How can anyone be undecided this time? Either you buy, hook, line, and sinker, the lies of the Republicans (and the sheer historical blindness that allows one to fence off Bush as a liability while still endorsing Bush policies - now that is mental illness!) or you buy the audacity of hope and a generally more truthful Democratic campaign but lacking in specifics.

I say 'generally more truthful' because I still hear a lot of pandering talk in the Obama proposals. This is especially the case in his statements regarding energy solutions and growing the economy as a green venture. Either he doesn't realize that you cannot have your cake and eat it too, or he is saying these things to get elected. Hopefully, if the latter, he won't forget, when up to his hips in alligators, that he got into the swamp to drain it (a thoroughly non-green metaphor!) If the former (which I suspect) then we are still in a good deal of trouble with regard to real solutions.

Take his continuing talk about clean coal for example. Either he doesn't know enough about the energetics of scrubbing CO₂ from the combustion products and pushing it down a pipe to some subterranean lacunae (carbon capture and sequestration, CCS), in which case he doesn't understand that the net energy gain from such a venture, even if we knew it would work, would be so low as to actually make us worse off in terms of total energy, or he doesn't want to let the rest of the country in on that dirty little secret. And especially, he doesn't want the coal industry (powerful and monied) to think he is a threat.

So the campaign as it has developed, I think, provides ample evidence that our culture is sick. We are addicted to high energy flows that produce toys and distractions. Something has gone wrong in our collective psyche that produces some kind of cultural illness. Viewed from the outside, I'm sure people from many other cultures see us as sick and behaving inappropriately. And there is nothing internally that can stop the downward spiral. There appears to be no sub-system that can check this disease. No immune system can fight off the problem because it isn't the result of an external agent. Like some forms of depression or Alzheimer's disease this cultural illness is genetic (or memetic) in that the seeds of destruction where within the culture from the outset. Other writers have traced our beliefs in free enterprise, profits, industry (working hard), and personal enrichment to historical traces of our collective character — the mentalities of early European immigrants. Indeed, I argue that much of those sentiments were adaptive for a new country with a frontier. But when we filled up the continent, we did not change our beliefs. They just turned in upon the psyche of the nation and today are maladaptive. As an idea can drive one mad, our beliefs have driven us to something like collective psychosis.

Unfortunately there are no cultural clinical psychologists to help intervene and reverse the illness.

Implications of a Sapient Governance, 4

Hurdles

Making a Living

Perhaps one of the hardest conceptual hurdles to get over in thinking about and implementing a sapient governance system will be how individuals will make a living. Recall that one of the aspects of a sapient governance system is that the economy will be in a steady-state condition with respect to energy flow. There will be no overall material growth when the human system is in balance with the Ecos. A no-growth economy need not mean that human development ceases as well. Rather, I've pointed out that the quality of life for individuals living in a reasonably sized population can be quite high and would emphasize mental and spiritual growth over technological growth.

This would not mean that work would not be done. We wouldn't all sit around reading and contemplating our navels all day long. There is entropy to be fought on an on-going basis. Things would need to be built to replace things that are no longer serviceable, repairs to infrastructure and private capital would need to be made, and social services, like fire fighters, healthcare, and communications would need to be maintained. So there would still be plenty of work to be done. There would need to be art to produce, dances to be danced, stories to be told, and music to be made. There would also be science and invention as now, perhaps even more so. There would be plenty to do. Food must be grown, harvested, and distributed (although I suspect far more would be grown on personal property).

Making a living means doing work for which one is rewarded with compensation to buy the necessities and pleasures of life. In the world of money = energy and steady-state economics that means one receives energy credit for producing energy available to do useful work. In my March 25 blog, "What is money, really?", I outlined the nature of money as a token conveying information about the amount of energy that is available to do useful work. In that blog I also mentioned that work which increased net available energy was the basis of real wealth. A little later in this posting I will expand this idea and provide some details of what it means in practice.

For the moment I want to review some basics about the nature of working for a living. How did our modern version of working for a living derive from our basic animal need to find food, shelter, and mates? It all started when we started relying on external sources of energy. That is energy flow that was not directly obtained from food.

Somewhere between 400,000 and 150,000 years ago Homo sapiens discovered how to control fire and it has been work, work, work ever since!

The most likely sequence of events goes like this. First man discovered fuels that supported small fires. S/He probably noticed brush and wood burning in a forest fire and simply carried some burning material off to a secluded location to have a contained fire. It was probably some time later that some bright bulb discovered that rubbing two sticks together generated enough heat from friction that a tiny ember could be created and puffed into a fire in some kindling. Prior to that event, however, it was likely necessary to keep the home hearth burning by continually stocking fire wood. That meant trips to the forest for more supplies.

Humans were always omnivores and probably discovered the benefits of eating cooked foods they scrounged from forest or grass fires. So they were motivated to tame fire for heating as well as culinary delight (actually this means deriving more calories from each unit of cooked food). Prior to that discovery their 'work' consisted of hunting, fishing, digging roots, foraging for fruits and nuts, making temporary shelters, and basically keeping tabs on each other. That was making a living.

After taming fire things started to change. As mentioned there was the necessity of keeping fire wood handy. That required additional scrounging but there was a net gain in energy (additional energy available for heat and release of calories in foods minus additional energy needed to scavenge wood) that made it worthwhile. In the early days another problem arose as a result of keeping a hearth going. It was necessary to stay in one place to keep the fire burning as one could never quite be sure where the next natural fire would occur. This problem may have been the introduction of humans to staying in one place for longer stretches but that need was lessened once humans learned how to start fires themselves.

However it played out, humans became dependent on an external source of energy to subsidize their living standards very early on. And we've been slaves to this need ever since. The agricultural revolution simply deepened this need considerably.

From that time on, humans have had to work at chores beyond mere biological necessity of food and warmth (shelter). They might have had to expend less energy to get and digest food, but they had to expend extra time doing support work to gain that advantage. Judging by the lifestyles of modern day hunter-gatherers it appears that humans basically made a trade off of time for energy.

The average human male burns something like 2000 Calories a day (actually kilocalories in energy metrics) to do the basic work of living. This includes basal metabolism (just breathing) and elevated metabolic rates to maintain body temperature as well as finding and digesting food, maintaining a shelter, interacting with others, supervising offspring, and doing the chores the mate requires. From that caloric burn comes arrow heads, patching holes in the shelter, gathering wood, etc. Putting effort into energy subsidization schemes such as fire and agriculture, clothing production, and any other technology that provides mechanical advantage has a great payoff. You put time into those chores, yes, but you also start to accumulate 'capital'. You also have more resources for producing families. All-in-all, work directed at improving your external sources of energy flow (beyond the food you eat) has a great payoff.

Somewhere along the line human industry started to produce excess capital. More grain in the granary. More bread than could be eaten, and so on. Excess capital meant spare time for leisure and play. It also meant some few individuals could live off the excesses of the labor of others. But that was OK because that was about the time that the total work effort needed some kind of coordination. Enter the hierarchical control system — bosses were born.

Specialization set in and individuals became locked into doing a specific kind of work that contributed to the whole social effort. The chores became the jobs. And the regimentation of work created a workplace and a work ethic. If you wanted to eat and feed your family, you did your job.

Today you get an education, learn a skill or two, and get a job. You get paid in cash for the work that you do, and a labor market sort of sets the price you can charge for your efforts. In this age of globalization that hasn't quite worked out for some folk. When jobs can go chasing the cheapest labor the buyers of labor seem to have the upper hand. But the rules are pretty simple. You work for a living.

There are a few main questions that have to be addressed in thinking about working in a steady-state economy. First the kind of work that needs to be done must be understood in terms of how it contributes to one of a few necessary functions. If a job is involved in creating new available energy, say an assembly line worker at a solar photovoltaic panel manufacturing company, then it should be valued. Second, work that ends up saving energy, like a home retrofitter for insulation, should be highly favored. Third, anyone developing tools that save energy or make additional energy available should take top billing. Jobs that repair infrastructure or educate (and I mean real education!) children and adults are contributing indirectly to the sustaining of our social matrix. Healthcare, and communications workers should be highly prized.

Designing bigger SUVs is probably not going to be highly thought of in such an economy. Any work that dissipates energy without contributing to the gaining of new energy or conserving energy is a loser. I suspect some entertainment jobs are going to be needed simply to provide diversions at a reasonable level. Mass entertainment strikes me as having some similarities to infrastructure — it's there for all of us. So it should probably be paid for in a manner similar to infrastructure construction and renewal. But that is a minor detail.

There are a huge number of jobs in today's bustling world that appear to serve little purpose than to help us all consume more. Advertising comes to mind. I suspect a huge part of the so-called service industry fits into this category. In a sapient governance approach it would behoove society to find ways to channel people into productive (i.e. energy sustaining) jobs and away from energy dissipating ones.

But this is why I say this is a big hurdle. People pursue careers today with no thought as to how it contributes to the sustaining of activity. In a world in which the flow of energy will be declining, there will be a much greater emphasis on jobs that contribute to energy flow and people who have pursued energy dissipating careers will find themselves increasingly on the fringes. Everyone would do well to consider how what they do for a living contributes to energy flow in some way. If you can't see the relationship, it might be a good time to start thinking about another career.

Some excellent reading resources:

Crosby, Alfred W., (2006). Children of the Sun: A History of Humanity's Uappeasable Appetite for Energy, W.W. Norton & Company, New York.

Smil, Vaclav (2008). Energy in Nature and Society: General Energetics of Complex Systems, The MIT Press, Cambridge MA.

Implications of a Sapient Governance, 3

Hurdles

Us-Them Dichotomous Feeling/Thinking

Globalization in its current incarnation is a sign that humanity might actually be able to jump this hurdle in principle. That is, as long as resources, in particular energy, were increasing and to the degree they were being shared, there was evidence that people from different cultures could actually find ways to get along.

But that was then (five years ago) and this is now. As the world experiences the financial meltdown due to diminishing energy supplies it will potentially become a world of increasing fragmentation and a return to us versus them mentality. Resource wars have already been witnessed and will possibly become the norm. Except possibly due to the fact that it takes massive amounts of energy to fight wars (today) maybe the carnage will be minimized. Who knows?

The reality of the human condition is that we are hard wired to want to be part of a group. We need to identify with a clan or tribe in order to feel supported as an individual. We are a social animal and at the same time can only deal effectively, mentally and emotionally, with at most a few hundred other individuals. This is in our genes (see reading list below for references).

We will apply our positive moral sentiments, care for, sharing, etc. to members of our own perceived tribe. We will be kind and cooperative with other tribes that are not perceived as competitors. But as soon as there is a sense that the others are potential threats we will apply our negative moral sentiments. That means believing ourselves and our tribe as having the moral high ground and thus justifying any form of belligerence toward the others.

Complicating the situation for humans is the fact that each of us can perceive ourselves as members of numerous kinds of groups. We identify with huge groupings like religions, or nations, or with small groupings like knitting clubs. Again, as long as things are going smoothly on the scale of whatever group we identify with we have little problem being Christian-Republican-soccer-moms who come from a little town in Alaska or an atheist-independent-intellectual who comes from New York City. But as soon as trouble arises (as in the situation with the American Episcopal Church's decision to allow ordination of gay and lesbian priests) fractionalization and destabilization of identity follow due to the psychological need to have solidarity with a smaller group.

Ethnic differences have overcome national or regional identities. See this article on ethnic cleansing as a response.

How are people going to respond to a contracting economic system? Contraction will mean fewer resources per person and competition between people and especially groups. This may very well be the most important hurdle to surmount in any attempt to transition to a sapient governance on a global level. This is so fundamental to Homo sapiens' nature that it may be the key element in human responses to diminishing energy supplies. People will tend to gather around them those with whom they finally identify. And they may increasingly see any other group as being the threatening 'them'.

Sapient governance is very much about cooperation and coordination with the strategic purpose of creating balance between the human-built world and the rest of the Ecos. If ordinary humans are experiencing strong Us-Them competitive feelings can there be anything approaching such an ideal? Sapient governance is not about forcing people to get along and share wealth. It has to come from below naturally. It cannot work as a dictatorial process.

Once again it seems that the fact of our nature as Us-Them dichotomous thinkers argues that our global problems are unsolvable as long as we stand on the premise that we have to solve all of this for Homo sapiens (and especially if it has to be solved for a population of 9+ billion and living a standard of material wealth similar to Western Europe). Humans need to become more strongly sapient, somehow. We need to evolve.

Some important books on the subject of moral evolution and us-them psychology. For a much expanded list of readings pertaining to evolution of consciousness, wisdom, and moral sentiment see my bibliography.

Berreby, David (2005). Us and Them: Understanding Your Tribal Mind, Little, Brown, and Company, New York.

Donald, Merlin, (1991). Origins of the Modern Mind: Three Stages in the Evolution of Culture and Cognition, Harvard University Press, Cambridge, MA.

Gazzaniga, Michael S., (2005). The Ethical Brain, Dana Press, New York.

Hauser, Marc D. (2006). Moral Minds: How Nature Designed Our Universal Sense of Right and Wrong, HarperCollins, New York.

Sober, Elliott & Wilson, David Sloan (1998). Unto Others: The Evolution and Psychology of Unselfish Behavior, Harvard University Press, Cambridge MA.