http://www.alternet.org/story/28584/
NO THANKS TO THANKSGIVING
One indication of moral progress in the United States would be the replacement of Thanksgiving Day and its self-indulgent family feasting with a National Day of Atonement accompanied by a self-reflective collective fasting.
In fact, indigenous people have offered such a model; since 1970 they have marked the fourth Thursday of November as a Day of Mourning in a spiritual/political ceremony on Coles Hill overlooking Plymouth Rock, Massachusetts, one of the early sites of the European invasion of the Americas.
Not only is the thought of such a change in this white-supremacist holiday impossible to imagine, but the very mention of the idea sends most Americans into apoplectic fits -- which speaks volumes about our historical hypocrisy and its relation to the contemporary politics of empire in the United States.
That the world's great powers achieved "greatness" through criminal brutality on a grand scale is not news, of course. That those same societies are reluctant to highlight this history of barbarism also is predictable.
But in the United States, this reluctance to acknowledge our original sin -- the genocide of indigenous people -- is of special importance today. It's now routine -- even among conservative commentators -- to describe the United States as an empire, so long as everyone understands we are an inherently benevolent one. Because all our history contradicts that claim, history must be twisted and tortured to serve the purposes of the powerful.
One vehicle for taming history is various patriotic holidays, with Thanksgiving at the heart of U.S. myth-building. From an early age, we Americans hear a story about the hearty Pilgrims, whose search for freedom took them from England to Massachusetts. There, aided by the friendly Wampanoag Indians, they survived in a new and harsh environment, leading to a harvest feast in 1621 following the Pilgrims first winter.
Some aspects of the conventional story are true enough. But it's also true that by 1637 Massachusetts Gov. John Winthrop was proclaiming a thanksgiving for the successful massacre of hundreds of Pequot Indian men, women and children, part of the long and bloody process of opening up additional land to the English invaders. The pattern would repeat itself across the continent until between 95 and 99 percent of American Indians had been exterminated and the rest were left to assimilate into white society or die off on reservations, out of the view of polite society.
Simply put: Thanksgiving is the day when the dominant white culture (and, sadly, most of the rest of the non-white but non-indigenous population) celebrates the beginning of a genocide that was, in fact, blessed by the men we hold up as our heroic founding fathers.
The first president, George Washington, in 1783 said he preferred buying Indians' land rather than driving them off it because that was like driving "wild beasts" from the forest. He compared Indians to wolves, "both being beasts of prey, tho' they differ in shape."
Thomas Jefferson -- president #3 and author of the Declaration of Independence, which refers to Indians as the "merciless Indian Savages" -- was known to romanticize Indians and their culture, but that didn't stop him in 1807 from writing to his secretary of war that in a coming conflict with certain tribes, "[W]e shall destroy all of them."
As the genocide was winding down in the early 20th century, Theodore Roosevelt (president #26) defended the expansion of whites across the continent as an inevitable process "due solely to the power of the mighty civilized races which have not lost the fighting instinct, and which by their expansion are gradually bringing peace into the red wastes where the barbarian peoples of the world hold sway."
Roosevelt also once said, "I don't go so far as to think that the only good Indians are dead Indians, but I believe nine out of ten are, and I shouldn't like to inquire too closely into the case of the tenth."
How does a country deal with the fact that some of its most revered historical figures had certain moral values and political views virtually identical to Nazis? Here's how "respectable" politicians, pundits, and professors play the game: When invoking a grand and glorious aspect of our past, then history is all-important. We are told how crucial it is for people to know history, and there is much hand wringing about the younger generations' lack of knowledge about, and respect for, that history.
In the United States, we hear constantly about the deep wisdom of the founding fathers, the adventurous spirit of the early explorers, the gritty determination of those who "settled" the country -- and about how crucial it is for children to learn these things.
But when one brings into historical discussions any facts and interpretations that contest the celebratory story and make people uncomfortable -- such as the genocide of indigenous people as the foundational act in the creation of the United States -- suddenly the value of history drops precipitously and one is asked, "Why do you insist on dwelling on the past?"This is the mark of a well-disciplined intellectual class -- one that can extol the importance of knowing history for contemporary citizenship and, at the same time, argue that we shouldn't spend too much time thinking about history.
This off-and-on engagement with history isn't of mere academic interest; as the dominant imperial power of the moment, U.S. elites have a clear stake in the contemporary propaganda value of that history. Obscuring bitter truths about historical crimes helps perpetuate the fantasy of American benevolence, which makes it easier to sell contemporary imperial adventures -- such as the invasion and occupation of Iraq -- as another benevolent action.
Any attempt to complicate this story guarantees hostility from mainstream culture. After raising the barbarism of America's much-revered founding fathers in a lecture, I was once accused of trying to "humble our proud nation" and "undermine young people's faith in our country."
Yes, of course -- that is exactly what I would hope to achieve. We should practice the virtue of humility and avoid the excessive pride that can, when combined with great power, lead to great abuses of power.
History does matter, which is why people in power put so much energy into controlling it. The United States is hardly the only society that has created such mythology. While some historians in Great Britain continue to talk about the benefits that the empire brought to India, political movements in India want to make the mythology of Hindutva into historical fact.
Abuses of history go on in the former empire and the former colony. History can be one of the many ways we create and impose hierarchy, or it can be part of a process of liberation. The truth won't set us free, but the telling of truth at least opens the possibility of freedom.
As Americans sit down on Thanksgiving Day to gorge themselves on the bounty of empire, many will worry about the expansive effects of overeating on their waistlines. We would be better to think about the constricting effects of the day's mythology on our minds.
Sunday, November 21, 2010
Thursday, November 18, 2010
SC104-3
http://www.oftwominds.com/blogmay10/burden-of-knowing05-10.html
The Burden of Knowing
Knowing what lies ahead is a great emotional burden.
The knowledge that the present is unsustainable is, for many of us, a great emotional burden. It troubles our sleep, our minds, and our basic emotional well-being. Knowledge, like memory, cannot be erased at will, and thus it runs in the background of our lives, unseen by others but deeply troubling to the knower.
I am not alone in feeling this weight; correspondents and readers write me that they feel it, too.
Yet it is not just the knowledge that all this is based on cheap, abundant oil and a rapidly imploding financial system based on fraud and lies that burdens us; it is the mirror image of reality pressed upon us by the status quo: the Mainstream Media, the corrupt Savior State beholden to Power Elites and crony-capitalist, predatory monopoly-capital cartels and Global Corporate America (which conveniently enough owns the mainstream media).
One of the most chilling stories to emerge from China's Great Leap Forward in the late 1950s and early 60s--in which peasants were instructed to "make steel" by melting down their metal farming and cooking tools, leaving them to starve in countless millions--involves the artifices presented to Mao to cover up the grotesque consequences of his policies.
Communist party officials fearful of Mao's ire and losing their own perquisites arranged to have a specific route through the countryside planted thickly with rice. Five meters deep on each side of this road, rice was planted so closely that it appeared to be the very acme of abundance; the road was seemingly a thin ribbon of pavement cut through endless green abundance.
It was all artifice and lies. While the officials pointed out the phony bounty to Mao, tens of millions of peasants were starving to death. Behind the five meters of contrived abundance lay a barren landscape.
The American media and Savior State are busy planting their own five meters of apparent abundance and "growth" along every highway in the land. The vast majority of people--even people who should know better but who prefer not to know, and thus they studioudsly avoid peeking through the curtain of sham prosperity--accept that GDP growth means something positive is happening in their own lives, even as the visible evidence points to a mirror-image of this "growth" propaganda.
We know that all the contrivances of "modern life" are ultimately the result of one single condition: cheap, abundant oil. Everything--the plays on Broadway, the film industry, the iPods made in China for cheap, the endless Mcmansions in gated exurbs, the grain-fattened, fat-marbled beef, the "cheap" fast-food meals, the Savior State and its Global Empire--is all based on cheap, abundant oil. There is no substitute in the near term.
Every "solution" fails to hold up beyond the most cursory examination. Natural gas? Well, yes, but then all those "fracc'ed" wells the industry extols as the "solution" have a nasty habit of depleting rather quickly. There are an an estimated 254.4 million vehicles in the U.S.; would you care to guess the cost of converting them to natural gas?
Will "entrepreneurship" re-make the distribution system to enable fueling those tens of millions of vehicles with natural gas? At what cost, and to whom?
How about that "new discovery" of a 1 billion-barrel oil field in deep water? Does the MSM or Savior State propaganda ministry mention that 1 billion barrels is less than two months of U.S. consumption, or that it may take 5 years to extract the first drop, or that the costs of such deepwater drilling are so prohibitive that oil extracted will not be cheap?
How about that "endless" shale oil? How many MSM stories note that production tops out at 2 million barrels a day, a mere 10% of U.S. consumption--and the Canadians and Chinese have claims on much of that production?
Even a cursory read of this site, or others which peek through the thick green screen of State/corporate propaganda, reveals the multiple frauds at the very heart of American finance, governance, real estate and the stock market.
Yet most people don't want to know. They adamantly accept the mirror-image of reality presented by the media and State: that the economy is "growing" and fundamentally sound, even though the reality is the opposite; that "reform" will fix the core problems, even though the reforms are simulacra designed to give the appearance of reform; and that sickcare "reform" will lower costs even as the sickcare cartels increase their take of the economy every year.
This heavily promoted and contrived mirror-image disconnect between what we are told is true and what is actually true threatens us with a very draining madness. Some readers donate money to this site because they say that it provides some sort of landing in a sea of lies, propaganda, misinformation and misprepresentation--that in reading it they know they are not alone and that they are not crazy.
The unease and insecurity is very real. None of us know the future; we only know that the present is vastly unsustainable, and that if we as a nation and species rely on simulacra, artifice, lies, fraud and propaganda instead of reality, then the status quo will end very badly. Any sane person who knows this finds it worrisome.
Hence the rational desire to hope for the best but prepare for the worst.
Yet many readers tell me they meet fierce resistance from those around them. I understand completely; I personally do not know a single person in my circle or neighborhood who has prepared for even a few days without the global supply chain--and I live in "earthquake country" where a massive earthquake is not a possibility, it is a certainty; the only missing bit of knowledge is "when."
As one correspondent put it recently, most people have more dog food on hand than they do food for themselves.
I don't advertise my own preparations, and I pass them off as "earthquake preparedness" as that strikes people as only slightly mad and paranoid rather than the full-blown madness of knowing the whole system is extremely vulnerable and precarious.
Very few people I know well have any savings to speak of either. I have repeatedly suggested that they sell--sell their second home, sell their office condo, sell anything and everything to reduce or eliminate their debt, but they persist in working themselves to death to pay the mortgages on their mini-real estate empire.
They all hope that the bubble will somehow magically reinflate, even though the possibility of that happening with 19 million vacant dwellings, rising interest rates and 5 million foreclosed homes in the pipeline is essentially zero.
Readers ask me for investment advice; I cannot offer any, because I am not qualified to do so, nor do I care to do so; the future is unknown to us all. I can only say that I don't trust the stock market or the propaganda, and so cash is King in my eyes, and whatever their drawbacks, gold and silver will not go to zero, while paper assets and even real estate can either go to near-zero or become a capital trap.
I don't have a "cure" for this MSM-Savior-State induced madness, or the emotional burdens of knowing it is all interlocking dependencies supported by webs of lies and fraud, and thus is it really is "different this time," but not in the way the shills, carnies and toadies think.
It does not have to turn out that badly; we could get by on much less. Half the energy in the nation is squandered, as is half the food produced from the fields. If you visit any orchard in the land post-harvest, ton after ton of fruit lays wasted on the ground, rotting, in row after row, acre after acre, state after state. The dumpsters are weighted down with the food we have thrown away, just as the air conditioners are running when nobody is even in the building. A staggering 5% of our electricity is wasted on zombie electronics on standby. The list of waste is almost endless.
I have carried water to a garden in 5-gallon buckets and gotten by on handfuls of beans and corn or brown rice, and been happy doing so. Life does not end when the exurbs no longer make sense and the Savior State checks stop coming. Our sense of reality has become so skewed, so riven with mirror images and marketing, that we have as a culture have lost touch with much more than "mere" reality.
It doesn't have to end badly, but it might. Power Elites desperate to maintain their perquisities have always found that fanning the winds of war distracts their citizenry from their own incompetence and greed.
So what is the solution? I don't know; nobody knows. We only know our own limitations, and what we can do, however modest it might be. We can turn off the TV, that is easily done and extremely helpful. We can also limit our time online, as that is just another firehose of information which quickly overloads our sense of identity and proportion.
There are feedback loops in every system. I know 2015 will not be like 2010, but I cannot know precisely how it will be different. I know 2020 will be very different from 2010 and 2015, but I don't know exactly how different; nobody else knows, either.
All that we can do is to realize the carefully planted screen is only thick and abundant along the specified route, and that we owe it to ourselves to peek through to the barren terrain beyond, and to base our decisions and identity on that reality.
We cannot convince our loved ones, friends, family and associates; in the odd moment, we can make a suggestion or leave a book for them to glance through. That is all we can do; the emotional burden we feel only gets heavier if we push too hard and create needless conflict. So all we can do is make our own preparations as responsible individuals, as autonomous beings seeking liberty, and act accordingly.
Prudence is a good screen. Having a bit of non-frozen food on hand is after all merely prudent, isn't it? And so are the rest: water filters, propane stoves, and so on. Camping equipment is good to have on hand; gardening is worthy exercise, and a nice hobby. Eliminating fast food and packaged food from one's diet is also merely prudent; why poision ourselves if we have any sort of choice at all?
Voting against every incumbent who has supported the bailouts of banking Elites, the fraudulent "reforms" and all the Savior State propaganda is also merely prudent; why reward liars and thieves if there is any other choice available?
Having savings is also prudent, as is eliminating debt. Limiting our exposure to the lies, marketing and madness of Corporate-State media is also prudent. So perhaps we can agree to be prudent, and perhaps others will accept it all as mere prudence.
The Burden of Knowing
Knowing what lies ahead is a great emotional burden.
The knowledge that the present is unsustainable is, for many of us, a great emotional burden. It troubles our sleep, our minds, and our basic emotional well-being. Knowledge, like memory, cannot be erased at will, and thus it runs in the background of our lives, unseen by others but deeply troubling to the knower.
I am not alone in feeling this weight; correspondents and readers write me that they feel it, too.
Yet it is not just the knowledge that all this is based on cheap, abundant oil and a rapidly imploding financial system based on fraud and lies that burdens us; it is the mirror image of reality pressed upon us by the status quo: the Mainstream Media, the corrupt Savior State beholden to Power Elites and crony-capitalist, predatory monopoly-capital cartels and Global Corporate America (which conveniently enough owns the mainstream media).
One of the most chilling stories to emerge from China's Great Leap Forward in the late 1950s and early 60s--in which peasants were instructed to "make steel" by melting down their metal farming and cooking tools, leaving them to starve in countless millions--involves the artifices presented to Mao to cover up the grotesque consequences of his policies.
Communist party officials fearful of Mao's ire and losing their own perquisites arranged to have a specific route through the countryside planted thickly with rice. Five meters deep on each side of this road, rice was planted so closely that it appeared to be the very acme of abundance; the road was seemingly a thin ribbon of pavement cut through endless green abundance.
It was all artifice and lies. While the officials pointed out the phony bounty to Mao, tens of millions of peasants were starving to death. Behind the five meters of contrived abundance lay a barren landscape.
The American media and Savior State are busy planting their own five meters of apparent abundance and "growth" along every highway in the land. The vast majority of people--even people who should know better but who prefer not to know, and thus they studioudsly avoid peeking through the curtain of sham prosperity--accept that GDP growth means something positive is happening in their own lives, even as the visible evidence points to a mirror-image of this "growth" propaganda.
We know that all the contrivances of "modern life" are ultimately the result of one single condition: cheap, abundant oil. Everything--the plays on Broadway, the film industry, the iPods made in China for cheap, the endless Mcmansions in gated exurbs, the grain-fattened, fat-marbled beef, the "cheap" fast-food meals, the Savior State and its Global Empire--is all based on cheap, abundant oil. There is no substitute in the near term.
Every "solution" fails to hold up beyond the most cursory examination. Natural gas? Well, yes, but then all those "fracc'ed" wells the industry extols as the "solution" have a nasty habit of depleting rather quickly. There are an an estimated 254.4 million vehicles in the U.S.; would you care to guess the cost of converting them to natural gas?
Will "entrepreneurship" re-make the distribution system to enable fueling those tens of millions of vehicles with natural gas? At what cost, and to whom?
How about that "new discovery" of a 1 billion-barrel oil field in deep water? Does the MSM or Savior State propaganda ministry mention that 1 billion barrels is less than two months of U.S. consumption, or that it may take 5 years to extract the first drop, or that the costs of such deepwater drilling are so prohibitive that oil extracted will not be cheap?
How about that "endless" shale oil? How many MSM stories note that production tops out at 2 million barrels a day, a mere 10% of U.S. consumption--and the Canadians and Chinese have claims on much of that production?
Even a cursory read of this site, or others which peek through the thick green screen of State/corporate propaganda, reveals the multiple frauds at the very heart of American finance, governance, real estate and the stock market.
Yet most people don't want to know. They adamantly accept the mirror-image of reality presented by the media and State: that the economy is "growing" and fundamentally sound, even though the reality is the opposite; that "reform" will fix the core problems, even though the reforms are simulacra designed to give the appearance of reform; and that sickcare "reform" will lower costs even as the sickcare cartels increase their take of the economy every year.
This heavily promoted and contrived mirror-image disconnect between what we are told is true and what is actually true threatens us with a very draining madness. Some readers donate money to this site because they say that it provides some sort of landing in a sea of lies, propaganda, misinformation and misprepresentation--that in reading it they know they are not alone and that they are not crazy.
The unease and insecurity is very real. None of us know the future; we only know that the present is vastly unsustainable, and that if we as a nation and species rely on simulacra, artifice, lies, fraud and propaganda instead of reality, then the status quo will end very badly. Any sane person who knows this finds it worrisome.
Hence the rational desire to hope for the best but prepare for the worst.
Yet many readers tell me they meet fierce resistance from those around them. I understand completely; I personally do not know a single person in my circle or neighborhood who has prepared for even a few days without the global supply chain--and I live in "earthquake country" where a massive earthquake is not a possibility, it is a certainty; the only missing bit of knowledge is "when."
As one correspondent put it recently, most people have more dog food on hand than they do food for themselves.
I don't advertise my own preparations, and I pass them off as "earthquake preparedness" as that strikes people as only slightly mad and paranoid rather than the full-blown madness of knowing the whole system is extremely vulnerable and precarious.
Very few people I know well have any savings to speak of either. I have repeatedly suggested that they sell--sell their second home, sell their office condo, sell anything and everything to reduce or eliminate their debt, but they persist in working themselves to death to pay the mortgages on their mini-real estate empire.
They all hope that the bubble will somehow magically reinflate, even though the possibility of that happening with 19 million vacant dwellings, rising interest rates and 5 million foreclosed homes in the pipeline is essentially zero.
Readers ask me for investment advice; I cannot offer any, because I am not qualified to do so, nor do I care to do so; the future is unknown to us all. I can only say that I don't trust the stock market or the propaganda, and so cash is King in my eyes, and whatever their drawbacks, gold and silver will not go to zero, while paper assets and even real estate can either go to near-zero or become a capital trap.
I don't have a "cure" for this MSM-Savior-State induced madness, or the emotional burdens of knowing it is all interlocking dependencies supported by webs of lies and fraud, and thus is it really is "different this time," but not in the way the shills, carnies and toadies think.
It does not have to turn out that badly; we could get by on much less. Half the energy in the nation is squandered, as is half the food produced from the fields. If you visit any orchard in the land post-harvest, ton after ton of fruit lays wasted on the ground, rotting, in row after row, acre after acre, state after state. The dumpsters are weighted down with the food we have thrown away, just as the air conditioners are running when nobody is even in the building. A staggering 5% of our electricity is wasted on zombie electronics on standby. The list of waste is almost endless.
I have carried water to a garden in 5-gallon buckets and gotten by on handfuls of beans and corn or brown rice, and been happy doing so. Life does not end when the exurbs no longer make sense and the Savior State checks stop coming. Our sense of reality has become so skewed, so riven with mirror images and marketing, that we have as a culture have lost touch with much more than "mere" reality.
It doesn't have to end badly, but it might. Power Elites desperate to maintain their perquisities have always found that fanning the winds of war distracts their citizenry from their own incompetence and greed.
So what is the solution? I don't know; nobody knows. We only know our own limitations, and what we can do, however modest it might be. We can turn off the TV, that is easily done and extremely helpful. We can also limit our time online, as that is just another firehose of information which quickly overloads our sense of identity and proportion.
There are feedback loops in every system. I know 2015 will not be like 2010, but I cannot know precisely how it will be different. I know 2020 will be very different from 2010 and 2015, but I don't know exactly how different; nobody else knows, either.
All that we can do is to realize the carefully planted screen is only thick and abundant along the specified route, and that we owe it to ourselves to peek through to the barren terrain beyond, and to base our decisions and identity on that reality.
We cannot convince our loved ones, friends, family and associates; in the odd moment, we can make a suggestion or leave a book for them to glance through. That is all we can do; the emotional burden we feel only gets heavier if we push too hard and create needless conflict. So all we can do is make our own preparations as responsible individuals, as autonomous beings seeking liberty, and act accordingly.
Prudence is a good screen. Having a bit of non-frozen food on hand is after all merely prudent, isn't it? And so are the rest: water filters, propane stoves, and so on. Camping equipment is good to have on hand; gardening is worthy exercise, and a nice hobby. Eliminating fast food and packaged food from one's diet is also merely prudent; why poision ourselves if we have any sort of choice at all?
Voting against every incumbent who has supported the bailouts of banking Elites, the fraudulent "reforms" and all the Savior State propaganda is also merely prudent; why reward liars and thieves if there is any other choice available?
Having savings is also prudent, as is eliminating debt. Limiting our exposure to the lies, marketing and madness of Corporate-State media is also prudent. So perhaps we can agree to be prudent, and perhaps others will accept it all as mere prudence.
Sunday, November 14, 2010
SC104-2
http://www.informationclearinghouse.info/article26795.htm
Thank a Vet?
We’ve all seen the bumper stickers: "My son is in the Air Force," "If You Can Read This in English, Thank a Marine," "Proud Vietnam Veteran," "Fly Navy," and of course, "Thank a Vet."
Why should we?
Why should we call them heroes, give them military discounts, grant them veterans preference, express our support for them with ribbons on our cars, honor them with a holiday, hold military appreciation church services for them, and thank them for their "service"?
Veterans Day began as Armistice Day to commemorate the signing of the armistice that ended World War I. It had nothing to do with honoring current and former members of the military like Veterans Day is celebrated today. And if the sole purpose of Armistice Day was to honor World War I veterans, it should never have been celebrated since no American soldier did anything honorable by intervening in a European foreign war. And it doesn’t matter if he was drafted or not.
Britain’s last World War I combat veteran, Harry Patch, died last year at the age of 111. He boasted that he hadn’t killed anyone in combat. "War isn’t worth one life," Patch said, it is "calculated and condoned slaughter of human beings." In his autobiography The Last Fighting Tommy, Patch wrote that "politicians who took us to war should have been given the guns and told to settle their differences themselves, instead of organising nothing better than legalised mass murder." In the last years of his life, Patch warned some young naval recruits that they shouldn’t join.
Frank Buckles, age 109, is the only American veteran of World War I still living. When asked while being honored for his service at a 2007 Veterans Day ceremony at Arlington National Cemetery what he thought about being there while the United States was at war, he replied: "I’m no authority, but I’m not in favor of war unless it’s an emergency." I think that Buckles is more of an authority on the horrors of war and the folly and wickedness of war than the current members of the Joint Chiefs.
It is only because World War I did not turn out to be the "war to end all wars" that the holiday was changed to Veterans Day as a tribute to all soldiers who fought for their country.
Although I believe World War II to be neither necessary nor good, I come not on this Veterans Day to criticize the "greatest generation," who, it turns out, were also great at pillaging and carousing.
For reasons I explained in "U.S. Presidents and Those Who Kill for Them," World War II marks the permanent establishment of the American military as the president’s personal attack force to kill by his decree Koreans, Vietnamese, Laotians, Cambodians, Grenadians, Panamanians, Yugoslavs, Serbians, Afghans, Iraqis, Somalis, Yemenis, and Pakistanis. Next on the list is Iranians. Sometimes these presidential decrees are rubberstamped by a congressional authorization to use force, but they are always preceded by presidential lies and warmonger propaganda.
So why should a Vietnam veteran be proud? He was typically young, ignorant, deceived, and drafted. He may have fought obediently, valiantly, selflessly, and fearlessly, but since he had no business fighting in Vietnam in the first place, I have nothing to thank him for. And I certainly can’t thank him for preventing the Viet Cong from turning America into a socialist republic. Besides, LBJ beat Ho Chi Minh to that anyway. Many Vietnam veterans have written me and expressed shame, remorse, anger, and resentment – not pride – for having been duped into going thousands of miles away from American soil to intervene in another country’s civil war. In fact, I have found that it is those who are not Vietnam veterans who are the most vociferous defenders of the war in Vietnam.
The most undeserved and oftentimes disgusting outpouring of thankfulness I have ever seen is over those who have fought or are fighting in Iraq and Afghanistan. The praise and adoration of those fighting in "the front lines in the war on terror" reaches its apex on Veterans Day, which has become a day to defend U.S. wars and recognize all things military. These soldiers certainly have done nothing worthy of thanks. Sure, they have rebuilt infrastructure – after bombing it to smithereens. They no doubt removed a brutal dictator – and unleashed American brutality in the process. And yes, they have rescued orphan children – after blowing their parents and brothers and sisters to kingdom come.
What is there to thank our soldiers for? They are not defending our freedoms. They are not keeping us safe from our enemies. They are not protecting us from terrorists. They are not guaranteeing our First Amendment rights. They are not defending U.S. borders. They are not guarding U.S. shores. They are not patrolling U.S. coasts. They are not enforcing no-fly zones over U.S. skies. They are not fighting "over there" so we don’t have to fight "over here." They are not avenging 9/11. They are not safeguarding the American way of life. Oh, and they are not ensuring that I have the liberty to write what I do about the military.
What, then, should we thank our soldiers for? Should we thank them for fighting an unconstitutional war, an unscriptural war, an immoral war, an offensive war, an unjust war, or a senseless war? Should we thank our veterans for helping to carry out an aggressive, reckless, belligerent, and interventionist foreign policy? Should we thank the military for sucking $1 trillion out of the federal budget?
But, some will say, these soldiers are just doing their jobs. They can’t help it if the U.S. military sends them to fight in an unjust war in Iraq or Afghanistan. They are just following orders. They didn’t enlist in the military to kill people.
What would any sane man think about a doctor who takes a job at a hospital knowing that the hospital instructs its doctors to euthanize old and sickly patients – and then says he was just doing his job, following orders, and didn’t take the job to kill people?
Why are soldiers treated so differently? Why do they get a pass on committing or supporting those who commit murder and mayhem?
But, someone else says, the military has lowered its recruiting standards and is scraping the bottom of the barrel. Many soldiers are ignorant about the true nature of the military and U.S. foreign policy. Why should we fault them for their ignorance? Why should they be criticized for unjustly killing Iraqis or Afghans or Pakistanis? They are just following orders.
Let’s go back to the doctor I mentioned. Suppose that after he takes a job in ignorance at what he thinks is a reputable hospital he is instructed to euthanize old and sickly patients?
What should he do? I don’t know of anyone who would say anything else but that he should quit his job or at least refuse to euthanize anyone.
Again, why are soldiers treated so differently? Why do they get a pass on committing or supporting those who commit murder and mayhem?
But, comes another reply, soldiers have a term of enlistment. They can’t just quit their jobs. Doctors can walk away from their jobs at any time. Then I guess it all comes down to morality: Be a mercenary and kill for the state or refuse to do so and suffer the consequences of dishonorable discharge and/or imprisonment.
It is high time that Americans stop holding veterans and current members of the military in such high esteem........
Thank a Vet?
We’ve all seen the bumper stickers: "My son is in the Air Force," "If You Can Read This in English, Thank a Marine," "Proud Vietnam Veteran," "Fly Navy," and of course, "Thank a Vet."
Why should we?
Why should we call them heroes, give them military discounts, grant them veterans preference, express our support for them with ribbons on our cars, honor them with a holiday, hold military appreciation church services for them, and thank them for their "service"?
Veterans Day began as Armistice Day to commemorate the signing of the armistice that ended World War I. It had nothing to do with honoring current and former members of the military like Veterans Day is celebrated today. And if the sole purpose of Armistice Day was to honor World War I veterans, it should never have been celebrated since no American soldier did anything honorable by intervening in a European foreign war. And it doesn’t matter if he was drafted or not.
Britain’s last World War I combat veteran, Harry Patch, died last year at the age of 111. He boasted that he hadn’t killed anyone in combat. "War isn’t worth one life," Patch said, it is "calculated and condoned slaughter of human beings." In his autobiography The Last Fighting Tommy, Patch wrote that "politicians who took us to war should have been given the guns and told to settle their differences themselves, instead of organising nothing better than legalised mass murder." In the last years of his life, Patch warned some young naval recruits that they shouldn’t join.
Frank Buckles, age 109, is the only American veteran of World War I still living. When asked while being honored for his service at a 2007 Veterans Day ceremony at Arlington National Cemetery what he thought about being there while the United States was at war, he replied: "I’m no authority, but I’m not in favor of war unless it’s an emergency." I think that Buckles is more of an authority on the horrors of war and the folly and wickedness of war than the current members of the Joint Chiefs.
It is only because World War I did not turn out to be the "war to end all wars" that the holiday was changed to Veterans Day as a tribute to all soldiers who fought for their country.
Although I believe World War II to be neither necessary nor good, I come not on this Veterans Day to criticize the "greatest generation," who, it turns out, were also great at pillaging and carousing.
For reasons I explained in "U.S. Presidents and Those Who Kill for Them," World War II marks the permanent establishment of the American military as the president’s personal attack force to kill by his decree Koreans, Vietnamese, Laotians, Cambodians, Grenadians, Panamanians, Yugoslavs, Serbians, Afghans, Iraqis, Somalis, Yemenis, and Pakistanis. Next on the list is Iranians. Sometimes these presidential decrees are rubberstamped by a congressional authorization to use force, but they are always preceded by presidential lies and warmonger propaganda.
So why should a Vietnam veteran be proud? He was typically young, ignorant, deceived, and drafted. He may have fought obediently, valiantly, selflessly, and fearlessly, but since he had no business fighting in Vietnam in the first place, I have nothing to thank him for. And I certainly can’t thank him for preventing the Viet Cong from turning America into a socialist republic. Besides, LBJ beat Ho Chi Minh to that anyway. Many Vietnam veterans have written me and expressed shame, remorse, anger, and resentment – not pride – for having been duped into going thousands of miles away from American soil to intervene in another country’s civil war. In fact, I have found that it is those who are not Vietnam veterans who are the most vociferous defenders of the war in Vietnam.
The most undeserved and oftentimes disgusting outpouring of thankfulness I have ever seen is over those who have fought or are fighting in Iraq and Afghanistan. The praise and adoration of those fighting in "the front lines in the war on terror" reaches its apex on Veterans Day, which has become a day to defend U.S. wars and recognize all things military. These soldiers certainly have done nothing worthy of thanks. Sure, they have rebuilt infrastructure – after bombing it to smithereens. They no doubt removed a brutal dictator – and unleashed American brutality in the process. And yes, they have rescued orphan children – after blowing their parents and brothers and sisters to kingdom come.
What is there to thank our soldiers for? They are not defending our freedoms. They are not keeping us safe from our enemies. They are not protecting us from terrorists. They are not guaranteeing our First Amendment rights. They are not defending U.S. borders. They are not guarding U.S. shores. They are not patrolling U.S. coasts. They are not enforcing no-fly zones over U.S. skies. They are not fighting "over there" so we don’t have to fight "over here." They are not avenging 9/11. They are not safeguarding the American way of life. Oh, and they are not ensuring that I have the liberty to write what I do about the military.
What, then, should we thank our soldiers for? Should we thank them for fighting an unconstitutional war, an unscriptural war, an immoral war, an offensive war, an unjust war, or a senseless war? Should we thank our veterans for helping to carry out an aggressive, reckless, belligerent, and interventionist foreign policy? Should we thank the military for sucking $1 trillion out of the federal budget?
But, some will say, these soldiers are just doing their jobs. They can’t help it if the U.S. military sends them to fight in an unjust war in Iraq or Afghanistan. They are just following orders. They didn’t enlist in the military to kill people.
What would any sane man think about a doctor who takes a job at a hospital knowing that the hospital instructs its doctors to euthanize old and sickly patients – and then says he was just doing his job, following orders, and didn’t take the job to kill people?
Why are soldiers treated so differently? Why do they get a pass on committing or supporting those who commit murder and mayhem?
But, someone else says, the military has lowered its recruiting standards and is scraping the bottom of the barrel. Many soldiers are ignorant about the true nature of the military and U.S. foreign policy. Why should we fault them for their ignorance? Why should they be criticized for unjustly killing Iraqis or Afghans or Pakistanis? They are just following orders.
Let’s go back to the doctor I mentioned. Suppose that after he takes a job in ignorance at what he thinks is a reputable hospital he is instructed to euthanize old and sickly patients?
What should he do? I don’t know of anyone who would say anything else but that he should quit his job or at least refuse to euthanize anyone.
Again, why are soldiers treated so differently? Why do they get a pass on committing or supporting those who commit murder and mayhem?
But, comes another reply, soldiers have a term of enlistment. They can’t just quit their jobs. Doctors can walk away from their jobs at any time. Then I guess it all comes down to morality: Be a mercenary and kill for the state or refuse to do so and suffer the consequences of dishonorable discharge and/or imprisonment.
It is high time that Americans stop holding veterans and current members of the military in such high esteem........
Friday, November 5, 2010
SC104-1
http://www.globalresearch.ca/index.php?context=va&aid=21760
The Impotence of Elections
Americans out of work, out of income, out of homes, out of hope....
In his historical novel, The Leopard, Giuseppe di Lampedusa writes that things have to change in order to remain the same. That is what happened in the US congressional elections on November 2.
Jobs offshoring, which began on a large scale with the collapse of the Soviet Union, has merged the Democrats and Republicans into one party with two names. The Soviet collapse changed attitudes in socialist India and communist China and opened those countries, with their large excess supplies of labor, to Western capital.
Pushed by Wall Street and Wal-Mart, American manufacturers moved production for US markets offshore to boost profits and shareholder earnings by utilizing cheap labor. The decline of the US manufacturing work force reduced the political power of unions and the ability of unions to finance the Democratic Party. The end result was to make the Democrats dependent on the same sources of financing as Republicans.
Prior to this development, the two parties, despite their similarities, represented different interests and served as a check on one another. The Democrats represented labor and focused on providing a social safety net. Social Security, Medicare, Medicaid, food stamps, unemployment insurance, housing subsidies, education, and civil rights were Democratic issues. Democrats were committed to a full employment policy and would accept some inflation to secure more employment.
The Republicans represented business. The Republicans focused on curtailing big government in all its manifestations from social welfare spending to regulation. The Republicans’ economic policy consisted of opposing federal budget deficits.
These differences resulted in political competition.
Today both parties are dependent for campaign finance on Wall Street, the military/security complex, AIPAC, the oil industry, agri-business, pharmaceuticals, and the insurance industry. Campaigns no longer consist of debates over issues. They are mud-slinging contests.
Angry voters take their anger out on incumbents, and that is what we saw in the election. Tea Party candidates defeated Republican incumbents in primaries, and Republicans defeated
Democrats in the congressional elections.
Policies, however, will not change qualitatively. Quantitatively, Republicans will be more inclined to more rapidly dismantle more of the social safety net than Democrats and more inclined to finish off the remnants of civil liberties. But the powerful private oligarchs will continue to write the legislation that Congress passes and the President signs. New members of Congress will quickly discover that achieving re-election requires bending to the oligarchs’ will.
This might sound harsh and pessimistic. But look at the factual record. In his campaign for the presidency, George W. Bush criticized President Clinton’s foreign adventures and vowed to curtail America’s role as the policeman of the world. Once in office, Bush pursued the neoconservatives’ policy of US world hegemony via military means, occupation of countries, setting up puppet governments, and financial intervention in other countries’ elections.
Obama promised change. He vowed to close Guantanamo prison and to bring the troops home. Instead, he restarted the war in Afghanistan and started new wars in Pakistan and Yemen, while continuing Bush’s policy of threatening Iran and encircling Russia with military bases.
Americans out of work, out of income, out of homes and prospects, and out of hope for their children’s careers are angry. But the political system offers them no way of bringing about change. They can change the elected servants of the oligarchs, but they cannot change the policies or the oligarchs.
The American situation is dire. As a result of the high speed Internet, the loss of manufacturing jobs was followed by the loss of professional service jobs, such as software engineering, that were career ladders for American university graduates. The middle class has no prospects. Already, the American labor force and income distribution mimics that of a third world country, with income and wealth concentrated in a few hands at the top and most of the rest of the population employed in domestic services jobs. In recent years net new job creation has been concentrated in lowly paid occupations, such as waitresses and bartenders, ambulatory health care services, and retail clerks. The population and new entrants into the work force continue to grow more rapidly than job opportunities.
Turning this around would require more realization than exists among policymakers and a deeper crisis. Possibly it could be done by using taxation to encourage US corporations to manufacture domestically the goods and services that they sell in US markets. However, the global corporations and Wall Street would oppose this change.
The tax revenue loss from job losses, bank bailouts, stimulus programs, and the wars have caused a three-to-four-fold jump in the US budget deficit. The deficit is now too large to be financed by the trade surpluses of China, Japan, and OPEC. Consequently, the Federal Reserve is making massive purchases of Treasury and other debt. The continuation of these purchases threatens the dollar’s value and its role as reserve currency. If the dollar is perceived as losing that role, flight from dollars will devastate the remnants of Americans’ retirement incomes and the ability of the US government to finance itself.
Yet, the destructive policies continue. There is no re-regulation of the financial industry, because the financial industry will not allow it. The unaffordable wars continue, because they serve the profits of the military/security complex and promote military officers into higher ranks with more retirement pay. Elements within the government want to send US troops into Pakistan and into Yemen. War with Iran is still on the table. And China is being demonized as the cause of US economic difficulties.
Whistleblowers and critics are being suppressed. Military personnel who leak evidence of military crimes are arrested. Congressmen call for their execution. Wikileaks’ founder is in hiding, and neoconservatives write articles calling for his elimination by CIA assassination teams. Media outlets that report the leaks apparently have been threatened by Pentagon chief Robert Gates. According to Antiwar.com, on July 29 Gates “insisted that he would not rule out targeting Wikileaks founder Julian Assange or any of the myriad media outlets which reported on the leaks.” http://news.antiwar.com/2010/07/29/gates-wont-rule-out-targeting-assange-media-in-leak-investigation/
The control of the oligarchs extends to the media. The Clinton administration permitted a small number of mega-corporations to concentrate the US media in a few hands. Corporate advertising executives, not journalists, control the new American media, and the value of the mega-companies depends on government broadcast licenses. The media’s interest is now united with that of the government and the oligarchs.
On top of all the other factors that have made American elections meaningless, voters cannot even get correct information from the media about the problems that they and the country face.
As the economic situation is likely to continue deteriorating, the anger will grow. But the oligarchs will direct the anger away from themselves and toward the vulnerable elements of the domestic population and “foreign enemies.”
The Impotence of Elections
Americans out of work, out of income, out of homes, out of hope....
In his historical novel, The Leopard, Giuseppe di Lampedusa writes that things have to change in order to remain the same. That is what happened in the US congressional elections on November 2.
Jobs offshoring, which began on a large scale with the collapse of the Soviet Union, has merged the Democrats and Republicans into one party with two names. The Soviet collapse changed attitudes in socialist India and communist China and opened those countries, with their large excess supplies of labor, to Western capital.
Pushed by Wall Street and Wal-Mart, American manufacturers moved production for US markets offshore to boost profits and shareholder earnings by utilizing cheap labor. The decline of the US manufacturing work force reduced the political power of unions and the ability of unions to finance the Democratic Party. The end result was to make the Democrats dependent on the same sources of financing as Republicans.
Prior to this development, the two parties, despite their similarities, represented different interests and served as a check on one another. The Democrats represented labor and focused on providing a social safety net. Social Security, Medicare, Medicaid, food stamps, unemployment insurance, housing subsidies, education, and civil rights were Democratic issues. Democrats were committed to a full employment policy and would accept some inflation to secure more employment.
The Republicans represented business. The Republicans focused on curtailing big government in all its manifestations from social welfare spending to regulation. The Republicans’ economic policy consisted of opposing federal budget deficits.
These differences resulted in political competition.
Today both parties are dependent for campaign finance on Wall Street, the military/security complex, AIPAC, the oil industry, agri-business, pharmaceuticals, and the insurance industry. Campaigns no longer consist of debates over issues. They are mud-slinging contests.
Angry voters take their anger out on incumbents, and that is what we saw in the election. Tea Party candidates defeated Republican incumbents in primaries, and Republicans defeated
Democrats in the congressional elections.
Policies, however, will not change qualitatively. Quantitatively, Republicans will be more inclined to more rapidly dismantle more of the social safety net than Democrats and more inclined to finish off the remnants of civil liberties. But the powerful private oligarchs will continue to write the legislation that Congress passes and the President signs. New members of Congress will quickly discover that achieving re-election requires bending to the oligarchs’ will.
This might sound harsh and pessimistic. But look at the factual record. In his campaign for the presidency, George W. Bush criticized President Clinton’s foreign adventures and vowed to curtail America’s role as the policeman of the world. Once in office, Bush pursued the neoconservatives’ policy of US world hegemony via military means, occupation of countries, setting up puppet governments, and financial intervention in other countries’ elections.
Obama promised change. He vowed to close Guantanamo prison and to bring the troops home. Instead, he restarted the war in Afghanistan and started new wars in Pakistan and Yemen, while continuing Bush’s policy of threatening Iran and encircling Russia with military bases.
Americans out of work, out of income, out of homes and prospects, and out of hope for their children’s careers are angry. But the political system offers them no way of bringing about change. They can change the elected servants of the oligarchs, but they cannot change the policies or the oligarchs.
The American situation is dire. As a result of the high speed Internet, the loss of manufacturing jobs was followed by the loss of professional service jobs, such as software engineering, that were career ladders for American university graduates. The middle class has no prospects. Already, the American labor force and income distribution mimics that of a third world country, with income and wealth concentrated in a few hands at the top and most of the rest of the population employed in domestic services jobs. In recent years net new job creation has been concentrated in lowly paid occupations, such as waitresses and bartenders, ambulatory health care services, and retail clerks. The population and new entrants into the work force continue to grow more rapidly than job opportunities.
Turning this around would require more realization than exists among policymakers and a deeper crisis. Possibly it could be done by using taxation to encourage US corporations to manufacture domestically the goods and services that they sell in US markets. However, the global corporations and Wall Street would oppose this change.
The tax revenue loss from job losses, bank bailouts, stimulus programs, and the wars have caused a three-to-four-fold jump in the US budget deficit. The deficit is now too large to be financed by the trade surpluses of China, Japan, and OPEC. Consequently, the Federal Reserve is making massive purchases of Treasury and other debt. The continuation of these purchases threatens the dollar’s value and its role as reserve currency. If the dollar is perceived as losing that role, flight from dollars will devastate the remnants of Americans’ retirement incomes and the ability of the US government to finance itself.
Yet, the destructive policies continue. There is no re-regulation of the financial industry, because the financial industry will not allow it. The unaffordable wars continue, because they serve the profits of the military/security complex and promote military officers into higher ranks with more retirement pay. Elements within the government want to send US troops into Pakistan and into Yemen. War with Iran is still on the table. And China is being demonized as the cause of US economic difficulties.
Whistleblowers and critics are being suppressed. Military personnel who leak evidence of military crimes are arrested. Congressmen call for their execution. Wikileaks’ founder is in hiding, and neoconservatives write articles calling for his elimination by CIA assassination teams. Media outlets that report the leaks apparently have been threatened by Pentagon chief Robert Gates. According to Antiwar.com, on July 29 Gates “insisted that he would not rule out targeting Wikileaks founder Julian Assange or any of the myriad media outlets which reported on the leaks.” http://news.antiwar.com/2010/07/29/gates-wont-rule-out-targeting-assange-media-in-leak-investigation/
The control of the oligarchs extends to the media. The Clinton administration permitted a small number of mega-corporations to concentrate the US media in a few hands. Corporate advertising executives, not journalists, control the new American media, and the value of the mega-companies depends on government broadcast licenses. The media’s interest is now united with that of the government and the oligarchs.
On top of all the other factors that have made American elections meaningless, voters cannot even get correct information from the media about the problems that they and the country face.
As the economic situation is likely to continue deteriorating, the anger will grow. But the oligarchs will direct the anger away from themselves and toward the vulnerable elements of the domestic population and “foreign enemies.”
Thursday, November 4, 2010
SC103-15
http://seekingalpha.com/article/233962-the-biggest-debt-bubble-in-the-history-of-the-world-3-charts
The Biggest Debt Bubble in the History of the World: 3 Charts
Do you want to see something truly frightening? Just check out the 3 charts posted further down in this article. These charts prove that we are now in the biggest debt bubble in the history of the world. As Americans have enjoyed an incredibly wonderful standard of living over the past three decades, most of them have believed that it was because we are the wealthiest, most prosperous nation on the planet with economic and financial systems that are second to none. But that is not even close to accurate. The reason why we have had an almost unbelievably high standard of living over the past three decades is because we have piled up the biggest mountains of debt in the history of the world. Once upon a time the United States was the wealthiest country on the planet, but all of that prosperity was not good enough for us. So we started borrowing and borrowing and borrowing and we have now been living beyond our means for so long that we consider it to be completely normal.
We have been robbing future generations blind for so long that it doesn't even seem to bother most people anymore. We have become accustomed to living in debt. We go into massive amounts of debt to get an education, we go into massive amounts of debt to buy a home, we go into massive amounts of debt to buy our cars, and we even pile up debt to buy holiday gifts and to purchase groceries.
Just check out the chart posted below. It shows the total credit market debt owed in the United States. In other words, it is a measure of what everyone owes (government, businesses and consumers).
30 years ago, total credit market debt owed was less than 5 trillion dollars. Today, it is over 50 trillion dollars. Total credit market debt is now at a level equivalent to about 360 percent of GDP. This is what has been fueling the great era of "economic prosperity" that we have been experiencing....
Click charts to enlarge
So what is the answer to this problem?
The truth is that there is not an easy answer under our current system. The only way that the U.S. economy continues to "grow" is if the debt bubble continues to "expand".
If our leaders allowed the debt bubble to "pop" and the U.S. economy went into a deleveraging cycle, it would mean that we would start living far below our means for an extended period of time and it would spawn a deflationary depression that would make the Great Depression look like a Sunday picnic.
Most Americans are in no mood to take that kind of hard medicine.
Do you really think that the American people are going to vote in politicians who tell them that it is time to live below our means and that we are going to have to experience a standard of living far below what our parents experienced in order to pay for all the debt that they racked up?
No, that is clearly a dog that isn't going to hunt. The American people want to hear that better times are ahead. One way to give the American people "better times", for the short-term at least, is to crank the debt spiral back up.
By introducing another huge flood of paper money into the economy, the Federal Reserve and the U.S. government are hoping that banks will start lending again and that U.S. consumers will start going into more debt again. Already, as you can see from the chart below, U.S. household debt has started to sink just a little bit. But considering the fact that approximately 70 percent of our GDP is generated by U.S. consumer spending, that is not good news for "economic growth" statistics.
Three decades of "economic expansion" have been fueled by consumer debt that has spiralled completely out of control. Over the past 30 years, total U.S. household debt has gone from less than 2 trillion dollars to almost 14 trillion dollars....
So where did the housing bubble come from? It came from Americans going into insane amounts of debt that they could not afford. The truth is that only the top 5 percent of all U.S. households have earned enough additional income to match the rise in housing costs since 1975.
Not only that, but Americans are going into staggering amounts of debt in order to pay for their educations. Total student loan debt in the United States is climbing at a rate of approximately $2,853.88 per second, and today Americans owe an all-time record of more than $849 billion on student loans, which is actually more than the total amount that Americans owe on their credit cards.
The truth is that American families are stretched thinner financially than they ever have been in the post-World War 2 era. According to a poll taken last year, 61 percent of Americans "always or usually" live paycheck to paycheck. That was up significantly from 49 percent in 2008 and 43 percent in 2007.
Many Americans have come to the absolute breaking point. 1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008.
But remember, approximately 70 percent of our GDP is generated by U.S. consumer spending, so without more consumer spending there won't be more economic growth.
So, instead of Obama and the Federal Reserve encouraging Americans to get out of debt and to save money, they are trying to get the American people to spend even more money and to go into even more debt because they desperately need positive "economic growth" figures.
The worst offender of all when it comes to debt, of course, is the U.S. federal government. Over the last 30 years, the U.S. national debt has gone from about 1 trillion dollars to almost 14 trillion dollars....
This is the largest single debt in the history of the world.
So just how big is one trillion dollars? If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars. Yet somehow the U.S. government has accumulated a debt that is well over 13 trillion dollars.
Unfortunately, it keeps getting worse month after month after month. According to the U.S. Treasury Department, the U.S. national debt is rapidly closing in on 14 trillion dollars and and will climb to an estimated $19.6 trillion by 2015.
Should we all throw a big party when it crosses the 20 trillion dollar mark? I can just hear the theme song now.... "I'm going to party like I'm 19.99 trillion in debt!"
But the cold, hard reality is that we are in far, far more trouble than what the official government numbers tell us.
In a recent article, Boston University economics professor Laurence J. Kotlikoff analyzed the financial condition of the U.S. government, and he summarized the horror we are facing by making the following statement: "Let’s get real. The U.S. is bankrupt."
After carefully going over Congressional Budget Office data, Kotlikoff came to the conclusion that the U.S. government is now facing a "fiscal gap" of $202 trillion dollars.
Now how in the world did that happen? Well, it turns out that we have made promises to future generations that we cannot possibly even come close to keeping. Social Security and Medicare are fiscal nightmares that are far more immense than anything that U.S. government has ever faced before.
According to an official U.S. government report (pdf), rapidly growing interest costs on the U.S. national debt together with spending on major entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every dollar of federal revenue by the year 2019. That is before a single penny is spent on anything else.
That is just 9 years away.
When people speak of the financial situation of the U.S. government being "unsustainable", they aren't kidding around. The truth is that the U.S. government has been running gigantic Ponzi schemes which are about to collapse.
Take the Social Security shell game for example. Back in 1950, each retiree's Social Security benefit was paid for by approximately 16 workers. Today, each retiree's Social Security benefit is paid for by approximately 3.3 workers. By 2025, it is projected that there will be approximately two workers for each retiree.
So exactly how is that supposed to work?
For much more on the coming Social Security nightmare, please see an article that I posted earlier this year: 22 Statistics About America’s Coming Pension Crisis That Will Make You Lose Sleep At Night.
Sadly, Professor Kotlikoff is not exaggerating in the least when he proclaims that the U.S. government is bankrupt. At our current pace, the Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080. Public debt at a level of 100 percent of GDP is supposed to be an absolute nightmare scenario.
Needless to say, the whole thing is going to come crashing down long, long before we ever get to 2080. We have been living far, far beyond our means for decades, and it has been the greatest party in the history of the world.
But it is time to turn out the lights because the party is over.
The Biggest Debt Bubble in the History of the World: 3 Charts
Do you want to see something truly frightening? Just check out the 3 charts posted further down in this article. These charts prove that we are now in the biggest debt bubble in the history of the world. As Americans have enjoyed an incredibly wonderful standard of living over the past three decades, most of them have believed that it was because we are the wealthiest, most prosperous nation on the planet with economic and financial systems that are second to none. But that is not even close to accurate. The reason why we have had an almost unbelievably high standard of living over the past three decades is because we have piled up the biggest mountains of debt in the history of the world. Once upon a time the United States was the wealthiest country on the planet, but all of that prosperity was not good enough for us. So we started borrowing and borrowing and borrowing and we have now been living beyond our means for so long that we consider it to be completely normal.
We have been robbing future generations blind for so long that it doesn't even seem to bother most people anymore. We have become accustomed to living in debt. We go into massive amounts of debt to get an education, we go into massive amounts of debt to buy a home, we go into massive amounts of debt to buy our cars, and we even pile up debt to buy holiday gifts and to purchase groceries.
Just check out the chart posted below. It shows the total credit market debt owed in the United States. In other words, it is a measure of what everyone owes (government, businesses and consumers).
30 years ago, total credit market debt owed was less than 5 trillion dollars. Today, it is over 50 trillion dollars. Total credit market debt is now at a level equivalent to about 360 percent of GDP. This is what has been fueling the great era of "economic prosperity" that we have been experiencing....
Click charts to enlarge
So what is the answer to this problem?
The truth is that there is not an easy answer under our current system. The only way that the U.S. economy continues to "grow" is if the debt bubble continues to "expand".
If our leaders allowed the debt bubble to "pop" and the U.S. economy went into a deleveraging cycle, it would mean that we would start living far below our means for an extended period of time and it would spawn a deflationary depression that would make the Great Depression look like a Sunday picnic.
Most Americans are in no mood to take that kind of hard medicine.
Do you really think that the American people are going to vote in politicians who tell them that it is time to live below our means and that we are going to have to experience a standard of living far below what our parents experienced in order to pay for all the debt that they racked up?
No, that is clearly a dog that isn't going to hunt. The American people want to hear that better times are ahead. One way to give the American people "better times", for the short-term at least, is to crank the debt spiral back up.
By introducing another huge flood of paper money into the economy, the Federal Reserve and the U.S. government are hoping that banks will start lending again and that U.S. consumers will start going into more debt again. Already, as you can see from the chart below, U.S. household debt has started to sink just a little bit. But considering the fact that approximately 70 percent of our GDP is generated by U.S. consumer spending, that is not good news for "economic growth" statistics.
Three decades of "economic expansion" have been fueled by consumer debt that has spiralled completely out of control. Over the past 30 years, total U.S. household debt has gone from less than 2 trillion dollars to almost 14 trillion dollars....
So where did the housing bubble come from? It came from Americans going into insane amounts of debt that they could not afford. The truth is that only the top 5 percent of all U.S. households have earned enough additional income to match the rise in housing costs since 1975.
Not only that, but Americans are going into staggering amounts of debt in order to pay for their educations. Total student loan debt in the United States is climbing at a rate of approximately $2,853.88 per second, and today Americans owe an all-time record of more than $849 billion on student loans, which is actually more than the total amount that Americans owe on their credit cards.
The truth is that American families are stretched thinner financially than they ever have been in the post-World War 2 era. According to a poll taken last year, 61 percent of Americans "always or usually" live paycheck to paycheck. That was up significantly from 49 percent in 2008 and 43 percent in 2007.
Many Americans have come to the absolute breaking point. 1.41 million Americans filed for personal bankruptcy in 2009 – a 32 percent increase over 2008.
But remember, approximately 70 percent of our GDP is generated by U.S. consumer spending, so without more consumer spending there won't be more economic growth.
So, instead of Obama and the Federal Reserve encouraging Americans to get out of debt and to save money, they are trying to get the American people to spend even more money and to go into even more debt because they desperately need positive "economic growth" figures.
The worst offender of all when it comes to debt, of course, is the U.S. federal government. Over the last 30 years, the U.S. national debt has gone from about 1 trillion dollars to almost 14 trillion dollars....
This is the largest single debt in the history of the world.
So just how big is one trillion dollars? If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars. Yet somehow the U.S. government has accumulated a debt that is well over 13 trillion dollars.
Unfortunately, it keeps getting worse month after month after month. According to the U.S. Treasury Department, the U.S. national debt is rapidly closing in on 14 trillion dollars and and will climb to an estimated $19.6 trillion by 2015.
Should we all throw a big party when it crosses the 20 trillion dollar mark? I can just hear the theme song now.... "I'm going to party like I'm 19.99 trillion in debt!"
But the cold, hard reality is that we are in far, far more trouble than what the official government numbers tell us.
In a recent article, Boston University economics professor Laurence J. Kotlikoff analyzed the financial condition of the U.S. government, and he summarized the horror we are facing by making the following statement: "Let’s get real. The U.S. is bankrupt."
After carefully going over Congressional Budget Office data, Kotlikoff came to the conclusion that the U.S. government is now facing a "fiscal gap" of $202 trillion dollars.
Now how in the world did that happen? Well, it turns out that we have made promises to future generations that we cannot possibly even come close to keeping. Social Security and Medicare are fiscal nightmares that are far more immense than anything that U.S. government has ever faced before.
According to an official U.S. government report (pdf), rapidly growing interest costs on the U.S. national debt together with spending on major entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every dollar of federal revenue by the year 2019. That is before a single penny is spent on anything else.
That is just 9 years away.
When people speak of the financial situation of the U.S. government being "unsustainable", they aren't kidding around. The truth is that the U.S. government has been running gigantic Ponzi schemes which are about to collapse.
Take the Social Security shell game for example. Back in 1950, each retiree's Social Security benefit was paid for by approximately 16 workers. Today, each retiree's Social Security benefit is paid for by approximately 3.3 workers. By 2025, it is projected that there will be approximately two workers for each retiree.
So exactly how is that supposed to work?
For much more on the coming Social Security nightmare, please see an article that I posted earlier this year: 22 Statistics About America’s Coming Pension Crisis That Will Make You Lose Sleep At Night.
Sadly, Professor Kotlikoff is not exaggerating in the least when he proclaims that the U.S. government is bankrupt. At our current pace, the Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080. Public debt at a level of 100 percent of GDP is supposed to be an absolute nightmare scenario.
Needless to say, the whole thing is going to come crashing down long, long before we ever get to 2080. We have been living far, far beyond our means for decades, and it has been the greatest party in the history of the world.
But it is time to turn out the lights because the party is over.
Monday, November 1, 2010
SC103-14
http://energybulletin.net/stories/2010-10-31/can-corporations-govern
Can corporations govern?
In the 1948 Frank Capra film State of the Union aircraft tycoon Grant Matthews is drafted as a candidate for president of the United States. Matthews has never sought office and his popularity stems solely from his business successes and his charismatic and plain-talking speeches. As it becomes clear to Matthews that his self-funded campaign might win him the nomination, he gives in to the corrupting influence of the politicians and party fixers who have recruited him and who now manage his campaign.
Today, the notion that tycoons are corrupted by politicians and not the other way around seems quaint. The last pretense that American political institutions are not merely an extension of global financial and industrial interests was stripped away earlier this year when the U. S. Supreme Court ruled that corporations may spend unlimited amounts of money influencing political campaigns. To be fair, corporations have long influenced American politics through a variety of means including political action committees, donations to major parties (which is no longer allowed), lobbying, issue advertising, threats to move operations out of the country (or the community), and, in some cases, actual bribery (still technically illegal).
Despite their obvious power, corporations up to this point had to accept that, however dominant their position in American politics, they still had to contend with other interests seeking the ear and votes of elected representatives. If corporations had had absolute power over federal policy, neither financial reform nor health care reform would have passed the Congress since, even in their admittedly watered-down state, they contained provisions which both industries vehemently opposed. Thus, their sway over elections and policy has been considerable, but not absolute.
That may now change. Without any limitations on what corporations can spend or even say (since no front group is obliged to disclose its donors), they are free to destroy the reputations of candidates they don't like anonymously and therefore with impunity. To be fair, an incurious group of voters called swing voters--these are the ones who switch their party allegiance from election to election--are complicit in this process. They do little vetting of candidates and issues and rely heavily on information provided by campaigns and by independent groups that sponsor political ads of questionable veracity.
The campaign of 2010 may produce members of Congress and of the Senate who are nothing but conduits for corporate agendas and whose loyalties can be traced directly to those corporate-funded campaign groups--groups made up of anonymous donors who seek nothing less than direct control of the government of the United States for their personal gain. What this means is that corporations will now for the first time since the Gilded Age be forced to govern rather than simply influence those who govern.
It is a common conceit that American businessmen (and now businesswomen) know how to run the government better than career politicians. Frank Capra's film is merely one product of this type of thinking. The claim often made by such people when they run for office is that they've met a payroll and created jobs. But what is most relevant is how they have gone about doing these things. Typically, businesspeople who seek office have run corporations as chief executives and often owners. That means their style of governance has always been buttressed by the fact that they are autocrats who can get their way by command. Getting things done in a large, modern corporation is, of course, more difficult than simply commanding it. But corporate structures remain highly undemocratic and hierarchical. The employees can't fire the boss.
But whether they run for office themselves or simply hire people to do it for them, there is no getting around the fact that these corporate managers and owners constitute a class of autocrats who wish to rule the country. They are not used to the give and take of the political process, and they do not suffer people they believe are fools easily. (In this context "fools" are merely people who oppose their views and aims.)
While the corporate paymasters of the new crop of corporate politicians profess their love for free markets, limited government, and respect for individual freedom, they believe in nothing of the sort. This is just what they and their minions say to voters in order to get their votes. What they really mean to do and have done, to the extent their powers have enabled them, is to use the government as a slush fund for their own benefit--both as a source of revenues through tax breaks and contracts and as an insurance pool for their corporate interests when they make disastrous financial decisions.
With regard to the insurance function the government has played, particularly for large financial institutions, former Wall Street trader and now author Nassim Nicholas Taleb explained before a Congressional committee last year that he was instructed again and again in his career not to worry about extreme losses, only smaller losses in the 5 to 10 percent range, since the government would bail out his firm in the event of a financial crisis. Here's what he said:
I was a trader for 21 years. And every time I said, "What if we blow up?", they [management] said, "Who cares? The government bails us out." And, I heard that so many times throughout my career.
To judge how the country's new corporate government might perform, one needs only to recall how events unfolded in a couple of areas in which corporate lobbyists got their way. First, the ongoing financial deregulation which had been occurring in the United States for many years was a product of heavy lobbying by financial firms. They got their deregulation and even lax enforcement of the remaining regulations based on the idea that markets are self-correcting and that the interests of the individual trader, his or her firm and the shareholders were identical.
When the financial system melted down because of the excessive risks, fraud and mismanagement by Wall Street managers and traders, these employees of the firm already had their huge bonuses in pocket. The bad trades and positions which led collectively to the financial meltdown were backstopped by the U. S. Treasury and the Federal Reserve, not the the firms or their employees. Nobody has been forced to give back their bonuses.
Second, for years under administrations from both parties, the oil industry essentially got whatever it wanted from what was formerly called the Minerals Management Service which oversaw offshore drilling. Inadequate regulations and poor enforcement were the policy of this agency under successive administrations. The BP well blowout and oil spill was one result of that lax regime. Of course, in this case BP was actually made to pay for some of the damage. But it will never be able to restore the Gulf of Mexico to its state prior to the spill, even if it expended all of the funds it will ever generate. Some things can't be fixed. And, the federal government and communities across the Gulf coast will be paying for the collateral damage for decades to come.
In both cases profits were privatized and risks were socialized, and we can expect to see more and more of that in every area of economic life in America under a new corporate-run government. The incentives for corporations are mostly short-term because the incentives for the managers are short-term. And, the incentives for shareholders to allow and encourage corporate misbehavior is huge, since shareholders demand maximum returns, usually in the short term. The average holding period for stocks listed on the New York Stock Exchange is nine months. The average holding period for all stocks including exchange-traded funds is four months.
The history of corporate governance also shows that when corporations might have naturally aligned themselves with changes that would have been good for their bottom lines as well as the public, these corporations have failed to do so. The American automakers would have benefited greatly from a universal health care system in the United States. Health care costs for autoworkers were one of the main financial drains on the industry and a competitive disadvantage in a world where Japanese and European automakers had the benefit of government-sponsored universal systems that picked up most of the costs. Yet, the automakers never supported such a plan and instead focused on defeating increases in fuel economy standards. Such shortsightedness in part led to the bankruptcy of two of the Big Three automakers. Their foreign competitors relentlessly chipped away at the market share of the Big Three with fuel-sipping cars and a lower overall cost structures. It is proof that oftentimes corporate managers either do not know or do not care what will be good for their own companies in the long run.
Some people have dubbed the gradual and perhaps all-but-complete melding of corporate and government power as fascist. None other than Mussolini dubbed such a combination one facet of fascism. But even the fascist regimes of Mussolini and Hitler engaged in large public works projects meant to boost employment and income during the Great Depression. And, it is, of course, of no small import that they incorporated their respective industrial establishments into their ambitions for military conquest.
Under fascism, the government colludes with corporate interests to achieve its goals. But what does one call a government in which the corporations, not the government, call all the shots? What does one call a government in which there is no political class to mediate the needs of many factions? The closest we might come is plutocracy. But this doesn't quite get it either because plutocracy refers to undue influence by the wealthy in the affairs of government. What shall we call it when the wealthy through their corporations achieve absolute control of government policy?
Naturally, not all corporations share the same interests. Those who make wind turbines do not have interests identical to those who mine coal. But in the fight over government policy, it is fervency that matters, for where corporations rule, money follows fervency. The fossil fuel lobby will continue to work to prevent any kind of climate change legislation even though the insurance industry knows only too well what risks its faces as climate changes and causes insured property damage to crops, homes and businesses. Yet, the insurance industry has many other areas which it must be concerned with. It will never be as focused as the fossil fuel industry is on this issue.
Will the alternative energy industry suffer the same fate? A tiny fraction of the world's energy comes from renewable energy today. While growing quickly, the alternative energy industry simply doesn't have the money to buy as many candidates as the new political funding regime allows to the fossil fuel industry.
Look for little or no progress on important environmental and natural resource issues in the years ahead in the United States as corporations battle it out for narrow advantages for themselves obtained through government policy. The trouble with this type of governance, however, is that it will miss the big picture and thus the big dangers and challenges and never prepare us for them.
Whether a politically moribund voting public will be able to associate an increasingly dysfunctional government with the corporate takeover now in progress is an open question.
Whether that public will be able to affect change if and when it does understand this is a troubling one. But, given the history of corporate intervention in American political life, we can summarize in one word how corporations will govern the American nation as they move toward complete political control: badly.
Can corporations govern?
In the 1948 Frank Capra film State of the Union aircraft tycoon Grant Matthews is drafted as a candidate for president of the United States. Matthews has never sought office and his popularity stems solely from his business successes and his charismatic and plain-talking speeches. As it becomes clear to Matthews that his self-funded campaign might win him the nomination, he gives in to the corrupting influence of the politicians and party fixers who have recruited him and who now manage his campaign.
Today, the notion that tycoons are corrupted by politicians and not the other way around seems quaint. The last pretense that American political institutions are not merely an extension of global financial and industrial interests was stripped away earlier this year when the U. S. Supreme Court ruled that corporations may spend unlimited amounts of money influencing political campaigns. To be fair, corporations have long influenced American politics through a variety of means including political action committees, donations to major parties (which is no longer allowed), lobbying, issue advertising, threats to move operations out of the country (or the community), and, in some cases, actual bribery (still technically illegal).
Despite their obvious power, corporations up to this point had to accept that, however dominant their position in American politics, they still had to contend with other interests seeking the ear and votes of elected representatives. If corporations had had absolute power over federal policy, neither financial reform nor health care reform would have passed the Congress since, even in their admittedly watered-down state, they contained provisions which both industries vehemently opposed. Thus, their sway over elections and policy has been considerable, but not absolute.
That may now change. Without any limitations on what corporations can spend or even say (since no front group is obliged to disclose its donors), they are free to destroy the reputations of candidates they don't like anonymously and therefore with impunity. To be fair, an incurious group of voters called swing voters--these are the ones who switch their party allegiance from election to election--are complicit in this process. They do little vetting of candidates and issues and rely heavily on information provided by campaigns and by independent groups that sponsor political ads of questionable veracity.
The campaign of 2010 may produce members of Congress and of the Senate who are nothing but conduits for corporate agendas and whose loyalties can be traced directly to those corporate-funded campaign groups--groups made up of anonymous donors who seek nothing less than direct control of the government of the United States for their personal gain. What this means is that corporations will now for the first time since the Gilded Age be forced to govern rather than simply influence those who govern.
It is a common conceit that American businessmen (and now businesswomen) know how to run the government better than career politicians. Frank Capra's film is merely one product of this type of thinking. The claim often made by such people when they run for office is that they've met a payroll and created jobs. But what is most relevant is how they have gone about doing these things. Typically, businesspeople who seek office have run corporations as chief executives and often owners. That means their style of governance has always been buttressed by the fact that they are autocrats who can get their way by command. Getting things done in a large, modern corporation is, of course, more difficult than simply commanding it. But corporate structures remain highly undemocratic and hierarchical. The employees can't fire the boss.
But whether they run for office themselves or simply hire people to do it for them, there is no getting around the fact that these corporate managers and owners constitute a class of autocrats who wish to rule the country. They are not used to the give and take of the political process, and they do not suffer people they believe are fools easily. (In this context "fools" are merely people who oppose their views and aims.)
While the corporate paymasters of the new crop of corporate politicians profess their love for free markets, limited government, and respect for individual freedom, they believe in nothing of the sort. This is just what they and their minions say to voters in order to get their votes. What they really mean to do and have done, to the extent their powers have enabled them, is to use the government as a slush fund for their own benefit--both as a source of revenues through tax breaks and contracts and as an insurance pool for their corporate interests when they make disastrous financial decisions.
With regard to the insurance function the government has played, particularly for large financial institutions, former Wall Street trader and now author Nassim Nicholas Taleb explained before a Congressional committee last year that he was instructed again and again in his career not to worry about extreme losses, only smaller losses in the 5 to 10 percent range, since the government would bail out his firm in the event of a financial crisis. Here's what he said:
I was a trader for 21 years. And every time I said, "What if we blow up?", they [management] said, "Who cares? The government bails us out." And, I heard that so many times throughout my career.
To judge how the country's new corporate government might perform, one needs only to recall how events unfolded in a couple of areas in which corporate lobbyists got their way. First, the ongoing financial deregulation which had been occurring in the United States for many years was a product of heavy lobbying by financial firms. They got their deregulation and even lax enforcement of the remaining regulations based on the idea that markets are self-correcting and that the interests of the individual trader, his or her firm and the shareholders were identical.
When the financial system melted down because of the excessive risks, fraud and mismanagement by Wall Street managers and traders, these employees of the firm already had their huge bonuses in pocket. The bad trades and positions which led collectively to the financial meltdown were backstopped by the U. S. Treasury and the Federal Reserve, not the the firms or their employees. Nobody has been forced to give back their bonuses.
Second, for years under administrations from both parties, the oil industry essentially got whatever it wanted from what was formerly called the Minerals Management Service which oversaw offshore drilling. Inadequate regulations and poor enforcement were the policy of this agency under successive administrations. The BP well blowout and oil spill was one result of that lax regime. Of course, in this case BP was actually made to pay for some of the damage. But it will never be able to restore the Gulf of Mexico to its state prior to the spill, even if it expended all of the funds it will ever generate. Some things can't be fixed. And, the federal government and communities across the Gulf coast will be paying for the collateral damage for decades to come.
In both cases profits were privatized and risks were socialized, and we can expect to see more and more of that in every area of economic life in America under a new corporate-run government. The incentives for corporations are mostly short-term because the incentives for the managers are short-term. And, the incentives for shareholders to allow and encourage corporate misbehavior is huge, since shareholders demand maximum returns, usually in the short term. The average holding period for stocks listed on the New York Stock Exchange is nine months. The average holding period for all stocks including exchange-traded funds is four months.
The history of corporate governance also shows that when corporations might have naturally aligned themselves with changes that would have been good for their bottom lines as well as the public, these corporations have failed to do so. The American automakers would have benefited greatly from a universal health care system in the United States. Health care costs for autoworkers were one of the main financial drains on the industry and a competitive disadvantage in a world where Japanese and European automakers had the benefit of government-sponsored universal systems that picked up most of the costs. Yet, the automakers never supported such a plan and instead focused on defeating increases in fuel economy standards. Such shortsightedness in part led to the bankruptcy of two of the Big Three automakers. Their foreign competitors relentlessly chipped away at the market share of the Big Three with fuel-sipping cars and a lower overall cost structures. It is proof that oftentimes corporate managers either do not know or do not care what will be good for their own companies in the long run.
Some people have dubbed the gradual and perhaps all-but-complete melding of corporate and government power as fascist. None other than Mussolini dubbed such a combination one facet of fascism. But even the fascist regimes of Mussolini and Hitler engaged in large public works projects meant to boost employment and income during the Great Depression. And, it is, of course, of no small import that they incorporated their respective industrial establishments into their ambitions for military conquest.
Under fascism, the government colludes with corporate interests to achieve its goals. But what does one call a government in which the corporations, not the government, call all the shots? What does one call a government in which there is no political class to mediate the needs of many factions? The closest we might come is plutocracy. But this doesn't quite get it either because plutocracy refers to undue influence by the wealthy in the affairs of government. What shall we call it when the wealthy through their corporations achieve absolute control of government policy?
Naturally, not all corporations share the same interests. Those who make wind turbines do not have interests identical to those who mine coal. But in the fight over government policy, it is fervency that matters, for where corporations rule, money follows fervency. The fossil fuel lobby will continue to work to prevent any kind of climate change legislation even though the insurance industry knows only too well what risks its faces as climate changes and causes insured property damage to crops, homes and businesses. Yet, the insurance industry has many other areas which it must be concerned with. It will never be as focused as the fossil fuel industry is on this issue.
Will the alternative energy industry suffer the same fate? A tiny fraction of the world's energy comes from renewable energy today. While growing quickly, the alternative energy industry simply doesn't have the money to buy as many candidates as the new political funding regime allows to the fossil fuel industry.
Look for little or no progress on important environmental and natural resource issues in the years ahead in the United States as corporations battle it out for narrow advantages for themselves obtained through government policy. The trouble with this type of governance, however, is that it will miss the big picture and thus the big dangers and challenges and never prepare us for them.
Whether a politically moribund voting public will be able to associate an increasingly dysfunctional government with the corporate takeover now in progress is an open question.
Whether that public will be able to affect change if and when it does understand this is a troubling one. But, given the history of corporate intervention in American political life, we can summarize in one word how corporations will govern the American nation as they move toward complete political control: badly.
Friday, October 15, 2010
SC103-13
http://www.culturechange.org/cms/content/view/674/66/
Peak Oil is History
Publisher's note: Dmitry Orlov authored Reinventing Collapse, based on his firsthand observations of the collapse of the USSR and the socioeconomic prospects for the U.S. His new article describes the key physical, social, political and economic factors which energy industry analysts must take into account when forecasting oil production in order for their forecasts to be meaningful. Peak Oil is History is exclusively on CultureChange.org until November 1. - JL
The marketing blurb on the back cover of the first edition of my first book, Reinventing Collapse, described me as "a leading Peak Oil theorist." When I first saw it, my jaw dropped -- and remained hanging. You see, if you run through a list of bona fide leading Peak Oil theorists -- your Hubberts, your Campbells, Laherrères, Heinbergs, Simmonses and a few others worth mentioning, you will not find a single Orlov among them. In vain would you search the annals and conference proceedings of the Association for the Study of Peak Oil for any trace of your humble author. But now that this howler is in print and circulated in so many copies, I suppose I have no choice but to try to live up to the expectation it set.
My disqualifications aside, now does seem to be an auspicious moment to hold forth with a new piece of Peak Oil theory, because this is the year when, for the first time, just about everyone is ready to admit that Peak Oil is real, in essence, though some are not quite ready to call it by that name. Just five years ago everyone from government officials to oil company executives treated Peak Oil theory as the work of a lunatic fringe, but now that conventional world oil production peaked in 2005, and all liquids world production peaked in 2008, everyone is ready to concede that there are serious problems with growing the global oil supply. And although some people still feel skittish about using the term Peak Oil (and a few experts still insist that the peak must be referred to as "an undulating plateau," which, if anything, is a graceful turn of phrase) the differences of opinion now largely stem from a refusal to accept the terminology of Peak Oil rather than the substance of peaking global oil production. This is, of course, quite understandable: it is awkward to suddenly jump from shouting "Peak Oil is bunk!" to shouting "Peak Oil is history!" in a single bound. Such acrobatics are only safe if you happen to be a politician or an economist.
Now that the matter has been largely settled, I feel that the time is ripe for me to weigh in on the subject and declare, unequivocally, that Peak Oil is indeed bunk. Not the part about global oil production reaching a peak sometime right around now then declining inexorably: that part seems true enough. Nor the part about oil production in any given province becoming constrained by geology and technology once the peak is reached: that part, under properly designed experimental conditions, seems predictive as well. In fact, the depletion model has been confirmed beautifully by the example of the continental United States minus Alaska since 1970. But the idea that this same depletion model can be applied to the planet as a whole, is, I feel, something that must be rejected as utterly and completely bogus. To see what I mean, look at a typical Peak Oil chart (Fig. 1) that shows global oil production climbing up to a peak and then declining.
Observe that the upward slope has a lot of interesting structure to it. There are world wars, depressions, imperial collapses, oil embargoes, discoveries of giant oil fields, not to mention the ugly boom and bust cycles that are the bane of capitalist economies (whereas socialist ones have sometimes been able to grow, stagnate and eventually collapse far more gracefully). It is a rugged slope, with cliffs and crevasses, craggy outcrops and steep inclines. Now look at the downward slope: is it not shockingly smooth? Its geologic origin must be completely different from that of the upward slope. It appears to be made up of a single giant moraine, piled to the angle of repose near the top, with some spreading at the base, no doubt due to erosion, with a gradual transition into what appears to be a gently sloping alluvial plain no doubt composed of silt from the runoff, which is then followed by a vast perfectly flat area, which might have been the bottom of an ancient sea. If climbing up to the peak must have required mountaineering techniques, the downward slope looks like it could be negotiated in bathroom slippers. One could do cartwheels all the way down, and be sure of not hitting anything sharp before gently rolling to a stop sometime around 2100. Mathematically, the upward slope would have to be characterized by some high-order polynomial, whereas the downward slope is just e-t with a little bit of statistical noise. This, you must agree, is extremely suspicious: a natural phenomenon of great complexity that, just when it is forced to stop growing, turns around and becomes as simple as a pile of dirt. Where else have we observed this sort of spontaneous and sudden simplification of a complex, dynamic process? Physical death is sometimes preceded by slow decay, but sooner or later most living things go from living to dead in an abrupt transition. They don't shrivel continuously for decades on end, eventually becoming too small to be observable. And so I like to call this generic and widely accepted Peak Oil case the Rosy Scenario. It's the one in which industrial civilization, instead of keeling over promptly, joins an imaginary retirement community and spends its golden years tethered to a phantom oxygen tank and a phantom colostomy bag.
The really odd thing is that the Rosy Scenario can be quite accurate, under ideal circumstances, when applied to individual countries and oil-producing regions. For instance, suppose one of the world's largest oil producers, which started out with more oil than Saudi Arabia, reaches Peak Oil in, say, 1970, but then promptly goes off the gold standard, foists its paper currency on the rest of the world by backing it up with the threat of force including the possibility of a nuclear first strike, eventually comes to import over 60% of its petroleum, much of it on credit, and, a few decades later, goes bankrupt. Then, over the intervening decades, its domestic oil production would indeed exhibit this wonderfully gentle geologically and technologically constrained curve -- up to the point of national bankruptcy.
Past the point of national bankruptcy circumstances are bound to become decidedly non-ideal, but the implications of this remain unclear. Will that hapless country still be able continue borrowing money internationally in order to import enough oil to keep its economy functioning, and, if so, under what terms, and for how much longer? It would be nice to know how this story ends ahead of time, but unfortunately all we can do is wait and see.
But we do have another example (Fig. 3), which may offer some insights into what we mean when we say that circumstances will be “non-ideal.” The country that is currently the world's largest oil producer reached Peak Oil around 1987. Its sclerotic, geriatric, ideologically hidebound, systemically corrupt leadership was unable to grasp the importance of this fact, and just three years later the country was bankrupt and, shortly thereafter, it dissolved politically. In this case, plummeting oil production became the country's leading economic indicator: it plummeted, then the GDP plummeted, then coal and natural gas production plummeted, and a decade later the economy was down 40%. Behind these numbers was a precipitous drop in life expectancy and a pervasive atmosphere of despair in which many lives were either lost or ruined.
But as long as no messy internal or external political or economic factors interfere with the natural depletion curve, the après-Peak predictions of Peak Oil theory do seem to hold. (When I say “ideal circumstances,” I suppose that I must mean circumstances that are ideal from the point of view of sentient though irrational hydrocarbon molecules, whose desire is to be pumped out of the ground and burned up as quickly and efficiently as possible, because it is unclear who else ultimately benefits, but let's not quibble.) Since the problem of not having enough oil to go around is known to cause all sorts of nasty political and economic problems, and since this is exactly the problem we should expect to encounter soon after the world reaches Peak Oil, the base assumption on which the predictions of Peak Oil theory for global oil production rest is not realistic. The specialists who are in a position to predict Peak Oil are not able to gauge its economic and political effects, and so all they can do is give us the Rosy Scenario as an ultimate upper bound. However, this caveat is not spelled out as clearly as it should be. The result is that we might as well be working with a theory which predicts that, once global Peak Oil is reached, delicious chocolate petits fours will spontaneously bake themselves into existence and fly into our mouths on dainty gossamer wings of marzipan.
The Peak Oil theory-based explanation is that while the upward slope is economically constrained, the downward slope is only constrained by the geology of depleting oil reservoirs and by oil extraction technology, which is subject to thermodynamic limits and cannot improve forever without encountering diminishing, then negative, returns. While the oil supply is growing, oil demand fluctuates, resulting in numerous ups and downs in production superimposed on the overall upward trend as production tries to match demand. But on the downward side, demand permanently exceeds supply, and so every barrel of oil that can be produced at each instant will be produced.
When extrapolating the aftermath of local oil production declines to global Peak Oil, the unstated assumption is that the global economy will continue to function with uncanny smoothness at the level of demand that can be met, while unmet demand will be cleanly washed off into the gutter by a strong, steady stream of economic and political nonsense. This will all sort itself out spontaneously with rational market participants responding to price signals and deciding at each instant whether they should:
A. continue consuming oil in the manner to which they have become accustomed, or
B. quietly wander off and die without calling attention to themselves or making a fuss.
Where else have we seen such flawless organization, in situations where a key commodity -- like, say, food, or drinking water -- becomes critically scarce? Anywhere? Anywhere at all?
And I suppose a further unstated assumption is that a shrinking economy (what with all this unmet demand and resulting attrition among market participants) can function much as a growing one does, without suffering a financial collapse. Special financial instruments called credit-default swaps can be used as a hedge against increased counterparty risk from your counterparties dying in droves from self-inflicted wounds, although after a while these instruments would become a bit too expensive. But I don't suppose that much of anything can be done about the economic growth projections baked into every single financial plan at every level. Once these turn out to be unfounded, then all the debt pyramids will come tumbling down. And since a fiat currency (such as the US Dollar) is composed of debt -- credit advanced based on a promise of future growth -- it is unclear how and with what the remaining oil will continue to be purchased. The end of growth is an imponderable; start talking about it, and everyone suddenly decides that it's lunchtime and starts ordering drinks. At least the French have a proper word for it: décroissance (literally, “de-growth”); here in the anglophone world all we can do is gibber and mumble about “double-dips.” Perhaps Geithner and Bernanke can come up with a dance number to illustrate.
Let us look at it another way. As I mentioned, Peak Oil theory has been quite good at predicting the depletion profile of certain stable and prosperous countries and provinces. But these predictions become meaningless when extrapolated to the world as a whole, for one very obvious reason: the world cannot import oil. Let me say it again, this time in title-case, bolded and centered, to emphasize the significance of this statement:
Planet Earth Can't Import Oil
When faced with insufficient domestic oil production, an industrialized country has but two choices:
1. Import oil
2. Collapse
But when faced with insufficient global oil production, an industrialized planet has just one choice: Choice Number 2.
Some might argue that there is a third choice: start using less oil right away. However, in practice this turns out to be equivalent to Choice Number 2. Using less oil involves making some radical, often technologically challenging, politically unpopular, and therefore expensive and time-consuming changes. These may be as technologically advanced (and unrealistic) as replacing the current motor vehicle fleet with electric battery-powered vehicles and a large number of nuclear power plants to recharge their batteries, or as simple (and quite realistic) as moving to a place that is within walking or bicycling distance from your work, growing most of your own food in a kitchen garden and a chicken coop, and so on. But whatever these steps are, they all require a certain amount of preparation and expense, and a time of crisis (such as when oil supplies suddenly run short) is a notoriously difficult time to launch into long-range planning activities. By the time the crisis arrives, either a country has already prepared as much as it could or wanted to (thereby delaying the onset of collapse) or it has not, bringing the crisis on sooner, and making it more severe. The oft-cited Hirsch Report states that it would take twenty years to prepare for Peak Oil in order to avoid a severe and prolonged shortage of transportation fuels, and so, given that the peak was back in 2005, we now have minus five years left to lollygag before we have to start preparing. According to Hirsch et al., we have failed to prepare already.
Some might also wonder why a shortage of oil should automatically trigger a collapse. It turns out that, in an industrialized economy, a drop in oil consumption precipitates a proportional drop in overall economic activity. Oil is the feedstock used to make the vast majority of transportation fuels -- which are used to move products and deliver services throughout the economy. In the US in particular, there is a very strong correlation between GDP and motor vehicle miles traveled. Thus, the US economy can be said to run on oil, in a rather direct and immediate way: less oil implies a smaller economy. At what point does the economy shrink so much that it can no longer meet its own maintenance requirements? In order to continue functioning, all sorts of infrastructure, plant and equipment must be maintained and replaced in a timely manner, or it stops functioning. Once that point is reached, economic activity becomes constrained not just by the availability of transportation fuels, but also by the availability of serviceable equipment. At some point the economy shrinks so much as to invalidate the financial assumptions on which it is based, making it impossible to continue importing oil on credit. Once that point is reached, the amount of transportation fuels available is no longer limited just by the availability of oil, but also constrained by the inability to finance oil imports.
The initial shortage of transportation fuels need not be large in order to trigger this entire cascade of events, because even a small shortage triggers a number of economically destructive feedback loops. A lot of fuel is wasted by idling in line at the few gas stations that remain open. More fuel is wasted by topping off -- keeping the tank as full as possible, not knowing when and where you will be able to fill it again. Even more fuel disappears from the market because people are hoarding it in jerrycans and improvised containers. As the shortages drag on and spread, fuel is hoarded, and a black market for it develops: fuel diverted from official delivery channels and siphoned from gas tanks becomes available on the black market at inflated prices. And so the effect of even a minor initial shortage can easily snowball into an economic disruption sufficient to push the economy over physical and financial thresholds and toward collapse.
If at this point you are starting to feel despondent, then -- I am sorry to have to say this, but you must be a lightweight, because there is more -- lots more to consider. Peak Oil's Rosy Scenario may look pretty, but even a rose has its thorns. And there are a number of other issues which need to be considered and taken into account within a single, integrated view.
First, the rosy post-Peak Oil global production profile is based on reserve numbers which have been overstated. Much of the remaining oil is in the Middle East, in OPEC countries, and these countries overstated their reserves by various large amounts during OPEC's “quota wars” back in the 1980s. While other OPEC members sheepishly cooked up bogus numbers that looked vaguely real, Saddam Hussein, who was always a bit of a showboat, rounded up Iraq's reserve numbers up to a nice round number: 100 billion barrels. And so OPEC reserves turn out to have been inflated by some large amount -- about a third at a minimum. Nor is OPEC unique in overstating their reserve numbers. Energy companies in the US play much the same game in order to please Wall Street. Set your bathroom slippers aside; to negotiate Peak Oil's downward slope you will need good mountaineering equipment.
Second, there is a phenomenon called Export Land Effect: oil-exporting countries, when their production starts to falter, have a strong tendency to cut exports before cutting into domestic consumption. To be sure, there are some countries that have surrendered their resource sovereignty to international energy companies and have lost control over their export policies. There are also some despotic regimes that starve their domestic consumers but to continue to earn the export revenue needed to prop up the regime. But most countries will only export their surplus production. This means that it will become impossible to buy oil internationally long before all the wells run dry, leaving oil importing countries out in the cold. Thus, if you live in an oil-importing country and thought you could negotiate the downward slope of Peak Oil in your hiking boots, put them aside. You will need a parachute.
Third, although total quantities of oil produced throughout the world were increasing up until 2005, the amounts of oil-based products (gasoline, diesel, etc.) delivered to their points of use peaked years earlier, in terms of usable energy derived. This was because more and more energy has been required to get a barrel of oil out of the ground and to refine it. Supplies of available crude oil have tended to become harder to extract, heavier, and more sulfur laden, plus the demand for more gasoline (as opposed to distillates or bunker fuels) with less lead for boosting octane add up to more energy being wasted. Energy Returned on Energy Invested (EROEI) went from 100:1 at the dawn of the oil age, when some strong-backed lads could dig you an oil well using picks and shovels, to an average of 10:1, now that oil production requires deepwater platforms (that sometimes blow up and poison entire ecosystems), horizontal drilling and fracturing technology, secondary and tertiary recovery using water and nitrogen injection, oil/water separation plants, and all sorts of other technical complexities which consume more and more of the energy they produce. As EROEI decreases from 10:1 toward 1:1, the oil industry comes to resemble an obese but famished wet-nurse ravenously sucking her own breast at the crib of a starving infant. At some point it will no longer be economically possible to deliver diesel or gasoline to a gas station. When that point comes is not certain, but there are some indications that 3:1 is the minimum EROEI that the oil industry requires in order to sustain itself. The effect of decreasing EROEI is to make the gentle slope of the Rosy Scenario much steeper. The slope no longer looks like a mound of pebbles -- more like lava flowing into the sea and solidifying in a cloud of steam. There may be plenty of energy left, but much of it is going to go by the wayside, and you might not be able to get close enough to it to roast your marshmallows.
Fourth, we must consider the fact that our modern global oil industry is highly integrated. If you need a certain specialty part for your drilling operation, chances are it can be sourced from just one or two global companies. Chances are this company has some very important, highly technical operations in a country that just happens to be an oil importer. The significance of this becomes clear when one considers what happens to that company's operations once Export Land Effect becomes felt. Suppose you are a national oil company in an oil-rich nation that still has enough oil left for domestic consumption, although it was recently forced to fire all of its international customers. Your oil fields are huge but mature, and you can only keep them in production by continuously drilling new horizontal wells just above the ever-rising water cut and maintaining well pressure by injecting seawater underneath. If you stop or even pause this activity, then your oil, at the wellhead, will quickly change in composition from slightly watery oil to slightly oily water, which you might as well just pump back underground. And now it turns out that the equipment you need to keep drilling horizontal wells comes from one of these unlucky countries that used to import your oil but now cannot, and the technicians who used to build your equipment have given up trying to find enough black-market gasoline to drive to work and are busy digging up their suburban backyards to grow potatoes. A short while later your drilling operations run out of spare parts, your oil production crashes, and most of your remaining reserves are left underground, contributing to an increasingly important reserve category: never-to-be-produced reserves.
When these four factors are considered together, it becomes difficult to imagine that global oil production could gently waft down from lofty heights in a graceful smooth and continuous curve spanning decades. Rather, the picture that presents itself is one of stepwise declines happening in more and more places, and eventually encompassing the entire planet. Whoever you are, and wherever you are, you are likely to experience this as a three-stage process:
Stage 1: You have your current level access to transportation fuels and services
Stage 2: You have severely limited access to transportation fuels and services
Stage 3: You have no access to transportation fuels and severely restricted transportation options
How long Stage 2 will last will vary from one place to another. Some places may go directly to Stage 3: gasoline tankers stop coming to your town, all the local gas stations close, and that is that. In other places, a thriving black market may give you some access to gasoline for a few years longer, at prices that will allow some uses, such as running an electrical generator at an emergency center. But your ability to successfully cope with Stage 2, and to survive Stage 3, will be determined largely by the changes and preparations you are able to make during Stage 1.
It should be expected that the vast majority of people will have done nothing to prepare, remaining quite unaware of the fact that this is something they should have been doing. Quite a few people can be expected to take a few small steps in a sensible direction, such as installing a wood stove, or insulating their home, or in a seemingly sensible but ultimately unhelpful direction, such as wasting their money on a new hybrid car or wasting their energies on trying to form a new political party or to lobby one of the existing ones. Some will buy a homestead, equip it for life off the grid, start growing all their own food (perhaps transporting their perishable surplus to a nearby farmer's market by cargo bicycle or by boat), and home-school their children, putting an emphasis on the classics and on agriculture, animal husbandry and other perennially useful knowledge. Some will flee to a place where transportation fuels are scarce already, and where a moped is considered a labor-saving device -- for your donkey or camel.
Unfortunately, it is hard to foresee which changes and adaptations will succeed and which will fail, because so much depends on the circumstances, which are sure to be unpredictable and vary from place to place, and on the person or persons involved: the uncertainty is just too great. But there is one thing of which we can be quite sure: that Peak Oil's Rosy Scenario, which projects a long and gradual global oil production decline, is bunk. Knowing this fact should impart a sense of urgency. Whether we use that sense of urgency foolishly or wisely is up to us, and our success may be a matter of luck, but having a sense of urgency is not at all bad. If we wish to prepare, we most likely have a few months, we may have a few years, but we certainly do not have a few decades. Let those who would have you believe otherwise first consider the issues I have raised in this article.
Peak Oil is History
Publisher's note: Dmitry Orlov authored Reinventing Collapse, based on his firsthand observations of the collapse of the USSR and the socioeconomic prospects for the U.S. His new article describes the key physical, social, political and economic factors which energy industry analysts must take into account when forecasting oil production in order for their forecasts to be meaningful. Peak Oil is History is exclusively on CultureChange.org until November 1. - JL
The marketing blurb on the back cover of the first edition of my first book, Reinventing Collapse, described me as "a leading Peak Oil theorist." When I first saw it, my jaw dropped -- and remained hanging. You see, if you run through a list of bona fide leading Peak Oil theorists -- your Hubberts, your Campbells, Laherrères, Heinbergs, Simmonses and a few others worth mentioning, you will not find a single Orlov among them. In vain would you search the annals and conference proceedings of the Association for the Study of Peak Oil for any trace of your humble author. But now that this howler is in print and circulated in so many copies, I suppose I have no choice but to try to live up to the expectation it set.
My disqualifications aside, now does seem to be an auspicious moment to hold forth with a new piece of Peak Oil theory, because this is the year when, for the first time, just about everyone is ready to admit that Peak Oil is real, in essence, though some are not quite ready to call it by that name. Just five years ago everyone from government officials to oil company executives treated Peak Oil theory as the work of a lunatic fringe, but now that conventional world oil production peaked in 2005, and all liquids world production peaked in 2008, everyone is ready to concede that there are serious problems with growing the global oil supply. And although some people still feel skittish about using the term Peak Oil (and a few experts still insist that the peak must be referred to as "an undulating plateau," which, if anything, is a graceful turn of phrase) the differences of opinion now largely stem from a refusal to accept the terminology of Peak Oil rather than the substance of peaking global oil production. This is, of course, quite understandable: it is awkward to suddenly jump from shouting "Peak Oil is bunk!" to shouting "Peak Oil is history!" in a single bound. Such acrobatics are only safe if you happen to be a politician or an economist.
Now that the matter has been largely settled, I feel that the time is ripe for me to weigh in on the subject and declare, unequivocally, that Peak Oil is indeed bunk. Not the part about global oil production reaching a peak sometime right around now then declining inexorably: that part seems true enough. Nor the part about oil production in any given province becoming constrained by geology and technology once the peak is reached: that part, under properly designed experimental conditions, seems predictive as well. In fact, the depletion model has been confirmed beautifully by the example of the continental United States minus Alaska since 1970. But the idea that this same depletion model can be applied to the planet as a whole, is, I feel, something that must be rejected as utterly and completely bogus. To see what I mean, look at a typical Peak Oil chart (Fig. 1) that shows global oil production climbing up to a peak and then declining.
Observe that the upward slope has a lot of interesting structure to it. There are world wars, depressions, imperial collapses, oil embargoes, discoveries of giant oil fields, not to mention the ugly boom and bust cycles that are the bane of capitalist economies (whereas socialist ones have sometimes been able to grow, stagnate and eventually collapse far more gracefully). It is a rugged slope, with cliffs and crevasses, craggy outcrops and steep inclines. Now look at the downward slope: is it not shockingly smooth? Its geologic origin must be completely different from that of the upward slope. It appears to be made up of a single giant moraine, piled to the angle of repose near the top, with some spreading at the base, no doubt due to erosion, with a gradual transition into what appears to be a gently sloping alluvial plain no doubt composed of silt from the runoff, which is then followed by a vast perfectly flat area, which might have been the bottom of an ancient sea. If climbing up to the peak must have required mountaineering techniques, the downward slope looks like it could be negotiated in bathroom slippers. One could do cartwheels all the way down, and be sure of not hitting anything sharp before gently rolling to a stop sometime around 2100. Mathematically, the upward slope would have to be characterized by some high-order polynomial, whereas the downward slope is just e-t with a little bit of statistical noise. This, you must agree, is extremely suspicious: a natural phenomenon of great complexity that, just when it is forced to stop growing, turns around and becomes as simple as a pile of dirt. Where else have we observed this sort of spontaneous and sudden simplification of a complex, dynamic process? Physical death is sometimes preceded by slow decay, but sooner or later most living things go from living to dead in an abrupt transition. They don't shrivel continuously for decades on end, eventually becoming too small to be observable. And so I like to call this generic and widely accepted Peak Oil case the Rosy Scenario. It's the one in which industrial civilization, instead of keeling over promptly, joins an imaginary retirement community and spends its golden years tethered to a phantom oxygen tank and a phantom colostomy bag.
The really odd thing is that the Rosy Scenario can be quite accurate, under ideal circumstances, when applied to individual countries and oil-producing regions. For instance, suppose one of the world's largest oil producers, which started out with more oil than Saudi Arabia, reaches Peak Oil in, say, 1970, but then promptly goes off the gold standard, foists its paper currency on the rest of the world by backing it up with the threat of force including the possibility of a nuclear first strike, eventually comes to import over 60% of its petroleum, much of it on credit, and, a few decades later, goes bankrupt. Then, over the intervening decades, its domestic oil production would indeed exhibit this wonderfully gentle geologically and technologically constrained curve -- up to the point of national bankruptcy.
Past the point of national bankruptcy circumstances are bound to become decidedly non-ideal, but the implications of this remain unclear. Will that hapless country still be able continue borrowing money internationally in order to import enough oil to keep its economy functioning, and, if so, under what terms, and for how much longer? It would be nice to know how this story ends ahead of time, but unfortunately all we can do is wait and see.
But we do have another example (Fig. 3), which may offer some insights into what we mean when we say that circumstances will be “non-ideal.” The country that is currently the world's largest oil producer reached Peak Oil around 1987. Its sclerotic, geriatric, ideologically hidebound, systemically corrupt leadership was unable to grasp the importance of this fact, and just three years later the country was bankrupt and, shortly thereafter, it dissolved politically. In this case, plummeting oil production became the country's leading economic indicator: it plummeted, then the GDP plummeted, then coal and natural gas production plummeted, and a decade later the economy was down 40%. Behind these numbers was a precipitous drop in life expectancy and a pervasive atmosphere of despair in which many lives were either lost or ruined.
But as long as no messy internal or external political or economic factors interfere with the natural depletion curve, the après-Peak predictions of Peak Oil theory do seem to hold. (When I say “ideal circumstances,” I suppose that I must mean circumstances that are ideal from the point of view of sentient though irrational hydrocarbon molecules, whose desire is to be pumped out of the ground and burned up as quickly and efficiently as possible, because it is unclear who else ultimately benefits, but let's not quibble.) Since the problem of not having enough oil to go around is known to cause all sorts of nasty political and economic problems, and since this is exactly the problem we should expect to encounter soon after the world reaches Peak Oil, the base assumption on which the predictions of Peak Oil theory for global oil production rest is not realistic. The specialists who are in a position to predict Peak Oil are not able to gauge its economic and political effects, and so all they can do is give us the Rosy Scenario as an ultimate upper bound. However, this caveat is not spelled out as clearly as it should be. The result is that we might as well be working with a theory which predicts that, once global Peak Oil is reached, delicious chocolate petits fours will spontaneously bake themselves into existence and fly into our mouths on dainty gossamer wings of marzipan.
The Peak Oil theory-based explanation is that while the upward slope is economically constrained, the downward slope is only constrained by the geology of depleting oil reservoirs and by oil extraction technology, which is subject to thermodynamic limits and cannot improve forever without encountering diminishing, then negative, returns. While the oil supply is growing, oil demand fluctuates, resulting in numerous ups and downs in production superimposed on the overall upward trend as production tries to match demand. But on the downward side, demand permanently exceeds supply, and so every barrel of oil that can be produced at each instant will be produced.
When extrapolating the aftermath of local oil production declines to global Peak Oil, the unstated assumption is that the global economy will continue to function with uncanny smoothness at the level of demand that can be met, while unmet demand will be cleanly washed off into the gutter by a strong, steady stream of economic and political nonsense. This will all sort itself out spontaneously with rational market participants responding to price signals and deciding at each instant whether they should:
A. continue consuming oil in the manner to which they have become accustomed, or
B. quietly wander off and die without calling attention to themselves or making a fuss.
Where else have we seen such flawless organization, in situations where a key commodity -- like, say, food, or drinking water -- becomes critically scarce? Anywhere? Anywhere at all?
And I suppose a further unstated assumption is that a shrinking economy (what with all this unmet demand and resulting attrition among market participants) can function much as a growing one does, without suffering a financial collapse. Special financial instruments called credit-default swaps can be used as a hedge against increased counterparty risk from your counterparties dying in droves from self-inflicted wounds, although after a while these instruments would become a bit too expensive. But I don't suppose that much of anything can be done about the economic growth projections baked into every single financial plan at every level. Once these turn out to be unfounded, then all the debt pyramids will come tumbling down. And since a fiat currency (such as the US Dollar) is composed of debt -- credit advanced based on a promise of future growth -- it is unclear how and with what the remaining oil will continue to be purchased. The end of growth is an imponderable; start talking about it, and everyone suddenly decides that it's lunchtime and starts ordering drinks. At least the French have a proper word for it: décroissance (literally, “de-growth”); here in the anglophone world all we can do is gibber and mumble about “double-dips.” Perhaps Geithner and Bernanke can come up with a dance number to illustrate.
Let us look at it another way. As I mentioned, Peak Oil theory has been quite good at predicting the depletion profile of certain stable and prosperous countries and provinces. But these predictions become meaningless when extrapolated to the world as a whole, for one very obvious reason: the world cannot import oil. Let me say it again, this time in title-case, bolded and centered, to emphasize the significance of this statement:
Planet Earth Can't Import Oil
When faced with insufficient domestic oil production, an industrialized country has but two choices:
1. Import oil
2. Collapse
But when faced with insufficient global oil production, an industrialized planet has just one choice: Choice Number 2.
Some might argue that there is a third choice: start using less oil right away. However, in practice this turns out to be equivalent to Choice Number 2. Using less oil involves making some radical, often technologically challenging, politically unpopular, and therefore expensive and time-consuming changes. These may be as technologically advanced (and unrealistic) as replacing the current motor vehicle fleet with electric battery-powered vehicles and a large number of nuclear power plants to recharge their batteries, or as simple (and quite realistic) as moving to a place that is within walking or bicycling distance from your work, growing most of your own food in a kitchen garden and a chicken coop, and so on. But whatever these steps are, they all require a certain amount of preparation and expense, and a time of crisis (such as when oil supplies suddenly run short) is a notoriously difficult time to launch into long-range planning activities. By the time the crisis arrives, either a country has already prepared as much as it could or wanted to (thereby delaying the onset of collapse) or it has not, bringing the crisis on sooner, and making it more severe. The oft-cited Hirsch Report states that it would take twenty years to prepare for Peak Oil in order to avoid a severe and prolonged shortage of transportation fuels, and so, given that the peak was back in 2005, we now have minus five years left to lollygag before we have to start preparing. According to Hirsch et al., we have failed to prepare already.
Some might also wonder why a shortage of oil should automatically trigger a collapse. It turns out that, in an industrialized economy, a drop in oil consumption precipitates a proportional drop in overall economic activity. Oil is the feedstock used to make the vast majority of transportation fuels -- which are used to move products and deliver services throughout the economy. In the US in particular, there is a very strong correlation between GDP and motor vehicle miles traveled. Thus, the US economy can be said to run on oil, in a rather direct and immediate way: less oil implies a smaller economy. At what point does the economy shrink so much that it can no longer meet its own maintenance requirements? In order to continue functioning, all sorts of infrastructure, plant and equipment must be maintained and replaced in a timely manner, or it stops functioning. Once that point is reached, economic activity becomes constrained not just by the availability of transportation fuels, but also by the availability of serviceable equipment. At some point the economy shrinks so much as to invalidate the financial assumptions on which it is based, making it impossible to continue importing oil on credit. Once that point is reached, the amount of transportation fuels available is no longer limited just by the availability of oil, but also constrained by the inability to finance oil imports.
The initial shortage of transportation fuels need not be large in order to trigger this entire cascade of events, because even a small shortage triggers a number of economically destructive feedback loops. A lot of fuel is wasted by idling in line at the few gas stations that remain open. More fuel is wasted by topping off -- keeping the tank as full as possible, not knowing when and where you will be able to fill it again. Even more fuel disappears from the market because people are hoarding it in jerrycans and improvised containers. As the shortages drag on and spread, fuel is hoarded, and a black market for it develops: fuel diverted from official delivery channels and siphoned from gas tanks becomes available on the black market at inflated prices. And so the effect of even a minor initial shortage can easily snowball into an economic disruption sufficient to push the economy over physical and financial thresholds and toward collapse.
If at this point you are starting to feel despondent, then -- I am sorry to have to say this, but you must be a lightweight, because there is more -- lots more to consider. Peak Oil's Rosy Scenario may look pretty, but even a rose has its thorns. And there are a number of other issues which need to be considered and taken into account within a single, integrated view.
First, the rosy post-Peak Oil global production profile is based on reserve numbers which have been overstated. Much of the remaining oil is in the Middle East, in OPEC countries, and these countries overstated their reserves by various large amounts during OPEC's “quota wars” back in the 1980s. While other OPEC members sheepishly cooked up bogus numbers that looked vaguely real, Saddam Hussein, who was always a bit of a showboat, rounded up Iraq's reserve numbers up to a nice round number: 100 billion barrels. And so OPEC reserves turn out to have been inflated by some large amount -- about a third at a minimum. Nor is OPEC unique in overstating their reserve numbers. Energy companies in the US play much the same game in order to please Wall Street. Set your bathroom slippers aside; to negotiate Peak Oil's downward slope you will need good mountaineering equipment.
Second, there is a phenomenon called Export Land Effect: oil-exporting countries, when their production starts to falter, have a strong tendency to cut exports before cutting into domestic consumption. To be sure, there are some countries that have surrendered their resource sovereignty to international energy companies and have lost control over their export policies. There are also some despotic regimes that starve their domestic consumers but to continue to earn the export revenue needed to prop up the regime. But most countries will only export their surplus production. This means that it will become impossible to buy oil internationally long before all the wells run dry, leaving oil importing countries out in the cold. Thus, if you live in an oil-importing country and thought you could negotiate the downward slope of Peak Oil in your hiking boots, put them aside. You will need a parachute.
Third, although total quantities of oil produced throughout the world were increasing up until 2005, the amounts of oil-based products (gasoline, diesel, etc.) delivered to their points of use peaked years earlier, in terms of usable energy derived. This was because more and more energy has been required to get a barrel of oil out of the ground and to refine it. Supplies of available crude oil have tended to become harder to extract, heavier, and more sulfur laden, plus the demand for more gasoline (as opposed to distillates or bunker fuels) with less lead for boosting octane add up to more energy being wasted. Energy Returned on Energy Invested (EROEI) went from 100:1 at the dawn of the oil age, when some strong-backed lads could dig you an oil well using picks and shovels, to an average of 10:1, now that oil production requires deepwater platforms (that sometimes blow up and poison entire ecosystems), horizontal drilling and fracturing technology, secondary and tertiary recovery using water and nitrogen injection, oil/water separation plants, and all sorts of other technical complexities which consume more and more of the energy they produce. As EROEI decreases from 10:1 toward 1:1, the oil industry comes to resemble an obese but famished wet-nurse ravenously sucking her own breast at the crib of a starving infant. At some point it will no longer be economically possible to deliver diesel or gasoline to a gas station. When that point comes is not certain, but there are some indications that 3:1 is the minimum EROEI that the oil industry requires in order to sustain itself. The effect of decreasing EROEI is to make the gentle slope of the Rosy Scenario much steeper. The slope no longer looks like a mound of pebbles -- more like lava flowing into the sea and solidifying in a cloud of steam. There may be plenty of energy left, but much of it is going to go by the wayside, and you might not be able to get close enough to it to roast your marshmallows.
Fourth, we must consider the fact that our modern global oil industry is highly integrated. If you need a certain specialty part for your drilling operation, chances are it can be sourced from just one or two global companies. Chances are this company has some very important, highly technical operations in a country that just happens to be an oil importer. The significance of this becomes clear when one considers what happens to that company's operations once Export Land Effect becomes felt. Suppose you are a national oil company in an oil-rich nation that still has enough oil left for domestic consumption, although it was recently forced to fire all of its international customers. Your oil fields are huge but mature, and you can only keep them in production by continuously drilling new horizontal wells just above the ever-rising water cut and maintaining well pressure by injecting seawater underneath. If you stop or even pause this activity, then your oil, at the wellhead, will quickly change in composition from slightly watery oil to slightly oily water, which you might as well just pump back underground. And now it turns out that the equipment you need to keep drilling horizontal wells comes from one of these unlucky countries that used to import your oil but now cannot, and the technicians who used to build your equipment have given up trying to find enough black-market gasoline to drive to work and are busy digging up their suburban backyards to grow potatoes. A short while later your drilling operations run out of spare parts, your oil production crashes, and most of your remaining reserves are left underground, contributing to an increasingly important reserve category: never-to-be-produced reserves.
When these four factors are considered together, it becomes difficult to imagine that global oil production could gently waft down from lofty heights in a graceful smooth and continuous curve spanning decades. Rather, the picture that presents itself is one of stepwise declines happening in more and more places, and eventually encompassing the entire planet. Whoever you are, and wherever you are, you are likely to experience this as a three-stage process:
Stage 1: You have your current level access to transportation fuels and services
Stage 2: You have severely limited access to transportation fuels and services
Stage 3: You have no access to transportation fuels and severely restricted transportation options
How long Stage 2 will last will vary from one place to another. Some places may go directly to Stage 3: gasoline tankers stop coming to your town, all the local gas stations close, and that is that. In other places, a thriving black market may give you some access to gasoline for a few years longer, at prices that will allow some uses, such as running an electrical generator at an emergency center. But your ability to successfully cope with Stage 2, and to survive Stage 3, will be determined largely by the changes and preparations you are able to make during Stage 1.
It should be expected that the vast majority of people will have done nothing to prepare, remaining quite unaware of the fact that this is something they should have been doing. Quite a few people can be expected to take a few small steps in a sensible direction, such as installing a wood stove, or insulating their home, or in a seemingly sensible but ultimately unhelpful direction, such as wasting their money on a new hybrid car or wasting their energies on trying to form a new political party or to lobby one of the existing ones. Some will buy a homestead, equip it for life off the grid, start growing all their own food (perhaps transporting their perishable surplus to a nearby farmer's market by cargo bicycle or by boat), and home-school their children, putting an emphasis on the classics and on agriculture, animal husbandry and other perennially useful knowledge. Some will flee to a place where transportation fuels are scarce already, and where a moped is considered a labor-saving device -- for your donkey or camel.
Unfortunately, it is hard to foresee which changes and adaptations will succeed and which will fail, because so much depends on the circumstances, which are sure to be unpredictable and vary from place to place, and on the person or persons involved: the uncertainty is just too great. But there is one thing of which we can be quite sure: that Peak Oil's Rosy Scenario, which projects a long and gradual global oil production decline, is bunk. Knowing this fact should impart a sense of urgency. Whether we use that sense of urgency foolishly or wisely is up to us, and our success may be a matter of luck, but having a sense of urgency is not at all bad. If we wish to prepare, we most likely have a few months, we may have a few years, but we certainly do not have a few decades. Let those who would have you believe otherwise first consider the issues I have raised in this article.
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