# The Archdruid Report

Druid perspectives on nature, culture, and the future of industrial society

## Wednesday, December 14, 2011

### The Future Can't Pay Its Bills

I want to expand here on some of the points raised in last week’s post, because they deal with factors in our situation that operate well below the surface. One of the things that makes the predicament of industrial society so difficult for most people to notice, in fact, is that its effects are woven so deeply into the patterns of everyday life. Over the last decade, for example, crude oil prices have more than tripled; over the last decade, behind a froth of speculative booms and busts, the world’s industrial economies have lurched deeper into depression. Peak oil researchers have pointed out for years that the former trend would bring about the latter, but long after events proved them right, the connection still remains unnoticed by most people.
To be fair, the way most people and nearly all economists think about economics makes this sort of blindness to the obvious hard to avoid. It’s standard these days to treat the circulation of money—the tertiary economy, to use a term from my book The Wealth of Nature—as though it’s all that matters, and to insist that the cycles of nature and the production of goods and services (the primary and secondary economies) will inevitably do whatever we want them to do, so long as there’s enough money. This is why, for instance, you’ll hear economists insisting that the soaring price of oil is good for the economy; after all, all the money being spent to buy oil is getting spent in turn on other things, right?
What this ignores, of course, is the fact that the price of oil is going up, in large part, because petroleum is getting steadily more difficult to extract as we exhaust the easily accessible sources, and so the cost of oil production is going up while the amount of oil being produced is not. As a growing fraction of industrial civilization’s capacity to produce goods and services has to be diverted into oil extraction in order to keep the oil flowing, the amount of that capacity that can be used for anything else decreases accordingly. Notice, though, that this diversion isn’t an obvious thing; it happens one transaction at a time, throughout the economy, as laborers, raw materials, capital, and a thousand other things go into oil production instead of some other economic sector.
The place to begin making sense of the shape of the process under way, it seems to me, is the intriguing article by green economist Herman Daly, cited in last week’s post, about the way that the World Bank’s pursuit of global growth via the worship of economic orthodoxies ran headfirst into a shortage of "bankable projects"—in plain English, economic projects that would yield the ten per cent or so per year necessary to pay off the loan and also make a profit. The World Bank, as Daly recounts, tried to make up for the shortage by lowering its standards, and pouring money into projects that counted as bankable only in the same imaginary world where Pets.com stock and subprime mortgage-backed securities count as good investments.
The point I’d like to make here, though, is that a shortage of bankable projects has been a problem for some time now in regions not normally consigned to the Third World. The Rust Belt town where I live, Cumberland, Maryland, is one example. Until 1974 it was a significant industrial center, with two large breweries, a tire factory, a fabric mill, and several smaller concerns. 1974, though, was the year that the consequences of America’s first brush with peak oil hit home, and Cumberland was one of the targets. A combination of soaring raw material costs, slumping sales, and competition from overseas shuttered every factory in town, and none ever reopened. Cumberland, like the rest of the Rust Belt, suddenly had a shortage of bankable projects. The shortage wasn’t total—a handful of "big box" stores found construction loans during the retail-empire boom of the 1990s, for example—but rock-bottom real estate prices, favorable tax policies, low labor costs, and two colleges nearby to provide workforce training at state expense couldn’t lure factory jobs back into the region.
That same experience is being repeated now all over America, and for that matter across much of the industrial world. Capital shortage isn’t an issue—with two rounds of quantitative easing and a tacit agreement on the part of bank regulators not to raise awkward questions about the actual value of the paper assets owned by banks, there’s plenty of money available to lend—but loans aren’t being made, and the reason given by bank after bank is that next to nobody who wants to borrow money has a credible plan that will allow them to pay it back. That claim has been rejected with some heat by commentators, but I’ve come to suspect that it may be more accurate than not. That was exactly what happened to Cumberland, after all; in the changed economic environment after 1974, a factory built here wouldn’t have made enough money to pay back the loans that would have been needed to build it, and so the loans weren’t made. Increasingly, that seems to be true of the industrial world as a whole.
All this can be described, in the terms I used in The Wealth of Nature, as a widening mismatch between the tertiary economy of money and the secondary economy of goods and services—or, to put the matter even more simply, a rising tide of paper wealth chasing a falling tide of actual value. Still, I’ve come to think that there’s another way of looking at it—one that unfolds from the perspectives I’ve been discussing here over the last few weeks.
Let’s step away for a moment from the game of arbitrary tokens we call "money," and look at the economy from a thermodynamic perspective, as a system for producing goods and services by applying energy to an assortment of raw materials. Until the coming of the industrial revolution, the vast majority of the energy that went into human economic systems went from sunlight to crops to human and animal muscle, which produced and distributed goods and services. The industrial revolution transformed that equation adding torrents of cheap abundant fossil fuel energy to the annual income from photosynthesis. Only a small fraction of the labor force and other resources had to be diverted from food production to bring this flood of energy into the economic equation, and only a small fraction of fossil fuels had to be cycled back into the fossil fuel extraction process; the rest of the labor force, other resources, and all that additional energy from fossil fuels could be poured into the rest of the economy, producing goods and services in unparalleled amounts.
Physicist Ilya Prigogine has shown by way of intricate equations that the flow of energy through a system increases the complexity of the system. If any further evidence was needed to back up his claims, the history of the world’s industrial economies provides it. The three centuries that followed the development of the first functional steam engines saw economic complexity, measured by the creation of new job categories, soar to a level almost unimaginably greater than any previous civilization had achieved. The bonanza of wealth produced by adding fossil fuel energy to the sun’s annual contribution spread throughout the industrial economies, and the ways and means by which money sprayed outwards from the pockets of coal magnates and oil barons quickly became institutionalized.
Governments, businesses, and societies ballooned in complexity, creating niches for entire ecosystems of office fauna to do tasks the presidents and tycoons of the nineteenth century had accomplished with a tiny fraction of the personnel; workloads obeyed Parkinson’s Law—"work expands so as to fill the time available for its completion"—and everyone found that it was easier to add more staff to get a job done than to get the existing staff to do it themselves. The result, in most industrial societies, is an economy in which only a small fraction of the labor force actually has anything directly to do with the production of goods and services, while the rest are kept busy managing the sprawling social and economic machinery that has come into being to organize, finance, manage, staff, market, advertise, sell, analyze, tax, regulate, review, praise, and denounce the production of goods and services.
What seems to have been lost sight of, though, is that this immense superstructure all rests on the same foundation as any other economy, the use of energy to convert raw materials into goods and services. More to the point, it depends on a certain level of surplus that can be produced in this way, and that depends in turn on being able to add plenty of fossil fuel energy to the economic system without having to divert too large a fraction of the labor force, resource base, and energy supply into the extraction of fossil fuels. Some sense of the difference made by fossil fuels can be measured by comparing the economies of the industrial age to those of societies that, by any other standard, were near the upper end of human social complexity—Tokugawa Japan and Renaissance Italy are the ones that come to mind. Urban, literate, and highly cultured, each of these societies had the resources to support extraordinary artistic, literary, and intellectual creativity. Still, they did this with economies vastly simpler than anything you’ll find in a modern industrial society.
The division of the labor force among economic roles makes a good measure of the difference. In both societies, the largest economic sector, employing around fifty per cent of the adult population (nearly all adult women and most elderly people of both sexes), was the household economy; a good half of the total economic value produced in each society came out of the kitchen gardens, spindles, looms, and other economic facilities associated with households. Another thirty per cent or so of the population in each society, including most of the adult men, was engaged full time in farming and other forms of direct food production; maybe ten per cent of the adult population worked in the skilled trades; and the remaining ten per cent or so was divided between religious professionals, military professionals, artists and performers, aristocrats, and merchants who lived by buying and selling goods produced by others.
The limited range of categories available in those societies was not the result of inadequate cleverness. If some Italian despot or Tokugawa shogun had decided he needed a staff of human resource managers, corporate image consultants, strategic marketing specialists, and the rest of the occupational apparatus of modern business life, say, he would have been out of luck, and if he tried anyway, he would have been out of a job—the resources needed to train and employ some equivalent of modern office fauna would have had to be diverted from more immediate necessities such as training and employing an adequate force of condottieri or samurai, which was not exactly a viable strategy in those times. This is why Italian despots and Tokugawa shoguns got by with relatively small staffs of clerks, scribes, feudal subordinates, and maybe an astrologer; that’s what their economic systems could afford.
Equally, an aspiring craftsman or merchant faced real challenges in expanding his business beyond fairly sharp limits. In a few cases, a combination of luck, technical skill, and adequate transport allowed one region to take on a commanding role in some specific export market, profit considerably from that, and build up an impressive degree of infrastructure; the golden age of Greece was paid for by the profits from Greek wine and olive oil exports, for example, and the woolen trade brought similar benefits to late medieval Flanders. Far more often, though, local needs had to be supplied by local production, because the surplus energy that would have been needed to power long distance trade on a large scale simply didn’t exist, or couldn’t be spared from more pressing needs. Thus the institutional arrangements that governed economic life before the industrial age were as closely tailored to a world of relatively scarce energy, in which most people worked in the household or farming sectors of the economy, as today’s institutional arrangements are tailored to a world awash in cheap abundant energy.
That last point defines the crisis of our times, however, because we no longer live in a world awash in cheap abundant energy. We’ve still got a lot more energy than Renaissance Italy or Tokugawa Japan had, to be sure, but the per capita surplus is not what it once was, and a growing fraction of what we’ve got has had to be diverted to cover increases in direct and indirect energy costs of energy production. Meanwhile, the institutional arrangements are still firmly fixed in place, and they aren’t optional; try starting a business sometime without dealing with banks, real estate companies, licensing boards, tax authorities, et al., and you’ll quickly discover how non-optional these arrangements are.
The mismatch between the economy we’ve got and the economy we can afford has many implications, but one of the largest is precisely the issue I raised earlier in this post: across the industrial world, there are very few bankable projects to be found, even at a time when there are millions of people who need work, and who would happily buy products if they had the chance to earn the money to do so. Our economy is burdened with an unproductive superstructure it can no longer support. The globalization fad of the 1990s, which arbitraged the difference in wage costs between Third World sweatshops and industrial-world factories, was in effect an attempt to evade the resulting difficulties by throwing the industrial nations’ working classes under the bus, and it only worked for a decade or so; as so often happens in the declining years of a civilization, a short term fix was treated as a long term solution, and a brief remission of symptoms allowed the underlying crisis to worsen steadily.
Over the long run, the mismatch is a problem that will solve itself; once the unraveling of the industrial economy goes far enough, the superstructure will come apart, leaving a great many human resource managers, corporate image consultants, strategic marketing specialists, and the like with about as much chance of finding jobs in their fields as they would have had 17th-century Osaka or 14th-century Milan. In the short and middle term, though, the mismatch will almost certainly continue to show itself in exactly the same way that it’s been visible over the last few decades: more and more often, business ventures simply won’t be able to make enough money to cover startup costs or to stay in business.
Of course there will be exceptions. We are talking about a shift that will appear, as it has appeared so far, as a shifting of statistical averages, and the background of ordinary economic fluctuations will make it more than usually difficult to tease out the signal from the noise. Even in hard times, some ventures make fortunes; what makes hard times differ from boomtimes is that the fortunes are fewer, and the odds of making one of them come more and more to resemble the odds of walking away from a Vegas casino with a six-figure jackpot.
All this has two implications, it seems to me, that are of core importance for the shape of our future. The first is simply that those of my readers whose plans for the future depend on holding down a job may have a very hard row to hoe. The shift under way in the economy will more than likely squeeze the current model of economic life from both ends—as it becomes harder to find, keep, and earn a decent living at an ordinary job, businesses will continue to fold, debase their products, or both, and so it will also become harder to convert the income from an ordinary job back into goods and services worth having. One of the core themes I’ve been discussing here for some time now, the need to move at least one family member out of employment into the household economy, is in part a response to that situation; what you produce yourself for your own consumption doesn’t pay a share of the costs of the economic superstructure. Beyond that, the deterioration of the official economy is accompanied, as pretty much always happens, by the growth of alternative economic networks that allow goods and services to be exchanged outside normal channels; it may be a while before those networks become solid enough to support more than a few people, but taking part in exchanges through these networks even in their early stages may be worthwhile.
The second implication also relates to a core theme of this blog, though it’s on a larger scale. While other economic arrangements are certainly imaginable, the one we have right now is strictly limited in what it can accomplish by what can make a profit: to repeat Daly’s term, it has to be a bankable project, or by and large, it won’t get done. This may just turn out to be a far more dangerous limitation than anybody has yet realized. There are, after all, any number of plans for grand projects in response to the end of the age of cheap abundant energy; each of them would require the investment of a great deal of capital, labor, raw materials, and other resources; and under present arrangements, none of them can go forward unless someone can count on making a profit from making them happen. Under present arrangements, in turn, it’s likely that none of them will be profitable enough to get a construction loan or to cover their operating costs once they get built.
We’ve already seen a solid prefigure of this in the ethanol bubble of a few years ago, in which firms in corn states rushed to build ethanol plants. Even with government subsidies and a guaranteed market, a great many of those plants are now bankrupt and shuttered. It’s an open secret that many recent solar and wind energy projects make money only because of government subsidies. Grandiose plans to turn large swathes of Nevada into algal biodiesel farms or vast solar arrays are arguably even more likely to be subject to the same rule—and the subsidies in these latter cases would be ruinously expensive. Earlier posts here have discussed some of the other reasons why such projects will not be built; if the pattern I’ve sketched here is anything to go by, though, the future these projects imagine won’t arrive, because it won’t be able to pay its bills.

#### 125 comments:

Ruben said...

  I am expanding our household economy while my girlfriend works for cash. What I still can't figure out is how housing is going to shake out as the whole thing comes unglued.
  Rents will drop, but landlords will resist that as long as possible. There will be quite a bit of displacement before the reality that any rent is better than no rent sets in.
  So, for now, the plan is to hope she doesn't lose her job before the landlords drop the rent. Not much of a plan....

  12/14/11, 11:50 PM
Rhisiart Gwilym said...

  JM, have you ever thought of teaching a course of 'Advanced Economic Theory For The New Paradigm' -- for professional economists? They need you!

  12/14/11, 11:54 PM
pasttense said...

  If one member of the family switches to household work then what happens if the family member with the job loses it? Economic catastrophe. But if both have jobs, and one job is lost there is still family income.
  And note the family could easily make the wrong choice in deciding which member should switch to household work. Suppose there is a husband making $20/hour at a factory and wife making $10/hour as a sales clerk. Overwhelmingly couples would choose the wife as the one who should switch to household work. Yet factories are closing down left and right--while the sales clerk position may well last decades.

  12/15/11, 12:02 AM
ofthehands.com said...

  So are we then already stuck? If the bankable projects aren't currently here, it doesn't seem like they're going to show up in the next year or two. How long, then, can we stumble forward without new investment and growth? At what point does it manifest in another shock to the system, and what will that shock be?
  I wonder, too, if we might see a collapse of much of the renewable energy industry in the near future. As government budgets get tighter, there's going to be greater pressure to cut a wide variety of subsidies. I know here in Oregon, we have some of the most generous state subsidies for renewable energy but there's been rising political pressure to cut back on these, with the argument that they're not really bringing in a good enough return. If the pressure grows too large and those subsidies do start to get cut in various states as well as at the federal level, it seems like that could sink a hefty portion of the industry. Which might just leave some people frustrated and bewildered.
  I wish we had some kind of index to measure household economic activity. I would have to think it's rising sharply at the moment. Even if a small minority of the population gets that the household economy is going to come roaring back soon as a major feature of the times, surely a decent chunk of the millions of unemployed people out there have started to do work within the household, just as a byproduct of their circumstances. I realize many of those skills have been lost, but there's been a certain small trend in recent years to rediscovering them and there are still a number of people out there who have at least some related skills but whom didn't utilize them when they had a job. Now's their chance, and with little money, it makes significant sense for them to get on it.
  Joel

  12/15/11, 12:48 AM
ofthehands.com said...

  On a different note, JMG, ever since reading your series of posts on magic--particularly "The Trouble with Binary Thinking" and "A Choice of Contemplations"--I've been struggling to understand and integrate into my thought process those concepts you introduced. In particular, I've been attempting to evaluate my support of and participation in the Occupy movement with some of those concepts. As the encampments have been broken up and the movement has quieted down a bit, I've been able to step back from the flood of news and actually try to better assess the movement. Your writings, to say the least, have had quite an impact on that assessment.
  I spent the last two days false starting and struggling to write a post on all those percolations and finally came up with something I felt good about. However, I'm not sure it doesn't have its share of problems. I wonder about the focus, if I engaged a bit too much in rhetorical flourish, if I actually have communicated a coherent idea or if I tried to pack too much into one post. I would love feedback from the community here (on my blog or via email, not hijacking this comment thread) particularly since they should be familiar with the concepts that drove my thought process.
  I'll also understand and not be offended, JMG, if you don't publish this comment. Not sure if it's entirely appropriate for the thread or not.
  Thanks,
  Joel

  12/15/11, 1:04 AM
Kammy said...

  Bravo!. Thank you for speaking sense to the situation that makes sense to the common man. The mechanics behind why the 'world of debt' we have built can't continue tends to stump an amazing range of intellects. The historical context and reference urges your readers (like me, anyway) to do the research, fill in the gaps, and ask the next question. Thanks again...

  12/15/11, 2:08 AM
jean-vivien said...

  Hi Mr Archdruid,
  I look forward to reading the next posts that do have practical implications within the framework you are defining. It seems that 'practical implications' are best left to each of us' discretion though.
  So this stuff is really hard to figure out... though having institutions and a social structure, even unadapted to lower energy consumption, is better than having nothing at all during the next decades or so.

  12/15/11, 2:15 AM
Yupped said...

  Good morning! Thanks for another fine post.
  A few years ago, I dropped out from a regular job and went into contract project management and consulting (I do IT work mainly). This has allowed me to adjust my hours down gradually, to the extent that I am now doing about 50% earning income, and 50% doing household economy stuff. This summer I only “worked” 25% in the business world, and spent most of my time doing serious gardening. We’ve dropped our expenses substantially, and will keep adjusting this balance over the next few years. So I recommend this contracting/part-time approach to people who want to put more time into their homesteads. Many corporations seem to be open to this approach, too.
  One challenge is trying to help my teenage kids with what to do next. I’m encouraging them to learn practical skills, be able to use those skills on a piece-rate basis with a flexible schedule, and try to find happiness in things other than making tons of money. It’s easy in principle, but will be trickier in practice, at least for a while until this becomes mainstream. But this approach is being perceived by their peers as a sensible strategy - betting one’s future on a stable “job” is starting to be seen as unrealistic.
  This is just a transitional approach, though. It still assumes that the regular money economy will be there to pay the bills - we are just changing the way that we interact with the money flows. It will get a lot more interesting as those money flows dry up. I have this hope that as the economy continues to contract, many smaller local businesses that seem hopelessly unrealistic now (butcher, baker or candlestick maker type of things), may become "bankable" again on a smaller scale, where "bankable" means they could support a low-cost lifestyle with barter as a significant part of the payment plan. We'll see. What exciting times we live in!

  12/15/11, 2:49 AM
CSAFarmer said...

  Thanks, Mr. Greer;
  It's a 'slowly boil the frog' scenario, I guess. Mankind is an adaptable creature, but adaptability and tolerance appear to have turned into apathy.
  So long as the crash occurs in slow motion, most people seem unable to overcome the inertia of their day to day routine.
  Or maybe it's just they are enthusiastic about the wrong things. My kids (both mid-twenty-somethings) are not apathetic, they have big plans for a future that, unfortunately, will not occur.
  Neither of their career choices or future success plans e.g. finding, fixing, flipping real estate - are likely long-term survival candidates. It's hard for a parent to throw cold water on your kids' ambitions, but I am trying to persuade them to have a back up plan, maybe take some profit from your 'flip' and buy and hold a nice little piece of farm land.
  In the meantime, on my farm I'm planning to have to house and feed them and their 'significant others'. They understand what I'm doing and don't denigrate it, but they don't really believe it will come to that.
  Boundless optimism of youth, I guess, 'something will come along to fix things'. They have both agreed the homestead is the fallback point though.

  12/15/11, 3:04 AM
russell1200 said...

  Money has a variety of functions, which sometimes makes it hard to pin down. One of my favorite definitions is that: money is an IOU against future production.
  And the part of the equation that always gets missed when they are taking about balancing social security, medicare , etcetera is that you can go through all sorts of contortions to make the accounting side of the ledger balance out, and you still have the problem that if there is less productive, your IOU’s won’t be worth very much even if you don’t flood the supply of them to make the accounting balance.
  It is this balance of factors that often caused inflation in preindustrial societies that were on a hard metal currency. In their case the money supply stayed the same, but the increase in population (with declining marginal returns on land) caused there to also be a greater demand for the same amount of production.

  12/15/11, 3:16 AM
carlosbenari said...

  "organize, finance, manage, staff, market, advertise, sell, analyze, tax, regulate, review, praise, and denounce..."
  JMG, you could make a living in stand up comedy, as you easily make us smile even presenting a very sad situation.

  12/15/11, 3:24 AM
Alice Y. said...

  Good post! Thanks for the numbers from Tokugawa Japan and Renaissance Italy. What are the sources for these, please? I am interested to know more particularly because "how much specialization in human labour can we plan for being able to support?" has been a conversation topic at our church meals. For a first approximation from those figures we could infer that putting about 20% of our labour into activities other than direct food and clothing production might be a useful upper limit, where we have choice.

  12/15/11, 3:27 AM
McMaven said...

  JMG - Greetings from Williamsport, MD! My buddy and I were talking about your blog the other day and how we need to make a "pilgrimage" up the C&O Canal to meet you this spring/summer haha. Have you visited other cities/towns in Western Maryland since your move to Cumberland? In a deindustrial future, do you think Hagerstown will ever live up to its "Hub City" nickname again?

  12/15/11, 4:26 AM
Source_Dweller said...

  Irving Stone's 1961 novel The Agony and the Ecstacy gives a flavour of Italy in Michaengelo's lifetime.
  I have an intuition that spirituality will play a much larger role in the lower energy societies of the future, as it did in the examples you mentioned. Especially so for spiritual practices that have an explicit ecological expression, a reverence for this Creation, and our individual Existence within it.
  There are some signs that a trinary position, a dialectical resolution if that is the correct phrase, between scientific materialism and established religions, is emerging.
  I look forward to your thoughts on this question.

  12/15/11, 4:28 AM
Greg Reynolds @ Riverbend said...

  Case in point; It is interesting that there are so many jobs in western North Dakota drilling for oil, that there is a shortage of housing for the workers.
  And I guess we will see if the promised oil bonanza plays out like the gas bubble out east.
  Greg

  12/15/11, 4:45 AM
Rashakor said...

  Do the future really needs to pay its bills?
  A maybe viable "bankable" project would be to build infrastructure that can bring a benefit in the future. If we assume a collapse of the tertiary economy maybe having build good resilient infractrures before it can bring those benefit without ever having to really pay for them.
  Many of the survalists out there may argue that weaponry, wood stoves, bicycles... and other appropriate technologies are worthwhile investments to buy now with funny money with the crude intention to never repay them.
  We need to think of bigger things in that scope.

  12/15/11, 5:55 AM
DC said...

  Great post, JMG!
  I find the discussion of value to be quite compelling in our current global economic predicament. As you say, the unraveling of the industrial economy is afoot and as alternative economic structures become more satiable--such that the "value" of a basic human need (clean water, food, shelter, energy, clothing, etc.) is determined not by the "price" in money someone is willing to pay, but by association and necessity of mutual needs. Of course, this requires an entirely new mode of production that reshapes our understanding of value and the production and distribution of "valuable" and more scarce resources.

  12/15/11, 6:10 AM
greenbasket said...

  It's interesting to read your thoughts from an economic, "big-picture" perspective. I've been doing a lot of reading on peak oil/post-industrial agriculture and what can be done now to start preparing not just families but communities for the future, and have started doing them in Gainesville, FL.
  I see a lot of theory and talk of the future. I'm really interested to read about what you are doing to prepare yourself and your community right now.

  12/15/11, 6:19 AM
Texas_Engineer said...

  Another excellent analysis JMG.
  The decline in "bankable" projects is certainly obvious to me. I work in patents and almost exclusively with start-ups. One of the visible changes over the last 5-10 years is how Venture Capital has dried up for entrepreneurs and in particular how the Venture Capital Industry is losing money. There are already calls for the Venture Capital Industry to restructure itself to survive. But as you might expect - most of those calls occur inside a narrative that eventually growth and bankable projects will reappear. The notion that this will not happen is still unthinkable to that industry.

  12/15/11, 6:27 AM
Wolfgang Brinck said...

  Thanks for bringing up Ilya Prigogine's name in conjunction with social complexity. I would like to add the name Rod Swenson to the discussion. He has a number of papers on the topics of order, complexity and entropy at his website, http://rodswenson.com/
  I think that there are two points worth noting in the connection between energy and social complexity. One is that it is not the absolute amount of usable energy that creates complexity but the rate at which that energy is burned to create useful work.
  The second point is that the creation of complexity or order that spontaneously arises with the burning of energy is not a continuous phenomenon, i.e. more energy burned does not automatically create more complexity. At each level and for each instance where complexity arises out of the burning of energy there is a minimum threshold below which the burning of energy does not produce more complexity. Stable complex structures are maintained only as long as the rate of burn remains above the minimal threshold.
  What I think this means for complex societies is that it is not enough to have some amount of energy to maintain some arbitrarily complex phenomenon such as the internet. Once burn rates drop below the threshold for the given phenomenon, order simply collapses and energy dissipates randomly without any creation of complexity. I suspect that this is what we may find out is wrong with wind, solar, ethanol and other alternative energy schemes. Not that they can't produce renewable energy, but that the rate at which they do this is simply not enough to maintain the level of social complexity that oil and coal could in the past. Jobs may be one of the first social phenomena to disappear as a result of reduced energy fluxes.
  A third point worth mentioning is that complex structures tend to be hierarchical. Higher level phenomenal rely on lower level phenomena. For instance, the internet relies on network technology which in turn relies on lower level hardware which in turn relies on manufacturing processes which in turn rely on manufacturing technology mining and energy production. Lowering the burn rate at any level of this hierarchy to where the necessary complexity can no longer be maintained will make the entire scheme collapse and it will do so all of a sudden.

  12/15/11, 6:36 AM
Andy Brown said...

  As you described the future ruins of Nevada's algae tank plantations, I couldn't help be reminded of the scenes in the film Rapa Nui, when the Easter Islanders frantically chop down the last of their trees to roll their great moai from the quarries to the shores . . . to accomplish something . . . that seemed like a good idea at the time.

  12/15/11, 6:37 AM
john said...

  "Beyond that, the deterioration of the official economy is accompanied, as pretty much always happens, by the growth of alternative economic networks that allow goods and services to be exchanged outside normal channels; it may be a while before those networks become solid enough to support more than a few people, but taking part in exchanges through these networks even in their early stages may be worthwhile." Thank you for tirelessly putting in the time to educate and inform. Word is getting around you know.

  12/15/11, 6:42 AM
hawlkeye said...

  Thanks JMG; covering some very juicy ground here...
  Now then, about "...alternative economic networks that allow goods and services to be exchanged outside normal channels..."
  Now there's a can of worms I hope to see opened soon for vigorous commentary. Because I understand you to mean normal channels as the "legal" ones.
  I would very much like to discuss the subject, yet have no interest in being perceived as someone who advocates felonious illegal activity on a public forum.
  So I hope you find a way to talk about smuggling theoretically and then other researchers can present their hypothetical examples or perhaps share some anecdotes they might have heard from friends...

  12/15/11, 6:44 AM
Ric said...

  While I greatly appreciate the bags of shiny rocks I was given as a COBOL programmer, I thought at the time that I could have done more for the accounting departments I wrote code for with a box of Blackfoot #2 pencils and a stack of 13-column paper than I ever did with 10's of thousands of lines of COBOL code, not to mentions the millions of dollars in hardware and infrastructure, including (pre-internet) the launching of a communications satellite. Our motto at one job was, "[Name of proprietary software package redacted]: Turning user input into error messages at the speed of light!"

  12/15/11, 6:48 AM
bryant said...

  Not only is this essay trenchant, well-reasoned and concise, it also explains what I am seeing in my town and on my travels.
  One of my personal economic indicators is the disposition of prime commercial real estate; those strip malls and commercial building on the corners of major intersections. For the last decade, old, established businesses; appliance stores, restaurants and the other staid apparatus' of the old economy, have been closing, and the space is often empty permanently.
  If these prime locations are eventually occupied, the new establishments are a radical departure from the previous ones. Dance and/or karate studios, tattoo parlors, nail salons and evangelical Christian churches... it is hard to believe that the property owners are getting much rent from these worthies. Rather, I expect that the owners are happy to have anyone who can help defray some fraction of the property tax liability, never mind make a profit.
  No bankable projects indeed!

  12/15/11, 7:07 AM
Ventriloquist said...

  There are as, it is said, many small things that one can do on a daily basis which, however incrementally, steps us down the path toward greater self-sufficiency.
  One thing that we have been striving towards has to do with our daily food consumption. We have a large vegetable garden, and have preserved significant amounts for storage. We also have significant amounts of stored commercial foods. Our original goal was to consume one meal per day from a combination of stored self-produced and commercial food. Then, one meal per day just from self-produced food.
  This progression, taken to its logical conclusion, would (hopefully, eventually) take us to the point of total food self-sufficieny. Whether we will actually achieve that goal remains to be seen, bait we are determined to get as far along that path as possible.

  12/15/11, 7:46 AM
Don Stewart said...

  I agree that doing more for yourself is quite important. I can't imagine going into the future without a kitchen garden or a neighborhood garden. I have a couple of observations I will add.
  First, I suggest you spend some time on a small, organic farm which is actually making some money. I work on one half a day a week. Many farms will let you work for a week in the summer. What you will discover is that it requires a tremendous amount of knowledge and work with your muscles to live on a solar budget through the courtesy of plants and animals. Nothing must be wasted, and everything must be recycled. One person's urine can fertilize one acre.
  Second, you have to deal with your location. Most local governments will make life as difficult for you as possible. It is hard to avoid the conclusion that local governments are among the criminal element. Anybody who gets serious about living on a solar budget will lead a less than antiseptic existence. A good one, but not anything a TV commercial would be happy about showing. Local governments will make your life miserable.
  Third, timing is everything. The current issue of Permaculture Activist talks about relocalizing staple crops. The tricky part is this. Most staple crops contain very little water (think of a grain of wheat). Water, and particularly the refrigerated water required for fresh produce, is way more expensive to ship than dried grain and dried beans. Therefore, it may well be decades before it becomes economically attractive to grow wheat again in the Champlain valley, rather than ship it in from Montana. So localize smartly--or you will lose all your money.
  Fourth. The mental adjustments that JMG has talked about are crucial. If you cannot enjoy preparing and eating fresh greens from your kitchen garden, then you are still in thrall to a culture that is dying. But it is going to gasp for air as long as possible.
  Don Stewart

  12/15/11, 7:47 AM
GHung said...

  One of the core themes I’ve been discussing here for some time now, the need to move at least one family member out of employment into the household economy, is in part a response to that situation; what you produce yourself for your own consumption doesn’t pay a share of the costs of the economic superstructure.
  Having been in this arrangement, a least partly, for several years, I can say that, this too can be a tough row to hoe. Convincing one's family members of the real value of household economy production is harder than showing the results of your labor quantified in a regular paycheck, and our culture still stigmatizes those who "don't have a real job".
  I mentioned in a late comment to last week's post that, so far this week, my efforts on the home front have resulted in: 30 raspberry plants transplanted; one deer shot, processed, and in the freezer; another cord of firewood in the shed; solar systems maintained (@50KwH in the batteries); helped two friends insulate (labor trade in the bank); about 6 hours in the garden, preping for spring; all of the cooking; etc.
  While it's hard to put a monetary value on these things, I'll take a few and try:
  @ 60 lbs. deer meat at $3.00/lb. = $180
  @ one cord firewood = $180
  10 hours labor banked at $10/hr = $100
  about $5 worth of electricity.
  The value of a generation's worth of raspberry production is hard to figure, as are other things, and the solar systems' costs were paid forward, their production ongoing. The costs of purchasing equipment (chainsaw/fuel/oil, etc) also needs to be factored in, but, taking what I know equals $465. I always multiply by about 1.5 due to no taxes being assessed, no money changing hands, none of the costs associated with formal employment applying, I calculate the real dollar value of my efforts over the last four days to be around $700. This arrangement also reduces the tax rate on my wife's income somewhat, as she can claim me as a dependent. 'Real' income from my part time business is low enough to be added to her income.
  Of course, as the Archdruid suggests, the greater value of such an arrangement may be more intangible. Helping friends insulate further cemented our cooperative relationship, and we had fun doing it = social capital. While my wife gets stressed by not being fully/formally employed, my stress level goes up, spinning my wheels, obtaining that almighty pay check. I have trouble divorcing a mainstream job from providing support to a system which is corrupt, destructive, and self-destructing.
  Having said all of this, I plan to get back into the job market soon, hoping for part time, fully knowing that whatever job I find likely won't exist for long. Pay a few things off, stockpile a bit of fiat cash (as Stoneleigh suggests); one last stand for America ;-)

  12/15/11, 8:03 AM
steve said...

  Of course, it's easy to see the "declining returns on complexity" thing as a monolithic absolute, when there remain many social and economic interstices where additional spending now would lead to a positive return in terms of genuine human wealth: mass insulation of homes; repairing the canal system; mailing a 'how to grow food' guide to every house in the country; even funding a 'TransitionTV' social innovation magazine show would still probably be worth it at this point.
  The trouble is, by the time real wealth - in the form of 'money' - has passed through the multiple distorting transformers of government, banking, bureaucracy, all under the influence of the international markets, real returns become pretty hard to recognise or allocate wealth to.
  So, once again, the problem is a very practical one, but our inability to respond to it is cultural, social, psychological.

  12/15/11, 8:04 AM
Zach said...

  JMG,
  That's a very nicely done (if unsettling) analysis. Having just finished The Wealth of Nature, it does mesh well with the model from the book.
  Here is a data point I received just this morning about lack of "bankable" projects -- one of my habits is to keep an eye on local properties for sale, in the hopes of getting some small acreage to call my own. There is one which has been for sale for almost two years, at what would have seemed an absurdly low price for just the bare land a few years ago before the bubble burst. It does have a house, although I gather from the description that substantial repairs would be required.
  Some months ago, a note was added to the listing that offers which were financed must be financed by institutions known by and approved by the seller.
  Today, that note was changed to say that all offers must be in CASH only (certified cashier's check, please).
  The property is a BANK-OWNED foreclosure.
  It would appear that the bank has concluded it cannot issue a "bankable" mortgage on this property.
  One tiny sign of how the credit crunch is playing out.
  peace,
  Zach

  12/15/11, 8:08 AM
Cathy McGuire said...

  I found it hard to read this post, JMG – but only because my mind kept leaping off into scenarios of how I could help my town connect these dots! I really appreciate your clarity, and I want to look for ways to share it with those who might not have looked at things from this perspective. What I keep finding is that most people are treading water so hard (if they’re lucky!) that they can’t look at the big picture, let alone figure out how to adjust and adapt. Your previous posts about detaching from the media really can help here – not only does one’s brain have a lot more quiet time to contemplate this overall picture, it helps to experience that one doesn’t need the stimulation and expensive geegaws in order to enjoy life. And this post points out that we’ve been applying bandaids for a while, and no wonder they are not working! I continue to go through the five stages of Kubler Ross grief and for the most part, I’m past the anger stage, and into accepting that the destruction of jobs (and the monetization of “non-profits” into hideous monstrosities that pay their workers $9/hr and their CEOs six figures) is part of this attempt to maximize rapidly disappearing profits. Like sand creatures scrambling as the tide ebbs… So I’m finding it easier to focus on how I am going to adapt, and paying more attention to how successful (or not) my attempts are. And when I feel I am getting the hang of these processes, I hope to be able to share with others – who might soon be looking around for hints!

  12/15/11, 8:16 AM
DE said...

  The major challenge, it seems to me, facing even the readers of this and similar blogs who with your help have seen beneath appearances, is a species of procrastination best described as “get yours while you can.” The timeline for the de-petroleumizing of the planet is a significant unknown, even as its effects are increasingly evident. Is a degree of freedom from mass thaumaturgy enough to motivate us?

  12/15/11, 8:17 AM
Ceworthe said...

  So we've exceeded the carrying capacity of the earth's petrochemicals or ability to extract them and the jobs created by them. Hence the unemployment of the tertiary economy supported thereby and jobs that are not coming back. We've exceeded the carrying capacity of creating new factories and the jobs that come with them as there won't be enough of a return on investment to justify the loan. So it will be like playing musical chairs for the secondary economy spots, and perhaps a crash of the real population by lack of means to thrive. Good thing people are starting to hold off on having so many kids.... Downsizing one's footprint on the earth will allow more people to survive at a lower standard of living and perhaps mitigate the inevitable somewhat?

  12/15/11, 8:20 AM
Jeffrey Kotyk said...

  "...business ventures simply won’t be able to make enough money to cover startup costs or to stay in business."
  I think this ties in with the institutional arrangements, as well. Staying in India the last few months, albeit in a monastery but still going out, has shed a lot of light on how a simple economy works (at least out here in the countryside) compared to back home in Canada.
  For example, in India you can grow cabbages and sell them on the roadside without a permit. In Canada the police wouldn't allow it as it would be considered unhygienic to sell produce in the open air on the roadside.
  You can also open an eatery here with minimal government paperwork. There is a trade-off because food handling in often unhygienic (by western standards), but the costs are kept low and I reckon it is actually fairly easy to make a living with just your family while buying local produce strait from the farmers conveniently on the roadside. A wok, boiling water pot, some tables and chairs is almost all you need really to open up an eatery in India.
  In contrast to that back home you have heaps of overhead costs and required restaurant equipment which make a little family-run eatery infeasible with intolerable start-up costs. That's also why the cost of eating out is so high.
  As peak oil sets in I wonder if much of the "First World" will start to resemble India in many ways as the economies by necessity have to simplify.

  12/15/11, 8:30 AM
Matt and Jess said...

  What a nice change from last week's super depressing post! So what you're saying is that the structure we have today was built to support a cheap energy flow and that as the economy isn't changing its rules the transition will happen when people start operating outside of the formal economy. So what do you think about American manufacturing? Is there a way to rebuild our infrastructure (to whatever limited extent)--or will that never happen? I thought that was one of the reasons you moved to the rust belt actually; the factories are there waiting to be reopened? I know we'll all have to get skilled again in things that have been outsourced to corporations or third-world laborers, in things like making clothes and such. But will we ever be able to boost local production in an industrial way or has that ship completely passed?
  And yes, there are certain ventures even in hard times that succeed. Some mad geniuses recently figured out how to make a (relatively) extremely cheap yet quality home espresso maker and in less than a week they've sold an incredible amount through Kickstarter--which seems to be one of those alternative business ideas--community investment in a project:
  http://www.kickstarter.com/projects/zpmespresso/pid-controlled-espresso-machine

  12/15/11, 8:34 AM
Mean Mr Mustard said...

  Heh JMG...
  'Modern office fauna'... Hey, that was my last job - Business Continuity Manager, aka Resident Disaster Planner. Seeing the multiple close-coupled dependencies and brittle infrastructure all around, then getting a Good Stiff Ignoring from the Higher Paid Help. Felt like I was a winner and loser at the same time. ;-) Not an uncommon experience within that specialism.
  cheers
  Mustard

  12/15/11, 9:14 AM
Susan said...

  Support your local black market! It's the only one that works...
  Forget abourt Donald Trump or the reporters on Fox or CNN; we need someone like you, Mr. Greer, to moderate the next debate between the people running for President. So far, at least, it doesn't appear that any of the current crop of candidates (or the people asking them questions) has a clue...
  My own analysis looks something like this: a successful household in the future might have to have a few acres of arable land to grow enough food to support an extended family. Some chickens, goats, etc, would provide eggs, meat, milk and cheese for family consumption or sale or trade, but most of the land would be required to grow fruits and vegetables, or grass for the cows and horses.
  Families that specialize in a particularly lucrative trade (skilled artisans, craftsmen, etc.) might need less land if they are successful enough to buy most of their food from others, but most households will have to be larger, with more generalists than specialists, in order to be more self-sufficient. Right now our relatives are scattered all across the country, but in the future, most of the kids and their partners will be staying closer to home.
  People are still going to need bread, but the acreage required for growing adequate amounts of wheat, corn, rice, or other staple row crops would be more than most households could afford to own, so those crops would still have to be mostly grown on large farms that specialize in those commodities.
  Transport costs would limit such farms to areas relatively close to the towns that they feed, and the towns would have to be spread out into the countryside to be relatively close to the food supply. This means the end of suburbia and several of the larger metro areas, and migration back to the small towns that housed most of our population before the automobile age. There will still be toll roads, maybe even railroads (although 10,000 ton coal trains will be a thing of the past), plus canals, etc. Who knows what political or economic models will be developed to meet our need for trade in the future?
  A stand of hardwood trees might supply some fire wood for the kitchen or winter heating, but the main reason for having such trees on your property might be to supply lumber for a small woodworking shop which could produce quality furniture for the local market, to bring in some extra income. The resource would have to be managed for the long term, rather than for maximized short-term profit, to make sure the grandchildren will still have a viable source of income.
  The shop equipment could be powered by water wheel, or by a handful of windmills or solar panels that the family has built over the years, but the production schedule would be determined by when the wind was blowing or the sun shining. Thus, most "industry" would have to be some sort of small-scale family operation instead of a factory setting with regular employees who show up at a regular time to punch a time clock. You just can't afford to have a bunch of regular employees who end up standing around with nothing to do because there is no electricity to power the machines. Family members, on the other hand, can always go out to weed the garden or perform other necessary chores around the household.
  Right now, life is relatively easy, but complicated. Life in the post-oil future will be hard, yet relatively simple. That's a trade-off I can accept.

  12/15/11, 9:18 AM
Thijs Goverde said...

  Excellent!
  I've often wondered where they came from, all these managers & marketeers riding our backs like an entire geriatric home full of Old Men of the Sea...
  After all, no one seems to want them. Why do they keep popping up?
  So, it's a law of physics, eh? That is to say: an inescapable nuisance, much like the old 2nd law of thermodynamics (I had a fun time yesterday explaining to my 10-year-old why his schemes for perpetuum mobiles weren't going to work.)
  A propos that alternative economy: There's a well-meaning bunch of people in my hometown who are trying to start up an alternative currency system. The authorities let them, provided they handed over their administration to the Tax dept. so VAT and income tax could be applied to the barter system... and they complied.
  I nearly split my sides laughing when I heard that.
  Then I cried a little bit.
  Then I went back to my gardening.

  12/15/11, 9:22 AM
Antonio Dias said...

  Great analysis!
  You've left one big assumption floating above then ending unexamined! The question of profit. I suspect you'll address this soon, but isn't the assumption of a "bankable profit" also a social construct that went from being considered an outright evil as usury in that Tuscan Republic to the sign of an almighty Providence's favor today?
  The infrastructure projects you mention fail for plenty of reasons beyond their lack of bank-ability. They are attempts to continue a charade. But there are surely other ways for a society to allocate its energies than whether they make a profit in money at 10% per annum!

  12/15/11, 9:35 AM
Walter said...

  Good post. However, I did not see a single mention of slavery. Civilization is dependent on slaves. Sometimes they are recognized as such (Aztecs, Greece, Rome); other times it is simply a case of the overlord being able to draft labor at will (Incas, medieval serfdom). Without slaves there is no civilization. We pat ourselves on the back because we think we don't have slaves, but we still had the draft until 1973 and most farmers are essentially slaves now (those making <$10,000 a year in gross receipts = 60% of US farmers and their net is even smaller).
  Colonel Drake's first commercial US oil well started in 1859 and by the end of the Reconstruction debacle, liquid petroleum was well on its way to powering American empire. The US did not have pre-industrial infrastructure in place as a drag on economic growth in the western states either. These two factors were not coincidental to the rise of US dominance.
  The energy slave concept is extremely important because it reframes our idea of the future. Will we go back to slaves to keep some semblance of civilization going? I doubt it. People are not going to go for it, even though we see governments ramping up the prison-industrial complex and corporations trying out a somewhat similar idea in the Bakken oil shale rental market.
  Sad to say, we are likely to revert back to tribal structures. However, for those of us well-prepared, we can choose our own tribes. As an activist for over 45 years and one of those "dirty hippy commie pinkos" left over from the 1960's, I have seen this movie before.
  Walter Haugen
  www.fafarm.org

  12/15/11, 9:55 AM
Susan said...

  McMaven:
  If things go terribly wrong in the near future, Hagerstown will see a flood of starving refugees coming up the Potomac from Washington. What are all those unemployed bureaucrats gonna do when Uncle Sam goes completely broke?
  Hawlkeye:
  In my favorite future, there are no government bureaucrats to enforce various forms of prohibition (they'll be dying by the thousands trying to storm the barricades at Hagerstown). Therefore, you can grow your own (most of your neighbors will be doing the same thing), if you know what I mean...
  Ventriloquist:
  We, too, have a couple hundred Ball jars full of canned goodies, enough to keep us well fed for months if the grid goes down. However, if the grid stays down, we're kinda SOL...
  Zach:
  Are you still in the Ypsitucky area? I grew up near Detroit, and spent some time in Ann Arbor (and still have lots of relatives in the general area). If we could get our hands on a big enough chunk of cash, we'd move back to Michigan in a minute and buy one of those bank-owned properties you wrote about. I'm not too keen on the whole economic situation around there, but there is some nice land available if you can afford it. Besides, if global warming really happens, Michigan could become a tropical paradise!
  Oh, and speaking of Michigan, last week's posts had many comments about those pesky deer that keep getting into people's gardens. We call 'em "rats on stilts"... My Dad used to bag a bunch of them every year to help local farmers up north. We'd end up with hundreds of pounds of deer steak, deer sausage, etc. It's good to be at the top of the food chain!

  12/15/11, 10:04 AM
Mary said...

  Pasttense, I would suggest that both family members keep their dollar paying jobs while they last, and take up gardening, insulation/energy upgrades, spinning, weaving, knitting, hunting, fishing, etc. on the side. Whoever loses their dollar-job first then has a base from which to expand the gardening, etc. versus scrambling from scratch.
  It is a *lot* easier for 2 people to start a small garden from scratch part time then for 1 to start it full time. And a lot easier for 1 person to expand an existing garden full time than start a new one, period.
  You do what you can while you can. Make hay while the sun shines....

  12/15/11, 10:16 AM
Thomas Daulton said...

  By an interesting co-incidence, a comic artist who's a friend of mine recently posted this comic:
  http://www.andysinger.com/sample7.html
  See also, http://www.andysinger.com/sample6.html
  ..

  12/15/11, 10:24 AM
Global Nomad said...

  Funding platforms like Kickstarter offer interesting ways to fund small businesses and projects outside of the traditional banking world. Rather than convincing a bank about the possibility of a projected profit, individuals invest in ideas that they want to see happen.
  One particular project funded through kickstarter might be interest to your readers. http://opensourceecology.org/
  While not really a green wizard project, The project does offer some interesting ideas.
  Here is a description from their site:
  Open Source Ecology is a network of farmers, engineers, and supporters that has been imagining and creating the Global Village Construction Set, an open source, low-cost, high performance technological platform. These DIY-fabricated industrial machines can be used to build a sustainable civilization with modern comforts. The GVCS lowers the barriers to entry into farming, building, and manufacturing. It is a life-size lego-like set of modular tools that can create entire economies.

  12/15/11, 10:28 AM
escapefromwisconsin said...

  Somewhat related to the topic of complexity is this essay making the rounds of a variety of economic blogs by Waldo Jacquith - "On the Impacticality of a Cheeseburger":
  ...Further reflection revealed that it’s quite impractical—nearly impossible—to make a cheeseburger from scratch. Tomatoes are in season in the late summer. Lettuce is in season in spring and fall. Large mammals are slaughtered in early winter. The process of making such a burger would take nearly a year, and would inherently involve omitting some core cheeseburger ingredients. It would be wildly expensive—requiring a trio of cows—and demand many acres of land. There’s just no sense in it.
  A cheeseburger cannot exist outside of a highly developed, post-agrarian society. It requires a complex interaction between a handful of vendors—in all likelihood, a couple of dozen—and the ability to ship ingredients vast distances while keeping them fresh. The cheeseburger couldn’t have existed until nearly a century ago as, indeed, it did not.
  Say goodbye to your cheeseburgers, folks.

  12/15/11, 10:48 AM
Richard Larson said...

  The reason solar and wind doesn't work in your context is because of all the reasons the general economy is no longer working.
  They work on a personal level, being without all that middle non-productive requirements.
  Centralizing sustainable energy through utilities will never work.
  And I can verify what you have typed about starting/owning a business. I can tell you stories about dealing with all these extraneous issues - it would make your head spin!
  I have become sick of it and recently broached the subject of selling the profitable business, both as a desire to get rid of the trouble of this system, and to lower my dependence on this system.
  You would be proud to read I made this fantastic venison soup the other day. I seared small cuts of venison in hot oil, then mixed them with large squares of rutabaga, potato, slices of cabbage, and 6 dried Thai hot peppers - all grown in the garden - into water and slowly heated it in the solar cooker.
  Ground pepper and a slab of butter is essential and best added to your bowl.
  This didn't really take much of my time, I can envision having more leisure time on my hands should this be a lifestyle.

  12/15/11, 10:50 AM
LewisLucanBooks said...

  "Over the long run, the mismatch is a problem that will solve itself; once the unraveling of the industrial economy goes far enough, the superstructure will come apart, leaving a great many human resource managers, corporate image consultants, strategic marketing specialists, and the like with about as much chance of finding jobs in their fields as they would have had 17th-century Osaka or 14th-century Milan."
  I read one of those disaster porn things recently ("One Second After" by Forstchen. EMP, end of the world as we know it, etc.. Set in Cumberland, by the way.) There's one scene that sticks with me. The town is sealed off from refugees, but they do take in people with skills. There's a woman who was a big tobacco public relations person. Her womanly wiles and the tatters of her power suit will not get her into the town. She has no skills.
  Right now, I'm in the midst of a move to the country. Judging myself with a hard eye, I have no skills. To coin and old phrase, I'm smart but have no sense. My first order of business is to develop some skills and figure out what I can contribute to the household economies that already percolate along that small country road.
  First order of business, keep my mouth shut, my ears open and offer a willing pair of hands.

  12/15/11, 12:14 PM
mallow said...

  Sorry that this isn't on topic, but I've been trying to figure out where to live and came across older posts from you about climate change and sea level rise saying to move above 300-350 feet to be on the safe side. My problem is that at around those levels, most of Ireland is under water. France becomes the nearest decent sized landmass. Should I just move as high as is practical here and accept the risk or do I start learning, or at least teaching my kids, French do you think?

  12/15/11, 12:23 PM
John Michael Greer said...

  Ruben, it's a fine plan. The fact that it may not work out that way doesn't make it a bad plan, so long as you think through the consequences and are ready with a plan B if plan A doesn't work out.
  Rhisiart, diolch yn fawr! I'm sorry to say, though, that you'd have a hard time finding professional economists willing to take a class from me -- it's a bit like asking "creation science" theorists to take a class in evolutionary biology.
  Pasttense, of course there are risks. Life is full of them. If the alternative is to stay committed to a two-income lifestyle, you're going to be left twisting in the wind when that falls out from under you.
  Ofthehands, exactly -- we're already stuck. We needed to be building out the grand renewable energy projects in the 1980s and 1990s, but we built the internet instead. At this point, the only frame of action that's still within reach is personal and local -- thus the theme of the last year and a half or so of posts. Speaking of which, thank you for the link to your blog post! Nicely written.
  Kammy, you're most welcome.
  Jean-Vivien, that's why we need to be sketching in the first rough drafts of new social arrangements now, before the old ones crash and burn completely.
  Yupped, exactly -- a lot of things will make sense economically after the next wave of crisis that don't make sense now. It's those who can anticipate the curve who have the best chance of benefiting thereby.
  Farmer, that sounds like a workable arrangement; they get to chase their dreams, and then come home to work on the farm. A lot of people will envy them.
  Russell, bingo. Money systems historically flourish in ages of economic expansion, and fall apart in ages of economic contraction, because the notion that money can preserve value (as an IOU on future production) only works in a growing economy.
  Carlos, thank you! The only kind of humor I do at all well is the sort of deadpan seriousness that goes into this blog, and even then, half the time I'm surprised when people laugh.
  Alice, those are rough estimates from extensive reading in the social history of both periods. I'd encourage you to look into how life was lived a century or two ago in whatever part of the world you live in, and try to get as much detail as possible -- that'll give you a much more nuanced view than simple percentages.
  McMaven, by all means come up the canal! We've got some decent lunch places in town. I haven't had the chance to do much exploring locally, since I don't own or drive a car -- I go where passenger rail service does. As for Hagerstown, though, I think there's every chance that it'll be a very lively place in the deindustrial future; small cities in agricultural regions on major transportation routes tend to do very well most of the time.

  12/15/11, 12:54 PM
Ceworthe said...

  One of the reasons I went from gov't "modern office fauna". besides being available for my ailing and aging mother, is that I did not see how I would be able to both work and do the "Green Wizarding" at the same time. I did not think that it would allow me enough time necessary to prepare for the unraveling of an economy dependant on petrochemicals in time. Fortunately I was of an age to retire and spend a good lot of time on gardening, etc. on my mother's farm that I grew up on. We didn't have the option of part-time work btw.

  12/15/11, 1:36 PM
John Michael Greer said...

  Dweller, if we do get a resolution of the binary between science and spirit, that would be good. The challenge is to come up with something that isn't simply a mushing together of the two ends, but a genuinely different third factor that brings them into balance.
  Greg, take a moment sometime to compare the amount of economically extractable oil in the Bakken shale with the amount the US uses in a year sometime. It's an enlightening comparison.
  Rashakor, yes, I figured there would be at least one person who wouldn't get it. How are you going to pay for the labor, raw materials, energy, etc. for all these infrastructure improvements here and now, when the debt markets are already circling the drain? That's the issue this post is about, and insisting that we ought to do it anyway doesn't exactly answer the questions I've raised.
  DC, precisely -- but until people lose faith in the money economy, that new way of understanding value is going to be a minority thing at best. Mind you, that's no reason not to get busy working out the details.
  Greenbasket, I've talked about that at great detail in previous posts. Right now I'm exploring something different.
  Engineer, thank you -- that's a useful data point. My working guess is that within two decades at most, and quite possibly less than that, the venture capital industry is going to be a dim memory, because in a contracting economy, on average, all investments lose money.
  Wolfgang, that's quite plausible. The process of decline and fall that we see in history fits your model well, provided that it's kept in mind that after a system comes crashing down, people normally scramble around putting the pieces back together again in some less complex form. Thus the internet could go down in a fairly short time, but something less complex will likely be cobbled together from some of the remaining hardware and software within a few years at most; later, of course, the next crisis hits, there's another round of disintegration, and another scramble to put something back together again at an even lower level of complexity.
  Andy, that's an unnervingly likely parallel.
  John, thank you. I hope it's getting around fast enough.
  Hawlkeye, good heavens. No, I didn't mean the illegal economy, though that will no doubt play a part in things. I'm talking primarily about small-scale, unlicensed, off-the-radar-screen production of goods and services for personal use and very local exchange, typically without money changing hands. I'll leave smuggling and the like to those who know something about the subject, which I don't.
  Ric, you've just named a career skill that I'd strongly suggest to anybody who's fairly young and has a good head for numbers: classic double-entry bookkeeping, using pencils and ledgers. Books on the subject are easy to find on the used market, and as computer technology prices itself out of low-end markets, somebody who can take care of the books for businesses will likely be in a very good position.
  Bryant, I've seen the ssme thing -- and you're quite right, it's an important indicator. Note how many of the businesses going away sell goods, and how many of those coming in sell services that require very little fossil fuel input.

  12/15/11, 2:44 PM
John Michael Greer said...

  Ventriloquist, good. One thing I encourage people to do, if they've got the option of growing their own food, is to concentrate on things that have the vitamins and minerals you don't get from bulk grains and legumes, which will likely be available for a very long time to come -- it's relatively economical to grow them in large quantities and ship them by train. Still, choose the path that works for you!
  Don, those are all excellent points. One good thing about living in a small city in the Appalachians, by the way, is that it's entirely legal to have livestock in your backyard, and there are no neighborhood associations to tell you that you can't turn your lawn into a garden.
  Ghung, been there, done that; I was a househusband for many years, and still put a lot of time into the domestic economy between bouts of writing. It helps if you can show that you're also getting training for some more obviously useful task, which you should be doing anyway.
  Steve, exactly! You get tonight's gold star for summing up the issue concisely. If our economic system had a different definition of value, one that took little things like survival into account, we'd be in fine shape even this late in the game; unfortunately it doesn't, and so we're neck deep in kim chee.
  Zach, the bank may also be desperate for cash. A lot of banks are just now -- the whole financial economy is in very deep trouble, and the sort of freeze-up of the banking system that happened in 1932 could well happen in the next year or so.
  Cathy, exactly. One of the really deadly traps that spring shut in times of crisis is that people get so caught up in struggling to stay afloat that they forget to look for the nearest shore, and when they can't keep paddling any more, they drown. Getting away from the media, and away from the delusional economic thinking so propular these days, makes it much easier to see past the demands of the moment.
  DE, depends on the individual. Those who get started preparing now, even if they can only prepare slowly, are likely to be in much better shape down the road than those who procrastinate, for whatever reason. Still, you can lead a horse to water...
  Ceworthe, nicely summarized.
  Jeffrey, exactly! Remember that the US is on its way to becoming a Third World nation, so a transition to Third World business models makes sense. I expect to see the emergence of a two-tier economy, in which the gradually shrinking well-off population maintains a shell of business as usual, while the bulk of the population lives in shantytowns and manages its own affairs. That won't last indefinitely -- the shell will eventually shatter -- but it may outlast many of this blog's readers.
  Jess, no, I didn't and don't expect the factories to be reopened. The role that I expect Cumberland and places like it to play is that of market center, transportation hub, and nursery for new economic models in the wake of the collapse of abundance industrialism. We'll rebuild our infrastructure, but it will be a very different infrastructure, and much of it will be rebuilt by hand.
  Mustard, that's got to have been an intriguing experience. You know, a book on managing organizational continuity, full of colorful bad examples with the names changed, would probably find an eager market.
  Susan, most rural households will need more than a few acres to produce enough to trade for necessities they can't produce themselves; most urban households will need a lot less, just enough for a kitchen garden, chicken coop, rabbit hutch, etc., since they'll be earning their living producing goods and services that can't be grown on farms. (They're the ten per cent who work in the skilled trades, plus an equivalent share of the domestic economy.) Other than that, your model looks good.

  12/15/11, 3:18 PM
John Michael Greer said...

  Thijs, I was on the receiving end of that same conversation when I was ten, and found it very frustrating -- I'd come up with the usual gimmick of hooking up a generator to a motor, and couldn't figure out why I couldn't get my test model to work.
  Antonio, of course there are other ways for a society to assign value to projects -- it's just that at the moment, our entire economic system is geared to this one, which happens to be hopelessly dysfunctional in a time of sustained contraction. It seems very straightforward to suggest that another ought to be found and put into use, but the details are where the devil pops up...
  Walter, sure, if you want to define slavery so broadly that it includes the lower end of any hierarchical society, you've inserted slavery into all possible civilizations. I don't find that rhetoric useful -- and I'd point out that slavery as such, in the strict (and proper) sense of the word, tends to be the product of specific historical circumstances. Will it happen in the future? More than likely, yes, when those circumstances occur -- just as it happens now, in those same circumstances.
  Thomas, very funny! Thanks for the link.
  Nomad, well, we'll see. Microcredit sounded good at first, too; now farmers in India are committing suicide because their microcredit loans were made by loan sharks.
  Escape, with a cold frame and long season tomatoes you can do a cheeseburger naturally -- once or twice a year, in October. Other than that, a very good point.
  Richard, reading that makes my mouth water. Enjoy!
  Lewis, that ought to be a very good start. Thing is, those who have no skills, know it, and are willing to learn are much more useful than those who've forgotten that they need skills in the first place.
  Mallow, in your lifetime you're unlikely to need to be more than about a hundred feet above sea level at most. Still, learning French might be a good backup.
  Ceworthe, that's a good option if you can do it. You might see if there are any young and enthusiastic would-be farmers with no land who would like to help you work the land, in exchange for experience and a share in the proceeds.

  12/15/11, 3:36 PM
MarcosLagoSalado said...

  As a librarian I also worry about the headlong rush into e-book and e-audio plus all the kindles and whatnots...we are are forced by patron demand and trendiness to buy into this....but it too is a "future bill" and access/sustainability problem we won't be able to sustain more than a decade or so I'm thinking....hopefully in the meantime we'll hold on to print and print reference

  12/15/11, 4:25 PM
Edward said...

  One of the posts above mentioned taxes. That jogged something in my memory and a quick look on the IRS site confirmed that bartering is indeed taxable income!
  No doubt that as people become more innovative and turn more to a local exchange economy, governments at all levels will try to shore up their income by also becoming more innovative in what they tax and how they collect it.

  12/15/11, 5:43 PM
Twilight said...

  Yes, there might be quite a number of useful projects that would make sense from an energy point of view, but they will have to meet the criteria of the petrified old tertiary economy - one that has become so divorced from the primary and secondary economy as to be but a rude parody. Therefore many will not be done even though it seems like they should be viable.
  I'm beginning to think that the only way to fund projects absent the benefits of stored energy is to save ahead of time. If you can put aside some extra, then by definition you've proved you can. Borrowing is a bet that you will be able to in the future, which often does not pan out.

  12/15/11, 5:43 PM
adamatari said...

  JMG, what you said about Tokugawa (Edo) Japan is only partially true, because it was a long period of peace and the samurai themselves were their own bureaucracy. The shogun did not need to hire bureaucrats precisely because samurai worked in this role. There were a lot of samurai doing various types of government work - it can hardly be dismissed as a few scribes here and there. That said, there were also a lot of samurai left out - there is a book called Musui's Story that you might want to check out.
  As for marketing and promoting, Edo Japan birthed countless commercial ventures, many of them with plenty of marketing - for example, the ukiyo-e prints that are so famous often featured famous actors and actresses. Posters and banners adorned the theaters. Advertising of various sorts was quite common.
  But your larger point is correct. Many more people lived in the countryside, even as Edo was one of the world's biggest cities (if not THE biggest) at the time.
  That said, I think that the balance may have shifted quite a bit, and in a way that is hard to undo. I think mechanized agriculture will be one of the last things to go, so what will happen to all the unemployed marketers? They aren't going to working farms. Sure, some will be swallowed up in the household economy (I've seen this a lot in people in their mid to late 20s), but agriculture isn't yet ready to pick them up. Even if we chase away all the immigrant workers, there just aren't that many jobs there. Perhaps agriculture will grow back to employing significantly more than the 2-3% it does now in the US, but it would take a real disaster for it to go back to 30%. I don't think even peak oil will do that, at least not for the next hundred years.
  The future may not be able to pay its bills, but that doesn't answer what happens... What I am seeing is the reconstitution of extended families and larger households, more people staying at home, less consumerism, more people doing things that require little energy and money (video games vs. driving out somewhere, eating in vs. eating out). Still, we have a surplus of variously unemployed people.
  But the end result is still unknown. The past is not a perfect map for the future, while some things we hold dear will die, unexpectedly others might live. Cellphones are big in the third world, where land-line service never worked. I think we are in for a surprise no matter what we expect.

  12/15/11, 6:07 PM
Rich_P said...

  JMG,
  The relationship between energy surpluses and specialization is probably one of the most important concepts in all of economics, but I rarely see it discussed outside of the peak oil/biophysical economics scene, though I think Georgescu-Roegen mentions it in one of his books.
  To borrow a phrase from the Pentagon: it seems like many folks are still fighting "yesterday's wars," i.e., following strategies that worked in energy paradigm A but make no sense in energy paradigm B. Look at all the people deep in debt because they thought law school was the ticket to a ton of money -- it's unlikely our future society will need as many lawyers, simply because they're unproductive. Let's not forget that two of the finest legal thinkers of the early republic, Thomas Jefferson and John Adams, were farmers. I do feel sorry for the folks blowing money in grad school hoping to "ride out" the downturn by earning useless degrees.
  If someone is going to burn jet fuel to travel abroad, you could probably do worse than visiting a relatively stable "Third World" country, learning what you can about how people survive there, and taking that knowledge back to the U.S, where "un-development" experts will be in high-demand. That's exactly what Ivan Illich, E.F. Schumacher, and Manfred Max-Neef did, and they're some of the finest thinkers in the subjects of economics and human well-being.

  12/15/11, 6:12 PM
Doctor Westchester said...

  The last posts have been superb. In my chemical career, I also picked up an MBA and did a lot of market analysis as well as chemical research. For the chemical industry, the lack of bankable projects was noticeable even in the ‘90s, except for building plants for existing products in the Far East. An eye-opening experience was to see the hoops that the line management of one chemical company I worked for had to jump through (and little white lies they had to tell) in order to modernize a old plant of theirs in the US. This chemical plant was about ready to literally collapse. The modernization then had to been done very quickly, in case someone above them changed their mind, so it wasn’t very well thought out.
  A few years later, the company bought another (failing) chemical company and closed the renovated plant which was in a suburb of Chicago, and moved the production to an acquired plant in Houston, TX as a cost saving move (they had a loss that year due to buying the failing company). More importantly though, acquiring the other company gave them a whole bunch of more people to fire, since their required annual blood-letting rite had gotten the headcount a bit too thin on the ground.
  The big point is that one simply could forget about commercializing any new chemical technology or products. An earlier chemical company that they acquired was doing comparatively innovative work in their laboratories. One product that was partly commercialized in Europe was taken up and commercialized here as well. But the laboratory that was doing creative work was taken apart over time. No new products, please – we are Americans.

  12/15/11, 7:10 PM
Mark Angelini said...

  This past weekend I did a bit of valuable research at the local library and uncovered, much to my geekiness and excitement, several texts on the history of my bioregion (Detroit), my county, and my own town. The historical text and photographs of my town was the most exciting; both a dose of nostalgia and divination. Like almost all of Michigan pre world war II, it was developed and grown around agriculture -- there was a map of all the local farmers of the day and what they grew. I felt all the while that this piece of the history was a very valuable and rough framework of what sort of economic activity will replace the facades of real estate, restaurants, finances and retail that now pass for community and economic centerpiece. This year our farmers' market expands, as well. Quite an exciting time. And I just got my compost toilet rolling...

  12/15/11, 7:19 PM
Jeff Z said...

  My wife and I have been trying to work full time, raise children, and also participate in the home economy to the greatest extend possible. Cutting out TV helps that a lot. We've truly burned the candle at both ends and have been fine up until a few weeks ago.
  My wife has just been diagnosed with breast cancer and everything has been called into question.
  Given the bizaare state of the health care, or sickness management industry in the US, it's fortunate that we both worked, as she has excellent insurance and short term disability insurance. We will be ok financially- for a while at least. Had we been a one-earner family, and all lived on the cut-rate insurance I have, we'd be in deep fertilizer.
  Of course, the cancer may have been cause by the frantic pace of our lives- which are now being forced to change.
  There are a million little compromises to be made in the long descent and we're in the process of making them and seeing which we wish we'd made earlier.
  I've written more at: http://eighthacrefarm.blogspot.com/2011/12/and-some-rays-of-hope.html

  12/15/11, 7:21 PM
dltrammel said...

  Here's a good example of just how the infrastructure is falling apart:
  "The scandal of the Alabama poor cut off from water"
  "Tammy Lucas is the human face of a financial and political scandal that has brought one of the most deprived communities in America's south to the point of what some local people believe is collapse.
  She says: "If the sewer bill gets higher, my light might get cut off and if I try to catch up the light, my water might get cut off. So we're in between. We can't make it like this."
  Mrs Lucas's monthly sewerage rate bills - the amount levied by the county to flush away waste and provide water for baths and showers - has quadrupled in the past 15 years. She says it is currently running at $150 (£97) a month, which leaves little left out of her $600 social security cheque for food and electricity.
  "We need to keep the water running because we're women," she says. "We need to take baths. I try to pay the sewer bill and the water bill together and then what little I got left I try to put on my lights. I got to have lights."
  Her neighbour in one of the poorest districts of Jefferson County's largest city, Birmingham, a father of four who asked not to be named, has already made that choice.
  The poorest citizens in Birmingham, Alabama, say they can no longer afford running water.
  His modest rented home, next to a busy freight train line, is one of a growing number in the area that now has a blue portable toilet next to it.
  He says he finds it cheaper to buy drums of water from a petrol station and pay a sanitation company about $14 a month to remove waste from his "porta-potty" than pay the combined sewer and water rate bill, which some months can reach $300."
  Though I think the writer betrays an attitude that is common among people who haven't woken up to what we here on ADR have discovered, and can be summed up as "How is it in a developed country that some might not have cheap water and support?"
  Birmingham is just the first wave of cities that are going to be squeezed by rising debt load and shrinking revenues. When its cheaper to hire a "port-a-poty" and get water from a gas station, than pay the bill for local service, then expect that local service will go away.

  12/15/11, 7:37 PM
siddrudge said...

  Another great post Mr. Greer!
  I've had some experience dealing with venture capitalists, angel investors and plain old bankers. They were the most unimaginative lot I've ever met. They should lose the term "venture" completely as that assumes risk, and these folks don't want to take risks -- they want sure things! Besides an utter lack of imagination, this breed is about as deep as Disney and as inspiring as an Excel spreadsheet. Most of them made their money the easy way -- on the sweat labor and exploitation of others or by inheriting it. Sorry if I seem to be painting with a broad brush here. I'm sure there are some fine venture capitalists out there. I just haven't come across any. But the fact is, they have all the money-- whether they deserve it or not. And it looks like they're holding on very tight to it.
  As for our current economic situation, has anyone else noticed a total lack of imagination in our leadership? Is market capitalism their only solution to everything? After reading your post JMG, I guess we shouldn't hold our breath for any WPA projects or the like, eh? Might we expect some broad debt-forgiveness acts?
  Perhaps it's time for some really EPIC changes -- the kind of change that happens overnight. I'm thinking something on the level of the Gregorian Calendar, where people went to bed on March 11, 1582 and woke up the next day and it was March 21-- losing 10 days of their lives overnight by way of a papal decree. Now that's some magic! Do you think they still had to pay rent for those lost days? LOL!
  So, since calendars and time is a human construct, what say we just change it all to benefit the economy-- fix the calendar so that one year stretches, oh, let's say four years with sixteen week months . . . I wonder if I can get any venture capitalists interested in this idea. Time is money after all isn't it?
  Sorry for the rambling -- I'll show myself to the door. LOL!

  12/15/11, 7:49 PM
Joseph said...

  Really well done post as usual. i thought the info about division of labor in the high cultures of japan and the Rennaisance city states helpful as models of comparison and wonder if there is an economic text that explores older models.
  While some sustainable technologies are not currently bankable that is partly because there is no cost for greenhouse gas emissions. There is no factoring of Fukushima type accidents, there is no vision for the kind of local household and local business energy conservation measures that could prime local economies and pay off in reduced costs. Also, we are spending half of our taxes on wars and most of the rest on servicing debt. There will be no escaping the worst political, economic and ecological catastrophes without working to make better political choices available. I am all for the green wizards idea, I have a very large garden, am working on mushroom cultivation, permaculture. But I wonder if you see any political hope in the OWS, Michael Moore/Naomi Klein/Bill Mckibben type activism?

  12/15/11, 7:57 PM
John Michael Greer said...

  Marcos, one of the things I'd like to do if one of my books ever becomes a bestseller is found a private lending library. We've still got some of them in the US from the late 18th century -- you pay a modest membership fee, and that and a trust fund keeps the doors open and the shelves full. It might be one of the few ways to break out of the downward spiral that's swallowing state funded public libraries.
  Edward, you're quite correct -- barter is taxable income. So is money gained by crime, and gambling winnings. The IRS doesn't miss much!
  Twilight, that's certainly one approach. Down the road I'll be suggesting another.
  Adamatari, granted, but compare the total number of samurai working in administrative functions in, say, 1650 with the number of employees of any one Japanese government bureaucracy today! Similarly, Edo had plenty of advertisements -- so did Pompeii, by the way -- but it was a very small industry by modern standards. I expect there will be advertising in urban areas a century from now, but it won't employ any more than the most minute fraction of the current total of advertising employees.
  Rich, that would work!
  Doctor W., and then people wonder why it is that the US is falling so far behind in most technological fields!
  Mark, photocopy that map and hand out copies to everyone at next week's farmer's market! I bet that stirs up some thinking, and some lively conversations.
  Jeff, I'm sorry to hear about your wife -- that's got to be a massive blow to both of you. My prayers are with you both, for whatever that's worth.
  David, many thanks for the link and story! Welcome to Third World America; I wonder if there might be a point in teaching people in Birmingham how to make and use inexpensive composting toilets.
  Sidd, actually, yes, they did have to pay rent on the lost days. That fact caused riots in a number of European cities, as I recall.
  Joseph, no, I don't see any particular hope in the protests and protesters you've named. It's very easy to make a name for yourself and get people riled up by criticizing the existing order of things, but if you don't offer a meaningful alternative -- just a collection of slogans -- it doesn't really matter that much. The real work has to begin at the level of the individual and build from there -- to the family, the neighborhood, the community, and so on. It's the lack of that foundation that's gutted the American Left since the 1970s, and still leaves it effectively powerless today.

  12/15/11, 8:15 PM
Don Mason said...

  Over at Zero Hedge, I just read that the EFSF (European Financial Stability Facility) just released its latest plan to bail out the PIIGS (Portugal, Italy, Ireland, Greece, and Spain).
  Just under one-third of the money required for the bailout would come from Italy and Spain.
  That’s right. The EFSF proposes that Italy and Spain’s money be used to bail out… Italy and Spain.
  And then the EFSF plans to resell the resulting bonds, ad infinitum.
  Presumably, the bonds would be purchased by… Italy and Spain.
  Why would any rational person believe that the whole global economy is anything other than the world’s largest pyramid scheme?
  http://www.zerohedge.com/news/revised-efsf-draft-shows-italy-spain-responsible-one-third-european-bailout-funding

  12/15/11, 8:20 PM
My donkey said...

  1. I don't know whether this is an example of superfluous complexity in structure or just over-the-top employment numbers (or both), but could someone please explain why the US embassy in Baghdad needs 15,000 employees?
  2. Regarding bankable projects, the sole bank in our village of about 1,000 closed 8 years ago as part of a national downsizing strategy in which many rural branches were closed.
  Villagers were not happy to be told "We will be pleased to continue serving you at the [nearest town] or [next-nearest town] branch" located 10 and 12 miles respectively from our village. But we were positively livid when we found out why the bank was abandoning our village: our branch was profitable (about 10-15% profit) but it simply wasn't profitable ENOUGH! They wanted at least 20% profit. In other words, pure greed.
  Luckily, a regional credit union agreed to open a branch in our village after the bank departed, so most of us are even happier than before.
  The point is, not only will there be fewer bankable projects in the future, but even currently viable companies will have to accept the erosion of profit margins that comes with a crumbling economy, and just hope they don't go under.
  By closing all these branches, the bank that abandoned us has burned many bridges. We villagers not-so-secretly hope that the bank will eventually fall on hard times and be forced to come begging for our business, at which point we will gleefully tell it where to go.

  12/15/11, 8:54 PM
DPW said...

  @ Joel -
  Anecdote: One of the largest wind developers in Oregon just happens to be a Spanish subsidiary. Care to harbor a guess as to what effect the EU crisis will have on their ability to continue investing in projects in the US? And if they pull out...there goes 200+ upper-end jobs from Portland...and then the housing markets, coffee shops, and schools they support. Then what happens to the wind farms? Sold to the highest utility bidder, then left to idle as the cost of integrating their output into the grid can't be recovered with declining electricity load, unpaid customer bills, and vanishing .gov subsidies. The farmers stop receiving their royalty checks. The tax dollars stop flowing to rural districts. Eastern Oregon/Washington already have 50+% real unemployment and half of Portland lives in the same basement apartment...what next?
  I'd keep going, but it's depressing enough without teasing apart the whole story.
  BTW - stopped in Astoria last week for a Cavatica, Vortex, and a couple others.
  BTW II - on the same day you climbed Neahkahnie I just happened to be at the Oswald West overlook on 101 and saw what I believe to be three blue whales doing their thing...the mammoths still roam.

  12/15/11, 8:56 PM
GingerSnap said...

  Hi JMG
  Regarding your statement
  "Beyond that, the deterioration of the official economy is accompanied, as pretty much always happens, by the growth of alternative economic networks that allow goods and services to be exchanged outside normal channels"
  I have read a book "McMafia" which discusses, amongst many things, the criminal networks established to move (or smuggle) goods around the world. They have been well established, especially in countries that have seen huge economic collapse such as Eastern Europe in the last 2 decades.
  Could these networks, that are so used to bypassing all regulation become the new powerful economic force?

  12/15/11, 10:40 PM
SophieGale said...

  Banks may not be able to find "bankable" projects, but there are a lot of people out there experimenting with other forms of doing business. In October the United Nations declared 2012 as the International Year of the Cooperative, and they will be focusing the coming year on cooperative ventures around the world.
  social.un.org/coopsyear/get-involved.html
  And the New York Times this week did a story on worker-owned companies in the US.
  http://www.nytimes.com/2011/12/15/opinion/worker-owners-of-america-unite.html
  The Fair Trade movement is a subset of the co-op movement, and most people associate it will crafts from Third World countries, but I think it's time to bring FT home. It can include food items, flowers, crafts, furniture. Fair Trade sales are booming right now. I would think that FT trade furniture produced close to big city markets would pay extremely well now and be prepared to transition into the Post Industrial future.
  I think we could take inspiration from some of the family business models from SE Asia. The Patels come to mind, establishing themselves in the hospitality industry:
  http://jacksonville.com/tu-online/stories/060606/enm_3345568.shtml
  And there are business incubators being tended by coalitions of universities, corporations, and regional development organizations: "Peoria {IL] was ranked by CNN Money as the fifth best midsized city in the U.S. to launch a small business in 2009 and the city continues to rank well in Milken Institute's annual Best-Performing Cities – 200 Largest Metros list."
  The community has put together Peoria Next, which just celebrated its 10th anniversary. It "aims to facilitate Discovery, Innovation and Commercialization of new technologies through collaboration and creativity for economic development." It's partnered with the Peoria Chamber of Commerce and The Heartland Capital Network, venture capitalists and angel investors.
  http://www.heartlandpartnership.org/content/entrepreneurs
  And then there's the good old grass-roots way. We had an African American group a couple years back who created a scholarship fund R.O.O.T.S: "Raising Our Own Teachers". If a community put its will into funding an essential business, I think the capital could be found.

  12/15/11, 10:53 PM
SophieGale said...

  And speaking of Manfred Max-Neef, here's an interview with him on Democracy Now:
  http://www.democracynow.org/2010/9/22/chilean_economist_manfred_max_neef_us

  12/15/11, 10:55 PM
Ruben said...

  @dltrammel
  This is exactly the contraction and self-preservation of the of the core at the expense of the periphery that Stoneleigh has described at The Automatic Earth.
  The real shame of Birmingham is that they were paying $14 a month for a rental toilet, when a half dozen five gallon buckets could be scrounged for free. The seat from their own toilet and a supply of sawdust or mulched leaves and they could be well on their way to good garden nutrients. Don't believe the *ahem* crap about humanure not being safe.

  12/15/11, 10:58 PM
Cherokee Organics said...

  Hi JMG,
  Mmmm complexity. This topic is a sore nerve for me. I'll try and explain by giving reference to the difference two decades can make to my profession.
  I started working full time for the public service and studying part time at university at night in the late 1980's. The recession hit in 1991 and by early 1992 I along with tens of thousands of others were made redundant. Job stability and security was finished whilst I was only in my early 20's. The previous generation had enjoyed relative job security. I endured a time of 10% unemployment and despite my education worked in commercial debt collection for several years before the economy picked up again. I took whatever job put food on the table and paid the rent. I learned a lot about people though!
  My profession now requires an undergraduate and post graduate degree plus three years experience prior to receiving professional recognition and membership (ie. licence to operate). I have jumped these hoops. There are also other licencing requirements which I have to meet. The previous generation entered the profession via an apprenticeship and joined the membership of the professional bodies by paying a $50 membership fee (which is now well over $1,100 per year).
  As for education, as I said before, twenty years before I started working, it was an apprenticeship and no formal education was required. However, had those people wanted to undertake an undergraduate university course, they could have done so free of charge. By the time I started university, courses were fee based (the debt accumulates with the government in Australia and you pay it back through the taxation system). Post graduate courses cost even more again and require payment up front.
  Houses prices over that 20 year period increased by a factor of 10, yet salaries increased by only about 4. Just enough so that you now require two people to pay a mortgage which would have been a different situation to the previous generation who would have been able to afford to have one member of the household working in the domestic economy, whilst still servicing a mortgage. Child care anyone?
  Oh yeah, working hours got longer too. I remember back in the late 1980's Friday afternoons used to be spent down the pub - bosses and all. Not so now. It's not enough to get the education and do the work experience, but apparently you also have to work long hours as well. Something about productivity and commitment they say. In my mind it's a wealth transferral mechanism - you're effectively providing work for free. Well done, employers!
  So at the end of the day it's hardly surprising that Gen X's are disaffected and probably a bit overwhelmed. Saddled with student loans, huge mortgages and double incomes that just keep your head above water. I'm also hardly surprised that Gen Y's are so late to start life, they're probably frightened silly.
  I might sound bitter, but I took all of the above lessons on board, jumped through the increasingly raised hoops and worked on personal projects on the side which proved to be the right way to go. I can't say the same for my friends who are being increasingly sidelined.
  My gut feel is that the baby boomers were at the very peak of resource availability. Still, second and third place is no bad thing in a historical perspective either. I somehow think that the baby boomers easy retirement plans will become unhinged very rapidly soon by the general fall in the economy. Would I have acted differently in their place? Probably not.
  Regards
  Chris

  12/16/11, 12:00 AM
Guardian said...

  A good example of the decline of complexity in a culture and the lag with society catching up with this is in the twilight years of the Roman Empire. Many jobs from city councillors to tenant farmer were made hereditary because they had become so onerous and expensive that no one wanted to do them. The structure becomes more ossified the more the pressures to change mounted, until of course the barbarians tore the whole thing down.
  In my experience all bureaucracies eventually come to see themselves as the most important thing rather than the people they should be serving, and I'm confident todays western 'democratic' bureaucracies are no different. Look at the difficulty all the politicians who promise 'efficiency savings' in the civil service have in actually delivering any savings.

  12/16/11, 12:30 AM
Cherokee Organics said...

  Hey everyone,
  I think people need to understand that lost time is exactly that, it's lost, never to be seen again.
  Regards
  Chris

  12/16/11, 12:40 AM
Cherokee Organics said...

  Hi everyone (again),
  A lot of people in their comments are asking questions about when, how etc. It might be useful for commenters to note that in the business press, most economists and pundits have no idea. The other thing to note is that they don't consider the current goings on as anything other than an abberation, before shortly returning to business as usual. They have not put two and two together yet.
  A crystal ball may come in handy at this point! I think I left it with Saruman...
  Regards
  Chris

  12/16/11, 12:47 AM
Cherokee Organics said...

  Hey Walter,
  Are you kidding me? There are slaves here and now in Australia - so I'm sure you have them over in the US too. You just need to look a bit harder.
  Chris

  12/16/11, 1:15 AM
Cherokee Organics said...

  Hey Rich_P,
  A degree or an education is not a useless thing. It can teach you how to learn and absorb a great mass of information whilst also enabling you to pick out a path to follow. It can also teach you how to get your thoughts together in a structured manner which can be very beneficial.
  I've noticed recently that there is a general disregard for education. The general tools provided by education are not to be sneered at even if the specifics are a bit dodgy.
  Chris

  12/16/11, 1:46 AM
Cherokee Organics said...

  Hi dtrammel,
  I read with dismay the article about Birmingham. There is certainly an opportunity for rain water tanks and composting toilets. Most old cottage gardens were founded on humanure, it is such a waste to flush it into some $3.1bn facility when nature already breaks it into soil for free.
  In a twist of irony, despite providing all of my own services here, I and all of my neighbours still get a water bill. What a joke on us all - our water service would be very hard for the powers to be to cut off. All the water I use is treated and returned to the soil so there is little loss in the whole system.
  They are however building a massive desalination plant and so are trying to spread the cost....
  The disaster story that is the desalination plant is another story all together.
  Regards
  Chris

  12/16/11, 3:42 AM
erich said...

  My contemplations along lines similar to those pertaining to surplus energy in modern society fuelling meaningless activity led me to coin Heinzle's law, "if someone would not have their current job in a war economy, they are probably a waste of space". I guess this speaks to the pared back energy frugality of a society at war with victory gardens etc, vs 'office fauna' of today...
  Perhaps one of the best examples of delusional, hyper ordered thinking in modern society, agstracted from the laws of thermodynamics, is the notion that with enough rules and regulation injuries can be eliminated by a safety management system. Such obsessive fixations with the elimination of all risk ignore the asymptotically increasing energy, resource and therefore ecological costs of increasing order and complexity in complex systems.
  The natural tendency of the universe is towards disorder, and energy inputs are all that can prevent it.

  12/16/11, 4:44 AM
Bill Pulliam said...

  One thing I feel is essential to make the single-cash-income household work is to ensure that money does not become a power issue between the partners. If you let one partner control the purse strings then, in this world where money still controls everything, you will have an unequal relationship. I personally don't see how you accomplish this unless you take a fully communal approach to the money -- all income that comes in from any source is *ours*, there is no "yours" or "mine." Otherwise you are accepting the external society's valuation of each partner's contribution to the household. Of course this only works to the extent that both partners are financially responsible and have sufficient impulse control.

  12/16/11, 5:21 AM
Pitchfork and Crow said...

  So glad I found The Archdruid Report! Thanks!

  12/16/11, 6:24 AM
Thijs Goverde said...

  I think I understand what you mean, mr. Greer.
  For my kid, however, the frustration was extremely manageable - the idea of building a prototype never once entered his head (he'd been thinking about giant pumps and a hydroelectric dam).
  In other words, he was merely hand-waving.
  A thing best put a stop to immediately, in my view.

  12/16/11, 7:04 AM
Chris Balow said...

  Maybe slightly off topic here, but your mention of Tokugawa Japan and Renaissance Italy reminds me of a comment you made some time back regarding cities: that those in temperate climates (like Osaka and Venice) have proven their sustainability, but that cities in arid and tropical climates are a mixed bag. To satisfy my curiosity, can I ask why would this be? The problem of adequate rainfall in arid climates seems clear enough, but I fail to see which difficulties the cities in a tropical climate would face that those in a temperate climate would not. If anything, it seems a year-round growing season is an advantage.
  One reason I ask, though this could go beyond the scope of my own lifetime, is that I recall your "Solstice 2100" short story featured a tropical climate (temperatures never dropping below 70) in what is now the American Midwest. Will North America have to wait for a cooler climate to develop the urban societies of a new civilization?
  "Ecosystems of office fauna" has to be one of the most hilarious phrases I've heard in some time, by the way. I appreciated the laugh I got out of that.

  12/16/11, 7:32 AM
Matt and Jess said...

  My thoughts have been the same as adamatari's, about the complications of the transition periods. For example, with the millions of people out of work, it would be nice to have farmwork available absorb these people right now, but that's difficult with industrial agriculture still going strong. And I've never met any WOOF farmer willing to take on an entire family. And going back into the household economy is only possible if you've got family or a spouse or something to rely on, I think.
  Also, housing during transition. It seems the height of absurdity that so many people are homeless while so many homes sit empty. If the Occupy movement seriously focuses on this concrete issue I think I'll take a look at them again. I wonder at what point will banks realize that they're never going to get the previous value of some of these properties. There has to be some policy or something that can be made to address that. I wonder if it will take a certain tipping point of the number of homeless. Surely it's in the government's best interest to ensure that the majority of their population isn't out on the streets. This is where dispelling the myth of progress would be useful I suppose.
  Anyway, ok I see what you mean about the rust belt areas. For some reason I thought I'd remembered you saying that some of the manufacturing infrastructure was there waiting to be reused. Well, I'm sure that there's at least some raw materials in all these old places that will prove useful in some way again.

  12/16/11, 8:38 AM
ofthehands.com said...

  JMG, thank you for the compliment! I've been wondering of late, if we had built out the renewable energy projects rather than diving full bore into burning fossil fuels as fast as possible, where do you think we would be headed now? Might be too big of a question for this venue, but I'm curious how far into the future you think that could have taken us and if that would have provided the real ability to create something of a technic society with relatively high energy usage (nothing like today, but higher than most of human history) within a sustainable framework.
  Then again, reading your thoughts on the collapse of societies (and wanting to read some of your sources--I just got a used copy of Overshoot and I'm seriously considering starting to tackle Toynbee's A Study of History in the new year) it would seem that even with a renewable energy push stemming from the 70s movement, would we still be on schedule for a collapse due to all the other non-energy issues? We could easily have built up a renewable energy infrastructure but continued on with a vapid and empty cultural reality, especially if said infrastructure prolonged our ability to outsource our survival and thus fail to build a real culture out of necessity for continued existence.
  Then again, it would probably be a mistake to take the possibility of having built such infrastructure and divorce it from cultural implications. In other words, if we had built said infrastructure, it seems that reasonable and wise decision would have coincided with a decision to solidify and build a more thoughtful and grounded culture.
  Joel

  12/16/11, 12:08 PM
ofthehands.com said...

  DPW, you're talking about Vestas, I believe? If so, I have multiple friends who work there. The collapse of that company would certainly seem to have some serious ramifications in Portland. The implications you tease out there are not pretty, but that seems like a very feasible future possibility. To the extent in general that Portland and Oregon is banking on the growth of the industrialized renewable energy sector suggests some bad times in the area if that sector does unravel in the near future. Of course, the real kicker is if the computer industry starts to go into contraction. Imagine what happens to the area economically if a good chunk of Intel's work force goes away.
  The basement apartment comment brought a chuckle out of me, as I did my time living in a cheap basement apartment. ($285 rent, right off Hawthorne and 34th!) Good times, that. Sometimes I try to figure out if the particularities of Portland (multiple young people sharing housing, the preponderance of small and locally-owned businesses at the expense of large, centralized employers, the trendiness of homesteading and local and urban farming, and so on) makes the city more or less resilient facing a future of lower energy and economic contraction. Perhaps a combination.
  Fort George! Did you try the North V, by any chance? I was curious about that, but haven't had a chance to try it. I missed out on the Holiday Ale Fest because somehow my volunteer sign up slipped through the computer cracks. $25 for eight 4 oz. tastings was a bit rich for my poor blood.
  I wish we could have a collective species chat with some blue whales. I imagine they could give us some very relevant and needed perspective on things. It's funny you mention them, as I was talking to my friend/employer the other day about the hike and he asked if I'd seen any whales. I hadn't, but I'm happy to hear they were out there.
  Joel

  12/16/11, 12:21 PM
Goat Path said...

  JMG- Your piece this week made me look back through the years of my life differently. I'm beginning to see the very slow, incrementally disorganizational effects of the energy descent.
  It helped me to put in perspective the harsh conditions under which my own family as lived- overworked, over stressed, not having time to spend with our children who grow up to live on Facebook and play Xbox.
  Despite my Ph.D. degree, I make less than my plumber. My father was a successful research scientist and my mother stayed at home to care for her family. I was not so lucky. I had two full time jobs.
  However, thanks to your education, I have a wood stove, a gas range, rain barrels, a two person saw, an awl for splitting wood. The suburbs where I live never passed an ordinance against farm animals.
  I just went out and got myself an industrial sewing machine built in 1948 as I know how to sew and could work as a seamstress. My husband and I both still have jobs, but I only work 3 days a week (3 12 hour shifts). My other time is spent in farming activities and learning about things like how to split my own firewood. I learned last week how to fix my oil burning furnace, but I have firewood in case I run out of oil.

  12/16/11, 3:14 PM
Rich_P said...

  RE Birmingham: As the BBC article notes, JP Morgan and the Boss Hoggs in the county cooked up crazy schemes to finance the sewer system, the cost of which ballooned due to graft, bribes, etc. Matt Taibii wrote an excellent article about how all this finally blew up after the market crash of 2008.
  Granted, I think extracting soil nutrients from the hinterlands, concentrating them in cities, and then flushing them away through expensive and complicated infrastructure is pretty stupid in the first place. Imagine how many copies of Farmers of Forty Centuries or The Humanure Handbook you could print and distribute for $3 billion :)
  @SophieGale: Foreign Policy, a magazine that mostly trivializes the idea of foreign policy, occasionally publishes insightful articles, such as this one about "System D," or the global "shadow economy" that gets stuff done outside of official, highly-regulated channels – the grey market as others might call it.
  @Cherokee: I'm mostly against the university degree as a sort of national cargo cult. Education can take many forms (junior colleges, apprenticeships, etc.), and spending a lot of money and time on a degree just to play the game of musical chairs for a declining number of administrative/management jobs is probably not a great choice for many young people. But I agree that many commentators are lashing out against education in general instead of offering more focused suggestions about how education ought to be done under our new economic paradigm.

  12/16/11, 7:37 PM
curmudgeon said...

  I find this situation to be exceedingly frustrating. As the answers to this problem appear obvious, while understandably complicated, it appears people are unwilling to even take the first steps in easing this burden. Probably to the irrational belief that this will turn around and well be back on the path to glory. Or because the answer implies a harsher lifestyle lacking the comforts we have created.
  Among the answers to our problem is a change of desires. Americans as well as all industrials see wealth as accumulation of dollars or other fiat currencies in which we can then purchase any comfort we desire, as we can afford it, which is what makes credit so appealing. And therefore to propose at this point a different system that advocates less fiat currency and more as you put it "household economy" is reviled by most. The "irrational positivist" those who believe "if I say it is then it is" wants nothing to do with any of the real answers to the end of our civilization that will result in the best of all possible transitions. It is exceedingly frustrating.

  12/16/11, 8:35 PM
Kevin said...

  @Marcos -
  Recently I was conversing with a librarian who is not particularly peak oil aware. When I asked his opinion of the trend toward electronic collections, to my surprise he promptly replied, "It smacks of Satan!"
  JMG wrote -
  "Marcos, one of the things I'd like to do if one of my books ever becomes a bestseller is found a private lending library."
  Don't forget the stone circle. ;)

  12/16/11, 9:05 PM
Don Plummer said...

  "Modern office fauna": that phrase is a keeper, John. It suggests, I think, an ecological framework to human activity that we need to be more aware of.

  12/17/11, 5:33 AM
risa bear said...

  @Wolfgang, I would argue the opposite, which is that high energy sources have led to mechanization and so have rendered people superfluous, and that as energy sources become diffuse and devolve we will all have to hire one another again. I think this is one of JMG's main points in his writings, and a point of agreement with Dmitri Orlov and Sharon Astyk.
  Perhaps few really want to go back to reaping with a scythe for a living. But everyone wants to eat. No, you can't feed ten billion with a scythe. But, as Dmitri cautiously words it, "perhaps some will be able to avoid the dismal outcome."

  12/17/11, 12:44 PM
SophieGale said...

  Economists revolt: "Last month, seventy freshmen at Harvard walked out of Gregory Mankiw's introductory Economics 10 lecture; they wrote to the well-known economist that his course 'espouses a specific – and limited – view of economics that we believe perpetuates problematic and inefficient systems of economic inequality in our society today.' And that, 'As your class does not include primary sources and rarely features articles from academic journals, we have very little access to alternative approaches to economics.'"
  http://finance.fortune.cnn.com/2011/12/16/its-time-for-economic-theory-to-evolve/
  And a resource for folks who are interested in learning more about cooperatives, Co-operative News:
  http://www.thenews.coop/

  12/17/11, 12:45 PM
phil harris said...

  JMG
  AliceY in comments has already raised the matter of ratios within populations:- food producers to craft economy & traders and the ratio of both to a smaller layer of 'bureaucracy'. (I presume we should include in the latter, regional granaries & admin as well as libraries and data bases and other continuities and forms of government). There are as you say important examples from history.
  <>//www.bbc.co.uk/history/british/empire_seapower/agricultural_revolution_01.shtml
  See the above BBC history web site for the important example of the agricultural revolution in England roughly 1750 to 1850, which was hardly subsidised much by fossil fuels although the surrounding expansion of industry clearly was. Though the popultion trebled to near 18M over the hundred years, about 22% of the population could just about feed the rest using mostly 'organic' resources. Of course there is not enough arable land here to feed our current 62M in the total UK, but you can see that a sizeable 'urban' population can be fed even if only when the conditions are right, but the knowledge remains that it can be done.
  On another point, I am very glad you have made the point again in comments that 'kitchen gardens' can provide essential vitsmins, minerals and phytonutrients to supplement the traditional grain and legume calories and protein, (which as you say should be available for some time yet). It is also possible to recycle NPK within such partly closed garden systems and thereby maintain high levels of soil fertility while using the ground intensively.

  12/17/11, 2:50 PM
Kevin said...

  I do permit myself some small hope as regards the Occupy movement, in a limited political sense. Certainly it does nothing to address issues of resource depletion, nor do I get the sense that most of those involved in it have any awareness that growth is over. But the United States at the moment suffers from an advanced case of plutocratic oligarchy, and I feel this ought to be addressed. If there's going to be a lot less wealth to go around, then surely it will never do to permit the bulk of that less to remain in the hands of a tiny minority.

  12/17/11, 4:38 PM
ladyimbrium said...

  I've been saying for years that this house of cards is going to come tumbling down, and my parents said it before me. Sadly, the rest of the extended family doesn't see it. It seems that this pattern holds true in most places- the majority just can't see past the moment. It's very easy to become frustrated. I admire your ability to keep working at the biggest part of the problem: widespread ignorance.
  I didn't realize you were nearly a neighbor. Maryland is a beautiful place to live.

  12/17/11, 5:04 PM
Diane said...

  Bill Pullman makes a good point about money and unequal power relationships. For whatever reason I came into this world with little interest in material possessions even as a very young child. Unfortunately this attribute was mercilessly exploited by mother and older sisters. Also it was never seen as a 'good' quality, but rather as a way to establish a form of victimhood, which followed me right until middle age. Fortunately the womens movement and then later a spiritual journey gave me the skills to keep the attribute without being endless exploited.
  I raise this point as many of the contributors here, lay emphasis on physical and material ways forward, and this is excellent, but we will need to learn new ways of relationships as well.

  12/17/11, 6:18 PM
Red Neck Girl said...

  Lots of comments on the comments and an "I-told-you-about-this-already!"
  @Jeff Z,
  have your wife try an herbal tea called Eissac, all the herbs grow in America since it's native American. I've just got my first bag for $9.50 and it will make about a gallon. The stories are anecdotal obviously since Radiation Therapy makes more money. I'll be going on it because of a genetic quirk, even as a part Native American I'm more prone to skin cancer and I'm developing a few spots that concern me, plus I've lost three family members, (a fourth survived) from various other cancers. Admittedly lifestyle but that doesn't remove me from the risk.
  Since I've mentioned this magazine before I'll tout an article from the Nov/Dec issue in The Backwoodsman magazine. On page 25 a submission from Surfers Without Borders, there's drawings of a slow sand filter for water made out of a 55 gal. plastic drum. The other drawing is of a 55 gal. plastic drum composting toilet! The drawings and explanations are clear on how to construct your own!
  The magazine has all kinds of articles by people who practice hard times skills, including an article on pg. 34 on making your own sauerkraut, building a permanent pit fireplace or containers for patio gardening. A lot of tips on low tech living skills, recipes, a lot of good things useful in a collapsing economy as they were during the Great Depression. Along with the Mother Earth News there's also Primitive Archer for reference.
  Another good book for reference that I'm sure has been mentioned before is Matt Stein's When Technology Fails. (Isn't this what we're facing now?)
  @LewisLucanBooks,
  I couldn't finish One Second After since I love animals and when he killed his starving Golden Retriever to feed his pregnant daughter I gave up. I know such things could happen and no doubt have in the past but it's not something my soft heart can handle.
  I can't find the post but it involved what the author said was slavery or Incan feudalism. You can't really compare their culture to ours. It's a whole different mind set but laboring on temples, roads and bridges was a form of taxation which they benefited from the roads. Taxes were also levied in the form of fiber and food in royal store houses.
  By contrast the Catholic priests of the era thought that the general level of good health enjoyed by the natives as well as goods supplied to the Incan peasants at the time of disasters and famines were 'sinful' since they felt suffering was a gift from god to peasants who worshiped pagan gods.
  @ Susan,
  What's hard? Our bodies are designed to be used in sometimes physically stressful situations. Life being 'easy' for us now ISN'T particularly good for us with all of the life style diseases we're suffering now. And I won't include the disconnect we labor under in regard to our environment, (the natural environment)!
  I personally believe we need to construct a culture that is mindful of our environment, kind to each other and humane to our animals. But with that disconnect our society labors under now, I have no idea of how to get there!
  Wadulisi Tsalagi

  12/17/11, 10:00 PM
hapibeli said...

  A movement whose time has come?
  http://www.miller-mccune.com/business-economics/the-growth-of-degrowth-economics-38390/

  12/18/11, 5:49 AM
Niels said...

  Dear JMG,
  It was only this year that I got interested in the Peak-oil predicament, looking for answers on the future of our societies. I devoured your book "The Long Descent" as well as works of Rob Hopkins and David Holmgren. Residing in Europe and trained as an architectural historian / heritage consultant, I fell out of work a few years ago (the market simply got too small for a freelancer) and am currently employed as a IT-helpdesk consultant. However not my favourite kind of work, computers are not really my thing. Looking currently for a new direction in life, willing to be useful in society, a job with a content / value, not just earning money. Can you give me any advice? Society will definitely change here in crisis-ridden Europe, modesty and solidartity will be key words for the future. Love to work in a multilingual environment with people of multiple backgrounds(languages are my strong point). Have a passion for spending time in nature (various travels to Africa)
  I will keep on following your blog!
  Best regards
  Niels

  12/18/11, 7:12 AM
hawlkeye said...

  Beg pardon if I ruffled.
  Perhaps the term smuggling carries too many nefarious undertones. But I tend to think of it as simply one type of flow through an underground economy. After all, these days you’re a smuggler if you carry a jar of raw milk over to a neighbor.
  Please help me understand these distinctions, because I interpret un-licensed, un-regulated, un-registered, un-official, to all mean illegal. Same with off-the-radar-screen, because whose radar screen are we talking about? Authorities’, no?
  Following the thought that complexity can't just reverse and de-complexify smoothly, how are current participants in the tertiary economy going to back ourselves into the exchange part of the household economy once we've got producing households? Apply for a business license?
  Modern life has become boxed in by big-box laws, which to a very large extent require us to live by that lifestyle. At some point in the establishment of household economies outside the Box, we’re going to be stepping on those legal toes. Fully binding legal complexity is one Dickens of a pickle! Green hands become tied in so many knots there’s no unknotting; at some point a knife is required.
  I see grey markets as inseparable from the household economy, and it seems to me that a willingness to make an illegal transaction is a peak oil initiation. Today, it’s what gains one entry to the shadow economy, and is a requirement for continued participation within it. This is as much a moral as a technical challenge for many people who strive to be law-abiding citizens while the rule of law falls out from under them.
  Determining the distinction between what is illegal and what is immoral is a strategic adaptation that will be necessary for the widespread adoption of green wizardly ways of living. Developing these networks also serves as a safety net during a financial crisis, as pointed out by Rich P’s Foreign Policy article, as well as Orlov’s descriptions of a collapsing USSR.
  This article also compares the world shadow economy as second only to the United State’s GDP of $14 trillion. Yet since most of the latter is tertiary fluff, I would say the shadow economy (consisting of actual deliverable goods), has already eclipsed it.
  System D is underrated because it is cloaked by necessity. The highest grossing agricultural commodity in all of California and Oregon doesn't appear on the books of either law or accounting. But it's there.
  It seems there is a measure of resiliency to be gained by working both outside the normal channels as well as currently highly restrictive legal ones. After all, if we’re going to become a Third World country, we’d better muster up some good old American ingenuity and do it right! Saddle up, Pilgrims!

  12/18/11, 9:13 AM
ruraldream said...

  Thought-provoking post, as always, Archdruid.
  For the folks wondering about transitioning at least one partner into a household economy role, we have done/are doing that, and I thought I would share a few things we've done and learned.
  We planned ahead for this, and saved up money for the livestock and basic gardening tools in advance. Because of that, we were lucky not to have to start small when we did find an acreage in our price range.
  We saved money by paring down our expenses - no eating at restaurants, for instance, and always buying things second hand - clothing, cars, frying pans, you name it. We did not have a TV anyhow, but we cancelled our magazine subscriptions. I see people who are insistent that they 'can't afford' to have only one spouse working, but they are usually people who have a very large house in a high-tax neighborhood, two brand-new vehicles, his-and-hers Blackberries, and a flat-screen TV wider than I am tall. Now, there are a lot of people who genuinely cannot make ends meet on one income, but there are also a lot of people who could easily do so if they re-evaluated their lifestyle.
  We are trying to preserve (and now, grow) a majority of our own food. Some days (years) this works better than others, but we've only been at the preserving for a few years, and this year was our first big garden. We grew a lot more than we needed, and shared with friends, family, and neighbors. We found it as easy to grow six rows of potatoes as three, and our extras have become social capital and a way to entice friends and family to take up gardening.
  There is a huge learning curve, but better to tackle it now, when there is so much information readily available on the internet, than later, when you may be on your own. We do have a large collection of relevant books, too, though.
  If things deteriorate to the point that I lose my job, there is a good chance that our extra farm products (organic eggs, milk, vegetables, etc) will have real (as in, enough to make it worth the effort) monetary value to local people, so my 'new job' will be in boosting the production of these things.

  12/18/11, 9:47 AM
Robert said...

  If you want to understand the international "grey" economy, you could do worse than have a look at Carolyn Nordstrom's anthropological; study, "Global Outlaws" (2007). She has an amazing knack for fieldwork under extremely difficult and dangerous conditions, and she makes it seem so easy when she writes about it.
  Robert Mathiesen / Mageprof

  12/18/11, 10:32 AM
Bill Pulliam said...

  One thing that has been bothering me for several years about this whole idea of being able to survive without cash income because you have land: Tax foreclosure. We own our house and 8 of our 38 acres free and clear. But should the financial economy really totally implode, we (and million of others) might not be able to come up with cash to pay the property taxes, because there just might not be any cash to be had in many rural areas.
  What happened in the 1930s, the last time the financial system imploded? Did governments wind up confiscating small farms en masse and packing their former owners off to bread lines in the cities, or did something prevent this? What might the prospects look like for the next time? I really don't know what to think about this.

  12/18/11, 12:27 PM
Cherokee Organics said...

  Hi Phil Harris,
  Yes, what you are saying is possible, but what you neglected to mention is that the majority of the population lived in abject poverty.
  It might also be worth mentioning that from 1788, the English began shipping off their criminal element and the poor off shore - well to over here actually. From the mid 1830's, Australia was also an efficient off shore farm for the UK as well. Plus, by 1850 the gold rush hit here and Melbourne was the second wealthiest city on Earth at the time and much of this wealth ended up back in the UK.
  You may also want to consider that the technology they employed at the time was appropriate for that time too. It would be an admission of defeat for our society to even consider employing such technology.
  Regards
  Chris

  12/18/11, 2:27 PM
Cherokee Organics said...

  Hey Hawlkeye,
  You can't seriously expect our host to provide an answer that advocates any illegal activities. This is a public forum after all. Please desist, I'd appreciate it if this forum continued.
  Regards
  Chris

  12/19/11, 12:28 AM
Adrian Skilling said...

  @pasttense. I agree. The danger of the losing the one and only job is a big risk. My wife and I our fortunate enough to both work part time - 3 and 4 days repectively. We can both share childcare and contribute to domestically. Its suits us but wouldn't suit everyone.

  12/19/11, 8:11 AM
Steve said...

  @Bill Pulliam:
  "What happened in the 1930s, the last time the financial system imploded? Did governments wind up confiscating small farms en masse and packing their former owners off to bread lines in the cities, or did something prevent this? What might the prospects look like for the next time? I really don't know what to think about this."
  It depended on the circumstances, of course. There were plenty of farm families foreclosed out of their farm for falling behind on mortgages, operating loans, etc. with banks, but there were also cases of tax delinquencies. Then there were farmers who had to take on mortgages or loans to keep up with their tax bills, who went on to foreclosure when next year's crop didn't bring in enough money to pay off the loan.
  In some places the locals got tired of these happenings, and they'd show up en masse at the foreclosure auction and buy everything the bank was selling for a dime or a quarter, not out-bidding one another, then give it all back when the bank auctioneer and the sheriff left. In a lot of places, though, some of the best farmland for miles around sat vacant and neglected because the owners had been run off for being broke.
  This is the one hope that I find in the Occupy movement. If the meme of occupation sticks around and it becomes an acceptable form of protest for foreclosed families to "occupy" their homes or farms, then I think something good will have come out of it.

  12/19/11, 9:15 AM
Hal said...

  Here in Mississippi, farm produce is allowed, tax free and with minimal administrative interference, at Farmer's Markets, but canned and other processed goods fall into a gray area. In the 4 years our market has been going, the authorities have more or less looked the other way, as they do for the countless informal tail-gate vendors on every highway in the state. That benign neglect has allowed our market to get off to a pretty good start the first couple of years, and to survive some really bad management over the last two.
  Unfortunately, it looks like that free ride is coming to an end soon. The state has informed us that sellers of canned and other prepared foods will be required to get Health Dept. certification starting next year, at a cost of about $200. Many of our vendors have basically said that means it's not worth it for them to stay in business.
  Now, I know a lot of people will read this as big, bad gummmint ruining a good thing with their bloated bureaucracy and greed for funds, but I'm actually pretty sympathetic to their concerns. First of all, the amount of money those fees would raise will not even pay for one bureaucrat. Second, no one knows how many lives have been saved by health and safety codes, but it's probably very many. I kind of like being able to eat in a restaurant with pretty high confidence I won't get food poisoning.
  And the state is trying hard to make it as easy as possible for growers. They have streamlined rules and inspection requirements, and taken oversight out of the hands of the counties and put it into a more friendly, uniform, and inexpensive state program.
  As always, it comes down to a question of what we, the people, want, and what we're willing to pay for. It's certainly not just a matter of energy resources available. Of course, the economic disruptions caused by the energy equation will probably cause a lot of that to be lost, but I would not be surprised if some level of public health bureaucracy were still around 100 years from now.

  12/19/11, 10:45 AM
ando said...

  JMG
  Happy Alban Arthan!!
  namaste (mixing languages here!)
  ando

  12/19/11, 12:07 PM
phil harris said...

  Cherokee organics
  Thanks for raising point about 19thC rural poverty in England. Indeed; but I was looking at carrying capacity and the first modern forms of what we now call 'temperate organic agriculture'. Previous maximum 'carrying capacity' of England seems to have been about 6M people. This ceiling was broken through after 1750.
  I had no opinion as to rights & wrongs - this was just history. We have letters belonging to one of our farm-labourer family predecessors who raised 9 children around the 1850s
  The technology was hardwork and still common enough in my childhood, even around the time mechanization was widely adopted during and after WWII. There were 26 pair of Shires on a farm local to here that are still remembered.
  It certainly existed before mechanization, but I do not know how much agriculture using only organic methods might be possible in Australia, nor how it might function without diesel machines.

  12/19/11, 2:22 PM
Don Mason said...

  Bill Pulliam wrote:
  “One thing that has been bothering me for several years about this whole idea of being able to survive without cash income because you have land: Tax foreclosure. We own our house and 8 of our 38 acres free and clear. But should the financial economy really totally implode, we (and million of others) might not be able to come up with cash to pay the property taxes, because there just might not be any cash to be had in many rural areas.”
  Essentially, this is what almost happened to me and my wife.
  We spent 15 years building a homestead in the country (4 acres, solar house, fruit trees, all the goodies).
  But the property taxes kept going up and up. It was obviously going to be financially unsustainable. So we finally sold the place the last week of 2004.
  Since then, it’s lost $100,000 in value, and the property taxes are now up to $6,200 a year.
  Where will these people end up? Some will probably end up back in the city like we did. We ended up buying a wrecked foreclosure in an extremely low-income neighborhood in Rockford (average sale price of a house is now down to $22,000). But we’re financially solvent, and I’m amazed at how much agricultural production can be accomplished on a 50’ x 150’ city lot. With the owner-occupied exemption, our taxes are less than $500 a year. The scenery is not as pleasant (junkies and crack heads instead of wild turkeys and deer), but it’s helped us to develop better situational awareness, which should be helpful as things grind down.
  We learned that we didn’t need as much land as we thought; and frankly, 4 acres is a lot more land than we could really handle at our age.
  My hunch is that people living by themselves in the rural areas will probably need to have additional people living with them to help bring in additional cash income. Governments will continue to provide infrastructure and services – even at a reduced level. So governments will require income; income will require taxes; taxes will require enforcement; and enforcement will require foreclosures. So people will have to scrape up the money, or it’s off to a FEMA camp.
  I’m glad we got out while we could. I miss living on the land a lot, but I don’t miss the financial pressure. It’s a lot easier to scrape up $40 a month for property taxes than $500.

  12/19/11, 7:24 PM
elVerde said...

  Hi, JMG. Some of the earlier comments mention splitting time between household work and money earning work, and how this arrangement might be tested by declining income from the loss of a money paying job. People wonder aloud about how this will affect their living arrangements. i wonder what scenario offers an answer to the question: How will people continue to pay their property taxes when faced with the loss of money income, and will it help them at that point to have made all this investment in a homestead when the prospect for that homestead to be claimed by the state is upon them?

  12/19/11, 9:17 PM
hawlkeye said...

  Hey Cherokee –
  No, I certainly know better than to expect advocacy; I thought I was asking for a clarification of terms. My point is that the grey economy looms much larger than a mere sideline across the landscape of the future; its existence ought to be considered, instead of dismissed outright.
  I don’t see how a discussion of this requires either advocacy or condemnation. It saddens me that I might be perceived as a threat to this forum, which I value as much as anyone. It's never been my intention to undermine it in any way.
  If I cross some line, I trust our host would boot me off the list; he’s done it before.
  Respect,
  Scott

  12/20/11, 4:37 AM
John Michael Greer said...

  Don, yes, I saw that. My reaction is about the same as yours.
  Donkey, I'm pretty sure that within a decade or two, most Americans are going to have to do without banks. In a contracting economy, lending at interest is going to be a losing game for all concerned -- and without that, banks basically have no income.
  Ginger, good question. I suspect that those networks make their money off the huge differentials in income between rich and poor countries; when Americans, for example, can't afford drugs they don't grow themselves, there's going to be a massive hole in the Mafia's profit margin.
  Sophie, many thanks for the links! There are plenty of ways to raise capital, in the financial and nonfinancial senses of the word, once the requirement that somebody make a profit off it goes away.
  Cherokee, it's about the same over here; of course we've got the progressive degradation of the US educational system at all levels to thank in part -- it's quite common for people to graduate from college with BAs who have never learned how to look up a fact their teachers didn't give them, think in quantitative terms, or write a literate paragraph of English. All that additional education required for jobs is in some part an attempt to fill in the gaps that should have been covered in elementary school.
  Guardian, it's an excellent example, and you're quite right about today's bureaucracies, of course.
  Erich, I see the proliferation of bureaucracy and the like as a function of entropy, not a resistance to it. Energy (in the form of money) is flowing outwards in every direction, cascading from one bureaucratized organization to another, until it finally gets lost in the void!
  Bill, that's certainly been my experience.
  Pitchfork, you're welcome.
  Thijs, glad to hear it. I put a lot of work into my ten-year-old perpetual motion scheme before finally getting the message!
  Chris, I'm far from sure why it is that cities and urban cultures tend to have shorter lifespans in arid and tropical climates than in temperate ones; I'm simply noting the historical fact that they do. Arid tends to be better than tropical, by the way.
  Jess, there are plenty of raw materials; more to the point, the same transportation routes that were major economic corridors a century ago will probably be major economic corridors again a century from now; and in the meantime, the cost of living in Rust Belt towns and cities is very low, and if you choose carefully, the quality of life can be very high.

  12/20/11, 5:40 AM
Chris Balow said...

  Yes, it is an interesting question why tropical climates have difficulty producing cities. My best guess would be that the combination of year-round high temperatures and high humidity makes for a proliferation of insects, making agriculture difficult. And, possibly, there is a tendency for the high rainfall to wash nutrients out of the soils. These are things our descendants will have to tackle if continental North America is to shift to a tropical climate.

  12/20/11, 7:10 AM
Brian Cady said...

  Could a global NGO like WorldWatch take on the task of reporting yearly on the relative values of primary, secondary and tertiary economies, as a way of keeping track of how we're doing, as JMG proposed in _The Wealth of Nature_?
  Fro reference, I understand that an average acre of woodland can sustainably yield 1/4 cord of firewood per year, and 1/2 cord with intensive management.
  I'm shifting toward building a small dory boat, to access Boston Harbor in hopes of raising mussels and edible seaweeds from rafts. I've got to see about integrating this with existing harbor use plans and the Harbormaster. And after also reading Dmitri Orlov's _Reinventing Collapse_ as well as _the Wealth of Nature_, I'm frightened.

  12/20/11, 11:58 AM
Cherokee Organics said...

  Hi Phil Harris,
  It would not be possible at all to feed the current population here using low energy organic methods. You keep reading about food security that we are OK because we currently export 2/3 of the agricultural produce so the assumption is that there is a lot of slack. However, that fossil fuel subsidy looms large and big agriculture produces a lot of this output.
  PS: It wasn't just rural poor, the urban folk would have had it far worse in those days.
  Regards
  Chris

  12/20/11, 2:52 PM
curmudgeon said...

  After reading some of the replies I'm left thinking that some still don't really understand the level of change necessary in our situation. By situation I mean economic, political, environmental. The only real answer to this mess we have today is a turn around of what we think needs are. For instance why does a home have to cost hundreds of thousands of dollars. The 800 square foot house I have planned and will build in a few months, that will house 4 and sits on 5 acres will cost me $6000. The land cost me 14,000 and thankfully was paid through a personal loan from a friend.
  So essentially I will not be leveraged against an out of control confiscatory government. So the reality is if I lose my property at some point due to not enough fiat cash I will have lost very little. As well as in the mean time what cash I can make will be better served storing reserves of real goods not a savings account in a bank. I will have no loan to repay. Opportunity to purchase better property as it presents itself is a viable option simply because I have not leveraged my future to a bank. The best answer for now and our future is a desire for sufficiency not more and more. When we can say I have enough is when we free ourselves from the burden and control of others. For the most part. We will always have to deal with tyrants.

  12/20/11, 5:10 PM
Mean Mr Mustard said...

  John,
  A very happy midwinter to you and yours, and all here at the AR.
  Thank you for another year of great insights.
  Mustard
  Solstice celebrations across cultures

  12/20/11, 9:50 PM
DW said...

  @ Don Mason:
  Curious if you've written more about your experiences with moving to the "inner city" as a more sustainable alternative? It seems like really the only way to go...but in order to be safe and not seen as an outsider or target, I imagine one would have to embrace a lot of JMG's "voluntary poverty" as opposed to a "green cornucopian" type of existence...which is what I largely see in PNW cities...classic gentrification, even of the Green type doesn't tend to go over so well with the existing residents...
  Anyway, that seems like the most viable option for a lot of us. I can't see maintaining a hobby-farm and trying to commute 40 miles each way to work through unstable gas prices and there's no way I could afford land/taxes without my job.
  Unfortunately, for us Seattle-ites, even the inner-most-city is still mighty expensive...$175K+ for run down houses in marginal neighborhoods...and still $2K/yr in property taxes. Oi.
  It's a hard rain's a gonna fall.

  12/21/11, 9:16 AM
John Michael Greer said...

  Apologies to everyone whose comment didn't get a response! I've been swamped of late -- I've got a manuscript due at the first of the year that still needs a lot of work, and that along with getting ready for the solstice and doing some planning for the AODA's centennial this coming June pretty much ate my week. A happy solstice to all!

  12/21/11, 8:41 PM
Zach said...

  @Susan,
  Thanks! It's nice to be remembered. Yes, I am still an Ypsituckian.
  As for the deer, while they're beautiful animals, I am starting to favor the term "hoof-rats." They are pests -- tasty, tasty pests. :) I figure if we're going to extirpate the wolf, it falls to us humans to play the role of top predator for the deer. I am happy to say that my son got his first deer this season, and we now have our first family-caught venison in the freezer. He finally listened to me about going out with some friends to hunt -- I am not a hunter, never having been taught, so I can't show him myself. But, I can point him to those who do know... (First outing, one shot with a muzzleloader, reportedly at about a hundred yards, and he made a clean kill. I'm proud of the kid.)
  peace,
  Zach

  12/29/11, 7:19 AM
Habibur Rahman said...

  Nice post from ground-up tutorial. Waiting for your next post on adding multiple LNBFs using Diseqc switch.
  Also it would be nice if you can provide some availability info regarding Conical Scalar Ring with C-Band LNBF or C-Ku band LNBF and its approx price.
  satellite-switches

  1/12/13, 9:07 AM

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