Feb 14 2009

Is your job a net income or a net loss?

Kal @ 12:30

Dmitry Orlov wrote a book about the parallel situations of Russian collapse in the last century and the American collapse that seems to be underway. Here are some of his thoughts as presented February 13, 2009, at Cowell Theatre in Fort Mason Center, San Francisco. He called it Social Collapse Best Practices.

But let’s take it apart. Starting from the very general, what are the current macroeconomic objectives, if you listen to the hot air coming out of Washington at the moment? First: growth, of course! Getting the economy going. We learned nothing from the last huge spike in commodity prices, so let’s just try it again. That calls for economic stimulus, a.k.a. printing money. Let’s see how high the prices go up this time. Maybe this time around we will achieve hyperinflation. Second: Stabilizing financial institutions: getting banks lending – that’s important too. You see, we are just not in enough debt yet, that’s our problem. We need more debt, and quickly! Third: jobs! We need to create jobs. Low-wage jobs, of course, to replace all the high-wage manufacturing jobs we’ve been shedding for decades now, and replacing them with low-wage service sector jobs, mainly ones without any job security or benefits. Right now, a lot of people could slow down the rate at which they are sinking further into debt if they quit their jobs. That is, their job is a net loss for them as individuals as well as for the economy as a whole. But, of course, we need much more of that, and quickly!
So that’s what we have now. The ship is on the rocks, water is rising, and the captain is shouting “Full steam ahead! We are sailing to Afghanistan!” Do you listen to Ahab up on the bridge, or do you desert your post in the engine room and go help deploy the lifeboats? If you thought that the previous episode of uncontrolled debt expansion, globalized Ponzi schemes, and economic hollowing-out was silly, then I predict that you will find this next episode of feckless grasping at macroeconomic straws even sillier. Except that it won’t be funny: what is crashing now is our life support system: all the systems and institutions that are keeping us alive. And so I don’t recommend passively standing around and watching the show – unless you happen to have a death wish.
Right now the Washington economic stimulus team is putting on their Scuba gear and diving down to the engine room to try to invent a way to get a diesel engine to run on seawater. They spoke of change, but in reality they are terrified of change and want to cling with all their might to the status quo. But this game will soon be over, and they don’t have any idea what to do next.
So, what is there for them to do? Forget “growth,” forget “jobs,” forget “financial stability.” What should their realistic new objectives be? Well, here they are: food, shelter, transportation, and security. Their task is to find a way to provide all of these necessities on an emergency basis, in absence of a functioning economy, with commerce at a standstill, with little or no access to imports, and to make them available to a population that is largely penniless. If successful, society will remain largely intact, and will be able to begin a slow and painful process of cultural transition, and eventually develop a new economy, a gradually de-industrializing economy, at a much lower level of resource expenditure, characterized by a quite a lot of austerity and even poverty, but in conditions that are safe, decent, and dignified. If unsuccessful, society will be gradually destroyed in a series of convulsions that will leave a defunct nation composed of many wretched little fiefdoms. Given its largely depleted resource base, a dysfunctional, collapsing infrastructure, and its history of unresolved social conflicts, the territory of the Former United States will undergo a process of steady degeneration punctuated by natural and man-made cataclysms. [emphasis mine]

Orlov has his list of realistic objectives; I would add education to the list, but agree that is slightly less important in the short run than food, shelter, transportation and security. I briefly spoke of this a couple of days ago in Stimulus Bill Passes - Main issues not addressed.

This is how Orlov ends his post:

As I briefly mentioned, the basics are food, shelter, transportation, and security. Shelter poses a particularly interesting problem at the moment. It is still very much overpriced, with many people paying mortgages and rents that they can no longer afford while numerous properties stand vacant. The solution, of course, is to cut your losses and stop paying. But then you might soon have to relocate. That is OK, because, as I mentioned, there is no shortage of vacant properties around. Finding a good place to live will become less and less of a problem as people stop paying their rents and mortgages and get foreclosed or evicted, because the number of vacant properties will only increase. The best course of action is to become a property caretaker, legitimately occupying a vacant property rent-free, and keeping an eye on things for the owner. What if you can’t find a position as a property caretaker? Well, then you might have to become a squatter, maintain a list of other vacant properties that you can go to next, and keep your camping gear handy just in case. If you do get tossed out, chances are, the people who tossed you out will then think about hiring a property caretaker, to keep the squatters out. And what do you do if you become property caretaker? Well, you take care of the property, but you also look out for all the squatters, because they are the reason you have a legitimate place to live. A squatter in hand is worth three absentee landlords in the bush. The absentee landlord might eventually cut his losses and go away, but your squatter friends will remain as your neighbors. Having some neighbors is so much better than living in a ghost town.
What if you still have a job? How do you prepare then? The obvious answer is, be prepared to quit or to be laid off or fired at any moment. It really doesn’t matter which one of these it turns out to be; the point is to sustain zero psychological damage in the process. Get your burn rate to as close to zero as you can, by spending as little money as possible, so than when the job goes away, not much has to change. While at work, do as little as possible, because all this economic activity is just a terrible burden on the environment. Just gently ride it down to a stop and jump off.
If you still have a job, or if you still have some savings, what do you do with all the money? The obvious answer is, build up inventory. The money will be worthless, but a box of bronze nails will still be a box of bronze nails. Buy and stockpile useful stuff, especially stuff that can be used to create various kinds of alternative systems for growing food, providing shelter, and providing transportation. If you don’t own a patch of dirt free and clear where you can stockpile stuff, then you can rent a storage container, pay it a few years forward, and just sit on it until reality kicks in again and there is something useful for you to do with it. Some of you may be frightened by the future I just described, and rightly so. There is nothing any of us can do to change the path we are on: it is a huge system with tremendous inertia, and trying to change its path is like trying to change the path of a hurricane. What we can do is prepare ourselves, and each other, mostly by changing our expectations, our preferences, and scaling down our needs. It may mean that you will miss out on some last, uncertain bit of enjoyment. On the other hand, by refashioning yourself into someone who might stand a better chance of adapting to the new circumstances, you will be able to give to yourself, and to others, a great deal of hope that would otherwise not exist.

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Category: Climate Change | Politics | Resource Depletion

Feb 13 2009

Feed In Utility Tariff Necessary for Large Scale Solar Development

Kal @ 11:24

From an article in the Nanosolar Blog. Martin Roscheisen, CEO, Nanosolar, Inc.

At a time when many folks in Washington are running around with their hair on fire looking for schemes to dramatically increase renewable energy use by mid-February at the latest, let’s consider that what renewable energy really needs is a shift to permanent, effective policies to pursue and develop its potential.

The recent inclusion of the Federal Investment Tax Credit for solar energy through 2016 is a good example of this type of policy. But, it is just the start.

In our view, renewable energy’s greatest potential and competitive advantage is its ability to evolve rapidly and offer technologies that produce electricity at lower and lower prices with no carbon emissions, subsequently decreasing our dependence on foreign fossil fuels.

Here is one effective, low-cost approach to encourage innovation: Create a set of national Standard Offers or Feed-in Rates for new, significantly better renewable technologies. This policy would offer predictable compensation to any renewable energy generator in the form of long-term power purchase contracts, creating a streamlined administrative national framework that makes developing renewable energy projects and manufacturing new technologies highly investable for entrepreneurs and private capital alike.

The great virtue of offering a national price for renewable energy is that it would be immediately transparent and open to any technology company/developer. Currently, developing utility-scale renewable energy projects requires dealing with hundreds of private and public utilities all operating under strikingly different state regulatory requirements, and often requiring substantial upfront investments just to respond to requests for proposal.

The feed-in rate we are proposing would be set below what current renewable technologies deliver in order to focus support on breakthroughs that will drive the price of renewable electricity down in order to replace more and more traditional, fossil fuel based electricity generation. The national feed-in price could be adjusted periodically by the policy’s governing board in order to move renewable electricity through the price points that would deliver greater market share to renewable generation while avoiding excess or windfall profits at the expense of the taxpayer. For example, the set of feed-in rate price points could be set by (1) on-peak natural gas fired generation to (2) combined cycle natural gas –fired generation to (3) base load coal generation with an adjustment to reflect the cost of CO2 emissions.

Setting an initial feed-in rate at $.15 per kWh for 20 years for solar projects, for example, would draw out multiple breakthrough technologies and greatly advance their market penetration.

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Category: Politics | Resource Depletion | Solar

Feb 13 2009

Nicholas Stern: Spend billions on green investments now to reverse economic downturn and halt climate change

Kal @ 11:04

Lord Stern: "The rich industrialized countries need to show leadership" - source: The Guardian Wednesday 11 February 2009 18.20 GMT

Governments across the world must commit to hundreds of billions of pounds in green investments within months in a combined attack on the global economic crisis and global warming, according to leading economists including Nicholas Stern.

The team says some $400bn (£277bn) should be channelled to support low-carbon technologies such as home insulation and renewable energy. Given the urgency of both the economic and climate crises, it wants the green investment made by this summer and to total 20% of the £1.4tn likely to be spent globally as fiscal stimulus.

Lord Stern, the former Treasury economist and now chair of the Grantham Research Institute on Climate Change and the Environment, said: "With billions about to be spent by governments on energy, buildings and transport, it is vital that these public investments do not lock us for many more decades into a costly and unsustainable high-carbon economy."

A report published today, written by many of the team that prepared the influential 2006 Stern Review on the economics of climate change, says politicians should not delay plans to cut greenhouse gas emissions because of the global slowdown. Instead, action to tackle climate change could form a central part of fiscal packages to stimulate national economies.

Lord Stern said: "The rich industrialised countries need to show leadership this year by committing to reduce their greenhouse gas emissions by at least 80% by 2050, compared with 1990, and their economic recovery plans need to be consistent with this target."

The report assesses the likely success of investment in a variety of green policies. It says the most effective of these could be energy efficiency measures for homes and public buildlings, boiler replacement programmes, efforts to fit cleaner appliances and lights, and a switch to renewable sources of heat, such as biomass. It also calls for greater investment in energy research and development, streamlined planning to promote renewable energy projects such as wind farms, and moves to encourage less polluting vehicles by adjusting car tax bands. One of the most cost-effective measures to reduce emissions, it says, is to encourage simple checks on tyre pressure. A green stimulus could provide a boost to the economy, increase the demand for labour and build the foundations for strong, sustainable growth in the future, the report says.

Alex Bowen of the Grantham Institute and formerly of the Bank of England, who is lead author on the report, said: "Our assessment shows that $400bn spent globally in the next 18 months on green policies and investments, such as smarter use of electricity, will help us to deal with current economic crisis, create jobs and help tackle climate change."

The report said action on cutting emissions remained urgent and putting off cuts would increase the risks of global warming. But convincing people of the importance of a comprehensive framework to cut emissions could unleash a "wave of creativity and innovation in greening the economy" and a better foundation for economic growth than the dot.com boom or the housing bubble.

Dimitri Zenghelis, a senior visiting fellow at the Grantham Institute who helped write the report, said: "It is clear that green investments are not luxury items that should be put off until after the current economic crisis is over. Our assessment shows that many of these measures fit the criteria for stimulating recovery, and we hope that governments will judge their merits in the same way that we have."

A call for a "green new deal" will also made this evening by Lord Chris Smith, the chairman of the government's environmental watchdog, the Environment Agency. In his first major speech, he will say national politics in the UK had "lost the ability to be bold" but that a moment of crisis was precisely the time for action.

He will add: "2009 could, I believe, be the year when we radically change some of our economic and social habits, and make a historic shift towards a more sustainable pattern of human activity."

He will also call for all electricity to be generated carbon-free by 2030, including by building a new generation of nuclear plants, and say it was a "tragedy" that the UK had to date failed to seize the business opportunities offered by wind and solar power. He will also say the UK should become a world leader in carbon capture and storage technology, which allows the burial of carbon dioxide from fossil fuel power stations.

Further support for a green new deal is expected on Monday in a new report from the United Nations Environment Programme.

It is certainly a better proposal than I have seen from our politicians, and worthy of support. But I wonder whether it is radical enough?

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Category: Politics | Resource Depletion | Climate Change

Feb 13 2009

The times require radical solutions

Kal @ 10:31

Title from Robert Kuttner this morning on Democracy Now. His point is that bailing out the banks and bondholders is not likely to return the economy to business as usual. So long as people owe more than we can afford to pay; there will be no funds left over to consume as before. I am sure he is correct about that, and that at some point the conventional solution would be to write down the debt to levels that people could afford to pay, and then this society can get back to what got us here.

Robbert Kuttner and Paul Krugman and Nouriel Roubini and many other relatively liberal economists all seem to agree that Obama's team is not really up to the task of returning the economy to "normal". But none of them question, at least not that I have seen, whether or not this is he right thing to do?

What is the right thing to do to get the earth back to equilibrium without destroying civilization in the process? Plenty of people have predicted collapse. And if we return the economy to "normal", that seems very likely. So why are no respected people addressing this question? 

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Category: Morals | Politics | Resource Depletion

Feb 12 2009

Stimulus Bill Passes - Main issues not addressed

Kal @ 18:07

Lawmakers say all issues settled in stimulus bill

AP – 55 minutes ago

 

On balance it seems better to have this bill than not. Krugman and other top economists say it is too little to "get the economy moving again."  But why is that the objective?

The scientific consensus seems to be that The World is headed toward disaster. I am reminded of the scene from The Titanic where the orchestra just keeps playing. I guess they could not think of anything better to do. Perhaps they were right.

We have global warming, dying oceans, and peak energy staring us in the face and the best we can do is trying to get back to business as usual?

My design of a stimulus bill would be quite different:

1) All industrial effort would be directed toward replacing fossil fuels with renewable energy sources.  The only exceptions would be for the production of food, medical supplies, and other essentials of day to day life. (For this purpose, essential includes education.)  There is a discussion of the magnitude of the required effort here.

2) Since number one would throw massive numbers of people out of work, at least temporarily, we would need to devise a way to keep us all healthy, in our homes, and well fed. I see no societal reason why being unemployed should result in life disruption as it now does.

In other words, focus all resources on the objective. The objective is repairing the earth while we still have time. If we still have time.

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Category: Morals | Politics | Resource Depletion | Solar

Feb 7 2009

What we have makes rational choices difficult

Kal @ 22:10

From The Oil Drum, Depletion Thoughts #1 - Sunk Costs and the Endowment Effect - emphasis mine.

How does this relate to resource depletion and new social trajectories? Many of our current government decisions (e.g. stimulus plan) are based on the sunk costs associated with our lifestyles. We require food, water, shelter, an appropriate range of temperatures, and a modicum of social interaction. But beyond these minimums, our choices and expenditures are directed towards maintaining what we already own, and the institutional infrastructure we are used to. Put differently, our choices are comprised of fixed and variable components - the fixed are largely biological in nature and the variable are largely cultural.

The hopeful part of this is that we could change to a more rational approach. But how will we decide together to do so?

Questions to ponder:

- What would we do if all of our vehicles 'vanished' and we had to restructure our basic needs without the sunk cost of automobiles?

-Would the answers to the above question ONLY be implemented IF all our vehicles 'vanished'? Why or why not?

 

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Category: Politics | Resource Depletion

Feb 6 2009

More Smart Grids

Kal @ 22:45

Nice summary of current developments in the Smart Grid space. Peak Energy.

 

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Category: Rss Basics

Feb 2 2009

The benefits of an intercontinental energy grid

Kal @ 10:15

Bucky  Fuller suggested an intercontinental energy grid, and according to a post at Peak Energy the idea has been resurrected, tying together Australia, Indonesia, and China.

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Category: Politics | Solar

Feb 2 2009

Prime Minister Kevin Rudd calls for a new "new world order"

Kal @ 10:04

It looks like SolSaves is more trendy than I thought:

Time for a new world order: PM

In an essay to be published next week, the Prime Minister is scathing of the neo-liberals who began refashioning the market system in the 1970s, and ultimately brought about the global financial crisis.

"The time has come, off the back of the current crisis, to proclaim that the great neo-liberal experiment of the past 30 years has failed, that the emperor has no clothes," he writes of those who placed their faith in the corrective powers of the market.

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Category: Politics

Feb 1 2009

Our civilization depends on cheap energy - Oil

Kal @ 22:49

"We are set on a disastrous course. Governments must accept that the way we use energy must change and that a painful period of adjustment lies ahead. The energy efficiency of energy use and procurement should lie at the heart of decision-making and a good starting point is to ensure that reliable efficiency data is available to guide this process." Go to The Oil Drum to see more under the title: The energy efficiency of energy procurement systems

How can we work together to make it as painless as possible? 

 

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Category: Politics | Solar | Resource Depletion