Sunday, June 9, 2019

Green Old Deal

Not Born Yesterday,

​I'm going to start with the conclusion, which is that actual productive economic growth has already ended, and we are keeping the complex system coherent by using fake financial "growth", which can seem to work, until it doesn't. I think the dateline "2019" on the graph below should be 2-3 mm to the right. People keep changing the year on that same line. The real economy is rolling over.
 The article on "degrowth" caught my interest, but it sounds like it was written by city people who are stressed out by paychecks that don't keep up with shopping, and see a life with less shopping, less pay, city buses, and free education and medical care as being simpler, with more leisure time. 
  It does not seem that the author has had to solve existential problems, grow food, or make useful necessities, like clothing or furniture.
The life with more leisure time was easier to believe in the 1960s, when there was more of everything for everybody every year.
This is the simpler, easier life we are living now, which is why so much of the world wants to get in where there is plenty of food, cars, public services and clean water..  
 I'll put in a piece Eleni sent from Jim Kunstler about where some of us might get to some day, without some of the others.
 Gail Tverberg's article, sent by Charles, along with the one about high tech can't last (really limited existence on the planet of rare-earth elements, which are completely critical to the screen I'm looking at and everything that precedes it).
 There's more about the trade wars from other perspectives, but Gail's perspective is paramount, directly related to global energy limits and the effects that expensive energy is having on the global economic web. She doesn't mention the US policy of bombing all the oil countries that start selling oil for anything other than dollars. That moves their oil into the future, by destroying their ability to pump and burn it now.  
 The latest analysis, still showing the financing of the shale oil miracle to be a lot like the housing bubble is included. Shale oil is useful as a US weapon on the global stage, increasing the power of the Petrobuck-Empire to bomb and blockade oil-producing non-vassals, while keeping tribute-paying vassals in Europe and Japan from economic collapse.
Charles' own essay about a rural revival follows that, and one I have sent before, about the rural creative class.
 Creativity and manufacturing going rural is important, because what is happening in the cities is compliance economy, with creativity fading away, too risky. To afford a creative project, one has to be where rents are lower, code-compliance less daunting, and expectations of workers less tightly scripted and defined.
​ The article that packed the most punch for me was the one about the very limited supplies of rare-earth elements on our fair planet. 
There is not enough to keep making laptops, smartphones, video screens, hard drives, microchips, electric car and wind turbine magnets and so on. Some of these very hard limits have already been brushed a few times, but the global trade war (best kind of war, I think) is likely to make them acute. The majority of these come from China, because that's where most of them are. China has few enough cards to play in a trade war. China will probably stop exporting these, except in manufactured products. 
I suspect there is already a lot of quiet coercion going on. Apple has to make iPhones in China, right?​
​Imagine an almost infinite celestial fruit-​cobbler...
 In 1972, a team at MIT published The Limits to Growth, a report that predicted what would happen to human civilization as the economy and population continued to grow. What their computer simulation found was pretty straightforward: On a planet of finite resources, infinite exponential growth isn’t possible. Eventually, non-renewable resources, like oil, would run out.
Historically, we have considered growth a positive thing, synonymous with job security and prosperity. Since World War II, the gross domestic product (GDP) measure has been used as “the ultimate measure of a country’s overall welfare.” ...
But growth has led to other problems, such as the warming of the planet due to carbon emissions, and the extreme weather and loss of biodiversity and agriculture that comes along with that. Consequently some activists, researchers, and policy makers are questioning the dogma of growth as good. This skepticism has led to the degrowth movement, which says the growth of the economy is inextricably tied to an increase in carbon emissions. It calls for a dramatic reduction in energy and material use, which would inevitably shrink GDP.
The Green New Deal, popularized by Alexandria Ocasio-Cortez, seeks to decrease carbon by growing the renewable energy industry. But the degrowth movement believes we need to take this further, by designing a social upheaval that disentangles the idea of progress and economic growth once and for all. This new accounting of economic success would instead focus on access to public services, a shorter work week, and an increase in leisure time. Their approach, they say, will not only combat climate change, but free us from a workaholic culture in which so many struggle to make ends meet...
 This is how degrowthers envision the process: After a reduction in material and energy consumption, which will constrict the economy, there should also be a redistribution of existing wealth, and a transition from a materialistic society to one in which the values are based on simpler lifestyles and unpaid work and activities...
 People can try to live a degrowth-esque lifestyle today by buying fewer things, but ultimately it's challenging to commit to degrowth without those public services that are built into the model...
 Since there are so few real-world examples of degrowth, Kallis has used a fictional utopia to explain the concept in a 2015 paper...
“It’s how we imagine the good life,” Kallis said. “A life that is simpler, not a life where we keep producing more and more running faster and faster, and having more and more products to choose from.”

​Eleni sent this from Kunstler:  Going Where, Exactly?
​ ​Well, we’d better adjust our thinking to the fact that the horn-of-plenty is shockingly out of goodies, and that no amount of financial hocus-pocus is going to refill it. Valiant attempts to redistribute the already-existing wealth are liable to prove disappointing, especially when the paper and digital representations of that wealth in “money” turn out to be figments — promises to pay that will never be kept because they can’t be kept.
 ​So, instead of fantasizing about free PhD programs for everybody, and free insulin for the multitudes, consider instead the vista of a reduced population working in the fields and pastures to bring enough food out of the long-abused land to live through the next winter. Consider a world in which, if we are lucky, the electricity runs for a few hours a day, but possibly not at all. Imagine a world in which men and women actually function in different divisions of labor and different social spaces because they must, to keep the human project going. Imagine a world in which the ideas in your head about that world actually have to comport with the way the way that world really works — and the severe penalty for failing to recognize that.

​ ​Nearly everyone wonders, “Why is Donald Trump crazy enough to impose tariffs on imports from other countries? How could this possibly make sense?”
​ ​As long as the world economy is growing rapidly, it makes sense for countries to cooperate with each other. With the use of cooperation, scarce resources can become part of supply lines that allow the production of complex goods, such as computers, requiring materials from around the world
The downsides of cooperation include:
(a) The use of more oil to transport goods around the world;
(b) The more rapid exhaustion of resources of all kinds around the world; and
(c) Growing wage disparity as workers from high-wage countries compete more directly with workers from low-wages countries.
​ ​These issues can be tolerated as long as the world economy is growing fast enough. As the saying goes, “A rising tide lifts all boats.”
​ ​In this post, I will explain what is going wrong and how Donald Trump’s actions fit in with the situation we are facing. Strangely enough, there is a physics aspect to what is happening, even though it is likely that Donald Trump and the voters who elected him would probably not recognize this. In fact, the world economy seems to be on the cusp of a shrinking-back event, with or without the tariffs. Adding tariffs is an indirect way of allowing the US to obtain a better position in the new, shrunken economy, if this is really possible.

​ ​Yet another downturn could not come at a worse time for U.S. shale drillers, who have struggled to turn a profit. Time and again, shale executives have promised that profitability is right around the corner. Years of budget-busting drilling has succeeded in bringing a tidal wave of oil online, but a corresponding wave of profits has never materialized.
​ ​Heading into 2019, the industry promised to stake out a renewed focus on capital discipline and shareholder returns. But that vow is now in danger of becoming yet another in a long line of unmet goals.
​ ​“Another quarter, another gusher of red ink.”

High Tech Can't Last; There Are Limited Essential Elements:
​ ​This long post describes the rare metals and minerals phones, laptops, cars, microchips, and other essential high-tech products civilization depends on.
​ Metals and minerals aren’t just physically limited, they can be economically limited by a financial collapse, which dries up credit and the ability to borrow for new projects to mine and crush ores. Economic collapse drives companies and even nations out of business, disrupting supply chains.
​ ​Supply chains can also be disrupted by energy shortages and natural disasters. The more complex, the more minerals, metals, and other materials, machines, chemicals, a product depends on, the greater the odds of disruption.
​ ​Minerals and metals can also be politically limited.  China controls over 90% of some critical elements.
​ ​And of course, they’re energetically limited.  Once oil begins to decline, so too will mining and all other manufacturing steps, which all depend on fossil energy.
​ ​The next war over resources is likely to be done via cyber-attacks that take down an opponent’s electric grid, which would affect nearly all of the other essential infrastructure such as agriculture; defense; energy; healthcare, banking, finance; drinking water and water treatment systems; commercial facilities; dams; emergency services; nuclear reactors, information technology; communications; postal and shipping; transportation and systems; government facilities; and critical manufacturing (NIPP)

What Would It Take to Spark a Rural/Small-Town Revival?​   Charles Hugh Smith
The decline of rural regions and small towns is a global phenomenon, and the causes are many but boil down to two primary dynamics:
1. Cities and megalopolises (aggregations of cities, suburbs and exurbs) attract capital, infrastructure, markets and talent, and these are the engines of job creation. People move to cities to find jobs...
2. Globalization has lowered the cost of agricultural commodities by exposing every locality to globally set prices (supply and demand).
​T​he relatively low cost of fuels has enabled produce from thousands of miles away to be shipped to supermarkets virtually everywhere.
These mega-trends have slashed farming incomes while costs have risen across the board. This squeeze as revenues decline and costs increase has driven even the most diligent and devoted farmers out of business...
Recent research supports the idea that this under-the-radar migration is already under way. The Rise of the Rural Creative Class (via Kevin M.) A growing body of research shows that innovative businesses are common in rural areas, and rural innovation gets a boost from the arts.
A series of studies from Tim Wojan and his colleagues at the U.S. Department of Agriculture’s Economic Research Service documents the drivers of rural innovation. Their findings draw on a variety of data sets, including a large-scale survey that compares innovation in urban and rural areas called the Rural Establishment Innovation Survey (REIS). This is based on some 11,000 business establishments with at least five paid employees in tradable industries—that is, sectors that produce goods and services that are or could be traded internationally—in rural (or non-metro) and urban (metro) areas.

​ The ​U.S. Department of Agriculture’s Economic Research Service documents the drivers of rural innovation. Their findings draw on a variety of data sets, including a large-scale survey that compares innovation in urban and rural areas called the Rural Establishment Innovation Survey (REIS). This is based on some 11,000 business establishments with at least five paid employees in tradable industries—that is, sectors that produce goods and services that are or could be traded internationally—in rural (or non-metro) and urban (metro) areas.
​ ​The survey divides businesses into three main groups. Roughly 30 percent of firms are substantive innovators, launching new products and services, making data-driven decisions, and creating intellectual property worth protecting...  

​ ​Wojan and company’s analysis find a strong statistical association between the arts, innovation, and economic dynamism in rural areas. And this leads them to conclude that the arts are a direct force in rural innovation, not just an indirect factor that helps to attract and retain talent.

The West's "Manufacturing War With Russia", useful context and perspective from Eleni.
​ ​In October 1993 Yeltsin, after dissolving the parliament, ordered army tanks to shell the Russian parliament building, which was being occupied by democratic protesters. The assault left 2,000 dead. Yet during his presidency Yeltsin was effusively praised and supported by Washington. This included U.S. support for a $10.2 billion International Monetary Fund loan to Russia during his 1996 re-election campaign. The loan enabled the Yeltsin government to pay huge sums in back wages and pensions to millions of Russians, with checks often arriving on the eve of the election. Also, an estimated $1.5 billion from the loan was used to directly fund the Yeltsin presidential campaign. But by the time Yeltsin was forced out of office in December 1999 his approval rating had sunk to 2%. Washington, losing Yeltsin, went in search of another malleable Russian leader and, at first, thought it had found one in Putin. ​“Putin went to Texas,” Cohen said. “He had a barbecue with Bush, second Bush. Bush said he ‘looked into his eyes and saw a good soul.’ There was this honeymoon. Why did they turn against Putin? He turned out not to be Yeltsin. We have a very interesting comment about this from Nicholas Kristof, the New York Times columnist, who wrote, I think in 2003, that his own disillusion with Putin was that he had turned out not to be ‘a sober Yeltsin.’ What Washington was hoping for was a submissive, supplicant, post-Soviet Russian leader, but one who was younger, healthier and not a drinker. They thought they had that in Putin. Yeltsin had put Putin in power, or at least the people around Yeltsin did.”
​ ​“When Putin began talking about Russia’s sovereignty, Russia’s independent course in world affairs, they’re aghast,” Cohen said of the Washington elites. “This is not what they expected. Since then, my own thinking is we were pretty lucky after the 1990s to get Putin because there were worst contenders in the wings. I knew some of them. I don’t want to name names. But some of these guys were really harsh people. Putin was kind of the right person for the right time, both for Russia and for Russian world affairs.”

More on the Multipola-world-power-contest from Eleni.
​ ​“It only happens when both countries are going into war. Cutting off oil supplies to China to some extent is equal to a declaration of war,” Beveridge told Bloomberg.
​ ​China, however, appears to be filling in its strategic petroleum reserves in recent months, as it has been boosting oil imports by 10 percent while refining output has been growing at 5 percent, according to the analyst... over the past few months China has also only sporadically bought crude oil and liquefied natural gas (LNG) from the United States—a sharp reversal from the booming Chinese imports of American energy at this time last year. There were even some months where China purchased no U.S. crude oil at all, according to EIA data. It has also drastically reduced LNG imports from the U.S. as China has a 10-percent import tariff on American LNG—a tariff set to rise to 25 percent on June 1.
​ ​With the trade war heating up, China appears to be rallying all means and resources available to reduce the role of the U.S. in its economy and economic growth, as Beijing has lost trust in the United States both as a supplier and an export market, Jefferies Group’s Yu told Bloomberg.  

Those forever-chemicals in our food are not inert. They keep working their magic "forever". 
The cat got out of the bag early.
​ ​The Food and Drug Administration (FDA) has quietly revealed some troubling information about a class of toxic chemicals that the agency found in significant levels in our food supply.
​ ​At a recent scientific conference, the FDA shared the findings of its first broad testing of food for a worrisome class of nonstick, stain-resistant industrial compounds called per- and polyfluoroalykyl substances, or PFAS.
​ ​The FDA has not made its findings public yet, but agency researchers discussed the results at a conference held by the Society of Environmental Toxicology and Chemistry last week in Finland. The Environmental Defense Fund and the Environmental Working Group obtained the FDA presentation and provided it to The Associated Press.
​ ​Substantial levels of PFAS were found in grocery store meats and seafood and in off-the-shelf chocolate cake:
​ ​The levels in nearly half of the meat and fish tested were two or more times over the only currently existing federal advisory level for any kind of the widely used manmade compounds, which are called per- and polyfluoroalykyl substances, or PFAS.​..

There is evidence that exposure to PFAS can lead to serious adverse human health effects, including cancer, reproductive harm, developmental harm, high cholesterol, damage to the immune system, hormone disruption, weight gain in children and dieting adults, and liver and kidney damage.

Children Also Affected

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