Wednesday, February 15, 2023

Necessities Of Life

Home Economists,

  Surplus Energy Economics, Dr. Tim Morgan's blog, has part 3 in a series explaining "Prosperity" as the economic output remaining after all of the essential needs of sustaining the economy have been met, which is a lot like my "disposable" income after bills, taxes, rent and food. We know that when food, rent and gas prices go up, we are poorer, less prosperous. There are multiple drivers of this. Fuel cost, the "Energy Cost of Energy" is a big one. When gasoline is $6/gallon , everybody feels poorer. The rest of the economy declines, because people have to buy gasoline first. This is pervasive in the economy, but not as apparent. It is why the Biden Administration can sell oil from the strategic petroleum reserve to goose the economy, and its political fortunes, but won't pay to refill it, which would raise the price of oil/energy and depress the economy.
  "Economics" looks at financial flows, which are assumed to reflect real, physical economy, but fail to actually do that, because they assume that any physical input, like oil, can be substituted-for by some other input, completely dependent upon the monetary price. This has worked in an era where it was possible to drill more oil wells and mine more coal, at a low price, but it does not work when the price of oil can double or triple in a few months, which keeps the economy from growing. These limits of oil supply now appear to be fixed. Saudi Arabia can't just pump more. 
  Economies can only afford to pay so much for energy before they begin contracting as the price exceeds that. The currently prominent economic theory assumes permanent growth, because anything that runs low can be replaced for a price, but we find that the price of oil going above $80/bbl seems to suppress the economy, because what's left as "prosperity" is needed to fund the non-essential parts of economy, like restaurants, pedicures and vacations.
Here is a graph of Energy, Economic Output, Prosperity and Prosperity per capita for the world:
  You see how different this is from the purely financial figures which are always reported, but more like what we experience in our lives. Most of us in the advanced economies were more prosperous 20 years ago. There have been lots of events which were blamed, but the trend has been the trend in advanced countries, which support complexities of bureaucracy in government, business, regulation, finance, social and environmental services. China took on a lot of western manufacturing because it could burn dirty coal, pay lower wages, pollute more, and supported lower regulatory, social service and environmental-protection costs.
  Declining prosperity per capita in advanced economies has been "hidden" to some degree by focusing on financial indicators like stock-market prices, which have continued to rise with financial support from cheap credit, but which are in contrast to the actual decline in value of companies as profits decline from increased costs of raw materials and labor, because laborers have to be paid more to buy their own necessities of life, also. 
  Increased borrowing with lower interest rates only works until interest rates become negative in real terms, then sudden loss of monetary purchasing power occurs, and this inflation destroys trust in the economy. Trust is as essential as energy to an economy. "Inflation Expectations" are the inverse of trust, and are now being addressed, which is painful. They were addressed from the early 1980s on by reducing the cost of labor, first by reducing the strength of collective bargaining in advanced economies, then by moving manufacturing to developing economies, with very low wages and benefits for workers.
  We can see that prosperity per capita in western countries began to fall about 20 years ago, and prosperity per capita in China is now also in decline, as is global prosperity per capita. Notably, but not graphed, Russian prosperity per capita is still rising, and may rise for even a few more years.
  The upshot of this is that everybody has to pay more of what they make for food, rent and fuel, and has less to spend on everything else. Many people are losing their homes in the US, because they can't sustain rent costs. Landlords have high taxes, compliance and maintenance costs, which is the cost of fuel and the cost of complexity. A lot of complexity cost is in the profit-taking structure of financial capitalism, which is also imposed on countries like Cuba and Venezuela, which do not subscribe to financial capitalism, through economic and military sanctions. Those countries are now known for having been forced to focus on food, housing, medicine and the minimal essentials of life for a long time. All accounts are that it causes constant anxiety, hardship and suffering. Blame is variously placed.
  A lot of the complexity cost in advanced societies is bureaucracy in general, which tends to grow, whether governmental or private. There are always good reasons, and everybody learns to protect their job in their bureaucracy, but that becomes the main point after awhile. Every ne protocol or procedure adds complexity expense. Every expansion adds not just size, but also complexity, which reduces the work-output of the bureaucracy per $US or other input.
  Reducing bureaucracy is very hard to do. It usually happens through collapse of systems, like the collapse of the USSR. The Russian population declined by 10% in 10 years, as retirees had no income; starved and froze to death. Everybody suffered as the economic life-support system failed. I may be getting into Dr. Morgan's next essay here, but we all need to consider what form the collapse of bureaucratic institutions in federal, state and local government, and many businesses will affect us. Many of us will lose our jobs, but will still be expected to pay rent and utilities and to buy food and fuel to live. What then?

Charles Hugh Smith envisions "A World Without Finance"
​  ​Given its parasitic, predatory nature, it's not surprising that finance is the primary engine of extreme wealth-income inequality. The fortunes of the few assembled over the past two decades largely trace back to the expansion of debt and leverage (i.e. financialization) which emphasizes marketing as consumption expands not from earnings but from the expansion of debt and leverage.
​  ​The problem is parasitic, predatory finance is inherently unstable, as it destabilizes the real economy by distorting every level of regulation and governance and deranges incentives to reward the least civic-minded, the least ethical and the sleaziest self-absorbed gamblers, those who demand a bailout when their private gains turn into private losses.
​  ​We're too big to fail, they whine, and the naive public bought that fraud in 2008-09.
​  ​I predict a wholesale eradication of finance once the public digs its way out of the ashes of an economy burnt to the ground by financialization. Finance and central banking will be truncated, limited to the core functions of greasing commerce and the construction of productive assets. All the weaponry of parasitic swindles, all the skims and scams of derivatives, swaps, corporate buybacks, etc. will no longer be allowed. Speculative gains will be so heavily taxed that those seeking wealth will be driven to actually generate real-world goods and services rather than financial frauds.

    Diana Johnstone writes about the peace rally in Washington DC this Sunday at the Lincoln Memorial. There is squabbling, rather than unity. Whose interests are served by squabbling in those who want peace, rather than war? Thanks Eleni.
​  ​If the Feb. 19 rally to end the war in Ukraine fails it will not be a success for other antiwar organizations that disagree with the Libertarian Party. It will only show that internal divisions can unravel every hope.

​  There is video of sparks and flames coming from the wheels and undercarriage of one of the rail cars onf the train in Ohio last week, 20 miles before it derailed.​
New toxins are identified. Gevernment won't talk to citizens in East Palestine or the national news.
"Get The Hell Out Of There" - Ohio's Apocalyptic Chemical Disaster Rages On

​  When PVC (poly-vinyl-chloride) burns, Dioxin is a combustion-product. Dioxin is also a combustion product of vinyl-chloride.
​  ​Palestine, Ohio train wreck: It's the dioxin​   ​
It's not just what was in the tanker cars. It's what happens when they burn and combine. This may be the largest dioxin plume in world history.

​  6 months ago, this would have been reasonable. Now it is magical thinking.​
​  ​The Washington Post reported on Monday that Biden administration officials say they want to help Ukraine retake as much territory as it can from Russia over the next few months before they sit down at the negotiation table with Russian President Vladimir Putin.
​  ​The report, which cited unnamed Biden administration officials, said that some “optimists” think Ukraine can stop Russian advances in the east, regain territory in the south, and negotiate a deal by the end of the year. But there are “skeptics” who recognize that Russia has been reinforcing its positions with hundreds of thousands of troops.
​  ​Russia has been making more gains around the eastern Donetsk city of Bakhmut, where Ukrainian forces have been taking heavy casualties. NATO Secretary-General Jens Stoltenberg said Russia has started its long-awaited offensive, but it’s not clear if Russia has launched a major push or the momentum is just on its side in Bakhmut.

​  Christine sent this article anticipating the Russian offensive, and laying out options for routes of attack, and what defenses would stand in the way. The ending scenarios of import are that Russia finishes taking Donbass and the territories now politically reintegrated to Russia, that Russia takes the entire Black Sea coastline, including Odessa, which would include the predominantly ethnic Russian areas, and that Russia takes that and everything east of the Dnieper river.​
​  It is worth pointing out that Russia can stage 3 fronts of attack simultaneously and still hold large, mobile reserve forces. Russia has taken steps to establish complete dominance of the air, with reactivation of mothballed Mig-29s (like F-16s). Russia would then be able to press forward rapidly wherever resistance was weakest. Ukrainian forces are reportedly exhausted, demoralized and mostly untrained at this point.​ 
  NATO does not want to declare war on Russia, and can't sustain such a war with conventional land forces.
  Russia will fulfil her stated goal of liberating all 4 provinces which have been politically added to the Russian Federation, and will likely do that first. That is not negotiable to Russia at this point. 
  Secret negotiations are rumored to be ongoing. Zelensky has been making a tour of European capitals, which would facilitate that, though the Ukrainian forces are a NATO proxy army. It may be that such negotiations are to stall for time, waiting for the ground to turn to mud, but time is otherwise on Russia's side.
  It seems to me that Russia is leaving open the option to stop at her declared national boundaries, but will require a demilitarization and "neutrality of Ukraine, with strict policing. Transnistria, along Moldova's Ukrainian border, will need to be protected to Russian satisfaction. Putin's February 24 speech approaches.
​  ​It’s clearer than ever that the West is hitting the panic button. With increased solemnity, the Western ‘mainstream’ titans are souring in their reportage of the war like wilting dandelions—headlines not only reeling back the earlier pomp and machismo of a certified victory, but now striking notes of urgency and doubt into their clouding forecasts for the war’s future.
​  ​Almost in unison, they now agree that “the next 3 months” will be the “critical turning point of the war”, one way or another. Some Western factions are beginning to float out more than just ‘feelers’ to their audience, to acclimatize them to Ukraine’s ensuing defeat.

​  Who decides and orders something like a nuclear-provocation, and who dies from it?​
​  ​Russia says Kiev is readying ‘great event’ to accuse Russia of violating nuclear safety
​  ​The purpose of the provocation is mainly to create a negative background by forcing countries that didn’t support sanctions against the Russian Federation to vote for the Kiev "peace formula" at the upcoming 11th special session of the UN General Assembly

​  Pepe Escobar looks further into Seymore Hersh' investigative report on the long-preplanned Nordstream Pipeline bombing sabotage (not "terrorist" attacks).​
The report reveals a limited institutional perspective. It has been pointed out that involvement must have been much wider within NATO than what is reported.
Hersh refers to a “secure room on the top floor of the Old Executive Office Building …that was also the home of the President’s Foreign Intelligence Advisory Board”.
  Christine sent this article about Erdogan's political fortunes, with fall elections looming, and 40,000 now estimated to have died. Eleni in Athens says that her connections in the Greek military suspect that the earthquake may have been induced to punish Turkey for doing business with Russia. Who can know?​ Erdogan already knows who his enemies are since the 2016 assassination attempt. What can he do to bolster his friendships this spring?
​  ​The full impact of the recent earthquake that hit both Turkiye and Syria has yet to be fully assessed, but the Turkish Republic has already sustained significant damage that could have long-lasting political effects.

​  Tessa Lena, ​  "I'm Not Going to Stop": A Conversation with Attorney Jeff Childers (Coffee & Covid)
  Prior to 2020, Jeff focused on his very successful practice as a business lawyer in Florida. When Alachua County, the county in Florida where he lives, instituted a mask mandate, Jeff felt a spiritual pull to stand up to tyranny—and so he filed his first case against a government entity.
  Being thrust into constitutional law, in June 2021, he won the first case in the U.S. against mask mandates, Green v. Alachua County, First District Court of Appeal.

  Meryl Nass MD: (There will be a 15 minute segment on how to start a successful and productive vegetable garden That's my "fighting back".
A teaser notice: I am producing a Symposium on the Attack on Food and Agriculture--and how to fight back, on Saturday, March 4

​Revolting Vegetarian (pictured with weaponized daikon in new kitchen)​ 

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