Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
You Are Expendable | The Agonist

Sustainable is going to become the 21st century mantra.

Sustainable in terms of population, resource utilization, capital formation, debt, energy utilization, throughput of goods, and the inevitable decline in labor needs. It is a truly new world, but not one of decaying infrastructure, but of hyper efficient infrastructure.

There are many many people going back to the drawing board and trying to figure this thing out.

Imagine the day we have autos that get 500 mpg equivalent, that can last 20 years, that charge in our garage with minimal moving parts and hardly ever break down. Needing little maintenance, no oil changes. With this 'efficiency' what happens to service garages, car dealers and gas stations? Add that the new business model of the plug in vehicle is for business to offer free vehicle charging as a means of attracting a business customer. Considering it costs about $1 to charge an EV that is just a good business model, but yet another product that is going mainstream and free. This is precisely what is happening to industry after industry. Downstream, what happens to the oil industry, the steel industry supporting the rigs, the fleets of tankers? Efficiency is going into hyperdrive right now.

Goods and services are going to have to be allocated in the system at a higher level than it is without relation to labor input. This is somewhat occurring at both ends of the age spectrum, and among women. The old receive a modicum of income and care beginning at 65 and they are being compensated without labor. The young are raised by parents to 18, and this is extending in recent years to 22 to 26 as educational requirements are growing. If the average age is 78 then 26 plus 13 years (39) of it are starting to be compensated without labor. About half. Social welfare programs, unemployment insurance, food stamps, and other forms of government assistance probably are beginning to take off another 5 years or so (I think it is up to 8 or 10 right now). Thus, 44 of 78 years are being subsidized as a means of taking surplus labor out of the pool (56% of your life is subsidized without labor input).

In the new economy that is not going to be enough. The efficiencies of computing and robotics is going to bring it lower probably to the tune of twenty more years, and somehow there is going to have to be a regime for paying for it all. Labor is the primary means of dispersing dollars, and it is going to stop working sometime in the next twenty years.

One other new mechanism being experimented with is changing the way money is created. In modern capitalism is is created through debt. The Federal Reserve prints money and lends it to the banking system, who then lends it out based on a ratio of equity to debt carry allowed by the system (currently 8 to 1). The issuance of new money in the form of debt carries with it a built in growth requirement that has worked for about 100 years. The system has to grow at least 3% to cover that growth requirement built into new money being issued as debt. The alternative is to print money and disburse the new money capital through infrastructure projects with a defined rate of return, and avoiding the debt model altogether. In other words the Federal Government would print money and issue it not through banks but through say the construction of $500 billion dollar windfarm, or other identified infrastructure with societal value. Hence the project carries a return to society but it would not require any growth as part of the benefit. In other words cash can be created without GDP growth (required due to interest costs). The dollars are disbursed as widely as possible through these projects. The bank model is not abandoned, but supplemented with this method of capital injection.

Hybrid capitalism. That is one of the more recent I have heard.

sounds familiar... are you lurking here, scottjen?


'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Tue Oct 6th, 2009 at 08:58:54 AM EST
[ Parent ]


Occasional Series