Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Energy limits: Why we see rising wealth disparity and low prices -- by Gail Tverberg

  1. Why we are right now seeing so many problems with respect to wealth disparity and low commodity prices (Answer: World per capita energy consumption is already falling, and the energy/economy system needs to reflect this problem somehow.)

  2. Why the quest for growing technology leads to growing wealth disparity (Answer: The economy must be configured in more of a hierarchical pattern to support growing "complexity." Growing complexity is the precursor to growing technology.)

  3. Why rising debt is an integral part of the energy/economy system (Answer: We could not pay workers for making long-lasting goods and services without using debt to "pull forward" the hoped-for benefit of these goods and services to the present, using debt and other equivalent approaches.)

  4. Why commodity prices can suddenly fall below the cost of production for a wide range of products (Answer: Prices of commodities depend to a significant extent on debt levels. A major problem is that when commodity prices rise, wages do not rise in a corresponding manner. Rising debt levels can mask the growing lack of affordability for a while, but eventually, debt levels cannot be raised sufficiently, and commodity prices fall too low.)

  5. The Brexit vote may be related to falling energy per capita in the UK. Given that this problem occurs in many countries, it may be increasingly difficult to keep the Eurozone and other similar international organizations together.
by das monde on Tue Jul 12th, 2016 at 06:03:27 AM EST
... This is simply a leftist way to buy into TINA. Rising inequality, or hell, the low growth in much of the first world has nothing to do with impersonal economic or technological forces.

It's class warfare from the top down. Typical wages are stagnant because politicians and central banks have expended enormous amounts of effort on keeping them low or dropping.
Wealth is concentrating because politicians and central banks expend enormous effort on concentrating it.

Rising trade only matters to the extent that politicians often go out of their way to write the treaties governing that increase in ways that deliberately fuck over labor (ISDS. The emphasis on IP over tax enforcement, ect.)

TINA is a lie. All variants on TINA is a lie.

Every time you hear a new narrative why the way the suffering of the workers and little people of the world is necessary and unavoidable, remember - it is a lie.

There is nothing except malice preventing us from having a rising standard on living and employment based on improved recycling and manufacturing techniques. Atoms are infinitely recyclable, and energy is not scarce.

by Thomas on Tue Jul 12th, 2016 at 07:56:30 AM EST
[ Parent ]
Indeed I had followed the link and was very unimpressed. Lots of confusion, someone clearly going way out of the field of competence...

As ever, it's not that it's 100% wrong of course. But even some of the things that are right come from non sequiturs, which does not exactly fill you with confidence.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Tue Jul 12th, 2016 at 08:30:44 AM EST
[ Parent ]
I can agree that there are no direct economic-technological forces pushing the elites to lie, implement destructive austerity, wage this class war fully. We could indeed have had social democratic societies, Keynessian economics, merry growth... for another 20-50 years perhaps!

Imagine this: Some captivated Elites take the Club of Rome Report seriously, and decide that global consumption of resources has to be reduced, even the global population perhaps. They literally see no alternative. Why would they have to discuss this thorny topic with masses in all countries? So they tell governments intimately: all ideologies, welfare aspirations,  social values, human rights are nothing compared to having an inhabitable planet. And so the TINA reversal towards a Hobbessian struggle begins. The USSR block is quickly dismantled, the Western politics is slowly but consistently pushed by transparently mean conservative governments and charismatic Third Way moles. How it come that TINA forces emerged (and strengthened unopposed) since 1970-80s while the social, democratic post-WWII values were totally betrayed?

Surely, destruction of the environment is seemingly only accelerating in these last decades. Contrary to perceptible evidence and parsimonious logic, I have to assume here uncanny planning, obfuscation. Some people like to do whatever it takes, if the goal is inescapable. Ain't economic depressions more human than world wars? The disregard towards the long term sustainability is too comprehensive to be true, no? Would we here know limits of misdirection for that purpose?

Whatever the timeline for real results, social-economic policies have clearly shifted, and Tverberg's graphs depict that energy consumption is decreasing in UK, Spain, Japan, etc.

by das monde on Tue Jul 12th, 2016 at 10:44:03 AM EST
[ Parent ]
Or, they could have, you know, pushed for investment in technological and economic policies that addressed the problems directly - dealing with trash problems, addressing water pollution directly, pushing for alternative energy in 1980 instead of 2000, etc.

Now, if the motive was, "The world is screwed, so I'm going to steal as much as possible so that in the future, I know that I will live, and have the pick of the remaining plebes to be my slaves."  But as far as a "save the Earth with a backhanded slap" narrative, neoliberalism makes no sense.

by Zwackus on Tue Jul 12th, 2016 at 12:38:00 PM EST
[ Parent ]
Again, composition matters. Is energy consumption declining because of increased energy efficiency or because of economic depression/recession? And how has the composition of that energy supply changed? The more renewables the better. The lower the carbon footprint the better.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Jul 12th, 2016 at 04:05:14 PM EST
[ Parent ]
Several years ago I was informed of a discussion with a Silicon Valley VC to the effect that, by 1980, it was no longer profitable to manufacture in the USA due to wages and benefits, so the wealthy were shifting their efforts off shore and planned to just grab as much as they could from the US economy, essentially switching from building wealth in the US to extracting wealth from the US. This seems to have been independent of peak oil or climate change concerns. But the plan described certainly seems to be what has unfolded.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Jul 12th, 2016 at 04:11:00 PM EST
[ Parent ]
I saw that personally, too.

Not all wealthy Americans think that way. But. Some do.

by John Redmond on Tue Jul 12th, 2016 at 05:03:55 PM EST
[ Parent ]
In the 1980s the US plant was obsolete and needed to be replaced.  Plant cost was the same no matter where they parked it so they went off-shore to be able to buy labor in a low wage rate environment, e.g., Indonesia, and sell in high wage rate markets and pocket the difference.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre
by ATinNM on Tue Jul 12th, 2016 at 06:29:09 PM EST
[ Parent ]
More than systemic under-investment, computerization and robotisation were also creating a whole new generation of manufacturing capabilities which were very capital intensive and which required changed work practices and extensive re-training which are often easier to implement in a green field environment rather than with expensive 50+ aged workers. Labour costs actually became a smaller fraction of the total cost of production, but it was the willingness of (say) Chinese workers to work all hours, learn new skills quickly, and the lack of unionisation which made the move overseas attractive.

Of course once they had acquired the skills, the Chinese set up their own factories with the same technology and the "borrowed" intellectual capital to effectively compete with the original out-sourcers. Too late, the out-sourcers realized their own technologies where being used to compete against them, and in many cases, sought to insource again or transfer to a less entrepreurial culture with less availale capital to replicate the technology.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jul 13th, 2016 at 10:13:01 AM EST
[ Parent ]
In the old German phrase, the outsourcers 'grew too soon old and too late wise.'

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Jul 13th, 2016 at 03:05:47 PM EST
[ Parent ]
Well, the relevant factor in that analysis is energy return on energy invested, and two factors are currenly helpful. The cost of energy has dropped which makes complexity more affordable - at least for the present, and we are rapidly building the most energy efficient renewable source of electricty currently available - wind, followed by solar. If we continue on the current path we may lock in enough sustainable, renewable energy to make un-affordable fossil fuels irrelevant as an energy source. And, while EROIs of 100 are no longer attainable, the EROI of wind and solar seems just adequate to our needs and to support complexity close to what we have.

Mostly we just have to stop being so stupid in how we use our resources. That is the real challenge, along with appropriate distribution of wealth. And overriding all of this is the importance of climate change - which has to be slowed and then reversed.  

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Tue Jul 12th, 2016 at 03:58:15 PM EST
[ Parent ]


Occasional Series