Limits to Growth

Say Goodbye to Normal

James Howard Kunstler

James Howard Kunstler

31 August, 2015

The tremors rattling markets are not exactly what they seem to be. A meme prevails that these movements represent a kind of financial peristalsis — regular wavelike workings of eternal progress toward an epic more of everything, especially profits! You can forget the supposedly “normal” cycles of the techno-industrial arrangement, which means, in particular, the business cycle of the standard economics textbooks. Those cycle are dying.

They’re dying because there really are Limits to Growth and we are now solidly in grips of those limits. Only we can’t recognize the way it is expressing itself, especially in political terms. What’s afoot is a not “recession” but a permanent contraction of what has been normal for a little over two hundred years. There is not going to be more of everything, especially profits, and the stock buyback orgy that has animated the corporate executive suites will be recognized shortly for what it is: an assest-stripping operation.

What’s happening now is a permanent contraction. Well, of course, nothing lasts forever, and the contraction is one phase of a greater transition. The cornucopians and techno-narcissists would like to think that we are transitioning into an even more lavish era of techno-wonderama — life in a padded recliner tapping on a tablet for everything! I don’t think so. Rather, we’re going medieval, and we’re doing it the hard way because there’s just not enough to go around and the swollen populations of the world are going to be fighting over what’s left.

Actually, we’ll be lucky if we can go medieval, because there’s no guarantee that the contraction has to stop there, especially if we behave really badly about it — and based on the way we’re acting now, it’s hard to be optimistic about our behavior improving. Going medieval would imply living within the solar energy income of the planet, and by that I don’t mean photo-voltaic panels, but rather what the planet might provide in the way of plant and animal “income” for a substantially smaller population of humans. That plus a long-term resource salvage operation.

All the grand movements of stock indexes and central banks are just a diverting sort of stagecraft within the larger pageant of this contraction. The governors of the Federal Reserve play the role of viziers in this comic melodrama. That is, they are exalted figures robed in magical Brooks Brothers summer poplin pretending to have supernatural power to control events. You can tell from their recent assembly out west — “A-holes at the J-hole” — that they are very much in doubt that their “powers” will continue to be taken seriously. This endless hand-wringing over a measily quarter-point interest rate hike is like some quarrel among alchemists as to whether a quarter-degree rise in temperature might render a lump of clay into a gold nugget.

What they do doesn’t matter anymore. What matters is that a great deal of the notional “wealth” they conjured up over the past decade or so is about to vanish —poof! Perhaps that will look like a black magic act. That wealth seemed so real! The bulging portfolios with their exquisite allocations! The clever options! The cunning shorts. Especially the canny bets in dark derivative pools! All up in a vapor. The sad truth being it was never there in the first place. It was just an hallucination induced by the manipulation of markets and the criminal misrepresentation of statistics, especially the employment numbers.

There are rumors that the Grand Vizeress of all, Ms. Yellen, is flirting with possible indictment over the “leakage” of valuable information out of her inner circle to potential profiteers. Whoops. It may lead nowhere but to me it is an index of her more general loss of credibility. All year she has spouted supernaturally fallacious nonsense about how “the data” guides Fed decision-making. Only her data is contrary to what is actually happening in the pathetic Rube Goldberg contraption that the so-called US economy has become (Walmart + entitlements). Her “guidance” amounts to a lot of futile drum-beating on a turret of the Fed castle, hoping to make it rain prosperity. Her enigmatic utterances have kept financial markets in a narrow sideways channel most of the year until recently.

I’d say she’d lost her mojo, and the lesser viziers on the Fed board are looking more and more like the larval, sunken-chested dweebs that they really are. So where is the nation to turn? Why, to the great blustering Trump, with his “can-do” bombast about “making America great again.” What does he mean, exactly? Like, making America the way it was in 1958?” Behold: the return of the great steel rolling mills along the banks of the Monongahela (and so on)! Fuggeddabowdit. Ain’t gonna happen.

I have to say it again: prepare to get smaller and more local. Things on the grand level are not going to work out. Get your shit together locally, and do it in place that has some prospect for keeping on: a small town somewhere food can be grown and especially places near the inland waterways where some kind of commercial exchange might continue in the absence of the trucking industry. Sound outlandish? Okay then. Keep buying Tesla stock and party on, dudes. Hail the viziers in their star-and-planet bedizened Brooks Brother raiment. Put your head between your legs and kiss your ass goodbye.

The end of growth

No More Industrial Revolutions, No More Growth?

Charles Hugh Smith

Of Two Minds,

27 December, 2012

The common feature of the transformative technologies of the 20th and 21st centuries is that they were one-offs that cannot be duplicated.

What if the engines of global growth that worked for 65 years (since 1945) have not just stalled but broken down? The primary "engines" have been productivity gains from industrialization, real estate development and expansion of consumption based on the continual expansion of debt and leverage--in short-hand, financialization.

The Status Quo around the globe has responded to the obvious endgame of financialization (the 2008 financial crisis) by doing more of what has failed: expanding credit and leverage, flooding the global economy with liquidity (money available for borrowing), credits and subsidies for real estate development and a near-religious belief in "the next industrial revolution" that will spark rapid growth in employment, profits and productivity.

"The usual suspects" for the next engine of growth include nanotechnology, biotechnology, unconventional energy and Digital Fabrication, i.e. 3-D printing and desktop foundries. But are any of these capable of not just replacing jobs and revenues in existing industries, but creating more jobs and expanding revenues and profits?

There is a growing literature on this very topic, as many start questioning the quasi-religious faith that there will "always" be another driver of growth, i.e. the expansion of wealth, profit, employment and assets.

The Status Quo dares not even entertain this question because the only way to service the fast-rising mountain of debt that is sustaining the Status Quo is to "grow our way out of debt," i.e. expand the real economy faster than debt.

The past 250 years has been one long "proof" that we can indeed "grow our way out of debt" because the low-hanging fruit of industrialization and cheap, abundant energy enabled wealth to be created at a faster pace than debt.  

Clueless Keynesians mock those questioning the possibility that the low-hanging fruit has been plucked by noting that doomsdayers were actively decrying the ballooning debt of the British Empire in the mid-1700s. We all know how that story ended: what looked like crushingly massive debt in 1780 was reduced to a trivial sum by the rapid expansion of industrialization.

But suppose the end of cheap, abundant energy (replaced by abundant, costly energy) and the Internet spells the end of centralized models of growth? What if all the innovation currently bubbling away only produces marginal returns?

Take biotechnology for example. Those with little actual knowledge of biotech are quick to latch onto the potential for genetic engineered medications, biofuels, etc. What they don't ask is if these technologies can scale up while costs decline, i.e. the computer technology model where everything progressively gets cheaper and more powerful.

Biofuels may have promise, but it still takes "old fashioned" energy to collect the feedstock, and it is a non-trivial task to keep micro-organisms alive on the scale that would be needed to produce a useful amount of liquid fuels, i.e. a few million barrels every day. Some processes may not scale up, and others may not see any significant reduction in fuel costs once the full input costs are calculated.

Genetic engineering also may not scale up--it may be limited by key barriers of individual patient complexity and by intrinsic costs that do not drop enough to make a difference.

Consider the diseases that have almost been eradicated--polio, for example--and the lifestyle diseases such as diabesity. The wave of diseases that were eradicated were caused by bacteria or viruses: a vaccine or agent that disabled or killed the bacteria/virus wiped out the disease.

Diabesity, cancer and heart disease are not caused by a single virus or bacteria. The "one med/vaccine works for all" model has failed and will always fail because diabesity and other lifestyle diseases have multiple, non-linear causes that are beyond the reach of a single "solution." These diseases may well be tied to epigenetic factors, for example, the interaction of "junk DNA" with environmental stresses that extend back into the individual genome.

What we face is the confusion of symptoms and effects with causes. Lowering cholesterol is not the "magic bullet" many hoped for, and neither was hormone therapy.

In the technology sector, it is clear that the Internet is destroying entire sectors of employment. The jobs that have been lost for good have not been replaced by jobs created by the Internet, nor is there any credible evidence to support this hope: automated software continues chewing up one industry after another, and the politically protected fiefdoms of healthcare (sickcare), education and government have yet to taste the whip of real innovation.

Rather than add jobs, we will lose tens of millions of jobs as faster-better-cheaper breaches the walls of these massive politically protected fiefdoms.

Healthcare spending is clearly in terminal marginal return: our collective health continues to decline in key metrics even as spending doubles, triples and quadruples. The same can be said of defense, education and many other industries.

Sectors such as agriculture have already seen employment decline by 98% even as production rose; there are still improvements in agriculture (robotic milking machine, for example) but the low-hanging fruit in agriculture as well as in medicine, education, etc. have all been picked.

The next wave of innovation will destroy protected profit centers and employment; even the Armed Forces are not immune, as the "ships of the future" will have relatively small crews and robotic drones will replace high-cost, high-employment weapons systems.

The semi-magical belief that technological innovation will create wealth in such quantities that all other problems become solvable may well be false. We may have entered an era of marginal returns, where innovations destroy jobs, wealth, assets and debt--the very foundations of "growth."

I have begun to speculate about a future where energy might be abundant but few can afford to consume much: money and income may be scarcer than energy.

The one innovation that might energize an entirely new field of employment is digital fabrication, the decentralization and distribution of production. But this will also creatively destroy jobs dependent on the present supply chain.

National governments have over-promised entitlements to their citizens on a vast scale, and the current "solution" to the mismatch of promises to national surplus is to borrow monumental sums to fund the promises. If innovations actually shrinks employment, incomes and wealth, then the base for taxes and debt will quickly shrink to the point that the debt is unserviceable. The Status Quo will collapse financially, even if energy and labor are both abundant.

Consider END OF GROWTH - six headwinds: demography, education, inequality, globalization, energy/environment, and the overhang of consumer and government debt.(via Zero Hedge)

The point made in this lengthy essay is a powerful one: the common feature of the transformative technologies of the 20th and 21st centuries is that they could only happen once. They are one-offs that cannot be duplicated. Doing more of what has failed will only set up a grander failure as returns on all our debt-based "investments" become ever more marginal and the return on increasing complexity drops into negative territory. Once complexity yields negative returns, the systems that depend on complexity quickly destabilize and implode.

No More Industrial Revolutions?

The Collapse of Complex Business Models

Richard Heinberg at the Sydney Opera House

The End of Growth

Our economy is based on a model of constant growth - growth in production, consumption and population. Economic growth has provided rising standards of living in the West and seen millions in China and India lifted out of poverty.

This model has been disrupted in many countries by the global financial crisis, which is now seeing another round of casualties, particularly in Europe. Will things settle down with growth resuming, or will our economies bump up against a wall of finite resources? And if they do, what will this mean the global balance of power?

For video GO HERE

Environmental tippin point

The answer seems to be 'yes'

Apocalypse Soon: Has Civilization Passed the Environmental Point of No Return?

Although there is an urban legend that the world will end this year based on a misinterpretation of the Mayan calendar, some researchers think a 40-year-old computer program that predicts a collapse of socioeconomic order and massive drop in human population in this century may be on target

By Madhusree Mukerjee

Scientific American

23 May, 2012

Remember how Wile E. Coyote, in his obsessive pursuit of the Road Runner, would fall off a cliff? The hapless predator ran straight out off the edge, stopped in midair as only an animated character could, looked beneath him in an eye-popping moment of truth, and plummeted straight down into a puff of dust. Splat! Four decades ago, a Massachusetts Institute of Technology computer model called World3 warned of such a possible course for human civilization in the 21st century. In Limits to Growth, a bitterly disputed 1972 book that explicated these findings, researchers argued that the global industrial system has so much inertia that it cannot readily correct course in response to signals of planetary stress. But unless economic growth skidded to a halt before reaching the edge, they warned, society was headed for overshoot—and a splat that could kill billions.

Don't look now but we are running in midair, a new book asserts. In 2052: A Global Forecast for the Next Forty Years (Chelsea Green Publishing), Jorgen Randers of the BI Norwegian Business School in Oslo, and one of the original World3 modelers, argues that the second half of the 21st century will bring us near apocalypse in the form of severe global warming. Dennis Meadows, professor emeritus of systems policy at the University of New Hampshire who headed the original M.I.T. team and revisited World3 in 1994 and 2004, has an even darker view. The 1970s program had yielded a variety of scenarios, in some of which humanity manages to control production and population to live within planetary limits (described as Limits to Growth). Meadows contends that the model's sustainable pathways are no longer within reach because humanity has failed to act accordingly.

Instead, the latest global data are tracking one of the most alarming scenarios, in which these variables increase steadily to reach a peak and then suddenly drop in a process called collapse. In fact, "I see collapse happening already," he says. "Food per capita is going down, energy is becoming more scarce, groundwater is being depleted." Most worrisome, Randers notes, greenhouse gases are being emitted twice as fast as oceans and forests can absorb them. Whereas in 1972 humans were using 85 percent of the regenerative capacity of the biosphere to support economic activities such as growing food, producing goods and assimilating pollutants, the figure is now at 150 percent—and growing

 

Randers's ideas most closely resemble a World3 scenario in which energy efficiency and renewable energy stave off the worst effects of climate change until after 2050. For the coming few decades, Randers predicts, life on Earth will carry on more or less as before. Wealthy economies will continue to grow, albeit more slowly as investment will need to be diverted to deal with resource constraints and environmental problems, which thereby will leave less capital for creating goods for consumption. Food production will improve: increased carbon dioxide in the atmosphere will cause plants to grow faster, and warming will open up new areas such as Siberia to cultivation. Population will increase, albeit slowly, to a maximum of about eight billion near 2040. Eventually, however, floods and desertification will start reducing farmland and therefore the availability of grain. Despite humanity's efforts to ameliorate climate change, Randers predicts that its effects will become devastating sometime after mid-century, when global warming will reinforce itself by, for instance, igniting fires that turn forests into net emitters rather than absorbers of carbon. "Very likely, we will have war long before we get there," Randers adds grimly. He expects that mass migration from lands rendered unlivable will lead to localized armed conflicts.

Graham Turner of Australia's Commonwealth Scientific and Industrial Research Organization fears that collapse could come even earlier, but due to peak oil rather than climate change. After comparing the various scenarios generated by World3 against recent data on population, industrial output and other variables, Turner and, separately, the PBL Netherlands Environmental Assessment Agency, conclude that the global system is closely following a business-as-usual output curve. In this model run the economy continues to grow as expected until about 2015, but then falters because nonrenewable resources such as oil become ever more expensive to extract. "Not that we're running out of any of these resources," Turner explains. "It's that as you try to get to unconventional sources such as under deep oceans, it takes a lot more energy to extract each unit of energy." To keep up oil supply, the model predicts that society will divert investment from agriculture, causing a drop in food production. In this scenario, population peaks around 2030 at between seven and eight billion and then decreases sharply, evening out at about four billion in 2100.

Figure courtesy of PBL Netherlands Environmental Assessment Agency

The End of Growth

Richard Heinberg Auckland, New Zealand, Sept 30 2012

Richard Heinberg is a Senior Fellow of the Post Carbon Institute and is widely regarded as one of the world's foremost Peak Oil educators. He is the author of ten books including End of Growth.

Richard brought his challenging and compelling messages on resilience, sustainability and a healthy future to Auckland on September 30, 2012. He asked and answered some of the most challenging questions we face today.

The LImits to Growth

Jorgen Randers: Our Specie's Biggest Risk is Our Lack of Coherent Long-Term Decision Making

Forty years ago, a group of researchers at MIT ran a study to address the question of how humans would adapt to the physical limitations of a finite planet.
 That study became the book, "Limits to Growth"

It should have been a starting point for a critical discussion at the national -- or even global -- level. It could have led to the birthing of many practical and then-implementable initiatives that may have brought our unsustainable demographic, industrial and consumptive behavior under better control. But sadly, the book instead became a lightning rod for controversy. And decades later, the issues it warned of loom larger than ever.

In this interview, Chris discusses our collective failure to act on this book's message with Jorgen Randers, one of the authors of "Limits to Growth" as well as a new book "2052 -- A Global Forecast for the Next Forty Years."

While there are some differences in opinion between Jorgen and Chris, particularly on the acuteness of our resource predicament, both agree that continuing to pursue the status quo will result in a poorer quality of life for most of the world's denizens. We increasingly appear to be facing a future shaped either by design or disaster, and unless we actively decide to change our behavior intelligently, the latter outcome will prevail.