The Crash Course: The Unsustainable Future of Our Economy, Energy, and Environment (39 page)

This is one area where I can see only shrinkage. I think government pay, benefits, and total employment have all seen their peaks. In a reduced-energy environment, there’s simply no way to afford having one in six workers employed by the government at a far higher total wage package than private workers enjoy.

With that in mind, where’s the opportunity here? I think private companies are going to have to fill the void left by shrinking government services, hopefully at a more competitive, cost-effective rate (or the services will be dropped because they won’t be worth it). Everything from trash removal, to policing, to sewer, water, and road maintenance will be up for grabs, and many communities have already made the leap to private management in some of these areas.

Whether we think this is the right thing or the wrong thing is beside the point; government services in a time of declining energy are going to be a lot smaller or fewer in number than government services in a time of abundant energy. Yes, there will have to be some trade-offs, and some treasured services may disappear, but not all of them will, and finding the best and most cost-effective way to provide the preserved services will certainly involve a new equilibrium in these areas.

The second opportunity will be for consultants to come in to help make trade-off decisions and provide insights into how to manage the tricky business of doing more with less. I can also envision local politicians needing (or desiring) someone to blame for necessary cuts, and consultants could provide cover for difficult decisions that need to be made.

Money

Money is a nonnegotiable element of a rich and complex society. Most people currently rely on others to manage our money for them, which is right and proper, because money is a service and it cannot manage itself. We call those managers “bankers.” I see a future that involves different forms of money, offering both competition (which is healthy) and complementary forms of money. There’s an enormous risk that our single-currency systems—the dollar or euro or yen or what-have-you—will cease to operate effectively, or at all, in the future. Recognizing this, many communities have decided that having only one currency is both undesirable and entirely too risky. What happens if that one currency fails?

Just as important, every currency enforces some behaviors and punishes others. Debt-based money is very good at motivating people to get out of bed and work extremely hard, but it’s not very good at fostering long-range thinking, cooperation, or generational investing. Debt-based money enforces short-range thinking and a perpetual sense of scarcity.

But some communities want to foster long-range thinking and a sense of mutual abundance. The easiest and surest way to do this is to introduce a new money type or system that can operate in parallel with the current system—or perhaps even multiple new types and systems. This way, if the status quo fails for any reason, there will be backups. As I said in Chapter 26 (
The Good News
), these can operate like wetlands during a drought, continuing to feed the river of commerce even if the main tributary has run dry.

My prediction is that enormous opportunities exist for specialists to introduce and operate new money systems for local communities, perhaps even at the municipal, state, or provincial levels. Some of these types of money will be purely electronic, like mutual credit systems, and some may actually be backed by something tangible, such as a commodity like energy, food, or even gold or silver.

It would be a shame to suffer through a damaged economy simply because we relied on a single mismanaged money unit and failed to provide ourselves with an appropriate backup that could facilitate our economic exchanges in a time of need. It’s time to recognize that our current money system is no longer serving us; we’re serving it. We can both better control our risks and enjoy a future of our own design if we implement new, different, and improved money systems. Bernard Lietaer, one of the world’s leading experts on monetary systems and alternative currencies, said this about money:

While economic textbooks claim that people and corporations are competing for markets and resources, I claim that in reality they are competing for money—using markets and resources to do so. So designing new money systems really amounts to redesigning the target that orients much human effort.

Furthermore, I believe that greed and competition are not a result of immutable human temperament; I’ve come to the conclusion that greed and fear of scarcity are in fact being continuously created and amplified as a direct result of the kind of money we’re using.

For example, we can produce more than enough food to feed everybody, and there’s definitely enough work for everybody in the world, but there’s clearly not enough money to pay for it all.

The scarcity is in our national currencies. In fact, the job of central banks is to create and maintain that currency scarcity. The direct consequence is that we have to fight with each other in order to survive.
²

Our current money system is damaged, its chances of survival aren’t robust, and we’d do well to build some redundancy and resilience into our experience by introducing and using other forms of money now, while we can. It’s my prediction that the difference between communities that merely survive and those that thrive in the future will depend, in part, on which ones have parallel currency systems in place.

Change Management

The enormity of the scope of the changes that I see coming will require whole new skill sets and specialties to be developed and delivered to individuals, companies, and governments alike.

Managing for growth is one skill set; managing for stasis or even shrinkage is a different skill set altogether. Consider the hapless municipal manager who only has experience in growing yearly operational budgets. Every department and function gains a little more in their budget each year. The manager develops skills in negotiating how much goes to each area and keeping everybody reasonably happy with their allotment.

But the reverse of that situation is an entirely different process. Cutting budgets requires knowing which items are essential and which ones aren’t. It involves making strategic decisions requiring a view of the future and knowing which services to retain, which to eliminate, and which to outsource. How does one plan for an uncertain future and then budget for it effectively? How does all of this get persuasively communicated to all the various stakeholders? The challenges are numerous, and the skills required to manage successfully here are quite often distinct from those that have been used during periods of active growth. Who will help bring these new skills to all of the municipal and corporate managers?

Reskilling will be important at all levels of the workforce, not just managerial. If my basic ideas hold true, then declining service jobs will be accompanied by a swing back toward manufacturing. Producing more local goods from local materials, especially recycled ones, will require an enormous retraining of a significant proportion of the workforce. In some cases, vital shop skills have been lost and will have to be regained somehow. There will be opportunities in the management and delivery of these reskilling services and lessons. But such dramatic work-life change isn’t easy, especially for those past a certain age or who have heavily invested in their prior careers, which means that part of the reskilling services will have to include psychological counseling and management.

Coming to terms with the vast changes is going to be difficult for many and will require the support and participation of individuals who are adept at change management.

The Greatest Opportunity of Them All

Your greatest opportunity is the chance to rethink everything: your priorities, what you do with your time, and how you relate to others. Great moments of change are opportunities to shift who you are and how you show up in the world. If you feel as though you have been performing in a dress rehearsal rather than living your true life, then perhaps this prospect of change is something to look forward to, not something to be feared.

The opportunity exists here to redefine your life into something with more meaning, greater community connections, and personal fulfillment. The most important thing you can do in the days ahead is to forge stronger community connections, and help your own local community become more aware of and prepared for the changes that are already beginning. For those without either awareness or preparation—and there will be many in every community—the changes are going to feel wrenching, confusing, and possibly overwhelming. You have the chance to help them even as you help yourself. I invite you to trust yourself and make the most of this magnificent opportunity.

Appendix

Figure A.1
Minerals Fully or Partially Imported by the United States

 

Notes

Chapter 5: Dangerous Exponentials

1.
United Nations Population Division, Department of Economic and Social Affairs, “World Population Prospects: The 2008 Revision,”
Population Newsletter
87 (2009): 1.

2.
U.S. Census Bureau, “Historical Estimates of World Population,”
www.census.gov/ipc/www/worldhis.html
(accessed November 6, 2010).

3.
United Nations Population Division, Department of Economic and Social Affairs, “World Population to 2300,” (2004): 179–180.
www.un.org/esa/population/publications/longrange2/WorldPop2300final.pdf
(accessed November 6, 2010).

4.
Wisdom from Pakistan, “The World’s Expected Carrying Capacity in a Post Industrial Agrarian Society,”
Oil Drum: Europe
, November 1, 2007.
www.theoildrum.com/node/3090
(accessed November 5, 2010).

5.
Albert A. Bartlett, “Forgotten Fundamentals of the Energy Crisis,”
American Journal of Physics
46 no. 9 (1978): 876.
www.albartlett.org/articles/art_forgotten_fundamentals_overview.html
(accessed November 5, 2010).

6.
Albert A. Bartlett, “Arithmetic, Population, and Energy” (video). Last modified June 16, 2007.
www.youtube.com/watch?v=F-QA2rkpBSY
(accessed November 5, 2010).

7.
Grant Smith and Christian Schmollinger, “China Passes U.S. as World’s Biggest Energy Consumer, IEA Says,”
Bloomberg
, June 20, 2010.
www.bloomberg.com/news/2010-07-19/china-passes-u-s-as-biggest-energy-consumer-as-oil-imports-jump-iea-says.html
(accessed November 5, 2010).

8.
C. Bergsten and others, “Energy Implications of China’s Growth,” in
China’s Rise: Challenges and Opportunities
(Washington, DC: Peterson Institute for International Economics, 2009), 137–168.
www.piie.com/publications/chapters_preview/4174/07iie4174.pdf
(accessed September 7, 2010).

Chapter 6: An Inconvenient Lie: The Truth about Growth

1.
“Kenneth Boulding,”
Wikiquotes
.
http://en.wikiquote.org/wiki/Kenneth_Boulding
(accessed September 7, 2010).

2.
Timothy F. Geithner, “Welcome to the Recovery,”
The New York Times
, August 2, 2010.
www.nytimes.com/2010/08/03/opinion/03geithner.html
(accessed September 7, 2010).

3.
Julian L. Simon, “When Will We Run Out of Oil? Never!”
The Ultimate Resource II: People, Materials, Environment,
December 23, 1993.
www.juliansimon.com/writings/Ultimate_Resource/TCHAR11.txt
(accessed November 4, 2010).

Chapter 7: Our Money System

1.
Justin Scheck, “Mackerel Economics in Prison Leads to Appreciation for Oily Fillets,”
The Wall Street Journal
, October 2, 2008.
http://online.wsj.com/article/NA_WSJ_PUB:SB122290720439096481.html
(accessed September 7, 2010).

2.
Larry Richter, “Argentina’s Stopgap Cash Gets Some Funny Looks,”
The New York Times
, August 26, 2001.
www.nytimes.com/2001/08/26/world/argentina-s-stopgap-cash-gets-some-funny-looks.html?pagewanted=all
(accessed November 4, 2010).

3.
John Kenneth Galbraith,
Money: Whence It Came, Where It Went
(New York: Houghton Mifflin, 1975), 18.

4.
“The Story of the Federal Reserve System,”
Federal Reserve Bank of New York
.
www.newyorkfed.org/publications/result.cfm?comics=1
(accessed September 7, 2010).

5.
“Putting It Simply,”
Federal Reserve Bank of Boston
, 1984.

Chapter 8: Problems and Predicaments

1.
John Michael Greer,
The Long Descent: The User’s Guide to the End of the Industrial Age
(Gabriola Island, British Columbia: New Society, 2008), 22.

Chapter 9: What Is Wealth?: (Hint: It’s Not Money)

1.
Adam Smith,
The Wealth of Nations
(New York: Classic House Books, 2009), 1.

Chapter 10: Debt

1.
Herbert Stein, “Herb Stein’s Unfamiliar Quotations,”
Slate
.
www.slate.com/id/2561
(accessed November 5, 2010).

2.
Carmen M. Reinhart and Kenneth S. Rogoff,
This Time Is Different: Eight Centuries of Financial Folly
(Princeton: Princeton University Press, 2009).

3.
“The Debt to the Penny and Who Holds It,”
TreasuryDirect
.
www.treasurydirect.gov/NP/BPDLogin?application=np
(accessed October 21, 2010).

4.
Richard W. Fisher, “The Fed’s Response to the Current Economic Challenge (With References to Gershon Bleichröder and Central Bank Independence),”
Federal Reserve Bank of Dallas,
February 9, 2009.
www.dallasfed.org/news/speeches/fisher/2009/fs090209.cfm
(accessed October 24, 2010).

Chapter 11: The Great Credit Bubble

1.
“Predicting the Housing Future: Los Angeles and Orange Counties. Using the Case-Shiller Index to Find a Bottom,”
Dr. Housing Bubble
.
www.doctorhousingbubble.com/predicting-the-housing-future-los-angeles-and-orange-counties-using-the-case-shiller-index-to-find-a-bottom
(accessed September 7, 2010).

2.
“Median Housing Price to Income Ratios For Various Cities,”
My Money Blog
.
www.mymoneyblog.com/median-housing-price-to-income-ratios-for-various-cities.html
(accessed October 24, 2010).

3.
“Update: Ratio Median House Price to Median Income,”
Calculated Risk
.
www.calculatedriskblog.com/2008/06/update-ratio-median-house-price-to.html
(accessed September 7, 2010).

4.
Nouriel Roubini, “Why Central Banks Should Burst Bubbles,”
International Finance
9 no. 1 (2006): 87–107.

5.
“The South Sea Company,”
Wikipedia
.
http://en.wikipedia.org/wiki/South_Sea_Company
(accessed September 7, 2010).

6.
Jonathan McCarthy and Richard W. Peach, “Are Home Prices the Next ‘Bubble?’”
Economic Policy Review
10, no. 3 (2004).
www.ny.frb.org/research/epr/04v10n3/0412mcca.html
(accessed September 7, 2010).

7.
Alan Greenspan, “Remarks by Chairman Alan Greenspan—Financial Derivatives—Before the Futures Industry Association, Boca Raton, Florida,”
Federal Reserve Board
.
www.federalreserve.gov/boarddocs/speeches/1999/19990319.htm
(accessed September 7, 2010).

8.
Chris Martenson, “Housing—Simple As That,”
ChrisMartenson.com.
www.chrismartenson.com/martensonreport/housing-simple
(accessed October 29, 2010).

9.
“Flow of Funds Accounts of the United States,”
Federal Reserve Statistical Release
.
www.federalreserve.gov/releases/z1/
(accessed September 7, 2010).

10.
Ludwig von Mises, “Interest, Credit Expansion, and the Trade Cycle: The Monetary or Circulation Credit Theory of the Trade Cycle,”
Human Action: The Scholars Edition
.
http://mises.org/humanaction/chap20sec8.asp
(accessed October 25, 2010).

Chapter 12: Like a Moth to Flame: Our Destructive Tendency to Print

1.
Alan Greenspan, “Gold and Economic Freedom,” in Ayn Rand, ed.,
Capitalism: The Unknown Ideal
(New York: Penguin Group, 1967), 101–108.

2.
Carmen M. Reinhart and Kenneth S. Rogoff,
This Time Is Different: Eight Centuries of Financial Folly
(Princeton: Princeton University Press, 2009).

Chapter 13: Fuzzy Numbers

1.
Kevin Phillips, “Numbers Racket: Why the Economy Is Worse than We Know.”
Harper’s Magazine
, May 2008.
www.harpers.org/archive/2008/05/0082023
(accessed September 7, 2010).

2.
“Fed Luminaries Spar Over U.S. Inflation Target,”
The Wall Street Journal
, April 20, 2009.
http://online.wsj.com/article/SB124006652812232007.html
(accessed October 25, 2010).

3.
“Zimbabwean dollar,”
Wikipedia
.
http://en.wikipedia.org/wiki/Zimbabwean_dollar
(accessed September 7, 2010).

4.
“Consumer Price Index: December 2007,”
Bureau of Labor Statistics
.
www.bls.gov/news.release/History/cpi_01162008.txt
(accessed October 25, 2010).

5.
“Retail Food Prices Up at Beginning of 2008,”
American Farm Bureau
, March 27, 2008.
www.fb.org/index.php?fuseaction=newsroom.newsfocus&year=2008&file=nr0327.html
(accessed September 7, 2010; calculations were done manually by author).

6.
Timothy Aeppel, “Accounting for Quality Change,” in
Essentials of Economics
, ed. N. Gregory Mankiw (Mason, OH: Cengage Learning, 2008), 350.

7.
John Williams, “Alternate Inflation Charts,”
Shadow Government Statistics
.
www.shadowstats.com/alternate_data/inflation-charts
(accessed November 8, 2010).

8.
Ibid.

9.
Nicole Mayerhauser and Marshall Reinsdorf, “Housing Services in the National Economic Accounts,”
Bureau of Economic Analysis
, 1.
www.bea.gov/papers/pdf/RIPfactsheet.pdf
(accessed September 7, 2010).

10.
“Table 7.12. Imputations in the National Income and Product Accounts.”
Survey of Current Business
, August 2010.
Bureau of Economic Analysis
, 169, line 133.
www.bea.gov/histdata/Releases/GDP_and_PI/2010/Q2/Third_September-30-2010/TP/TPSection7all_xls.xls
(accessed October 27, 2010).

11.
Ibid., lines 28 and 29.

12.
For a rather nice and comprehensive discussion of the role and history behind the utilization of hedonics by the BEA, the reader is directed to a paper by Dave Wasshausen and Brent R. Moulton titled, “The Role of Hedonic Methods in Measuring Real GDP in the United States.”
www.bea.gov/papers/pdf/hedonicGDP.pdf
(accessed October 15, 2010).

13.
Mike Shedlock, “Grossly Distorted Procedures,”
Mish’s Global Economic Analysis
, May 11, 2005.
http://globaleconomicanalysis.blogspot.com/2005/05/grossly-distorted-procedures.html
(accessed November 4, 2010).

14.
Phillips, “Numbers Racket.”