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Advice to Pres. Obama #1: An Actuary’s Impractical Perspective
Gail Tverberg, The Oil Drum
The suggestion was made to Oil Drum staff that some of us might want to write recommendations relating to President Obama’s energy policy. It seems to me that several steps come before energy policy: we need to get the worst of our financial problems behind us and we need to understand where we are, before we can make intelligent decisions going forward. Also, the issues are really broader than energy policy–they include agriculture, education, commerce, and a broad range of other areas affected by reduced energy supplies.
In this post, I offer a few ideas regarding what needs to be done. My ideas not chosen from a point of view of what is practical; instead, they are chosen based on what logically needs to be done, regardless of the practicality. Also, these ideas assume a fairly high level of understanding, and a desire to implement the best long-term solution, without consideration of the politics involved. In the real world, I doubt that these ideas have much chance of being implemented.
1. Put our financial problems behind us. …
2. Set a floor for energy prices. …
3. Start adopting practices that flatten wages between management and rank-and-file workers. …
4. Make an honest assessment of what energy availability is likely to be in 10, 20, 30, 50, and 100 years, at selected price levels. …
5. Put together a number of alternative infrastructure spending plans and evaluate them in light of the amount of energy resources that are likely to be available at various points in time, based on (4). …
6. Make an honest assessment of how the minimum needs for the population might be met, without large fossil fuel inputs. …
7. If there is any significant chance that a significant downgrade in lifestyles is needed within 20 years, start teaching the skills now to deal with those downgrades. …
8. Start thinking durable, flexible, and recyclable in everything we build. …
(12 January 2009)
Why (and How) We May Survive Peak Oil
Ryan McGreal, Raise the Hammer
… My thesis … is that our civilization is making a very big mistake by ignoring peak oil and defering whatever coordinated steps we may take to prepare for the coming time when the rate of oil production goes into permanent decline.
… If we’re not lucky, all that unremitting economic chaos could simply pull our civilization apart. It’s not unthinkable: in our own time, plenty of seemingly stable societies have collapsed into lawlessness, warlordism and even genocide.
… Reasons for Optimism
Every civilization throughout history has eventually collapsed – mainly through a combination of resource depletion and negative returns on added organizational complexity – and we’d be fools to think our own civilization is somehow exceptional in this regard.
I’m not suggesting that this collapse is inevitable or that it will follow peak oil, but it’s absolutely a possibility. At the same time, our civilization does have some important circumstances in our favour that previous civilizations did not:
1. Universal comprehensive education. We’re the first civilization in history to commit to educating everyone, not just the children of the elites. This has dramatically increased the average productivity of citizens, as well growing as the pool of researchers, engineers and creative professionals.
2. Science-Based Worldview. Our civilization is still magical in many ways, and we still hold many taboos and irrational beliefs, but our systematic efforts to understanding how the world works are based on empiricism – a rigorous, peer reviewed process of testing hypotheses about how the world works for predictive power. This has resulted, in part, in an rapid and accelerating explosion of new methods, technologies and operating models in a virtuous cycle of self-reinforcement.
3. Regulated free markets. At its best, a regulated free market combines the confidence and predictability of well-maintained public infrastructre and open, transparent, rules-based contracts and transactions with freedom to invest, develop and market inventions. Price signals in an open market are generally (though not universally) much better at allocating resources than the command of a narrow leadership.
4. Liberty. Our civilization is broadly committed to the maximum personal freedom (including freedom of expression, movement, and association) that can be shared by all. A society committed to freedom is better equipped to tolerate open discussions and heed warnings in time to respond to them.
5. Democracy. At the same time, our civilization is committed to the idea that the government ought to represent the public interest as expressed by the citizens themselves. Of course, in practice this is susceptible to bureaucratic imperatives, mission creep and co-optation by interest groups, but it is emphatically possible for citizens to self-organize and hold their political leaders accountable.
6. Feedback systems. All the education and information in the world won’t help us if we can’t share it and make effective use of it. Between universal education, a vast and growing body of public knowledge, personal freedoms, and democratic accountability, citizens need to be able to get good information about the challenges we face and insist that our governments respond appropriately.
New Feedback Systems
(12 January 2009)
I notice that Ryan has some good suggestions about writing for the web (scroll down). I’ve been meaning to write up something like this. If you follow Ryan’s advice, you will greatly increase your chance of getting published on the web!
-BA
A novel plan for economic stimulus
Conn. State Rep. Terry Backer and Paul Sankowski, Connecticut Post
In response to the most significant downturn in the economy in a century, President-elect Barack Obama has asked governors and municipal leaders to propose “shovel-ready” projects to stimulate our economy. Gov. M. Jodi Rell has responded with a list of proposals from the departments of Transportation and Public Works, including many to rebuild our bridges and roads. On the surface, this sounds reasonable. But over the last few years we have discovered to our dismay that superficial decisions made in haste often have unintended consequences. Let’s think this through.
What’s different now?
In the 1930s, even though the U.S. economy collapsed, we still had a surplus of natural resources — we were then the world’s No. 1 producer of oil and coal.
Fast forward 80 years.
Despite the recent temporary dip in the price of gas and heating oil, it has become painfully obvious over the past few years that our energy situation has fundamentally changed. We’ve burnt through much of our natural resource birthright — we import 70 percent of our energy — and we’re the largest debtor nation on earth. The Big Three automakers, near bankruptcy, have announced a 40 percent to 50 percent reduction in car sales; the Federal Transportation Department reported an 8 percent annual drop in passenger miles driven. The National Intelligence Council’s “Global Trends 2025” report concluded that, in the near term, pressure on resources — particularly energy, food, and water — would entail sacrifices as demand outstrips supply. The Defense Department arrived at the same conclusion in its “Joint Operations Environment 2008” report. It would appear that we need to plan for a less energy-intense future.
Connecticut imports 98 percent of its fuels from out of state. That means that a very large proportion of the money you spend on fuel or heating also leaves the state. None of this money is available to recirculate in our local economies. Why don’t we address this problem, along with the economic one?
So what should we do about it? What project can we pursue to revitalize our communities, create jobs, reduce the financial burden on every household, improve the housing infrastructure in every city and town, and keep more of our money from leaving the state?
The cheapest way to save energy is not to use it. Connecticut has more than 1.2 million residences, each spending $3,000 to $5,000 per year for heating and cooling. What if you could save 25 percent of that each year?
What we are proposing as a stimulus project is a massive weatherization program for residential housing. It will employ many people in every community at all skill levels. It should be on the order of $2 billion. It will return benefits in fuel savings and dollars to the pockets of renters and homeowners alike. Weatherization will insulate people from higher fuel costs, regardless of source for the foreseeable future.
The state has more than 65,000 contractors and construction laborers who could use the work. The houses are ready. The labor force is ready. This federal largesse may not come our way again. Let’s not miss it.
State Rep. Terry Backer represents Stratford’s 121st Assembly District. Paul Sankowski, of Stratford, is on the Mayor’s Joint Task Force on Energy and the Environment.
(9 January 2009)
Terry Backer spoke at the recent ASPO-USA conference in Sacramento. -BA
The six-hour work day solves the problem
Conrad Schmidt, The Republic of East Vancouver
Technological efficiency is the root of the economic crisis, and over-production can be solved by sharing the remaining work
—
The best way to get a grip on the current financial crisis is to look at a few past recessions and depressions.
… Industrial technology increases the efficiency with which we can produce more goods and services. But if we do not consume more as technology wends its way, we end up with a surplus of labour and people lose their jobs.
The same pattern repeated itself in the early 20th century. There were more new technological inventions in the late 19th and early 20th centuries than ever before. Combustion engines, production lines, transatlantic flights, radio and many other inventions increased productivity. The biggest increase in output as a result of technological efficiency was in the automobile sector where output of automobiles increased ten fold. Tractors and mechanization of farms increased the efficiency of food production. Between 1923 and 1930, output per labourer increased 25%. However take home pay only increased 8%.
The first person to predict the coming of the depression in the thirties was Henry Ford. He pointed out that even though technology now enabled factories to produce so much more, the average person could not afford to buy all the goods being manufactured.
… The present economic problem is two fold. Firstly, once adjusted for inflation, wages in North America have barely risen. In a global context, the situation is much more serious. When jobs are exported to third world countries with minimum labour standards, it creates a labour force that can’t afford to buy all the goods and services being produced. This is a virtually identical repeat of the problem that caused the Great Depression.
Secondly, what we have been consuming is the planet itself.
… So what’s the solution now? One potential solution is what was implemented in 1933 by President Roosevelt during the Great Depression, a measure to reduce the workweek from ten hours a day to eight hours a day. Instead of having a high unemployment rate, the work was shared so that more people could remain employed.
Technological efficiency gives us a choice: we can either continue to work just as hard and exponentially consume and grow the economy, or we can translate those gains in efficiency into other more meaningful activities such as child rearing, education, arts and holding elected leaders accountable.
(4 December 2008)
I think the Technocrats thought along similar lines during the 30s. I remember first reading about this idea in 1966. It hasn’t made much headway in America – in fact average working hours have increased. The 35-hour workweek was introduced in France, but has subsequently been weakened.
If unemployment continues to increase, we may see a de facto decrease in the average workweek – but some people will be working overtime while others not at all.
-BA
