The Crisis That Is Upon Us

As the global financial mess unfolds, people of different political philosophies are picking their favorite scapegoats – some vilifying greed on Wall Street while others vilify naive economic  presumptions built into government programs and regulations.

In the grand scheme of things, the economic fantasies underlying the now infamous credit default swaps are quite similar to those underlying many government programs. The Madoff ponzi scheme is not at all fundamentally  different from the vastly larger ponzi scheme built into the Social Security system, other than one has been perpetrated by an individual while the other has been created with the full blessing of Congress.

None of these issues getting the news are the underlying drivers of the current economic story.

And unfortunately, the desperate efforts the Fed and the US Treasury are making to try to restore economic growth are not real solutions and will at best postpone dealing with the underlying issues, ultimately making the problems harder to solve.

In my mind, we will all be best served by heeding the advice of a couple generally acknowledged geniuses:

“Lord, give me the strength and wisdom to see things as they are…not the way I believe they are” — Leonardo Da Vinci

“The important thing is not to stop questioning.” –Albert Einstein

My hope is that our new leaders find the strength to be braver and will start more honestly and realistically addressing the severe challenges we face rather than pretending that life might again be restored to what seemed to be reality just a year or two ago.

The bottom line is this: The fundamental source of our economic growth and prosperity over the last century is actually very simple to trace, as is the underlying cause of our current problems.

Energy is the life blood of the economy that enabled all the economic growth our society has enjoyed for the last century. Check out the chart on the “History of Energy Use in the United States 1635 – 2000” from the US Energy Information Administration.

Compare the time line to the growth of middle class prosperity relative to the way people have lived throughout history.

Is that energy consumption growth and the general prosperity that it created sustainable? Personally, I doubt it can be sustained with fossil fuels. We are hitting real limits to our vast energy waste.

The current crisis is focusing things clearly.

The only sources of energy possible to sustain economic prosperity without running into insurmountable environmental limits are renewables. We have some very heavy lifting  in the clean energy sector if the American Dream is to continue. Unfortunately, the huge transformation necessary is not going to happen spontaneously or quickly

Let me suggest that you watch the “Crash Course”.    It is an amazingly clear presentation of basic facts of economic and environmental reality, tied together in such a way as to explain the fundamental causes of the economic situation we are facing. The author Chris Martenson suggests a few solutions that you may find helpful at a personal level, but very consciously stays away from the political in an effort to help make sure folks remain open to hearing and understanding some basic facts necessary make reasoned and responsible decisions in the rapidly changing world we are entering.

As Martenson suggests in the Crash Course, the prosperity that we children of serfs, slaves and subsistence farmers enjoy today is built entirely on the work of modern energy slaves – primarily fossil fuel slaves. Unless we get our act together on energy efficiency and sustainable energy resources, it is highly possible that  our children will have to return to lives of serfs, slaves and subsistence farmers.  Unfortunately, what is highly unlikely is that the planet can support the hugely inefficient economic and land use models of century’s ago for today’s vast populations. And as has happened throughout history, serious economic stress presage much worse social stresses. Looking at the underlying fundamentals on that graph makes it somewhat hard to be hopeful.

In our society that is largely innumerate (arithmetically illiterate), it is important to help people realize that the issues fundamentally aren’t about politics or blame, but about numbers. Idealized politics won’t solve our problems. Smart engineers perhaps can help.

I am actually more hopeful than Martensen’s Crash Course seems to be. I really do believe that a massive shift to renewable energy resources and clean energy technologies can keep modern society progressing. But that will only happen if we manage to avoid destroying all the economic and political underpinnings of a democratic free market society. And the moral hazard embedded in most of the solutions coming out of Washington at times makes it hard to remain hopeful.

Having observed in my limited readings of history that markets seem to be an inevitable reality in human societies, whether officially sanctioned or run inefficiently as black markets, the political prejudice I am still holding to is a hope that our society isn’t foolish enough to destroy the rule of law and the fundamental market systems necessary to efficiently make the transformation to a clean energy economy.

Enjoy the Crash Course. Let me know what you think.

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Filed under Best Stuff, Economic Policy, Energy Policy, Fundamental Perspectives

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