Archive for the 'Economics' Category

Some Links on Financial Permaculture

July 29th, 2008 by shrimppop

Just came across these links and wanted to save them for later: Catherine Austin Fitts on Financial Permaculture, and Greg Landua on The New Green Deal including an upcoming seminar at The Farm.

Escape from Suburbia

July 22nd, 2008 by shrimppop

I watched Escape from Suburbia the other night. Phil and Tom are featured in the film, and I wanted learn more about what they are doing in NYC. The movie covers a number of efforts across North America to deal with and find solutions to Peak Oil, and secondarily Climate Change and poverty, mainly through local food production. At least local food production was a theme.

What was most moving to me was the segment on LA’s South Central Community farm, a 14 acre community project at ground zero of urban gardening. This farm had private plots for 350 local families who grew food, medicinals and ornamentals. They started a market because people there were growing things not available anywhere else in LA. Horrifyingly, the city took back the land and sold it to a “logistics” company to build a warehouse there, because “people in South Central need jobs.” Despite community action and protest, the site was bulldozed on camera while the urban farmers could only look on in despair.

Carolyn Baker points out in her review what this means. Relocalization is not currently threatening to the powers that be, but will be soon, and we can expect a very nasty backlash. This example is just a taste of that. I’m relating this to the Archdruid’s post a couple of days ago about the misconception that collapse will somehow mystically be okay, and not too violent. I doubt that. The image I have of collapse is not a bunch of spontaneously emerging ecovillages, but something like New Orleans, post-Katrina, times every major metropolitan area in the world. I see pain in our future.

The conclusion I’m coming to, inescapably, is that food, relocalization and gardening are political. The good news is that gardening also seems to be a great way of organizing people in a way that doesn’t overtly seem political. In other words, like me, it’s only after gardening for some years that one comes to understand that gardening is political.

There seem to be two approaches to fighting the Beast. One is to go head to head, like Gandhi, Mandela or MLK. Another is to go underground like the mycelium network and stay off the radar until there is enough strength or pain to stand and fight. The danger is that being underground can become comfortable and the standing up never happens, or it gets co-opted before the groundswell.

Farmers’ Markets

July 1st, 2008 by shrimppop

This morning I made my first trip to Rochester’s world famous Public Market in over a year. As part of my family’s attempt to get our finances in better shape, we’re looking at our food spending and cutting back wherever possible. I knew the Public Market was open most days during the week and I could stop by before work, but then I’d have veggies baking in the hot car all day. Y. said, “why not just put a cooler with some ice packs in the car and keep them in there?” Within a day I’d found a free cooler sitting by the side of the road and I was set to go.

So here’s what $13.50 got me this morning:

  • five heads of garlic
  • three large cucumbers
  • seven large carrots
  • a pint of limes
  • a pint of lemons
  • a pint of blueberries
  • five plums
  • a pound of grapes
  • four tomatoes

I believe this is about half the price I’d pay at the local supermarket. Plus, these things I bought today usually taste like fruits and vegetables as opposed to tap-water taste and tennis-ball texture of stuff shipped here from Chile or Bakersfield. This gap in cost highlights the huge chunk of food prices being taken by the supply chain, and the quality gap makes another argument for localization. I’d rather be supporting the farmers and getting good food rather than supporting the BigCos and getting garbage.

Even on a Tuesday morning when the place is really quiet, the Public Market offers a lot of variety- tons of peppers, locally grown beans (including favas), potatoes, apples, annuals and perennial plants, not to mention the garage-sale fare. An added benefit is getting to chat with the vendors, or at least say good morning. Usually the most charitable thing I feel like saying at the supermarket is “can you get that f*&#$@ing restocking cart out of my way!” The Public Market and various farmers’ markets are just so much more friendly and pleasant.

The local paper ran a story on all the markets popping up all over town, and some of the more established players were complaining that there wasn’t the demand to support all these, yet I believe the demand will catch up, especially as they start to become more present and convenient.

Withdrawal

June 9th, 2008 by shrimppop

This weekend was the last installment of the Permaculture Design Course in Hancock. Five of the original ten graduated and I’ve become very fond of these people. We gave presentations of our design projects on Saturday, held the “talent show” after dinner and ended up Sunday talking about invisible structures like legal, money systems, cultural and social processes. Saturday we’d had a visit from a local organic farmer who, after 20 years of struggle, is now facing the Hobson’s choice of selling out to natural gas drilling interests (like Haliburton ferinstance) or continuing to work endlessly treading water in a system where the full weight of the economy falls on the family farmer. This tied in, in a very real, visceral way, with the discussion of these invisible structures.

What I come away with is the concept of Withdrawal. First, I’m feeling the end of this transition, and it was in many ways life-changing for me. After other such initiations there is the need always for an integration period. It leaves me feeling like I’m coming back to a culture that is in no way plugged into the things we were talking about all winter and spring. I feel depressed. Like I’m withdrawing.

There’s the obvious addiction connotation here, as is often tossed about with terms like “addiction to foreign oil.” Like, as if, it’s no big thing to overcome an addiction! Anyway, that’s a little how I feel- on a very small scale- and I anticipate there is more pain ahead as I start to really look at how I’m living. One of my next steps is to “take inventory” but then maybe there’s a real 12-Step progression to this recovery and I should start with powerlessness. The organic farmer is right there: despair.

Looking at the Haliburtons and Blackwaters and World Banks running around screwing everyone, it’s hard not to despair. But there’s another kernel of hope in the word Withdrawal. As in withdrawing from participation in, cooperation with, cooptation by, apologizing for, rationalizing for, and investing in this s***storm we’ve created. Backing away slowly. And with each tiny, seemingly inconsequential action taken (like pulling the paper coffee cup out of the garbage and taking it home to use as a transplant pot for a cauliflower) I will say, “I’m making a withdrawal.” Each withdrawal goes into another account that accumulates over time. One day, one action, one withdrawal at a time. They add up.

Just When Everything Was Looking Bleak

April 14th, 2008 by shrimppop

The New York Times has a story today that gave me hope and a warm fuzzy feeling. Apparently, several people are not concerned about a recession at all. Thanks to the American sucker-taxpayer, there’s basically no consequence for the equity traders, hedge fund managers and Bear-Stearns’ chairman, despite what Joseph Stiglitz, Henry Kaufman, and the IMF conclude is a $1 Trillion bust. Party on!

Complexifying the Terms

March 14th, 2008 by shrimppop

With this post I want to complexify some of the terms that are commonly used in discussions around Peak Oil, climate change, economic viability and sustainability.

Energy

H. T. Odum shows that not all BTUs, kilocalories and quads are created equal. Since these measure heat, into which all forms of energy can be converted, they are convenience measures. However, dilute energy forms, such as solar radiation, are less able to do work than highly concentrated forms such as gasoline, TNT and high voltage electricity. Collected wood has about 0.5 Fossil Fuel Equivalents (FFE) in terms of quality. Collected sunlight calories need to be concentrated at a rate of 2000:1 FFEs through plant photosynthesis. The ability to do work determines economic as well as ecological growth.

Furthermore, he shows that there is a typical pattern in successful ecological energy systems, where a portion of high quality energy is fed back to improve the quality of a low quality energy source of greater volume. This pattern can be chained to move energy up the chain. When calculating net energy, we should consider the quality of the energy, not just raw heat equivalents.

Resources

Mollison shows that resources are not all created equal. They can be categorized based on the effects of their use on themselves and other resources. Some resources when used degrade or destroy themselves. Some, like a skill or knowledge, improve with use. Others degrade if they are not used. Some resources improve other resources with their use. An example is the one cited above, where a high quality energy source improves a lower quality source. Some resources are neutral with respect to themselves and / or others.

The worst resources degrade themselves and others with use. The extent and reversibility of this degradation, destruction or improvement indicates another dimension in grading resources. So when we talk about resource yields from use we can be more specific by identifying the downstream as well as upstream costs of resource usage. This is a largely ignored aspect of energy accounting, and is almost nowhere captured in micro-economics (though sometimes captured in macro-economic analyses).

Waste

From the foregoing we can see that waste, too, is a matter of perspective. One man’s trash, and so on. Waste is in fact simply a resource that degrades itself or other resources when used or not used.

Concentrated livestock manure is a “waste problem” under the current industrial divisions and geographical separations of livestock operation inputs and outputs.Manure is rich in nitrogen, fosters soil organisms, generates heat, and acts as water conserving mulch when spread on fields at lower concentrations.

For this reason, Permaculture says “the problem is the solution.” Also we can see that any gross accumulation of a resource, not used by the system, is a form of pollution to the next larger scale system. By this definition, even money, when highly concentrated and not reinvested in the system becomes a form of pollution.

Relocalization and System Scale

March 8th, 2008 by shrimppop

I want to weigh in on the relocalization debate that has been going on for the last several weeks on The Oil Drum. The debate continued with the ArchDruid’s mixed-metaphor weigh-in on Friday. I’ve finally got some coherent thoughts about this. My argument follows.

Mollison defines yield in terms of a system, which creates both product and energy yield. Since energy is not created, according to the 1st Law of Thermodynamics, energy yield is not truly a “net” but rather the surplus energy after the system’s needs are met. This is the key measure of sustainability in a general sense.

System yield is the sum total of surplus energy produced by, stored, conserved, reused, or converted by the design. Energy is in surplus once the system itself has available all its needs for growth, reproduction and maintenance.

Cheap oil has allowed us to create really big systems, so that current agricultural grain system yields need to be measured against a system that includes oil inputs from Canada, refining in Texas, potash from Canada, nitrogen from Venezuela, processing and shipping to markets all over the world. For all practical purposes this includes the entire global ecosystem. Whether this system is in surplus is a question for another post. The point is that the scale of the system has been driven by cheap and abundant fossil fuels. Therefore, the end of cheap energy will necessitate a reduction in scale of all operations, including agriculture, if it is to be sustainable.

To Staniford’s point that BigAg can continue under improved economic conditions due to Peak Corn, at some point this cannot be argued to be sustainable. There’s a price point that will be reached if it has not done so already. Mollison’s items about all the needs for growth, reproduction and maintenance seem to indicate, in a world where 1/6 of the population live in extreme poverty, that this point has already been reached.

Relocalization can be defined as an attempt to create sustainable systems at a much smaller, more human scale. This would apply to food, money, transportation, media and other “extensions of man.” It follows then that the scale and progress of relocalization is a function of energy supply. This is not to imply that this is a linear relation; the function is necessarily complex.

This realization leads to a further question about the mechanisms and strategies for achieving relocalization. “Planning” is clearly a term with a lot of baggage, so I prefer Mollison’s term “Design.” This will still make Market Fundamentalists twitch, but the fact is the current system has been historically designed in very specific ways. Again this is subject for a future post. The IMF is a case in point, if you need one.

Donald Norman, the usability expert says there is no such thing as “no design”: there is good design or bad design. So we should start designing for a future with a much smaller scale, and the relocalization movement is attempting to do this. To the extent that we employ conscious systems design, for example using Permaculture strategies, relocalization is not a “reversalist” approach.

An important follow-on question is the pace at which re-scaling and relocalizing must take place. I would argue that this depends on whether we are in a Code Red situation or whether there is yet time to design a controlled energy descent, especially in light of Global Warming.

Assumption Central

February 29th, 2008 by shrimppop

I’m seeing a lot of assumptions out in the Peak Oil blog traffic lately that really demand some critical response. To take a recent example, Dave Cohen yesterday wrote in Everybody’s Jumping on the Solar Bandwagon

Do we live in a world of ever flowing abundance, or do we live in a world of limits to growth?

If your answer is “abundance”, your approach to the future requires a shift in direction in a context of business as usual. If your answer is “limits”, your approach requires a shift in behavior in a context of living within your means. What follows examines possible constraints on the expansion of solar energy in the 21st century.

The assumed correct answer here is “limits.” However this doesn’t square with physics. In fact, the answer is that both are true. This is based on understanding what a system is, and what the 2nd Law of Thermodynamics actually says, and on our common thinking about natural resources and time.

What the 2nd Law says is that in a closed system not yet in equilibrium, entropy - the measure of disorder in a system - is always increasing. Clearly the Earth is not a closed system, thanks to the continuous inputs of solar energy, the vast quantities of which Cohen thoughtfully describes in detail. So from the perspective of systems thinking, the world is abundant from an energy and material perspective (since one can be converted into the other).

Systems theory has been around for a long time, and has been well-articulated in the last 70 years. One of it’s more popular incarnations has been Donella Meadows’, (et. al.) studies and books Limits to Growth and Beyond the Limits based on the systems work of Jay Forrester (Urban Dynamics, Industrial Dynamics, etc.). Big Gav recently had some interesting things to say about Limits to Growth.

Limits tried to predict, using a computer model, dynamic measures of world population, food, pollution and prosperity. Some aspects of systems theory were made clear by this work, including that systems behave in complex, non-linear and often counter-intuitive ways.

Where we come down on the side of limits is in the domain of natural resources: fossil fuels, minerals, forest and arable land for agriculture, air and water. Let me point out that the concept of “natural resource” needs further elaboration and critical analysis, being defined, as it is, from the viewpoint of economics. This analysis and the wildly undervalued way in which natural resources are priced will be the subject of a (near) future post.

Nobody (that I’ve read, heard or talked to) doubts that oil is a limited natural resource. The Peak Oil community has pointed out clearly that this limit is compounded by the shape of Hubbert’s production curve. Thus, “limit” is itself a complex concept, that has been assumed to be simple and straightforward in environmental discussions on both sides. A limit is a function of a system, not a hard and fast quantity in and of itself.

The POs also make clear that oil is basically millions of years of compressed sun-time. We have been living off our natural capital rather than natural income at least since the beginning of the fossil fuel age. They also rightly argue that the history of economics, that is of capitalism, is contiguous with the age of fossil fuels, and is dependent on many assumptions about the supply, demand and price of fossil fuel resources.

All of this discussion has profound implications for economic theory. This theory is still being worked out, by the way, no matter what Reagan-praisers and neo-Hayekian Thatcherites might say. Georgescu-Roegen is the key figure here, though his work is rarely mentioned in discussions on general economics. Not surprisingly, Georgescu-Roegen’s economic lineage inherits from Schumpeter and passes down to Herman Daly. A version of Daly’s famous “The Economy is a Wholly-owned Subsidiary of the Ecosystem” diagram can be seen here.

Underlying all this are my deep misgivings about concepts at the heart of economic theory and policy, including what we mean by cost, work, labor, value, trade, rationality, power and so on. These are the topics - energy, ecology, economics, sustainability, systems- I want to take up in the next several months. I’ve chosen to blog about them for two reasons: 1) I want your input, and 2) my method is what I would call “patch-and-mosaic”, to borrow a phrase from landscape ecology. What I mean is that I want the freedom to write topically, stochastically, in more of an essay form. My hope is that these threads and discussions turn into something more tangible, but for now my aim is to clarify our thinking on these muddy topics.

UK Costs for Converting to Renewable Energy

October 23rd, 2007 by shrimppop

The Guardian reveals this morning that Gordon Browne’s government is planning to move away from EU targets for renewables.

At the very end of the article is this staggering line:

Analysis by Mr Hutton’s department suggests it could cost the UK £4bn a year to achieve a 9% share of renewable energy by 2020.

£4bn a year? That’s about $8bn. This is such a tiny investment to make a major move toward sustainability that it’s pathologically insane not to do it!

Today President Bush will ask Congress for another $46bn for another 6 months in Iraq. That would pay for 6 of the 13 years for the UK to make the move.

The article also states that Germany now produces 9% from renewables, and has gotten there in the last 6 years. This is all good news. It means that the switch can be made, despite the lunatic resistance of politicians and entrenched interest. And it’s not catastrophically expensive either.

10 Stupid Things

September 3rd, 2007 by shrimppop

I’m often annoyed by projections that start out “given current rates of …” I’ve noticed there are a lot of stupid things we do as a society, which when changed on a large enough scale will start to bring us into alignment with reality once more. I rarely see anyone analyze what the effect of eliminating stupidity would have.

Here’s a quick list I came up with in five minutes.

1. Flushing toilets with drinking water

This clearly makes no sense in a world starving for fresh water. A simple fix is to use gray water for flushing. Run a drainpipe from a hand sink to the toilet reservoir. Here we run up against government bureaucracy and zoning regulations. Even a place as advanced as Berkeley, CA is attacking “gray water guerrillas” for re-plumbing their houses for gray water reuse.

2. Feeding food-grade grain to livestock

Energy calories are lost at every link along the chain from crude oil production to grain production, especially corn, and on to feed for cattle. Every calorie of beef requires many multiples of grain calories, which in turn use many multiples more of high-quality petroleum-based energy. The ROI on this energy is so far negative that no one in their right mind would even consider it. In fact, it is criminal insanity.

3. Feeding food-grade grain to machinery (ethanol)

At best, ethanol produces about 64% of the BTUs produced by gasoline. So does it make sense to grow corn, which is highly petroleum-intensive (as grown today) to lose at least 36%? Again the ROI is ridiculous here. In real estate, this is called an alligator. This doesn’t even start to get into the ethics of growing corn for energy or cattle feed when people are starving everywhere.

BTW, Sugar Beets yields double per acre what corn yields as an ethanol stock.

4. Deforestation, especially for ethanol crops or beef

Forests provide so many services, and are so productive, that there is not one good reason to cut them down. They create oxygen and soil, sequester carbon, filter and store water, maintain genetic diversity, prevent flooding, grow food, timber and medicine. Forests are a resource without a measurable opportunity cost, because the next best use is so far below and less than their use just as they are as to be wholly inaccurate. Therefore, all of our economic activity ought to be geared toward growing and harvesting forests. A friend of mine has just started an investment fund based on purchased forestland throughout the country. He suggested that the Southern Tier, rather than targeting switch grass for ethanol production, should be replanted to black cherry, which is in high demand for woodworking and grows in only a very small area in the world.

5. Depleting energy capital rather than energy income first

This is where I get annoyed with the current analyses, even at the Oil Drum, that show that solar, wind and biofuels will never replace the demand for petroleum-based energy. The point is we are outrageously and extravagantly liquidating the assets in our trust fund, when we could be living very comfortably off the interest.

6. Lawns

The American lawn represents one of the single largest agricultures in the world, the gross product of which is very nearly nothing. It uses more artificial fertilizer than the agriculture of India and requires endless hours of mowing, gasoline-powered equipment and chemical sprays. We could easily grow the bulk of our food by simply replacing our lawns and planting to vegetables, herbs and fruit trees. When we do this we see grass as it is: a weed.

7. Suburbs

Suburbs are clearly a result of car culture. I am not one to believe they need to go away, but need to be re-designed. There is a subdivision in Davis, CA called Village Homes that is built along sustainable lines. It includes a community garden, fruit trees everywhere, extensive swaling for water retention, and sidewalks in the back yards. All new subdivisions and housing developments can be designed and planned to avoid the suburban scourges, too much driving, water runoff from streets and parking lots, over-extended infrastructure and so on. Existing suburbs can be retrofitted to reduce need for driving and replanted to useful small-scale gardens and agriculture. Some reforestation can be started.

8. Seed Patents

I have nothing against intellectual property, but the idea of cornering parts of the food market is just plain wrong. The seed companies ought to be able to patent maybe the specific changes they’ve made to existing stock, but the original DNA belongs to no one.

9. Air Travel

George Monbiot has a lot to say about how destructive air travel is, so I won’t repeat that. High Speed Rail would be a much more efficient and cleaner way to travel long distances. This is practical today but would probably require infrastructure and subsidy on a national level. I’ve always found travel by train to be much more comfortable and enjoyable than air travel anyway. If you’ve flown recently, you might agree.

10. Market Fundamentalism

The Thatcher revolution, under whose cloud we’ve been forced to live for the last 30 years represented an extremist swing away from moderate liberal capitalism, where the excesses of capitalist redistribution of wealth from laborers to owners is moderated by democratic government. We have two hundred and fifty years of history to look at here. The laissez faire extremism of the last generation needs to move back toward the middle.