The United States balance sheet is looking like a weaker and weaker attempt at recovery. Some might even make the argument that the US is insolvent, unable to pay back its debts.

What does all this mean?

This issue has long been at the attention of fringe economic commentators but as it has begun to enter the mainstream, I’m becoming more concerned. This week saw more attention to the issue with two fantastic podcasts on the US Federal Deficit which are absolutely crucial for understanding an approaching crisis.

NPR Talk of the Nation, Samuelson Warns U.S. Could Go Broke

EconTalk, Hamilton on Debt, Default, and Oil

James Hamilton of the University of California, San Diego, and blogger at EconBrowser talks with EconTalk host Russ Roberts about the rising levels of the national debt and the growing Federal budget deficit. What is the possibility of an actual default, or an implicit default where the government prints money to meet its obligations and causes inflation? What might signal an impending default? And what is the long-range forecast for the U.S. government’s obligations? Later in the conversation, the subject turns to oil prices, an area of Hamilton’s research. Hamilton explores the causes of the increasing price of oil over the last decade and the implications for the economy.

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Post tags: collapse, economic crisis, economy, united states

Sander’s talk started by covering the history of innovation. By adapting the environment and the brain to tackle new challenges, humans are one of the greatest success stories in nature’s history, all because we can adapt and innovate. Eventually, humans began focusing their innovation centers in cities. Cities are not more energy efficient but are better innovation engines.

This centralization comes with a requirement: as centralization increases, the rate of innovation that must occur to support the structure has to increase. Food and energy must be brought from further and futher away because the ecological footprint of the city grows. Once fossil resources became harnessed, innovation became fundamentally necessary to support the collapse of society. As more of our society depended on oil for growth, that growth continued because of innovation. Technology has allowed us to harvest more oil faster and from more remote places. This supported more population growth and further innovation. At this point in the talk Sander makes a shocking claim: perhaps innovation is the greatest ponzi scheme of all, the rate of innovation must increase at all times to prevent the collapse of civilization.

And the more I think about it, the more I think he is right. How could I prove him wrong? If we stopped innovating, would we destroy humanity with the state of our current technology? All signs point to yes, especially in the United States.

Sander continues by pointing out two views of humanity and its relation to nature.

1) In the cohesion of nature, strangeness and force are emphasized. That change is attributed to nature but people are passive and resistive to change. Nature and change are viewed as dangerous because they are outside the realm of human control.

The opposing view is that,

2) Humans are overly agressive, forcing change on our environment to support our war-like culture and nature is passive receiver of our exploitation.

These two views interplay to create a critical approach to human decision making: natural dangers are exaggerated, human dangers are underplayed.

This can be seen in the climate change debate. We fear the response of nature to our actions but ignore the many other problems humanity is creating through our technological program.

Sander continues by stating the inevitable result of technological innovation. We intervene more and more in our environment, thinking that we reducing our risks but all we do is change the spectrum of risks, not the overall quantity of risks. The end state is that we lose control because we lose the ability to understand the complex chain of events resulting from our interventions.

Human changes are rapid and shallow attempt to replace and begin to outweigh the natural changes which are slow yet all encompassing. Risk spectrums shift over time with respect to their environments. We tend to overemphasize the frequent risks, try to reduce them and substitue completely unknown risks at larger scale over a longer time period. This accumulation of long term, large scale risks build up and collapse the civilization.

At some point, Sander believes that every social system will go out of control. The system pushes itself into a trap, the cost of problem solving goes up, flexibility goes down, the outcome is included in the way it was started, our exploitation of our environment creates the weaknesses we must contend with at the end.

Oil has provided us a shockingly stable environment but this environment has reduced our ability to adapt. Now, we can only innovate within the structure we create for ourselves, aggravating the situation even further, reducing our ability to break with the overarching problems. Climate change isn’t bad for humanity, it is bad for the status quo, our social structure. The fall of the Roman Empire resulted primarily because they used up all their wood, their primary energy source, shipping it from further and further away. This collapse was not a “solution”, it was simply the inability to maintain innovation at the rate necessary to extract new energy sources. After the fall of Rome people migrated from urban areas to the rural environment. The city was the keeper of information, the archivist was the maintainer of civilization. Perhaps we are in a slightly better position now because the internet helps us maintain our global knowledge, yet is even more dependent on energy than the city.

Sander stated that he thought the urban situation will explode, it is fragile and we invest more and more in our cities and less in a resilient rural environment.

He shared my sentiment: optimistic for humanity, pessimistic for society.

So what if we can accelerate our innovation to maintain the pace required to avoid collapse? Unfortunately that acceleration also rapidly adds up in unintended consequences. Technology must be implemented at faster and faster rates to avoid collapse but prevent the long term viewpoint. Many immediate problems add up and then you can’t focus on the long term problems.

Sander compared our situation to a tribe in the Southern hHghlands that saw deforestation and decided to counter with a ceremony of slaughtered pigs. The tribe raised continually more and pigs to slaughter, converting the entire valley to mud. Eventually the pigs piled up and died of disease. The land was ruined because of the mud and the tribe was left in the mess they’d created.

Hardly a mainstream view, it is much more attractive to spout the promises of nanotechnology and artificial intelligence. Assuming that rates of technological innovation will continue or exponentially increase as technological determinists like Ray Kurzweil do, is turning a blind eye to the role energy plays in civilization. By considering energy do we have to conclude our industrial civilization will unravel over the next few decades? Perhaps all our 20th century innovation is built on the high energy environment provided to us by cheap oil, if that’s the case it’s going to be an interesting ride down the back side of Hubbert’s peak.

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Post tags: history, technological program, technology

The first podcast I subscribed to when I bought my Creative Zen Vision: M in 2006 was Mysterious Universe. One of the things that got me through the work week was listening to Ben Grundy’s reports on the mysterious and the paranormal.

After his mysterious exit from the podcasting world, pledging to record a final episode and then never recording it… he’s back!  The new podcast has has retained its slick production value and Australian accent. My favorite excerpt from this episode were the accounts of grinning man sightings.

I’m happy to have this show back in my weekly playlist.

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Post tags: excitement, mysterious, paranormal, Podcasts

There is a much deeper crisis at work as well, a crisis in the creation of goods and services that underlies money to begin with, and it is this crisis that gave birth to the real estate bubble everyone blames for the current situation. To understand it, let’s get clear on what constitutes a “good” or a “service”. In economics, these terms refer to something that is exchanged for money. If I babysit your children for free, economists don’t count it as a service. It cannot be used to pay a financial debt: I cannot go to the supermarket and say, “I watched my neighbors kids this morning, so please give me food.” But if I open a day care center and charge you money, I have created a “service”. GDP rises and, according to economists, society has become wealthier.

The same is true if I cut down a forest and sell the timber. While it is still standing and inaccessible, it is not a good. It only becomes “good” when I build a logging road, hire labor, cut it down, and transport it to a buyer. I convert a forest to timber, a commodity, and GDP goes up. Similarly, if I create a new song and share it for free, GDP does not go up and society is not considered wealthier, but if I copyright it and sell it, it becomes a good. Or I can find a traditional society that uses herbs and shamanic techniques for healing, destroy their culture and make them dependent on pharmaceutical medicine which they must purchase, evict them from their land so they cannot be subsistence farmers and must buy food, clear the land and hire them on a banana plantation — and I have made the world richer. I have brought various functions, relationships, and natural resources into the realm of money. In The Ascent of Humanity I describe this process in depth: the conversion of social capital, natural capital, cultural capital, and spiritual capital into money.

Essentially, for the economy to continue growing and for the (interest-based) money system to remain viable, more and more of nature and human relationship must be monetized. For example, thirty years ago most meals were prepared at home; today some two-thirds are prepared outside, in restaurants or supermarket delis. A once unpaid function, cooking, has become a “service”. And we are the richer for it. Right?

Basically, this podcast from KEXP’s Sustainability segment sums the idea up nicely as David Korten speaks with Diane Horn about his most recent book Agenda for a New Economy: From Phantom Wealth to Real Wealth. The idea which I relayed from Charles above is that modern American society has money but little wealth, wealth has mainly been imported from other countries. Is the only way to fix the economic crisis is to deflate the currency to match the actual value of society.

Click here to view the embedded video.

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Post tags: economy, ideas

If you are new to Charlotte and want to know the history and story behind UNC Charlotte football, check out this great interview with Charlotte 49ers Athletic Director Judy Rose and WFNZ’s Mike Collins. At 23 minutes in, Judy and Mike talk UNC Charlotte Student Government.

Click here to view the embedded video.

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Post tags: 49er football, college sports, football, Podcasts, unc charlotte