Crude Awakening: The Oil Crash

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I could not find a thread about this, I just watched it today, here's the link:

http://video.google.com/videoplay?docid=-703701197044020456

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Crude Impact

it's in 10 parts, follow the links^^^

 

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Oil Smoke & Mirrors

http://video.google.com/videoplay?d...=51&start=0&num=10&so=0&type=search&plindex=0

 

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Big Melt Meets Big Empty
Rethinking the Implications of Climate Change and Peak Oil

http://www.richardheinberg.com/museletter/187

Environmental and development NGOs are now fixated on climate change to the exclusion of nearly every other topic. Discussions in and among these organizations center on capping carbon emissions and trading emissions rights, and doing this internationally in a way that will be deemed equitable by the global South and acceptable to the industrial Northern countries.

Most of these policy organizations are seeking ways of implementing recommendations made in 2001 by the Intergovernmental Panel on Climate Change (IPCC), which suggested that to keep the global average temperature rise to two degrees Celsius above pre-industrial levels (by consensus, the maximum increase the world's climate system can absorb without triggering catastrophic climate change), the amount of greenhouse gases in the atmosphere must be capped at 450 parts per million of carbon dioxide equivalents. This will require a 60 to 80 percent reduction in carbon emissions below current levels by 2050.

In order to win any reduction agreement from less-industrialized nations, the richer, more industrialized nations will have to promise to reduce their emissions more and faster. A growing number of organizations (including the Global Commons Institute, EcoEquity, the Climate Equity Project, Feasta, Just Transition Alliance, The Sky Trust, and Third World Network) contend that the fairest solution would be to allocate annually capped emissions rights globally on an equal per-capita basis; then, if wealthy nations wished to continue using proportionally more fossil fuels, they would have to purchase emissions rights from more parsimonious consumers in poor nations. This would result over time in both a diminishing amount of total emissions (based on the declining trajectory of the annual caps) and an enormous transfer of wealth from the more-industrialized to the less-industrialized nations. Some organizations advocate immediate allotment of equal per-capita emissions rights; others envision a staged implementation of the program, that would give wealthier nations time to plan and adjust (the two most widely promoted versions of this strategy are known as "Contraction and Convergence" and "Cap and Share").

From the perspective of less-industrialized countries, a global climate policy that does not include an equity provision is a non-starter. The existing humanly produced atmospheric carbon, which will continue driving climate change for the next 40 years or so even if all emissions are halted now, was generated overwhelmingly by rich countries in the process of getting rich. Thus it is these countries' obligation to shoulder most of the burden of necessary cutbacks. A second equity argument has to do with expected population growth: since the population of the global South is expected to double during the next 50 years while total population in rich countries is projected to remain at current levels (the US is an exception), even if the South reduces carbon emissions at half the rate of the industrial North that will translate to an equivalent per-capita cut.

If people in the industrializing countries (particularly China and India) continue to burn more coal and drive more cars, they will metaphorically cook the planet. These nations have the highest growth rates for fossil fuel emissions, and China is set to soon become the world's foremost carbon emitter if it has not already done so. These nations are in effect saying to North America, Europe, and Japan, "Agree to reduce your emissions faster than we do, or we won't reduce ours at all and the entire planet will burn."

This Grand Bargain could amount to an unprecedented shift of the world's economic center of gravity. During decades of "development" policy and aid, the disparity between rich and poor only grew; now, however, the poor world has a weapon - even if its use implies a suicide pact.

The environment/development advocacy community is pushing its agenda with particular urgency for two reasons: first, scientific data show dramatic climate impacts already appearing that could devastate global ecosystems within decades or even years (more on that in a moment); and second, the agenda itself promises to solve at one stroke three enormous problems - the world's unsustainable reliance on fossil fuels, a pending environmental catastrophe, and the global equity dilemma.

However, the Grand Bargain is going to hit three serious snags before it can gain acceptance: politics, scarcity of fuels, and a growing perception that it is already too late to avert catastrophic climate change. These barriers may require new tactics if NGOs are to achieve their goals.

Has the Climate Revolver Already Fired?

In a paper titled "Climate Change and Trace Gases" published in the Philosophical Transactions of the Royal Society earlier this year, six of America's leading climate scientists, led by James Hansen, director of NASA's Goddard Institute for Space Studies, warned that the Earth is rapidly approaching a "tipping point" beyond which climate change will become unstoppable (www.planetwork.net/climate/Hansen2007.pdf). The authors discussed feedback mechanisms not included in the assessments of the IPCC and argued that unless effective measures are put in place to control CO2 emissions over the next ten years, the rise in the Earth's temperature could set loose self-reinforcing processes that would be beyond human control.

Some critics said Hansen was overstating his case. Richard Peltier, a University of Toronto physicist and the director of the Centre for Global Change Science, criticized the tone of the paper and the use of words such as "cataclysm," saying that Hansen had moved "dangerously away from scientific discourse to advocacy" (http://postcarboncities.net/node/1018).

But this was before the summer Arctic ice melt of 2007.

This year, Arctic ice reached a minimum extent of 4.13 million square kilometers, compared to the previous record low of 5.32 million square kilometers in 2005. This represented a decline of 22 per cent in just two years; the difference amounted to an expanse of ice roughly the size of Texas and California combined. Between 1979 and 2005, the rate of Arctic ice retreat had averaged 7 percent per decade; in the two years from September 2005 to September 2007 that rate increased to more than 20 percent. Moreover, the average thickness of the ice has declined by about half since 2001. Altogether, taking into account both geographic extent and thickness, summer Arctic sea ice has lost more than 80 per cent of its volume in four decades. While sea levels will not be directly affected by the total melting of the northern icecap since it floats on and thus displaces ocean water, that event will severely destabilize Greenland's ice pack - whose disappearance would cause sea levels to rise by several meters, inundating coastal cities home to hundreds of millions.

The organization Carbon Equity issued a report last month, "The Big Melt: Lessons from the Arctic Summer of 2007" (www.carbonequity.info/PDFs/Arctic.pdf), which draws conclusions from this disturbing new information:

The data surveyed suggests strongly that in many key areas the IPCC process has been so deficient as to be an unreliable and indeed a misleading basis for policy-making. . . . Take just one example: the most fundamental and widely supported tenet - that 2°C represents a reasonable maximum target if we are to avoid dangerous climate change - can no longer be defended. Today at less than a 1°C rise the Arctic sea ice is headed for very rapid disintegration, in all likelihood triggering the irreversible loss of the Greenland ice sheet and catastrophic sea level increases. Many species are on the precipice, climatechange- induced drought or changing monsoon patterns are sweeping every continent, the carbon sinks are losing capacity and the seas are acidifying. . . . The Arctic began to lose volume at least 20 years ago when the global temperature was about 0.5°C over the pre-industrial level. So we can now see that to protect the Arctic the average global temperature rise should be under 0.5°C.

According to the report, if this suggested 0.5°C precautionary warming cap were adopted, the target for allowable concentrations of atmospheric greenhouse gases would have to be about 320 ppm CO2 equivalents, a level that was passed more than 50 years ago.

Another report published this month, this one in the Proceedings of the National Academy of Sciences (www.guardian.co.uk/environment/2007/oct/23/climatechange.carbonemissions), documents that carbon is accumulating in the atmosphere much faster than previously thought, and only adds weight to the Carbon Equity recommendations. While global carbon dioxide emissions from fossil fuel burning rose annually by 0.7 percent in the 1990s, the new study shows they have increased by an average 2.9 percent each year since 2000.

What would targets of 0.5 degrees warming over pre-industrial levels, and 320 ppm CO2e, mean in terms of policy? While the Carbon Equity report doesn't say so, if all nations were to bear the brunt of equal emissions cuts the latter would have to be huge - well over 90 percent in just three or four decades. But if international equity is also targeted, this means that for the wealthy nations more than 100 percent reduction would be needed. In other words, leaving aside the notion of carbon capture and storage (discussed below), not only would wealthy nations have to transform their economies to run entirely without fossil fuels (which currently supply 85 percent of world energy), but they would need to spend considerable capital on efforts to capture and sequester existing atmospheric carbon - for example, through massive reforestation projects. One has to wonder: With all the energy and investment that would be needed to de-carbonize industrial economies (by developing renewable energy sources, building public transportation infrastructure, and so on) and store carbon, what money and energy would be left to run existing economies, much less to fuel growth in goods and services to the population?

Politics: An Alternate Reality

Climate science exists in a different world from the one peopled by politicians. Inhabitants of both worlds think of themselves as realists: while scientists study the real physical world, politicians are arbiters of what can and will get done in the real human socio-economic world.

In general, any policy that means voluntary economic contraction of any noticeable magnitude doesn't stand much of a chance in the real world of politics. At least in the current political climate, absent a massive public education effort, voters will not support it and no politician will stake her career on it.

This in itself constitutes an enormous roadblock to the achievement even of the IPCC recommendations, much less the far more stringent targets (but more "realistic" ones in the scientific sense) that Carbon Equity is proposing. Faced with this roadblock, climate activists typically respond by minimizing the estimated cost of de-carbonizing economies, and by assuring one and all that economic growth can continue into the indefinite future while industrial nations radically reduce their consumption of the very fuels that made the industrial revolution possible. But if this sanguine, politically acceptable notion is at least arguable in the case of the IPCC reduction targets, it is hardly credible when it comes to the emissions reduction trajectory suggested by Carbon Equity.

Take the US as an atypical but essential example. One can realistically calculate a possible 50 percent reduction in fossil fuel consumption for the country through conservation (though that will be an enormous job, requiring extensive new electrified public transport infrastructure, new housing codes, subsidized energy retrofit programs, and so on). Another 25 percent of current fossil fuel consumption could be offset with renewable energy sources. All of this would take a few decades, and during that time we have to assume no population growth and no economic growth. That gets us to 75 percent reduction from current levels. Beyond that, it is difficult to see how more could be achieved - unless America continues burning fossil fuels but captures and stores the carbon. Suddenly with that possibility a relief valve is opened: coal-based electricity could flow in to fill the void.

This is why carbon capture and storage is the technical centerpiece of most politically acceptable prescriptions for climate salvation. However, technologies for carbon capture will add to the cost of energy, will reduce the amount of useful energy derivable from fossil fuels, and won't be ready for widespread commercial application for about three decades. We do not even know if the captured carbon will stay where we put it. These are not trivial problems, and the first two will bite hard in the emerging context of scarce energy supplies and high prices (more on that below).

Still, politicians are feeling increasing pressure from constituents, NGOs, and the scientific community to agree at least to the IPCC target of 60 to 80 percent emissions reductions by 2050. The European nations have signed on to a carbon reduction scheme, as has the state of California. The method being adopted is cap and- trade - the creation of a carbon emissions rights market that, according to its critics, is actually an elaborate shell game that enables wealthy nations and energy corporations to continue burning fuels at high rates by paying others to do the hard work of figuring out how to get by on less fuel (a point hilariously illustrated on the website www.cheatneutral.com). While cap-and-trade employs many of the same basic mechanisms as the emissions rights distribution programs advocated by the environmental/equity NGOs, there are also substantial differences: governments and corporations envision high caps and free or auctioned distribution of emissions rights to industry; the NGOs advocate much lower caps and free distribution of rights to the people. Resolving these two visions of the process will be no small matter.

But let's assume the best - that cap-and-trade will in fact move nations toward their targeted reductions; in that case, would promises continue to be met if compliance began to compromise economic growth? Significantly, California's climate law, AB32, contains an escape clause:

1. In the event of extraordinary circumstances, catastrophic events, or threat of significant economic harm, the Governor may adjust the applicable deadlines for individual regulations, or for the state in the aggregate, to the earliest feasible date after that deadline.
2. The adjustment period may not exceed one year unless the Governor makes an additional adjustment pursuant to subdivision (a).

In other words, the Governor can essentially cancel the state's greenhouse gas reduction efforts for a year, then do the same the next year, and so on.

Meanwhile, international bargaining on the equity issue will be a nightmare. The "North/South" terminology used by development NGOs utterly fails to capture the complexity of the negotiations. The reality is that "North" consists primarily of the US, Europe, Japan, Australia, Canada, and South Korea, which have quite different energy trajectories and political positions. "South" consists of rapidly industrializing countries (China, India), really poor countries whose economies are stagnant or declining (Zimbabwe, for example), as well as major fossil fuel exporters (OPEC) whose revenues are increasing but whose industrial base is small. Again, these categories of countries have very different energy mixes and bargaining positions that are poorly captured by a single term.

China represents itself as speaking for the entire less-industrialized world in insisting on an equity provision, and in some ways this makes sense: its voice is much louder than that of Zimbabwe, so the latter gets a free megaphone. But China can easily afford to bid up energy prices and can continue to grow its economy even with oil at $100 per barrel, while Zimbabwe can't afford much fuel at all at current prices even if it is permitted to burn all it likes under climate accords. Thus the practical climate mitigation question that must be addressed with regard to the South is not whether the desperately poor in fuel-importing nations should have the right to industrialize using coal or oil - that is not an option, given global supply constraints (which, again, we will address in a moment); the question, rather, is whether China and India will continue to industrialize by burning coal.

Russia is in a category of its own, but due to its wealth of remaining fuels it will be a key player in the energy and climate discussions.

And so, while in some ways the situation is more complex than it is represented to be, in another it is simpler. As James Hansen has recently noted (http://pubs.giss.nasa.gov/docs/notyet/submitted_Kharecha_Hansen.pdf), the resolution of the climate dilemma really centers on coal (it is the world's fastest growing energy source because of its current cheapness and abundance, while it is also the most carbon-intensive of fuels), and thus it revolves mostly around four nations - China, the US, India, and Russia (the US and Russia have the largest reserves; China is the foremost consumer; and India has both large reserves and fastgrowing consumption levels). Getting these countries to agree on major reductions in coal consumption, in which the US reduces much faster than India and China for the sake of global equity while Russia keeps its treasure chest of fuels buried, is going to be . . . well, difficult. Moreover, since China consumes twice as much coal as the US, arguing for the US to reduce faster than China is also, in effect, arguing for slower total declines in emissions from coal.

And we must remember: the global South may have a leverage point here, but the North still has the guns. In history, nations have gone to war to enforce or avoid transfers of wealth much smaller than those implied in some climate equity proposals.

But What About Supply?

Conventional cap-and-trade carbon markets work by creating a scarce commodity (rights to emit) and then allocating that commodity by price. If the commodity turns out not to be scarce, its price will collapse and so will the market. If fossil fuel depletion means that carbon emissions will be declining anyway, rights to emit carbon will cease to be scarce. People will buy such rights only if they can afford the fuel. When fuel is expensive and the supply is shrinking at a rate comparable to reduction rates mandated by caps, the carbon market becomes utterly irrelevant.

That is essentially the situation we face.

Global oil production has probably already peaked, as was affirmed just this month by an authoritative report from the Energy Watch Group of Germany (www.energywatchgroup.de/Erdoel-Report.32+M5d637b1e38d.0.html). The peak for global natural gas production is likely to follow in a few years, perhaps a decade or two at most. And, according to another Energy Watch Group study, "Coal: Resources and Future Production," published earlier this year, global coal production is likely to peak between 2025 and 2030 (www.energywatchgroup.org/files/Coalreport.pdf). With oil past its peak, and with gas and coal able to do little to compensate, total energy derived from fossil fuels will peak around 2010, while total CO2 emissions will peak somewhat later due to the fact that coal will commence its decline after oil and gas.

Aside from the fact that it undermines the efficacy of carbon trading, this news has one good, one not-so-good, and one rather terrible implication.

On the good side, the early peaking of fossil fuels means that most estimates of future global carbon emissions will never be realized. The Special Report on Emissions Scenarios (SRES) of the IPCC presents 40 scenarios for future CO2 emissions. Most scenarios show growth in emissions to 2100; the average of all 40 shows fossil fuel consumption in 2100 at about twice current levels. The Report offers no discussion of supply constraints for oil, gas, or coal.

Engineering professor David Rutledge of the California Institute of Technology has authored an online article titled "The Coal Question and Climate Change" (www.theoildrum.com/node/2697), in which he applies techniques typically used to forecast oil production peaks to coal, arriving at conclusions similar to those of the Energy Watch Group. In his analysis, supply constraints will yield lower emissions from coal than envisioned in any of the 40 IPCC scenarios. On the basis of supply constraints alone - not assuming any voluntary emissions-based consumption cuts - atmospheric CO2 will peak at 460 ppm by 2070. Rutledge writes:

The maximum temperature rise for our Producer-Limited Profile is 1.8°C in 2150. The . . . part of the temperature rise that is associated with future fossil fuel use . . . is calculated by running the simulation with and without future fossil fuels, and subtracting. It turns out that the maximum temperature rise associated with future fossil fuel use is only 0.8°C, less than half of the total. This means that the contributions to the temperature rise from fossil fuels that have already been consumed, and from deforestation, and from other greenhouse gases amount to more than the contribution from future fossil fuel use.

So much for the good implication of fuel supply constraints. The not-so-good implication is that, while shortages of extractable oil, gas, and coal will nearly ensure the achievement of the low-range IPCC targets of 60 percent reduction in carbon emissions by 2050, they will not guarantee the more than 90 percent reductions by 2040 that will be required if we are to come close to achieving 320 ppm CO2e before the end of the century. Thus deep carbon cuts will still be needed if there is yet hope of averting catastrophic climate change.

The terrible implication is that a relentlessly declining fuel supply will almost certainly have devastating economic, social, and political impacts. Trade, manufacturing, and farming will be hard hit. No nation is prepared to deal with the high prices and shortages for energy that will soon begin to work their way through the entire global economic system.

Political Reality Confronts Physical Reality

Taking all of this information together - the physical realities of climate data and fuel supply projections, and the political realities previously mentioned - what conclusions can be drawn? Perhaps the best way to find out would be to bring together several of the most knowledgeable and open-minded experts in relevant fields and let them talk these issues through for a few days away from the public eye. However, until that happens here are a few thoughts of my own.

Some kind of climate agreement will probably emerge within the next two years due to pressure from NGOs and the real concerns of governments. But the economic self-interest of those governments (and major corporations) will most likely ensure that only a watered-down version will be agreed to. Some form of carbon market will be deemed the acceptable means of implementing it. And its terms will include a mild equity provision that won't make anyone happy.

At the same time, supply constraints will be starting to hit hard - globally for oil, regionally for gas, and in China for coal. Ultimately, these supply shortfalls may drive policy far more than fear of climate change. The response of governments to fuel shortages will be one of desperation: climate mitigation efforts will fall by the wayside as nations flail about attempting to keep their food and transport systems functioning. International conflict is likely.

This clearly is not the optimal scenario. What alternative policies would yield different results, and how might we go about assessing policy options in the light of factors discussed above?

One way to begin the assessment process would be to list and rank candidate policies in a two-by-three matrix. Start with two vertical columns; in the first, list those that could actually achieve emissions reductions; in the second, list those that could actually help societies adapt to scarce and expensive energy. In these first two columns, order policies in terms of the degree of positive impact anticipated. Then in three rows, rank those policies in terms of (1) how they will affect equity; (2) how politically viable they are now; and (3) how politically viable they are likely to be in the context of energy scarcity.

If a policy is likely to be highly efficacious but is politically unacceptable now or later, we might leave it on the table for further consideration while taking note of the problem. (The fact is, policies that rank well under the heading of what is politically viable now may not correspond with much of anything in the high range of the two columns.)

It would be interesting to see if different organizations would arrive at similar or widely varying conclusions from this exercise. The following are some observations from my own initial run-through.

At the top of the two columns should be some overall umbrella policy to manage the transition away from fossil fuels. We have already seen the potential problems with cap-and-trade resulting from fuel shortages. Those problems could be addressed by lowering the caps with the goal of making emissions rights scarce again, but in a contracting economy this might not work, and most people would see the effort as arbitrary and onerous anyway. Distribution of emissions rights directly to the people on an equal per-capita basis might help avert a carbon market collapse (as long as there was a demand for fuel, there would also be demand for the emissions rights). But why not just cap the extraction, and ration the distribution, of fuels themselves instead of regulating the emissions they produce? The rationing of scarce fuels is historically proven; this approach would be both more effective, and more intuitively reasonable and understandable to all concerned. Two existing proposals could be helpful here - the Oil Depletion Protocol (www.oildepletionprotocol.org), which if generalized would provide a direct mechanism for capping fossil fuel extraction and consumption; and Tradable Energy Quotas (www.teqs.net), guaranteeing equitable access to the available domestic supply of scarce fuels - a basic electronic rationing scheme that will be essential when oil outages begin, and that needs to be installed in advance.

Since fuel depletion alone will not result in emissions cuts sufficient to achieve an atmospheric greenhouse gas concentration of 320 ppm CO2e, and since carbon capture and storage is problematic, if nations are serious about climate protection the discussion must center on leaving coal and other low-grade fossil fuels (such as tar sands) in the ground. The fact that this is a politically distasteful notion now, and is likely to become even more so, puts a big burden on the persuasive abilities of all of us who care about the climate. But this is the one policy that will assuredly work to achieve our goal.

As for equity: Since we live on a finite planet, equity for the global poor can only really be achieved by a reduction in material living standards for the billion or so inhabitants of wealthy nations. As we have seen, this notion is extremely difficult to sell to the governments of industrialized democracies now, and it will be no less so when their economies are in tatters.

However, steep declines in standards of living will be hitting these wealthy countries anyway, due simply to depletion of important energy resources, starting with oil. The only way to avert massive social chaos and famine as extraction levels decline will be to devote public capital domestically toward the building of low energy infrastructure (e.g., electrified rail networks, trolley lines, wind farms) while moving many people to rural areas and teaching them to farm sustainably. Production and consumption will have to be largely re-localized, essential goods rationed by quota. Basically the same thing will have to happen in the poor nations.

One end result will be a world characterized by much greater international equity - but this will have been achieved without enormous direct international wealth transfers. Another result might be the reduction of control by the present power-holders within all nations, since their power is currently maintained and exerted in the context of giant centralized systems of production and distribution.

One more helpful equity strategy would consist of the transfer of renewable energy technologies from rich to poor countries for domestic implementation free of intellectual property rights.

The single factor that would undermine the energy transition and bring everyone to ruin is resource wars.

Some of the policies mentioned (such as the development of renewables and reforms to industrial agriculture) are ones climate activists are hoping to promote indirectly through emissions caps. My analysis suggests that it may be better to champion these policies more directly, and to buttress the argument with depletion data.

Ultimately, power holders must be convinced that such policies, if obnoxious to them now, will be far less destructive to their interests than a complete breakdown of society and biosphere - which is the very real alternative. For a historic example of a similar conversion of elites think of the 1930s New Deal: then the titans of industry had to sacrifice some of their financial power in order to keep from losing it all. Many wealthy individuals never forgave Franklin Roosevelt, whom they regarded as a "traitor to his class," but most of them reluctantly agreed that redistribution represented the lesser of evils.

Today the central question facing us is not whether the world will move away from fossil fuels, but how. The primary dispute will be between those who look for short-term solutions to energy supply shocks (burn the last of the coal, attempt to expand the use of other low-grade fossil fuels, go to war to control remaining highgrade fuel deposits), and policy advocates with a long-range plan for dealing effectively and peacefully with climate change, adaptation to scarcity, and global inequity. If NGOs are stuck fighting for policies that simply won't work, then the short-term options, however disastrous, will win by default.

At best, this article can only describe the situation in general terms, point to a few of the possible policy options, and begin assessing them, without delving into messy but essential details. Much more analysis is clearly required. It is surely time for the climate and equity policy discussion to broaden to include the challenge of impending energy resource scarcity, as well as a more nuanced reconnoitering of the current and future political terrain. Perhaps this essay can serve as a conversation opener.

 

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Oil dependency is America's ruin
Miami Herald, Thu, Mar. 20, 2008
By GAL LUFT

By now it is abundantly clear that the U.S. economy is in dire straits. What should also be clear is that the path to economic recovery will be compromised as long as America is dependent on imported oil to the degree that it is while oil continues to hover over $100 a barrel.
At current oil prices, this country sends overseas $460 billion per year to finance the daily buying of 12 million barrels of imported oil. This amount of money is about the size of our defense budget and three times the size of the ''economic stimulus'' package recently passed by Congress. But the real economic impact of oil dependence is hidden to most Americans. Energy economist Milton Copulos (who passed away this month) calculated last year that the grand total of all external costs associated with foreign oil dependence -- including the cost of oil-related defense expenditures, amortized cost of supply disruptions, and lost economic activity and tax revenues -- stands at $825 billion per year.

A double whammy

To put the figure in perspective, this is equivalent to adding $8.35 to the price of a gallon of gasoline refined from Persian Gulf oil, making the cost of filling the gasoline tank of a sedan $214, and of an SUV $321. At today's oil prices, these costs would be even higher.

For the U.S. economy, oil dependence is a double whammy. While it contributes to our economic decline, it allows OPEC governments, many of which do not have our best interests in mind, not only to laugh all the way to the bank but to literally own the bank. The recent buyout by foreign governments of chunks of America's prime symbols of economic prowess -- like Citigroup, Merrill Lynch, Morgan Stanley, Blackstone Group and Bear Stearns -- is only the preview to what is yet to come should the petrodollar fueled transfer of wealth continue.

To understand the forces at play it is instructive to visualize the scale of OPEC's potential wealth in comparison to that of the consuming countries. At $100 a barrel, OPEC's oil assets stand at roughly $92 trillion, equivalent to almost half of the world's total financial assets and nearly twice the market capitalization of all the companies traded in the world's 27 top stock markets. If one adds the worth of OPEC's huge gas reserves as well as additional oil reserves that have not yet been discovered, the wealth of OPEC more than doubles.

If oil prices climb to $200, as President Hugo Chávez of Venezuela recently warned, this wealth would double again. While the value of the dollar and the U.S. economy is shrinking, OPEC's monumental wealth enables its countries unprecedented buying power. As an illustration, at current oil prices it would take OPEC just six days to buy GM and three years to buy a 20 percent voting block in every S&P 500 company. It is hard to see how such buying power amassed by oil producers would not upset the West's economic and political sovereignty. At the current rate of investment, foreign governments are likely to be increasingly willing to translate their wealth into power, dictating business practices, vetoing deals, appointing officers sympathetic to their governments, dismissing those who are critical of them and imposing Islamic laws on Western corporations.

Since stopping foreign investors from providing cash infusions for big companies in distress is not an option, the only way to stop the bleeding is for the United States and other major consumers to break the strategic stronghold of oil over our transportation system. Congressional leaders can start doing so by mandating that every new car sold in the United States is capable of running on -- in addition to gasoline -- nonpetroleum fuels like alcohols, coal-based fuels and electricity made from domestic resources.

Terrible choice

To make a car flex-fuel so it can run on any combination of gasoline and alcohol would cost an automaker an extra $100 -- the cost of one barrel of oil. If each passenger car and truck sold in America were flex fuel, the cost to automakers would be less than the $30 billion the Fed forked over last weekend to salvage Bear Stearns' riskiest assets.

The United States is essentially facing a terrible choice between a financial meltdown and a metastasizing sovereignty loss, political decline and eventual enslavement to OPEC and its whims. It's past time for Congress to recognize that the solution to our economic predicament lies in our garage.

Gal Luft is executive director of the Institute for the Analysis of Global Security and co-chair of the Set America Free Coalition.

 

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http://www.gulfnews.com/business/Oil_and_Gas/10203450.html

GCC demand to curtail oil exports

By Babu Das Augustine, Banking Editor
Published: April 06, 2008, 00:31

Dubai: Spiralling energy demand in the Gulf states, coupled with a gas-supply crunch, might lead to oil exports from the region falling during the summer, according to energy econ-omists.

A Lehman Brothers report puts the possible Gulf export shortfall due to high domestic demand at up to one million barrels per day (bpd).

According to Edward Morse, Lehman's chief energy economist, the world markets faced a shortfall of about one million barrels per day last July and August, and it could be repeated this year.

"The Middle East now appears to require more hydrocarbons being devoted to power generation than had been the case historically, as power needs to grow," said Morse.

While many expansion projects are being pursued across the region, the fear is that export capacity might not grow enough in the coming six months, leading to an increasingly tight market.

"Oil-boom-fuelled econ-omic growth, together with spiralling populations and subsidy-driven consumer patterns, have made the Gulf states some of the largest per-capita energy consumers in the world. Meanwhile, most of the countries have failed to bring sufficient amounts of new gas onstream, leading to a growing use of oil in power generation," said Samuel Ciszuk, Middle East energy analyst with Global Insight.

While describing Leh-man's assessment of export shortfall as too high, Ciszuk said that during the coming summer, peak demand is likely to cause a diversion of gas from oilfield injection - lowering oil output - and crude from exports to power generation.

During the last few years some Gulf states such as Kuwait, Saudi Arabia and Oman have used rolling blackouts to cope with power shortages, and it has been reported that Abu Dhabi redirected some gas from its oilfield injection programmes to its power plants in order to prevent blackouts.

Based on its assessment of the demand-supply scenario, Lehman has increased its price forecast for the second, third and fourth quarters for Brent crude, in part to reflect the Middle East constraints, after prices averaged $96.31 in the first quarter.

The bank now expects Brent to average $85 a barrel in the second quarter from previous forecasts of $80 a barrel, $105 in the third quarter against an earlier call of $90, and $80 in the fourth quarter from $75 previously.

Despite the temporary shortfall, Lehman's Morse expects the region's output capacity to catch up with domestic demand in 2009, probably making the mid-2009 summer season much less tight when it comes to Gulf crude exports.

 

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Grains Gone Wild

http://www.nytimes.com/2008/04/07/opinion/07krugman.html?_r=2&ref=opinion&oref=slogin&oref=slogin

These days you hear a lot about the world financial crisis. But there’s another world crisis under way — and it’s hurting a lot more people.

I’m talking about the food crisis. Over the past few years the prices of wheat, corn, rice and other basic foodstuffs have doubled or tripled, with much of the increase taking place just in the last few months. High food prices dismay even relatively well-off Americans — but they’re truly devastating in poor countries, where food often accounts for more than half a family’s spending.

There have already been food riots around the world. Food-supplying countries, from Ukraine to Argentina, have been limiting exports in an attempt to protect domestic consumers, leading to angry protests from farmers — and making things even worse in countries that need to import food.

How did this happen? The answer is a combination of long-term trends, bad luck — and bad policy.

Let’s start with the things that aren’t anyone’s fault.

First, there’s the march of the meat-eating Chinese — that is, the growing number of people in emerging economies who are, for the first time, rich enough to start eating like Westerners. Since it takes about 700 calories’ worth of animal feed to produce a 100-calorie piece of beef, this change in diet increases the overall demand for grains.

Second, there’s the price of oil. Modern farming is highly energy-intensive: a lot of B.T.U.’s go into producing fertilizer, running tractors and, not least, transporting farm products to consumers. With oil persistently above $100 per barrel, energy costs have become a major factor driving up agricultural costs.

High oil prices, by the way, also have a lot to do with the growth of China and other emerging economies. Directly and indirectly, these rising economic powers are competing with the rest of us for scarce resources, including oil and farmland, driving up prices for raw materials of all sorts.

Third, there has been a run of bad weather in key growing areas. In particular, Australia, normally the world’s second-largest wheat exporter, has been suffering from an epic drought.

O.K., I said that these factors behind the food crisis aren’t anyone’s fault, but that’s not quite true. The rise of China and other emerging economies is the main force driving oil prices, but the invasion of Iraq — which proponents promised would lead to cheap oil — has also reduced oil supplies below what they would have been otherwise.

And bad weather, especially the Australian drought, is probably related to climate change. So politicians and governments that have stood in the way of action on greenhouse gases bear some responsibility for food shortages.

Where the effects of bad policy are clearest, however, is in the rise of demon ethanol and other biofuels.

The subsidized conversion of crops into fuel was supposed to promote energy independence and help limit global warming. But this promise was, as Time magazine bluntly put it, a “scam.”

This is especially true of corn ethanol: even on optimistic estimates, producing a gallon of ethanol from corn uses most of the energy the gallon contains. But it turns out that even seemingly “good” biofuel policies, like Brazil’s use of ethanol from sugar cane, accelerate the pace of climate change by promoting deforestation.

And meanwhile, land used to grow biofuel feedstock is land not available to grow food, so subsidies to biofuels are a major factor in the food crisis. You might put it this way: people are starving in Africa so that American politicians can court votes in farm states.

Oh, and in case you’re wondering: all the remaining presidential contenders are terrible on this issue.

One more thing: one reason the food crisis has gotten so severe, so fast, is that major players in the grain market grew complacent.

Governments and private grain dealers used to hold large inventories in normal times, just in case a bad harvest created a sudden shortage. Over the years, however, these precautionary inventories were allowed to shrink, mainly because everyone came to believe that countries suffering crop failures could always import the food they needed.

This left the world food balance highly vulnerable to a crisis affecting many countries at once — in much the same way that the marketing of complex financial securities, which was supposed to diversify away risk, left world financial markets highly vulnerable to a systemwide shock.

What should be done? The most immediate need is more aid to people in distress: the U.N.’s World Food Program put out a desperate appeal for more funds.

We also need a pushback against biofuels, which turn out to have been a terrible mistake.

But it’s not clear how much can be done. Cheap food, like cheap oil, may be a thing of the past.

 

[ThaG]

Food prices rise beyond means of poorest in Africa

http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article3701346.ece

It has been called a “perfect storm” - a combination of apparently unrelated events that have come together to trigger soaring food prices. Millions of people, particularly in developing countries, are affected by rises that have caused riots and many deaths.

Increased energy prices, competition between biofuels and food, rising demand from economic growth in emerging countries and the effects of sudden climatic shocks, such as drought and floods, have combined to cause skyrocketing prices in some of the world's poorest countries, such as Ethiopia and Burkina Faso.

Peter Smerdon, Africa spokesman for the UN's World Food Programme (WFP), told The Times: “The people hit hardest by this combination of factors are those living on the razor's edge of poverty.

There is not one single country in Africa not negatively affected. Indeed, most countries in the world are affected.”

The “perfect storm” has arrived as global food reserves are at their lowest for 30 years and commodity markets volatile and vulnerable to sudden spikes and speculation.

The situation is exacerbated by the falling value of the dollar, the currency in which all main commodities are traded.

In Sierra Leone, the price of rice has risen 300 per cent and in Senegal and much of the rest of West Africa by 50 per cent. Palm oil, sugar and flour, all imported, have also surged.

Two weeks ago Josette Sheran, the new US head of WFP, made an extraordinary emergency appeal for $500 million (£250 million) to 20 heads of government to offset the increased price of food commodities.

As ever, the world's poor - those who spend between 60 per cent and 80 per cent of their budget on food - are hit hardest. These groups include rural landless and small-scale farmers, but the biggest impact has been on the world's increasing urban poor.

Mr Smerdon added that, dangerously for governments, it is not a question of availability as one saw in previous drought-induced famines. “People can suddenly no longer afford the food they see on store shelves because prices are beyond their reach. It is about accessibility and it is hitting hard populations who are reliant on the markets.”

African governments are watching nervously. Food riots have been reported in recent weeks in several countries. At least 40 people were killed in protests in Cameroon in February. There have also been violent demonstrations in Ivory Coast, Mauritania, Senegal and Burkina Faso, where a nationwide strike against any more food price increases started yesterday.

Experts say that the only way out for Africa is greater self-sufficiency and alternative sources of energy to cut demand for imported food and oil. They praised an initiative by Sierra Leone to start producing rice from next year and to ban imported rice.

 

[ThaG]

Food riots turn deadly in Haiti

http://news.bbc.co.uk/2/hi/americas/7331921.stm

At least four people were killed and 20 wounded when demonstrations against rising food prices turned into riots in southern Haiti, officials say.

Reports say scores of people went on the rampage in the town of Les Cayes, blocking roads, looting shops and shooting at UN peacekeepers.

The UN said its personnel had opened fire at some of the armed protesters.

For two days running, parts of Haiti have been erupting into violence triggered by the soaring cost of food.

The prices of rice, beans and fruit have gone up by 50% in the last year.

Earlier this week, UN Secretary General Ban Ki-moon issued a report saying that the food crisis threatened the Caribbean nation's fragile security.

Government food aid

The demonstrations against the high cost of living began on Thursday in a number of towns, but in some areas they turned into riots.

On Friday, thousands took to the streets again, with some blocking roads, burning cars and looting shops. A small group of protesters also broke into the UN compound in Les Cayes and damaged its gate.

Some also fired shots at peacekeepers deployed in the town in an attempt to maintain public order. The UN troops fired back in response.

The ensuing unrest left three dead in Les Cayes, including one young man who demonstrators said was fatally shot in the head by the UN peacekeepers. The UN said it was investigating the death.

Haiti's Prime Minister, Jacques Edouard Alexis, condemned the violence, but said the mass demonstrations had been manipulated.

"We know that these demonstrations have been infiltrated by individuals linked to drug dealers and other smugglers," he said.

Mr Alexis said he had made $10m (£5m) available for schemes to help fight the rising cost of food, including food aid and half-price fertiliser. He also announced job creation and credit programmes.

Haiti is one of the poorest countries in the Americas. Around 80% of the population lives on less than $2 (£1) a day.

 

[ThaG]

Fear of rice riots as surge in demand hits nations across the Far East

http://business.timesonline.co.uk/tol/business/industry_sectors/consumer_goods/article3701347.ece

Any farmer in the Philippines caught hoarding rice risks spending the rest of his life in jail for the crime of “economic sabotage”.

Meanwhile, on the streets of Jakarta, Indonesia, thousands of makers of traditional tempeh soyabean cakes strike in protest as their livelihoods are destroyed and their countrymen starve. In Malaysia, where immense palm oil plantations stretch as far as the eye can see, panic buying of palm oil has stripped stores bare.

Chinese, Korean and Japanese companies are preparing to compete in a desperate “land grab” for agricultural land across the globe. Japan already owns three times more farmland overseas than in its home territory; Seoul is keen to do the same.

For Asia's 2.5 billion people who depend on rice, these are anything but isolated incidents. They are what happens when huge sections of society move into the cities, when farm productivity growth halves over two decades and when bad weather or disease exposes fragile dependencies on the exports of a few nations.

They are also the result of the harsh economics of industrial growth. The dramatic improvement in lifestyles and family finances of millions of Chinese and Indians has driven a demand for meat, milk and cooking oils that did not exist a decade ago.

The more than doubling of China's average meat consumption since 1985, for example, has created an equivalent leap in demand for animal feed.

The US Department of Agriculture believes that the world will suffer a 29 million tonne discrepancy this year between what it needs to feed itself and what it can actually produce. Markets have been quick to recognise this and the traditional Asian staples of soyabeans, palm oil and pork have all soared.

Many grain and edible oil markets have also been squeezed by what some observers believe is an unsustainable conflict between cars and stomachs. Land that might previously have been used to feed people is increasingly planted with crops designed for conversion to biofuels, forcing unexpected rises in the prices of everything from tofu to instant noodles.

But perhaps more unsettling has been the suddenness with which Asia's exposure to a food crisis has emerged. Countries that, until a few weeks ago, could rely on substantial imports of rice from India, Egypt or China are scrambling to cope with a new reality in which they cannot do so.

Nations such as Japan and South Korea that were running food economies with small self-sufficiency ratios have taken only a few weeks to react bitterly to the new situation as the world's food stocks-to-consumption ratio plunges to an all-time low.

India - which traditionally has exported millions of tonnes of rice - has decided to set aside a special strategic food reserve on top of its existing wheat and rice stockpiles. Vietnam, the world's third-largest rice producer, has been forced to curb exports and Cambodia has banned them completely.

In Thailand, the world's largest producer of rice, rising concerns of a shortage have sent rice prices more than 50 per cent higher over the past month. When Samak Sundaravej, the Thai Prime Minister, appeared on his weekly television cooking show over the weekend he told Thais there would be “enough rice for the Kingdom”.

It was not a message designed to calm nerves elsewhere in Asia where Thai rice exports are an essential part of the diet.

Amid these highly visible signs of government-level panic, Asian countries that have rarely faced severe conflicts of “resource diplomacy” are accordingly readying themselves for showdowns.

Analysts give warning of governments across the region resorting to a “starve-your-neighbour” policy in an effort to becalm rioting domestic populations, and the UN International Fund for Agriculture has previously said that food riots will become commonplace.

In the Philippines and Sri Lanka, both nations that are heavily dependent on rice imports, politicians and business leaders are racing to strike deals with the likes of Vietnam and even Burma in their bid to secure rice supplies.

Troops and special police are expected to be used in the process of distributing rice to regions where supply was never an issue.

Feeding the world

33% Rise since January in price paid by Philippines for rice from Vietnam
3 billion People worldwide who rely on rice as a staple food
40% Rise in rice price in Thailand this year
19.2% Rise in consumer prices in Vietnam last month, against March 2007
8.4% Rise in food prices in the Philippines last month, compared with March 2007
854 million Number of people worldwide who are “food insecure”
1 billion People globally who survive on less than $1 a day, defined as “absolute poverty”

 

[ThaG]

Food price rises threaten global security - UN

http://www.guardian.co.uk/environment/2008/apr/09/food.unitednations

Rising food prices could spark worldwide unrest and threaten political stability, the UN's top humanitarian official warned yesterday after two days of rioting in Egypt over the doubling of prices of basic foods in a year and protests in other parts of the world.

Sir John Holmes, undersecretary general for humanitarian affairs and the UN's emergency relief coordinator, told a conference in Dubai that escalating prices would trigger protests and riots in vulnerable nations. He said food scarcity and soaring fuel prices would compound the damaging effects of global warming. Prices have risen 40% on average globally since last summer.

"The security implications [of the food crisis] should also not be underestimated as food riots are already being reported across the globe," Holmes said. "Current food price trends are likely to increase sharply both the incidence and depth of food insecurity."

He added that the biggest challenge to humanitarian work is climate change, which has doubled the number of disasters from an average of 200 a year to 400 a year in the past two decades.

As well as this week's violence in Egypt, the rising cost and scarcity of food has been blamed for:

· Riots in Haiti last week that killed four people

· Violent protests in Ivory Coast

· Price riots in Cameroon in February that left 40 people dead

· Heated demonstrations in Mauritania, Mozambique and Senegal

· Protests in Uzbekistan, Yemen, Bolivia and Indonesia

UN staff in Jordan also went on strike for a day this week to demand a pay rise in the face of a 50% hike in prices, while Asian countries such as Cambodia, China, Vietnam, India and Pakistan have curbed rice exports to ensure supplies for their own residents.

Officials in the Philippines have warned that people hoarding rice could face economic sabotage charges. A moratorium is being considered on converting agricultural land for housing or golf courses, while fast-food outlets are being pressed to offer half-portions of rice.

The UN Food and Agriculture Organisation says rice production should rise by 12m tonnes, or 1.8%, this year, which would help ease the pressure. It expects "sizable" increases in all the major Asian rice producing countries, especially Bangladesh, China, India, Indonesia, Burma, the Philippines and Thailand.

Holmes is the latest senior figure to warn the world is facing a worsening food crisis. Josette Sheeran, director of the UN World Food Programme, said last month: "We are seeing a new face of hunger. We are seeing more urban hunger than ever before. We are seeing food on the shelves but people being unable to afford it."

The programme has launched an appeal to boost its aid budget from $2.9bn to $3.4bn (£1.5bn to £1.7bn) to meet higher prices, which officials say are jeopardising the programme's ability to continue feeding 73 million people worldwide.

Robert Zoellick, president of the World Bank, said "many more people will suffer and starve" unless the US, Europe, Japan and other rich countries provide funds. He said prices of all staple food had risen 80% in three years, and that 33 countries faced unrest because of the price rises.

In the UK, Professor John Beddington, the new chief scientific adviser to the government, used his first speech last month to warn the effects of the food crisis would bite more quickly than climate change. He said the agriculture industry needed to double its food production, using less water than today.

He said the prospect of food shortages over the next 20 years was so acute it had to be tackled immediately: "Climate change is a real issue and is rightly being dealt with by major global investment. However, I am concerned there
is another major issue along a similar time-scale - that of food and energy security."

 

[kayvee]

holy shit.

~k.

 

[ThaG]

Chile Power Crunch May Cut Copper Output, Spur Record

http://www.bloomberg.com/apps/news?pid=20601072&refer=energy&sid=a9lkWu0s_TS8

April 9 (Bloomberg) -- An energy shortage in Chile may do for copper what cuts in electricity supplies did for platinum in South Africa -- spark a record-setting rally in prices.

Reduced natural-gas imports from Argentina and a drought that cut hydropower output may force Chile, the world's biggest copper producer, to ration electricity to mines owned by Codelco, Anglo American Plc and Antofagasta Plc. In South Africa, platinum production plunged and prices jumped as much as 51 percent this year after utilities limited power in January.

``Power is a problem now in Chile,'' Hugh Callaghan, chairman of copper miner Tamaya Resources Ltd., said in a phone interview from London on March 25. ``The ingredients are there for another spike in copper.''

Power cuts or blackouts in Chile may push copper above its March 6 record of $8,820 a metric ton in London, said Allan Trench, head of copper research at consulting company CRU in London. If Chinese demand keeps rising and supplies are disrupted, copper may jump 17 percent to $10,000, he said in a phone interview March 28, before he was scheduled to join mining executives at a CRU-sponsored copper conference in Santiago that began last night.

Energy in Chile is ``a real issue,'' Bret Clayton, chief executive officer of Rio Tinto Group's copper division, said in an interview at the conference today. With ``Chile being the primary producer, it's going to have an impact on the market.''

Copper has quintupled in the past five years as rising global demand for wire and pipe, led by China, eclipsed output, forcing manufacturers to draw down inventories.

Rationing Power

Chile may be forced to limit power use for the first time since 1999 because a drought has reduced water levels at hydroelectric reservoirs, said Sergio Zapata, an energy analyst at Santiago stock broker BanChile Corredores de Bolsa.

The drought pared electricity output at utilities already strained after neighboring Argentina decreased gas shipments starting in 2004. In northern Chile, generators designed to run on natural gas are using diesel instead, increasing the risk of machinery failures and blackouts, Zapata said.

``There can be a problem at any moment because of equipment breakdowns,'' Zapata said.

Copper futures on the Comex division of the New York Mercantile Exchange may top the record of $4.04 a pound if supplies are disrupted, said Rodrigo Aravena, an economist at BanChile. The brokerage forecasts an average for 2008 of $3.50, compared with $3.23 last year.

`Buying Orgy'

Copper gained 32 percent this year to $4, making it the third-best performer behind natural gas and corn among 19 commodities in the Reuters/Jefferies CRB Index. Credit Suisse Group said April 4 copper may reach $12,000 a ton ($5.44 a pound) this year in London.

Not everyone expects higher prices.

This year's first-quarter gain was fueled more by hedge- fund buyers than physical demand or supply shortages, Austin Brown, an analyst at Touradji Capital Management LP, said April 2. Paul Touradji, founder of the fund, said last month a raw- materials ``buying orgy'' had increased the risk of a collapse.

Copper will decline to $3 a pound in the first quarter of 2009 from $3.33 this quarter, according to the median estimate of nine analysts surveyed by Bloomberg.

South Africa Disruptions

In South Africa, the world's top platinum producer, most mines were forced to shut for five days in January, partly because domestic utilities have been unable to expand to keep pace with rising demand.

Disruptions in supplies of coal to generate electricity and maintenance on turbines led to energy shortages, said Mark Davidson, an analyst at Standard & Poor's in London. Power to mines has been reduced by 10 percent this year, and South Africa may have rolling blackouts through 2012, he said.

Platinum futures for July delivery gained $15, or 0.7 percent, to $2,044.60 an ounce in New York, after reaching a record $2,308.80 on March 4.

An energy shortage in Chile won't boost copper as much as the South Africa blackouts did for platinum, Trench said. South Africa produces 85 percent of the world's platinum, while Chile mines 35 percent of global copper, he said.

Vulnerable Mines

Mines in central Chile owned by Chile's state-run copper producer Codelco, Anglo American, Antofagasta and Freeport- McMoRan Copper & Gold Inc. are vulnerable to electricity cuts because of the drought. The mines account for about a quarter of the country's copper production.

Codelco will install back-up generators in central Chile within a month to supply about 10 percent of its energy, which probably is enough to prevent production cuts in the case of rationing, Chief Executive Officer Jose Pablo Arellano said April 7 at a news conference in Santiago. Most mining companies will have back-up generators installed by June, said Jorge Bande, a board member of Codelco, in a telephone interview.

Codelco and BHP Billiton Ltd. agreed April 2 to help utility GasAtacama SA avoid bankruptcy in a bid to avert power cuts.

Oscar Gonzalez Rocha, chief executive officer of Southern Copper Corp., the fifth-largest producer, and Joanne Freeze, chief executive of Candente Resource Corp., also said prices will rise.

A scarcity of energy, equipment and labor, and few large mines opening worldwide, will keep the price above $3 for years, Gonzalez Rocha said in a telephone interview.

 

[ThaG]

http://www.energybulletin.net/42744.html

Published on 15 Apr 2008 by Energy Bulletin. Archived on 15 Apr 2008.
A conversation with Michael Klare, author of Rising Powers, Shrinking Planet

by Kate Pinnick

Your last book, Blood and Oil, warned of the United States’ growing dependence on imported oil and the dangers it brings to Americans at home and abroad. Has there been any change in the world’s resources since that book was published?

Two things have happened: First, the intensity of demand has increased dramatically as China and India (and other rapidly industrializing developing nations) have stepped-up their consumption of oil, coal, natural gas, and uranium to meet the rising energy needs of their booming economies. Second, energy experts have become increasingly pessimistic about the future availability of petroleum, due to an increased rate of decline of many of the world’s existing oil fields and a failure by the major energy firms to discover many new giant fields to replace those in decline.

Rising Powers, Shrinking Planet argues that international power will no longer depend solely on a nation’s military might, but instead on its energy reserves. How has this already played out on the international stage? And how will it continue as resources become more scarce?

Surely the most dramatic indication of this trend is the emergence of Russia as an “energy superpower” by dint of its massive reserves of oil and natural gas. Although widely viewed as a marginal world player following the collapse of the USSR in 1992, Russia has emerged as a self-confident world power in the years since Vladimir Putin assumed the presidency and reasserted state control over Russia’s major oil and gas companies. Putin has used this power to influence and intimidate neighboring states such as Ukraine that rely on Russia for vital energy supplies. Now, with his protégé, Dmitry Medvedev, ensconced in the Kremlin, he plans to extend Russia’s political sway even further afield, as more and more countries become dependent on Russian oil and gas. In Latin America, Hugo Chávez of Venezuela has also sought to exploit his country’s abundance of oil and gas to achieve political objectives, much to the chagrin of Washington. A similar pattern can be expected in other energy-surplus states as global supplies dwindle and consuming countries must compete with one another for access to whatever remains.

What does this mean for the United States role as the sole superpower?

The United States remains the world’s sole military superpower, but it is unclear what advantage this offers in a world of shrinking energy supplies and intense competition for what remains of them. Because the United States must import the vast bulk of its petroleum supplies, it is exporting hundreds of billions of dollars every year, and this is contributing to the declining value of the dollar and the gradual enfeeblement of the U.S. economy—bad signs for a supposed superpower. Meanwhile, foreign petro-states like Russia, Saudi Arabia, Kuwait, and the United Arab Emirates are becoming richer in comparison to the United States, enhancing their ability to dominate the world economy—and to buy up valuable segments of U.S. banks and corporations, as the Saudis and Kuwaitis have recently been doing. Thus, while the U.S. remains the world’s sole superpower in military terms, it is no longer the sole superpower in economic terms.

In the book, you warn of the possibility that growing competition among the major energy-consuming powers for shrinking supplies of vital resources will lead in time to violent conflict. How great is this danger?

I do not believe that the Great Powers would ever deliberately choose to go to war over oil, natural gas, or uranium—the destructive consequences of modern war are just too great for that. But I do show how they are engaging in behaviors that make the danger of inadvertent or accidental war ever greater. These include the use of arms deliveries as an inducement to oil producers to sign major supply contracts, or the establishment of military bases in unstable oil-producing regions. As these activities multiply, there is an ever-growing danger that the major consuming nations will provoke regional arms races and get drawn into local resource disputes, thus increasing the risk of unintended Great Power-conflicts.

What effect does the rapid rise of China and India have on the world’s resources?

Mainly, the rapid rise of China and India are increasing the demand for global supplies of energy and industrial minerals. Until very recently, China and India consumed only a small share of these materials, especially in comparison to the older industrial powers. As the pace of their economic growth has accelerated, however, China and India have begun to compete on equal terms with the older powers in their consumption of vital resources— and in some cases to overtake them. China is now the world’s leading consumer of iron, copper, aluminum, cement, and many other minerals, and is catching up to the United States in its consumption of oil. India’s resource demands are not yet as great as those of China, but as its economy continues to grow, it, too, will overtake the older industrial powers in the level of demand. What this means, of course, is that the world’s natural resource base is being subjected to an unprecedented –and unsustainable—level of demand.

In the book, you show how the increased demand for cars, appliances, and utilities in nations such as China and India having a negative impact on the environment. What does this mean for the future of the world and its resources?

Every time a country has commenced its entry into the Industrial Revolution, beginning with England, France, Germany, and the United States in the 19th century, it has used resources in a profligate manner and dumped its wastes into the surrounding environment causing serious and widespread destruction; eventually, most mature industrialized nations have learned the folly of their ways and adopted strict environmental controls. Now, China and India are following the same trajectory, displaying the careless utilization of resources we associate with the early years of the Industrial Revolution. But unfortunately, due to our own recklessness in previous years, the planet (and the surrounding atmosphere) is less well-equipped to absorb a fresh round of damage on the scale that China and India is about to inflict upon it. Hence, the effects of China’s and India’s environmental insults are likely to be catastrophic not only for their own populations but—in the form of accelerated global warming –the entire world’s.

How can the U.S. and other leading nations convince these countries to clean up their act?

Because, as I’ve indicated, we in the mature industrialized nations bear responsibility for the earlier damage to the environment, we cannot simply criticize China and India for following in our footsteps rather than jumping immediately to our more enlightened (though not always rigorously enforced) policies of the current era. Adopting tough environmental standards entails an economic cost that the Chinese and Indians are not willing to bear alone, especially at this early stage of their economic modernization, and so if we want them to jump ahead to more advanced (and more costly) technologies, we will have to expect to bear some of the burden. Given that we are all at risk from global warming, it seems to me that we could all benefit from cooperative efforts aimed at enhancing the environmental performance of China’s and India’s energy systems—for example, through efforts to reduce the carbon dioxide emissions of their coal-fired power plants.

Another consequence of scarce resources, you write, are the unlikely alliances between energy-deficient nations and energy-rich states. What threat do these coalitions pose to the rest of the world?

I worry about alliances that take on a geopolitical character because I think they introduce new sources of instability in the world. For example, I worry about an energy alliance between China and Russia that also assumes a military dimension. After the United States blocked China’s acquisition of the Unocal Corporation—an episode that I recount in the book—China strengthened its ties with Russia. This was intended in part to increase Chinese imports of Russian oil and gas, but also to bolster Sino-Russian military ties. The two also accelerated their efforts to convert the Shanghai Cooperation Organization—a loose confederation of Central Asian states—into an overtly anti-American security organization. All of this sets the stage for a New Cold War between Russia and China on one side, and the United States and its allies on the other—an unhealthy development with unforeseeable risks.

In many ways, Rising Powers, Shrinking Planet, seems like a gloomy prognostication for the future of our world, one that seems unavoidable. Can anything be done to save our planet?

This prognosis stems from our current determination to consume more and more of the planet’s vital resources and from the major consuming nations’ tendency to view their competition over what remains of these materials as a zero-sum contest, with winners and losers. In the final chapter of the book, I argue that we must turn this competition into a cooperative rather than combative relationship, in which the major consuming nations—especially the United States and China—collaborate in the development of alternative fuels and energy-saving technologies, making all of us winners and slowing the disappearance of vital materials. This is a logical, practical response to the situation we face—and one that could spark an economic revitalization in the United States

You show in your book how our depleting resources will be an important issue for the next president. Are the candidates addressing the issue in their campaign? What should voters know when it comes to deciding on a candidate based on this issue?

Although the 2009 presidential election is not focused specifically on the issues raised in this book, they constitute a significant subtext for the respective campaigns. For example, any discussion of rising gasoline prices, global warming, alternative energy, China, Russia, and the war in Iraq, bears, to some degree, on the Rising Powers, Shrinking Planet conundrum. Essentially, the Republican candidates have largely defended the current energy paradigm—Big Oil, King Coal, nuclear power, and so on—along with the use of military force to protect American access to overseas sources of petroleum. The Democrats, for their part, have stressed a “new energy” paradigm based on conservation and energy alternatives, plus a reduced reliance on military force. Most voters are aware of the difference, and the election’s outcome will depend, to at least some degree, on their preference for one energy paradigm or the other.

 

[ThaG]

http://www.energybulletin.net/43514.html

Presented at the House of Delegates Meeting of the
Pennsylvania Association of Staff Nurses & Allied Professionals (Pasnap)

Harrisburg, Pennsylvania
April 29, 2008



Hello, it’s nice to be with you today. My intent is to give you a realistic take on the future of your profession by explaining why healthcare and nursing will be transformed by rising energy costs. Is there danger ahead? You bet. It’s going to be difficult, probably life-changing for all Americans. Here’s why: the scale of our energy predicament is enormous, unprecedented and grossly misunderstood by institutional leaders and most of the media.

I know some of you may be wondering, Energy scarcity? That’s someone else’s problem; put this guy in touch with geologists and politicians.

So let’s step back for the big picture.


Overview

A few numbers to set the context:

* The amount of crude oil pumped out of the ground has been on a bumpy plateau since May of 2005. Until then oil production was steadily increasing about 2% a year –with periodic declines - and the world had a daily surplus, or emergency cushion. That surplus is gone, everything produced, supply, is immediately purchased, demand. Whether or not the world has reached “peak oil” –the point at which yearly total worldwide extraction cannot be increased - this 3 year plateau indicates that the era of cheap energy is over.

* Oil is now over $100.00 a barrel. It was $10.00 a barrel in November 1998.

* Oil powers 90% of all transportation and it is essential to food production and distribution; it is the primary ingredient in many products –think plastics, petrochemicals, and clothing. It is fair to say that all our institutions, especially medicine, are dependent upon oil, the lynchpin resource that keeps the economy humming and allows it to grow.

* And it’s not just oil that’s getting scarce. Natural gas in Pittsburgh went up 30% on April 1st, to $12.50 per MCF (thousand cubic feet); it was $2.50 in 2001. Typically, the cost of natural gas drops after the winter but here we are facing higher prices during the summer.

* Coal is becoming scarce in many countries and more expensive here; its price has about doubled in the past year. It is our main source of electricity. In about 15 years the world may hit a peak in its production, and this combined with the fact that natural gas –the secondary source of electricity generation - simultaneously will be at or past its peak, poses a threat to our supply of electricity.

* To put a human face on this, a polling agency found in December 2007 that 12% of Americans planned to put their winter energy bills on their credit card –no wonder Christmas spending was down. An article in this past Saturday’s New York Times details the rising number of people unable to pay their winter utility bills and now facing service cutoffs1. Many hospitals in California are on the verge of bankruptcy; rising energy costs –in tandem with other increasing costs - could be a breaking point for them. Further, we are merely at the beginning of what some of you recognize as Jim Kunstler’s poetic phrase “The Long Emergency.”

* The total amount of energy the world gets from fossil fuels is predicted to peak in 2010, so we’ve probably got about two years before systemic disruptions and breakdowns become commonplace and then worsen. Even now we see the airlines struggling, food prices soaring, and we have a fiscal/financial crisis of unknown scope that is connected to the price of oil in numerous ways I cannot delve into today.


Energy in Hospitals

Now let’s look at energy use in hospitals and then use the issue of record keeping, a biggie for nurses, as one small but significant example of how energy scarcity will shape the future of healthcare. Then we’ll close with some comments on where medicine is heading and my claim that nursing stands to become a force in reforming the healthcare system.

The EPA estimates that hospitals use twice as much energy per square foot as do office buildings. Until recently hospital administrators have not paid attention to the cost of energy because they think –mistakenly - that it represents less than 2% of their operating expenses. Therefore, they have considered rising energy costs a nuisance, not a threat. However, a few weeks ago a former AMA (American Medical Association) official told me hospital administrators are getting worried about energy costs because sharp increases are eating into profits. For example, all energy costs in the US rose 17% in 2007, with the cost of oil climbing 57%. The first quarter of 2008 shows no change in this trend. How many years can our society –and hospitals - absorb these increases?

We should look a bit closer at that alleged 2% because it ignores hidden oil-related costs - also, this percentage is from 2005, when oil was $48.00 a barrel. Virtually every item consumed in a hospital is to some extent connected to fossil fuels, primarily oil. In medicine petrochemicals are used to manufacture analgesics, antihistamines, antibiotics, antibacterials, rectal suppositories, cough syrups, lubricants, creams, ointments, salves, and many gels. Processed plastics made with oil are used in heart valves and other esoteric medical equipment. Petrochemicals are used in radiological dyes and films, intravenous tubing, syringes, and oxygen masks. This could be a much longer list.

Finally, as the cost of oil, natural gas and coal rise in tandem their impact is surpassing that 2% of operating expenses just mentioned.

Now let’s consider our example of how nursing will be changed.

Recently, I read a report which estimates the amount of paperwork (communication, medication administration, admission, discharge, transfer, supplies, equipment, and so on) is so burdensome that the average nurse devotes only 31% of the workday to direct care.

The American Academy of Nursing is pushing for fully electronic records. I won’t get into whether or not this will increase patient contact hours. What is salient is that this is a solution based on an increasing amount of energy flowing into hospitals. Indeed, all across our society planning takes for granted an ever increasing supply of cheap and uninterrupted energy. My colleague, Gail Tverberg, an actuary with a good deal of experience in the medical industry, has been studying the economic ramifications of peak oil and notes:

”I expect that electrical interruptions will become more common in the next 20 or 30 years. These may even become a problem early on, for a whole host of reasons, including lack of water for cooling, lack of fuel for power generation, and poor upkeep of the electrical grid. Healthcare providers would be wise to plan for the day when elevators and electronic records may not be available.”

Wow. Imagine doing your work under these conditions. Needless to say, the healthcare professions have no inkling of - let alone are preparing for - this astonishing future. In fact, a recent study showed that the electricity used exclusively for medical records is rapidly increasing, by 400-800% in the past four years. Also, MRI usage is increasing, as are many technologies that rely on electricity. Add to this the inevitable shortages of other supplies and medicines that will simultaneously result from peak oil.

I would not be surprised if some of you are now thinking, “this is crazy; this simply cannot happen.” To which I’d like to be confrontational and assert, Fossil fuel costs will continue to rise and eventually the healthcare system will be forced to downsize –just as the Baby Boomers and (possibly) climate change effects - inundate the system. Let me just mention our perilous national economic status and note that some commentators are claiming that the government has in effect nationalized Wall Street by bailing out Bear Stearns. Further, anyone who thinks the health sector is recession or nationalization-proof is confusing health-care, which is indispensable, with the current system, which is unsustainable.

This is a lot to lay on you in a few minutes of exposition, and I’m tempted to apologize; however, nursing –unlike, say, public relations - is where the rubber meets the road. So let me make a few closing comments and then take your questions.


Summary

1. I feel safe observing that the vast majority of insurance companies, medical associations, HMOs and other hospital associations will resist facing the stark consequences of peak oil because they are benefiting from the status quo. On the other hand, those hospitals with a mission for stewardship of the earth and charitable activity are likely to be among the first to recognize the need for radical change in medical care.

2. In the same vein, it’s obvious that nursing is not prospering even though it is in some ways the backbone of the system. Your profession’s main themes for reforming the healthcare system should center –I hate to use the word “should” - around radical resource conservation and efficiency, and the elimination of wasteful and environmentally harmful practices. In other words, reduce, reuse, recycle, and repair.

3. Simultaneously, there will be a political struggle for the soul of healthcare: We will look to other nations with decent health systems where three core values predominate:
1. no one goes bankrupt due to medical status;
2. no one is denied treatment for any reason, and
3. preventive and treatment medicine are integrated.
This means one response to energy downturn leads to healthcare for all. The alternative to this is medicine becoming something for the wealthy few, with the rest of society receiving what amounts to triage –or, alternatively, home care or “folk medicine.” In some respects these alternatives represent the familiar themes of the Jeffersonian/egalitarian and Hamiltonian/elitist traditions.

4. By forming a coalition with public health and even some of the growing number of doctors2 who favor a “single-payer” system, nursing can shape the transformation of our healthcare system.


Rather than elaborate, let me thank you and open the floor for discussion.

 

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Asian leaders issue poverty warning

http://www.iht.com/articles/2008/05/04/business/adb.php

Reuters
Published: May 4, 2008
MADRID: Soaring food prices may throw millions of people back into poverty in Asia and undo a decade of gains, regional leaders said Sunday while calling for increased agricultural production to meet rising demand.

Asia - home to two-thirds of the world's poor - risks rising social unrest as a doubling of the price of wheat and rice in the past year has hurt people spending more than half their income on food, Fukushiro Nukaga, the Japanese finance minister, said during the annual meeting of the Asian Development Bank.

If food prices rise 20 percent, 100 million poor people across Asia could be forced back into extreme poverty, the Indian finance secretary, D. Subba Rao, warned. "In many countries that will mean the undoing of gains in poverty reduction achieved in the past decade of growth," Rao said at the bank's meeting in Madrid.

A 43 percent rise in global food prices in the year ended in March set off violent protests in Cameroon and Burkina Faso as well as rallies in Indonesia following reports of starvation deaths.

Many governments have introduced food subsidies or export restrictions to counter rising costs, but they have only exacerbated price rises on global markets, Nukaga said. "Those hardest hit are the poorest segments of the population, especially the urban poor."

"It will have a negative impact on their living standards and their nutrition, a situation that may lead to social unrest and distrust," he added.

The bank, an international financial institution, tries to help its developing member countries reduce poverty and improve the quality of life of their people. It estimates the very poorest people in the Asia-Pacific region spend 60 percent of their income on food and a further 15 percent on fuel - the crucial basic commodities of life that have been subjected to relentless price increases in the past year.

Japan is one of 67 bank members gathered in Spain to discuss measures to counter severe weather and rising demand that have ended decades of low-cost food in developing nations.

The Asia-Pacific has three times the population of the European Union - around 1.5 billion people.

Despite brisk economic growth, averaging about 6 percent annually across the Asia-Pacific region in recent years, more than 600 million people still live in absolute poverty, surviving on less than $1 a day.

According to the bank's statistics, almost half of the world's poor live in South Asia alone. In China, 452 million people earn less than $2 a day, a figure that reaches 868 million in India. Child malnutrition is high and almost half of the children in Afghanistan, Bangladesh, India and Nepal are undernourished. Some 1.9 billion people in the region do not have access to basic sanitation.

Rice is a staple food in most Asian countries and any shortage threatens instability, making governments extremely sensitive to its price.

High inflation, driven by food and raw materials costs, topped the agenda of the bank's annual meeting. The bank, based in Manila, has had to defend itself from U.S. criticism that it is focused on middle-income countries and has neglected Asia's rural and urban poor.

Such smaller countries as Cambodia urged the bank to focus its lending on the poorest Asian states.

The bank on Saturday called for immediate action from global governments to combat soaring food prices and coupled it with a pledge of fresh financial aid to help feed the region's poorest nations. Japan, China and India backed the bank's long-term strategy of providing low-cost credit and technical assistance to raise agricultural productivity.

The United Nations said the rural poor represented a political time-bomb for Asia that could only be defused by higher agricultural investment and better technology.

"Unless you can look at the plight of the poorest farmers in the region and how they are going to add to the numbers of very poor, very deprived people, we are unnecessarily going to create a problem that will erupt into a political crisis," said Rajendra Pachauri, head of the UN panel on climate change.

 

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The Coming Collapse of the Middle Class

 

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http://harvardmagazine.com/2006/01/the-middle-class-on-the.html

Forum: The Middle Class on the Precipice
Rising financial risks for American families

by Elizabeth Warren

During the past generation, the American middle-class family that once could count on hard work and fair play to keep itself financially secure has been transformed by economic risk and new realities. Now a pink slip, a bad diagnosis, or a disappearing spouse can reduce a family from solidly middle class to newly poor in a few months.

Middle-class families have been threatened on every front. Rocked by rising prices for essentials as men’s wages remained flat, both Dad and Mom have entered the workforce—a strategy that has left them working harder just to try to break even. Even with two paychecks, family finances are stretched so tightly that a very small misstep can leave them in crisis. As tough as life has become for married couples, single-parent families face even more financial obstacles in trying to carve out middle-class lives on a single paycheck. And at the same time that families are facing higher costs and increased risks, the old financial rules of credit have been rewritten by powerful corporate interests that see middle-class families as the spoils of political influence.




Raising Incomes the Two-Worker Way

In just one generation, millions of mothers have gone to work, transforming basic family economics. The typical middle-class household in the United States is no longer a one-earner family, with one parent in the workforce and one at home full-time. Instead, the majority of families with small children now have both parents rising at dawn to commute to jobs so they can both pull in paychecks.

Scholars, policymakers, and critics of all stripes have debated the social implications of these changes, but few have looked at their economic impact. Today the median income for a fully employed male is $41,670 per year (all numbers are inflation-adjusted to 2004 dollars)—nearly $800 less than his counterpart of a generation ago. The only real increase in wages for a family has come from the second paycheck earned by a working mother. With both adults in the workforce full-time, the family’s combined income is $73,770—a whopping 75 percent higher than the median household income in the early 1970s. But the gain in income has an overlooked side effect: family risk has risen as well. Today’s families have budgeted to the limits of their new two-paycheck status. As a result, they have lost the parachute they once had in times of financial setback—a back-up earner (usually Mom) who could go into the workforce if the primary earner got laid off or fell sick. This “added-worker effect” could buttress the safety net offered by unemployment insurance or disability insurance to help families weather bad times. But today, a disruption to family fortunes can no longer be made up with extra income from an otherwise-stay-at-home partner.

Income risk has shifted in other ways as well. Incomes are less dependable today. Layoffs, outsourcing, and other workplace changes have trebled the odds of a significant interruption in a single generation. The shift from one income to two doubled the risks again, as both Mom and Dad face the possibility of unemployment. Of course, with two people in the workforce, the odds of income dropping to zero are lessened. But for families where every penny of both paychecks is already fully committed to mortgage, health insurance, and other payments, the loss of either paycheck can unleash a financial tailspin. Nor are such risks solely related to unemployment. Consider health-related exposures. Two wage-earners means either Mom or Dad could be out of work from illness or injury, losing a substantial chunk of the family income. Finally, the new everyone-in-the-workforce family faces higher risks for caregiving. When there was one stay-at-home parent, a child’s serious illness or Grandma’s fall down the stairs was certainly bad news, but the main economic ramification was the medical bills. Today, someone has to take off work—or hire help—in order to provide family care. At a time when hospitals are sending people home “quicker and sicker,” more nursing care falls directly on the family—and someone has to be home to administer it.

Even the economic risks of divorce have changed. A generation ago, the end of a marriage was an economic blow, but a nonworking spouse usually took a job, bringing in new income to stay afloat. Now, whatever the two-income divorcing couple earns has to cover both their old and new expenses. Evidence mounts that post-divorce, both women and men are struggling to make ends meet as they try to support two households on the same combined income. A divorced woman with children, for example, is about three times more likely to file for bankruptcy than a man or woman, single or married, without children. And men who owe child support are about three times more likely to file for bankruptcy than men who don’t.

The news is even worse for single parents. They face all the difficulties of dual-income families—all income is budgeted, there is no one at home to work if the primary earner loses a job or gets sick, and no one to take over if a child gets sick or an elderly parent needs help—and they are trying to make it on a lot less money, competing with two-income families for housing, daycare, health insurance, and all the other goods and services. As one divorced, working mother put it, “With what my ex contributes and what I earn, I can just about match what a man can make, but I can’t match what a man and woman both working can make.” The two-parent families are struggling to swallow the risk, but their single-parent counterparts are choking.

Does this mean that middle-class women should return to the home in order to reduce their families’ risk? Before jumping to that conclusion, it is important to look at the expenses middle-class families face.


Soaring Expenses— and Risk

Why are so many moms in the workforce? Surely, some are lured by a great job, but millions more need a paycheck, plain and simple.

It would be convenient to blame the families and say that it is their lust for stuff that has gotten them into this mess. Indeed, sociologist Robert Frank claims that this country’s newfound “Luxury Fever” forces middle-class families “to finance their consumption increases largely by reduced savings and increased debt.” Others echo the theme. A book titled Affluenza (by John De Graaf, David Wann, and Thomas H. Naylor) sums it up: “The dogged pursuit for more” accounts for Americans’ “overload, debt, anxiety, and waste.” If Americans are out of money, it must be because they are over-consuming—buying junk they don’t really need.

Blaming the family supposes that we believe that families spend their money on things they don’t really need. Over-consumption is not about medical care or basic housing; it is, in the words of Juliet Schor, about “designer clothes, a microwave, restaurant meals, home and automobile air conditioning, and, of course, Michael Jordan’s ubiquitous athletic shoes, about which children and adults both display near-obsession.” And it isn’t about buying a few goodies with extra income; it is about going deep into debt to finance consumer purchases that sensible people could do without.

But is this argument true? If families really are blowing their paychecks on designer clothes and restaurant meals, then the household expenditure data should show them spending more on these frivolous items than ever before. But the numbers don’t back up the claim.

A quick summary of the data from the Bureau of Labor Statistics’ Consumer Expenditure Survey paints a very different picture of family spending. Consider what a family of four spends on clothing. Designer toddler outfits and $200 sneakers are favorite media targets, but when it is all added up, including the Tommy Hilfiger sweatshirts and Ray-Ban sunglasses, the average family of four today spends 33 percent less on clothing than a similar family did in the early 1970s. Overseas manufacturing and discount shopping mean that today’s family is spending almost $1,200 a year less than their parents spent to dress themselves.

What about food? Surely, families are eating out more and buying shopping carts full of designer water and exotic fruit? In fact, today’s family of four actually spends 23 percent less on food (at-home and restaurant eating combined) than its counterpart of a generation ago. The slimmed-down profit margins in discount supermarkets have combined with new efficiencies in farming to cut more costs for the American family.

Appliances tell the same picture. There is a lot of complaining about microwave ovens and espresso machines: Affluenza rails against appliances “that were deemed luxuries as recently as 1970, but are now found in well over half of U.S. homes, and thought of by a majority of Americans as necessities: dishwashers, clothes dryers, central heating and air conditioning, color and cable TV.” But manufacturing costs are down, and durability is up. Today’s families are spending 51 percent less on major appliances than their predecessors a generation ago.

This is not to say that middle-class families never fritter away money. A generation ago, big-screen televisions were a novelty reserved for the very rich, no one had cable, and DVD and TiVo were meaningless strings of letters. So how much more do families spend on “home entertainment,” premium channels included? They spend 23 percent more—a whopping extra $180 annually. Computers add another $300 to the annual family budget. But even that increase looks a little different in the context of other spending. The extra money spent on cable, electronics, and computers is more than offset by families’ savings on major appliances and household furnishings alone.

The same offsetting phenomena appear in other areas as well. The average family spends more on airline travel than it did a generation ago, but less on dry cleaning; more on telephone services, but less on tobacco; more on pets, but less on carpets. When we add it all up, increases in one category are offset by decreases in another.

So where did their money go? It went to the basics. The real increases in family spending are for the items that make a family middle class and keep them safe (housing, health insurance), that educate their children (pre-school and college), and that let them earn a living (transportation, childcare, and taxes).

The data can be summarized in a financial snapshot of two families, a typical one-earner family from the early 1970s compared with a typical two-earner family from the early 2000s. With an income of $42,450, the average family from the early 1970s covered their basic mortgage expenses of $5,820, health-insurance costs of $1,130 and car payments, maintenance, gas, and repairs of $5,640. Taxes claimed about 24 percent of their income, leaving them with $19,560 in discretionary funds. That means they had about $1,500 a month to cover food, clothing, utilities, and anything else they might need—just about half of their income.

By 2004, the family budget looks very different. As noted earlier, although a man is making nearly $800 less than his counterpart a generation ago, his wife’s paycheck brings the family to a combined income that is $73,770—a 75 percent increase. But higher expenses have more than eroded that apparent financial advantage. Their annual mortgage payments are more than $10,500. If they have a child in elementary school who goes to daycare after school and in the summers, the family will spend $5,660. If their second child is a pre-schooler, the cost is even higher—$6,920 a year. With both people in the workforce, the family spends more than $8,000 a year on its two vehicles. Health insurance costs the family $1,970, and taxes now take 30 percent of its money. The bottom line: today’s median-earning, median-spending middle-class family sends two people into the workforce, but at the end of the day they have about $1,500 less for discretionary spending than their one-income counterparts of a generation ago.

What happens to the family that tries to get by on a single income today? Their expenses would be a little lower because they can save on childcare and taxes, and, if they are lucky enough to live close to shopping and other services, perhaps they can get by without a second car. But if they tried to live a normal, middle-class life in other ways—buy an average home, send their younger child to preschool, purchase health insurance, and so forth—they would be left with only $5,500 a year to cover all their other expenses. They would have to find a way to buy food, clothing, utilities, life insurance, furniture, appliances, and so on with less than $500 a month. The modern single-earner family trying to keep up an average lifestyle faces a 72 percent drop in discretionary income compared with its one-income counterpart of a generation ago.

Combine changes in family income and expenses, and the biggest change of all becomes evident—on the risk front. In the early 1970s, if any calamity came along, the family devoted nearly half its income to discretionary spending. Of course, people need to eat and turn on the lights, but the other expenses—clothing, furniture, appliances, restaurant meals, vacations, entertainment, and pretty much everything else—can be drastically reduced or even cut out entirely. In other words, they didn’t need as much money if something went wrong. If the couple could find a way—through unemployment insurance, savings, or putting their stay-at-home parent to work—they could cover the basics on just half of their previous earnings. Given the option of a second paycheck, both could stay in the workforce for a few months once the crisis had passed, pulling the family out of their financial hole.

But the position today is very different. Fully 75 percent of family income is earmarked for recurrent monthly expenses. Even if they are able to trim around the edges, families are faced with a sobering truth: every one of those expensive items—mortgage, car payments, insurance, childcare—is a fixed cost. Families must pay them each and every month, through good times and bad; there is no way to cut back from one month to the next, as can be done with spending on clothing or food. Short of moving out of the house, withdrawing their children from preschool, or canceling the insurance policy altogether, they are stuck.

In other words, today’s family has no margin for error. There is no leeway to cut back if one earner’s hours are cut or if the other gets sick. There is no room in the budget if someone needs to take off work to care for a sick child or an elderly parent. Their basic situation is far riskier than that of their parents a generation earlier. The modern American family is walking a high wire without a net.




The Rules Have Changed

The one-two punch of income vulnerability and rising costs has weakened the middle class, at the same time that the revision of the rules of financing delivers a death blow to millions of families each year. Since the early 1980s, the credit industry has rewritten the rules of lending to families. Congress has turned the industry loose to charge whatever it can get and to bury tricks and traps throughout credit agreements. Credit-card contracts that were less than a page long in the early 1980s now number 30 or more pages of small-print legalese. In the details, credit-card companies lend money at one rate, but retain the right to change the interest rate whenever it suits them. They can even raise the rate after the money has been borrowed—a practice once considered too shady even for a back-alley loan shark. When they think they have been cheated, customers can be forced into arbitration in locations thousands of miles from home. Some companies claim that they can repossess anything a customer buys with a credit card.

Credit-card issuers are not alone in their boldness. Home-mortgage lenders are writing mortgages that are so one-sided that some of their products are known as “loan-to-own” because it is the mortgage company—not the buyer—who will end up with the house. Payday lenders are ringing military bases and setting up shop in working-class neighborhoods, offering instant cash that can eventually cost the customer more than a thousand percent interest.

For those who can stay out of debt, the rules of lending may not matter. But the economic pressures on the middle class are causing more families to turn to credit just to make ends meet. When something goes wrong the only place to turn is credit cards and mortgage refinancing. At that moment, the change in lending rules matters very much indeed. The family that might manage $2,000 of debt at 9 percent discovers that it cannot stay afloat when interest rates skyrocket to 29 percent. And the family that refinanced the home mortgage to pay off other debts suddenly faces escalating monthly payments and may find itself staring at foreclosure. Job losses or medical debts can put any family in a hole, but a credit industry that has rewritten the rules can keep that family from ever climbing back.


A Politics of Living on the Edge?

Every day, middle-class families carry higher risks that a job loss or a medical problem will push them over the edge. Although plenty of families make it, a growing number who worked just as hard and followed the rules just as carefully find themselves in a financial nightmare. The security of middle-class life has disappeared. The new reality is millions of families whose grip on the good life can be shaken loose in an instant.

Although my own work, on bankruptcy and credit, has focused on the specifics of families’ household finances, I cannot help but think that their changed circumstances during the past generation have larger echoes for public policy.

During the same period, families have been asked to absorb much more risk in their retirement income. In 1985, there were 112,200 defined-benefit pension plans with employers and employer groups around the country; today their number has shrunk to 29,700 such plans, and those are melting away fast. Steelworkers, airline employees, and now those in the auto industry are joining millions of families who must worry about interest rates, stock market volatility, and the harsh reality that they may outlive their retirement money. For much of the past year, President Bush campaigned to move Social Security to a savings-account model, with retirees trading much or all of their guaranteed payments for payments contingent on investment returns. For younger families, the picture is not any better. Both the absolute cost of healthcare and the share of it borne by families have risen—and newly fashionable health-savings plans are spreading from legislative halls to Wal-Mart workers, with much higher deductibles and a large new dose of investment risk for families’ future healthcare. Even demographics are working against the middle class family, as the odds of having a frail elderly parent—and all the attendant need for physical and financial assistance—have jumped eightfold in just one generation.

From the middle-class family perspective, much of this, understandably, looks far less like an opportunity to exercise more financial responsibility, and a good deal more like a frightening acceleration of the wholesale shift of financial risk onto their already overburdened shoulders. The financial fallout has begun, and the political fallout may not be far behind.



Elizabeth Warren is Gottlieb professor of law and faculty director of the Judicial Education Program. This article is based in part on “Rewriting the Rules: Families, Money, and Risk,” a paper written for the nonprofit Social Science Research Council (see http://privatizationofrisk.ssrc.org/Warren). Warren and her daughter, Amelia Warren Tyagi, are the authors of The Two-Income Trap: Why Middle-Class Mothers and Fathers Are Going Broke (see “The Middle-Class Trapdoor,” January-February 2004, page 10) and All Your Worth: The Ultimate Lifetime Money Plan.

 

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The Gospel of Consumption
And the better future we left behind
by Jeffrey Kaplan

http://www.orionmagazine.org/index.php/articles/article/2962

PRIVATE CARS WERE RELATIVELY SCARCE in 1919 and horse-drawn conveyances were still common. In residential districts, electric streetlights had not yet replaced many of the old gaslights. And within the home, electricity remained largely a luxury item for the wealthy.

Just ten years later things looked very different. Cars dominated the streets and most urban homes had electric lights, electric flat irons, and vacuum cleaners. In upper-middle-class houses, washing machines, refrigerators, toasters, curling irons, percolators, heating pads, and popcorn poppers were becoming commonplace. And although the first commercial radio station didn’t begin broadcasting until 1920, the American public, with an adult population of about 122 million people, bought 4,438,000 radios in the year 1929 alone.

But despite the apparent tidal wave of new consumer goods and what appeared to be a healthy appetite for their consumption among the well-to-do, industrialists were worried. They feared that the frugal habits maintained by most American families would be difficult to break. Perhaps even more threatening was the fact that the industrial capacity for turning out goods seemed to be increasing at a pace greater than people’s sense that they needed them.

It was this latter concern that led Charles Kettering, director of General Motors Research, to write a 1929 magazine article called “Keep the Consumer Dissatisfied.” He wasn’t suggesting that manufacturers produce shoddy products. Along with many of his corporate cohorts, he was defining a strategic shift for American industry—from fulfilling basic human needs to creating new ones.

In a 1927 interview with the magazine Nation’s Business, Secretary of Labor James J. Davis provided some numbers to illustrate a problem that the New York Times called “need saturation.” Davis noted that “the textile mills of this country can produce all the cloth needed in six months’ operation each year” and that 14 percent of the American shoe factories could produce a year’s supply of footwear. The magazine went on to suggest, “It may be that the world’s needs ultimately will be produced by three days’ work a week.”

Business leaders were less than enthusiastic about the prospect of a society no longer centered on the production of goods. For them, the new “labor-saving” machinery presented not a vision of liberation but a threat to their position at the center of power. John E. Edgerton, president of the National Association of Manufacturers, typified their response when he declared: “I am for everything that will make work happier but against everything that will further subordinate its importance. The emphasis should be put on work—more work and better work.” “Nothing,” he claimed, “breeds radicalism more than unhappiness unless it is leisure.”

By the late 1920s, America’s business and political elite had found a way to defuse the dual threat of stagnating economic growth and a radicalized working class in what one industrial consultant called “the gospel of consumption”—the notion that people could be convinced that however much they have, it isn’t enough. President Herbert Hoover’s 1929 Committee on Recent Economic Changes observed in glowing terms the results: “By advertising and other promotional devices . . . a measurable pull on production has been created which releases capital otherwise tied up.” They celebrated the conceptual breakthrough: “Economically we have a boundless field before us; that there are new wants which will make way endlessly for newer wants, as fast as they are satisfied.”

Today “work and more work” is the accepted way of doing things. If anything, improvements to the labor-saving machinery since the 1920s have intensified the trend. Machines can save labor, but only if they go idle when we possess enough of what they can produce. In other words, the machinery offers us an opportunity to work less, an opportunity that as a society we have chosen not to take. Instead, we have allowed the owners of those machines to define their purpose: not reduction of labor, but “higher productivity”—and with it the imperative to consume virtually everything that the machinery can possibly produce.

FROM THE EARLIEST DAYS of the Age of Consumerism there were critics. One of the most influential was Arthur Dahlberg, whose 1932 book Jobs, Machines, and Capitalism was well known to policymakers and elected officials in Washington. Dahlberg declared that “failure to shorten the length of the working day . . . is the primary cause of our rationing of opportunity, our excess industrial plant, our enormous wastes of competition, our high pressure advertising, [and] our economic imperialism.” Since much of what industry produced was no longer aimed at satisfying human physical needs, a four-hour workday, he claimed, was necessary to prevent society from becoming disastrously materialistic. “By not shortening the working day when all the wood is in,” he suggested, the profit motive becomes “both the creator and satisfier of spiritual needs.” For when the profit motive can turn nowhere else, “it wraps our soap in pretty boxes and tries to convince us that that is solace to our souls.”

There was, for a time, a visionary alternative. In 1930 Kellogg Company, the world’s leading producer of ready-to-eat cereal, announced that all of its nearly fifteen hundred workers would move from an eight-hour to a six-hour workday. Company president Lewis Brown and owner W. K. Kellogg noted that if the company ran “four six-hour shifts . . . instead of three eight-hour shifts, this will give work and paychecks to the heads of three hundred more families in Battle Creek.”

This was welcome news to workers at a time when the country was rapidly descending into the Great Depression. But as Benjamin Hunnicutt explains in his book Kellogg’s Six-Hour Day, Brown and Kellogg wanted to do more than save jobs. They hoped to show that the “free exchange of goods, services, and labor in the free market would not have to mean mindless consumerism or eternal exploitation of people and natural resources.” Instead “workers would be liberated by increasingly higher wages and shorter hours for the final freedom promised by the Declaration of Independence—the pursuit of happiness.”

To be sure, Kellogg did not intend to stop making a profit. But the company leaders argued that men and women would work more efficiently on shorter shifts, and with more people employed, the overall purchasing power of the community would increase, thus allowing for more purchases of goods, including cereals.

A shorter workday did entail a cut in overall pay for workers. But Kellogg raised the hourly rate to partially offset the loss and provided for production bonuses to encourage people to work hard. The company eliminated time off for lunch, assuming that workers would rather work their shorter shift and leave as soon as possible. In a “personal letter” to employees, Brown pointed to the “mental income” of “the enjoyment of the surroundings of your home, the place you work, your neighbors, the other pleasures you have [that are] harder to translate into dollars and cents.” Greater leisure, he hoped, would lead to “higher standards in school and civic . . . life” that would benefit the company by allowing it to “draw its workers from a community where good homes predominate.”

It was an attractive vision, and it worked. Not only did Kellogg prosper, but journalists from magazines such as Forbes and BusinessWeek reported that the great majority of company employees embraced the shorter workday. One reporter described “a lot of gardening and community beautification, athletics and hobbies . . . libraries well patronized and the mental background of these fortunate workers . . . becoming richer.”

A U.S. Department of Labor survey taken at the time, as well as interviews Hunnicutt conducted with former workers, confirm this picture. The government interviewers noted that “little dissatisfaction with lower earnings resulting from the decrease in hours was expressed, although in the majority of cases very real decreases had resulted.” One man spoke of “more time at home with the family.” Another remembered: “I could go home and have time to work in my garden.” A woman noted that the six-hour shift allowed her husband to “be with 4 boys at ages it was important.”

Those extra hours away from work also enabled some people to accomplish things that they might never have been able to do otherwise. Hunnicutt describes how at the end of her interview an eighty-year-old woman began talking about ping-pong. “We’d get together. We had a ping-pong table and all my relatives would come for dinner and things and we’d all play ping-pong by the hour.” Eventually she went on to win the state championship.

Many women used the extra time for housework. But even then, they often chose work that drew in the entire family, such as canning. One recalled how canning food at home became “a family project” that “we all enjoyed,” including her sons, who “opened up to talk freely.” As Hunnicutt puts it, canning became the “medium for something more important than preserving food. Stories, jokes, teasing, quarreling, practical instruction, songs, griefs, and problems were shared. The modern discipline of alienated work was left behind for an older . . . more convivial kind of working together.”

This was the stuff of a human ecology in which thousands of small, almost invisible, interactions between family members, friends, and neighbors create an intricate structure that supports social life in much the same way as topsoil supports our biological existence. When we allow either one to become impoverished, whether out of greed or intemperance, we put our long-term survival at risk.

Our modern predicament is a case in point. By 2005 per capita household spending (in inflation-adjusted dollars) was twelve times what it had been in 1929, while per capita spending for durable goods—the big stuff such as cars and appliances—was thirty-two times higher. Meanwhile, by 2000 the average married couple with children was working almost five hundred hours a year more than in 1979. And according to reports by the Federal Reserve Bank in 2004 and 2005, over 40 percent of American families spend more than they earn. The average household carries $18,654 in debt, not including home-mortgage debt, and the ratio of household debt to income is at record levels, having roughly doubled over the last two decades. We are quite literally working ourselves into a frenzy just so we can consume all that our machines can produce.

Yet we could work and spend a lot less and still live quite comfortably. By 1991 the amount of goods and services produced for each hour of labor was double what it had been in 1948. By 2006 that figure had risen another 30 percent. In other words, if as a society we made a collective decision to get by on the amount we produced and consumed seventeen years ago, we could cut back from the standard forty-hour week to 5.3 hours per day—or 2.7 hours if we were willing to return to the 1948 level. We were already the richest country on the planet in 1948 and most of the world has not yet caught up to where we were then.

Rather than realizing the enriched social life that Kellogg’s vision offered us, we have impoverished our human communities with a form of materialism that leaves us in relative isolation from family, friends, and neighbors. We simply don’t have time for them. Unlike our great-grandparents who passed the time, we spend it. An outside observer might conclude that we are in the grip of some strange curse, like a modern-day King Midas whose touch turns everything into a product built around a microchip.

Of course not everybody has been able to take part in the buying spree on equal terms. Millions of Americans work long hours at poverty wages while many others can find no work at all. However, as advertisers well know, poverty does not render one immune to the gospel of consumption.

Meanwhile, the influence of the gospel has spread far beyond the land of its origin. Most of the clothes, video players, furniture, toys, and other goods Americans buy today are made in distant countries, often by underpaid people working in sweatshop conditions. The raw material for many of those products comes from clearcutting or strip mining or other disastrous means of extraction. Here at home, business activity is centered on designing those products, financing their manufacture, marketing them—and counting the profits.

KELLOG’S VISION, DESPITE ITS POPULARITY with his employees, had little support among his fellow business leaders. But Dahlberg’s book had a major influence on Senator (and future Supreme Court justice) Hugo Black who, in 1933, introduced legislation requiring a thirty-hour workweek. Although Roosevelt at first appeared to support Black’s bill, he soon sided with the majority of businessmen who opposed it. Instead, Roosevelt went on to launch a series of policy initiatives that led to the forty-hour standard that we more or less observe today.

By the time the Black bill came before Congress, the prophets of the gospel of consumption had been developing their tactics and techniques for at least a decade. However, as the Great Depression deepened, the public mood was uncertain, at best, about the proper role of the large corporation. Labor unions were gaining in both public support and legal legitimacy, and the Roosevelt administration, under its New Deal program, was implementing government regulation of industry on an unprecedented scale. Many corporate leaders saw the New Deal as a serious threat. James A. Emery, general counsel for the National Association of Manufacturers (NAM), issued a “call to arms” against the “shackles of irrational regulation” and the “back-breaking burdens of taxation,” characterizing the New Deal doctrines as “alien invaders of our national thought.”

In response, the industrial elite represented by NAM, including General Motors, the big steel companies, General Foods, DuPont, and others, decided to create their own propaganda. An internal NAM memo called for “re-selling all of the individual Joe Doakes on the advantages and benefits he enjoys under a competitive economy.” NAM launched a massive public relations campaign it called the “American Way.” As the minutes of a NAM meeting described it, the purpose of the campaign was to link “free enterprise in the public consciousness with free speech, free press and free religion as integral parts of democracy.”

Consumption was not only the linchpin of the campaign; it was also recast in political terms. A campaign booklet put out by the J. Walter Thompson advertising agency told readers that under “private capitalism, the Consumer, the Citizen is boss,” and “he doesn’t have to wait for election day to vote or for the Court to convene before handing down his verdict. The consumer ‘votes’ each time he buys one article and rejects another.”

According to Edward Bernays, one of the founders of the field of public relations and a principal architect of the American Way, the choices available in the polling booth are akin to those at the department store; both should consist of a limited set of offerings that are carefully determined by what Bernays called an “invisible government” of public-relations experts and advertisers working on behalf of business leaders. Bernays claimed that in a “democratic society” we are and should be “governed, our minds . . . molded, our tastes formed, our ideas suggested, largely by men we have never heard of.”

NAM formed a national network of groups to ensure that the booklet from J. Walter Thompson and similar material appeared in libraries and school curricula across the country. The campaign also placed favorable articles in newspapers (often citing “independent” scholars who were paid secretly) and created popular magazines and film shorts directed to children and adults with such titles as “Building Better Americans,” “The Business of America’s People Is Selling,” and “America Marching On.”

Perhaps the biggest public relations success for the American Way campaign was the 1939 New York World’s Fair. The fair’s director of public relations called it “the greatest public relations program in industrial history,” one that would battle what he called the “New Deal propaganda.” The fair’s motto was “Building the World of Tomorrow,” and it was indeed a forum in which American corporations literally modeled the future they were determined to create. The most famous of the exhibits was General Motors’ 35,000-square-foot Futurama, where visitors toured Democracity, a metropolis of multilane highways that took its citizens from their countryside homes to their jobs in the skyscraper-packed central city.

For all of its intensity and spectacle, the campaign for the American Way did not create immediate, widespread, enthusiastic support for American corporations or the corporate vision of the future. But it did lay the ideological groundwork for changes that came after the Second World War, changes that established what is still commonly called our post-war society.

The war had put people back to work in numbers that the New Deal had never approached, and there was considerable fear that unemployment would return when the war ended. Kellogg workers had been working forty-eight-hour weeks during the war and the majority of them were ready to return to a six-hour day and thirty-hour week. Most of them were able to do so, for a while. But W. K. Kellogg and Lewis Brown had turned the company over to new managers in 1937.

The new managers saw only costs and no benefits to the six-hour day, and almost immediately after the end of the war they began a campaign to undermine shorter hours. Management offered workers a tempting set of financial incentives if they would accept an eight-hour day. Yet in a vote taken in 1946, 77 percent of the men and 87 percent of the women wanted to return to a thirty-hour week rather than a forty-hour one. In making that choice, they also chose a fairly dramatic drop in earnings from artificially high wartime levels.

The company responded with a strategy of attrition, offering special deals on a department-by-department basis where eight hours had pockets of support, typically among highly skilled male workers. In the culture of a post-war, post-Depression U.S., that strategy was largely successful. But not everyone went along. Within Kellogg there was a substantial, albeit slowly dwindling group of people Hunnicutt calls the “mavericks,” who resisted longer work hours. They clustered in a few departments that had managed to preserve the six-hour day until the company eliminated it once and for all in 1985.

The mavericks rejected the claims made by the company, the union, and many of their co-workers that the extra money they could earn on an eight-hour shift was worth it. Despite the enormous difference in societal wealth between the 1930s and the 1980s, the language the mavericks used to explain their preference for a six-hour workday was almost identical to that used by Kellogg workers fifty years earlier. One woman, worried about the long hours worked by her son, said, “He has no time to live, to visit and spend time with his family, and to do the other things he really loves to do.”

Several people commented on the link between longer work hours and consumerism. One man said, “I was getting along real good, so there was no use in me working any more time than I had to.” He added, “Everybody thought they were going to get rich when they got that eight-hour deal and it really didn’t make a big difference. . . . Some went out and bought automobiles right quick and they didn’t gain much on that because the car took the extra money they had.”

The mavericks, well aware that longer work hours meant fewer jobs, called those who wanted eight-hour shifts plus overtime “work hogs.” “Kellogg’s was laying off people,” one woman commented, “while some of the men were working really fantastic amounts of overtime—that’s just not fair.” Another quoted the historian Arnold Toynbee, who said, “We will either share the work, or take care of people who don’t have work.”

PEOPLE IN THE DEPRESSION-WRACKED 1930s, with what seems to us today to be a very low level of material goods, readily chose fewer work hours for the same reasons as some of their children and grandchildren did in the 1980s: to have more time for themselves and their families. We could, as a society, make a similar choice today.

But we cannot do it as individuals. The mavericks at Kellogg held out against company and social pressure for years, but in the end the marketplace didn’t offer them a choice to work less and consume less. The reason is simple: that choice is at odds with the foundations of the marketplace itself—at least as it is currently constructed. The men and women who masterminded the creation of the consumerist society understood that theirs was a political undertaking, and it will take a powerful political movement to change course today.

Bernays’s version of a “democratic society,” in which political decisions are marketed to consumers, has many modern proponents. Consider a comment by Andrew Card, George W. Bush’s former chief of staff. When asked why the administration waited several months before making its case for war against Iraq, Card replied, “You don’t roll out a new product in August.” And in 2004, one of the leading legal theorists in the United States, federal judge Richard Posner, declared that “representative democracy . . . involves a division between rulers and ruled,” with the former being “a governing class,” and the rest of us exercising a form of “consumer sovereignty” in the political sphere with “the power not to buy a particular product, a power to choose though not to create.”
Sometimes an even more blatant antidemocratic stance appears in the working papers of elite think tanks. One such example is the prominent Harvard political scientist Samuel Huntington’s 1975 contribution to a Trilateral Commission report on “The Crisis of Democracy.” Huntington warns against an “excess of democracy,” declaring that “a democratic political system usually requires some measure of apathy and noninvolvement on the part of some individuals and groups.” Huntington notes that “marginal social groups, as in the case of the blacks, are now becoming full participants in the political system” and thus present the “danger of overloading the political system” and undermining its authority.

According to this elite view, the people are too unstable and ignorant for self-rule. “Commoners,” who are viewed as factors of production at work and as consumers at home, must adhere to their proper roles in order to maintain social stability. Posner, for example, disparaged a proposal for a national day of deliberation as “a small but not trivial reduction in the amount of productive work.” Thus he appears to be an ideological descendant of the business leader who warned that relaxing the imperative for “more work and better work” breeds “radicalism.”

As far back as 1835, Boston workingmen striking for shorter hours declared that they needed time away from work to be good citizens: “We have rights, and we have duties to perform as American citizens and members of society.” As those workers well understood, any meaningful democracy requires citizens who are empowered to create and re-create their government, rather than a mass of marginalized voters who merely choose from what is offered by an “invisible” government. Citizenship requires a commitment of time and attention, a commitment people cannot make if they are lost to themselves in an ever-accelerating cycle of work and consumption.

We can break that cycle by turning off our machines when they have created enough of what we need. Doing so will give us an opportunity to re-create the kind of healthy communities that were beginning to emerge with Kellogg’s six-hour day, communities in which human welfare is the overriding concern rather than subservience to machines and those who own them. We can create a society where people have time to play together as well as work together, time to act politically in their common interests, and time even to argue over what those common interests might be. That fertile mix of human relationships is necessary for healthy human societies, which in turn are necessary for sustaining a healthy planet.

If we want to save the Earth, we must also save ourselves from ourselves. We can start by sharing the work and the wealth. We may just find that there is plenty of both to go around.