[R-G] [BillTottenWeblog] Steady-State Economy

[Bill Totten]

Light at the End of the Tunnel

by Chuck Burr

Culture Change (February 16 2009)


The growing economic meltdown is a wake-up call that our infinite growth
bubble has burst. After the house of cards finishes falling, there will
be only one viable economic solution left standing: a steady-state economy.

Insolvency Crisis

The world economy is essentially broke. US daily bankruptcy filings have
risen from about 1,300 in January 2006 to about 5,000 in September 2008.

Here is how big the problem really is. First, the value of all the money
in the world until recently was three times greater than the value of
all physical goods and services. In other words, our "money" is actually
worth thirty cents on the dollar. And considering, physical assets such
as real estate have been over valued, your pixel money is actually
"worth-less".

Second, the US government's $9.7 trillion commitment to solving the
financial crisis amounts to almost two-thirds of the value of everything
produced in the US last year. The promises are composed of about $1
trillion in stimulus packages, around $3 trillion in lending and
spending and $5.7 trillion in agreements to provide aid.

Third, until recently our growing economy has been able to cover our
debts and deficits, but now the blue-light-special lifestyle is over.
Everyone, from the public to governments is now under water. America has
built up a staggering amount of debt. At the time of the 1929 stock
market crash, total US debt was 176 per cent of GDP. Before the current
financial crisis began, total debt stood at a whopping 304 per cent of
GDP. Today it is far worse; we are well beyond our means.

The next bubble to burst will be pensions. America's 500 largest
companies have a deficit of $200 billion in their pension plans. If the
Dow hits 4,000, the deficit would rise to $400 to $500 billion.
Companies will stop contributing and reduce payouts when forced to make
a choice between payroll, corporate jets, and pension contributions.

Bailout Liquidity Makes Situation Worse

If the world financial crisis is really one of global insolvency, adding
liquidity in the form of more government debt is actually dangerous. If
I have a successful business and I borrow money for a temporary cash
flow problem, no problem. But, if I am actually insolvent, increasing my
debt by borrowing more money makes the situation worse for both me and
the lender who will lose their investment in my soon to be bankrupt
business.

Because of their size, the bailouts may ignite hyperinflation from all
of the liquidity that is being generated out of thin air. Since the
financial crisis began last year, the money supply has been nearly
doubled out of thin air. Hyperinflation may cause the $50 trillion
derivative markets to explode. The credit default swaps would be the
first to blow driving interest rates to double digits which would light
the fuse to the $50 trillion interest rate swaps supernova [more on this
subject in a follow-up article - editor].

Wasted Opportunity

Since World War Two, we have produced little of value, but built a huge
pile of debt upon debt. Europeans invaded what was an entire unspoiled
continent 517 yeas ago, and today we have little of real value to show
for it except a lot of people and a trashed ecosystem. What was once a
vast expanse of fertility and old growth biodiversity from sea to
shining sea is now an input-dependent monoculture wasteland. Take a ride
on an plane while you still can and look down. Almost everything coming
out of big-box stores is soon destined for the dumpster and our spread
out suburban infrastructure will prove to be a liability as peak oil
eliminates happy motoring.

Bernard Madoff''s $50 billion ponzi scheme revealed how our Taker
economic system really works. The problem is bigger than just our
institutions such as fractional reserve banking, the Federal Reserve,
and the looming derivative bubble. Our entire Taker culture is based on
little of value. Growth, debt, greed, concentration of wealth, something
for nothing, depleted resources, and overpopulation are not assets -
they are liabilities. If we are to ultimately thrive, we must contribute
to biodiversity, not destroy it.

Long History

We have actually had this "value-less" system that Daniel Quinn calls
our Taker culture for 10,000 years since the agricultural revolution.
Ever since it became OK to lock up the food, privatize land, concentrate
wealth, make war, and for a minority to control the majority we have
been impoverished. As long as we had abundant enough natural resources
and a low enough population, the Taker ponzi scheme worked. We kept
consuming the world to keep everybody happy. But, now we have overshot
the earth's carrying capacity.

Steady-State Economy

When all of the cards are done falling, local powered-down steady- state
economies will be the only replacement for our infinite growth global
consumer economy. To live within our means for perpetuity means living
within the earth's carrying capacity which we have vastly reduced
especially over the last 100 years.

Economic growth is a threat because it assumes a growth in population,
production, and consumption within our finite planet. A steady-state
economy has a constant stock of capital that is maintained by a rate of
output no higher than the environment can absorb. Even banks can lend
only as much money as they have.

In a steady-state economy, society focuses on more noble goals than
economic growth. The late Masanobu Fukuoka asked "Why do you have to
develop? If economic growth rises from five per cent to ten per cent, is
happiness going to double? What's wrong with a growth rate of zero per
cent? Isn't this a rather stable kind of economics? Could there be
anything better than living simply and taking it easy?"

Our economic measurement systems are a shell game. Bhutan's Gross
National Happiness is a better indicator than our Gross Domestic Product
(GDP). GDP counts goods and services, but ignores the important things
such a clean water, fresh air, public health, and biodiversity. GDP also
lumps everyone together. If executive pay goes from 100 times average
wages to 1,000 times, while real middle classes wages are falling, GDP
does not show that. Concentration of wealth, externalized costs,
depleted resources are invisible.

A sustainable economy requires a stable population, lower per capita
consumption, and reduced complexity. In fact, since human population has
overshot the earth's carrying capacity by over twenty per cent, our
population and the economy are going to have to be significantly reduced
size before true stability can occur. See Chapters three and four of
Culturequake (2007) for an in-depth discussion of our population
explosion and overshoot.

Also, since human population is in overshoot, taking more resources than
the earth can generate, future carrying capacity will continue to be
eroded. Imagine how great a population North America could have
supported with all of our old-growth forests, topsoil, watersheds, and
biodiversity intact? Now, half our topsoil is gone, much of what's left
is dead mineral matter only able to supporting crops through fossil fuel
fertilizers, watersheds and fisheries are collapsing, the Ogallala
aquifer supplying farmers from the Dakotas to Texas will be depleted in
forty years, and global warming is ending stable weather. I'll stop there.

Invest Locally

President Obama's Herculean effort to revive the consumer economy is
about as useful as a bucket-brigade on the Titanic. I have great respect
for president Obama's comitment and abilities, but he still clings to
the illusion that "growth" is still possible with dwindling resources
and a burgeoning population.

Other than feeding unemployed people and keeping them in their homes,
the rest of the money would be better spent rebuilding our big-box
bombed-out local communities, our railroads, and start Cuban-style urban
agriculture and land reformation. Urban agriculture feeds half the
people in Havana and eighty to 100 per cent of people in smaller cities.
Bank deposits should be insured and insolvent banks allowed to fail.

This will probably be last time we will be able to muster this level of
resources; the last time people will lend us this much money. Our
resource base is a shadow of what it was 100 years ago and our
population has grown six times. I am saddened to see what is ultimately
my children's tax dollars squandered trying to revive the rusting,
sinking hulk of our industrial economy.

Because our elected leaders and the media do not realize that we are
entering the twilight of modern culture, they have not leveled with the
people. Thus the people are not ready for the kind of cultural change we
are going to see over the next century. It takes a crisis like this to
be the wake-up call.

Economic Decline Can Be a Good Thing

Earnest Callenbach wrote in Ecotopia (1975) that a financial panic can
be turned into an advantage if in the end society can be focus its
energy, knowledge, and skills to what is really important in life. With
the ensuing flight of capital, the factories, farms, and other
productive facilities would fall into the people's hands like ripe
plums. Whole markets should be reorganized, no one or no corporation
should be able to own more than say forty acres. In fact, corporations
should only exist for public projects such as roads or utility
infrastructure and be de-chartered when the project is completed.

Our economy will be reshaped by many influences including
re-localization, new-urbanism, peak oil, and learning lost horticulture
and craft skills. Powering-down will happen discontinuously. We will
rest at a plateau for a while and then drop to the next lower energy and
complexity level. Governing institutions would be more useful if
realigned along bioregion and watersheds lines - not in a continent-
sized country made up of arbitrary squares.

Where to Begin?

Start where you are now and live your truth. Act from a sense of passion
and joy. Plug into your local community; offer your skills and resources
to sustainability efforts. Use your creative imagination. Ask yourself,
"how can I partially or completely unplug from the wage economy in the
next three years?" By doing so you will meet like minded people. If
people see you as sharing what you have, they will share with you.

Turn off your TV and tune into your family, friends, and neighbors.
Educate yourself about useful skills such as permaculture. You are
better off living near a community on a good piece of land that you own
in a yurt than you are buying a house with a mortgage that the bank owns.

Seek a new vision and a new lifestyle. Instead of recycling, how can my
waste become another's food? Instead of debt, how can I simplify?
Instead of mining topsoil how can I build it?

Humans are meant to take their modest place in a seamless web of life,
disturbing that web as little as possible. This means sacrificing
present complexity and consumption, but it ensures future survival.
People should be happy not to the extent that they exploit their fellow
man and creatures, but to the extent they live in balance with them.

Starting this spring, Culturequake essays will begin to describe our own
personal journey to re-localize on our small permaculture farm in
Ashland, Oregon. We will share our experiences with soil food web
building, food forest design, installation, harvest, appropriate
technology, and community education.


Notes:

Herman Daly
Steady State Economics (1974)

James Bruges, Resurgence
Enduring Economies

Mark Pittman and Bob Ivry, Bloomberg.com
US Taxpayers Risk $9.7 Trillion on Bailout Programs

Bob Chapman
Acts Of Insanity Are What Destroyed The Economy

Larry Korn, permaculture.org

Masanobu Fukuoka's Natural Farming and Permaculture

Earnest Callenbach
Ecotopia

Richard Heinberg
Powerdown: Options and Actions for a Post-Carbon World

Center for the Advancement of the Steady State Economy
steadystate.org

Institute of Ecolonomics
instituteofecolonomics.org

Search for other articles by Chuck Burr in Culture Change, and visit
Culturequake.org to learn more about Culturequake the book and the
online magazine. (c)2009 Chuck Burr LLC

http://culturechange.org/go.html?327

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