Things may unfold faster than you think

Nicole Foss, one of the authors at The Automatic Earth, on the triple challenges of economy, energy and environment (especially climate in this case). She sees energy as the most significant driver of where industrial civilisation heads next, though economics is the way that it will manifest itself with most speed and violence in a debt-driven economy. Her analysis of the effects of peak oil as being an exacerbation and acceleration of economic swings is an important corrective to those who imagine that peak oil simply means ever increasing price spikes. I think she underestimates the long term significance of climate, but her points about resilient communities of trust and the importance of forward thinking prudence in order to avoid toxic and violent responses are well made. Whether she is right about deflation as the way in which the next financial crisis (the continuation of the present financial crisis, depending how you look at it) is above my pay grade (which, given that it is almost zero, isn't saying much).

In short, she thinks it is very important to get out of debt as soon as possible, to prepare mentally for a different and more difficult world within the next few years and to invest in local relationships of trust. As a Christian, I don't see much to disagree with in this advice.

Discounting the future

Nicole Foss (a.k.a. Stoneleigh) nicely summarises the effects of crises, instability and uncertainty on human ethical deliberation: our horizons shrink. This is true of both temporal and relational horizon. Nicole has written before about the shrinking relational horizon in times of difficulty (when the chips are down, you stick with those you know and mistrust strangers and those who are other to you) and this recent post points out that much of human history has been lived from hand to mouth, with immediate concerns dominating our time, effort and thinking. When you're worried about where your next meal will come from (or, slightly less pressingly, worried about where your next pay packet is going to come from), you're much less likely to be able to reflect coherently upon or plan for longer term threats and opportunities. Practical and moral vision is narrowed and shortened in order to focus upon the immediate. This is one of the reasons that ecological concerns decline during recessions.

It is also why my expectation of growing economic and social disruptions over the next few decades signals bad news for our collective ability to respond well to the longer term threats our society faces. Human reactions to increasing perceptions of threat constitute a complex series of feedback cycles, both positive and negative, rendering linear trends hyperbolic. This is why specific forecasting has such a bad track record and why "bumpy" is about the level of specificity I'm willing to commit myself to in describing the coming decades.

Some human reactions make crises worse than they need to be. Food shortages can lead to hoarding behaviour that exacerbates the problem for those with least access to food. First order problems (e.g. hunger) can lead to second order problems (e.g. riots) that drain resources from addressing the primary problem.

Other human reactions can mitigate the worst of crises. Co-operation, trust and sharing can spread the burden of a situation upon more shoulders, making it lighter for everyone. Sudden shocks to the status quo can sometimes awaken the moral imagination to envisage a new way of life (or the renewal of old ways).

Which kind of feedback is likely to dominate? It is very difficult to know, and may well differ from place to place. How is it possible to create the conditions now under which communities of trust and co-operation can flourish during times of crisis? How can such communities maintain an openness to outsiders and strangers? And what kinds of communities of trust are able to face immediate challenges without discounting the future?

Is Christian ethics just for Christians? and other links

Andrew asks about Christian ethics: just for Christians?

Jason ponders ordinary time.

Halden rethinks whether the new monasticism is what it says on the tin.

Nicole (a.k.a Stoneleigh) peers beyond the trust horizon (scroll down past the ad for a talk that I linked to back here).

Stephan points out that real experts don't know everything and gives a useful test for how to spot a fake expert (as well as the schedule for a series of interesting talks in various Australian cities).

Matt reflects on why he buys organic foods out of love for his neighbour, rather than his own health.

Sager thinks about what it takes to build a resilient community.

And Charlie Brown - finally! - kicks the ball.

The coming financial crisis and peak oil: two interviews

"I think a lot of governments are taking it very seriously but they are not mostly talking about it in public because nobody wants to frighten anybody. [...] But I think they understand perfectly well that peak oil is a reality."

- Nicole Foss (a.k.a. Stoneleigh from The Automatic Earth).

This podcast makes for sobering listening. It consists of two interviews. The second, and cheerier, one is with Antony Froggatt, Senior Research Fellow at Chatham House, who lays out the key trends in global energy resources. Froggatt helped to write a recent white paper by Lloyd's of London, titled "Sustainable energy security: strategic risk and opportunities for business" (executive summary can be found here).

From the forward: "We have entered a period of deep uncertainty in how we will source energy for power, heat and mobility and how much we will have to pay for it. [...] The bad times have not yet hit." In the interview, Froggatt discusses the problems with an economy based on just-in-time supply in a world that is no longer able to rely on cheap energy. He believes we may be heading for more supply crunches like 2008 in which the price spiked to almost US$150 (a five-fold increase in a matter of years). He then partially attributes the following economic downturn to this spike.

He points to three fundamental trends in the energy sector:

(a) Declining oil output from existing wells: "the current output from existing oil production globally is decreasing by about 4% per year. So just to maintain the current output for oil will require the discover and exploitation of a new Saudi Arabia every three years."

(b) Surging energy consumption in emerging economies: "If we carried on using energy in the same way we do at the moment, we would need 40% more of it by 2030."

(c) Increasing international recognition of the threat of climate change largely due to fossil fuel combustion.

All three combine to mean that "the age of cheap oil is over. [...] The current energy system will have to change". The only questions are when and how abruptly and smoothly this energy transition occurs. Previously, a transition on anything like this scale has only been achieved about once per century, and with momentous social and economic implications. We have mere years to achieve a larger transition than we've managed in the past only with concerted effort over many decades.

But that is the optimistic interview.

The first interview (transcript here) is with Nicole Foss (her background and credentials are summarised here), who calls herself a "big picture person". She also speaks of possible interactions between a further financial crisis and peak oil. However, rather than seeing rising oil prices undermining global economic growth, she sees a dangerous relationship in the other direction. She expects the next few years will witness a larger global credit crunch leading to a "greater depression" in which we'll look back at the 1930s as the good old days. She argues that the various government stimulus packages in 2008 merely postponed and made worse the inevitable deflationary period.

She is also very concerned about peak oil, but believes the timeframe for finance is shorter than for energy and so "finance is going to re-write the energy debate. [...] Demand collapse is going to set up a supply collapse. [...] Low prices are going to mean no investment, no exploration, no maintenance." So she predicts a double-whammy: a financial crisis for the next few years, which in turn will set up a longer and larger energy crisis. And she reminds us that being in debt during a major credit crisis isn't likely to be pretty: "When you have a large amount of indebtedness, the civilised methods of getting out of debt are likely to disappear." She is primarily talking about the US situation, but we live in a globalised world.

Listen with a grain of salt, but I'm not sure we can safely ignore these warnings.
The German article mentioned briefly in both interviews is here.

The next twenty years

The next twenty years are very unlikely to be like the last twenty years. Most of the time, it is reasonable to expect and plan for the future on the basis of the recent past. This is how we are wired and the force of habits and the power of cultural inertia make this kind of thinking natural.

However, for all the reasons I have listed here (and quite a few more, which include consideration of the present economic situation and a debt-based economy that requires continued growth (or at least the perception of the likelihood of continued growth over the long term) to prevent meltdown), I am fairly pessimistic about the likely economic, social and/or political stability of the coming decades.

I am no prophet, nor a prophet's son and I make no claims to predicting what is likely in a massively complex and historically novel globalised system with all kinds of unexpected feedbacks. It is also very hard to be precise about the level of severity we're talking about it. I expect that we will face more than a recession, and something larger than the credit crunch of 2008.

However, I don't think we're talking Mad Max or The Road anytime soon (unless global tensions reach a point where someone reaches for the nuclear option, in which case all bets are off). But we're also not talking Star Trek or even . I think the possibility of political and/or technological silver bullets to avoid the raft of approaching crises is low enough to make it reasonable to hold a fairly bleak outlook.

There are three interconnected systems that are currently under grave threat, and the failure or further deterioration of any one of them will have significant knock-on effects on the others. These are economy, energy and ecology, or finances, fuel and flora & fauna (and fresh water and flooding and fires). I've written primarily about the third category, with occasional references to the second (especially regarding peak oil). In more recent weeks I've been learning quite a lot more about the first, and the ways in which the failures of the other two can be magnified and brought home by the financial system.

Two presentations
I plan to say more on this in due time, but I thought I'd flag the development of my thinking and suggest two presentations that might give you a taste of the kinds of things I've been pondering recently. Both are far from perfect and contain material or emphases which I think are wide of the mark, but at a broad level, I suspect they are identifying some of the most pressing issues of our day.

The first is this talk recorded at the Transition movement conference earlier this year by Stoneleigh, one of the authors of The Automatic Earth blog (H/T Sam and more thoughts here).

The second is called the Crash Course by Chris Martenson. This one is quite a bit longer, but most of the meat is in the second half so feel free to skip the explanations of what money is and how credit works if you like.

Both these presentations major on the first of the three crises (i.e economic), not because it is necessarily the most dangerous, but because it is most likely to make itself felt first and most directly. I suspect that the ecological crises which are largely in the background of these presentations will ultimately prove to be larger and more significant in the long term.