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CATASTROPHIC SYSTEMIC FAILURE Umair Haque ... How Bad Will the Economy Get? You Don’t Want to Know ... The Economy’s Crashing Because We’re an Industrial Civilization on a Dying Planet 
Image Credit: Kevin Frayer Original article: https://eand.co/the-economys-crashing-because-we-re-an-industrial-civilization-on-a-dying-planet-2505e36bd4db Peter Burgess COMMENTARY I was never particularly interested in the classical side of education ... I preferred the wonders of science and technology. But I do remember one quote that seems to be relevant today. It was to do with the Roman Emperor who is famously known for the apocryphal story that he fiddled while Rome burned in a great fire. This is what the rich and powerful in modern times seem to be doing. I am not particularly astute ... but it has been pretty clear to me that for a long time (like 40 years or more) that the socio-enviro-economic system that has become the driver of the modern world is unsutainable and we need to do something to change things. I grew up from age 5 in a rural part of England ... in Devon in the West of England. My father was an educator and he had resonably long vacations. We used to visit my grandparents who lived in Lancashire (on my Mother;s side) and Yorkshire (on my Father's side) which were both in the industrial North of England where there was horrendous levels of particulate pollution. I think it was in 1952 that there was what became referred to as the 'Killer Smog' when the whole of Engand was blanketted by a mixture of cloud fog and particulate laden smoke. Visibility was cut to a few feet and everyone with respiratory issues got into trouble. To its credit, the British Government of the time immediately passed legislation to control pollution and severely limiting the use of coal, expecially soft coal which dominated domestic heating. The Government of the United States has taken some modest steps to curb air pollution ... but 20 years after the UK killer smog ... and essentialy quite ineffective. It is only California that became serious about air pollution with politicans everywhere else doing the minimum, and certainly not showing any strategic leadership. Worse ... several major industries have done all in their power to not only pollute the world, but also to pollute the discourse about pollution and its dangers. These industries are the energy industry (coal and oil) and the banking and finance sector. These industries (sectors) are making huge profits ... that is earning a ridiculously high return on investment ... and doing essentially nothing to ensure the sustainability of anything. It seems to be only about the sustainablity of 'financial wealth creation' and 'instant gratification' and nothing else. I like what Umair Haque has to say ... Peter Burgess | ||
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How Bad Will the Economy Get? You Don’t Want to Know
The Economy’s Crashing Because We’re an Industrial Civilization on a Dying Planet Written by Umair Haque June 19th 2022 Inflation skyrocketing. Stock market tanking. Pundits are calling it 'a tough new economic climate” and 'a slow economy.” So…how bad is the economy going to get? If you really want to understand this question, then let’s talk about it seriously and subtly. There’s a certain thing, a kind of stupidity, which happens in our economic discourse. The economy’s always booming. Have you noticed? As soon as 'the pandemic ended” — which of course it hasn’t — the economy was said to be booming. The truth, though, is far from that. Do you know anyone who feels good about their economic prospects? I don’t. With the exception of aging generations, and maybe including plenty of them, literally every single person I know has spent their adult worried intensely about one thing first and foremost. Money. At this point, we have a downward spiral of what’s called intergenerational inequality. Wages have been stagnant in America since the 1970s. In Europe, since 2000 or so. That hurts the generations who’ve grown up amidst stagnation most. So at this point, Gen X did worse than the Boomers, and it was considered to be almost funny, but then Millennials did worse than Gen X, and things started to look pretty bad, and now Zoomers basically have no economic future whatsoever. Owning a home, starting a family, retiring? LOL — good luck with that. And the generations which come after them? They’ll have it even worse than that. Why? Let me come back to the reason. Sorry to be annoying, but let’s talk about the economy a bit more first, in general terms. They say that the reason the economy is cratering right about now is…the aid people received at the peak of the pandemic. LOL. That’s not true. There’s this theory that’s spread and far and wide by crackpots, which goes like this: 'printing money equals inflation!!” Sorry, it’s not remotely that simple. How do we know that government aid isn’t the reason the economy’s tanking now? Just by looking around the world, and observing. If it were the case that stimulus led to inflation, then of course countries with the greatest support would have the highest inflation. But that’s not true. Europe, which offered people way, way more support than America and the UK, has lower inflation rates. And plenty of countries which offered people no support — because they’re poor nations — have skyrocketing inflation rates. It’s not about stimulus. This isn’t demand-led inflation. When people subscribe to this naive pop myth that 'printing money during the pandemic caused inflation,” what are they really saying? That the economy’s cratering right now because people have too much money. LOL. Do you know anyone who has too much money? That’s an absurd thing to say. If people had 'too much money,” presumably they’d use some of it to get out of debt. To invest, to spend on luxuries and so forth. None of that’s the case. People are more indebted than ever. 'The Quarterly Report on Household Debt and Credit for the first quarter of 2022 shows a solid increase in total household debt of $266 billion.” See my point? This isn’t about some kind of sudden massive spike in demand because people are suddenly whooping and cheering in the streets, because for the first time in anyone’s adult life, they have too much money. LOL — are you kidding me? This is supply side inflation. Let’s do a few painfully obvious examples of it. Americans can’t get tampons and baby formula at the moment. Why is that? Because, I don’t know, every woman in America suddenly got her period all month long in a warning about Gilead via the Supreme Court? Because, suddenly, there was a round of instantaneous virgin births numbering in the millions? Of course not. Americans can’t get these basics because these basics are currently being underproduced. The problem is on the supply side. Why are there supply side problem stretching throughout the economy? Well, one reason is Covid — it caused labour shortages across sectors from healthcare to transportation. But the bigger picture here is about 'climate change,” a term I don’t like. It’s causing all kinds of shortages that nobody much — at least in the orthodox worlds of business and finance — ever really expected. Paper shortages — bye, tampons. Harvests of all kinds are beginning to fail, from sugar to wheat to coffee. As the resources of the planet dwindle, in anticipation, warlords and oligarchs start conflicts to try and seize what of them they can — hence, Putin’s targeted Europe’s breadbasket, Ukraine. Yet another reason is our reliance as a civilization on centralized production. Why is it that there’s just a handful of baby formula factories for an entire nation? Does that make any sense to you? Shouldn’t essentials like this be produced in every town? Then there’s our civilization’s reliance on fossil fuels — they grow more expensive by the day, precisely because of all the above, war, climate change, pandemics. See the big picture here. We are living on a dying planet. We killed our planet. Birds drop dead from the sky around the globe now. Heatwaves stretch across much of it, and then come megafires and floods. We aren’t ready for this. We are a civilization with an industrial economy on a dying planet. What happens to civilizations like that? They crash. Inflation, war, and stagnation wreck them. As the resources run out, people get poorer — fast, because prices skyrocket. As the temperature increases, infrastructure fails — and what little resources are left must be devoted to fixing it. As ecosystems die off, just providing basics — water, energy, clean air, medicine, food — becomes impossible, and things go into shortage. Sound like what’s happening to our world? It should. Industrial economies aren’t built for dying planets. They’re extractive. Exploitative. Rent-seeking. They don’t nourish, create, care, give birth to. They just manufacture lowest-common-denominator stuff and literally turn life into death: plastic, fossil fuels, forests ripped down, oceans polluted, skies full of carbon, rivers turned to poison. They take without giving, and then they concentrate all the illusory wealth they’ve created in the hands of a tiny few, who have no incentive to invest it back in anything at all. Hence, billionaires grew so much richer during the pandemic they could have ended world hunger or cancelled debt a hundred times over. Crazy town. Industrial economies aren’t built for dying planets, because of course they’re what kill planets. You might say, well, Umair, why does that matter? It matters for a very, very important reason. What’s about to happen next. In response to all this, central banks are raising interest rates. Now, you have to understand something about our institutions, which is going to freak you out a little bit. Central banks know that this isn’t going to work. 'Bailey said that runaway energy and food costs driven by global market forces were beyond his control, admitting he feels ‘helpless’ when it comes to surging inflation.” Why not? Well, because what difference does raising an interest rate make when the problem is on the supply side? Is raising an interest going to, I don’t know, plant a forest to renew the paper supply? Restore the soil, so the wheat harvest doesn’t keep on dying? Build a new factory for essentials like baby formula? Of course not. Central banks know that what they’re doing is wrong. Crazy, right? So why the aitch are they doing it? Because…well…they’re on autopilot. Central banks, the way we’ve set them up, can only do two things. One, raise interest rates, two, lower them. But they’ve been at zero for decades now. This is what our institutions do. They just…react…in this weird, automatistic, unthinking ways. The idea is that doing the wrong thing is better than doing nothing. But obviously it’s stupid, absurd, ridiculous, lethal, and untrue. Raising interest rates when there is a huge, huge supply shock racing through the global economy — everything dwindling, all our resources running out, our factories crippled, just getting things across the globe a major challenge — is a catastrophic mistake. It’s only going to make things worse. Much, much, much worse. If people had 'too much money,” then sure, raising interest rates would make sense. But now? Think about the average person’s life now. They don’t just not have 'too much money,” LOL — they never have enough, so they’re always in debt. But now, they’re beginning to face chronic shortages, of everything from computers to food to soon enough electricity and even water. The basics are becoming harder and harder to get. So what is raising interest rates really going to do? It’s just going to make things more expensive. Most people exist on credit. Credit card debt, mortgage debt, student debt — a game of musical chairs, because in real terms, nobody much makes enough to really live on. And so raising interest rates is going to make the average person’s life hell. Now they’re going to face shortages and inflation — but also paying more and more interest on the debt they owe. How much debt is that? The average American owes about $25K in personal debt. That’s about a year’s median income. That number is about to go way, way up. Next, raising interest rates is only going to make inflation worse. Think about it. If we raise interest rates — but the problem is underinvestment, in everything from factories to forests to oceans — what are we really doing? We’re now making it even harder to invest. To raise money, to cross the threshold of viability, and so on. How do you solve a problem like this, then? Look. We are facing the greatest supply shock in human history. Our resources are running out. This isn’t a joke, it isn’t hyperbole, it isn’t alarmism. Even the Financial Times — the last good economic paper left — talks about it now. As our resources dwindle, of course the result will be inflation, skyrocketing prices, shortages, even forms of rationing, like California’s doing for water. What do we have to do to fix this? We have to invest. We have to build. We need new factories to supply the basics, built on new infrastructure that doesn’t kill the planet. We need everything from better power grids to water systems to food systems right down to basic hygienic products, not to mention advanced things like medicine, education, management, financing it all. The old ones — the systems we built for an industrial civilization — are not going to work for much longer. We are an industrial civilization at a turning point. The greatest one in human history so far. A few hundred years ago, we had this thing called the industrial revolution. Yes, it was a net good. But it also ended up having externalities — hidden costs. One of those was killing the planet. The price of all this manufactured plenitude ended up being the carbon in the skies which is raising the temperature to the point that we are having one of deep history’s handful of Extinction Events now. Industrial civilizations cannot last forever. After they chew up a planet’s resources, a civilization has only two options. One, replenish the planet, or two, flee. The billionaires have the fantasy of fleeing a dying planet. LOL, have fun on Mars, guys, I hear the weather’s great up there. Really nice place, too, lots of museums, cafes, bars, restaurants. I kid. Maybe one idiot can survive that way, but a civilization can’t — at least not ours. We don’t have another planet to flee to, and even if we found an earth-like one, we don’t know how to get there, not one person, let alone billions. We’re stuck here, on this dying planet that was killed by our industrial civilization. That leaves with only one realistic choice. Evolve. Advance. Transform our economies — into the next stage, what lies beyond industrial ones, economies we might call renewable ones, where everything is manufactured in loops, where balance is the purpose of the system, not profit. Alter our societies and cultures — so that just killing everything on the planet isn’t OK, but something regarded as reprehensible, just like Antonio Guterres, the UN Secretary General’s warned. How bad is it going to get? Maybe I didn’t answer the question clearly enough yet. How bad do you think it is now? That depends, probably, a lot on your age. So take however bad you think it is now, and imagine things getting much worse. That shortages become the new normal. That prices keep skyrocketing — half because a planet is facing extinction, and half because psychotic billionaires profiteer from what’s left. That amidst all that, your already huge debt load only grows, to the point that you’re just paying the interest, and the principal never goes anywhere. And then things just go poof. Suddenly, one day, you can’t get this or that anymore. Not for a year, two, three. Then the basics begin to stutter and flash out. Water systems go down regularly, energy grids, food, hygienic products, medicine. This is where we’re headed. All this? It’s just the beginning. This isn’t a recession. It’s the beginning of the Extinction Depression. Hold on, I’ll wait while you call me an alarmist. See that? Don’t look up. Look down. The birds are falling dead from the skies. Umair June 2022
| The text being discussed is available at | https://eand.co/the-economys-crashing-because-we-re-an-industrial-civilization-on-a-dying-planet-2505e36bd4db and |