Sunday, November 28, 2010

Korea: The Fate of a Cold War Vestige

[We are currently witnessing increasingly nasty displays of deadly force on both sides of the Korean divide. The North appears to be getting ready to call America's bluff. What will the South do, faced with growing belligerence from the North and progressive paralysis in the US? Our thoughts should be with the Korean people—both North and South. What follows is the introduction to the Korean edition of Reinventing Collapse which I wrote earlier this year.]

[Update: Andrei Lankov of Kookmin University, Seoul, South Korea, has a singularly lucid view of the recent cross-border shelling: North Korea is peculiar (we knew that) and this is how it asks for money. South Korea must not overreact and provoke a hugely destructive military conflict when all it has to do is part with a little bit of money.]

Over the course of the Cold War, the two superpowers—USA and USSR—built up an inventory of unresolved conflicts, which they, by tacit agreement, placed in deep freeze for the duration of their combined existence. In some cases, ethnically homogeneous entities were split up across artificial political boundaries, while in other cases disparate ethnic groups were held together by force within a single artificial political unit. Once the USSR collapsed, the multi-ethnic entities—Georgia, Moldova and Czechoslovakia—did their best to break apart, while the partitioned ones did their best to try to reunify. While some of these frozen conflicts—most notably Germany—needed both superpowers to remain refrigerated, one particular example—Korea—remained well-preserved even after the the collapse of the USSR, with the North providing its own, self-sufficient source of refrigeration.

For now, the US military continues to maintain over a thousand foreign military bases around the world, including South Korea. Most of these serve no real purpose. Even while it was still opposing the Soviets, the US military morphed into a sort of grand extortion scheme: the American intelligence community exaggerated global threats, and the military spent copious public funds pretending to counter them. To this day the military remains Washington's single most powerful political lobby (Israel is a distant second) and thanks to its efforts America spends more on defense than most of the other nations of the world combined. But what it gets for all this money is in fact quite meager. There are just two things that the US military can do well: it can shoot civilians and blow things up with wild abandon (as it has been doing in Iraq and Afghanistan); it can also hold a proud and purposeful pose while doing nothing (as in South Korea and many other countries around the world). There is not a single country that is sufficiently defenseless, defunct and impoverished—not Iraq, not Afghanistan, not even Somalia—so that the mighty US military can successfully conquer and control it. (Perhaps Haiti—but only just after a major earthquake.)

It is something of a law of history that sooner or later all empires must collapse. It is also something of a law of group psychology that people always underestimate the probability of large and sudden changes, and so are they are always taken by surprise when they occur. Nobody was more surprised by the collapse of the USSR than the professional sovietologists. As Reinventing Collapse explains in detail, the collapse of the United States of America is already a given. Only the timing of its collapse remains uncertain, because it can be triggered by any number of relatively minor, unexpected events. Inevitably, the US will be forced to repatriate its troops and to liquidate its overseas military bases, in order to concentrate its efforts on attempting to rein in the forces of chaos on its own territory. We can only hope that the unwinding and scrapping of the US military empire will proceed in a controlled manner. There are few countries in the world that have more of a reason to think forward to that day and to plan accordingly than South Korea, and so it is quite appropriate that Korean is the second language, after English, in which Reinventing Collapse has been published.

The collapse of the American empire is certain to be accompanied by a long cascade of global crises. International trade and finance are sure to be disrupted. Countries around the world will be subjected to an experience similar to what countries in the former Soviet sphere went through after the USSR collapsed. They are sure to experience economic dislocation, numerous bankruptcies, mass unemployment and impoverishment, political crises, and many lives will be cut short as a result. Some countries did better than others in adjusting to the new circumstances, and can offer useful lessons. For instance, when Cuba was cut off from the Soviet oil supply, it pioneered the use of organic urban agriculture, and it did succeed in feeding its population without the use of fossil fuel inputs. North Korea is generally not seen as a success story, but it too may be able to offer a few useful lessons on surviving superpower collapses. Moreover, it does have a population accustomed to extreme hardship, and that, in the new circumstances, may itself turn out to be an asset.

Over the course of my life I have known many Koreans, both in the US and in Russia. (There is one particular North Korean student of nuclear engineering I remember: a very serious and sober young man living quietly in a fraternity of hard-drinking Russian engineering students. "Our little Chernobyl" we called him.) From what I have been able to piece together based on what I've been able to observe, Koreans are quite patriotic, very resourceful, detest foreign meddling in their affairs, and are exactly like everyone else in wanting a peaceful and prosperous existence for themselves. It may very well be that Korea's 21st century will make up for the horrors of the 20th, while most of the former USA devolves into a collection of lawless, ungovernable, sparsely populated territories that, gradually or abruptly, fade from the world scene. But such a positive result for Korea is by no means automatic. Fierce beasts are at their most dangerous right after they have been fatally wounded, and it is hard to predict what sort of damage a fatally wounded America might cause in its agony. Korea will have to reinvent America's collapse to its own advantage. Being a foreigner, and not wishing to meddle in Korean affairs, all I can say is, think ahead, plan ahead, and may you have the best luck possible!

Wednesday, November 24, 2010

America—The Grim Truth

[Guest post by Anonymous. I was planning to write something a bit like this, but found that someone has done some of my work for me. Please give it a read, while I concentrate on the part of the topic that interests me the most: "What's Keeping You Here?"]

[Update: Judging from a lot of the comments, many people seem to think that the rest of the planet might not offer any good places for American former middle class persons to continue to pretend that they are successful. I don't find this particularly relevant; the life of a refugee is rarely comfortable. Some people even think that the US military is somehow going to be helpful moving forward, (by stealing other countries' oil, I suppose). I can't think of an occasion when it was helpful, being incapable of victory and a huge waste of resources. Apparently, to stay in the US is to stay in denial; perhaps that is what it takes to make the continuous psychological trauma of living in this country bearable. The one encouraging sign is that this condition is curable: not a single expat has voiced anything but complete and enthusiastic agreement with this article.]

Americans, I have some bad news for you:

You have the worst quality of life in the developed world—by a wide margin.

If you had any idea of how people really lived in Western Europe, Australia, New Zealand, Canada and many parts of Asia, you’d be rioting in the streets calling for a better life. In fact, the average Australian or Singaporean taxi driver has a much better standard of living than the typical American white-collar worker.

I know this because I am an American, and I escaped from the prison you call home.

I have lived all around the world, in wealthy countries and poor ones, and there is only one country I would never consider living in again: The United States of America. The mere thought of it fills me with dread.

Consider this: you are the only people in the developed world without a single-payer health system. Everyone in Western Europe, Japan, Canada, Australia, Singapore and New Zealand has a single-payer system. If they get sick, they can devote all their energies to getting well. If you get sick, you have to battle two things at once: your illness and the fear of financial ruin. Millions of Americans go bankrupt every year due to medical bills, and tens of thousands die each year because they have no insurance or insufficient insurance. And don’t believe for a second that rot about America having the world’s best medical care or the shortest waiting lists: I’ve been to hospitals in Australia, New Zealand, Europe, Singapore, and Thailand, and every one was better than the “good” hospital I used to go to back home. The waits were shorter, the facilities more comfortable, and the doctors just as good.

This is ironic, because you need a good health system more than anyone else in the world. Why? Because your lifestyle is almost designed to make you sick.

Let’s start with your diet: Much of the beef you eat has been exposed to fecal matter in processing. Your chicken is contaminated with salmonella. Your stock animals and poultry are pumped full of growth hormones and antibiotics. In most other countries, the government would act to protect consumers from this sort of thing; in the United States, the government is bought off by industry to prevent any effective regulations or inspections. In a few years, the majority of all the produce for sale in the United States will be from genetically modified crops, thanks to the cozy relationship between Monsanto Corporation and the United States government. Worse still, due to the vast quantities of high-fructose corn syrup Americans consume, fully one-third of children born in the United States today will be diagnosed with Type 2 diabetes at some point in their lives.

Of course, it’s not just the food that’s killing you, it’s the drugs. If you show any sign of life when you’re young, they’ll put you on Ritalin. Then, when you get old enough to take a good look around, you’ll get depressed, so they’ll give you Prozac. If you’re a man, this will render you chemically impotent, so you’ll need Viagra to get it up. Meanwhile, your steady diet of trans-fat-laden food is guaranteed to give you high cholesterol, so you’ll get a prescription for Lipitor. Finally, at the end of the day, you’ll lay awake at night worrying about losing your health plan, so you’ll need Lunesta to go to sleep.

With a diet guaranteed to make you sick and a health system designed to make sure you stay that way, what you really need is a long vacation somewhere. Unfortunately, you probably can’t take one. I’ll let you in on little secret: if you go to the beaches of Thailand, the mountains of Nepal, or the coral reefs of Australia, you’ll probably be the only American in sight. And you’ll be surrounded crowds of happy Germans, French, Italians, Israelis, Scandinavians and wealthy Asians. Why? Because they’re paid well enough to afford to visit these places AND they can take vacations long enough to do so. Even if you could scrape together enough money to go to one of these incredible places, by the time you recovered from your jetlag, it would time to get on a plane and rush back to your job.

If you think I’m making this up, check the stats on average annual vacation days by country:

Finland: 44
Italy: 42
France: 39
Germany: 35
UK: 25
Japan: 18
USA: 12

The fact is, they work you like dogs in the United States. This should come as no surprise: the United States never got away from the plantation/sweat shop labor model and any real labor movement was brutally suppressed. Unless you happen to be a member of the ownership class, your options are pretty much limited to barely surviving on service-sector wages or playing musical chairs for a spot in a cubicle (a spot that will be outsourced to India next week anyway). The very best you can hope for is to get a professional degree and then milk the system for a slice of the middle-class pie. And even those who claw their way into the middle class are but one illness or job loss away from poverty. Your jobs aren’t secure. Your company has no loyalty to you. They’ll play you off against your coworkers for as long as it suits them, then they’ll get rid of you.

Of course, you don’t have any choice in the matter: the system is designed this way. In most countries in the developed world, higher education is either free or heavily subsidized; in the United States, a university degree can set you back over US$100,000. Thus, you enter the working world with a crushing debt. Forget about taking a year off to travel the world and find yourself – you’ve got to start working or watch your credit rating plummet.

If you’re “lucky,” you might even land a job good enough to qualify you for a home loan. And then you’ll spend half your working life just paying the interest on the loan – welcome to the world of American debt slavery. America has the illusion of great wealth because there’s a lot of “stuff” around, but who really owns it? In real terms, the average American is poorer than the poorest ghetto dweller in Manila, because at least they have no debts. If they want to pack up and leave, they can; if you want to leave, you can’t, because you’ve got debts to pay.

All this begs the question: Why would anyone put up with this? Ask any American and you’ll get the same answer: because America is the freest country on earth. If you believe this, I’ve got some more bad news for you: America is actually among the least free countries on earth. Your piss is tested, your emails and phone calls are monitored, your medical records are gathered, and you are never more than one stray comment away from writhing on the ground with two Taser prongs in your ass.

And that’s just physical freedom. Mentally, you are truly imprisoned. You don’t even know the degree to which you are tormented by fears of medical bankruptcy, job loss, homelessness and violent crime because you’ve never lived in a country where there is no need to worry about such things.

But it goes much deeper than mere surveillance and anxiety. The fact is, you are not free because your country has been taken over and occupied by another government. Fully 70% of your tax dollars go to the Pentagon, and the Pentagon is the real government of the United States. You are required under pain of death to pay taxes to this occupying government. If you’re from the less fortunate classes, you are also required to serve and die in their endless wars, or send your sons and daughters to do so. You have no choice in the matter: there is a socioeconomic draft system in the United States that provides a steady stream of cannon fodder for the military.

If you call a life of surveillance, anxiety and ceaseless toil in the service of a government you didn’t elect “freedom,” then you and I have a very different idea of what that word means.

If there was some chance that the country could be changed, there might be reason for hope. But can you honestly look around and conclude that anything is going to change? Where would the change come from? The people? Take a good look at your compatriots: the working class in the United States has been brutally propagandized by jackals like Rush Limbaugh, Bill O’Reilly and Sean Hannity. Members of the working class have been taught to lick the boots of their masters and then bend over for another kick in the ass. They’ve got these people so well trained that they’ll take up arms against the other half of the working class as soon as their masters give the word.

If the people cannot make a change, how about the media? Not a chance. From Fox News to the New York Times, the mass media in the United States is nothing but the public relations wing of the corporatocracy, primarily the military industrial complex. At least the citizens of the former Soviet Union knew that their news was bullshit. In America, you grow up thinking you’ve got a free media, which makes the propaganda doubly effective. If you don’t think American media is mere corporate propaganda, ask yourself the following question: have you ever heard a major American news outlet suggest that the country could fund a single-payer health system by cutting military spending?

If change can’t come from the people or the media, the only other potential source of change would be the politicians. Unfortunately, the American political process is among the most corrupt in the world. In every country on earth, one expects politicians to take bribes from the rich. But this generally happens in secret, behind the closed doors of their elite clubs. In the United States, this sort of political corruption is done in broad daylight, as part of legal, accepted, standard operating procedure. In the United States, they merely call these bribes campaign donations, political action committees and lobbyists. One can no more expect the politicians to change this system than one can expect a man to take an axe and chop his own legs out from underneath him.

No, the United States of America is not going to change for the better. The only change will be for the worse. And when I say worse, I mean much worse. As we speak, the economic system that sustained the country during the post-war years is collapsing. The United States maxed out its “credit card” sometime in 2008 and now its lenders, starting with China, are in the process of laying the foundations for a new monetary system to replace the Anglo-American “petro-dollar” system. As soon as there is a viable alternative to the US dollar, the greenback will sink like a stone.

While the United States was running up crushing levels of debt, it was also busy shipping its manufacturing jobs and white-collar jobs overseas, and letting its infrastructure fall to pieces. Meanwhile, Asian and European countries were investing in education, infrastructure and raw materials. Even if the United States tried to rebuild a real economy (as opposed to a service/financial economy) do think American workers would ever be able to compete with the workers of China or Europe? Have you ever seen a Japanese or German factory? Have you ever met a Singaporean or Chinese worker?

There are only two possible futures facing the United States, and neither one is pretty. The best case is a slow but orderly decline – essentially a continuation of what’s been happening for the last two decades. Wages will drop, unemployment will rise, Medicare and Social Security benefits will be slashed, the currency will decline in value, and the disparity of wealth will spiral out of control until the United States starts to resemble Mexico or the Philippines – tiny islands of wealth surrounded by great poverty (the country is already halfway there).

Equally likely is a sudden collapse, perhaps brought about by a rapid flight from the US dollar by creditor nations like China, Japan, Korea and the OPEC nations. A related possibility would be a default by the United States government on its vast debt. One look at the financial balance sheet of the US government should convince you how likely this is: governmental spending is skyrocketing and tax receipts are plummeting – something has to give. If either of these scenarios plays out, the resulting depression will make the present recession look like a walk in the park.

Whether the collapse is gradual or gut-wrenchingly sudden, the results will be chaos, civil strife and fascism. Let’s face it: the United States is like the former Yugoslavia – a collection of mutually antagonistic cultures united in name only. You’ve got your own version of the Taliban: right-wing Christian fundamentalists who actively loathe the idea of secular Constitutional government. You’ve got a vast intellectual underclass that has spent the last few decades soaking up Fox News and talk radio propaganda, eager to blame the collapse on Democrats, gays and immigrants. You’ve got a ruthless ownership class that will use all the means at its disposal to protect its wealth from the starving masses.

On top of all that you’ve got vast factory farms, sprawling suburbs and a truck-based shipping system, all of it entirely dependent on oil that is about to become completely unaffordable. And you’ve got guns. Lots of guns. In short: the United States is about to become a very unwholesome place to be.

Right now, the government is building fences and walls along its northern and southern borders. Right now, the government is working on a national ID system (soon to be fitted with biometric features). Right now, the government is building a surveillance state so extensive that they will be able to follow your every move, online, in the street and across borders. If you think this is just to protect you from “terrorists,” then you’re sadly mistaken. Once the shit really hits the fan, do you really think you’ll just be able to jump into the old station wagon, drive across the Canadian border and spend the rest of your days fishing and drinking Molson? No, the government is going to lock the place down. They don’t want their tax base escaping. They don’t want their “recruits” escaping. They don’t want YOU escaping.

I am not writing this to scare you. I write this to you as a friend. If you are able to read and understand what I’ve written here, then you are a member of a small minority in the United States. You are a minority in a country that has no place for you.

So what should you do?

You should leave the United States of America.

If you’re young, you’ve got plenty of choices: you can teach English in the Middle East, Asia or Europe. Or you can go to university or graduate school abroad and start building skills that will qualify you for a work visa. If you’ve already got some real work skills, you can apply to emigrate to any number of countries as a skilled immigrant. If you are older and you’ve got some savings, you can retire to a place like Costa Rica or the Philippines. If you can’t qualify for a work, student or retirement visa, don’t let that stop you – travel on a tourist visa to a country that appeals to you and talk to the expats you meet there. Whatever you do, go speak to an immigration lawyer as soon as you can. Find out exactly how to get on a path that will lead to permanent residence and eventually citizenship in the country of your choice.

You will not be alone. There are millions of Americans just like me living outside the United States. Living lives much more fulfilling, peaceful, free and abundant than we ever could have attained back home. Some of us happened upon these lives by accident – we tried a year abroad and found that we liked it – others made a conscious decision to pack up and leave for good. You’ll find us in Canada, all over Europe, in many parts of Asia, in Australia and New Zealand, and in most other countries of the globe. Do we miss our friends and family? Yes. Do we occasionally miss aspects of our former country? Yes. Do we plan on ever living again in the United States? Never. And those of us with permanent residence or citizenship can sponsor family members from back home for long-term visas in our adopted countries.

In closing, I want to remind you of something: unless you are an American Indian or a descendant of slaves, at some point your ancestors chose to leave their homeland in search of a better life. They weren’t traitors and they weren’t bad people, they just wanted a better life for themselves and their families. Isn’t it time that you continue their journey?

Sunday, November 21, 2010

But what is "Community"?

[Auf Deutsch. Vielen Dank, Alexander!]


[This is another guest post from Yevgeny, which he wrote in response to my article How (not) to Organize a Community. He poses what, to a Russian, seems an obvious question: “How (not) to organize a WHAT?” You see, upon close examination the English word “community” turns out to be all but meaningless. English speakers all assume that they know what they are talking about when they say it, but a Russian speaker who tries to translate it ends up with the following list: “society, union, locality, district, hostel, state, population, residents, communal ownership.” One begins to suspect that “community” is just a pompous and self-important way of saying “people,” just as American nannies (sorry, “daycare specialists”) refer to the little sprogs in their charge as “doing activities,” instead of “playing games” as normal, non-robotic children do. How did I manage to lose sight of this? “It's because you listen to idiots,” says my wife. In any case, it is good of Yevgeny to reel me back in.]

[Update: Looks like we ruffled some feathers in the Transition Towns neck of the woods. Here I am doing my best to bring to you stories of real survival by real Russians (so you don't have to limp along with your hackneyed Mad Max/Waterworld clichés), and for that I am painted as being part of an "apocalyptic cult" that rejects the sacred idea of "komyooniti!" This, they say, is a "direct assault on the optimism of people who accept peak oil!" I am happy to be able to assure you that this is all complete nonsense. Jean, who attended my talk in Lincoln, MA last week, wrote this: "I found you very reassuring in your reminding me that despite all the upcoming disaster life will go on; perhaps not as we would like but then perhaps not so bad either. Somehow I had lost track of that. It may not be the life we're familiar with but then it might be a better life too."]

[Update: Thank you Dave Ewoldt for straightening out the "apocalyptic cult" nonsense I quoted above. Let's be straight with each other: Transition would have required some Solutions, like Powerdown and Relocalization, to have already been implemented by now on a large scale, so we won't be making our scheduled stop there. Our next, emergency stop will be at Collapse. Let's make the best of it.]

[Update: It just keeps going. Now Eric Curren of the "apocalyptic cult" nonsense referred to above has provided some more commentary on this ever-exciting topic:  "Too much scary talk won't help us recruit people; instead, it will just scare them away," he says, and this will prevent us from "preaching beyond the peak-oil and eco-choir." So, choir, are you scared? All 16,641 of you who have visited this blog since this article got published six days ago? (That, by the way, is a stunning 0.00065% of all of humanity; we are doling out planetary salvation by the heaping teaspoon!) I for one definitely am scared—that this blog will become too popular and turn into a job—an unpaid job, of course. "Preaching"—now that does sound like a job, and may J-Zeus the hip-hop god strike me down if I ever get preachy. Believe me!—or not, and think for yourselves, because you are on your own.]

I read your article about differences in “komyooniti.” Let me ask you as a linguist, what's the most adequate Russian word for it?

It's been hammered into my head that the most important things are food, a roof over your head, security and mobility—the first two especially, and everything else is just there to tempt you. And it seems that the best way to procure food is not to take it away or steal it or buy it, but to grow it and to guard it, because there are always people to guard it from. That is, to be close to food. And when the local industrial agriculture kicks the bucket and the food will stop being delivered to the cities, won't the residents of backward little villages be the winners? You can imagine gangster raids into rural places, rifling through barns and fields, and forcing people to pay a tribute, as in feudal times—but that's only if they find enough fuel to get there and back.

I know that no matter what economic or political regime prevails, my Russian village kin will survive, provided they hold on to their land and provided climate change doesn't kill off all the flora and fauna around them. I believe that the Russian, conditioned by centuries of serfdom, the GULAG and the entire Soviet experience, is a very hardy beast, in spite of alcoholism, drug abuse and moral decay. Also, as a child of the industrial ghetto, I entirely agree that the underclass is better-prepared. Our city is a smelly, dusty port city, industrialized in the extreme. It is inhabited by exasperated, embittered, bloody-minded people. Mothers often have to bring up children by themselves because the husbands spend half the year out on the sea. The merchant marine offers about the only way to rise above poverty. The criminal element is prosperous and well-organized, just as it should be in a port city. Every child knows the names of the celebrated local criminals (the so-called “authorities”), including the legendary ones, who perished in the maelstrom of the 1990s. The little children play at Cosa Nostra and go around mugging people. Every one of them belongs to a neighborhood or even a specific courtyard. Sometimes there are wars between kids from different apartment buildings. The most important question in any meeting, during any time of day or night, is “What neighborhood are you from?” If you are unlucky enough to be from the wrong neighborhood, you might still have a straw to grasp if you know one of the local criminal “authorities.” If you decide to get the police involved, then you are in for some additional, official abuse. Smart people don't stray outside their territory in places where they don't know anyone. Children know who lives where and who would mug them, and keep out. The parents aren't particularly concerned about the safety of their children, and the children are quick enough to learn what they need: how to break noses, how to be on guard, how to talk like a gangster, how to spot easy marks for grabbing a cell phone or a wallet, how to be a street-fighter. They start from about age seven, as soon as they start going to school. This all happens quite spontaneously, without any conspiracy. This is how it will always be in my city. It's not a pleasant way to live, but it is survivable.

I have already lived through some of the experiences mentioned in Reinventing Collapse. Some of my friends took the crooked path in childhood, some have done time, some more than once. But I was certain that they won't touch me, or let anyone else touch me. On quite a few occasions they saved my skin and even helped me out with money. Some have lived with me, some I've sheltered from police: they are “our people” and the police are “the enemy”—along with the rest of the government, and we must defend “our people” from them.

None of this was the case in my father's village. There were plenty of alcoholics and drug addicts, but everyone was “our people,” and so there was no-one to fight. If any one of them got assaulted, the entire village would be out looking for the offender. Theoretically, a misbehaving stranger could get his comeuppance right there and then, but in fact street crime was all but nonexistent. Bicycles would get stolen, but that is about it.

The people there are a gregarious lot. At all the weddings, funerals, army send-offs, birthdays, anniversaries the house is full of people, there is a ton of food, and plenty of singing and dancing. Everybody has their own domestic food source, and, of course, everyone brews their own alcohol. All passers-by say hello to each other, even if they don't know each other. Friends and neighbors are treated as part of the family. Russians don't use the word “cousin”—everybody is just a brother or a sister—and that says a lot about our culture. In that village, I have so many brothers, sisters, nieces and nephews, uncles and aunts, grandfathers and grandmothers that in every tenth house they are happy to receive me. Growing up, I was bored there, and was attracted by the excitement of the concrete jungle in the city. But village was real life, the way life should be.

My father's family did not live on this land for centuries. They migrated from the hungry Urals to the fertile Kuban in the 1940s. But nothing held them back from becoming “our people” in just one generation. My grandfather had so many brothers and sisters that the village was a sort of clan—a very large family. Everybody was either related, or friends, or friends of friends, and so everybody could always find a sympathetic policeman, inspector, doctor, teacher, social worker, military representative and so on. All business was transacted in this way only: through acquaintances, which is the one and only guarantee of helpful and excellent service.

The black market flourished to such an extent that nobody depended on official employment or deliveries to stores. Many men fished illegally, and having connections at the Fisheries Service helped a lot. Everyone had kitchen gardens, chicken coops, cattle, pigs. We bought salt at the government store, and bread, although my grandmother could bake the bread just as well herself. But the most pleasant part of the black market is, of course, controlled substances. Dear reader, why do you think it is that Russia lags behind Luxembourg, Switzerland and the Czech Republic in per capita consumption of alcohol? Well, that's because actual alcohol consumption in Russia is incalculable. To say that not all of what Russians drink is purchased at a store is to say nothing. Black market alcohol manufacturing and distribution thrives in Russia as nowhere else. Superpower politicians seem to have poor memory for history. Everyone knows how the Prohibition in the USA gave rise to powerful criminal syndicates and enriched the Kennedy clan. Well, on May 17, 1985 Gorbachev passed a “dry law” which proved catastrophic for the Soviet economy. Black market production blossomed and thrived right through the 1990s. Before that law, profits from the sale of alcohol made up 25-30% of the state budget of the USSR, and so Gorbachev's decision was quite possibly the last nail in the Soviet regime's coffin.

As far as transportation, the busiest street in the village saw maybe one car a minute during the busiest part of the day, and so the air was very clean. At night the village and the surrounding farms turned dark and quiet. But even this small village was served by buses from different directions, and the drivers of these buses could be asked to stop at any house. My uncle drove one such bus, and so on special occasions our family had the bus to ourselves, to go on a mass excursion somewhere—at government expense, of course! (Everyone knew of this, and nobody was opposed.)

The level of poverty sometimes looked quite frightening, but there was something about it that provided a sense of safety and security. I remember watching news reports of street demonstrations in Moscow in 1991: a crowd chanting “Yeltsin is a traitor” marches menacingly toward a line of riot police, and a melée ensues. But we couldn't care less, because none of this had any effect on us. We were poor under the Soviets, and we were poor afterward, but we stuck together. Whenever we need to marry one of us, bury one of us, get one of us a government job, a solution always presented itself. Family celebrations never involve just the nuclear family. The house is always open, the food is brought in by the guests, and there is always a musician or two present, because after eating and drinking Russians like to sing. At moments like this you can forget that you are living in a third world country and that life is really hard. Saturday is sauna day—another excuse to receive guests, since a sauna relaxes and predisposes to conversation. These are the simple ingredients that make up a real society: Family, Clan, Home—where you feel safe in any situation.

It seems to me that Russia and other former Eastern Block countries have already gone through hell and are now on the way to recovery, while the USA and other formerly rich countries are yet to go through this hell, and nobody knows what it will look like. The take-home point is simple: to survive in a third world country, you have to know who your people are, and who are the strangers. The more of your people there are, the better, but it is absolutely unacceptable if everyone beyond the confines of your family nest is a stranger. Then there is simply no chance that you will survive.

Sunday, November 14, 2010

The Limits of Incompetence

Our social instincts compel us to think well of our fellow man. In spite of much evidence to the contrary, we think him competent to cast votes, to decide how to spend and borrow money, and how to bring up his own children. We persist in this conviction even as the manifest lack of competence at every level of American society causes it to careen toward ruin. We recoil at the thought of government bureaucrats separating the competent from the incompetent, making those who are incompetent, along with their children, wards of the state, remedying their incompetence through strict discipline when possible, and consigning the rest to a lifetime of manual labor in service of society. Many of us quite justifiably think that the government bureaucrats are themselves incompetent, or worse. Those who no longer trust the competence of either the government or our fellow man instead put their faith in corporations or in churches or even in bloggers and internet newsgroups (pathetic, I know). They may preserve their sanity by doing so, but it does nothing to change the big picture. Presumably, it is better to be a competent observer of collapse than an incompetent one.

Of course, the label of generalized American incompetence seems to cast too wide a net. After all, most of us have the competence to not starve when provided with cans of baked beans and a can opener. But it seems that each and every one of us is forced to plead incompetence when presented with the task of judging the value of various figments of financial imagination which comprise fully half of the increasingly fictional US economy, for the depths of incompetence on which this crumbling edifice floats are truly unfathomable. It started with incompetent public officials who blithered on about “ownership society,” which is a boneheaded idea. This, in turn, empowered individuals who were incompetent to make financial decisions to borrow vasts sums of money, with the loans backed by an implicit government guarantee. It proceeded to incompetent appraisers, who inflated the value of the collateral based on circular reasoning (value = price = value), and to incompetent bankers, who improperly documented, resold and bundled the loans into unfathomably faulty Collateralized Debt Obligations. It proceeded to incompetent government officials who treated these faulty documents as valuable and backed up their value with public money which they are yet to collect in taxes. It proceeded to incompetent judges who rush through foreclosures and throw people out of their homes based on faulty or nonexistent documentation of ownership.

Some people express umbrage at all this, harrumphing about this and that technical defect in the paperwork, throwing around big words like “personal responsibility” and “fraud.” Some of them claim that a concerted effort by brilliant legal and financial minds must be made, to flush all of this illegality out of the system, to determine what all of this soiled paper is really worth, to punish the guilty and to restore dignity to the innocent who were harmed along the way. In this they have so far been quite incompetent: they have vociferously yet impotently complained about a matter over which not a single one of them is competent to exercise any degree of control. An attempt to unscramble all of the faulty financial paperwork is bound to lead to a ridiculous death by a thousand paper cuts. About half of the US economy consists of financial froth that is floating above an unfathomable abyss of incompetence, and once that froth blows away, what will remain of the US economy will turn out to look like a deflated, shriveled little thing, at a standstill because it will be unable to borrow internationally to finance fuel imports, full of defunct financial institutions right up to and including the Federal Reserve, with a worthless currency that nobody is willing to accept as payment, and full of people furiously shaking their tiny fists, hurling their impotent rage at an indifferent sky.

How does a “can do” nation degenerate to such depths of incompetence? A key insight is offered by the Dunning-Krueger effect, defined and experimentally tested by Justin Kruger and David Dunning at Cornell University. Kruger and Dunning proposed that, “for a given skill, incompetent people will:
  1. tend to overestimate their own level of skill;
  2. fail to recognize genuine skill in others;
  3. fail to recognize the extremity of their inadequacy;
  4. recognize and acknowledge their own previous lack of skill, if they can be trained to substantially improve.”
Krueger and Dunning, and other experimenters, have shown this effect to be quite pronounced. Competent people initially assumed that others were competent as well, and were able to correct their misperception once they were allowed to examine the work of others. Incompetent people, on the other hand, were only able to recognize competence in others after being taught to recognize their own incompetence. Thus, a weaker version of point 4 above suffices: incompetent people do not need to become competent, but to able to judge the superior competence of others they do have to gain some insight into their own incompetence.

But now comes an embarrassing fact: Krueger and Dunning carried out their initial research on American subjects, and their results squared well with their hypothesis, but when their experiments were repeated with Europeans and East Asians, a different picture emerged. With Europeans, the effect seemed barely measurable, while with East Asians the exact opposite picture emerges: Dr. Steven Heine of the University of British Columbia has found that East Asians tend to underestimate their abilities, focusing on self-improvement and group cohesion. I have come across examples of such a systematic error before. I recall listening to a certain researcher of human behavior at Yale, who was discussing the results he got by doing experiments on his students, which he blithely extrapolated to all of humanity. But I suspected that an error had crept into his experiments, due to his unstated and unquestioned assumption that his little sample of Yalies was representative of the inhabitants of Planet Earth rather than Planet Yale (which is what I walked away thinking).

And so it turns out that this blind faith in everyone and sundry's competence is quite specifically an American trait. I invite cultural anthropologists to concentrate their efforts on finding out how this cultural trait could have ever evolved, seeing as it is quite obviously maladaptive. I would venture to guess that it will come down to a false incentive for fostering “inclusive fitness” rather than fitness per se: one's ability to work and play well with others being emphasized and rewarded over and above one's ability to work and play well, others be damned if they can't keep up. A certain vital part of humanity has been bred out of us. How many of you Americans have sat through endless meetings, listening dutifully (or pretending to while doodling on a pad or daydreaming) whereas what you really wanted to do is to stand up, extend the accusatory finger and say: “This is bullshit. You, Sir, are an idiot. How dare you waste our time with this nonsense? Shut up and get out.” Were you to do this, you would have found your American colleagues cringing pathetically and trying desperately to smooth things over while avoiding your eyes like whipped puppies, while your foreign colleagues would be doing their best to stifle their guffaws while looking at you with newfound respect.

Now, if you have ever worked for a Chinese, a Russian, or especially an Israeli company, chances are you have been witness to a few variants of the scene described above, all accompanied by easy laughter and cheers, and a general sigh of relief: idiot expelled, sanity restored. But here in America we are now a bunch of pathetic cringing ninnies branded with a peace sign and mooing dolefully. Some Mr. Gnang-Gnang or other from Planet 10 can get up in front of us and tell us that printing half a trillion dollars will create jobs, and not a single person jumps up an screams “WHAT? WHAT?” No, we don't do that here, plus it's almost lunch, so let's just chew our cud until somebody comes and feeds us. Here's a prime example: just a week ago Germany's Finance Minister Wolfgang Schäuble called US policy “ratlos,” which translates into the local vernacular as “clueless.” Immediately some apologists popped up, saying that “clueless” is too harsh a translation. Well, here is “ratlos” done unto English via Russian, thanks to Google Translate: “ignorant, embarrassed, helpless, indecisive.” Does that work for everyone?

To recap, we have three categories of incompetent people, whose definitions at this point in our exposition should seem uncontroversial. First, we have the proud, the few—the competent. They are becoming rather thin on the ground in the US, because Americans have largely forgotten how to make new ones, and the ones that exist are getting a bit long in the tooth. Their main problem is that they have been conditioned to think the best of others; in essence, to suffer fools gladly. They can be turned around simply by setting the right incentives.

Second, we have the incompetents who know the limits of their competence. These are potentially useful: they just have to be matched up with tasks at which they can become competent. They are less likely to have inflated expectations for what they can expect to achieve through their labors, and although their lavish habits may not be in line with what their increasingly impoverished country can provide, they can be brought around.

Third, we have the vast army of the deeply incompetent, some of whom look upon themselves as paragons of home-spun self-reliance, have a “who the hell do you think you are to tell me anything” attitude toward their betters, and with their clueless bungling pose a grave danger to themselves and to everyone else. They are a problem, but many of them can be rehabilitated. You see, being pointed and laughed at when you do something stupid is something of a human universal, and most people are wired to accept that message, remember it as a formative experience, and struggle to avoid it in the future.

But there is also a fourth category of incompetent people: those who are so deeply incompetent that nobody can assess their competence, or lack thereof, because they cleverly shy away from all forms of productive activity, thus making their competence, or lack thereof, impossible to assess. Wouldn't it be nice if they displayed some telltale physiological trait, such as tufts of hair on the earlobes or the nose? Or if some genius were to devise a hand-held sensor that, when pointed at them, would blink a red light and sound an alarm? Alas, nothing of the sort exists. What's more, pointing at them and laughing serves no purpose, for they inhabit a rarefied bureaucratic realm where human cultural universals do not apply, and where anyone who calls them incompetent can be treated as a security risk, to be handled by those who are competent at just one thing: dispensing violence.

The final refuge of the deeply incompetent is in economics and finance. It is easy to see why this is so. Think of any very useful object you happen to own, and think of its value. Do you know how to use it well? Do other people? (The fewer the better, of course.) Is it ruggedly built, to last a long time, or is it flimsy? If it breaks, do you know how to repair it? Can you live without it, or are you hopelessly dependent on it? Is it a popular item, and therefore a thief magnet, or is it sufficiently unusual to be passed over by the casual thief despite of its usefulness to you? Does anyone know that you have it? (The fewer know, the safer it will be.) Do you know one or two people who like it as much as you do, in case you have to sell it? And so on. Now usher in a bunch of financial incompetents. What can they tell about the value of your very useful object? Just its price. How can they tell? By asking other incompetents how much they would pay for it. To this bunch, value equals price equals value equals price, at various times and in different places, until the whole thing crashes and burns because nobody actually knows the value of anything to them.

What empowers these people is our love of money. The last vestige of sanity an American seems to be able to cling on to is in his ability to count his money. While he still has some money, he adds up his “net worth,” and the higher the number, the better he feels about himself. Once all he has left is debt, he adds up the money he doesn't have, and the more “credit” he has, the better he feels about himself, because of all the things he can still “afford.” And once he finally defaults on his loans and no longer has any credit, it is as if, in his own minds, he ceases to exist. “I lost everything,” he is apt to say, as if his earthly existence amounted to a number written on a piece of paper. A population that is in thrall to arbitrary numbers written on bits of paper is what makes it possible for the financial incompetents to remain undetected, practicing their sort of low-grade magic. It is as if everyone is blindly in love with them and thus unable to see their faults. But this spell can and will be broken, because the rest of the world is now quite ill-disposed to tolerating any more of this financial nonsense. A day will arrive when America's sages and high priests of finance, together with their wealthy clients, will suddenly turn out to be, for all to see, what they have been all along: clueless incompetents unsuitable for any task that is worth doing.

Sunday, November 07, 2010

Happy November Seventh

Will people still celebrate the Fourth of July once the United States of America has ceased to exist? Let's hope they do, for memory's sake.

Power to the Councils! Peace to the Nations! Land to the Farmers! Happy Revolution Day, everyone!

Tuesday, November 02, 2010

A Survey of Unlikely Voters

It is election season in the United States, and if you tune in to any of the local news programs/comedy shows you are likely to get an earful of commentary, opinion, conjecture and wild speculation on what the “likely voters” are likely to do. Allow me to save you the trouble: they are likely to go and vote. Who they are going to vote for doesn't matter: without exception they are going to vote for an American politician: a lawyer or a businessman, someone belongs to one of a few available political categories, all of them misnomers designed to confuse the public. There are those who call themselves conservatives, and who are in fact not conservatives at all but free market liberals. There are those who call themselves libertarians, but who either are not libertarians at all, or have somehow forgotten their anarchist-socialist roots, and who are in fact also free market liberals. Then there are the “liberals,” who are also free market liberals but aspire to being nice, whereas the rest of the free market liberals are nasty. But nobody here wants to be called a “liberal,” because in this topsy-turvy political universe it has become little more than a term of abuse. It takes a long time to explain this nonsense to visitors from abroad, and when you round out the explanation by saying that these distinctions don't actually matter—because no matter what these politicians call themselves they are all state-capitalists who have been exhibiting quite a few fascist tendencies of late—the visitors inevitably feel that you have wasted their time.

But if you try to explain this nonsense to a domestic audience, it will be you who will feel that your time has been wasted. US voters are easy marks for political tricksters, and it is probably something that just can't be helped. The neatest trick is getting them to vote against their class interest. A few generations ago we had the “Reagan democrats”: working class people who voted—not once but twice!—for someone who was anti-union and generally anti-labor. And now, a few decades of political progress later, we have the “Teabaggers”: middle-aged obese and sickly white people who are about to cast their vote for someone who will take away their government-provided electrifc scooters and their very expensive medical care. When the political tricksters fail and the voting public actually gets a little bit upset, it is time to send in the clowns, and so most recently a couple of late-night TV comedians have joined the fray, holding a massive rally to “restore sanity.” This new sanity is epitomized by the following family portrait: daddy is a “Conservative Republican” mommy is an “Obama Liberal,” the son is a “Libertarian,” the daughter is a “Green,” and the dog (the only one of them who is sane) is trying to run away. Meet the Losers: they are the ones who have no idea what class their family is in, or what their class interest is, and as far as their chances of making successful use of democratic politics to collectively defend and advance their class interest, well... they are the Losers—that says it all, doesn't it? All that blood spilled in the name of liberty and democracy, and to show for it we have a country of insane Losers and the odd sane stray dog, free to a good home.

But it is all a waste of time: the Losers may vote or not vote, they may flap their gums at the breakfast table or twinkle their toes up and down the street holding signs, where they may take part in peaceful protest or get teargassed and shot with rubber bullets—the result will be exactly the same. No matter who US politicians claim to be, all of them exhibit two powerful but conflicting tendencies: to bureaucratize and to privatize. The bureaucratizers among them wants to grow public bureaucracies, creating political machines and systems of patronage, and providing ample scope for pork barrel politics. The privatizers among them want to dismantle public institutions and privatize everything under the sun in order to shrink the public realm and to enhance the concentration of private wealth. These two imperatives are at odds, not for any ideological reason, but simply because there is an inevitable tug of war between them: big public bureaucracies expand the public realm, but privatizing the public realm shrinks it. All American politicians find it in their interest to both expand government and to privatize its functions. When the US economy is growing nicely, the two factions find that their wishes are granted, and they go merrily along enlarging federal and local bureaucracies while assisting in the concentration of wealth, making everyone they care about happy—everyone except the population, which is being steadily driven into bankruptcy and destitution, but that's just a problem of perception, easily remedied by an army of political consultants come election time.

This public-private feeding frenzy is called “bipartisanship.” When the economy isn't growing, the two factions are forced to square off against each other in what amounts to a zero-sum game. This is called “gridlock.” Currently the US economy is growing at such an anemic rate that unemployment (defined as “percentage of working-age able-bodied people without a job”—not the fake “official” number) is continuing to increase. Even this anemic growth is likely to be corrected down in the coming months. The future glows even dimmer: a good leading indicator of economic growth happens to be “discretionary consumer durable goods spending,” and the good people who have had their eye on it tell us that it has been trending downward for a few months now, and portends a GDP growth rate of around negative six percent, which, if it holds at that level and does not deteriorate further, gives the US economy a half-life of just under a dozen years. A continuously shrinking economy assures continuous gridlock.

Although most if not all political commentators are on record saying that gridlock a bad thing, it is hard to find a reason to agree with them. Given the country's predicament, which of the two fruits would we wish this putatively beneficial bipartisanship to yield: the gift of more federal and local bureaucracy or the gift of more privatization and concentration of private wealth in fewer and fewer hands? Let us suppose that you are a big fan of government bureaucracy; how, then, do you expect the country to be able to afford to feed all these bureaucrats when the economy—and therefore the tax base— is shrinking? And supposing that you idolize the ultra-rich and expect to become one yourself as soon as you win the lottery; how, then, do you expect your riches to amount to anything, seeing as the vast majority of this private wealth is positioned “long paper”—currency, stocks, bonds, intellectual property or some more exotic or even toxic pieces of paper with letters and numbers printed on them. All of these financial instruments are bets on the future good performance of the US economy, which, by the way, is shrinking. A continuously shrinking economy is a large incinerator of paper wealth, and all these paper instruments are in the end just ephemera or memorabilia, like tickets to a show that's been cancelled. The bureaucratic contingent and the wealthy-on-paper contingent have enough paper between the two of them to feed the fire for a little while longer, but does the country really need a bipartisan effort increase this rate of combustion? If you enjoy being part of this system, and want to show your appreciation for it by casting a vote, you might as well vote for gridlock, because doing so is more likely to prolong your pleasure.

Cast your vote for gridlock, if you wish; your time is yours to waste. But what of all those who aren't particularly interested in voting? My informal survey of unlikely voters indicates that a surprisingly large number of them is thinking of leaving the country. Some days it seems like anybody who has a brainwave is thinking about running away. This is especially true of dual citizens who hold a US passport as a passport of convenience (it is one of the easiest in the world to get). For them it is more a question of “When?” It is also true of those born elsewhere, or have a foreign-born parent, or some other tenuous connection with another country. But there are many among those who are thinking of leaving who have lived in the US their entire lives, have barely ever ventured abroad, and are not proficient in a single foreign language! They don't know how to fit in anywhere but here, but they do know that they can't stay where they are. Finding these people a good new home seems like a bit of a challenge.

It seems that many of those who are clever enough to realize that voting here is a fool's errand also want to leave this country. But how many of them are actually successfully leaving? The answer (again, based on my decidedly informal and limited survey of unlikely voters) is that the vast majority of those who are thinking of leaving are failing to do so. This is rather unfortunate, because the planet can absorb only so many US expatriates. Should you decide to become one yourself, it would make sense for you to try to find yourself a chair to sit down on before the music stops. Even now the mood in many countries is turning anti-immigrant. The longer you wait, the higher your risk of becoming stranded in what remains of the US.

I will certainly have more to say on this topic—once the election fever has abated, Washington is safely gridlocked, and the bonfires of bureaucratic grandiosity and paper wealth are burning bright.

Monday, November 01, 2010

Peak Oil is History

[Japanese translation (pdf) (Cached)]
[In italiano. Grazie, Paolo!]
[En français. Merci, Tancrède!]
The marketing blurb on the back cover of the first edition of my first book, Reinventing Collapse, described me as "a leading Peak Oil theorist." When I first saw it, my jaw dropped—and remained hanging. You see, if you run through a list of bona fide leading Peak Oil theorists—your Hubberts, your Campbells, Laherrères, Heinbergs, Simmonses and a few others worth mentioning, you will not find a single Orlov among them. In vain would you search the annals and conference proceedings of the Association for the Study of Peak Oil for any trace of your humble author. But now that this howler is in print and circulated in so many copies, I suppose I have no choice but to try to live up to the expectation it set.

My disqualifications aside, now does seem to be an auspicious moment to hold forth with a new piece of Peak Oil theory, because this is the year when, for the first time, just about everyone is ready to admit that Peak Oil is real, in essence, though some are not quite ready to call it by that name. Just five years ago everyone from government officials to oil company executives treated Peak Oil theory as the work of a lunatic fringe, but now that conventional world oil production peaked in 2005, and all liquids world production peaked in 2008, everyone is ready to concede that there are serious problems with growing the global oil supply. And although some people still feel skittish about using the term Peak Oil (and a few experts still insist that the peak must be referred to as "an undulating plateau," which, if anything, is a graceful turn of phrase) the differences of opinion now largely stem from a refusal to accept the terminology of Peak Oil rather than the substance of peaking global oil production. This is, of course, quite understandable: it is awkward to suddenly jump from shouting "Peak Oil is bunk!" to shouting "Peak Oil is history!" in a single bound. Such acrobatics are only safe if you happen to be a politician or an economist.

Now that the matter has been largely settled, I feel that the time is ripe for me to weigh in on the subject and declare, unequivocally, that Peak Oil is indeed bunk. Not the part about global oil production reaching a peak sometime right around now then declining inexorably: that part seems true enough. Nor the part about oil production in any given province becoming constrained by geology and technology once the peak is reached: that part, under properly designed experimental conditions, seems predictive as well. In fact, the depletion model has been confirmed beautifully by the example of the continental United States minus Alaska since 1970. But the idea that this same depletion model can be applied to the planet as a whole, is, I feel, something that must be rejected as utterly and completely bogus. To see what I mean, look at a typical Peak Oil chart (Fig. 1) that shows global oil production climbing up to a peak and then declining.


Observe that the upward slope has a lot of interesting structure to it. There are world wars, depressions, imperial collapses, oil embargoes, discoveries of giant oil fields, not to mention the ugly boom and bust cycles that are the bane of capitalist economies (whereas socialist ones have sometimes been able to grow, stagnate and eventually collapse far more gracefully). It is a rugged slope, with cliffs and crevasses, craggy outcrops and steep inclines. Now look at the estimated downward slope: is it not shockingly smooth? Its geologic origin must be completely different from that of the upward slope. It appears to be made up of a single giant moraine, piled to the angle of repose near the top, with some spreading at the base, no doubt due to erosion, with a gradual transition into what appears to be a gently sloping alluvial plain no doubt composed of silt from the runoff, which is then followed by a vast perfectly flat area, which might have been the bottom of an ancient sea. If climbing up to the peak must have required mountaineering techniques, the downward slope looks like it could be negotiated in bathroom slippers. One could do cartwheels all the way down, and be sure of not hitting anything sharp before gently rolling to a stop sometime around 2100. Mathematically, the upward slope would have to be characterized by some high-order polynomial, whereas the downward slope is just e-t with a little bit of statistical noise. This, you must agree, is extremely suspicious: a natural phenomenon of great complexity that, just when it is forced to stop growing, turns around and becomes as simple as a pile of dirt. The past is rough and rocky, but the future is as smooth as a baby's bottom? Where else have we observed this sort of spontaneous and sudden simplification of a complex, dynamic process? Physical death is sometimes preceded by slow decay, but sooner or later most living things go from living to dead in an abrupt transition. They don't shrivel continuously for decades on end, eventually becoming too small to be observable. The model on which the estimate of future oil production is based must be bogus. And so I like to call this generic and widely accepted Peak Oil case the Rosy Scenario. It's the one in which industrial civilization, instead of keeling over promptly, joins an imaginary retirement community and spends its golden years tethered to a phantom oxygen tank and a phantom colostomy bag.

The really odd thing is that the Rosy Scenario can be quite accurate, under ideal circumstances, when applied to individual countries and oil-producing regions. For instance, suppose one of the world's largest oil producers, which started out with more oil than Saudi Arabia, reaches Peak Oil in, say, 1970, but then promptly goes off the gold standard, foists its paper currency on the rest of the world by backing it up with the threat of force including the possibility of a nuclear first strike, eventually comes to import over 60% of its petroleum, much of it on credit, and, a few decades later, goes bankrupt. Then, over the intervening decades, its domestic oil production would indeed exhibit this wonderfully gentle geologically and technologically constrained curve—up to the point of national bankruptcy.


Past the point of national bankruptcy circumstances are bound to become decidedly non-ideal, but the implications of this remain unclear. Will that hapless country still be able continue borrowing money internationally in order to import enough oil to keep its economy functioning, and, if so, under what terms, and for how much longer? It would be nice to know how this story ends ahead of time, but unfortunately all we can do is wait and see.

But we do have another example (Fig. 3), which may offer some insights into what we mean when we say that circumstances will be “non-ideal.” The country that is currently the world's largest oil producer reached Peak Oil around 1987. Its sclerotic, geriatric, ideologically hidebound, systemically corrupt leadership was unable to grasp the importance of this fact, and just three years later the country was bankrupt and, shortly thereafter, it dissolved politically. In this case, plummeting oil production became the country's leading economic indicator: it plummeted, then the GDP plummeted, then coal and natural gas production plummeted, and a decade later the economy was down 40%. Behind these numbers was a precipitous drop in life expectancy and a pervasive atmosphere of despair in which many lives were either lost or ruined.


But as long as no messy internal or external political or economic factors interfere with the natural depletion curve, the après-Peak predictions of Peak Oil theory do seem to hold. (When I say “ideal circumstances,” I suppose that I must mean circumstances that are ideal from the point of view of sentient though irrational hydrocarbon molecules, whose desire is to be pumped out of the ground and burned up as quickly and efficiently as possible, because it is unclear who else ultimately benefits, but let's not quibble.) Since the problem of not having enough oil to go around is known to cause all sorts of nasty political and economic problems, and since this is exactly the problem we should expect to encounter soon after the world reaches Peak Oil, the base assumption on which the predictions of Peak Oil theory for global oil production rest is not realistic. The specialists who are in a position to predict Peak Oil are not able to gauge its economic and political effects, and so all they can do is give us the Rosy Scenario as an ultimate upper bound. However, this caveat is not spelled out as clearly as it should be. The result is that we might as well be working with a theory which predicts that, once global Peak Oil is reached, delicious chocolate petits fours will spontaneously bake themselves into existence and fly into our mouths on dainty gossamer wings of marzipan.

The Peak Oil theory-based explanation is that while the upward slope is economically constrained, the downward slope is only constrained by the geology of depleting oil reservoirs and by oil extraction technology, which is subject to thermodynamic limits and cannot improve forever without encountering diminishing, then negative, returns. While the oil supply is growing, oil demand fluctuates, resulting in numerous ups and downs in production superimposed on the overall upward trend as production tries to match demand. But on the downward side, demand permanently exceeds supply, and so every barrel of oil that can be produced at each instant will be produced.

When extrapolating the aftermath of local oil production declines to global Peak Oil, the unstated assumption is that the global economy will continue to function with uncanny smoothness at the level of demand that can be met, while unmet demand will be cleanly washed off into the gutter by a strong, steady stream of economic and political nonsense. This will all sort itself out spontaneously with rational market participants responding to price signals and deciding at each instant whether they should:

A. continue consuming oil in the manner to which they have become accustomed, or

B. quietly wander off and die without calling attention to themselves or making a fuss.

Where else have we seen such flawless organization, in situations where a key commodity—like, say, food, or drinking water—becomes critically scarce? Anywhere? Anywhere at all?

And I suppose a further unstated assumption is that a shrinking economy (what with all this unmet demand and resulting attrition among market participants) can function much as a growing one does, without suffering a financial collapse. Special financial instruments called credit-default swaps can be used as a hedge against increased counterparty risk from your counterparties dying in droves from self-inflicted wounds, although after a while these instruments would become a bit too expensive. But I don't suppose that much of anything can be done about the economic growth projections baked into every single financial plan at every level. Once these turn out to be unfounded, then all the debt pyramids will come tumbling down. And since a fiat currency (such as the US Dollar) is composed of debt—credit advanced based on a promise of future growth—it is unclear how and with what the remaining oil will continue to be purchased. The end of growth is an imponderable; start talking about it, and everyone suddenly decides that it's lunchtime and starts ordering drinks. At least the French have a proper word for it: décroissance (literally, “de-growth”); here in the anglophone world all we can do is gibber and mumble about “double-dips.” Perhaps Geithner and Bernanke can come up with a dance number to illustrate.

Let us look at it another way. As I mentioned, Peak Oil theory has been quite good at predicting the depletion profile of certain stable and prosperous countries and provinces. But these predictions become meaningless when extrapolated to the world as a whole, for one very obvious reason: the world cannot import oil. Let me say it again, this time in title-case, bolded and centered, to emphasize the significance of this statement:

Planet Earth Can't Import Oil

When faced with insufficient domestic oil production, an industrialized country has but two choices:

1. Import oil

2. Collapse

But when faced with insufficient global oil production, an industrialized planet has just one choice: Choice Number 2.

Some might argue that there is a third choice: start using less oil right away. However, in practice this turns out to be equivalent to Choice Number 2. Using less oil involves making some radical, often technologically challenging, politically unpopular, and therefore expensive and time-consuming changes. These may be as technologically advanced (and unrealistic) as replacing the current motor vehicle fleet with electric battery-powered vehicles and a large number of nuclear power plants to recharge their batteries, or as simple (and quite realistic) as moving to a place that is within walking or bicycling distance from your work, growing most of your own food in a kitchen garden and a chicken coop, and so on. But whatever these steps are, they all require a certain amount of preparation and expense, and a time of crisis (such as when oil supplies suddenly run short) is a notoriously difficult time to launch into long-range planning activities. By the time the crisis arrives, either a country has already prepared as much as it could or wanted to (thereby delaying the onset of collapse) or it has not, bringing the crisis on sooner, and making it more severe. The oft-cited Hirsch Report states that it would take twenty years to prepare for Peak Oil in order to avoid a severe and prolonged shortage of transportation fuels, and so, given that the peak was back in 2005, we now have minus twenty-five years left to lollygag before we have to start preparing. According to Hirsch et al., we have failed to prepare already.

Some might also wonder why a shortage of oil should automatically trigger a collapse. It turns out that, in an industrialized economy, a drop in oil consumption precipitates a proportional drop in overall economic activity. Oil is the feedstock used to make the vast majority of transportation fuels—which are used to move products and deliver services throughout the economy. In the US in particular, there is a very strong correlation between GDP and motor vehicle miles traveled. Thus, the US economy can be said to run on oil, in a rather direct and immediate way: less oil implies a smaller economy. At what point does the economy shrink so much that it can no longer meet its own maintenance requirements? In order to continue functioning, all sorts of infrastructure, plant and equipment must be maintained and replaced in a timely manner, or it stops functioning. Once that point is reached, economic activity becomes constrained not just by the availability of transportation fuels, but also by the availability of serviceable equipment. At some point the economy shrinks so much as to invalidate the financial assumptions on which it is based, making it impossible to continue importing oil on credit. Once that point is reached, the amount of transportation fuels available is no longer limited just by the availability of oil, but also constrained by the inability to finance oil imports.

The initial shortage of transportation fuels need not be large in order to trigger this entire cascade of events, because even a small shortage triggers a number of economically destructive feedback loops. A lot of fuel is wasted by idling in line at the few gas stations that remain open. More fuel is wasted by topping off—keeping the tank as full as possible, not knowing when and where you will be able to fill it again. Even more fuel disappears from the market because people are hoarding it in jerrycans and improvised containers. As the shortages drag on and spread, fuel is hoarded, and a black market for it develops: fuel diverted from official delivery channels and siphoned from gas tanks becomes available on the black market at inflated prices. And so the effect of even a minor initial shortage can easily snowball into an economic disruption sufficient to push the economy over physical and financial thresholds and toward collapse.

If at this point you are starting to feel despondent, then—I am sorry to have to say this, but you must be a lightweight, because there is more—lots more to consider. Peak Oil's Rosy Scenario may look pretty, but even a rose has its thorns. And there are a number of other issues which need to be considered and taken into account within a single, integrated view.

First, the rosy post-Peak Oil global production profile is based on reserve numbers which have been overstated. Much of the remaining oil is in the Middle East, in OPEC countries, and these countries overstated their reserves by various large amounts during OPEC's “quota wars” back in the 1980s. While other OPEC members sheepishly cooked up bogus numbers that looked vaguely real, Saddam Hussein, who was always a bit of a showboat, rounded up Iraq's reserve numbers up to a nice round number: 100 billion barrels. And so OPEC reserves turn out to have been inflated by some large amount—about a third at a minimum. Nor is OPEC unique in overstating their reserve numbers. Energy companies in the US play much the same game in order to please Wall Street. Set your bathroom slippers aside; to negotiate Peak Oil's downward slope you will need good mountaineering equipment.

Second, there is a phenomenon called Export Land Effect: oil-exporting countries, when their production starts to falter, have a strong tendency to cut exports before cutting into domestic consumption. To be sure, there are some countries that have surrendered their resource sovereignty to international energy companies and have lost control over their export policies. There are also some despotic regimes that starve their domestic consumers but to continue to earn the export revenue needed to prop up the regime. But most countries will only export their surplus production. This means that it will become impossible to buy oil internationally long before all the wells run dry, leaving oil importing countries out in the cold. Thus, if you live in an oil-importing country and thought you could negotiate the downward slope of Peak Oil in your hiking boots, put them aside. You will need a parachute.

Third, although total quantities of oil produced throughout the world were increasing up until 2005, the amounts of oil-based products (gasoline, diesel, etc.) delivered to their points of use peaked years earlier, in terms of usable energy derived. This was because more and more energy has been required to get a barrel of oil out of the ground and to refine it. Supplies of available crude oil have tended to become harder to extract, heavier, and more sulfur laden, plus the demand for more gasoline (as opposed to distillates or bunker fuels) with less lead for boosting octane add up to more energy being wasted. Energy Returned on Energy Invested (EROEI) went from 100:1 at the dawn of the oil age, when some strong-backed lads could dig you an oil well using picks and shovels, to an average of 10:1, now that oil production requires deepwater platforms (that sometimes blow up and poison entire ecosystems), horizontal drilling and fracturing technology, secondary and tertiary recovery using water and nitrogen injection, oil/water separation plants, and all sorts of other technical complexities which consume more and more of the energy they produce. As EROEI decreases from 10:1 toward 1:1, the oil industry comes to resemble an obese but famished wet-nurse ravenously sucking her own breast at the crib of a starving infant. At some point it will no longer be economically possible to deliver diesel or gasoline to a gas station. When that point comes is not certain, but there are some indications that 3:1 is the minimum EROEI that the oil industry requires in order to sustain itself. The effect of decreasing EROEI is to make the gentle slope of the Rosy Scenario much steeper. The slope no longer looks like a mound of pebbles—more like lava flowing into the sea and solidifying in a cloud of steam. There may be plenty of energy left, but much of it is going to go by the wayside, and you might not be able to get close enough to it to roast your marshmallows.

Fourth, we must consider the fact that our modern global oil industry is highly integrated. If you need a certain specialty part for your drilling operation, chances are it can be sourced from just one or two global companies. Chances are this company has some very important, highly technical operations in a country that just happens to be an oil importer. The significance of this becomes clear when one considers what happens to that company's operations once Export Land Effect becomes felt. Suppose you are a national oil company in an oil-rich nation that still has enough oil left for domestic consumption, although it was recently forced to fire all of its international customers. Your oil fields are huge but mature, and you can only keep them in production by continuously drilling new horizontal wells just above the ever-rising water cut and maintaining well pressure by injecting seawater underneath. If you stop or even pause this activity, then your oil, at the wellhead, will quickly change in composition from slightly watery oil to slightly oily water, which you might as well just pump back underground. And now it turns out that the equipment you need to keep drilling horizontal wells comes from one of these unlucky countries that used to import your oil but now cannot, and the technicians who used to build your equipment have given up trying to find enough black-market gasoline to drive to work and are busy digging up their suburban backyards to grow potatoes. A short while later your drilling operations run out of spare parts, your oil production crashes, and most of your remaining reserves are left underground, contributing to an increasingly important reserve category: never-to-be-produced reserves.

When these four factors are considered together, it becomes difficult to imagine that global oil production could gently waft down from lofty heights in a graceful smooth and continuous curve spanning decades. Rather, the picture that presents itself is one of stepwise declines happening in more and more places, and eventually encompassing the entire planet. Whoever you are, and wherever you are, you are likely to experience this as a three-stage process:

Stage 1: You have your current level access to transportation fuels and services

Stage 2: You have severely limited access to transportation fuels and services

Stage 3: You have no access to transportation fuels and severely restricted transportation options

How long Stage 2 will last will vary from one place to another. Some places may go directly to Stage 3: gasoline tankers stop coming to your town, all the local gas stations close, and that is that. In other places, a thriving black market may give you some access to gasoline for a few years longer, at prices that will allow some uses, such as running an electrical generator at an emergency center. But your ability to successfully cope with Stage 2, and to survive Stage 3, will be determined largely by the changes and preparations you are able to make during Stage 1.

It should be expected that the vast majority of people will have done nothing to prepare, remaining quite unaware of the fact that this is something they should have been doing. Quite a few people can be expected to take a few small steps in a sensible direction, such as installing a wood stove, or insulating their home, or in a seemingly sensible but ultimately unhelpful direction, such as wasting their money on a new hybrid car or wasting their energies on trying to form a new political party or to lobby one of the existing ones. Some will buy a homestead, equip it for life off the grid, start growing all their own food (perhaps transporting their perishable surplus to a nearby farmer's market by cargo bicycle or by boat), and home-school their children, putting an emphasis on the classics and on agriculture, animal husbandry and other perennially useful knowledge. Some will flee to a place where transportation fuels are scarce already, and where a moped is considered a labor-saving device—for your donkey or camel.

Unfortunately, it is hard to foresee which changes and adaptations will succeed and which will fail, because so much depends on the circumstances, which are sure to be unpredictable and vary from place to place, and on the person or persons involved: the uncertainty is just too great. But there is one thing of which we can be quite sure: that Peak Oil's Rosy Scenario, which projects a long and gradual global oil production decline, is bunk. Knowing this fact should impart a sense of urgency. Whether we use that sense of urgency foolishly or wisely is up to us, and our success may be a matter of luck, but having a sense of urgency is not at all bad. If we wish to prepare, we most likely have a few months, we may have a few years, but we certainly do not have a few decades. Let those who would have you believe otherwise first consider the issues I have raised in this article.