Symptoms of No Growth

First published in the RADIX think-tank.

Once we shift our worldview, another world becomes possible

On 11th January this year, I wrote that growth is no longer possible.

So much that is going on are symptoms of the shrinking global economy.

President Putin wants to add the economy of Croatia to Russia’s economy, to make up for Russian economic shrinkage.  Thousands of refugees see the UK as a better place to be than in their own less well-off countries.  The UK health and care systems want more money.  The UK railway union and people generally are unable to keep up with increasing costs.  Threats of strikes are being heard.

All kinds of reasons are being given for these upsets, but no one dares to suggest that the underlying reason is the shrinking economy.

Maybe the likelihood of endless recession/shrinkage is just too awful to contemplate by everyone still hooked on a belief in endless growth.

Why can’t the Prime Minister boldly tell the House that the time has come to accept that the era of economic growth is over?  That we, the country, the establishment and our families must now get used to the fact that we are in a new era. In which growth has to be replaced by survival.

Failure to admit the reality of no more growth must lead to increasing nastiness.  Trade Unions, the NHS, and all kinds of bureaucracies will be fighting to protect their share of a shrinking cake.  This is not to suggest that admitting that growth has ended will be any better.  But at least we will know where we are headed and the current excuses will longer be acceptable.

The shrinkage will not be fair.  The better-off areas will become relatively much better off.  The differences between areas are already becoming obvious, by observing the differences in discretionary spending.

We have yet to begin to imagine the other side of the coin.  The possibility of a life-affirming ecological future as advocated by Jeremy Lent.

The time has come to face up to the reality of no more growth.

 

 

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Videos worth watching

These will introduce you to Jeremy Lent’s doings.

https://deeptransformation.network/posts/recording-limits-to-growth-at-50-where-do-we-go-from-here

https://deeptransformation.network/posts/video-of-my-masterclass-on-ecological-civilization-with-earth-charter-international

 

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Maybe we should realign our thinking.  The future is coming sooner than we thought

This was first published in the Deep Transformation Network: A global community to explore pathways to an ecological civilization.  Run by Jeremy Lent: “Whose work investigates the underlying causes of our civilization’s existential crisis and explores pathways toward a life-affirming future.”

If you believe that ongoing economic growth will lead to a future of ecological catastrophe and climate breakdown, then please read on.

Recent increases in energy costs and their impact on local and national economies have made us aware of the possibility that the economy is an energy system, not a financial one. Because nothing that has any economic value whatsoever can be supplied without the use of energy.

This hasn’t been a problem in the past because the (fossil fuel) energy used to produce useful energy, known as the Energy Cost of Energy (ECoE), has been positive.  Which has enabled the world economy to grow, with the ecological and social consequences now confronting us.

However, without us realising it, the energy required to enable growth to continue is now more than the energy produced.  The growth we are now said to be having is a myth.

The false impression of growth that has been given in recent years has been achieved by Governments printing money.

The reality is that the global economy is now shrinking and will continue to do so for the foreseeable future.

The rate at which the economy shrinks is, at first sight, being tempered by the use of renewables (solar, wind and tidal).  However, renewables depend on the use of steel, concrete, copper, cobalt and lithium. All of which require energy for their production.

The implication for those of us looking for an ecological future is that we must now focus our attention on the changes already taking place beneath our noses.

As the global economy shrinks the establishment will be tempted to deal with the social consequences in ways which will accelerate the ecological degradation of our world.  Money will be “created” and spent in ways which appear to generate increases in the GNP.  Such as by building new roads.

We are being misled by our politicians whose future is dependent on growth.

W should welcome a shrinking (no growth) economy.

So, how will it evolve?

There are two kinds of spending.  Essential and discretionary.  We became used to the idea during the Covid when discretionary (non-essential) spending was curbed to protect us from ourselves.

Essential spending, on keeping ourselves warm and fed, is dependent on increasing energy costs, which is forcing us to reduce our discretionary spending.  The problems of the so-called “hospitality industry” are an obvious example.    As the economy shrinks discretionary spending will continue to reduce, leading to the kind of economy I knew as a teenager in the UK in the 1940s and 50s.

In due course, much of what we now consider to be essential spending will become discretionary.  We may choose not to heat the whole of our house.

The long-term effect of the shrinkage will be a “direction of travel” which will head towards some kind of agrarian economy with little use of fossil fuels.   Goodness knows when this will be.  We may be surprised how soon this will become evident for some of us.

As the new reality becomes generally acknowledged fundamental changes in our national and individual mindsets will occur.  This will be a subconscious change for most people, that cannot be avoided.   It will be part of a collective change that will shape the future.

At first sight, it may seem that how this change will be handled will be crucial to the future.  But this view assumes that some entity will do the handling, from the top down.  Which is how we used to see change.  That will no longer be necessary.

I have long thought that change must come from the bottom-up.  As a result of localisation.  But that implies it will be a conscious process, in an ordered and organised way.  This is unlikely because the self-seeking growth-oriented capitalistic establishment will block any undermining of their power.  As is happening in the UK with Neighbourhood Planning which has to follow edicts from the local authority planners.

Change is now coming from individuals, connected consciously, cooperatively and intuitively, finding the way.

The top-down ways will not survive.  How can they if there will be no financial growth?  It will wither away.

The disorganising and shrinking energy system which we call the economy can no longer support financial growth.

We are now finding out how to look after ourselves.

See also:  https://surplusenergyeconomics.wordpress.com/2022/05/21/229-in-the-eye-of-the-perfect-storm-2/

 

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We must have a food crisis – scientists say eating grass will solve it

https://www.telegraph.co.uk/business/2022/06/01/eat-grass-solve-britains-food-crisis-scientists-say/

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Diesel Underpins Global Economy – ‘EROEI’ Explained – Great Depression II in view – System Failure

https://www.theburningplatform.com/2022/05/28/diesel-underpins-global-economy-eroei-explained-great-depression-ii-in-view-system-failure-letter-from-great-britain-05-28-22/

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There can be no more growth

It is difficult to get a man to understand something when his salary depends on his not understanding it.
Upton Sinclair

This is a deliberately short piece to make a simple point.

The oncoming recession is not a temporary blip in the economy.

Unlike past recessions, there can be no more growth to get us back to business as usual.  Moreover, the economy will continue to shrink for the foreseeable future.

As Tim Morgan says:
The economy is in big trouble, not ‘maybe’, not ‘perhaps’, not ‘in the future’, but NOW. We can’t explain this away in terms of covid, or the war in Ukraine.

The unravelling of the energy dynamic is what’s really behind economic deterioration, worsening living standards and market woes.  There’s no technological fix for this, and no monetary policy fix either.

Tim Watkins adds::
Once again, the economists and policy-makers will be asked why nobody saw it coming. Once again they will shuffle their feet, bow their heads and mumble something about black swans. And only later will we come to learn that everyone on the inside from the guy who reads your electricity meter right the way up to the Grid’s technical director knew all too well that it is impossible to run a complex modern economy on renewable energy… only by then it will be too late.

The economy is shrinking and will do so for the foreseeable future.

The problems implicit in the shrinking economy will be quite different from those presently anticipated by the Government and those of left, right and green inclination.

We must now begin to imagine a world with no economic growth.

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The Future

I don’t have time at the moment to write about these three links.   I have scanned them and they are very good.

https://consciousnessofsheep.co.uk/2022/04/25/walking-backward-into-the-storm/
https://consciousnessofsheep.co.uk/2022/04/29/economic-train-wreck-ahead/
https://surplusenergyeconomics.wordpress.com/2022/04/28/227-pictures-of-imperfection/

 

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Some activities will transfer from essential to discretionary

The following exchange of messages in Tim Morgan’s blog is both interesting and important.

  1. UPDATE

    I’ve been ‘missing in action’ for a week or so, partly finalising the latest version of the model (SEEDS 23), and partly upgrading systems.

    Apologies if you’ve been waiting for comments to be moderated, or for replies to questions. I’ll catch up as soon as possible.

    As well as incorporating a lot of new data, SEEDS 23 is a streamlined and more efficient version of the model.

    But its conclusions haven’t changed in any significant way.

    The pace of economic change, though, is accelerating. The focus is switching towards discretionary distress – which will intensify as covid-support liquidity drains from the system – and affordability issues, compounded by the inevitability of rising rates.

    Like Basil Fawlty when he was “fresh out of Waldorfs”, central banks are ‘fresh out of options’.

    Inflation is the game-changer, the one thing that can’t be remedied, but can only be made worse, by repeating the “innovations” of 2008-09. Many countries’ official rates now in or close to double-digits. Inflation can be traced to a combination of energy issues and over-loose monetary policy.

    It seems to me that things are panning out pretty much as many of us have expected. I hope that the new version of SEEDS will give us greater visibility, helping us to clarify the questions without, necessarily, supplying the answers.

  2. Necessities and discretionaries
    Worth a read and a listen to the linked video…especially for the British:
    https://ergobalance.blogspot.com/2022/04/four-meals-from-anarchy-we-must-grow.html

    For true necessities, the demand is inelastic, which means that a small reduction in supply results in a large increase in monetary costs. So, as an example, it is quite possible that the British could increase the percentage of income spent on food from 10 percent to 40 percent in a very brief period of time. The effect of the monetary shift would collapse much of the house of cards so enthusiastically erected by Neo-conservative governments and financial markets.

    Don Stewart

    • Thanks Don.

      For a long time now I’ve been endeavouring to emphasise the importance of essentials, and hence of discretionaries, within the overall allocation of prosperity. The latest version of SEEDS confirms that top-line prosperity and the cost of essentials are converging towards a moment, varying between countries, at which the prosperity of the average person is below the projected real cost of essentials.

      Since this “average” person is rather notional, what this means in practice is that ever-growing numbers of people are struggling to meet the cost of essentials.

      Your reference to “true necessities” underlines the point that the definition of “essential” varies over time, and for that matter geographically as well. For instance, most Westerners today would define a television, and perhaps a car, as necessities, whereas both were considered luxuries in the not-too-distant past.

      Therefore, as convergence (between prosperity and essentials) draws nearer, and cross-over looms, the probability is that the definition of “essential” will change, this time in a downwards direction. This has the effect of transferring some activities from the essential to the discretionary category.

      It seems to me that these processes are not remotely understood at the level of decision-making. If they were, at least three things would be happening.

      First, and most obviously, investors would flee from discretionary sectors.

      Second, businesses would start to change their models away from, for example, the “streams of income” model that has become increasingly popular in recent times.

      Third, politicians would start to recognise that the battleground of the future is the provision of essentials, available and affordable to all.

 

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Four Meals from Anarchy: Rising Food Prices Could Spark Famine, War, and Revolution in 2022

From TheAltWorld’s Newsletter:

https://ergobalance.blogspot.com/2022/04/four-meals-from-anarchy-we-must-grow.html

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Free Public Transit Is Not a Climate Policy

This is copied from the Bloomberg Press

Dropping the farebox on buses and trains can boost ridership and ease inequality. But the environmental case for making transit free is less clear.

Throughout last February, the regional Utah Transit Authority paused fare collection. Salt Lake City Mayor Erin Mendenhall suggested that this “Fare Free February” would accomplish two goals at once: commemorating the 20th anniversary of Salt Lake City hosting the 2002 Winter Olympics while also reducing emissions in a region where air quality has been a longstanding concern.

A few weeks ago UTA issued a report that evaluated the month-long pilot. Average ridership rose sharply compared to January: 16.2% during weekdays and 58.1% and 32.5% during Saturdays and Sundays, respectively. “Far more people will take transit when cost is not a barrier,” Mayor Mendenhall tweeted as she shared the report. “I’m so excited about the possibilities this presents for our air quality.”

UTA is not the only U.S. transit agency to experiment with fare-free transit recently; riders can currently board the bus for free in Richmond and Alexandria, Virginia; Kansas City, Missouri; and Lawrence and Haverhill, Massachusetts, as well as on certain Boston routes. Local boosters generally cite goals of addressing inequality, but several, like Mendenhall, have also stressed the climate benefits of making transit free.

But those claims are shaky at best. After more than a decade of transit agencies around the world experimenting with free trips, it’s far from clear that dropping fares delivers an environmental upside.

It boils down to this: If fare-free transit doesn’t substantially reduce driving, it’s not mitigating emissions or slowing climate change. And all signs suggest that it doesn’t.

It’s easy to understand why one might think otherwise. Transportation is the largest source of emissions in the U.S., mostly from motor vehicles. Transit trips are far less polluting than driving; a study last year from the National Academies of Sciences found that a person riding transit instead of driving saves the equivalent of 9 million metric tons of carbon dioxide annually. In Utah, transit trips grew considerably after UTA stopped charging fares, as they have during fare-free pilots elsewhere.

In its report, UTA estimated that Fare-Free February reduced pollution emissions by 68 tons, based on an assumption that 47% of the new transit riders would have otherwise driven. That figure relies on a 2019 survey, which found that 47% of UTA riders were so-called “choice” riders who had access to a car. But trips during Free Fare February were likely made by different riders than in 2019, when fares were charged. Data from other fare-free transit programs suggests that making travel free enticed those who, due to limited income, would have otherwise walked, rode a bike or foregone the trip entirely. Such shifts would increase net emissions, not lower them. (UTA declined a request for comment.)

Providing enhanced mobility for those of limited means is societally valuable — but it doesn’t reduce emissions. To accomplish that, fare-free transit must win over a significant number of people who would otherwise have driven. And that’s a trickier proposition. Car owners tend to be wealthier than the general public, and their access to a private vehicle makes them less willing to tolerate bus transfers, wait times, or slow journeys. Especially in a region lacking frequent and fast bus service (UTA buses arrive every 15 minutes on many routes), removing a $2.50 fare seems unlikely to convince many drivers to leave their keys at home.

To support this hypothesis, we can look to Europe, where several cities adopted fare-free transit years ago — without finding evidence of subsequent mode shift from driving.

Residents of the Estonian capital of Talinn have been able to ride public transportation for free since 2013. Last year Estonia’s national auditor issued its assessment of that policy: It had induced many additional transit rides, but it failed to reduce car journeys. Dunkirk, France, and Frydek-Mistek, Czech Republic, have adopted free transit as well.

“There’s no evidence at all that cities introducing fare-free public transport have seen their car traffic reduced,” said Mohamed Mezghani, the secretary-general of the International Association of Public Transport, which has published a policy brief on the topic. “Most of the [new] people taking public transport used to walk.”

Public transportation is a powerful tool to reduce transportation emissions — it’s just that dropping fares isn’t the right approach.

The story was similar in Santiago, Chile, where researchers randomly assigned free two-week transit passes to residents. Those receiving the free passes took 12% more trips overall, but they did not drive less.

If free public transportation failed to attract drivers in relatively transit-rich Europe and Santiago, there’s little reason to think it would fare better (pun intended) in the U.S., where scant transit service acts as a deterrent. An extensive 2012 study by the National Academies of Sciences noted that fare-free experiments undertaken in Denver (1978-9) and Austin (1989-90) failed to reduce driving; most new trips were taken by those lacking access to a car.

An absence of evidence hasn’t prevented many U.S. advocates of fare-free transit from touting its climate upside. “The environmental benefits of fare-free service are significant,” a Montgomery County, Maryland, councilmember wrote in a Washington Post op-ed. “The fare-free model can shift people away from cars and onto transit,” a climate advocate wrote in the Bay Area’s Press-Democrat in an editorial promoting cutting fares on Sonoma County Transit buses. The Barr Foundation published a post promoting free transit as part of a “climate-friendly future.”

Perhaps the most prominent U.S. booster for free transit is Boston Mayor Michelle Wu, who campaigned for the post last year with a promise to “Free the T” to address both climate change and income inequality. Three MBTA bus routes went fare-free last August, and data showed that ridership on the 28 line rose 38%. (Other Boston bus routes, where fares were still collected, also saw increases, but smaller ones.) A survey of riders indicated that 15% of riders were new — but the fare-free rides replaced more biking and walking trips (8%) than driving (5%).

A two-year program in Boston makes MBTA bus lines 23, 28, and 29 free.

Photographer: Lane Turner/The Boston Globe via Getty Images

To be sure, emissions reduction is usually not the only — or even the most important — justification cited for fare-free transit; equity benefits are usually mentioned first. Because transit riders typically have lower incomes than drivers, reducing their expenditures represents a progressive redistribution of wealth.

Even so, many transit advocates remain skeptical of equity arguments for fare-free transit. The nonprofit advocacy group Transit Center found that low-income and new riders would prefer more frequent and reliable service to a reduction in fares.

That said, the group’s executive director, David Bragdon, does agree with fare-free advocates that public transportation is a powerful tool to reduce transportation emissions — it’s just that dropping fares isn’t the right approach. “If you take bad American transit that costs $1.50 and make that bad service free, that won’t move the needle enough to make a climate impact.”

Bragdon dismissed fare-free transit as “a distraction from doing the things that we need to do” — like converting general traffic lanes for bus rapid transit and generally expanding transit service to make it more readily available. “The key to getting people out of automobiles is providing abundant, frequent service around the clock,” he said.

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Another way to boost transit would be to remove longstanding subsidies for urban driving. Cities could implement decongestion pricing that forces drivers to pay for the slowdowns they impose on other road users. Or cities could start charging a market price for residential parking permits. Boston, for instance, has no fee to obtain one, even for a person’s third or fourth vehicle left overnight on public streets. But local officials know that imposing new costs on drivers invites a voter backlash. (As a Boston councilmember, Mayor Wu tried unsuccessfully to introduce a fee for residential parking permits.)

There is a lesson here: Serious efforts to entice drivers to become transit riders won’t come cheap; local leaders must allocate significant dollars and political capital toward expanding transit service and curtailing the preferential treatment of cars.

Fare-free transit may look like a tantalizing shortcut to decarbonize urban transportation. But that image is illusory. In mode shift as in life, you get what you pay for.

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