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.

Posted in collapse, de-growth, economy | Leave a comment

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.

Posted in General | Leave a comment

Whilst the Bank of England fiddles with rates people’s livelihoods are failing, and the economy is burning.

An interesting post by Richard Murphy and Danny Blanchflower with the heading:

Is the Bank of England at risk of missing a major downturn again?

…. who have been working together on their vision for the economic policy that the UK needs at present concludes that :

We are likely to be in recession again, already. But still the Bank does not get the issues, the messages from the data, or the required responses. 

This coincides with Tim Morgan’s view of the future.

Posted in economy | Leave a comment

Degrowth is now happening

In a recent piece, I wrote about  “Global Transition: From growth to degrowth and top-down to bottom-up” I explained the process in which top-down organisations are shrinking and will eventually disappear as a result of de-layering. At the same time, individual and cooperative activities are emerging from the grassroots.

In a recent post in “The consciousness of sheep” Tim Watkins points out that:

IIn the absence of an alternative, cheap, high-density energy replacement for finite fossil fuels, there is no financial means of preventing a permanent depression – quarter after quarter, year after year of negative growth until the economy comes back into balance with the energy and resources available to us. And while a process of managed de-growth might have been possible had we acted sooner, the reality is that we have been so conditioned to the myth of infinite growth on a finite planet that only a small minority would have ever voted for a politician who advocated de-growth. 

Tim Watkins is referring here to degrowth as an energy-related process.

Also, he says that:

…. we are not simply going through a rebalancing of the economy in which slightly more is spent on essentials and slightly less on discretionary items. By the beginning of 2022, we were already in a process of economic shrinkage and simplification in which only the wealthiest 20 percent or so will be able to engage in widespread discretionary spending. Certainly, the bottom 50 percent – whose incomes have fallen since 2008 – will see an ever-greater part of their income devoted to essentials like food, light and heat. And it goes without saying that those at the very bottom are going to go cold and hungry next winter.

It is “the bottom 50 per cent” who are having to look for new ways to earn a livelihood.  the opportunity to participate in the ideological kind of degrowth.

Degrowth, no matter how you see it, is a process.  It can be seen as a process of declining economic growth (GDP) and emerging growth of a society based on sustainability, well-being, concern for the environment and cooperation.

The process is ongoing now.   It should be seen as defining the “pathways toward a life-affirming future” which Jeremy Lent sees as the way forward.

Posted in de-growth, energy, General | Leave a comment

UK food production to shrink as input inflation hits 24%

From the Farmer’s Weekly:

https://www.fwi.co.uk/business/markets-and-trends/input-prices/uk-food-production-to-shrink-as-input-inflation-hits-24

Double-digit cost inflation is hitting every single enterprise of British agriculture, casting doubt on the sector’s ability to maintain food supplies in the year ahead.

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Elon Musk – How his brain works

From TED · Elon Musk discusses his new project digging tunnels under LA, the latest from Tesla and SpaceX and his motivation for building a future on Mars in conversation with TED‘s Head Curator, Chris Anderson.

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Degrowth: Fact or Ideology: Both

The two explanations of degrowth (1) that it is an energy-related process and (2) that it is an ideology, are misleading fruitful discussions.  It is neither one nor t’other.  It is both.

I  believe in the ideology of degrowth and I also believe in the fact that the economy is an energy-based system.

[If you want to understand what is being written about the surplus energy economy, please go to Tim Morgan’s blog – in which the world’s energy experts, those who do not have a vested interest in the money economy, discuss the issues involved.]

Maybe it would helpful for the purposes of this discussion if I use the phrase “the declining energy economy”.

Degrowth and the declining energy economy (DEE) complement each other. The DEE makes degrowth much more likely than a future of never-ending growth.

There is no need to argue the case for degrowth, it is already happening, but perhaps not in the ways those who believe in the ideology of degrowth expect or want.

This is because the DEE is making the economy shrink towards a state where human energy dominates the world.  As it did in pre-industrial times.

The emphasis NOW should be to ensure that the process of DEE takes a path towards the kind of degrowth wanted.  Much of what is happening now is having the opposite effect.

What tangled webs we weave!

Posted in de-growth, energy | Leave a comment