The un-Denial Decision Tree

Kurt Cobb on mutant minks.

http://resourceinsights.blogspot.com/2020/11/is-denmark-about-to-export-more.html

Unfortunately for the minks and the mink industry, the Danish government has now pledged to kill every mink in Denmark is order to eradicate a mutant strain of COVID-19 carried by mink that is transmissible to humans. That would mean dispatching some 17 million animals in short order.

Why are the Danes so panicked? Because this mutant strain “is not readily stopped by antibodies to the dominant strain of the virus.” That could mean that vaccines currently being developed for this dominant strain will be of little or no value in treating people with the mutant strain.

Nate Hagens with a new essay published on November 2, just before the election.

https://www.energyandourfuture.org/2020/11/02/no-matter-who-wins/

Nate does not see any merit in Varki’s MORT theory, and yet most of his essay is about reality denial:

The situation is this: various demographics now quite vocally (and reasonably) want a larger share of the economic pie, but the pie itself is about to shrink, which is something few are aware of – and don’t like to hear/think about.

Let’s unpack this using an overused analogy – the Titanic. On the Titanic were 3 classes of passengers – First Class, Second Class and Steerage (or 3rd Class). You can imagine the conversations, hopes, dreams and concerns of the various people on that ship over a century ago. And, history tells us that the tragedy did not befall each class equally – 39% of 1st class passengers perished, 58% of nd class and 76% of steerage passengers drowned. The same demographics exist today and are probably having similar conversations within and between groups, focused on maintaining status, moving up in class, or demanding better conditions.

And then there is someone like me – shouting (to all 3 classes) that we just hit an iceberg and need to use science, discourse, reason and planning to find the best solution to navigating what’s ahead. You can imagine the reaction – indeed you see it in the news and in your town hall meetings. The ‘first class passengers’ publicly decry that there is no iceberg that technology would never allow the ship to hit an iceberg let alone sink (but privately they are looking to ‘lifeboats’ aka gated communities and the like). The second class passengers are scrambling like mad to ingratiate themselves to the first class passengers to get crumbs of surplus lest they slip into steerage. And the steerage passengers – a full 50%+ of American society today have 2 common responses: 1) “Ok sure there may be an iceberg, but we need to solve our more immediate concerns like our current unacceptable living/working conditions, because we’ll drown from those before any freaking iceberg” (they are mostly right) or 2) “Ya right, an iceberg -that is just another story by elites and governments telling us what we have to do and taking away our rights and freedoms”. The difference now (vs on the actual Titanic) is that the steerage class (economically) houses both the far left and the far right, effectively creating an additional ‘iceberg’ within the ship. The people in ‘steerage’ can’t really conceive that in addition to their current troubles, society ALSO has hit an iceberg (see below).

The point here is that the narratives (and religions) that make people feel good are often not based on reality. Which makes discussing, planning and responding to ‘the iceberg of the 2020s’ a very difficult task.

No matter who wins the election we will be faced with multiple non-overlapping memes and explanations for the upheaval that is coming. Our plight is biophysical (biology and physics) in nature but will be blamed on class, race, politics, and ideology. Navigating this is going to be exceedingly difficult. A new captain can change the morale and surround himself by great minds to make the best civic decisions, but he/she cannot change the fact that our economy and culture has hit an iceberg.

Nate now thinks complexity may prove to be our most significant risk. I agree. I frequently think about things that make my life pleasant, like for example a light bulb, and how many links in a long chain are required for me to walk into Costco and buy a light bulb at a reasonable price.

Increasingly I think it’s not oil nor finance, nor social disruption that is our core risk but declining returns to complexity. Historian Joseph Tainter famously studied how ancient civilizations collapsed due to the inability of resources/productivity to keep pace with complexity. In today’s world, this can be seen in myriad ways, from the unemployment software in US States being written in COBOL and FORTRAN, to APIs for majority of our medicines made in India and China.

Nate explains that energy remains the biggest issue that almost everyone denies:

If you took a poll and asked people what the single biggest casualty was from the pandemic, very few people would respond with ‘oil’. But no matter who wins the election, US oil production, including shale oil, is about to fall off a cliff, with massive consequences for society.

In aggregate, US production is so far down -2.28 mmbpd from a 2019 monthly average high of of 12.86 mmbpd. Assuming rig counts and prices stay roughly where they are (and with no stimulus they may get worse), this implies a level of about 7 mmbpd by late summer 2021 – nearly a 50% drop. Globally, the reduction in travel, leisure and transport due to COVID effectively squeezed upstream investment- we are down to 72.8 mb of crude and condensate from 84.6 in November 2018, -which date is highly likely to be the all time peak in global production. Note: this will likely never be recognized as such because there will always be a non-biophysical reason articulated as to why we aren’t getting more oil. E.g. ‘the chinese’ or ‘the environmentalists’ or ‘the war’.)

Nice. I’ve added this to my sidebar of favorite quotes:

To label this geologic phenomenon as ‘peak demand for oil’ is the economic equivalent of saying the reindeer on St Matthew Island faced ‘peak demand for lichen’.

This data confirms my belief that our decline, once it gets going in earnest, will be quick, meaning any personal preparations must be completed beforehand. <– hint

If governments guarantee high prices to oil companies, or there are other incentives, production might be higher than indicated here – but here is a glaring statistic – if we were to stop drilling in USA entirely we would lose around 40% of our entire oil production in 1 year – we have to keep investing/drilling in more difficult and costly spots to avoid such a decline. (the 1 year decline rates are: Texas 40%, ND is 52%, Oklahoma 50%, GOM/deepwater 32% New Mexico 45% – these 5 regions are 80% of US production).

This is not remotely being discussed in our culture.

Nate concludes with a nice analogy:

Society right now is dancing – and fighting on the roof of an A-frame with the winds blowing hard and a storm shooting lightning at our heads. We need to keep dancing (less fighting) while we climb down to more stable ground.

Unfortunately there’s no mention, again, of the need for democratically supported rapid population reduction policies.

Tim Morgan today explains that continuing to borrow $5 to achieve $1 of growth will no longer work.

https://surplusenergyeconomics.wordpress.com/2020/11/02/183-a-new-stark-clarity/

The first take-away here is that no amount of financial gimmickry can much extend our long-standing denial over the ending of growth in prosperity. The energy dynamic which drives the economy has passed a climacteric. The pandemic crisis may have anticipated this inflexion-point, and to some extent disguised it, but the coronavirus hasn’t changed the fundamentals of energy and the economy.

The second is that the downtrend is going to squeeze the prosperity of the average person in ways that are likely to be exacerbated by governments’ inability to understand the situation, and to adjust taxation and spending accordingly.

Third, this squeeze on household disposable prosperity is going to (a) have severely adverse effects on discretionary (non-essential) consumer spending, and (b) put at risk many of the forward income streams (mortgages, rents, credit, stage payments, subscriptions) that form the basis of far too many corporate plans, and have been capitalized into far too many traded assets.

Barring short-lived exercises in outright monetary recklessness, most discretionary sectors are set to shrink, and asset prices (including equities and properties) are poised for a sharp correction.

This enables us to summarise three of the more direct and immediate implications of de-growth.

First, there will be adverse consequences for any business supplying discretionary purchases. We’ve been seeing a foretaste of this since 2018, with downturns in the sales of everything from cars to smartphones. The discretionary category doesn’t just apply to goods, of course, and service sectors particularly exposed include travel, leisure and hospitality. Just as households scale back non-essential spending, businesses are likely to trim discretionary outgoings such as advertising and outsourcing.

Second, the increasing strain on household budgets is going to put income streams at risk. This is extremely important, for two main reasons. One of these is the expanded prevalence of sales techniques which cultivate streams of income in preference to outright purchases, whether by consumers or by business customers. The other is the capitalization of income streams, a process pioneered by the securitization of future mortgage payments. A significant part of the capital markets now consists of capitalized streams of income linked to everything from car purchase and higher education to the supply of gadgets and domestic appliances.

Third, the public is likely to become increasingly focused on economic issues, demanding, not just lower taxation but pro-active measures to bolster household circumstances. We should anticipate growing pressure for nationalization (notably of utilities), combined with calls for greater redistribution from ‘the rich’ to the ‘ordinary’ voter.

For government, business and investors, this poses challenges that have, in many instances, yet to appear on the ‘radar’ of forward planning.

Governments, whilst unwilling to scale back their activities to affordable levels, will nevertheless find that their scope for expenditure falls a long way short of previous expectations.

At the same time, the priorities of the public can be expected to undergo a sea-change, swinging resolutely towards the economic. As a result, many of the cherished ambitions of policymakers will become of diminished importance to the voters, just as they become ever less affordable.

It’s October 30. I heard Christmas carols in Home Depot today.

Must watch interview with Glenn Greenwald.

Finally, a physicist brings some clarity to the muddled thinking of health experts.

One of my favorite hobbies is cooking and I like to understand the history and science behind recipes. The bible for cooking science is Harold McGee’s book but for YouTube video you can’t beat Adam Ragusea. His video today on the history of pork is very interesting.

Tim Watkins’ essay today on energy and other non-renewable resources is superb. Perhaps his best ever and a great primer for anyone trying to understand our overshoot predicament.

The whole essay is essentially an argument for why our top priority, and perhaps our only priority, must be rapid population reduction, which interestingly Watkins does not mention, and so his essay is also a good example of reality denial.

I wanted to paste the whole essay here but it’s too long so you should go to his site and read it.

https://consciousnessofsheep.co.uk/2020/10/26/lets-talk-croci/

The one thing that green campaigners share with economists is (with a few notable exceptions) complete blindness to energy. This may seem an odd claim, given that most green campaigners spend their waking hours arguing for a shift from one source of energy – fossil fuels – to another – renewables. Dig beneath this veneer, though, and it is obvious enough that the majority of green campaigners have given little thought to the enormous value that fossil fuels have generated since the dawn of the industrial age.

By “value,” I don’t just mean the various financial chicaneries which dominate most contemporary debates about the economy. Rather, I mean just about everything that we are able to do in a modern and largely urbanised society. The fact that I am able to write – and you are able to read – this simple post, depends on the burning of vast quantities of fossil fuels in data centres, in delivery trucks that keep replacement parts flowing, in the various machinery and vans that allow maintenance to take place, and in the factories, refineries and mines that provide the components and the raw materials. Less obviously, without industrialised agriculture and transportation, neither you nor I would have been able to eat; leaving us with little time or energy to read or write posts. In short, energy determines everything that we do… and yet we treat energy as just another low-cost input to our daily lives.

The reason is simple enough. We pay only the cost of producing fuels and generating electricity and heat, not the equivalent of the value that they deliver to us. Moreover, we take no account of the environmental costs associated with the burning of fossil fuels or, indeed, of the manufacturing of solar panels and wind turbines. Since most of the manufacturing these days takes place in someone else’s country – usually in Asia – we treat the pollution as someone else’s problem. We, on the other hand, can virtue signal our green credentials by erecting non-renewable renewable energy-harvesting technologies in the pretence that this is doing something to wean the global industrial economy off fossil fuels.

One consequence is that national politicians and campaigners can make wildly inflated promises about how some kind of “green new deal” or “fourth industrial revolution” is going to usher in a new round of “clean” growth and prosperity. The reality though, is that the world is no less dependent upon fossil fuels today than it was twenty years ago. Massive subsidised investment in modern renewable energy technologies (i.e. excluding hydroelectric and wood burning) has carved out a four to five percent share (depending upon how reliable you think Chinese data is) of global primary energy. But this energy has been added to the global mix rather than substituting for the fossil fuels we are supposed to be turning our backs on.

The blithe assumption is that we just need our politicians to subsidise and invest even harder so that we can multiply that renewables base twenty-fold in order to finally dispense with fossil fuels. But that would only work if we were prepared to give up all economic growth, since without additional energy input the real economy cannot grow; and while this might be covered by growth in the financial sectors of the economy, the debt we have already accumulated means that the mother of all reckonings awaits us long before we get around to de-carbonising the economy. So maybe we need to multiply our renewable energy forty-fold in order both to maintain growth at a level high enough to service the debt and to replace fossil fuels. This though, comes with show-stoppers of its own.

In the same way as economists down the ages have simply assumed that we can treat Planet Earth like a sewer without consequence, so they also take for granted that raw materials will always be available in quantities and at a price that we require. But we “civilised” humans have learned nothing since our hunting and gathering ancestors wiped out the large mammals on every new continent they migrated into. As with woolly mammoths, we used up all of the cheap and easy mineral deposits so that we now find ourselves exploiting ores containing tiny fractions of the metals we need. This, in turn, requires us to redirect ever more of the energy available to us to powdering and smelting those ores or, in the case of copper and aluminium, to recycling the metal we have already produced.

There’s some partisan crap in here, sorry please ignore, the non-partisan stuff is pretty good.