Societies periodically go insane. Fallacious memes sweep through a frightened and confused populace and bad things happen, bad choices get made. Two bad ideas in particular infect the American thought-o-sphere these days: 1) that non-cheap oil can keep all the rackets of consumerism going; 2) that we can offset all the quandaries of non-cheap oil with accounting fraud and debt creation.
These ideas present themselves in the places of greatest authority and influence. The president says “we have a hundred years of shale gas.” The Wall Street Journal says that an inflating Dow Jones index stands for a growing economy. My recent favorite came out of the increasingly demented New York Times on Saturday: Even Pessimists Feel Optimistic About the American Economy. Quoting an econ professor named Tyler Cowen from George Mason University The Times said:
The recent surge in domestic oil and gas production signals “the start of a new era of cheap energy,” he said, while less expensive online education programs could open the door to millions of people who have been priced out of more traditional academics.
That was a two-fer of stupidities since A) it ought to be self-evident that $90-a-barrel oil is not cheap oil, and B) that because of A, there’s unlikely to be lucrative employment for people who learn double-entry book-keeping on their laptops. In fact, anyone who actually learns math over the Internet must conclude that $90-a-barrel oil will crash all the supposedly normal operations of a consumer society, including the ability of oil-and-gas companies to get the capital investment necessary for further oil production.
None of these accredited morons seems to get the basic equation between available cheap energy — e.g. oil with a high energy-return-on-investment — and capital formation — the accumulation of wealth that can be deployed to produce more wealth-producing activity. That was only possible on the way up Hubbert’s curve. On the way down, alas, the relationship enters a Ponzi unwind of too many claims on excessive promises to pay. The net result is a society with a lower standard of living. Personally, I think it will go way lower, and way sooner than later.
The idea that online education is a sovereign tonic for economic vitality is just another gloss on the inane belief that technology can take the place of energy in the equation above. Tom Friedman, grand poobah, of The New York Times Op-Ed page is the cheerleader-in-chief for that meme, but it is accepted by virtually all authorities in business and politics, and their handmaidens in the academic chairs. As the American economy dissolves in an acid bath of capital scarcity and grievance, these idiots will be waiting for the next iPhone app that can power the electric grid — and thus all the new iPhones streaming out of the Apple factories of China into the hot little hands of nineteen-year-olds in Michigan taking “Macroeconomics” on the Kahn Academy website.
Speaking of China, The New York Times ran another humdinger over the weekend: China’s Great Uprooting: Moving 250 Million Into Cities that illustrates how meshugga that society is. Such are the tragic sorrows of late-blooming techno-industrialism that China is doing exactly the opposite of what the future requires — namely, destroying the basis for small-scale local food production. But, not to put too fine a point on it, China is fucked. They are simply in the hopeless zone of population overshoot and resource scarcity. There was some loose talk in thatTimes story to the effect that China will offset all its problems by colonizing Africa (and, who knows, other lands with other resources), but it will be interesting to see how it goes on the slow boat back to Shanghai with all that bok choy rotting in the hold as it plies east out of Mombasa under an ever-hotter tropical sun.
Chinese leadership apparently thinks this is the way to go. Just as the Princeton-bred American economists think that we can all migrate onto the Web and live a virtual existence on virtual wealth with virtual energy. The manifold disappointments that societies around the world face as they discover the falsity of their own memes is already leading to a lot of dangerous mischief, which is to say armed conflict. There is potential for a lot worse.
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