>The Economy Is Not Coming Back

by Gilles d’Aymery

Part I: A Short History of the Maelstrom

(Swans – September 20, 2010) Another mid-term election is looming in the United States. Next November, the electorate will choose the political team that in the midst of a recession and widely-held fears about the future will carry the day. One side will win. It matters not though, because neither of the two contesting political parties is willing to face reality: The U.S. is not in a so-called great recession. It is in a latent depression. What has stopped it from becoming a full-fledged depression has been the willingness of the elites, both under the Bush II and Obama administrations, to resort to age-old Keynesian policies to stem the hemorrhage — soup kitchen lines have so far been substituted by government checks in the mail. Some argue that governments’ actions have not been enough to stem the recessionary times. Others claim that too much has been done, and time has come to cut spending and taxes in order to let the economy run to its natural ever-growing self. Again, it matters not, whatever position is taken. Do or don’t, the economy is not coming back, and it should not. The Republican plan to cut spending (an age-old endeavor) will only bring more pain and social devastation. The Democratic plan to pump up the economy through deficit spending will only delay the actuality that the bind we all are in is a Catch-22. The economy that we have been used to in the past half-century is simply not going to come back. This three-part analysis will attempt to show the historical making of the dire and deepening crisis we all face, then try to demonstrate why the past paradigm won’t and shouldn’t come back, and end with a few suggestions that hopefully will lead to a future that is not predicated on the dead end the few want the many to embrace.

To fully grasp the extent of the current crisis one needs to take a short and much abridged walk through history. Human relationships have long been a story of antagonisms among the haves and the have-nots. In the feudalism era sharecroppers and peasants were peons of landowners and the divine royalties. The rise of the entrepreneurial class with the advent of the Industrial Revolution and capitalism led to a (often violent) change in leadership. The bourgeoisie overthrew the old order and the working masses migrated from the land to the mines and the factories and the shipyards, etc. Working conditions were execrable and the exploitation of the laborers was so prevalent (1) that they benefited the happy few and led to la belle époque, the Gilded Age, for the moneyed class whose rate of profits was very high and to labor demands for more equitable sharing of the created wealth and humane working conditions — demands that were met with recurring violent and bloody repressions. The class struggles, which can be defined in layman’s terms as profits for the few vs. the well being of the many (and private property vs. collective ownership), became the order of the era, increasingly influenced by political economists and philosophers. (2) The 1917 Russian Revolution threatened the moneyed class more than ever even though their hold on power with its resulting excesses in the accumulation of wealth could not be tamed until the Great Depression hit. In its wake, reformists like FDR and socialist parties in Europe cut their feathers substantially. Progressive taxation on income, estate, and capital was put in place; salaries among the wealthiest and the average workers trimmed from a ratio of about 400:1 to 30:1; social programs instituted… It must be remembered that workers’ rights, unions, public education, health care, Social Security, public services, women’s rights, civil rights, secular regimes, etc., are all a legacy of the left, which shed so much blood and tears to achieve these gains (even though the record ought to be tempered by the same left’s avocation of the “civilizing mission” in far away lands — i.e., colonialism). Nonetheless, the moneyed class became so worried about the loss of their privileges and the spread of socialist ideas that they, in Europe and in the U.S., supported Mussolini’s Fascism and Hitler’s National Socialism until well into World War Two when Hitler, instead of focusing on their interests — the destruction of the Soviet Union and communist expansion in Europe — launched an attack on their own countries and interests.

In 1945, Europe lay in ruins, its infrastructure and industries devastated, its people impoverished, lacking food and services (like electricity and water). Communist parties, particularly in France and Italy, gained strong traction and the influence of the Soviet Union loomed large. Threatened by the advance of leftist ideas, the powers-that-be chose to join them half way. Western elites devised a reconstruction plan based on Keynesian-Fordism — state control and planning of the economy to varying degrees, mass post-Taylorism production, progressive taxation, collective bargaining through strong unions, and the transfer of gains in productivity to the salaried work force in the form of higher wages, which greased the wheel of demand for industrial production. The USA was an intimate participant in that process through the European Recovery Program (the Marshall Plan) passed by Congress in 1947, which was motivated by three objectives: First, to create new markets for American products (the U.S. was producing 55% of worldwide manufactured products in 1945 and feared a potential domestic recession could happen if new markets were not developed). Second, to neutralize and work against the growing influence of the Soviet Union and the Communist parties in Western Europe. Third, an altruistic desire to alleviate the dire conditions Europeans faced…which could lead to social unrest and bring on political developments that its second objective aimed to prevent (American idealism has always been mated with a heavy dose of pragmatic self-interest).

That political-economic plan was apt enough to generate what has been known, with some exaggeration as facts show, (3) by Jean Fourastié’s famous saying: les trente glorieuses (the “thirty glorious years”). By the late 1960s, Keynesian-Fordism was running out of steam and in the wake of the 1973 oil crisis stagflation became the order of the day. In the atmosphere of malaise that took over the Western world, long-time opponents of Keynesian-Fordism found ready followers. Free-market evangelists like the classical liberals Friedrich Hayek, the author of The Road to Serfdom (Routledge, 1944), Milton Friedman of the Chicago School of Economics, the Randian Ludwig von Mises, and others (Karl Popper comes to mind) (4) became the intellectual force behind post-Fordist globalization (5) as they advocated their ideology — low taxes, small government with minimal interference in the economy, little regulations if any, no redistributive policies that could lead to any kind of entitlements, individualism, free will, etc. By the early 1970s Keynesian-Fordism had by and large been nailed into the dustbin of history. In 1979, Margaret Thatcher became the British prime minister, and in 1981, Ronald Reagan the president of the United States.

Frédéric Lordon, a French economist and research director at the National Center of Scientific Research (CNRS) has called this historical reactionary watershed the reconquista of the moneyed class. (6) It must be noted that during that period — approximately 1965-1975 — the national corporations that were answering to and constrained by their respective governments turned into transnational entities (what was then called multinationals). Their allegiance was increasingly answering to the interests of their shareholders and no longer to the political whim or the demands of their workers. Coupled with the internationalization of the financial services, the moneyed class, les possédants (“those who possess”) as Lordon calls them, were now in a position to blackmail the political class — besides, concurrently, bribing it through campaign contributions. “If you do not lower our taxes we can move our headquarters to another country,” threatened the managerial class, adding, “if you do not allow working flexibility and deregulate industry, we’ll relocalize in more favorable climates.” Finally, they concluded in a crescendo, “you politicians have to get rid or substantially lower social services, those dreaded entitlements.”

Bought politicians and heedless governments relented. The age of detaxation and deregulation had begun in earnest. Taxes were smashed; (7) regulations were lessened; working flexibility — a neutral expression to mean the contraction of wages and hiring/firing at will — was instituted, and trade unions weakened. As Lordon reminds us, the goal was to starve the beast but the beast (the workers) was not willing to starve and kept fighting heartedly for the rights gained over a century of blood and tears. The result: public debt. What taxes did not finance any longer was substituted by national debt. Wealth was being transferred from the whole to the few though a simple mechanism — financial gains for the few, debt for the many.

How could the masses get on board with this scheme? It had little to do with the so-called unsophisticated and uneducated masses (the Mises/Rand paradigm) — though disinformation has been a part of the tragedy. Of late, a few mainstream economists and commentators (e.g., Robert Reich, Paul Krugman, Michael Hudson, Bob Herbert, et al.) have documented that wages have been remaining flat for about forty years (8) while, writes Reich, “In the late 1970s, the richest 1 percent of American families took in about 9 percent of the nation’s total income; by 2007, the top 1 percent took in 23.5 percent of total income.” (9) The facts are slowly seeping out. Yet, they appear to have not reached the consciousness of the overwhelming majority of the people. Why? Of course, there have been relentless PR campaigns vaunting trickle-down economics, the rising tide lifting all boats, the influence of the Laffer curve on the partisans of supply-side economists, and all other shibboleth lines, for example “freedom” and “greed is good.” But objective socioeconomic conditions have been in play, which served to hide reality from reaching consciousness.

What happened can be seen in how the American elites handled the reconquista. Let’s take a look at it in the United States. First, as Reich states, “women streamed into the paid work force. By the late 1990s, more than 60 percent of mothers with young children worked outside the home (in 1966, only 24 percent did).” Second, people started to work longer hours. However, these two factors were not enough to keep households ahead, and the elites were fully aware that a discontented populace tends to translate into social unrest. So, a devilishly smart scheme was devised, based on credit and real estate.

After a long decline that began in the mid 1960s the rate of profits bottomed out in the early 1980s before ascending again (see note #3), a result of stagnating wages and therefore wealth transfer to the rich. Yet, the economy was in recession with high inflation and unemployment (the latter reaching 10.8% in December 1982). The inflation was eventually tamed through the drastic policies enacted by the Fed under the chairmanship of Paul Volcker, which benefited creditors; further tax cuts were passed (1984 and ’87), which benefited the wealthy; and access to credit was vastly expanded, which permitted the vast majority of households to keep afloat — for a while. Credit cards multiplied like enzymes (10) as did consumer credits. Everything could be purchased on credit (vehicles, home appliances, students’ fees, etc.). Private debts skyrocketed. Still, it was not enough to keep the economy growing. Policies to help the value of real estate rising indefinitely and home ownership enlarged were deliberately put in place by both Republican and Democrat administrations. These policies can be traced back to the New Deal, but were widely expanded from the 1970s onward. Home ownership as part of economic security and the realization of the American Dream became the major engine of the economy. It was achieved through a mix of fiscal and monetary policies (11) and access to easy credit guaranteed and securitized by Government Sponsored Enterprises — the best known being Fannie Mae and Freddie Mac — and governmental agencies such as the Federal Housing Administration, which is a part of the Department of Housing and Urban Development and others (e.g. Ginnie Mae). These policies became increasingly financially “sophisticated” under the stewardship of Bill Clinton and George W. Bush. (12) The end result has been exceptional, that is, out of the ordinary: The value of real estate in the USA has risen spectacularly for four decades (except for a short and slight downturn in the early 1990s) with returns on investment superior to those of financial services (13) — until the proverbial feces hit the fan in a combination of a series of perfect storms.

Let’s recapitulate this short history with a graphical helping hand.

Forty years of socioeconomic trends in the U.S. (14)

This graphic, developed in-house and certainly imperfect (for instance, it does not take into account the war economy that has been so dominant since WWII), brings together the various socioeconomic developments that have taken place in the U.S. and have led to the perfect multiple storms and the resulting wreckage to the world that will remain with us for years — if not decades. The olive line at the bottom illustrates how wages, after steadily rising in the wake of WWII, have remained flat. The green line shows how taxes have abruptly been reduced for the benefit of the wealthy, which, in turn, have raised public debt (the pink line) as conflicting interests could not allow the slashing of social services and thus forced the moneyed class and its political companions (often the same crowd) to delay — not forsake — “starving of the beast,” which they have relentlessly tried to accomplish for decades. (15) For the majority — at least 80% of the American people — the loss in wages was compensated by cheap credit and plastic debt (the red line), and since it was not enough to keep up with the Joneses and the PR, the very last recourse was to gamble on the rise of value in real estate (the blue line). Equity loans were taken out in abandon; mortgages refinanced not just once, but twice or more, in the belief that the value of property would keep rising forever. Much of the raised funds were spent on consumer products, vacations in exotic places, instant gratification, etc. A few borrowers attended to their children’s needs — the college tuitions that are bringing graduates to become debt peons even before they have entered productive life. Reich noted that “from 2002 to 2007, American households extracted $2.3 trillion from their homes.” Money was of no concern. It grew on trees. One president advocated going to Disneyland and driving to the mall and to shop. A vice president asserted that deficits didn’t matter. Any dissenter or skeptical observer was tagged un-American, thus ignored. Life was good, asserted the masters of the universe. People heard and wanted to believe the message and acted accordingly.

Sometime in 2005 cracks began to appear on Main Street. Households had maxed out their credit lines. The great wealth creation, it turned out, had been borrowed. The financial sector began to notice an increase in consumer defaults in 2006, which started to put a squeeze on their balance sheets. The burgeoning crisis moved to Wall Street. The meltdown took off in earnest with the Bear Sterns collapse in March 2008 and the FDIC seizure of IndyMac in July 2008. By the fourth quarter of that same year, Lehman Brothers was no more, AIG had to be rescued, Fannie Mae and Freddie Mac taken over by the government, and the financial sector had to be bailed out through the Troubled Asset Relief Program and huge interventions by the Fed. By then the crisis had spread to the entire world. Economic activity came to a screeching halt and business embarked on an abrupt deleveraging of its work force, thus compounding the damage done to the economy. The latent depression was in full force. It carries on to this very day.

The consequence can be seen, for anyone who is not blindly following a dismal ideology, that for decades le beau monde has peddled over the voices of reason — and still does to this very day — arguing that laissez-faire would bring heaven to earth. The result is here for all to see. Many will ask for more of the same in the name of sheer ignorance and emotional convictions based on an ideology they do not master, to the benefit of a class to which they do not belong — not even considering the ecological bind that will bring us all to the realization that a paradigm change is not only required but needed if the survival of all species is a desired and chosen outcome.

1.  For an example among many, see the 1850 internal regulations of a company located in Chaumont, France.  (back)
2.  To cite but a few: Saint-Simon, Fourier, Proudhon, Owen, Engels, Marx, Lenin, Luxemburg, etc.  (back)
3.  The model began to fall apart in the early 1960s when the rate of profit flattened before taking a plunge until the early 1980s — a fact that is largely ignored by mainstream economists. For more on this topic, see “The causes of the post-war economic boom,” International Review,October 29, 2008. The rate of profit and the dynamic of capital accumulation in capitalism are best understood and explained by people who are rooted in the Marxist tradition and knowledgeable enough to make sense of them — a tradition and knowledge this author regrettably does not possess.  (back)
4.  George Soros’s hero, Karl Popper, was one of the founders in 1947 of the Mont Pelerin Society, a society that advocates classical liberalism. Other founders included Milton Friedman, Friedrich Hayek, Ludwig von Mises, and George Stigler.  (back)
5.  For a more extended review of this topic, please see “Flexible Relations and Post-Fordist Globalization,” by Taimur Rahman, chowk.com, April 23, 2003.  (back)
6.  “La dette publique, ou la reconquista des possédants,” by Frédéric Lordon, Blog of Le Monde Diplomatique, May 26, 2010. For readers who can read French, this is the clearest exposé of events that have taken place in the past 40 years, which have decimated the masses for the benefits of the few. Lordon is to my knowledge the only economist that has been able to undertake a serious contextual analysis with an impressive sense of humor. Highly recommended.  (back)
7.  The trend toward lower taxes began earlier in the U.S. under the Kennedy administration. In 1963, Kennedy proposed a plan to lower income taxes across the board. The plan was passed in 1964 by the Johnson administration. All marginal tax rates were cut, the top one from 91% to 77%., then 70% in 1965, 50% in 1982, 38.5% in 1987, 28% in 1988, up to 31% in 1991, 39.6% in 1993, and 35% in 2003. See U.S. Federal Individual Income Tax Rates History, 1913-2010 at the Web site of the Tax Foundation.  (back)
8.  They actually have contracted. The latest Census data shows that “the median household income fell 0.7% to $49,777 in 2009, down 4.2% since 2007, when the recession started.”  (back)
9.  “How to End the Great Recession,” by Robert Reich, The New York Times, September 2, 2010.  (back)
10.  “Between 1989 and 2006, the nation’s total credit card charges increased from about $69 billion a year to more than $1.8 trillion.” Seecreditcards.com for broad statistics on credit cards.  (back)
11.  With inflation kept in check due to downward pressures on wages and the growing import of ever-cheaper consumer products, the Fed has been able to keep the federal funds rate low, slashing it even more in times of recession (e.g., 1975, 1982, 1989, 2001, 2007) — see Fed Ratesand the actions taken by the Federal Open Market Committee.

Fiscal policies include the full deduction of interests paid on mortgages, and an entire panoply of tax credits that are offered to home buyers in various circumstances (first-time buyers, etc.).  (back)

12.  See “Bill Clinton’s drive to increase homeownership went way too far,” by Peter Coy, Business Week, February 27, 2008, and the remarks on homeownership by George W. Bush at the Department of Housing and Urban Development, June 18, 2002 (i.e., in the midst of a recession).  (back)
13.  For a very detailed analysis of the crisis in the U.S., I highly recommend the work of Onubre Einz published at criseusa.blog.lemonde.fr on the Web site of Le Monde. Regarding real estate policies, consumerism, private and public debts, and wages, please refer to “Faut-il dégrader la dette souveraine des USA ou des Trois Krash financiers?“, March 21, 2010. Einz’s research and analysis are quite comprehensive and comprehensible, even for people who have no economic background. His work would certainly deserve to be translated in English.  (back)
14.  This graph, developed by the author, is only an approximate representation of five trends that have taken place in the USA in the last 40 years. It is statistically researched but not statistically formulated — and the author does not profess to be a graphic designer! It is an aperçu of an historical period.  (back)
15.  Note that public debt began to explode under the Reagan administration and has grown even further after the public bailout of private financial interests (TARP). Note too that the debt grew commensurably with the tax cuts showered upon the wealthy, those people who needed those “breaks” the least.  (back)

Part II: The Reasons it Won’t

(Swans – October 18, 2010) The thinking in some quarters where so-called “experts” abound is that the road to recovery and the creation of much needed jobs ought to be driven by demand. Consumption spending, goes that thinking, will lead businesses to invest in productive assets, banks to lend again, and bring the unemployed masses back into the workforce. Since the private sector is unable or unwilling to do its part, it is then up to the government to pick up the tab and stimulate the economy. As an economic mini-commentator has put it, “[G]overnment spending must increase to make up for the slack in demand and reduce unemployment. That means larger budget deficits until households have patched their balance sheets and can spend again at pre-crisis levels.” (1) This is a perfectly reasonable Keynesian methodology that has worked in times past. However, it misses the fact that the economic crisis is the result of both over-production — a tremendous overhang of productive assets — and over-consumption fueled by cheap credit and ballooned household debt, compounded by the shenanigans of the financial sector (2) orchestrated at the highest levels of political power by “brilliant” men. (3) It also misses the point that this crisis is the “mother of all crises.” It has hit production, consumption, public and private debts, ecological disasters, all in the midst of a financial system that remains in shambles, as Raghuram Rajan clearly explains in an October 12, 2010, Der Spiegel interview. (4)

In the wake of these tsunamis, the Federal Reserve (Fed) and the US Treasury went to work and injected trillions of dollars in the financial sector through monetary and fiscal policies and in Main Street through an economic stimulus. Although some economists argue that the Obama stimulus package ($850 billion-plus) has been insufficient as it did not match the output gap — that it was, in the words of Larry Summers, only a tool to avoid “catastrophic failure” (real, deep, 1930s-like Depression), a sort of “insurance package” — these policies have served their purpose. Deep depression has so far been forestalled and unemployment kept in check, albeit at a hidden increasing rate. But recovery has not taken place. Why? And why won’t it?
As stated in Part I, the U.S. is in a latent depression. No public stimulus or austerity measures can overlook or change the actualities. The system is in a bind.

First of all, the country is crippled by a staggering amount of household debt. According to the Fed, household debt amounted to almost $14 trillion in the second quarter of 2010, only $200 billion less than a year ago. Credit card liabilities declined to $832 billion from $915 billion for the same period, largely the result of bank write-offs (known as charge-offs).Defaulters, of course, lose their credit rating and won’t be able to borrow in the future, except at usurious rates. (Some homeowners stopped paying their mortgage in order to pay their revolving debts.) (5) Total student loan debt is a mere $830 billion. (“The cost of a college education has risen, in real dollars, by 250 to 300 percent over the past three decades,” according to Christopher Shea of The Boston Globe.) (6)

Secondly, these debts have been compounded by the residential real estate crash — the mother of all bubbles — in which some $8 trillion in equity have vanished. Median house prices have dropped between 20 and 30 percent (and even more in some states like Florida and California). Over six million households have already lost their homes to foreclosure. Another 4.2 million are in or near foreclosure. At the peak of the market in 2006, 69 percent of Americans “owned” (through their lenders) a home. It is now down to 65 percent, and notwithstanding the recent foreclosure moratorium there may be over 3 million other homes lost in the next couple of years. Which means that there is a huge oversupply of houses on the market. Note that this situation has a direct impact on job creation since people, unable to sell their homes without bearing a substantial loss, can hardly relocate (even if they could get a job elsewhere). In other words, the work force has lost its mobility due to the real estate freeze. Add to this dire state of affairs the soaring commercial vacancies (and defaults) that has also led to a huge oversupply of office buildings and stores, and it then becomes quite understandable that the construction sector, the major engine of the US economy, is going to remain in the doldrums for years to come. (7)

So, the U.S. is confronted with both an overhang of debt and an oversupply of depreciated or idle assets (which includes not only construction, but many other sectors, especially in transportation).

Thirdly, the country is also confronted with the Baby-Boom Generation that will begin retiring next year. According to Wikipedia, “The United States Census Bureau considers a baby boomer to be someone born during the demographic birth boom between 1946 and 1964.” That’s about seventy-six million people or close to 25 percent of the population. Over 4 million will be retiring every year until 2030. The boomer generation is also known as the spending generation. Boomers have kept the consuming pedal to the floor for the past 40 years, and, but for a minority, are utterly unprepared for retirement, many depending on their home equity (and Social Security) to make ends meet, and seeing that equity melt like an Alpine glacier. The few that managed to save see those savings being quickly eroded by the monetary policies enacted by the Fed (near-zero interest rates, rampant inflation that most probably will increase in the future due to, again, deliberate Fed actions). Older people do naturally spend less — except in health care — but older people who have lost a big chunk of their assets (both in equity and in cash) have to become by necessity a thrifty lot. Their spending is not coming back and there are no new spenders to replace them.

Fourthly, any increase in consumption spending directly leads to a rise in the US trade deficit, which for 2010 may reach $500 billion. (8) While about 47 percent of US importations are what is called “related party trading” — that is, US-funded companies that have moved their manufacturing facilities to low-wage countries and repatriated their vast profits for the benefit of their shareholders — imports have only a marginally positive effect on domestic employment (a few high-end engineering and some low-paid retail jobs), (9) except for dock workers and transportation. Simply put, foreign trade is not going to boost the economy. Manufacturing, or “reindustrialization” — that fetish of politicians and unions — won’t do the trick either, because as Jagdish Bhagwati, a professor of economics and law at Columbia University, has shown, “There is no proof that economic health depends on manufacturing.” The issue is nonetheless moot, for the manufacturing jobs that have been “relocalized” over the years will not come back anytime soon. Why would anyone want to pay, say, $1,000 for an iPod made in America with a tiny profit margin for Apple, when one can get the same device made in China for a fraction of the price (and a huge profit margin for Apple)? A manufacturing facility would be built in the U.S. and workers hired, but the device would no longer be affordable — a self-defeating proposition that would lead inevitably to layoffs and plant closing. One cannot escape the logic and the contradictions of the system — call it capitalistic or not.

One could throw into the mix the continued contraction of wages, which certainly won’t help consumers increase their spending, and the massive upsurge in government anti-poverty programs, (10) but enough depressing news for today!

To recap: Evident over-production and over-supplies worldwide, a crippling US-led debt burden, trade imbalances that may well turn into proactive protectionist policies (i.e., trade wars), an entire generation drifting toward graveyards (not just in the U.S.), unable to spend any longer, manufacturing dreams that cannot be realized as people are willing to work pennies on the dollar to desperately dig their way out of poverty, and a dearth of intellectual knowledge are not going to bring the economy back to what it should not have been in the first place.

However, since the USA is a gambling nation par excellence (and history), it appears that the elites are going to do a double-down bet.

Ben Bernanke, a so-called “expert” on the Great Depression and head of the Fed, who has been wrong every step of the way, (11) intends to further monetize the federal debt through a second round of quantitative easing. He may also recommend a more direct injection of liquidity targeted to consumers through a suspension of the payroll tax. Meanwhile, in an effort to help American exports (and weaken the exports of European competitors and emerging countries), he keeps weakening the dollar — an action that is creating new distortions in the global economy as Raghuram Rajan explains in theDer Spiegel interview, and could turn into an ugly global currency war and lead to a world of beggar-thy-neighbour policy.(12) (The US Congress, quick to blame China for America’s ills, is calling for the imposition of tariffs on Chinese products.)
As made plain above, American consumers who have kept the world economy growing through their irresponsible credit binge are not going to “spend again at pre-crisis levels” for a long time, if ever. They simply cannot afford the game anymore. No one can, and no one should. There are externalities that are much larger than daily life. Pre-crisis spending should be dwarfed in light of the ecological disasters humanity faces.


1. “Red Flags for the Economy”, by Mike Whitney, CounterPunch, July 6, 2010. (back)

2. The theoretical analysis by John Bellamy Foster on how money got disconnected from productive endeavors, and how the financial sector ended accounting for 40 percent of profits in the U.S. explains in great details this point. See, “The Financialization of Accumulation,” Monthly Review, October 2010. (back)

3. One sterling example is Larry Summers, who oversaw the repeal of Glass-Steagall, successfully helped engineer the deregulation of financial markets, blocked all attempts to regulate derivatives, etc. In 1999, Summers was a member of the triumvirate with Robert Rubin and Alan Greenspan known as the “Committee that Saved the World” — neoliberal ideologues that have consistently been proven wrong and are directly responsible for the long-term socio-economic crisis that will carry on for many years. See Professor Bill Mitchell (University of Newcastle, NSW Australia) December 2009 blog entry “Being shamed and disgraced is not enough” for a pertinent analysis of their exploits. Mitchell cites Ayn Rand saying in 1959, “I am opposed to all forms of control. I am for an absolute laissez fair free unregulated economy. Let me put it briefly I am for the separation of state and economics.” (back)

4. Raghuram Rajan, currently an economics professor at the Booth School of Business at the University of Chicago, used to be Economic Counsellor and Director of the IMF’s Research Department Financial Markets, Financial Fragility, and Central Banking (September 2003 – January 2007). On August 27, 2005, Rajan delivered a speech at A Symposium Sponsored by the Federal Reserve Bank of Kansas City in Jackson Hole, Wyoming, entitled, “The Greenspan Era: Lessons for the Future.” In that speech, which at this writing remains posted on the IMF Web site, Rajan warned in very diplomatic terms of the looming dangers of “a catastrophic financial crisis” and called for what he modestly called “Prudential supervision” of the financial sector. According to Charles Ferguson, the director and producer of the recently released documentary Inside Job, “When Rajan finished speaking, Summers rose up from the audience and attacked him, calling him a ‘Luddite,’ dismissing his concerns, and warning that increased regulation would reduce the productivity of the financial sector. (Ben Bernanke, Tim Geithner, and Alan Greenspan were also in the audience.)” — see “Larry Summers and the Subversion of Economics,” in The Chronicle Review,October 3, 2010. (back)

5. See “Bank Losses Lead to Drop in Credit Card Debt,” by Christine Hauser, The New York Times, September 24, 2010.http://www.nytimes.com/2010/09/25/business/25credit.html (back)

6. Christopher Shea: “The End of Tenure?” The New York Times Book Review, September 5, 2010, p.27. (back)

7. One could make the case that a means t o resolve the housing crisis would be to actually bulldoze all vacant homes and building development. It would create jobs in the short term for hordes of demolition crews and then, once the swamp is sanitized, construction workers would start building again — the good old creative destruction paradigm. Problem is that the banks would go the way of the Dodo and the Masters of the Universe tends to shy away from their own demise. (back)

8. As an example: This household had to rebuild a rotten deck from scratch: The pressure-treated wood and plywood came from Canada. The stainless steel screws (2,400 of them!) were made in Thailand. Only the composite boards (Trex) were made in the U.S. We also bought a LCD/DVD TV combo (a Toshiba 19″), which was made in Thailand. A small adjustable gate to keep the dogs on the deck was made in China, and four pair of socks were made in South Korea. One would think that a clay “Superstone” covered baker (to bake bread) by “Sassafras” — a small business located in Chicago — would have come from either Italy or France, but one would be wrong. It was made in Taiwan. We also had to put in place a new leach field for our recurring clogged septic tank. Here, at least, our hardship benefited the US economy, as the needed rocks and labor originated locally, though the pipes and the contractor’s backhoe may well have been manufactured abroad. (back)

9. For further exploration on the topic of trade (and manufacturing), see Bill Mitchell’s blog entry “What you consume or what you produce?”in which he refers to a 2009 UC Irvine study that examined the pros and cons of manufacturing Apple’s iPods in China, and found that “the iPod supports nearly twice as many jobs offshore as in the U.S., yet wages paid in the U.S. are over twice as much as those paid overseas.” (back)

10. Excerpted from “Record number in government anti-poverty programs,” by Richard Wolf, USA TODAY, August 31, 2010: More than 50 million Americans are on Medicaid, up 17 percent since December 2007. More than 40 million people get food stamps, up almost 50 percent in the same period. More than 4.4 million people are on welfare, an 18 percent increase. Close to 10 million receive unemployment insurance. Unemployment insurance trust funds in 30 states are insolvent. (back)

11. To grasp Bernanke’s real “expertise,” one has to only read the comments he made in 2005 and 2006:

July 1, 2005: Bernanke: “We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s going to drive the economy too far from its full employment path, though.” (We did have an actual decline in house prices in the early 1990s.)

February 15, 2006: Bernanke: “Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.” (The housing market was beginning to implode at the very time Bernanke made this statement…) (back)
12. Brazil’s finance minister Guido Mantega recently said, “We’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness.” See “Currencies clash in new age of beggar-my-neighbour,” by Martin Wolf, The Financial Times, September 28, 2010. (Free registration required.) (back)

Part III: The Reasons it Shouldn’t

“This meeting is part of the world’s efforts to address a very simple fact — we are destroying life on Earth.”

—Achim Steiner, head of the U.N. Environment Program, Nagoya, Japan, October 18, 2010

“We are nearing a tipping point, or the point of no return for biodiversity loss. Unless proactive steps are taken for biodiversity, there is a risk that we will surpass that point in the next 10 years.”

—Ryu Matsumoto, Japanese Environment Minister, Nagoya, Japan, October 18, 2010 (1)

(Swans – November 15, 2010) The first part of this long essay presented an abridged history of the road to the current deep socioeconomic crisis that some observers had predicted, even though no one could pinpoint the exact timing of the implosion. The second part submitted that there are objective factors that explain why the economy is not going “to come back” any time soon. But, more importantly, profound and intensifying environmental and ecological crises militate in favor of not having the economy revert to the shape and form it had. Some of these crises are the object of this third part. In short, to return to business as usual will lead to collective suicide, which Mother Nature will trigger in the not so distant future.

According to the WWF (2) 2010 Living Planet Report, “human demand outstrips nature’s supply.” “In 2007,” the report states, “humanity’s Footprint exceeded the Earth’s biocapacity by 50%.” The Global Footprint Network (GFN) has calculated that on August 21, 2010, the world reached Earth Overshoot Day — that is, “the day of the year in which human demand on the biosphere exceeds what it can regenerate.” As GFN president Mathis Wackernagel stated: “If you spent your entire annual income in nine months, you would probably be extremely concerned. The situation is no less dire when it comes to our ecological budget. Climate change, biodiversity loss, deforestation, water and food shortages are all clear signs: We can no longer finance our consumption on credit. Nature is foreclosing.” Though these environmental organizations are promoting policies that are essentially based on demographic and increasingly economic Malthusianism — independent researcher Michael Barker has written in-depth analyses, particularly in regard to the WWF, in these pages (3) — they do acknowledge the gravity of the situation. As the WWF report states, “An overshoot of 50% means it would take 1.5 years for the Earth to regenerate the renewable resources that people used in 2007 and absorb CO2 waste. … CO2 and other greenhouse gas emissions from human activities are far more than ecosystems can absorb.” In other words, the world, or to be more precise, some parts of the world, over-produces and over-consumes natural resources that are being depleted at an exponential rate. That’s the main reason for not having US (and other rich nations’) households “spend again at pre-crisis levels.” (4) The socioeconomic paradigm built on capital accumulation, perpetual material growth, and financial profits for the infinitesimal few must be not just overhauled but buried, and replaced by an equitable new arrangement that takes into account all natural ecosystems.

Fossil fuels

Fossil fuels have been feeding the materialistic economic paradigm, whether under capitalism or socialism, since the early 1800s. Their use increased moderately between 1850 and 1950, thereafter shooting up like a rocket. (5)

According to the US Energy Information Administration, “in 2007 primary sources of energy consisted of petroleum 36.0%, coal 27.4%, natural gas 23.0%, amounting to an 86.4% share for fossil fuels in primary energy consumption in the world.” Today, worldwide transportation depends on oil for 90 percent of its needs. There is not one sector of the economy that is independent of fossil fuels. From 1990 to 2008 the global consumption of fossil fuels has increased as follows: oil: 25 percent, with a stabilization since the beginning of the economic crisis; coal: 48 percent; and natural gas: 54 percent. (6)

With these few facts in mind, where does the world stand in regard to fossil fuels?


Since the beginning of the current latent depression, as oil consumption has flattened or slightly decreased, the topic of peak oil has by and large disappeared in the mainstream media. Were it not for the Blogosphere (7) that keeps bringing facts of oil depletion to the fore, one would believe that everything is fine and dandy — and, anyway, the alarmists are deemed radicals (right or left) and as such are discounted. However, what to make of Charles Maxwell, a senior energy analyst at Weeden & Co. — certainly not a “radical” — who has written and talked extensively about The Gathering Storm? (8)

Or what about Robert Hirsch? Swans readers may recall Hirsch’s 2005 report “Peaking of World Oil Production: Impacts, Mitigation, and Risk Management” that was highlighted on January 29, 2007, in the dossier, “Energy Resources And Our Future,” by Admiral Hyman G. Rickover. In that report, Hirsch, an oilman par excellence, showed the dire challenges the world faces and how to possibly mitigate them. What happened to that report is best explained by Hirsch himself, which he did in a potent interview (in English) with the French Le Monde on September 16, 2010 (the report was shelved by both the Bush and Obama administrations).

Still, Hirsch remains adamant. In The Impending World Energy Mess, co-authored with Roger Bezdek and Robert Wendling (Apogee Prime, October 2010), Hirsch makes the case that oil production is on the decline; that no quick fixes are available; and that societal priorities will have to change drastically.

The research done by the British Chatham House, the UK Industry Taskforce on Peak Oil & Energy Security, the German military analysis, and other US military reports, like the “2010 Joint Operating Environment” (pdf) shows that oil-consuming countries are bracing themselves for the decline of oil and the risks of conflicts it will engender. But for a few scientists supported and financed by energy conglomerates and pro-growth lobbies, the scientific community has by and large reached the conclusion that the decline of oil was not reversible — a conclusion reached as early as 1998 by the Paris-based International Energy Agency though this crucial information was left out of its annual World Energy Outlook report under pressure from powerful players. (9) Keep in mind that peak oil does not mean the end of oil, as some doomsayers claim. It denotes the end of cheap oil on the one hand and on the other the physical (and economic) inability to find new reserves proportionately to the oil being consumed.

Peak oil deniers and advocates of abiogenic oil need to ponder why oil companies take so many risks to hunt for oil deep in the seas for poor and marginal results in oil supplies, all the while causing recurring ecological disasters, or engage in such environmentally-destructive projects as the Canadian oil sands — one of the worst ecological projects in the entire world that is bound to destroy the boreal forest in an area the size of Florida, devour hundreds of million cubic meters of fresh water and 600 million cubic feet of natural gas every day, and dramatically increase the emissions of carbon dioxide while yielding a relatively low energy return on investment (EROI), or energy returned on energy invested (EROEI) — that is, the amount of energy needed to produce energy. (10) In other words, the world is using more and more energy to produce less and less of it at an ever faster-growing financial and environmental cost.

But since a picture is worth a thousand words, readers may want to look at the superb photographic work of Canadian photographer Edward Burtynsky, which is exhibited on the Web site of the Corcoran Gallery of Art in Washington D.C. (11) Paul Roth, the curator of the exhibition, wrote in the catalog:

…..Edward Burtynsky shows the man-made world—the human ecosystem—that has risen up around the production, use, and dwindling availability of our paramount energy source. The mechanics and industry of extraction and refinement; the development, products, and activities associated with transportation and motor culture; and the wreckage, obsolescence, and human cost that lies at the End of Oil. These photographs are about man, and what he has made of the earth. (12)
In 1980 the worldwide production of petroleum (in thousand barrels per day) was 63,963.116. It went up to 66,217.937 in 1990, and reached 85,477.530 in 2008. (13)

Natural gas

Natural gas is generally seen as both abundant and less polluting than oil and coal, which is factually correct. However, what the proponents of natural gas do not mention is the huge environmental consequences of its extraction, especially when using hydraulic fracturing, known as fracking, that take up huge amounts of water and chemicals and contaminate ground water. Fracking, as a June 2010 Vanity Fair report indicated, has become a “colossal mess.” The real environmental costs of extracting natural gas are widely underestimated or ignored by the proponents of using this fuel as a “bridge to the future.” (14)

Whatever T. Boone Pickens’s proselytizing and the lobbying of vested interests to expand the use of this “clean fuel,” we face, in the words of Professor Francis Shor, “a toxic cancer,” which will lead to “an unprecedented assault on the environment that may very well doom future generations of residents of the United States to a slow, but sure, toxic death.” (15)

In 1980 the worldwide production of natural gas (in billion cubic feet) was 53,375. It went up to 73,788 in 1990, and reached 109,789 in 2008.


According to Greenpeace (16) “coal is the largest driver of global warming pollution on the planet and a primary driver of toxic air pollutants like mercury and nitrogen oxide. But coal combustion also results in millions of tons of solid waste in the form of coal ash and scrubber sludge.” Whether through Mountaintop removal mining or traditional in situ extraction, the environmental impact on humans and natural ecosystems is ominous. China, the largest producer and consumer of coal for the country’s generation of electricity by a factor of 3:1 in relation to the USA (the second largest), is a case in point. (17)

A September 15, 2010, report (18) by Greenpeace, “The True Cost of Coal,” notes:

China depends on coal for more than 70 pct of its energy needs.

For the last 8 years China has added new coal plants once a week in average. It has 1,400 coal plants.

The combustion of 4 tons of coal produces 1 ton of ashes. China produces 375 million tons of ashes a year, 2.5 times more than in 2002.
Greenpeace estimates that only 30 percent of these ashes are recycled. Environmental accidents similar to the 2008 Kingston Fossil Fuel Plant spill in Tennessee (19) are prone to increasingly happen.

Coal, in a nutshell, is the most polluting fuel (air, water, soil, and animal species) that ought to be phased out as quickly as possible. Instead, production and consumption are increasing exponentially.

In 1980 the worldwide production of coal (in thousand short tons) was 4,181,850. It went up to 5,346,680 in 1990, and reached 7,271,749 in 2008.

What these fossil fuels have in common is their significant production/consumption growth over time, which brings to mind the Exponential Expiration Time that Dr. Albert A. Bartlett, an emeritus professor of physics at the University of Colorado at Boulder, popularized in his famous 1978 presentation, “Arithmetic, Population, and Energy” — a presentation he has revised and augmented over the years. Bartlett has often bemoaned human “inability to understand the exponential function” and the general ignorance of the “doubling time.” — “The growth in any doubling time is greater than the total of all the preceding growth!” (20)

Missing from his paper, however, is another trait that these fossil fuels share.

Emissions of carbon dioxide

According to the US Energy Information Administration (EIA), China passed the U.S. to become the largest emitter of carbon dioxide in 2007. In 2008 (the year of reference for this article), China emitted 6,533.544 million metric tons of CO2 and the U.S. 5,832.819. However, these numbers are distorted, as they do not reflect the amount of CO2 the U.S. has “exported” toward China and other emerging economies through the relocalization of parts of its manufacturing sector (which this research has been unable to estimate). Neither are these figures taking into account the respective emissions per capita. In this latter case, the U.S. emits almost 4 times (3.92 to be precise) as much as China. (21) Still, these two countries emitted 40.7 percent of worldwide CO2 emissions in 2008.

More ominous is the worldwide growth of CO2 emissions in the past three decades. In 1980 (the farthest back the EIA statistics go), total emissions were 18,488.253 million metric tons. A decade later, in 1990, they were 21,677.327. By 2000, they had reached 23.876.592; and by 2008, 30,377.313. To put this growth in perspective, suffice it to note that in a mere 28 years the emissions of carbon dioxide have increased by a sheer 64.31 percent!

Climate change and global warming

According to an October 28, 2010, report by the French Sciences Academy, “Climate Change” (PDF, in French), (22) “the concentration of CO2 has been increasing continually since the middle of the 19th century, due principally to industrial activities, going from 280 parts per million around 1870 to 388 ppm in 2009. (Climatologists show that the safe upper limit is 350 ppm.) The rate of growth measured since 1970 is about 500 times higher than the slow growth observed in the last 5,000 years. … The origin of this growth is for more than half due to the burning of fossil fuels, and the rest is due to deforestation and in a small part the production of cement.” (p. 4) Sea levels, the report states, have risen 0.7 mm per year between 1870 and 1930, and began rising faster ever after, reaching a current 3.4 mm per year. Land glaciers and sea ice sheet, from Greenland to Antarctica, are all melting and receding rapidly. (23)

Correlated with the rise of carbon dioxide is the increasing acidification of the oceans that has taken place in the past 30 years or so. The depletion of oxygen in the seas is creating ever-larger ocean dead zones. More troubling yet, starting in 1950 phytoplankton, the very basis of the food chain, has declined by 40 percent, which will affect “everything up the food chain, including humans.”

Surely, the “merchants of doubt,” like Fred Singer, William Nierenberg, Fred Seitz, and Patrick Michaels, who are backed by some of the biggest polluters on the planet, will keep questioning and dismissing the science as they used to do for the ozone hole, acid rain, and even the dangers of smoking. Cordula Meyer calls them “The Traveling Salesmen of Climate Skepticism” in “Science as the Enemy” (Der Spiegel, October 8, 2010) (24) For these people more research must be done and no action is warranted — a message that is compliantly passed on in the MSM. (With a twinkle of irony, even rambunctious muckrakers join those professional skeptics!) (25) Like peak oil deniers, climate change Homo ignoramus are a species that are hard, if not impossible, to break, although one would wish they’d become extinct sooner rather than later. At the very least, one would hope that in the economic realm of this piece, they would acknowledge human-made destruction of the oceans, like plastic garbage and the depletion of fisheries.

Accumulation of plastic in the oceans

Last July, the Sea Education Association (SEA) of Woods Hole, Massachusetts, reported having found a huge plastic garbage patch, possibly the size of Texas, in the North Atlantic gyre that rivals the northern Pacific “superhighway of trash” that Charles Moore discovered in 1997. Another one has been found in the Indian Ocean, and according to SEA chief scientist Giora Proskurowski, the south Pacific and south Atlantic are affected as well. Scientists estimate that 200 species are put at risk by this plastic garbage and no one knows how long it will take to have humans affected through the food chain. But effects are there to be seen.

Here again, a picture is worth a thousand words. Chris Jordan, the Seattle-based photographer, has documented extensively in his “Message from the Gyre” the damages that our throwaway consumerist culture inflicts on the animal lives. In light of Jordan’s photographic documentation, no additional word is needed to depict the insanity of the current socioeconomic system.

The destruction of fisheries

If the scallops may become a past palate-endearing delight in relatively short order due to the acidification of the oceans, the heavily subsidized fishing industry is working against the clock to literally exterminate all fish stocks around the globe. As late as the nineteen nineties, fisheries were considered limitless. Meantime the stocks of halibut, cod, sole, yellowtail flounder, and hake have been utterly depleted. The bluefin tuna is getting closer and closer to extinction due to overfishing and “The Black Market in Bluefin.” In a fascinating, and must-read August 2, 2010, New Yorker essay, “The Scales Fall,” Elizabeth Kolbert tells how cods were once believed to be inexhaustible (they have essentially disappeared). Kolbert notes:

In 1964, the annual global catch totaled around fifty million tons; a U.S. Interior Department report from that year predicted that it could be “increased at least tenfold without endangering aquatic stocks.” Three years later, the department revised its estimate; the catch could be increased not by a factor of ten but by a factor of forty, to two billion tons a year.
“Peak fish,” Kolbert writes, took place in the late 1980s when “the total world catch topped out at around eighty-five million tons, which is to say, roughly 1.9 billion tons short of the Interior Department’s most lunatic estimate.” She adds: “For the past two decades, the global catch has been steadily declining. It is estimated that the total take is dropping by around five hundred thousand tons a year.”

Daniel Pauly, a professor at the Fisheries Centre of the University of British Columbia, warns that we are “[sliding] toward a marine dystopia.” He notes that “[I]n the past 50 years, we have reduced the populations of large commercial fish, such as bluefin tuna, cod, and other favorites, by a staggering 90 percent.” Pauly insists that the world is witnessing an “aquacalypse.” (26) He states that “[F]ish are in dire peril, and, if they are, then so are we”; and concludes that “governments [must free themselves] from their allegiance to the fishing-industrial complex.”

In guise of a conclusion

There is a direct relation between our neoliberal socioeconomic system based on capital accumulation and over-production and the destruction of the earth’s ecosystems. So the statement Mike Whitney made on July 6, 2010, (“Government spending must increase to make up for the slack in demand and reduce unemployment. That means larger budget deficits until households have patched their balance sheets and can spend again at pre-crisis levels.”) appears to be poorly thought out or particularly irresponsible in light of the damages the policy he advocates would inflict on the environment. From peak oil to peak fish, from CO2 emissions to the extinction of species, from global warming to climate change, all indicators point in the same direction. The pursuit of limitless growth as currently designed is nothing less than a suicidal pact that Mother Nature will in the not so distant future trigger.

It must be noted that the partisans of new-Keynesian demand stimulation through government spending — people like Dean Baker, Michael Hudson, Paul Krugman, et al. — rarely, if ever, take into consideration in their research and advocacy the natural world and the ecological consequences of the neoliberal order. Is it because they all reason from within, and are active supporters of that paradigm?

But again, the socioeconomic paradigm built on capital accumulation, perpetual material growth, and financial profits for the infinitesimal few must be not just overhauled but buried, and replaced by an equitable new arrangement that takes into account all natural ecosystems. Humanity needs to build a new socio-ecological paradigm. Such a transformation can only be attained through revolutionary thinking and processes.


1. Both statements were made at the opening session of the Tenth Meeting of the Conference of the Parties to the Convention on Biological Diversity in Nagoya, Japan.

According to Der Spiegel, “20 percent of the planet’s 380,000 plant species are in danger of becoming extinct, primarily due to habitat destruction. […] Of 5,490 species of mammals, 1,130 are threatened and 70 percent of the world’s fish population is in danger from over-fishing.”

In a nutshell, Mother Earth is facing a mass extinction of natural species and habitats due to human activities that overwhelmingly originated in the materially rich Northern Hemisphere, which has been scarifying the biosphere ever since the beginning of the Industrial Revolution. (back)

2. The WWF, which was formerly known as the World Wildlife Fund, was created in 1961 in Gland, Switzerland. It is one of the largest environmental NGOs with over “1,300 conservation projects around the world.” It promotes free-market corporate environmentalism and advocates neoliberal solutions to mitigate the many ecological crises that the world faces — what Michael Barker calls “eco-imperialism.” (back)

3. See Barker’s research on these organizations (and more), particularly “The Philanthropic Roots Of Corporate Environmentalism,” Swans Commentary, November 3, 2008. (back)

4. See Part II of “The Economy Is Not Coming Back,” Swans Commentary, October 18, 2010. (back)

5. See http://en.wikipedia.org/wiki/File:Global_Carbon_Emissions.svg (back)

6. See a picture on Der Spiegel to visualize the increase of fossil fuels consumption in only 18 years. (back)

7. E.g., the Energy Bulletin, The Oil Drum, Hubbert Peak of oil Production, etc. (back)

8. See his recent interview with Wally Forbes, of Forbes magazine (not a particularly leftist publication!), “Bracing For Peak Oil Production By Decade’s End.” Says Maxwell:

“The use of petroleum in the world is now up to about 30 billion barrels per year. The rate at which we have found new supplies of petroleum over the last 10 years has fallen to an average of only about 10 billion barrels per year.

“We’re obviously in an unsustainable situation. We are now using up a greater number of barrels that we have found in the recent past and that we have reserved in the ground. We are now beginning to use it up relatively quickly — with scary consequences for the future.” (back)

9. See “How the global oil watchdog failed its mission,” by Lionel Badal, Oil Man (a Blog from Le Monde), May 18, 2010. See also “Peak oil alarm revealed by secret official talks,” by Terry Macalister and Lionel Badal, The Observer, August 22, 2010. (back)

10. In the 1930s one barrel of oil yielded 100 barrels; that is, the EROI was 100:1. By the 1970s the EROI was down to 30:1. Today, it is closer to 11/18:1 (in the U.S.) and 20:1 worldwide. See the March 2010 report by the Oil Drum. In comparison, the Canadian oil sands’ EROI is about 5.2:1 (see http://www.theoildrum.com/node/3839). Worse, US ethanol based on corn yields an EROI of about 1.25:1 (one unit of energy consumed to produce 1.25 unit of energy — and the calculation does not even take into account the economic and environmental costs of the Gulf of Mexico dead zone generated by fertilizer run-off from corn-producing Midwest agribusiness through the Mississippi River, or the dramatic rise in the price of food stuff, which has so negatively impacted US neighbors in Mexico. (back)

11. Some of the pictures have also been published on the Web site of Foreign Policy. (One needs to log on to the site because the article and the pictures have been archived.) (back)

12. Oil, the catalog for the exhibition, was published by Steidl/Corcoran in 2009. Excerpts can be seen on the Web site of Edward Burtynsky where this excerpt was found.
See http://edwardburtynsky.com/Oil_Book_Gallery/

Furthermore, a 2006 documentary, Manufactured Landscapes, featured the work of Burtynsky. To learn more about this documentary and view more pictures, see http://pingmag.jp/2007/04/12/manufactured-landscapes/. (back)

13. Except where indicated all the figures used in this piece come from the US Energy Information Administration, International Energy Statistics — a very comprehensive set of worldwide statistics by country and geographical zones regarding production and consumption of fossil fuels, electricity, renewables, emission of carbon dioxide, and other key indicators.

Here are some 2008 stats worth keeping in mind:

(CO2 emissions are for year 2008; primary energy consumption is for year 2007.)

Total CO2 emissions for 2008: 30,377.313 (Million Metric Tons)

CO2 Emissions from the Consumption of Petroleum (Million Metric Tons)

USA: 2,435.952
All Europe: 2,193.769
Japan: 572.862
Russia: 373.394
All Africa: 455.341
China: 1,000.439
India: 384.390

C02 Emissions from the Consumption and Flaring of Natural Gas (Million Metric Tons)

USA: 1,271.699
All Europe: 1,119.080
Japan: 200.124
Russia: 908.287
All Africa: 261.741
China: 151.117
India: 84.943

CO2 Emissions from the Consumption of Coal (Million Metric Tons)

USA: 2,125.168
All Europe: 1,344.736
Japan: 441.203
Russia: 447.701
All Africa: 391.251
China: 5,381.998
India: 1,025.549

Total Primary Energy Consumption (Quadrillion Btu)

USA: 101.554
All Europe: 85.002
Japan: 22.473
Russia: 28.355
All Africa: 14.546
China: 73.219
India: 17.255

(For comparison: In 2000, the U.S. consumed 98.5 Quads: See “United States’ Gargantuan Energy Appetite,” by Gilles d’Aymery, Swans Dossier, October 21, 2002.) (back)
14. See the [T. Boone] PickensPlan. (back)

15. See “Frick-Fracking Away, Or Frackicide,” by Francis Shor, Swans Commentary, November 15, 2010. (back)

16. See “Coal ash is a global problem,” Greenpeace, September 15, 2010. (back)

17. While Greenpeace focuses its attention on China and in so doing may inadvertently (or willingly) add to the fashionable China-bashing that is currently taking place in Western political circles and media, it should not be forgotten that on a per capita basis, the U.S. consumes 3,460.5 thousand short tons versus 2,469.14 in China (2009) — and even the per capita consumption should be carefully examined since high and low consumptions are very dependent on social classes. (back)

18. “The True Cost of Coal – An Investigation into Coal Ash in China.” The full report in PDF format can be downloaded from
http://www.greenpeace.org/usa/Global/usa/planet3/publications/gwe/2010/coal-ash2010-ENG-RPT.pdf (back)

19. “On December 22, 2008, in the US state of Tennessee, the retaining wall of a five-hectare ash pond collapsed, spilling 500 million gallons (2 million cubic meters) of coal ash. The spill destroyed houses, polluted the earth, rivers, and air, causing hundreds of millions of dollars in losses. According to the Tennessee Valley Authority, owner of the Kingston Fossil Fuel Plant, the ash covered more than 160 hectares of roads and lands, affecting an area greater than the 1989 Exxon Valdez oil spill.” The True Cost of Coal, p.5. (back)

20. While his presentation is most valuable and worth pondering, it has a major weakness: Professor Bartlett falls into the ideological trap of demographic Malthusian catastrophe — like so many Western ethnocentric scholars and others (politicians, pundits, etc.) do time and again. The ecological conundrum is not related or correlated to population growth — there is plenty of food, water, and land for the world to take in more people. It has to do with the ratio of production/consumption per capita. Evidently, the world cannot emulate the US model of “growth” — see the ecological footprint of national populations worldwide (The U.S. has an average ecological footprint of 8 global hectares per capita compared to 2 for China) — but the U.S. could and should develop a different model that would put needs before profits and embark on an entire retooling of its productive forces. China cannot be blamed for following a path to development that mimics that of the U.S. and other so-called wealthy nations (“so-called” because they are all essentially bankrupt). As said with some humor as early as 1996, get rid of the hypocrisy whereby the U.S. and other “advanced” nations want to keep their way of life all the while denying other nations to follow the same destructive path to “wealth” and China, as well as most countries in the world, will respond positively. (back)

21. While quite a telling indicator, CO2 emissions per capita is also a skewed indicator because it does not differentiate among energy users. For instance, the US armed forces’ emissions; or wealthy Americans (e.g., Bill Gates) with very large estates and constant traveling with private jets; or owners of suburban McMansions driving around in their gas-guzzler SUVs; or, again, more modest households. Still here are a few examples of per capita emissions of CO2 in million metric tons for 2008: USA: 19.2 — Russia: 12.3 — Germany: 10 — Japan: 9.5 — UK: 9.4 — France: 6.5 — China: 4.9 — India: 1.3 — All of Africa: 1.1.

This tends to demonstrate the erroneous advocacy of demographic Malthusians. Compare the emissions of CO2 by the African continent (967.8 million inhabitants in 2008) to India’s (1,140.6 million) and the U.S. (304 million). Once again, it’s not the number of people that drives the dire ecological and economic challenges the world must confront. It’s the ratio of production/consumption per capita. (back)

22. A summary of the report is available in a Microsoft PowerPoint presentation (also in French). (back)

23. “The Arctic is sending us perhaps the clearest message that climate change is occurring much more rapidly than scientists previously thought. In the summer of 2007, sea ice was roughly 39% below the summer average for 1979-2000, a loss of area equal to nearly five United Kingdoms.” See 350.org. (back)

24. As Meyer writes, “[T]he professional skeptics tend to use inconsistent arguments. Sometimes they say that there is no global warming. At other times, they point out that while global warming does exist, it is not the result of human activity. Some climate change deniers even concede that man could do something about the problem, but that it isn’t really much of a problem. There is only one common theme to all of their prognoses: Do nothing. Wait. We need more research.” (back)

25. For instance, Alexander Cockburn, the publisher and co-editor of the center-right-leaning libertarian newsletter and Web site CounterPunch, contends that the science is flawed and the results doctored by a bevy of scientists that are lining their pockets with ever-increasing grants from the government and private foundations. (back)

26. See “Aquacalypse Now: The End of Fish,” in The New Republic, September 28, 2009. (back)

© Gilles d’Aymery 2010. All rights reserved.

About the Author

Gilles d’Aymery on Swans — with bio. He is Swans’ publisher and co-editor.


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