Sunday, January 20, 2008

Everything Must Go...

An article in today's New York Times, echoed by a more-sensible than normal column by Maureen Dowd, calls attention to the firesale on American assets, now being snapped up at bargain prices by the countries that increasingly own us, China and nations in the Middle East. We can expect our politicians to begin denouncing these encroachments on American sovereignty - without noting for a moment that our sovereignty had already been compromised over thirty years ago. Our future is sure to prove that demagogues are not limited by party affiliation.

The sale on our nation began in 1971 when oil production peaked in the continental United States, and the nation went from being a net exporter of oil to a net importer. From that day forward we began selling overseas everything of value that we had built up over the preceding hundred years or so. Here's why: the extraordinary energy bonanza of the oil age made possible the massive expansion of our economy during the century that oil production rose annually. The massive energy infusion of our domestic oil reserves effectively allowed us to ignore any concomitant and at times steep costs of that economic system given the increasing levels of oil production from 1865 until 1971. Costs like the creation of an enormous interstate highway system, the build-out of America's suburbs and the resulting massive alteration of our patterns of living, the built-from-nothing cities in deserts and swamps with their massive air-conditioning costs and irrigation demands, the expansion of a continental system of commerce with its energy intensive forms of production and transportation - all these and more were easily borne during a period of increasing domestic energy supplies. It was the oil reserves in Pennsylvania, Texas, California and Alaska that provided us the illusion that it was our ingenuity and Protestant work ethic, and not this one-time geologic blow-out, that made possible such achievements that would have been inconceivable to previous ages.

In 1971 the nation no longer had the domestic supplies to allow us to sustain what we had already built, much less continue our now economically- and politically-essential growth. In spite of experiencing the dependency upon Arab tyrants that our oil addiction necessitated, we refused to heed the obvious loss of self-governance that continuation on our course now entailed. Rather than living within our means, we began selling the surplus value we had not created, but exploited, in our century-long fossil fuel burn-up. First we began selling our debt, the promise of any future growth of our national economy increasingly to foreign owners of our treasuries. Then we began selling our jobs, the outsourcing of work that allowed us to avoid paying the actual cost of products by exploiting human labor abroad. We began selling our military to regimes that proved cooperative or necessary, most recently a sweetheart weaponry deal for the Saudis (bought largely with petrodollars that we had been giving them in fistloads over the decades). Our economy seemed to hum along, the "market" growing every year as we continued to import vital and growing supplies of oil even as we increasingly sold everything of value overseas lest we have to face the reality that we had no domestic ability to sustain our growth addiction. We had to start selling off parts of the nation to keep what we still had afloat.

All along it was clear where the collapse would begin: the money economy, built upon the "miracle" of compound interest, would one day become decoupled from the matter-energy economy which allowed for no actual miracles. The laws of thermodynamics couldn't be suspended by all our inventiveness or by any amount of oil: energy cannot be created, only converted to another form, a result of which is the dissipation of energy in the process of conversion - or, "entropy." Our money economy is built on the possibility of endless growth by means of which money becomes more valuable as a result of increased economic (energy) activity in the future. Absent the guarantee of future growth, no banking system could function in anticipation of less valuable future currency used to pay past loans.

In addition to correctly pegging the year 1971 as the point of U.S. peak oil, M. King Hubbert also understood well its implications for our economy. He noted the stresses that the money economy would ultimately experience as a result of limits in the matter-energy realm:

The world's present industrial civilization is handicapped by the coexistence of two universal, overlapping, and incompatible intellectual systems: the accumulated knowledge of the last four centuries of the properties and interrelationships of matter and energy; and the associated monetary culture which has evolved from folkways of prehistoric origin.

The first of these two systems has been responsible for the spectacular rise, principally during the last two centuries, of the present industrial system and is essential for its continuance. The second, an inheritance from the prescientific past, operates by rules of its own having little in common with those of the matter-energy system. Nevertheless, the monetary system, by means of a loose coupling, exercises a general control over the matter-energy system upon which it is superimposed.

Despite their inherent incompatibilities, these two systems during the last two centuries have had one fundamental characteristic in common, namely exponential growth, which has made a reasonably stable coexistence possible. But, for various reasons, it is impossible for the matter-energy system to sustain exponential growth for more than a few tens of doublings, and this phase is by now almost over. The monetary system has no such constraints, and, according to one of its most fundamental rules, it must continue to grow by compound interest" ("Two Intellectual Systems," 1981).

Our money system was able to function for the past century not because of our investing acumen, but because of our ability to utilize our potent but ultimately limited oil reservoirs. Growth would cease as a result of geological limits, but our money economy would continue to attempt to find ways to increase the growth of money in the form of loans. Eventually it would seek to make loans even to borrowers patently unable to repay those loans except under the assumption that the laws of physics could be suspended. Given the current price of oil, there is every reason to believe that our financial crisis is not necessarily or merely a credit crisis, but a crisis of the attempt to circumvent the second law of thermodynamics. Money cannot grow in the absence of surplus energy; what America avoided in 1971 by selling its valuables abroad is now being realized with the worldwide encounter with peak oil. The pain of these limits will only be keener given how much more entropy we have thrown off in the intervening 35 years.

It has been suggested that I am a "protectionist." I refuse the label - "protectionism" was a label used to describe those who sought to protect domestic markets from the challenge of foreign markets. A wholly different label would be needed to describe what our times demand: the preservation of those abilities and crafts we still possess, and the fostering of those talents we have given up or forgotten, in anticipation of the time when we will not be able to rely on foreigners to subsidize our profligacy. For the moment foreign powers buy whatever we still have left of value, and will continue to do so for the foreseeable future. Ultimately those institutions will not retain their value (especially the banks that are now being bought by our "owners," merely formalizing an existing arrangement), as the money economy will unravel just as surely for them as it will for us. We need rather to foster local economies where they persist and create them where they are absent. We need to begin to live within our means, a task we can do without government dictates but which might be aided by creative and thoughtful policies that begin to reverse the thoughtless and costly ones that have brought us to this moment. I am not confident that we will willingly embrace self-governance and the acceptance of limits: very little in our past, and particularly our recent past of self-indulgent demands for everything from tax cuts to "the Whopper" suggest a culture of deep and warped entitlement. This does not mean that we will avoid the imperative to accept those limits - only that it will be even more painful when those limits are no longer avoidable, which becomes daily more evident.

In many respects, our nation is currently experiencing massive amounts of entropy - the loss of energy that naturally occurs in the conversion of fuel from one form to another. The effort to keep at bay the chaos of induced by constantly dissipating energy requires work, i.e., energy. As long as there are sufficient quantities of energy available, it is possible to maintain a high energy way of life without noting the growing levels of entropy. At the point at which energy becomes more constrained - that is, it begins to be difficult to avoid noticing and "paying" for the energy lost in the conversion from one form to another - our ability to control the resulting chaos will decrease and the consequences of entropy will become ever more evident. We have built an awesome society, but precisely because of our intensive energy lives we are approaching a reckoning in which all around us is the evidence of increasing levels of entropy. From our housing collapse to our banking crises, from military commitments to food prices, from strains on household budgets to divorce rates, from rising levels of crime to rising levels of type II childhood diabetes, from the rampant steroid use in sports to pornography everywhere - and one could keep going - entropy encroaches upon us in every direction. A relatively small and ecologically complex system (in contrast to our current forms of "efficiency" that increase entropy) can thwart entropy with relatively small exertions of energy (cleaning a house is easier than restoring a city), whereas high-energy environments will throw off massive amounts of entropy that require massive energy investments to resist. As we enter an age of reduced energy, we can expect levels of entropy to increase even as our ability to contend with entropy decreases. Our politicians will promise to restore hope and to bring "change," but until they brush up on their elementary physics, they'll be blowing smoke out their rears, a dense fog into which we'll gladly ensconce ourselves, better not to have to see what's really happening.


Anonymous said...

One wonders if the above is quite true. In the first place, is oil the sine qua non of energy? Possibly so but then again maybe not. Much of the argument is predicated on the uncertainty that nothing will replace oil as an energy source. It's not unreasonable to posit some replacement energy. Thus, the apocalypse may be late in arriving.

Next, what - if anything - of value are the foreign speculators purchasing? Highly leveraged financial firms? Surplus Manhattan office space? Vast tracts of unoccupied McMansions in the southwest desert? Why should foreign speculators care to purchase our wares and why should we care if they do? Assuming the truth of post-peak energy collapse, does it really matter who ends up holding the worthless scrip?

I assume the opportunity to waste and squander will always be with us and that no cataclysmic event will - always and everywhere - force folks to live on a smaller scale. Is there no other reason to live a small, simple, and - ultimately - abundant life than that the universe is about to implode?

Why not assume future energy inputs will come on line as required and change how we live anyway? Why not grow a garden even if the grocery store is still there? Why not walk instead of drive? Why not turn of the television and enjoy a real life? Why not find happiness outside the mall? Would we bother to change if we didn't think the world was about to end?

Think about it.

Patrick Deneen said...

Of course oil is not the only form of energy - it is a uniquely powerful and portable form of energy that has made our contemporary civilization possible. Humans have always used external energy forms, whether in the form of animals, human slaves, wood, coal, water, wind, etc... Nothing has ever approached the concentrated power of oil, and it is this one time inheritance that has made our modern industrial system possible.

You ask, "why not assume that future energy inputs will come on line as required..."? Do the laws of physics alter themselves to our "requirements?" I might also ask, "why not assume that humans will sprout wings to fly and develop the ability to transform matter with our brainwaves?" I can assume all sorts of things that might reflect wishful thinking, but that doesn't change what reality dictates. We might find ways of running our civilization on seawater or pig poop, but should I make future plans on those assumptions? Don't grownups try to make plans not based on best case scenarios, but with awareness of the potential for expected or unexpected challenges?

You're correct that we can choose to alter our behavior whether we face any such dire circumstances or not. But, absent such thoughts about the likely consequences of our current behavior, our minds have a tendency to resist becoming focused and we are likely to continue in our "consensus trance."

Anonymous said...

I'm inclined to agree that many - if not most - folks require a sort of road-to-Damascus moment in order to be sufficiently motivated to alter their lifestyle. Certainly peak oil scenarios are jolting for a few. These same scenarios do little to explain why anyone might choose to live differently in their absence. Because the eventual arrival of peak oil is necessarily going to be difficult to predict and its affects even more so, it makes for a sort of non-argument. In the short term, it is easily dismissed as a sort of doomsday fad and in the long term it is at least as likely to be overcome by events as not. Point being, these arguments take on a sort of repent-for-the-end-is-nigh quality that is often unpersuasive. My general assumption is not that we will all 'sprout wings', nice as that may be but that the short term fix is always more attractive and readily available. Keep in mind that I do not suggest that a short term fix that is acceptable in 200 years is necessarily acceptable today, who knows what may be plausible by then? The question I am asking then is: what is inherently more attractive about the long term solution? Is there any reason to change besides the lack of oil and money? Will the lifestyle forced upon us by that lack be fundamentally better in any real sense (morally, physically, emotionally) or will we just slink deeper into the cave in the manner of Gollum seeking his lost precious?

Anonymous said...

First of all, oil is an impressive energy storage material, but it is not magic. It is merely a tiny fraction of the sun's energy stored in chemical form. Fusion would provide effective free energy; it would throw a big hole in your theories, just like oil did to Maluthus. The reason we use oil is that it is easy. We waste because we can. We won't when we can't.

Second, entropy is merely dS = dQ / T, where dQ is heat absorbed in a reversible process changing states. It's got nothing to do with the "amount" of energy out there - which, in the universe, is pretty much limitless. The entropy you refer to, say going from thermal to mechanical energy, loses all meaning when you have plenty of energy, and the universe is full of it. We just have to use it properly. Remember, there is zero incentive to get new energy sources when pretty much the free energy of oil (EROI around 100) is sitting around. This will change once oil supply becomes short.

Third, the concept of America going into complete debt due to being an oil consumer is crazy. Japan is the second wealthiest country in the world, very efficient, very hardworking, and they have ZERO oil. They work, they produce wealth. So do we; check out our GDP. In your vision of things, who is producing all the wealth in the world? Where does it come from? Just oil? Come on, we certainly will be poorer once all the oil is gone (assuming no breakthroughs in fusion) but we will still be cranking out wealth through new technologies, and continue to grow the economy, just like we did before oil was discovered. It will merely be slower growth.

Fourth, I agree wholeheartedly with your assessment of social decline of America: T2 diabetes, obesity, the driving culture, divorce, sexual decline, lack of parenting, abortion, lack of religion, working mothers, decline of the family - these indeed are the serious threat to our way of life. Just look at Russia, the big, highly educated oil producer in perpetual social and economic decline. However, I think you are wont to confuse real social decline with science (peak oil) and economic issues (financial markets). Oil is not the magic that makes these things run, as they were running at nice clips before oil was discovered. And America is quick to change; certain groups (unlike Europe) are making it fine, having strong families, and moving forward. America is the place that can shift quickly to the changing times, to my mind.

Patrick Deneen said...

Mr. Seal asks an extremely important question, and I need to devote more than a few posts to it. Let me say a few words here.

He is asking me to defend the inherent choiceworthiness of my Aristotelian/Thomistic/MacIntyre/Berry-ism. This can only be done in terms of nature - that it is in keeping with our nature as human beings to live in a certain way, namely, in a way that is moderate, in which we control our appetites by means of a habituation and education in virtue that is reinforced not only by families and schools, but in the broader culture. It stresses our reliance upon that very community, a kind of "feedback loop" in which the community forms us as much as we contribute to its sustenance. It assumes that there are certain human goods that are deeply connected to certain moderate human virtues - liberality, generosity, devotion, memory, faith, hope, charity... - etc. It bases its arguments on the basis of a belief in the good life, one that in which we govern ourselves individually and politically.

Aristotelianism was assaulted in theory by thinkers like Bacon and Hobbes, which in turn gave rise to its assault in fact in the form of the revolution in scientific investigation, from the Aristotelian effort to understand (and therefore, conform to) nature to the Baconian effort to master and exploit nature. The Aristotelian argument was "falsified" by the human ability to alter and manipulate nature to its desires - rather than the need to conform human behavior to the limits of nature. In recent years "virtue theory" has made a comeback, but it remains a philosophic and lifestyle "choice," one that therefore is subordinate to a broader philosophy in which choice dominates. An argument about the inherent choiceworthiness of a life governed by natural ends is made in the context of a culture and economy that generates more choices than can be counted. A philosophy critical of free market ideology nevertheless appears as a choice in the marketplace of ideas. This puts it at a significant argumentative disadvantage (and this was the basis of Peter Lawler's uncharacteristically uncharitable attack on Rod Dreher).

This raises a profound question - is the human ability to control nature more fundamental to its "nature" than the Aristotelian form of nature? Three options - perhaps among many - present themselves as serious contenders: first, most of our contemporaries would say yes - we are homo techne, the technological animal that alters and changes nature to reflect our will and desires. Second, there is the argument of Peter Lawler - yes, we are the technological creature, but all our manipulations don't obviate certain aspects of our nature, most fundamentally our anxiety about death. We are death-haunted, and this basic feature of our nature prevents us from wholesale technological mastery and transformation. For Peter, everything is getting better and getting worse at the same time. His refrain - don't worry, be miserable.

Then, there is the MacIntyre/Berry, and ultimately Aristotelian argument: our efforts to manipulate and control nature are exacting a cost, albeit one that tends to be indiscernible to us or subordinated to our celebration of our technological mastery. There are arguments that, in our excesses, we deform ourselves as creatures - we deform our souls and our culture just as surely as in excesss we also damage our bodies. Curiously, however, because our modern technological mindset denigrates the very idea of soul and doesn't count the deformations of soul that manifest themselves in our modern pathologies, the default argument tends to require material justification. Here the Aristotelian is on tough terrain, because the material news seems to be so good. We are more prosperous, more satiated, more leisured than any society in the history of the world. Yet, the argument based in nature would strongly suggest that - just as surely as our we are undergoing deformation of our souls and culture - so, too, our natural world is undergoing a collection of deformations as our ungoverned appetites continue to consume the bounties of the natural world without limit or afterthought.

There is much evidence to suggest that this is indeed the case. Just as our society is manifesting numerous pathologies that arise from the deformation of soul and culture, so too our natural world is increasingly exhibiting the scars of our ravages. Our liberals excuse the first as "personal liberty" while our conservatives excuse the second as the "free market." The conservatives offer up apocalyptic arguments about the death of character, the demise of the family, the evisceration of our schools... Our liberals decry the impending doom of global warming and environmental degradation. Both seek to urge us to alter our behavior before we go too far, before we pass a tipping point from which there is no return. They may be right, but if so, they are only half right inasmuch as they ignore half our embodied creatureliness.

In the end, the Aristotelian/Thomistic/MacIntyre/Berry position - and indeed, my own - must have recourse to nature, and in particular, the costs of our current form of life and the promise of an alternative. At the moment the more pressing side of the argument seems to be the costs of our current path, which seem to be gathering in severity and irreversibility. Yet, it's possible, even if unlikely, that we can continue on our present course without ever paying any of the costs we seem to be accumulating. The history of humankind, and other creatures, suggests otherwise, and much evidence seems to argue against our contemporary faith in unlimited technological fixes. The irony is that it is our scientists and technologists who form the true faith-based community, the priests of a complacent populace who believe the future will be better, no matter the signs of the times.

Still - it is necessary to make the positive argument, and it's one I'll try to make here without too much recourse to doom and gloom...

Anonymous said...

Just so. Very much looking forward to your follow-on posts.

Anonymous said...

I appreciate your thoughtful posts. Thank you. That said, alternative energy is on the way and hopefully we aren't too late in turning to it. Hopefully it will be an American industry, just as oil once was.

Here is a California solar company that has invented a cost-effective method of harnessing the sun's energy. The ultimate cost clocks in now at that of coal: $1/megawatt hour.

As such, it is no longer a technology issue, but a production limitation problem.

papabear said...

This may be of some interest to you and your readers: