Bill Freeland : With 'Occupy,' the People are the Point

Image from Addicting Info.
‘Occupy America’:
The people are the point

By Bill Freeland / The Rag Blog / November 17, 2011

The “Occupy” movement, which began as a small gathering in a private park near Wall Street in New York City in September, has already swept across America and into another dozen countries around the world.

While these gatherings are local, their concerns are global. They are responding to economic and social trends that have been developing for decades. But the catalyst was the financial collapse of 2008.

In the aftermath of that collapse, what has become clear to many Americans­­ -- following aggressive bailouts for the banks but inaction on lost jobs and homes -- is that the nation’s economic system functions differently depending on which side of this divide you are on.

People in the top 1%, for example, according to the Congressional Budget Office (CBO), between 1979 and 2007 saw their pretax income grow by an average of 275%. That’s an average increase of $700,000. People in the lower 90%, however, saw their pre-tax income actually fall by $900 for the same period.

As a result the CBO reports that now 1% of Americans control 35% of the nation’s wealth, which is the highest level of wealth disparity since 1929, the last great financial crash.

Occupy supporters advocate for the “99%ers," their now-famous shorthand for the majority of Americans. These are the people who increasingly find themselves with under-water mortgages and dangerously depleted savings. And with persistent 9% unemployment, they are just as likely to be out of work as out of their homes.

But when they look to Washington, what they find is gridlock. Most solutions include severe spending cuts, which many economists warn will likely result in a replay of the Hoover Administration’s policies of the early 1930s that only deepened that generation’s Depression.

And lawmakers are not the only bad actors. While the financial fallout continues to be borne by the victims of the crisis, those on Wall Street and elsewhere who created the mess have kept their profits without ever being held to account.

Unlike with the savings and loan crisis of the 1980s, today -- after three years and hundreds of investigations -- not a single criminal charge has been filed by the Justice Department, the SEC, or any state Attorney General against a major figure in the financial industry.

For the Occupy movement, all of these developments are interrelated.

Financial and corporate interests hold the money and the influence they buy. That influence has produced the kind of tax code and financial deregulation that, over time, have lead directly to the huge economic imbalances which Occupy exposes.

Critics charge that the movement to date has no agenda to address all it decries. The Occupiers respond that, since the movement is barely 60 days old, the criticism is premature. But more than that, with their bottom-up approach, the process by which solutions are arrived at, they believe, is equally important as the solutions themselves.

It’s impossible to know now how public opinion will ultimately judge this effort. From my perspective, however, the movement at this early stage is similar to the lunch-counter-sit-in stage of the 1960s protests in the South. Except this time the demonstrators are fighting for economic, rather than civil, rights.

The loud turmoil and resulting media scrutiny is similar to those days 50 years ago, but it is also likely that someone is already at work on his or her own “I Have a Dream” speech.

[In the Sixties, Bill Freeland was a contributor to The Rag in Austin and Liberation News Service in New York. Read more articles by Bill Freeland on The Rag Blog.]

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Ellen LaConte : When Too Big to Fail is Too Big Not To

"Blick auf den Planeten Erde" by Heikenwaelder Hugo, Austria / Wikimedia Commons.
When too big to fail
is too big not to

Where bailout theory comes a cropper, no matter who’s doing or who’s receiving the bailout, is when it ignores the inevitability of finiteness on a finite planet.

By Ellen LaConte / The Rag Blog / November 10, 2011

Author and sustainability advocate Ellen LaConte will be Thorne Dreyer's guest on Rag Radio, Friday, November 11, 2011, 2-3 p.m. (Central) on KOOP 91-7-FM in Austin. Stream it live here.

The Occupy Wall Street (OWS) protesters here and around the world and most of the now iconic 99% of humans have something in common with the forces and powers they’re protesting.

Like the powers that be on Wall Street, in Washington, and in the rest of the nation’s and the world’s capitols and financial centers, they believe in the global economy’s ability to deliver them the goods -- the resources, jobs, wages, and services they deserve and depend on -- if only the people managing it were more fair.

As I write this the occupy moment in the U.S. is weakening and, its having neither chosen a single demand or coherent cluster of them nor posed any coherent solution to present inequities and trespasses, seems likely not to become a coherent movement. This leaves OWS in much the same position as the political and economic forces against which it is arrayed: incoherent.

Inarguably, the global economy could be managed in a way that would come closer to creating the flat world, level playing field, and economic equity envisioned by analysts like Tom Friedman and Paul Krugman. But even if it were, we would still be dealing with an economy that’s approaching a terminal condition capable of bringing to an end life as we know it. It’s this terminal condition we need to be protesting, or better still, trying mightily to mitigate or avoid.

Global economic theory tends to rely on one particularly counterintuitive notion: that huge transnational corporations, organizations, and economic systems are not vulnerable to the defects inherent in all forms of gigantism and overreach. Rather they are and should be treated as if they were "too big to fail" -- or at least too big to be allowed to.

Why?

Letting them go under would, exactly as we’ve seen, put at risk the national and regional economies, investors, stockholders, suppliers, and other businesses and organizations, and even sovereign nations, they would weaken or take down with them. Some other economy, corporation, organization, country, or consortium of them will -- even must -- as a matter of course, bail out vulnerable mega-companies and institutions and nations. They must not be allowed to fail.

And so stock markets, investors, and even individuals who are not vested in the financial sector or directly in the global economy but who do depend on its ability to keep funding the systems they rely on for their lives and livelihoods keep counting on the powers and the world’s leaders to make sure the system doesn't fail. And they assume, or at least try very hard to believe, they can actually do that.

Bailout Theory, as it is called, is fatally flawed, however, when it comes to a globalized, fossil-fueled, industrial, and hyper-capitalized economy. The kind of economy we are all now living “under.” The very economy that both fat cats and fist-shakers stake their futures on.

Again, why?

"Because Mother Nature does not do bailouts," says former Vice President and climate change spokesperson Al Gore. Just as there's no other Earth to turn to if we live for too long beyond this one's means, there's no larger economy to turn to if the global economy operates much longer beyond its means. And there are no unaffected national or regional economies that are sufficiently big, rich, or independent to bail the global economy out.

As we’ve seen in Europe, the global economy’s wealthiest, most powerful and aggressive subsidiary economies are heavily invested and implicated in each other’s bad paper, foreclosures, bankruptcies, and other forms of debt. Witness Germany’s virtual ownership of Greece and Britain, and European banks teetering on the edge of insolvency due to bad loans made to the overdrawn PIIGS (Portugal, Ireland, Italy, Greece and Spain) and in development, infrastructure, energy, military and expansion projects that are so big that no subsidiary economy can afford to undertake them alone.

The global economy’s poorest subsidiary economies already hang on by a thread that the richest, finding themselves ever less rich, may choose or have no choice but to cut. National economies are propping up each other’s credit and financial institutions in such a way that each of them is vulnerable to the failure of any of the others.

In spring 2008, in an earlier draft of my book Life Rules, I predicted that only one opportunistic condition would be required to bring down this jerry-rigged, multinational system of props: protracted widespread drought, cumulative weather-related disasters coupled with bankrupt emergency management systems, failed grain crops, another major resource war, recognition of and panic around peak oil, a rapid or prolonged sequence of serious seismic events, or meltdown of the U.S. or European Union economies, for example. Here we are.

But surely economic collapse isn’t inevitable, is it? After all, we pulled out of the Great Depression of the 1930s. That was a worldwide phenomenon too and the decades following the crash brought the most prosperity to the most people in human history.

The mid-20th century miracles of industrial productivity, the phenomenally productive (not to say completely harmless) agricultural Green Revolution, computer, electronic and digital technologies, and (so-called) free-market economic policies accomplished a number of wildly ambitious goals.

They enriched and added to the list of self-designated First World (or at least prosperous, powerful, developed, industrialized) economies and so-called Second World (developing, industrializing) economies. They hauled many so-called Third World economies -- by the First World’s reckoning, the poor, less powerful, undeveloped, not-yet industrialized economies -- into the modern era.

In the process they created a conceptual divide that gave putative First World nations a dangerous sense of superiority and entitlement and global aspirations that carried stock markets around the world to such heights that at century’s end one investment analyst predicted the DOW Jones Industrial Average, which had yet to exceed 14,000 points, could hit 36,000.

Couldn’t upgraded versions of the same sorts of activities and policies that bailed us out then (Keynesian policies, for example, that we still like to believe will work now) actually bail us out now too?

No.

Why not? Several once-in-an-Earthtime conditions permitted the boom that followed that early 20th century bust. Among them were:

• a war-driven, full-employment, manufacturing economy based on the production and deployment of conventional (that is, non-nuclear, non-biological) weaponry;
• cheap, abundant fossil fuels and natural resources, like minerals, metals, land and water;
• free, reliable ecosystem services;
• relatively predictable, mostly good weather;
• the gold standard limitation on economic and environmental overreach;
• widespread faith in “endless capital” and effective big government.

None of these can save us now. Perpetual warfare bankrupts and corrupts rather than bankrolling nations and threatens unprecedented death and destruction. Earth’s cornucopia of resources and fossil fuels is approaching empty and will not be refilled. Ecosystem services like carbon sequestration, soil maintenance, flood control, pH balance, and water purification have been seriously taxed by global economic activity over the past half century.

The climate has already become noticeably unstable and increasingly unfriendly and CO2 in the atmosphere (not to mention other greenhouse gases) is almost 50 parts per million higher than life as we’ve known it can tolerate. The removal of any tie between the amount and value of monies in circulation and a finite material like gold has allowed -- caused -- the increasing funniness and decreasing actual value of money and created a false sense of limitlessness.

And the capacity of governments to manage at the global or even national level the complex symptoms that characterize our present critical mass of environmental, economic, social, and political crises appears to be nil.

“Thus it is that we can say,” writes American sociologist Immanuel Wallerstein in a paper titled “Globalization or the Age of Transition,” “that the capitalist world-economy has now entered its terminal crisis, a crisis that may last up to 50 years. . . As the world-economy enters into a new period of [attempted] expansion it will exacerbate the very conditions which have led it to this terminal crisis.”

“Collapse, if and when it comes again, will this time be global,” wrote anthropologist and historian Joseph Tainter in The Collapse of Complex Societies as long ago as 1988. “No longer can any individual nation collapse. World civilization will disintegrate as a whole.” He no longer includes the hedge “if and when it comes again” in his prediction.

In short, the booming, credit-driven economy that those once-in-an-Earthtime conditions permitted is the biggest economy there is and ever has been. There’s no bigger human economy for it to turn to for help. It’s too big not to fail.

If this is true, then future moment-cum-movements may wish, will likely need, to focus on post-global economics rather than tweaking of the present system which is both moribund and a danger to living things, including most humans.

[A freelance journalist, contemporary issues writer, and memoirist, Ellen LaConte is author most recently of a controversial, widely-endorsed meta-synthesis, Life Rules: Why so much is going wrong everywhere at once and how Life teaches us to fix it. Information about Ellen and her work can be found at www.ellenlaconte.com. Read more articles by Ellen LaConte on The Rag Blog.]

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Ted McLaughlin : Media Won't Report the Real Wall Street Story

Members of the Occupy Wall Street media organization produced bails of newspapers chronicling the past three weeks of protests. Photo by John Minchillo / AP / Christian Science Monitor.
Occupy Wall Street:
The media won't report the real story

By Ted McLaughlin / The Rag Blog / October 3, 2011

You've probably heard about the demonstrations being held in the financial district of New York City by now. The protests started as an attempt for ordinary citizens to occupy Wall Street, and that occupation is still going on days later.

But I'll bet that all you've heard about this "occupation" is the ongoing interplay between the protesters and the police -- especially the mistreatment and arrests of the demonstrators. That seems to be the only part of the story that interests the mainstream media.

But that is an old story -- older even than this country. The powers that be have always used police/troops to try and suppress demonstrations against them -- and if those police/troops needed to use violence to quell the dissent, then so be it. Police violence was used against the demonstrators in Chicago during the 1968 Democratic Convention, and troops fired on demonstrators at Kent State, killing four of them.

Violence by police against the civil rights demonstrators was common throughout the South for many years. And it was the Army that broke up the "Hooverville" camps and demonstrations during the Great Depression.

And this is not just a 20th century phenomenon. When workers were trying to unionize in the late 19th Century, it was the police and troops that helped company "goons" bust up strikes and club the union organizers. And in the 18th Century, before this country was even born, troops fired on a crowd of demonstrators in Boston (now commonly referred to as the "Boston Massacre"). Those are just a few examples -- there are hundreds, if not thousands more. It has always been commonplace for authority to be misused by those in power to suppress dissent and prevent change. It's an old, old story.

I'm not saying it's not an important story, because it is. Police violence and the misuse of police to suppress dissent is wrong, and it should be exposed and stopped whenever it occurs. But covering only that, as the mainstream media seems to be doing, is missing the bigger story -- the much more important story. And that is the story of why those demonstrators are there in the first place -- the truth that they are trying to expose to the American public.

This used to be a country where real power rested in the hands of the citizens. They elected officials to represent them and make the rules for all the entities in this society. It was a system that worked fairly well, and when one segment got a little too much power those officials made regulations to bring things back into balance. This has always been a country that worked best when no one sector had too much power -- whether that be the corporations, unions, churches, special interest groups, political organizations, social organizations, etc..

But currently things have gotten seriously out of balance, and it is destroying our economy and hurting many millions of Americans. Starting about 1980, the Republicans began removing regulations and instituting other practices that favored one segment of American society above all others -- the giant corporations.

It was called "trickle-down" economics, and the theory was that if the corporations (controlled by the richest 1% in America) were given enough money they would eventually share it with the rest of us. Since that time these corporations have fared very well, amassing vast quantities of both money and power -- at the expense of workers, the middle class, and small businesses. And nothing was shared -- and nothing trickled down.

When George Bush was elected in 2000, this process was greatly accelerated. They didn't just funnel more money and power to the corporations -- they actually let corporate executives write the laws relating to the economy and economic regulations (and to no one's surprise they removed many regulations, allowing Wall Street and the other giant corporations to go on a rampage of greed).

This has led to the greatest disparity of wealth and income between the richest Americans and the rest of America since before the Great Depression -- and just like it did back then, it has led directly to the most serious economic disaster since the Great Depression (our current Great Recession).

In 2008, the people voted for change. They wanted to restore the balance that had been destroyed. But that didn't happen. First, the Republicans have blocked any change to the status quo. They like the plutocracy they have created.

But the failure of the Democrats has been even sadder. Note that every economic advisor the president has appointed or sought advice from is from either Wall Street or a giant corporation. The same people that were running the economy in the last administration are still running it. The names may have changed, but they are still coming from the Wall Street/corporate power base.

It seems like no one in Washington from either party thinks anyone outside of Wall Street or the corporate sector could possibly understand economics. That is wrong, and it is just resulting in a deepening of corporate power and an institutionalization of plutocratic government. We used to have a government of the people, by the people, and for the people. That is no longer true. We now have a government of the corporations, by the corporations, and for the corporations. And it is killing this country.

That is the story the Wall Street demonstrators are trying to tell. And that is the story the mainstream media is ignoring. It is the biggest story going, and it is the biggest problem facing this country. But it is also a problem that the corporate-owned mainstream media is not going to cover. They won't cover it because they are owned and controlled by those same corporations, and they are part of the problem.

So enjoy the stories about police and demonstrator clashes, because that's all you're going to get. The real story is too hot to handle.

[Ted McLaughlin also posts at jobsanger. Read more articles by Ted McLaughlin on The Rag Blog.]

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Roger Baker : U.S. Driving Hits the Wall

Digitized image by Harm van den Dorpel / Today and Tomorrow.
Coming soon:
Peak oil, peak driving, peak cars

Part III: U.S. driving hits the wall

By Roger Baker / The Rag Blog / July 7, 2011

[This is the third part of a series by Roger Baker on transportation, centering on the issue of peak oil and its ramifications.]

Peak driving has many causes

In my last post, we saw that total U.S. driving hit a peak back in 2007. This time we will take a closer look at the situation to examine the reasons, the implications, and the prospects for the future of driving in the United States.

There are a number of contributing factors behind the 2007 peak. High unemployment simultaneously reduces the need to commute as well as the ability to afford to do so. There is the deteriorating condition of U.S. roads amidst increasing congestion. U.S. government grants to the states for highways are anticipated to drop further from the current level of $41 billion a year to about $32b next year.

The reduction in driving is not only due to high fuel prices as various observers have noted. It seems to be part of a global trend that predates the big runup in fuel prices.

A fairly recent study by economists Kenneth Small and Kurt van Dender found that a 10 percent increase in gas prices leads to a 0.2. to 0.3 percent reduction in driving in the short run, and an eventual reduction of 1.1 to 1.5 percent. But does this explain the driving slowdown? Maybe partially, but not entirely.

The growth of driving began to abate around 2000, and driving flattened out around 2004; the big gas price hikes didn’t come until late in the decade. Besides, though the graph I showed you last time has a couple of kinks in the 1970s, the relentless rise in driving basically shrugged off a comparable (in real terms) runup in oil prices during that decade.

Another factor is that an aging U.S. population tends to drive less. A recent AARP report, “How the Travel Patterns of Older Adults Are Changing,” predicts that older travelers will change the landscape of transportation in coming years, and concludes that transportation planners and policy makers must adapt to this shift. The number of Americans 65 and older is projected to rise by 60 percent in the next 15 years.

Seniors are piling onto public transportation

This analysis of the 2009 National Household Travel Survey by Jana Lynott and Carlos Figueiredo found that:

• Older adults comprise an increasing share of the nation’s travel.
• Although individuals are traveling less, particularly in private vehicles, public transportation use is up.
• Older men are more mobile than older women; however, the gap has been narrowing.
• The number of older non-drivers has grown by more than 1.1 million.

End of a love affair? Cartoon from Wellsphere.
Driving less is mostly due to the economy

The closer we look, the more evidence we find that the single biggest factor behind both the driving and car ownership decrease is the economy. The cost of driving has been going up a lot faster than average income. A new poll that helps to reveal the degree to which high fuel prices are impacting average folks concludes that about 40% are already stressed by steadily rising driving costs.

If we look at driving trends among young people we see that driving as a favorite teenage pastime is in decline. It is hard not to attribute a lot of this decline to the fact that the unemployment rate among youth is at a depression level of about 24%.

Thanks to a Brookings Institution report on U.S. metropolitan areas released last year, we can easily see the strong link between household income and car ownership.

If we go to the Brookings site we find all kinds of interesting demographic data on an interactive U.S. map, and sometimes yearly data series, for most major U.S. metropolitan areas. In this case, we can choose a city, go to "explore the data," then "commuting," and then "Vehicles availability by median household income." The income cutoff points used are: 80% of average is Low; 81-150% is Medium; and 150% of median or above is the High income category.

The report shows that most of the bottom third or so of households in U.S. metropolitan areas are unable to afford family cars. These households typically only have a 30-40% vehicle ownership rate. Of the roughly third in household income above that, comprising what we might often call the middle class, roughly 80% own cars. In the top third, typically about 90% of households own cars.

Following are NO-CAR family percentages for Texas and other big U.S. cities in 2008.


In each case, we see dramatic differences in household car ownership by income level, usually differing by a factor of four or more between the high and the low income levels. It is apparent that perhaps a quarter of U.S. households can't afford to own cars now. It is apparent that any continuation of the current hard times combined with higher driving costs will decrease car ownership and driving even more.

Since the data above is for 2008 car ownership, such ownership at the bottom end must have declined further, since the cost of driving has now risen above the previous 2008 peak. It appears likely that high imported oil prices are now killing the current recovery.

PRINCETON, NJ -- The slight majority of Americans, 53%, say they have responded to today's steep gas prices by making major changes in their personal lives, while 46% say they have not. Sizable proportions of adults of all major income levels have made such changes, including 68% of low-income Americans, 54% of middle-income Americans, and 44% of upper-income Americans.

What about the family budget available for driving? We can use the interactive map at the same Brookings link to see a series of yearly metropolitan income trends ending in 2009. Here we see that most metro areas show a striking decrease in median family income over the past decade, commonly 10% or more.

Economists often say that the core rate of U.S. inflation is just a few percent, since this core rate calculates inflation to exclude food and energy and focuses more on labor costs. However, at the low end of the car driver income scale, necessities like food and fuel and housing make up a comparatively larger portion of the family income. For low income drivers, inflation is effectively higher.


Another way to track the economic stress level for low income families is food stamps, where we see a large increase in use since 2008. Those who can afford to buy new cars are switching to smaller, more fuel efficient cars. Those who can't are trying to keep their current cars running longer.

People aren’t buying expensive items like cars and durable goods as much as they used to. Not even gas-saving hybrid cars are exempt from this downward trend. Interestingly, spikes in searches for maintenance related issues like “new tires” and “oil change” suggest people are looking for ways to keep their old cars running longer... A record number of Americans -- around 45 million -- now rely on food stamps. That means nearly 1 in 7 people, or 14%, are living on food stamps. The number of food stamp recipients increased 16% in 2010.

There is a lot of other evidence of a strong shift underway from two car families to one car families. A number of reasons for the decline in car ownership in recent years are reviewed here.

Ten reasons for drop in car ownership

In the United States, we embarrassingly have more vehicles than people with driver’s licenses. We have 246 million vehicles. AAA estimates that it costs $8,000 per year for each car owned, which creates a financial burden on cash-strapped Americans... One Car Households. The average suburban U.S. household has two vehicles. Some more. The average urban U.S. household has one vehicle. More American families and roommates are going from three cars to two cars to one car...

The latest polls show that about 40% of the US population is being squeezed hard by the rising cost of driving which now consumes about 20% of the typical family budget, even while total household income remains flat and families struggle to cope with a backlog of credit card debt and increasingly burdensome mortgage payments. There can be little doubt that American family budgets are now being severely stressed by the rising costs of driving their cars.

NEW YORK (CNNMoney) -- Wal-Mart's core shoppers are running out of money much faster than a year ago due to rising gasoline prices, and the retail giant is worried, CEO Mike Duke said Wednesday. "We're seeing core consumers under a lot of pressure," Duke said at an event in New York. "There's no doubt that rising fuel prices are having an impact."

Wal-Mart shoppers, many of whom live paycheck to paycheck, typically shop in bulk at the beginning of the month when their paychecks come in. Lately, they're "running out of money" at a faster clip, he said. "Purchases are really dropping off by the end of the month even more than last year," Duke said. "This end-of-month [purchases] cycle is growing to be a concern."

In Texas, we can see that the big box retailers are quite concerned that their customers are running out of money because of the cost of driving, causing them to shop less, especially toward the end of the month.

High gas costs are changing consumers' shopping habits, and that's hurting national retail chains like Wal-Mart Stores Inc. In fact, one in five Walmart moms list gasoline costs as their top expense behind housing and car payments, Wal-Mart spokesman Greg Rossiter said. Wal-Mart recently reported its eighth consecutive quarter of sales declines at U.S. stores open at least one year.“You know, it's just a ripple effect,” Rossiter said. “These concerns aren't geographic -- they aren't limited to any part of the country.”

Cartoon by johnxag / toonpool.
Further evidence for a big shift in U.S. driving behavior;
Elasticity of demand with driving cost

It used to be thought that the amount of driving in the U.S. was relatively blind to fuel cost. As economists would say, driving demand is an inelastic function of the cost of driving. In the past, most Americans would tend to spend less elsewhere in order to keep driving about as much. The need for U.S. drivers to keep driving at all costs in order to get to work and do other vital errands meant that they willing to pay a high price at the pump to keep driving.

In economic terms this is called a low elasticity of demand with fuel price. Over the longer run, people can move closer to work, or buy a smaller car, but over the short run they are stuck with paying, no matter what their fuel costs. However, this assumption has its limits when we reach the point that growing numbers simply can't afford to drive. The decrease in car driving and ownership due to a higher driving cost is resulting in a growing increase in the elasticity of oil demand with higher fuel price.

This snip from an insightful analysis by Tom Whipple reviews the conventional wisdom on the elasticity of driving with fuel prices. The conclusion is that these elasticity numbers may have reflected driving behavior in response to fuel price increases in the past, but not necessarily currently when many drivers are being forced to give up driving in order to support other equally important survival costs like food and housing.

In the very short run, motorists have no choice but to spend whatever it costs to keep their automobiles and trucks running for their livelihoods depend on it. Over the course of a year or so, some can move to substitute forms of transport, cut back on discretionary travel, and, if they have a choice, use more fuel efficient vehicles.

Within a year, all this should add up to an elasticity of demand of roughly -0.26 suggesting that for every 10 percent increase in gasoline prices, gasoline demand should fall by 2.6 percent. If prices remain high for several years, then the elasticity number goes to -.58 suggesting that the demand will fall by 5.8 percent for every 10 percent increase in prices. These numbers of course were derived from past experience in a simpler time before global oil production had peaked and price run-ups were mostly short-lived.

This diversion of spending toward fuel for cars automatically subtracts consumer spending, the bulk of the U.S. economy, from other areas. If the food and fuel and commodity sector of the economy is seeing inflation, this subtracts spending from other discretionary spending areas of the economy.

Inflation in the relatively necessary energy sector subtracts spending and generates deflation in the other sectors, hurting consumer wages of those drivers in the service sector of the economy. With U.S. income stagnant, a combination of inflation for non-discretionary expenses like driving and a simultaneous cutback in discretionary consumer spending in other areas adds up to stagflation. This is bad news to economists, since there is no good economic remedy.

The British Economist has noticed a fundamental shift in U.S. driving behavior.

Yet, here’s the conundrum. Following all previous recessions, petrol consumption has been a leading indicator of recovery, bouncing back sharply as people started using their vehicles more to shop, to dine out, to seek the curious and the entertaining, and, above all, to take vacations. Despite the American economy’s belated and still timid recovery -- seen in increasing sales of cars, clothing, hospitality, entertainment, and consumer goods generally (though still not housing) -- the amount of petrol being consumed across the country has tumbled to 2001 levels, and shows every sign of falling further.

The Bureau of Economic Analysis, the federal agency that churns out monthly reports on how the economy is faring, believes the 2008 spike in petrol prices and the subsequent recession have changed the consumption patterns of American motorists irreversibly. How so? The short answer is that technology and marketing have altered the type of vehicles Americans are now buying

Driving behavior and public opinion toward driving are both changing in the world's more affluent countries.

Until now, most projections for future energy use and transportation needs have taken for granted that there will always be more people owning more cars, driving farther and using more oil. But those assumptions are being put to the test by a profound change under way in the countries that have long been the world's biggest fuel consumers. And it goes beyond the payoff that is already being realized from government fuel economy efforts, like the U.S. government's announcement today of enhanced consumer labeling to promote efficient vehicles.

We could already see a big change in 2008 when rising fuel price spiked driving costs. "From 1970 to 2008, total highway fuel consumption increased from 92 billion gallons to nearly 181 billion gallons in 2007. The vehicle fuel consumption decreased to 175 billion gallons in 2008." The fact that we are driving less and using less fuel for years suggests that all the easy changes have already been made.

Driving costs are even higher now, while incomes are relatively lower, leading to a trend toward single car families.

Many families limiting themselves to a single car

Motivated by the declining economy, rising gas prices and a concern for the environment, families like the Rogerses say they are starting to rethink the need to have more than one car. Make no mistake, however: America’s love affair with the automobile is still strong. According to a February study by Experian Automotive, which specializes in collecting and analyzing automotive data, Americans own an average of 2.28 vehicles per household, and more than 35 percent of households own three or more cars.

But there are signs of change. Brian Gluckman, a spokesman for AutoTrader.com, a leading automotive Web site, said more buyers were moving to one car. Until the last three months, Mr. Gluckman said, that car tended to be a midsize S.U.V. or crossovers. He said AutoTrader.com’s more recent data showed buyers shifting toward smaller, more fuel-efficient vehicles.

U.S. transit demand grows

As both driving and cars on the road peak while the need for transportation remains relatively constant, it is apparent that the public will tend to seek out alternatives to cars. The rapid increase in bikes being used for commuting is one sign of this trend. See Fig. 3: "Trend in Share of Workers Commuting by Bike in Large North American Cities, 1990-2009" Another indication is car sharing, which is also growing rapidly.

A loss of driving affordability tends to turn up as increased transit use whenever the transit is useful and available.

Transit ridership up due to rising gas prices
by Joseph Cutrufo on Thursday, May 5, 2011

It was only a matter of time: Transit agencies are reporting increased ridership due to higher gas prices. With the national average for a gallon of regular unleaded now at $3.98, motorists across the nation are switching to public transportation. We saw it in 2008, when the national average reached $4, and we’re seeing it all over again. According to the American Public Transportation Association, $4 per gallon is the tipping point where people begin to drive less and use transit more -- a lot more. If gas prices stay this high, we can expect an additional 670 billion transit trips made this year nationwide.

When fuel prices get high enough, many are willing to shift to transit since they must get to work somehow.

PRINCETON, NJ -- Americans are most likely to say they would seek vehicles that get better gas mileage if gas prices keep rising but don't go above the $5-per-gallon range. Americans are second most likely to say they would use mass transit. Seven in 10 Americans would not move and about the same number of workers would not change jobs or quit working, no matter how high prices rise.

Nothing could be more positive for increasing transit use than for the cost of car driving and car ownership to go high enough so that broad new sectors of the population seek to use it. The current stress of rising fuel prices on the family budget is indeed causing a national increase in transit ridership.

Higher gas prices driving motorists to mass transit

"When gas prices hit $3, we see serious interest," Williams said. "Some people come and leave (when gas prices recede). Others come and stay. "The link between higher gas prices and increased use of mass transit is a significant one. It could get even more pronounced. According to a study by the American Public Transportation Association, the U.S. will see an additional 1.5 billion mass transit boardings per year if gas reaches $5 per gallon.

A lot of the new potential users are senior citizens. In particular, the aging baby boomer population is increasing its use of transit as this sector of the total population grows. However poor public transit is a threat, especially to older Americans.

A recent Brookings study has thoroughly documented the fact that, in the U.S., transit tends not to go where it is most needed to help low income workers get to work.

These trends have three broad implications for leaders at the local, regional, state, and national levels. Transportation leaders should make access to jobs an explicit priority in their spending and service decisions, especially given the budget pressures they face. Metro leaders should coordinate strategies regarding land use, economic development, and housing with transit decisions in order to ensure that transit reaches more people and more jobs efficiently. And federal officials should collect and disseminate standardized transit data to enable public, private, and non-profit actors to make more informed decisions and ultimately maximize the benefits of transit for labor markets.

Public support for transit will no doubt continue to increase along with decreasing driving, stagnating income, and higher driving cost, whenever the transit can be easily used. The problem is that much transit in the U.S., when it is available, does not go where it could be most useful. The private business sector is not much interested in helping out, so even jitneys are being suggested. Meanwhile, the expansion of transit service is becoming harder for local government to afford, just when it is most needed as an alternative to private cars.

Transit, and especially rail, typically has high up-front capital costs despite the overall cost and energy savings of rail when it has a high ridership ("Electric traction offers a lower cost per mile of train operation but at a higher initial cost, which can only be justified on high traffic lines.") One problem lies in trying to explain to the public that saving money on the initial cost is not always a smart long range policy. For now we should expect less federal help in spending for transit, and most other public infrastructure, as the result of the Congressional gridlock over the U.S. budget deficit.

Widespread support for better public transportation awaits a broad turnaround in public opinion led by peak oil, higher fuel prices, and less affordable driving. As a nation, the U.S. is still in denial about the unsustainability of its car habit. The economic reality is stubborn, telling us that our transportation habits will soon have to change more than most American are willing to admit.


Why rising fuel prices are likely to prevent a driving recovery

Could we ever recover our previous driving or car ownership levels? The slow replacement rate of the vehicles now on the road strongly suggests that the current level of total U.S. driving cannot increase by very much, nor for very long.

Since the 2007 driving peak followed by the 2008 economic crisis, there has been a partial recovery in vehicle sales, but these sales have never approached the previous peak. U.S. family budgets for car replacement are shrinking as driving costs rise. People are hanging on to their old cars longer than ever, and a lot of SUV owners are financially unable to easily downsize to more fuel efficient cars. Currently, there is a shortage of small used cars and this is reflected in their relatively higher prices.

This is not to say that those who can afford to replace them are not already choosing smaller cars. Robert Sinclair Jr., a spokesman for the New York regional chapter of AAA, agrees that “we are witnessing a major sea change in both the types and number of vehicles on the road."

There has been some backsliding on new vehicle mileage since 2008, but recently higher fuel prices will likely help turn this gas mileage trend around again.

Hybrid sales rose quickly in 2007 as gas prices climbed, then dropped noticeably in the second half of 2008 as gas prices plummeted from over $4 to $1.60. This time around, despite gas prices climbing steadily over the past year, hybrid cars shrunk from 2.9% of new vehicle sales in 2009 to 2.4% in 2010, according to Ward's Auto. Meanwhile, sales of trucks, SUVs, crossovers and minivans rose from 48% of the market to 51% from 2009 to 2010. In addition, the average fuel economy rating of new vehicles sold in 2010 was 22.2 mpg, down from 22.3 mpg in 2009.

Some imagine that electric cars or smaller more fuel-efficient cars could make a big difference. They will make a difference, but probably only a small difference overall. For an economy structurally geared over decades to run on cheap oil to serve low density sprawl development, historic energy transitions like reducing dependence on oil for commuting turn out to be unexpectedly slow and expensive. Electric cars are not well suited for long suburban commutes, and are typically a lot more expensive when new than the current U.S. fleet of gas guzzlers.

Cartoon by JennyBowman / Drive.com.
Little prospect for a U.S. driving recovery as seen by the global economists

Oil prices have moved to center stage as a primary factor governing the recovery of the global economy.

Fatih Birol, chief economist of the International Energy Agency, said that the current price of $120 per barrel could be the catalyst for a global economic crisis on the scale of the one experienced in 2008. "If you don't see any softening of the prices, there is a risk of derailing the economy, of a double-dip," Dr Birol told the Reuters Global Energy and Climate Change Summit. "We all know what happened in 2008. Are we going to see the same movie?"

Oil prices fell nearly $3 in London to $117.30 and more than $5 in New York to $94.84 on worries about the faltering global economy. However, economists believe the price is still at a level near to tipping the global economy back into a downturn. To combat sky-high oil prices, the U.S. is reported to have attempted an ambitious swap with Saudi Arabia in the past month.

The IEA is now warning that a fuel supply bottleneck has emerged in the face of growing demand because the loss of Libyan sweet crude is hard to make up with increasingly low grade Saudi oil.

Last week saw the publication of the IEA’s monthly Oil Market Report (OMR) and its Medium Term Oil and Gas Markets outlook which projects the Agency’s assessment of global supply and demand for the next five years. In recent weeks the IEA has been sounding nearly non-stop warnings that ever since the Libyan and Yemen uprisings took some 1.5 million b/d off the oil markets there was a real danger of higher oil prices and shortages this summer.

The current publications are no exception. The Agency is still expecting global oil demand to increase this year by 1.3 million b/d to 89.3 million b/d with OECD demand down a bit due to high prices and the economic slowdown, and Chinese and Indian demand up a bit. The IEA says that global oil supply for May rose by 270,000 b/d from 87.41 billion b/d in April with 210,000 b/d coming from OPEC. The cartel is reported as supplying an average of 29.18 million b/d in May which is close to the Platts survey which put OPEC production for the month at 29.04 million b/d. The IEA, however, points out that the OPEC’s May production was still 1.25 million b/d below the pre-Libyan uprising level.

Here are the most recent two years of gasoline and diesel price trends which show a slight increase in 2009-2010 and then a big jump in the past year. The recent slight decline in gasoline price at the pump is tied to the poor economy and slack U.S. demand.

Fuel demand in North America will decline this year by 190,000 barrels to 23.7 million a day, the Paris-based IEA said. The agency lowered its forecast for the region by 220,000 barrels a day from last month’s report, citing lower growth projections from the International Monetary Fund... “High gasoline prices are scaring off some incremental demand,” said Rick Mueller, a principal with ESAI Energy, LLC in Wakefield, Massachusetts. “We’re going to see people conserve more and cut down on trips.”

If we look at the next few years, according to this analysis by Chris Martenson (and others equally savvy), we see that, even if nothing unexpected goes wrong, we can expect another serious oil price spike by about 2013, due to declining global supply and inflexible demand. Assuming fuel price trouble over the short term and trouble over the long term, how can U.S. driving recover?

The economists at Levy Institute don't talk about oil much, but they do have excellent economic models that arrive at a gloomy outcome if U.S. trade cannot be brought back into better global balance. Their recent analysis, "Jobless Recovery Is No Recovery: Prospects for the U.S. Economy," is pessimistic enough, even without mentioning peak oil. The best economic prescription the Levy economists offer is in part based on dollar devaluation. This, of course, would increase the cost of imported oil priced in dollars, reducing U.S. driving further.

It is not just driving that is in trouble because of fuel cost. This is arguably part of the bigger problem of global industrial production no longer being able to outrun global energy costs.

While it’s a positive that the U.S. is reducing its demand for oil, it doesn’t necessarily mean we are becoming more efficient. More to the point, the U.S. is no longer able to reduce its overall energy expenditures as an input to its GDP. Post 2008, some of the “gains” enjoyed by lower energy expenditures were simply made possible by a lower GDP.

When the U.S. reduces its use of oil, and switches over more to coal and natural gas, its GDP tends to fall. For an economy that structured itself towards oil-dependency the past 70 years, that should be expected. The U.S. therefore can have a higher GDP or a lower GDP, but the Energy Limit model reveals that energy costs are becoming more stubborn on the upside. This is a structural change, that will not revert.

Industrialism in the U.S., and elsewhere in the OECD, is therefore no longer able to outrun energy costs. This means that in order to maintain production, prices for assets like housing, and input costs we can produce less or measure “production” in non-industrial terms.

Either way, this megatrend is simply the reverse of the dynamic which began 250 years ago when humanity moved from wood to coal, and the impact on wages and asset prices was revolutionary. The same model which explains that ascent, now explains our descent.

[Roger Baker is a long time transportation-oriented environmental activist, an amateur energy-oriented economist, an amateur scientist and science writer, and a founding member of and an advisor to the Association for the Study of Peak Oil-USA. He is active in the Green Party and the ACLU, and is a director of the Save Our Springs Association and the Save Barton Creek Association in Austin. Mostly he enjoys being an irreverent policy wonk and writing irreverent wonkish articles for The Rag Blog. Read more articles by Roger Baker on The Rag Blog.]

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BOOKS / Danny Schechter : Villains Galore! A Bankster Dozen

Bankster graphic from ANU News.
Villains galore!
Good holiday reads about
the great economic crisis

By Danny Schechter / The Rag Blog / December 4, 2010

Back in 2007, just as the markets began their meltdown, I started writing a book I called Plunder to investigate the then emerging economic calamity. I had a well-known agent representing me, and, at that time, had published 10 books. My agent warned me that I was ahead of the curve but agreed that the subject couldn’t be timelier.

Before we were through, the manuscript went to and was returned by 30 publishers. I was told that there is only one person that a book like mine had to pass muster with, not an economist, not a book editor -- but the book buyer who handles business books for Barnes and Noble. If she/she didn’t like it, forget it. (This was before the bottom dropped out of that company that was later nearly sold.)

So much for their business savvy. I guess Plunder was too much of an anti-business book for them then.

At that point, they were looking for “How to Get Rich” books and volumes with investment advice. Since I was not offering either, my warnings of the collapse ahead were off-message. No sale. Finally, a small press, Cosimo Books put it out. Sadly, with no real advertising budget or retail support, it wasn’t going to go anywhere. It was on the money in one sense -- published just before Lehman Brothers went down.

Since then, as the crisis was acknowledged and legitimated, the subject was finally validated for the publishing world, perhaps as millions of people began asking, "What the F…? What the hell happened?"

To answer that question, a mighty stream of crisis books was commissioned and soon poured forth. Every publisher wanted one. Some authors blamed psychological factors. Others were technical to a fault and unreadable. Still, others trashed borrowers who bought homes they couldn’t afford. Many framed the problem in terms of Wall Street mistakes and miscalculations, and occasionally greed.

Wrote Satyajit Das, author of Traders, Guns & Money: “The number of books on the Global Financial Crisis (GFC) has reached pandemic proportions -- the World Health Organization (WHO) is investigating. With the decorum of vultures at a carcass, publishers are cashing in on the transitory interest of the masses (normally obsessed with war, scandal or reality TV shows) in the arcane minutiae of financial matters.”

Few indicted the system; fewer still focused on intentionality -- crime in the suites, the subject I explore in my film Plunder: The Crime Of Our Time and the more detailed companion book The Crime of Our Time (Disinfo).

In the meantime, I tried to keep up with the hype and a flow that is still flowing.

Here are 12 books worth reading:

1. The Pecora Investigation: Stock Exchange Practices and The Causes of the 1929 Stock Market Crash. This is the just reissued actual text of the U.S. Senate Committee on Banking and Currency in the days before the Congress was bought and sold. Pecora had said “Legal chicanery and pitch darkness were the banker’s stoutest allies.”
   
   So far, in today’s crisis, there has been only ONE real Senate hearing, by Senator Levin questioning ONE deal by Goldman Sachs who denied everything until the bank reached a $550 MILLION settlement without admitting any wrongdoing. Clearly we still need a new Pecora-like investigation, not a tepid Congressional inquiry commission


2. Matt Taibbi: Griftopia: Bubble Machines, Vampire Squids and the Long Con that is Breaking America (Spiegel & Grau). As Rolling Stone readers know, Matt is a bold reporter and brilliant stylist turning his rage into brilliant prose and giving no mercy to the Goldman Sachs gang.


3. Nomi Prims: It Takes A Pillage: Behind the Bailouts, Bonuses and Backroom Deals from Washington to Wall Street. An elegant writer, Nomi knows the financial world up close because she’s "been there and done that" with high paying stints at Bear Stearns and Goldman Sachs. You can see her brilliance in my film, Plunder. Her book goes much deeper.


4. Les Leopold: The Looting of America: How Wall Street’s Game of Fantasy Finance Destroyed Our Jobs, Pensions and Prosperity -- and What We Can Do About It (Chelsea Green). Les is a passionate and compelling writer, teacher and activist. He has been steeped in union politics and knows how to fuse analysis and agitation


5. Joseph E. Stiglitz: Free Fall: America, Free Markets, and the Sinking of the Global Economy (Norton). Siglitz is the economist’s economist, a Nobel Prize Winner, an insider turned fierce critic of our economic crisis. He has the credentials and THE critique and a much needed global perspective.


6. Howard Davies: The Financial Crisis: Who is to Blame? (Polity). I picked this book up at my alma mater, the London School of Economics, which Davies now directs. This is straight down the middle without dismissing more radical insights. He even references my critique of media complicity.


7. Randall Lane: The Zeroes: My Misadventures in the Decade Wall Street Went Insane. A colorful personal account by a gonzo editor who covered the madness for Wall Street pubs. Sample: “Historically, Wall Street has been like one giant extended High School (A boy’s High School). The jocks become trader -- large, aggressive men who succeed in the pits based on heft and testosterone. The nerds went into banking, crunching numbers and pumping out spread sheets to determine the efficacy of deals.”



8. Yves Smith: ECONned: How Unenlightened Self Interest Undermined Democracy, and Corrupted Capitalism (Palgrave Macmillan). Yves is a rock star in the business of critical economics. A financial industry professional, she defected to the “light side” and founded the must read website, NakedCapitalism.com. This book skewers government policy, the economics “profession” and Wall Street fraudsters.


9. Steig Larsson: The Millennium Trilogy. The late Swedish journalist, turned popular writer, has produced three volumes of best-selling action thrillers with intelligent plots. I cite his work here because he and the character he created, Mikael Blomkvist, were investigative reporters in the financial realm.
   
   Larsson describes Blomkvist’s contempt for his fellow financial journalists based on morality: “His contempt for his fellow financial journalists was based on something that in his opinion was as plain as morality. The equation was simple. A bank director who blows millions on foolhardy speculations should not keep his job. A managing director who plays shell company games should do time.
   
   “The job of the financial journalist was to examine the sharks who created interest crises and speculated away the savings of small investors, to scrutinise company boards with the same merciless zeal with which political reporters pursue the tiniest steps out of line of ministers and members of Parliament.”
   
   His books are more than storytelling. They are also a cry for more truth in media.


10. And, since I try to practice the investigative protocols of journalism in this sphere, may I call your attention to the republication of one of the greatest American classics of taking on corporate power?
    
    Ida M. Tarbell may be gone but her work is not forgotten, especially her classic, two volume blistering The History of the Standard Oil Company. I was privileged to write the introduction for the Cosimo edition. She wrote this muckraking blockbuster in 1904 and remains relevant, and an example of the best of us.


11. For a left critique, try Michael Chossudovsky and Andrew Gayin Marshall, Editors: The Global Economic Crisis: The Great Depression of the XXI Century (Global Research) from the Canadian-based global web site I contribute to.


12. Barry James Dyke: The Pirates of Manhattan: Systematically Plundering The American Consumer and How To protect Yourself Against It. The one financial book I saw “blurbed” by Jay Leno (Self-published).

So, this is my “cheaper by the dozen” for 2010. I am sure I have overlooked some great work so it is hardly the “end-all” and “be-all.” Many of the new financial books out there are written by journalists for leading newspapers and magazines, as well as mainstream economists, many of whom missed the crisis when they might have warned us about it.

And, while many of us wait for the promised Wikileaks take down of a major bank, many authors and journalists still fail to tackle the really essential issues.

Hopefully, some of the books I am recommending will fill some gaps in your knowledge.

["News Dissector" Danny Schechter is a journalist, author, Emmy award winning television producer, and independent filmmaker. Schechter directed Plunder: The Crime of Our Time, and a companion book, The Crime of Our Time: Why Wall Street Is Not Too Big to Jail. Contact him at dissector@mediachannel.org.]

Listen to Thorne Dreyer's Sept. 28 interview with journalist and filmmaker Danny Schechter on Rag Radio here. To find all shows on the Rag Radio archives, go here.

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Roger Baker : American Political Denial and the 'Downsizing of Civilization'

Image from Gas 2.0.

“My grandfather rode a camel, my father rode a camel. I drive a Mercedes. My son drives a Mercedes. His son will ride a camel.” -- Saudi warning

Our only hope may lie in crisis:
American politics and global discontent

By Roger Baker / The Rag Blog / November 24, 2010

See "The peak oil crisis: Did we vote ourselves to extinction?" by Tom Whipple, Below.

All the political polls show that the American public is deeply unhappy. This was reflected in the broadly anti-government sentiment that threw out many moderate incumbents during the recent mid-term elections. The onset of hard times commonly favors new and stronger political medicine in search of restoring the previous prosperity, whether this be right, left, or radical center.

Such popular discontent is now global, but is rather more concentrated in the mature and established capitalist economies accustomed to high living standards. The USA sees increasing political dissatisfaction with growing support for the Tea Party Movement and almost half thinking that America's best days are past. However we also see growing economic unrest in France, Britain, and Ireland, and echoed in much of the rest of the world.

The root cause of this dissatisfaction is a globally overextended, indebted market economy, unable to grow enough to pay back its debts without cheap energy. The end of cheap oil, with its current plateau and peaking in global production, means that the global economy will never recover its previous scale of material production and level of material profitability.

The global lack of market demand needed to generate the previous profit is being fitfully met by increases of sovereign debt, via the issuing of fiat currency by the world's major central banks. This is reflected in a retreat to investment in gold to preserve wealth.

Like a pack of hungry dogs fighting over scraps of meat, we now see the G20 nations trying to gain trade advantage for their national business interests and banking groups. This is threatening a global trade war leading to a contraction of total trade, probably leading to the creation of new regional trading blocks and alliances. Yesterday Greece, today Ireland -- tomorrow Spain?

In the USA, as grassroots political and economic anxiety increases, the corporate media is actively promoting right wing political gurus like Glen Beck and Sarah Palin. They campaign against Washington, deny global warming, offer easy solutions mostly in line with corporate profitability, and blame liberal establishment scapegoats like Obama for a steadily increasing level of economic pain, joblessness, and political gridlock. Even with effective Republican control of Congress, there are deep internal divisions in the making.

One way to grasp the core political problem is to understand that the public is economically stressed, and unwilling to tolerate much economic sacrifice. In some ways this makes sense, given that an obviously dysfunctional and unstable political coalition is in charge of managing the U.S. economy, even while the independent Federal Reserve is struggling to be seen as nonpolitical.

Facing severe problems, any government needs to convince its public to tolerate temporary economic pain for long term benefit. It is as if we badly need an operation to restore our national health, but we cannot tolerate the pain of surgery, so we listen to the medical quacks as our health deteriorates. The problem now is that U.S. voters no longer trust the government to operate fairly. This is especially so after the bank bailouts that were accompanied by little banking reform.

The reality of course, is that to actually solve our problems, we first need to somehow break through our denial of the true nature of our problem. Then we need to rekindle a national spirit of political and economic cooperation such as the U.S. public willingly offered during WWII, and more recently the level of national unity seen under President G.W. Bush just after the 9/11 attacks.

Our immediate prospects seem gloomy. Because of a combination of economic decline and political paralysis, we seem to be headed for a political and economic crisis of some sort, perhaps our greatest depression, with peak oil as the icing on that cake.

Yet there is hope. Sometimes a crisis is the only way to disrupt business as usual enough to make the system receptive to fundamental change, even if wiser policies are only adopted as a last resort after the other possibilities have been exhausted.

There are still voices of reason to be found, in fact all over the Internet. One policy analyst I follow and recommend is Tom Whipple, an expert on energy economics and a fellow of the Post Carbon Institute. (The Post Carbon Institute is essentially a progressive environmental think tank, a coalition of about 30 leading environmental policy experts in different areas with a good grip on the big picture and reasonable and appropriate policy options.)

In the brief essay below, Whipple does a remarkable job of tying everything together; explaining how the end of cheap energy, the depressed U.S. economy, and the current political gridlock in Washington are tied together in terms of cause and effect. One can scarcely overemphasize the need to accurately understand what is really going on, as we collectively engage in the "downsizing of civilization."

[Roger Baker is a long time transportation-oriented environmental activist, an amateur energy-oriented economist, an amateur scientist and science writer, and a founding member of and an advisor to the Association for the Study of Peak Oil-USA. He is active in the Green Party and the ACLU, and is a director of the Save Our Springs Association and the Save Barton Creek Association. Mostly he enjoys being an irreverent policy wonk and writing irreverent wonkish articles for The Rag Blog.]


American body politic? Image from MediaFuturist.

The peak oil crisis:
Did we vote ourselves to extinction?

By Tom Whipple / November 17, 2010

The disconnect between the American body politic and reality grows larger every day.

In reviewing hundreds of pages of commentary on the election, one searches in vain for analysis that even comes close to describing what is happening to the nation -- i.e. we are in the midst of a massive deflating credit bubble and running short of affordable liquid fuels at the same time.

There seems to be general agreement that the new balance of power in Washington means two years of gridlock. Despite an occasional bow in the direction of bi-partisanship, the new majority in the house is saying quite openly that it will work to lower taxes, cut spending, will stop any efforts to deal with climate change, and will spend the next two years investigating everything it can about the Obama administration in hopes it will be so discredited in two years that the President can't possibly win another term.

Whether this agenda is what the voters thought they would get on November 2 when they voted yet again for change is another question.

Upon assuming office, the Obama administration faced the biggest choice of any American President since Lincoln -- either face up to the fact that the industrial age, with its mantra of endless economic growth, was over and start making preparations for a new era, or try to revive the economy.

Apparently the new President, unwilling to grapple with the downsizing of civilization, chose to prolong the deteriorating industrial economy for a few more years by increasing deficit spending, attempting to reform health care, and resorting to various monetary tactics that may or may not keep the financial system from ultimately collapsing.

The basis of the problem is that without steadily increasing amounts of cheap energy, reviving economic growth as we know it is simply not sustainable for long. Borrowing and printing trillions of dollars may briefly slow the decline, but little more.

The trillions spent on bailouts and stimulation kept the illusion of recovery going for some months, but did little to increase employment or reverse the disintegration of the inflated housing market. Some polls show nearly half of U.S. households have been seriously affected in some manner by the adverse economic conditions, yet the administration continued to express optimism rather than realism.

In November of 2009 and 2010, the people spoke and the Congress and many statehouses were populated with many new faces. In most cases these newly elected officials had even less idea how the situation could be fixed, but they were new and that gave the voters a ray of hope.

The one policy area where the Obama administration tried to make major changes was in dealing with global warming by controlling carbon emissions. It is interesting that an issue on which there should be universal agreement -- saving life on the planet -- managed to degenerate into an imbroglio which approaches religious fanaticism. The reason of course is that controlling emissions is now thought by many as synonymous with further job losses.

Although a stream of studies conclude that global temperatures are rising, ice is melting everywhere, and people who study such things say increasing amounts of carbon in the atmosphere is to blame, over half of America believes man-made global warming is a giant hoax.

A recent Pew poll says that only 37 percent of Americans and 41 percent of the Chinese believe global warming is a serious problem. Only in Pakistan, which ironically is on the cusp of being done in by global warming, and Poland of all places, are people said to be less worried than here in the U.S.

So where is all this leading? The new House majority can't cut the interest on the national debt, will be viscerally reluctant to make serious cuts in defense spending, and is unlikely to have the stomach to make serious cuts in entitlements. Therefore, it will likely content itself with chopping a few marquis spending programs such as earmarks, declare victory, and go back to preparing for the 2012 elections.

There is even a good chance that they will still be preparing when the next oil price spike occurs. If the spike is high enough and lasts long enough it could enter into the political debates in the 2012 election. But it really doesn't matter; very high oil prices are going to do serious harm to the economy one of these days, and when they come, the realistic discussions can begin as to what we can do.

Unfortunately the most serious of all issues facing us in the long run could turn out to be the failure of the United States to exercise any sort of leadership on emissions controls. As matters stand right now the new majority in the House of Representatives seems dead set against any kind of controls and says it will do its utmost to prevent the administration from controlling emissions administratively.

Now a few years or even a few decades of unchecked carbon emissions may not be of consequence. The problem, however, is: what if, as many believe, we are nearing a carbon tipping point. Some climate scientists say that an average global increase of 6o C will leave the earth uninhabitable.

Long before we get there, rising sea levels, droughts, floods, storms, and what have you will make life very unpleasant for those of us still around or our descendants. Someday, those who are left will wonder just what we were thinking about when we let all this happen.

[Tom Whipple is a retired government analyst who has been following the peak oil issue for several years. This article first appeared in the Falls Church News-Press and was also published in the Energy Bulletin.]

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