Sunday, April 23, 2017

The Greater Fool

"The overdeveloped countries are raising generations of gamblers."

  All ecosystems, including the human variety, move through stages of succession from very simple to very complex until there is a disturbance that causes a shakeout or a reset.

A system that has grown in complexity to the point where it is “supermediated” by tiny organisms (or organizations) trying to squeak in the spaces between older groupings and exploit exchanges to draw off their own existence becomes brittle at some point. Fluctuating diversity is more robust for the whole ecosystem but more fragile for the individual members. Just as an evolutionary innovation may dislodge long-residing stalwarts, a small disturbance may disintermediate recent interlopers.  

Global technoculture — we almost said “western culture” but a quick glance at India, China, or Japan would show that concept to be outdated — has been fostering lots of intermediation. The tech boom — rapid evolutionary innovation — is partly responsible. ‘Higher’ education vacillates between the stalwart model of molding students into consumerist cubicle rats, learning to push the correct buttons to get fed, and the disruptive counterpart — the next-gen, wired, tech-savvy entrepreneur class attempting to pay back outsized student loans by developing a killer app or discovering a hitherto unexplored niche for intermediation. By and large, the overdeveloped countries are raising generations of gamblers while the underdeveloping countries are herding masses of enslaved vassals deeper into debt.

This makes a lot of sense if you have to grapple with an explosion of 15- to 25-year-olds entering the workforce. In 2016 there were 963,981,944 males and 898,974,458 females in that category, the greatest portion entering from China, India, USA, Indonesia, Brazil, Pakistan, Nigeria, Bangladesh, Russia and Japan (in that order).

Boom and bust is an emergent property of social organization at civilization scale. Some would blame capitalism, but in our view that is mere scapegoating. True, by lending with interest one places the onus on the borrower to produce enough surplus to pay the interest, and in many ways that can resemble a game of musical chairs, but the principle of being able to borrow to establish and then repay from the new production of that establishment is not unsound. That is how many life forms regenerate themselves — “lending” seed that they produce in overabundance in order to endow next season’s replacement for themselves.

We have been in an expansion phase of human society since the end of the last glacial maximum. Since the discovery of first coal and then oil and natural gas, and the means to industrialize their extraction and use, we have been expanding at some multiple of our natural fecundity rate because fossil fuels have allowed a post-natural expansion of food supply and global trade.

If we want a way forward that can seriously address the real challenges, it would have to begin with deescalation. Beyond getting population under control, we need to find an economic model involving satisfaction of needs, including productive and internally-rewarding employment, without continuing to feast on the seed corn as if that did not matter. To gain adherents, any proposed change has to offer a lifestyle that is no less attractive than the old ways, although we also have within us hero genes that can be stimulated to get us to make sacrifices and feel good about it.

Since the 1980s, that expansion has been on steroids. Each year we add another 30 million humans worldwide. We double our population every 30 to 40 years. If we were to continue with business as usual until, say, 2050, we should expect to have 14 billion people sharing Earth. Of course we can’t do that, for several good reasons, not the least being the food supply. Right now food security for most depends on securing 2000 calories of oil to produce 1 calorie of grain. Each year fewer and fewer of us will be able to do that and will have to find other means, or perish.

In the early stages of our expansion we borrowed from our savings to start productive enterprises that produced more than enough to repay the loans and expand further. That is self-liquidating debt as we climb a ladder of constant growth. In the later stages, marked by contraction, with declining resources and unfulfilled demand, we have been substituting sophisticated debt instruments — fiat currencies, fractional reserve banking, adjustable rate mortgages, credit default swaps, the list goes on….

Those imaginary assets are not backed by anything but the expectation of speculative profits, but as long as everyone agrees to overlook the emperor having no clothes, the parade goes on. There is no actual income being produced to repay the debts, just proxy poker chips.

In any speculative bubble, we lose the connection between price and value. It is short sighted — based on assuming that speculative value will always trump real value. This sets the stage for the inevitable bust, as we saw in the debasement of metals in coins in Ancient Rome, Tulip Mania in Holland in the 1630s, and the Stock Market Crash of 1929. As Nicole Foss explains (at 32:17):

They think that the supply of greater fools will be limitless. Unfortunately it isn’t. Eventually you’ve found the greatest possible fool and no one will pay more than this person did. At that point everything just dries up and the price just absolutely collapses.


The simple living movement in its various names and forms has been trying to grapple with that idea for a long time. The computer design aesthetic of Steve Jobs was a form of simplification — merging music players and hand calculators with mobile phones in ways that kept the device user friendly and ergonomic. You didn’t have to carry both a boom box and a brick phone. 

Another strain of voluntary simplicity is individuals, in the style of Tolstoy and Gandhi, who are satisfied with what they have rather than want.  These experiments — extending back to Epicurus and up through Thoreau, to Daniel Suelo and Freeskilling Mark Boyle who renounce money entirely — shows that happiness comes from carefully considered choices, not by acquisition of stuff or brute force.

We are not condemned to Consumerist Armageddon. There are alternatives. Consider the 100 Thing Challenge — to whittle down personal possessions to one hundred items. Consider co-housing, tiny houses or the natural building movement. Living more simply in communities of like minded people produces a much higher quality of life than most people have now in both the underdeveloping and the overdeveloped world.


“How would you like to live very, very comfortably working only one day a week for money? Most people are trapped into a worried, 30-year period of trying to pay off the mortgage, fearful that if they lose their job they’ll lose their house, and having to work too long hours, causing stress, depression and anxiety — our biggest health problems now — in a fiendish rat race….

“I know people who live in alternative communities who live very nicely in ways I envy with one or two days work a week. Firstly they cut their expenses by not having a big house, not having a lavish wardrobe, and having alternative sources of leisure… and secondly and probably more importantly, living in a community that is highly supportive, with lots of musicians and weekend concerts and stuff, and sources of local food and shelter — build your own little mud brick house with the help of the community. And so you are living in an economy that doesn’t require much money … a non-monetary economy.”

Given these kinds of choices, we have to ask, why still seek the greater fool?


This post is part of an ongoing series we’re calling The Power Zone Manifesto. It is a series of building blocks that describe our existential climate dilemma and the only possible way to escape it. We post to The Great Change and Medium on Sunday mornings and 24 to 48 hours earlier for the benefit of donors to our Patreon page. Albert Bates offers ecovillage apprenticeships, including Cool Lab trainings, this year at The Farm in Tennessee April through July. He is teaching a full permaculture course in Ireland in August and will be on speaking tours in Brazil, Germany and India in late 2017.

Sunday, April 16, 2017

Confounding Collapse

"As brilliant as your conceptual breakthrough may be, there is no escaping your cultural milieu."


The Paris Agreement calls for deep decarbonization by 2050 (net neutrality) and drawdown of all the legacy carbon thereafter, returning humans to the comfortable Holocene from which we evolved.

A recent study by Energy Innovation Reform Project (a pro-nuclear, pro-coal think tank), reviewing the now extensive literature on the renewable energy transition, concluded that a 100% renewables goal, while technically feasible, still faces many challenges:

To achieve Paris policy goals — by no means an assurance that climate catastrophe will be averted — power sector CO2 emissions must fall to zero by 2050. The pressure of this timeline is itself disruptive. Decarbonization is significantly — exponentially —  more difficult than mere emissions reductions, even if it loses the baggage of that Dogberry neologism ("decarbonization").
  • Renewables are primarily delivered by electricity, and to a lesser extent by liquid or pelletized biofuels. To abate carbon, there needs to be a shift to electricity for transportation, heating, and industrial energy. 
  • Power generation systems involving renewables such as wind and solar are physically larger, requiring more land area.
  • Wind and solar require much greater total installed capacity — 3 to 6 times peak demand — to offset their intermittency.
  • Stable electric grids require a mix of “dispatchable” energy (variable generation on demand) and long-duration (seasonal) energy.
  • Battery storage is infeasible for long duration storage. In the USA, for instance, you would need 37.8 billion Tesla Power Wall 2.0 home energy storage systems—or 320 Power Walls per household to sustain present power consumption.
  • Biofuel backup, the most practical form of seasonal storage, would entail converting some fraction of Earth’s photosynthetic capacity to supplying electricity while somehow maintaining the other essential functions that natural ecosystems supply. You can’t rob Peter (Rabbit) to PayPal.
When one considers that the so-called industrial revolution was fueled by a switch from energy-light whale oil and firewood to energy-dense petroleum and coal — enabling expansion of human population from 1 billion to 7 billion — reversion to some sort of status quo ante is a daunting prospect. To start with, where will you find the whales?

Even if new generations of solar cells can take the place of whales in lighting homes, it is questionable whether those can provide the kinds of surplus energy that enabled construction of the world’s megacities, airborne armies, or space programs capable of landing men on the Moon or operating satellite-based Cloud technologies.

Humans now propose to switch from dependency on Earth’s 650-million-year-old savings account of fossil sunlight to a much more modest daily ration of photons arriving from the Sun. To do so, they must first gather and store those photons or their effects (e.g.: wind, tides, radiant heat, growing things) and then dispense them in some fashion similar to their previously accustomed habits for using oil or coal. They must finance all that while under the pressure of economic decline and mounting climate catastrophes. And they must overcome the problems of intermittentcy, diffusion and storage.

Consumer optimism is at a 17 year high — no worries, invest!
These are not small challenges. To suggest that we can supply a consumerist economy elevated to the scale of 7 billion — soon-to-be 12 billion as the pent-up demographic time bomb explodes — from silicon wafers, neodymium turbines, or terrestrial and marine vegetation, seems deluded.

Nonetheless, most governments, and all the major international development banks, now have the scare in them. Typical is the InterAmerican Development Bank, whose 2017 portfolio is 80% mitigation ($2.127 billion) and 20% adaptation (562 million). Mitigation refers to efforts to reduce or limit fossil emissions, or to a lesser extent, to drawdown and sequester greenhouse gases. Adaptation refers to efforts to reduce or limit vulnerability by restructuring shelter, food and water security around the new normal. 

IDB’s 2016 report warned its client countries that 60 to 80 percent of publicly listed fossil fuel reserves “are unburnable if the world is to avoid disastrous climate change.” Worse, they broke it to them that their agriculture systems, tourist industries, and most of the jobs they have created to productively employ their workforce over the past century of industrialization are all stranded too. IDB would now seem to agree with James Howard Kunstler that Robert Moses' utopian vision of America as happy-motoring affluent suburbia was the worst misallocation of resources in human history.

As brilliant as your conceptual breakthrough may be, there is no escaping your cultural milieu.

What we might call civilization, historian Joseph Tainter recast as something more nuanced: complexity. In his 1988 classic, The Collapse of Complex Societies, Tainter did not attribute the rise of the Greek, Mayan or the Roman Empires to military conquest, slavery or some new form of energy. He said that complexity creates resources just as resources create complexity. The binding energy is social organization.

A corollary of that is that depletion of resources does not necessary doom a civilization, even one that has been sawing off the tree limb it is perched upon. Rather, Tainter said, what is experienced in the periodic arrival of collapse is the normal and routine feedback of complexity.

Endlessly iterating intermediation as a society complexifies places greater demands on resources while yielding diminishing returns, both energetically and in terms of social benefit. Think of the store in the mall that only sells baseball caps. It is highly specialized. The store’s owner, who probably pays a franchise fee, requires a trained sales force, working probably at minimum wage but with health and unemployment insurance; rent to the mall owner; store liability, fire and theft insurance; advertising; payroll accountant; tax accountant; inventory depreciation; and more. The store management has a long list of complex regulations it has to abide by.

At the same time, its business model is very fragile. Success depends on people having discretionary income to buy new baseball caps. It is predicated on a demand adequate to meet the overhead of the store and avoid insolvency. It assumes people will continue to drive from some distance away to shop at the mall. It assumes that the costs to light, heat, cool and secure the mall will not become so prohibitive that the mall closes.

Today it is not just that business model that is too fragile. Its the entire global consumer economy. The signs are all around us. The collapse phase of the civilizational cycle is here. Two distinguishing features of this one are that it is global in scope for the first time and that it is capable of being watched in real time by nearly everyone.

In a recent interview with Steve Keen, Michael Hudson described the plight of the average US city dweller in 2017:
Hudson: Let’s say that debt is equal to 100% of GDP, which it is, at least in almost every country. Now, if countries are only growing at 1%, then if you pay interest at usually 5%, a country would have to grow 5% per year — the GDP — just to pay the interest. And if countries are growing at 1%, and the interest rate for average that everybody pays, about 5% or 6%, then you’re going to have the actual economy shrinking every year as there’s this siphoning off of interest. That’s what debt deflation is.

And that’s the situation that England is in. That is turning Eurozone into a dead zone. And it’s the situation of the US economy. That all of the surplus is paid for interest — not to mention financial returns, capital gains, and economic rent to the landlord class and to the monopolies.
So no wonder the economy is shrinking. Nobody has enough money to buy what they produce anymore. So that’s why there are so many vacancies in storefronts in New York. Why stores are going out of business. Restaurants are going out of business. There’s a squeeze on.
Keen: Yeah. Can you - is that palpable in the States? Because in England it’s not quite so palpable.

Hudson: Well, just imagine the average paycheck. I don’t know if it’s similar. In the United States, the big chunk off the top of every paycheck is for housing. Now in America almost all mortgages — 85% of mortgages are guaranteed by the government and banks will write a mortgage up to the limit of 43% of your total income.

So imagine, here’s a family that in order to have a home is either paying 43% of its income on a mortgage, or it’s paying that in rent. The average rent in New York City is $4,500 a month. Well, you can imagine if the average salary is about $80,000, do the math for yourself. [$54000 or 67.5%]

Now in addition to that, people have to pay maybe 10% more of their income to the banks for credit card debt, student loans, auto debt. And then also taken off the front of every paycheck is 15% of a forced saving of social security and medical care. So that’s taken off. And there’s about another 15% recombination of state and local and federal income taxes. And then you have the value-added taxes. So you add all that up. To the 43%, to 10% to the banks, maybe the 25% for taxes, you have only about 25% of the average paycheck that’s available to be spent on goods and services.

Now think of the circular flow. The whole of economics was founded by a doctor, Francois Quesnay in France, that looked at a national income like the circulation of blood in the body. But you have this blood being drained — 75% of the circular flow now is drained for what we call the FIRE sector - finance, insurance, and real estate.
It is when progressively increasing complexity goes past the point of net energetic loss and starts to drain blood that hooded figures bearing scythes appear.

Buoyed by low energy prices and buyer confidence the markets keep climbing
Exceeding biophysical limits may not be the proximate cause of collapse, assuming Tainter is correct, but the societal response to the encounter is critical. The Collapse of Complex Civilizations does not ask why a society would be utterly unable to change course, even in the face of imminent disaster, but it begs that question. Is our social inertia so hard wired? Are homo that un-sapien?

In her inside look at the Federal Reserve, Fed Up: An Insider’s Take on Why the Federal Reserve is Bad for America, Danielle DiMartino Booth depicts the bank presidents who make up that board as nervous engineers, clinging to unproductive Keynesian stimuli in a desperate effort to re-track the train after it has derailed.

Since the 2008 crisis the Fed, along with the European, Chinese, Japanese and every other central bank, have racked up mountainous debt, with inflationary effects hidden only by the much-derided income gap whereby the super-rich take money out of circulation nearly as quickly as it is created. To the cabal of economists who haunt the halls of the central banks, the modern tools of money manipulation have gotten so good that economic growth is forever assured. DiMartino Booth, David Stockman, Nicole Foss, Max Keiser and many others believe a reckoning is long overdue.



The shape of the descent will not resemble the shape of the ascent — a smooth bell curve — because of the Seneca trap. The more you employ artifice to extend the peak, the steeper the downslide that comes when you can no longer pretend to extend. 

With the crash of fossil fuel production, already well along and scraping the barrel for the dirty, tarry scraps, greenhouse gas emissions may decline much faster than they grew up, which is good news. Of course, so will world GDP, and with it, food supply, consumer goods and, inexorably, population. This is not going to be pretty.

The economic earthquake that pundits warn is coming might keep us within a hospitable climate a while longer, but it will only slow the exit from that normalcy, not return it.

Eventually, and with absolute certainty now, we will arrive at both the collapse of the global economy and runaway climate change, the two of them feeding off each other the way crumbling empires eat their seed corn.

In a number of those historic collapse events, rapid-onset climate change was the triggering event. The gun — mass psychosis — was cocked and loaded.

Since the problem is overcomplexity, what we really need is reversion to simpler ways to live. We need degrowth and depopulation; relocalization and transition; antifragility and mutually assured security.

When we described our cool lab concept we gave the example of a rural village in Haiti. While cities pose more of a challenge, we showed in the example of Los Angeles Eco-Village that it is possible to accomplish the required change anywhere and everywhere.

What we most need next are the vehicles — the change agencies, accellerants, and transformation catalysts. For those we will need to open the tool chest of social inventions.


This post is part of an ongoing series we're calling The Power Zone Manifesto. We post to The Great Change and Medium on Sunday mornings and 24 to 48 hours earlier for the benefit of donors to our Patreon page. Albert Bates offers ecovillage apprenticeships, including Cool Lab trainings, this year at The Farm in Tennessee April through July.

Sunday, April 9, 2017

The Flies of Summer

"Any faith that China will be standing at the base of the burning building with a fireman’s net is misplaced. "

A portion of the Silk Road passing through Northern Fujian Province, October 2016 image by Albert Bates



  As national Republican political strategist Rick Wilson said on The Last Word, what we witnessed this past Thursday at the clown show in the White House was impulse, not policy. "Whoosh, whoosh, bang, bang, he got to turn the key and watch the pretty rockets go ... this is a guy with the attention span of a gnat on meth."

The cost of the whoosh whoosh bang bang, just in spent ordnance, not delivery, was somewhere north of $80 million. Damage on the ground has been estimated at $700,000. Raytheon, who makes Tomahawks for the Navy, saw its stock value jump $500 million.

The more important meeting took place in Rick Wilson's home state of Florida, where POTUS continued to rack up Secret Service bills (some $30 million so far this year) at his Mar-A-Lago Resort where membership fees — that go to him — went up $100,000 since he took office.

That meeting was between Romulus Augustulus, the final Caesar (if you don't count the Russian Czars), and the future Justinian. The president of a dying empire met with the president of its successor.

The world being handed off was concisely described 200 years ago by Edmund Burke: 
“... [T]he temporary possessors and life-renters in it, unmindful of what they have received from their ancestors, or of what is due to their posterity ...  act as if they were the entire masters; that they ... think it amongst their rights to cut off the entail, or commit waste on the inheritance, by destroying at their pleasure the whole original fabric of their society; hazarding to leave to those who come after them, a ruin instead of an habitation - and teaching these successors as little to respect their contrivances, as they had themselves respected the institutions of their forefathers.
"By this unprincipled facility of changing the state as often, and as much, and in as many ways as there are floating fancies or fashions, the whole chain and continuity of the commonwealth would be broken. No one generation could link with the other. Men would become little better than the flies of summer.”



In the dying empire, both the left and the right share the same myopia. In the inner chambers of most of the world’s governments economic growth and environmental stewardship are viewed as an adversarial relationship. In fact, that need not be the case. It is not seen that way in Bhutan, Denmark or Iceland.

In the new empire there are no dichotomies; One Belt One Road (OBOR); Two Mountains. As yet, these remain completely obscure concepts in the West.

We described the Two Mountain policy here last fall. Xi Jinping himself described it in his January address to the UN plenary in Geneva:
“Man coexists with nature, which means that any harm to nature will eventually come back to haunt man. We hardly notice natural resources such as air, water, soil and blue sky when we have them. But we won’t be able to survive without them. 

“Industrialization has created material wealth never seen before, but it has also inflicted irreparable damage to the environment. We must not exhaust all the resources passed on to us by previous generations and leave nothing to our children or pursue development in a destructive way.

“Clear waters and green mountains are as good as mountains of gold and silver. We must maintain harmony between man and nature and pursue sustainable development.”

China has staked its future now on preservation of nature. While POTUS erects his 2000-mile long, 100-foot-tall concrete barrier on the Mexican border, Xi is planting the 2800-mile long Three-North Shelterbelt or “Green Great Wall,” to halt and re-vegetate the Gobi Desert.

Erebus Wong, Lau Kin Chi, Sit Tsui and Wen Tiejun, writing for the independent socialist Monthly Review, observe:

The Chinese government has publicly stressed the lessons of the 1930s overcapacity crisis in the West that precipitated the Second World War, and promoted these new initiatives in the name of “peaceful development.” Nevertheless, the turn to OBOR suggests a regional scenario broadly similar to that in Europe between the end of the nineteenth century and the years before the First World War, when strong nations jostled one another for industrial and military dominance.

China is aware that it is the most likely candidate for leading world power to succeed the United States, whose role as the world’s leading empire began with the Spanish American War, peaked in the global economic boom following the Second World War and is now in steep decline. Wong et al write:

China is arguably only the third country in history, after Britain and the United States, with the capacity to shape and lead a global system of finance and trade. Of course, in the foreseeable future, China will not replace the U.S. dollar system; it could at most stand on equal footing. After the United States overtook the United Kingdom to lead the world in industrial production capacity in the late nineteenth century, it took another fifty years and two world wars before it could dominate global finance. China recognizes this reality, and has consistently promoted the AIIB [Asian Infrastructure Investment Bank] and other organizations as complements, not competitors, of the World Bank and Asian Development Bank (ADB).
***
Awkwardly for the United States—which launched the TPP with the original intent of blocking China—the AIIB marks the first time since before Bretton Woods that the United States has been excluded from an important international financial structure. When trusted European allies like the United Kingdom, Germany, France, Italy, Switzerland, and others announced their participation, Obama called an emergency national security meeting. The reason is clear: the AIIB challenges, albeit still within an institutional framework, the U.S. financial hegemony that has prevailed since the Second World War.

Of course, these allies are not jumping ship from the U.S. dollar-dominated system just yet, but only hedging their bets, as that hegemony has shown clear signs of exhaustion. In setting up the AIIB, China has stressed shared interests and cooperation among member nations, the better to attract interested allies.

What the US and its allies see in China is a possible way to climb off the ledge they have found themselves on after the liquidity crisis of 2008 was resolved by issuing massive new debt and resuming the exponential derivatives trade. This time they have no margin left, so perhaps China will be there with a net to catch them, they hope. Switzerland, Luxemburg and Britain — strongholds of financial capital that have previously declined to join most international organizations — became the first to join AIIB.

The liquidity swap alliance formed in October 2013 among six central banks—the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, the U.S. Federal Reserve, and the Swiss National Bank—is designed to prevent another large-scale liquidity crisis in Europe and North America like the one that precipitated the financial crisis of 2008–09. Yet it is only preventive. The new global paradigm now needs new institutions and proactive propositions. The IMF and the World Bank (and its subsidiary, the ADB), constrained by U.S. interests, are not up to the task. Can China take this opportunity to oversee the development of a new global financial alliance? For a large industrial country just entering the phase of financial capitalism, increasingly roiled by domestic disturbances, the challenge is unprecedented and enormous.

Any faith that China would survive the coming financial crash and be standing at the base of the burning building with a fireman’s net is misplaced. Rob Mielcarski observes:

The Chinese are repeating all of our mistakes, but on a larger scale. It makes no difference how leaders are educated, they will eventually succumb to the inherited behaviors common to all humans.

The main difference between us and them now is that they are “borrowing to employ” and we are “borrowing to consume”.

Tim Morgan adds:

The picture that emerges is quite extraordinary. Over the ten years between 2005 and 2015, GDP grew at rates of between 9% and 14% annually, not even stumbling materially during the 2009 global downturn. But debt has grown by between 17% and 35% of GDP each year, with the exception of 2009, when debt increased by 47% of GDP.

Tianjin (Ghost City) built to employ underemployed construction workers
What this means is that, over a period in which reported GDP increased by RMB 40tn, debt expanded by RMB 129tn. This is a borrowing-to-growth ratio of 3.2:1, still reasonably modest by Western standards, but a far cry from past Chinese practice – back in 2005, the trailing ten-year (T10Y) ratio was only 1.67:1.

Unlike the Western economies, whose vice-of-choice is to use debt to fund consumption and inflate property markets, the Chinese bias is towards using debt for investment in capacity. In theory, capacity investment should be “self-liquidating”, because capacity increases should increase income, and thus fund the paying off of the initial debt. (This is contradistinction to consumer borrowing, which is “non-self-liquidating”).

But the self-liquidating characteristic of business investment depends on capacity expanding without depressing margins, something which happens when expansion creates major capacity surpluses. It is abundantly clear that Chinese PNFC borrowing has followed the course of excess, depressing returns in the process.

As a result, much of the Chinese business sector earns returns which appear to be well below the cost of debt capital. In this situation, an obvious remedy is to convert debt into equity. This, however, seems to have been tried, and failed, because it showed clear tendencies to crash the equity market.

The final sting in the tail of this analysis is that, if underlying GDP is a lot lower when stripped of the borrowing effect, debt ratios are correspondingly higher. On the SEEDS basis of computation, aggregate debt already stands at 385% of GDP (rather than the reported 246%), and is growing a lot more quickly than publicly available numbers indicate, adding around 43% of GDP (rather than 20%) annually.

The void that China attempts to fill with OBOR and AIIB is deeper than merely technical insolvency. Since at least the Second World War, the United States based its economic empire on its military power. The only reason that the dollar has not already been replaced by the Yuan as the standard international currency is that the former is backed by overwhelming force. The US spends more on its military than the next 10 countries combined and the current administration is willing to beggar its domestic programs to double down.

That cloak is showing tears in its fabric, however. “Bringing democracy to the Middle East” has been revealed for what it really is — chaos and mayhem; internecine regional conflicts; and death and displacement on a massive, economic-community-destroying scale.

China plans to replace military bluster with “peaceful development” — to sponsor infrastructure investments, promote cooperation and minimize conflict. It will find that difficult.

For instance, how can the AIIB avoid the damage done by the World Bank and others to the environment and indigenous livelihoods? How can China promote infrastructure investments that drive local development through diversity and sustainability, and not simply serve its own need for export outlets? The challenge, in other words, is to ensure that the AIIB and Silk Road Fund do not simply become East Asian counterparts of the IMF and World Bank.
***
It should be clear that this discursive power will depend on deeds as much as words. If China continues to absorb excess capacity through rapid urbanization without regard for rural culture or ecological sustainability, and if the government fails to address the severe social contradictions caused by rising wealth inequality, labor disputes, environmental deterioration, and official corruption, then the slogans of “infrastructure-based developmentalism” will have little persuasive power overseas.

Jack Goldsmith, writing for Lawfare, sums up our predicament:

Two months into the Trump administration, we are witnessing the beginnings of the greatest presidential onslaught on international law and international institutions in American history. 
***
An in-your-face attitude toward international law and institutions will invite blowback — from international and domestic actors — not unlike what Trump has been experiencing in response to his controversial attacks on domestic courts and the press. There is a quiet way to pull back from international law and institutions, and a loud way. The loud way has heightened symbolic impact, and for that reason invites heightened resistance and retaliation.

This is what we are witnessing. We are over the peak on the Limits to Growth and into the slide. There is a jockeying for position for the quickly vanishing scraps on the false premise that there is still some way to regain the peak we only just experienced.  The prosperous way down is to downsize population, expectations, and mechanistic productivity.

None of that is yet being done and so a hard reckoning is inevitable. Whether that hard reckoning comes to blows remains to be seen, but our side is not taking its gloves off. It likes to poke sticks at hornets' nests.

It is doing that now, with Tomahawks hurled at Russian MIGs.

Burke also said in his Reflections:
“Nothing turns out to be so oppressive and unjust as a feeble government.”

Village Tofumaker, October 2016 by Albert Bates
Perhaps Xi Jinping's best contribution is one that is most overlooked. As part of his Two Mountains policy Xi is sponsoring creation of 100 ecovillages in 5 years. The key to social adoption of climate ecoforestry is ecovillage. The social glue of ecovillage depends upon cognitive semantics training and permaculture. The economic engine will be, in most cases, small (village-scale, even in urban contexts) microenterprises, particularly the Cool Lab, which we described in last week's post.

Key to the kind of capital formation that is needed, and redirection from the kinds of capital that are not, is the training of trainers, particularly in Cool Schools, and the development of even better varieties of social benefit (B-type) enterprises to share profits in order to spread wealth more evenly and achieve the more difficult measures required to stabilize climate and return us to the Holocene in which we all have a safer space to argue.





This post is part of an ongoing series we're calling The Power Zone Manifesto. We post to The Great Change on Sunday mornings and 24 to 48 hours earlier for the benefit of donors to our Patreon page. Albert Bates offers ecovillage apprenticeships, including Cool Lab trainings, this year at The Farm in Tennessee April through July.

Sunday, April 2, 2017

The Cool Lab

"Is it possible that technology no more complicated than an Easy Bake Oven — one that pays for itself — can reverse climate change?"



Permaculturally, the first stage of any design is protracted observation. What does a biological system have in over-abundance? What is scarce? How will it restore balance? What are the obstacles?

Let us say that an impoverished village in Haiti risks being carried away by mudslides that follow brush fires where the forest has been cut down to supply wood for shelter and cooking. What things are scarce? In no particular order:
food
water
cooking fuel
secure shelter
energy
productive employment
biodiversity
soil
birth control
health care

What things are over-abundant?
mud
deforestation
rain
hurricanes
earthquakes
unemployed people
superstition
resentment
mosquitoes
climate change

Lets see which of these things we can match up and cancel out. What we are about to describe is a carbon cascade.

The hillside needs to be planted with vegetation. It is especially important that the hilltops be forested. A keyline analysis will show us where water wants to go when it rains, and how best it can be held high in the landscape and directed both to subsurface flows and to dam storage for uses in the dry season. Alley cropping along the contours follows hand-cut swales (or machine cut where financial capital  substitutes for social capital).

The berms are planted with successional understory (in this tropical example, pineapple, cassava, ginger, allspice, coffee and medicinal herbs), mid-level canopy (banana, papaya, moringa, cacao, mulberry, tree legumes of mimosa, cassia, and pea subfamilies, chaya, climbing vines such as vanilla, dioscorea, cucumber, chocho and pasaflora, and eventual overstory (coconut, jackfruit, breadfruit, breadnut, ramon, samwood, mahogany, cedar, bamboo, peach palm, etc). Between the alleys are seeded perennials such as callalu, okra, sorghum, and supergrasses like kernza (Thinopyrum intermedium), sunn hemp (Crotalaria juncea), pennisitum and pearl millet hybrids (Tembo), brassica napus, amaranth, etc., as well as familiar food crops such as maize, rice, yam and beans, where soils and water supply are well suited.

As much as possible, the planting process can be accompanied by biofertilizers having a high percentage of finely pulverized biochar, activated indigenous microorganisms, some immediate food for those microbes (such as composted food wastes and manures), and minerals keyed to redress local soil deficiencies. If these biofertilizers are not immediately available for the first plantings, they can always be added later, as a byproduct of the early harvests.

Water in storage on the hillsides is edge-planted with Acoris, a plant that inoculates the water with a mosquito-larvae destroying resin. As the Acoris matures, pools and dams progress from being mosquito generating to mosquito decimating.

In the lowlands, water that overflows from catchments above is directed into chinampas, constructed wetlands composed of alternating islands and channels and rotating between aerobic (horizontal and vertical flow reedbeds) and anaerobic (settling lagoons) seeded with aquatic and semi-aquatic plants (taro, Chinese water spinach, lotus, azola, wild rice) and freshwater fish (aquaculture). Acoris for mosquito control can also be planted here, but the fish do most of that work already, so the plant is only needed in mudflats and places fish cannot go. The appearance of this microbiome also augurs the reappearance of frogs, peepers, lizards, dragonflies, water birds, bats, turtles, and forest mammals who venture to the water's edge to drink.

Within the first season, the hillside mud problem is erased, deforestation is reversed, and food scarcity begins to be alleviated from the fast-yielding varieties of annuals, perennials and fish. Productive employment can expand this system as much as available land permits, even on relatively steep hillsides. Resentment diminishes, and with it, superstition.

Within the village a regenerative, biological energy system arrives to replace the fossil fuel (diesel electric) grid-based source that previously had supplied electricity only intermittently, occasionally dimming lights and frying phone chargers and boom boxes.

This system consists of a biomass furnace, running on the woody wastes from coppice (the moringa, jackfruit and cassava plantation), coconut, rice or other shell crops, pelletized supergrasses and other biomass after food harvest or extraction of leaf protein, vitamins and useful fiber.

The loading dock at the biorefinery receives raw materials second-harvested from the farms. Leaves of tropical legumes (Leucaena Zeucocephala, Vigna unguiculata, Clitoria ternatea, Desmodium distortum, Psophocarpus tetragonolobus, Macroptilium lathyroides, Phaseolus calcaratus, Brassica napus, and Manihot esculenta, for instance) are taken by conveyor and chopped into 2-cm pieces, soaked in 2-percent sodium metabisulfite, disintegrated in a hammer mill and pressed in a single-screw press. The expressed juice is heated with steam (produced by the furnace) and protein coagulum collected, centrifuged, and pressed, then spread in a thin layer on glass plates and dried in an air-filtered, dehumidified room. It is then collected as a powder and containerized to be used or sold as a feed supplement.

At its most basic level, high-protein, high-quality leaf protein fractionation is simple. Production is geared to consumption by farm animals to remove some of the food safety, preservation and storage concerns. Later improvements can produce dried leaf extracts for human consumption but higher capital costs are incurred and clean-room protocols by workers become essential.

Following leaf-protein extraction, the dried mash from the press is used as a feedstock for the furnace, where it joins other dried agricultural wastes: coppice wood, prunings, bamboo thinnings, pallets, cardboard boxes, coconut coir, nut and rice husks, etc. All of this is pyrolyzed, the heat captured to run both the leaf protein process and produce electricity, and co-products (fractionated volatile gases, wood vinegar) drawn off before the final product — high quality biochar — remains.

The biochar is quenched (preferably with urine because that adds a 30% fertility gain), pulverized, and charged (blended with microbe-rich aerobic compost) to make a potent “cool” biofertilizer. Alternatively, it is kept at food-grade and sold as a dry product for use as a food supplement, animal feed probiotic, water filtration medium or deodorizer. At less-than-food-grade it can be used as a litter amendment to reduce smells in animal enclosures, improve the fermentation of silage, or go into a variety of natural building materials — paints, dyes, plasters, wallboard and bricks. And it can always become biofertilizer, even after undergoing one or more of these other uses.

Styrofoam “clamshell” food containers, which are ubiquitous from take-out restaurants and shops in the cities and often wind up just floating away on ocean currents, never to be destroyed, are collected and brought to the biorefinery. There they go into an acetone bath and the dissolved liquid blended with low-grade biochar and poured into molds to dry. The resulting hard resin is mold-proof, waterproof, non-degradable, lightweight and durable. Depending on the dies and molds, it can become a whole range of products — roofing tile, caulk, surfboards, fishing boats, life-vests, doors, bicycles, and ice chests.

If there is a surge in demand for a particular product — refrigerator deodorizers or animal feed supplements, for instance — or there is a surplus of some particular feedstock — bamboo knocked down by a storm — the biorefinery can shift its production pattern to take advantage immediately.

This  system sequesters more carbon than it emits, so we call it “cool.” By adding biochar, mineral rich compost, and microorganisms to the poor soils, we can jump-start soil productivity and boost farm productivity. The gains in those alley-cropped contours will be anywhere from 40-percent to 400-percent vegetative growth, depending on the type of plants and the quality of the soils (poor soils will produce higher performance gains than good soils). The same can be said for fish and livestock fed the leaf-protein and biochar nutriceuticals.
Let us pause here just a moment. Step back and take a look at the big picture. What is really being increased here is not so much village-scale well-being as photosynthesis. How are the greenhouse gases that are causing climate catastrophe — principally CO2, CH4 and N2O — to be removed from the atmosphere? Mainly, although not exclusively, they will be removed by photosynthesis. The more of Earth's surface that can be brought to bear on that task, the sooner the vital balance that harbors life on this tiny blue rock in space can be restored and the crisis ended.

Poultry can free-range the alleys to benefit of both plants and animals. Grazers can be moved through rotational cells that take advantage of water impoundments and high quality supergrasses. Fed nutrient-dense supplements with biochar, fish, poultry and grazing animals all grow faster and healthier without antibiotics or hormones, and deposit long-lived biochar back into the earth for long term carbon storage and soil fertility.

Growing nutrient-dense, no-till, organic food and perennial fibers on these marginal lands, using bioenergy and biofertilizers, creates a new, circular bioeconomy.  There is no such thing as waste. Nothing need leave the system, but what does is not raw material or pollution — representing the depleting wealth of the land — but high value byproducts — providing return on social capital invested. Waste becomes an orphaned verb.

Transportation presents an energetic challenge in the post-petroleum world. Nearly all modern forms of transportation evolved in an era of cheap net energy and diminish in economic viability when costed on renewable sources and life cycles.

Gone will be diesel-powered semi-tractor-trailers and locomotives. There could be new generations of electrified tow-paths for barges and gondolas, mag-lev rail and other innovations, but these costly innovations will be fragile in an era marked by overpopulation, resource constraints, climate chaos and economic contraction and likely will not provide a stable foundation for commerce in most places. Returning will be sail and animal powered transport.

If taken to maximum scale (rotationally planting an area the size of India each year and installing Cool Labs in every village), at a capital cost of $10000 to $15000 per hectare, the price would tally up to approximately 2% of the price of the fairy dust BECCS (Biomass Energy with Carbon Capture and Storage) conversion favored by geoengineers stuck in the fossil industrial paradigm.

Moreover, while BECCS represents continuing cost and is fraught with risk from plantation biomass crops — possibly genetically engineered and carrying along the can of worms that opens up — hazardously supplanting forested, multi-diverse, self-regenerating ecosystems. The Cool Lab alternative represents antifragile synergies of local conservation communities, continuous and adaptive profits, and continuous gains in ecological health, stability and wealth.

Can the conversion be done in time? In contrast to the 45-year gradual expansion of soybean cropping from the early 1960s to reach 200 Mha today, this system offers 5 times the protein per area farmed while providing a far greater, and more immediate, returns on investment. When one considers the rapid growth of renewable energy in the past decade, consider this: an energy producing Cool Lab costs one-seventh the capital as hydro, wind or solar and runs entirely on "wastes" that would otherwise be destined to add greenhouse gases to the atmosphere but are now intercepted and neutralized.

Cool Labs use the existing financial and technological landscape of the world today and simply change the way products are produced in order to heal the earth, balance carbon, and make more real wealth for more people more quickly. Does this hold a hazard in the form of perpetuating wealth inequality, militarism and hegemony by the "taker" class? Yes it does. However, in the post-petroleum era, relocalization of economies is inevitable, and with relocalization comes local control over shared destinies. Cool Labs represent circular economies that are inherently leveling.

Each lab adapts to needs and available resources and can flex to provide more or less of a particular kind of benefit and tailor fuels to available feedstocks and labor options. The number of cascades possible is limited only by the imagination and each year we conceive of more. We are at the dawn of a new kind of lean, clean, nature-centered economy.

This system can turn almost any human settlement into an ecovillage, although the criteria for what defines ecovillage must necessary include a few more elements than merely having a Cool Lab or permacultural support systems.

Ecovillages are based on a cohesive worldview, an abiding respect for the ecological integrity of your home biome, a circular local economy and a culture of peace and mutual respect. Depending on your starting point for each of these elements, bringing all of them into harmony can take time and effort.

The energy and food production system using mixed-aged, mixed-species forest, wetland and marine ecosystems we’ve outlined, taken to scale on the world's available marginal land (not productive farmland or developed areas) could restore the fertility of those soils and waters while sequestering carbon from the atmosphere at the average rate of 17 PgC/yr after getting established. To get back to the Holocene we need to return atmospheric carbon to pre-industrial range, around 260 ppm. The system just described, at full scale, could do that within about 50 years, taking into account the oceans' CO2 outgassing feedback.

Village scale Cool Labs could achieve the cumulative storage of 667 gigatons of legacy carbon required to bring atmospheric carbon back to pre-industrial levels in the lifetimes of the majority of people now living. Were nations to collectively phase out fossil fuels as quickly as called for in the Paris Agreement, restabilization of the climate would be achieved sooner.

Recovering one percentage point of soil organic matter means that around 27 long tons of organic matter per hectare would enter the soil and remain there. Because around two thirds of organic matter added to agricultural soils will be decomposed by soil organisms and plants and given back to the atmosphere, in order to add permanently 27 tons, a total of 81 tons of organic matter per hectare would be needed. This cannot be done quickly or it just washes or evaporates away. A slow process is required.


An example of how this could play out in Haiti or anywhere else can be seen in the Loess Plateau of Northern China where fertile soils were overworked until they had to be abandoned. At the time of abandonment organic carbon concentrations had dropped to under 3 percent. Thirty years later Loess soils had regained concentrations of 6 percent by natural processes. If natural restoration were accelerated by amending soil carbon in both metabolizable forms (such as crop litter and manures) and recalcitrant forms (such as biochar), the potential to increase soil carbon in a few decades could be raised to 10 percent or greater. This could happen virtually anywhere.

A farm that switches to organic, animal powered no-tillage methods can sequester 1 to 4 tons of organic matter per acre per year. By employing perennial polycultures, rotated pastures of grazing animals, trees and wild plant strips, that amount can be doubled or tripled.

Harvard professor Thomas Goreau writes:
Current rates of carbon farming at typical current levels would take thousands of years to draw down the dangerous excess CO2, but state of the art methods of soil carbon sequestration could draw it down in as little as decades if the percentage of long lived carbon is raised to as little as about 10%.


If the recuperation of soil carbon became a central goal of agricultural policies worldwide, it would be possible and reasonable to set as an initial goal the sequestration of one half ton per acre-year (1.5 t/ha-y or 500 grams per m2/y), comparable to the 4 pour 1000 program (4 grams per kg of soil) proposed by the French delegation at COP-21.

Carbon stored in the world's soils and living biomass provides additional benefits beyond sequestration. As soil conditions improve, erosion and pests decline and the land comes back into balance. Farming this way globally could sequester about 8 percent of the current total annual human-made emissions of 10 petagrams of carbon (PgC). However, the fertility gains (equivalent to more than all of current global fertilizer production) would mean that chemical fertilizers could be (and should be) eliminated where carbon farming is practiced. By reducing emissions of nitrous oxide from fertilizer (equivalent to approximately 8 percent annual human-made greenhouse gases) and the transportation and energy impacts of fertilizer production, we shave another 1 percent off global emissions.

But let's keep going. If organic waste is returned to agricultural soils in the form of compost, then methane and CO2 emissions from its current destinations to landfills and wastewater (equivalent to 3.6 percent of man-made emissions) could be significantly reduced. Even a modest start, such as by elevating the soil carbon content of existing farmed soils by 0.4 percent, would have the potential to offset global greenhouse gas emissions by approximately 20 percent per year.

If biochar is added to the compost, we can quickly get to 100 percent, and then 120 percent. That is when it starts to matter.

After 10 years, we can increase progressively the reincorporation of organic matter into soils. By mid-21st century, we could increase the total world reservoir of carbon in the soil by two percentage points, and possibly more. In this way it is conceivable to restore our soil carbon reservoir to 10 percent, as Goreau argues. Because the system works best in poor soils, and because it eventually creates its own hydrological cycles, it can even re-green and reforest sandy deserts.

Are we doomed to Near Term Human Extinction?

Not yet. While there are still wild cards waiting to be played, what we have outlined shows a complete escape from our present trajectory. Is it possible that technology no more complicated than an Easy Bake Oven — and that pays for itself — can reverse climate change?

The rotary oven pictured at the top of this essay gasifies waste rice husks at the rate of 2.5 tons per hour. Thirty-five percent of that weight is transformed into biochar. Half of the rest, as pyrogas, is extracted for useful synthetic compounds that replace petrochemicals. The other half of that gas is used to co-generate 1.6 megawatts of electricity from this half-million-dollar biorefinery. It could also be refined into a liquid substitute for gasoline.

The Chinese government has invested heavily to develop this technology, and the wares they are producing are now the most efficient and lowest cost in the world. They will pour another $40 million into advanced biochar research this year.

Chinese Cool Lab reactors have been sold to 20 countries, including Haiti. In Senegal there is a prototype that has been continuously operating for 8 years. In Egypt, the biochar made by their Chinese reactor is producing organic cabbages from the sandy shore of the Suez Canal. We witnessed a similar effect in the infertile clay soil beside the Asian Biochar Centre in Nanjing.

This we know: we can achieve faster and more well-rounded human development within the carrying capacity of the Earth. Will we? Who decides?


This post is part of an ongoing series we're calling The Power Zone Manifesto. We post to The Great Change on Sunday mornings and 24 to 48 hours earlier for the benefit of donors to our Patreon page. Albert Bates is offering ecovillage apprenticeships in 2017 at The Farm from now until July, including instruction on biochar and cool labs.
 

 

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