Democratic Underground Latest Greatest Lobby Journals Search Options Help Login

"We do not have oodles of energy and time for blunders or boondoggles - we must get this right"

Printer-friendly format Printer-friendly format
Printer-friendly format Email this thread to a friend
Printer-friendly format Bookmark this thread
This topic is archived.
Home » Discuss » Archives » General Discussion (1/22-2007 thru 12/14/2010) Donate to DU
JohnyCanuck Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 08:00 AM
Original message
"We do not have oodles of energy and time for blunders or boondoggles - we must get this right"

Our Humpty-Dumpty economy
by Dan Bednarz, PhD

This is not just another recession. We are reeling from two entwined problems, Bad Money and The Bottleneck of ecological pressures. The financial/economic crisis represents the market and Mother Nature forcing us to devise a sustainable economy. Unfortunately, government, Democrats and Republicans alike, is attempting to put Humpty Dumpty back together again.

Bad Money is the title of a book by pundit Kevin Phillips. Money is bad, he writes, when a nation allows the development of a debt-gorged and negligent financial sector. Phillips notes that in 1950 finance was 6% of the economy; today it is 20%. He adds that the federal government made a momentous policy decision whose bitter fruits we are harvesting- three decades ago to favor finance and allow manufacturing to decline.

Americans are realizing that the financial sectors iconic leaders are either a gaggle of Mr. Magoos the defense of Alan Greenspan, Ben Bernanke, Hank Paulson and Robert Rubin-, or enablers of the mother of all financial bubbles. With wages stagnant and unemployment growing, the solution of Paulson and Bernanke is to pour money into the financial sector to revive the economy. For instance, Bloomberg News estimates that the federal government thus far has committed over $7.4 trillion to rescue financial institutions. However, financial houses possess untold trillions of dollars of nearly worthless holdings. Their desperate hope is that housing values will magically without wages increasing- rebound or stabilize. The reality is that our gargantuan financial sector is no more viable or well run than the Big Three automakers.

The lessons of Bad Money are to 1) right-size Wall Street by making it bear the market consequences of its toxic assets debacle while 2) recommitting the nation to manufacturing by, first of all, converting our fossil fuel energy infrastructure and reviving mass-transit. In short, give people dignified work that leads to an ecologically sustainable economy.

Nevertheless, our addiction to debt-based growth makes us susceptible to a greening the economy bubble similar to the dotcom and housing busts. This brings us to the importance of The Bottleneck of ecological pressures now battering economies. We do not have oodles of energy and time for blunders or boondoggles -we must get this right.

Peak oil still relevant? More than ever.


Here's where the distinction between conventional and unconventional oil is important. More unconventional oil becomes unprofitable to produce as the price of oil falls; $80 is a commonly cited cutoff point for some of the big tar sands projects, for example. Sure enough, we've heard reports of tar sands projects and even refinery projects being shelved or delayed since oil plummeted below $100 a few months ago.

Now, remember that unconventional oil isn't just a tap that we can turn on and off. It's 'unconventional' precisely because it's logistically more difficult to produce than regular oil. Putting a bunch of oil derricks on the Oklahoma flatlands is peanuts compared to developing a multi-billion dollar, state-of-the-art deepwater project that can extract oil from below many thousands of feet of ocean and seabed, and requires a small army of highly-trained engineers and geologists to operate. Some of the big deep-sea projects can take from six to nine years from discovery to regular production.

So when these unconventional oil projects get shelved because prices are falling, they're not going to suddenly start producing oil immediately when prices go back up. Meanwhile, we keep drawing on the world's supply of conventional oil -- which pretty much everyone agrees is very near peak since discoveries of conventional oil peaked back in the 1960s. When demand does rise again and prices go up, there'll be that much less conventional oil available and the unconventional oil won't necessarily be there to step in right away.

Indeed, some commentators have said that peak oil will turn out to have been July 2008 at ~87 mbpd, for the simple reason that by the time the global economy demands more than 87 mbpd it'll be prohibitively expensive to deliver that much, and both demand and 'supply' (flow) will be forced back down. Thus,

The peak oil concept is more relevant than ever, because it warns us that the current low prices (that is, the oil supply glut) are only temporary.

Printer Friendly | Permalink |  | Top
OneBlueSky Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 09:22 AM
Response to Original message
1. "In short, give people dignified work that leads to an ecologically sustainable economy." . . .
pretty much sums it all up . . . if Obama can accomplish that, he'll go down as one of our greatest presidents . . . if not, then ???? . . .

it all comes down to whether he can forestall a real depression long enough to get programs in place and producing results . . .
Printer Friendly | Permalink |  | Top
JohnyCanuck Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 08:18 PM
Response to Reply #1
3. But does Obama know
that the theory still prevalent in mainstream economics today that you can have perpetual (i.e. infinite) growth in a finite world originated in a misunderstanding and a misapplication of what is now a discredited branch of mid-19th century physics. As long as he and his advisers try to continue to run the economy based on these outmoded paradigms and concepts we will find ourselves further in the hole with less chance of getting out.

Brother Can You Spare Me A Planet: Modern Economics and the Environmental Crisis


The Origins of Neoclassical Economic Theory
In economics textbooks, the 19th-century creators of the economic theory now used by mainstream economists (Stanley Jevons, Leon Walras, Maria Edgeworth and Vilfredo Pareto) are credited with transforming the study of economics into a rigorously mathematical scientific discipline. There are, however, no mentions in these textbooks, or in all but a few books on the history of economic thought, of a rather salient fact: The progenitors of neoclassical economics, all of whom were trained as engineers, developed their theories by substituting economic variables derived from classical economics for physical variables in the equations of a soon-to-be outmoded mid19th century theory in physics. (2)

The physics that the economists used as the template for their theories was developed from the 1840s to the 1860s. During this period, physicists responded to the inability of Newtonian mechanics to account for the phenomena of heat, light and electricity with a profusion of hypotheses about matter and forces. In 1847 Hermann-Ludwig Ferdinand von Helmholtz, one of the best known and most widely respected physicists at this time, posited the existence of a field of energy that could unify these phenomena. This proposal served as a catalyst for a movement called "energetics" in which physicists attempted to explain very diverse physical phenomena in terms of a vaguely defined protean field of energy that fills all space.

The strategy used by the creators of neoclassical economics was as simple as it was absurdthe economists copied the physics equations and changed the names of the variables. In the resulting mathematical formalism, utility becomes synonymous with the amorphous field of energy described in the equations taken from the physics, and the sum of utility and expenditure, like the sum of potential and kinetic energy in the physical equations, is conserved. Forces associated with the field of utility (or, in physics, energy) allegedly determine prices, and spatial coordinates correspond with quantities of goods. Because the physical system described in the equations of the theory in physics is closed, the economists were obliged to assume that the market system described in their theory is also closed. And because the sum of energy in the equations that describe the physical system is conserved, the economists were also obliged to assume that the sum of utility in a market system is also conserved.


Several well-known mid19th century scientists told the economists that there was no basis for substituting economic variables for physical variables in the equations of the theory in physics. But the economists did not appreciate how devastating this criticism was and proceeded to claim that they had transformed the study of economics into a scientific discipline comparable to physics. In what is surely one of the strangest chapters in the history of Western thought, the origins of neoclassical economics were forgotten, the claim that neoclassical economic theory is scientific was almost universally accepted, and subsequent generations of economists disguised the existence of the unscientific axiomatic assumptions in this theory under an increasingly complex maze of mathematical formalism.

This misalliance between economic thought and a 19th-century physical theory explains why the neoclassical economic paradigm is predicated on the following unscientific assumptions:

* Market systems exist in a domain of reality separate and distinct from other domains.
* Capital circulates in these systems in a closed circular flow between production and consumption with no inlets or outlets.
* The lawful dynamics of closed-market systems legislate over the behavior of economic actors, and the actors obey fixed decision-making rules.
* The dynamics that operate within closed market systems, if they are not interfered with by the external or exogenous agencies such as government, will necessarily result in the growth and expansion of these systems.
* Market forces will resolve environmental problems via price mechanisms, along with more efficient technologies and production processes.
* The resources of nature are largely inexhaustible, and those that are not can be replaced by other resources or by technologies that minimize the use of the exhaustible resources or rely on other resources.
* The environmental costs of economic activities can only be determined by pricing mechanisms that operate within closed market systems.
* There are no biological or physical limits to the growth and expansion of market systems.
Printer Friendly | Permalink |  | Top
Gman2 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 10:42 AM
Response to Original message
2. I think, no matter what, we are in for new currency.
An ad hoc jubilee. A fleecing of those solvent, and a forgiving of those insolvent. As one said, there are only two ways to deal with this. Bankruptsy's and inflation. Within the system. New currency and hour zero resets the clock. The whole world will quake. Biblical in scope. Possible to create new realities after this though. Perhaps a new age. Maybe even an improvement. Or not.
Printer Friendly | Permalink |  | Top
DU AdBot (1000+ posts) Click to send private message to this author Click to view 
this author's profile Click to add 
this author to your buddy list Click to add 
this author to your Ignore list Sat Jul 22nd 2017, 02:16 PM
Response to Original message
Advertisements [?]

Home » Discuss » Archives » General Discussion (1/22-2007 thru 12/14/2010) Donate to DU

Powered by DCForum+ Version 1.1 Copyright 1997-2002
Software has been extensively modified by the DU administrators

Important Notices: By participating on this discussion board, visitors agree to abide by the rules outlined on our Rules page. Messages posted on the Democratic Underground Discussion Forums are the opinions of the individuals who post them, and do not necessarily represent the opinions of Democratic Underground, LLC.

Home  |  Discussion Forums  |  Journals |  Store  |  Donate

About DU  |  Contact Us  |  Privacy Policy

Got a message for Democratic Underground? Click here to send us a message.

© 2001 - 2011 Democratic Underground, LLC