Get Real

SUBHEAD: It's not the hullabaloo about celebrities. For those interested in a digest of reality, here's what's going on. By James Kunstler on 23 May 2011 for Kunstler.com - (http://kunstler.com/blog/2011/05/get-real.html) Image above: Lance Armstrong - an example of celebrity fail. From (http://dancappello.com/2011/05/21/my-reaction-to-the-lance-armstrong-allegations). Americans gathered around the hearth of CBS's 60 Minutes must have been bemused to hear reporter Scott Pelley announce self-importantly that the US Department of Justice is investigating Lance Armstrong's bicycling team for performance-enhancing drug use. Does it really matter if any pro athlete takes drugs? Why not throw Babe Ruth out of the Baseball Hall of Fame for drinking sixteen beers the night before a World Series opener? Or Ditto Mickey Mantle for that, plus smoking two packs of Marlboros in the dugout during every game.
Notice that Scott Pelley did not announce that the US DOJ is investigating Goldman Sachs, or Citi, or Merrill Lynch, or Bank of America or several other so-called banks for looting the American public and influence-peddling in the halls of government. Or the SEC and the CFTC for failing to regulate the trade in frauds and swindles. The window for that sort of action is closing, and with it the reasonable hopes of citizens in the legitimacy of institutions that manage things.
The failures in journalism are now so stupendous that there are only a few possible explanations.
  1. The major media, hard pressed by declining revenues and the extremes of competition on cable TV and the Internet, are in thrall to corporate advertisers who expect cheerleading for the status quo in return.
  2. Major media editors and producers - the officer corps of journalism - are not smart enough to tell the difference between what's important and what's not and can't run their newsrooms.
  3. Mainstream media only reflects the cognitive dissonance that pervades the collective imagination of a culture - too much noise to think coherently.
  4. We really don't want to know what's going on - it's too scary.
  5. Sometimes a generation of leaders just fails.
For those of you interested in a digest of reality, here's what's going on:
The global energy predicament really is a crisis, even though nobody is currently lining up at the gasoline pumps. It's a crisis because peak oil is for real and oil is the primary resource of advanced economies, and there are no miracle rescue remedies ("drill, drill, drill," shale oil, shale gas). Peak oil means that we can't increase supply in relation to still-growing demand, which creates disturbances in the energy markets. Peak oil also leads directly to a crisis of capital (money), because a nation (an economy) that can't get increasing energy "inputs," can't create more wealth, can't generate more loans (debt), and most importantly can't expect what we've come to think of as normal economic growth. This creates further disturbances and distortions in financial markets.
Without that sort of growth you get stagnation and then contraction. We're probably past the stagnation phase and into contraction. We tried to compensate for stagnation (and conceal it) by allowing the financial part of the economy grow from 5 percent of all activity to over 40 percent of all activity. In the process, banking changed from a boring utility aimed at directing capital into legitimate investment (highly regulated) to a swashbuckling realm of unregulated swindles having nothing to do with real capital allocation but rather aimed at the sales of worthless "innovative products" (CDOs, et cetera), the creaming off of huge transaction fees, the use of computers to game exchanges, colossal carry trades between banks and public treasuries (you borrow money at zero percent - for free! - and invest it in paper that pays, say, 2.5 percent and keep rolling it over), and let's not forget pervasive accounting fraud practiced by government and private business to the degree that money matters are now completely opaque and dishonesty can run rampant. After a while, nobody can have faith in the way things work, and that is a dangerous situation because it leads to political problems. The ultimate question is: how does a society manage contraction?
One way to think about it is to stop using the word "growth" and substitute the term "economic activity." There are lots of useful things we can do to rearrange daily life in the USA that would put people to work, but they would tend to defy the status quo. We could recognize that peak oil means that we have to grow our food differently and make local agriculture a more up-front piece of the economy. We could rebuild the railroads so that people don't have to drive everywhere. We could rebuild our inland ports to move more bulk freight on boats. Notice these are very straightforward activities, unlike the manipulation of financial paper and markets. We're not interested in focusing on agriculture and transport reform. Business and political interests are arrayed against changing anything. Something's got to give.
Political problems arise when many people in a society lose faith that their institutions are competent, trustworthy, and fair, and seek ways to bring them down. We're in a political crisis and we don't know it. Other parts of the world know it, and more of them are finding out every day. Yesterday was Spain's turn, as the governing party took a beating in local elections and unemployed young people moiled in the city squares. Many of them probably expected to work in corporate jobs. They may end up back on the farm or in the cork orchards. The rest of Europe has a lot to sort out, too, and after a half-century of being the world's fairly-tale theme park, the terms of daily life have suddenly changed. The tensions between the requirement to adjust to change and the resistance to change will produce all kinds of disorder within and between the different nations of Europe. It will be hard to believe as it occurs, but essentially each nation, or region, will be thrown back on whatever resources it can muster, and that will be very difficult.
The trouble in the Middle East and North Africa (MENA) is probably not so much over abstract ideas about "freedom" and "democracy" (we flatter ourselves to think so) as food scarcity and the pressures of exploding populations. The OCED nations might not care so much if this region didn't produce so much of the world's precious oil - but it does, of course, so we can't help but meddle in the politics there. I would not bet on continued stability of the type that has prevailed for decades, and by that I just mean the expectation that regular supplies of oil will get to the market. The USA is pissing away vast money resources to keep these supply lines open. We've made an enemy of Persia (Iran) and they want to rule the region, so we are trying to make a baloney sandwich out of them with garrisons east and west in Afghanistan and Iraq. It's not working so well. Now, Persia is making noises about establishing missile bases in Venezuela. They may overstep on that one. Pay attention. China has a deep interest in keeping the oil supply lines open, and it's possible, if the wells, pipelines, and terminals are not wrecked by whatever happens next in MENA, that China will get some oil even if we don't. They offer engineering aid; we just send guys in desert camo with night-vision goggles and guns. Japan, you can possibly forget about. I maintain that they will be going medieval, especially now that they've foresworn further nuclear power development.
If the US is politically nervous, it is not showing a whole lot at the moment, but there is so much potential for financial havoc and economic hardship that I have a hard time imagining the 2012 election will play out as many suppose - another red-blue pie-eating contest bought-and-paid-for by Wall Street. We're cruising straight into some kind of money crisis that is going to spin heads. This isn't the first time I've said we could wake up one morning and find a Pentagon general in charge of things. If US economic history is any rule, Barack Obama would just be plain un-reelectable. But would anybody really vote for such a bumbling, glad-handing Babbitt non-entity as Tim Pawlenty? The things that really could tip the USA over are boring issues like interest rates and currency values - and the rule of law in money matters. They can't compete for sex appeal with Lance Armstrong and whoever the latest incarnation of Lindsay Lohan is these days.
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GMO Contamination

SUBHEAD: The totalitarian strategy of the GMO crop industry - to contaminate non-GMO crops out of existence. By Kurt Cobb on 22 May 2011 in Resource Insights (http://resourceinsights.blogspot.com/2011/05/contamination-totalitarian-strategy-of.html) Image above: From (http://www.greenpeace.org/seasia/ph/News/news-stories/gmo-rice-contamination-found-i).

Certainly, many of us know people who say (wrongly) that nowadays everything causes cancer. This view becomes a justification for making no effort to avoid carcinogens, especially in food. It is a case of learned helplessness that becomes a major public relations weapon for creating and maintaining docile populations. Make people feel powerless. Then, even if they disagree with you, they won't oppose you. This appears to be the strategy of the genetically modified organism (GMO) crop industry. The mode of attack is the contamination of non-GMO crops through the spread of pollen and the inadvertent mixing of GMO and non-GMO seeds. Large agribusiness giants such as Monsanto claim to recognize "coexistence" with conventional and organic growers as a desirable state. But, the industry acknowledges that contamination is inevitable.

In fact, the complete segregation of GMO and non-GMO crops was never on the table. Several high-profile cases of mixing have already demonstrated this. Starlink corn comes to mind as well as the virtual elimination of organic canola growing in Canada because of GMO contamination (with no effective redress in the courts available). And, what we now know about the spread of genes via pollen from GMO to non-GMO plants makes it all but certain no regulatory regime, no matter how comprehensive and severe, could prevent contamination. This fact has not stopped aggressive enforcement of the GMO industry's intellectual property rights which involves threats and lawsuits designed to intimidate not just those supposedly in violation of crop patents, but the entire farming community even when the cases involve contamination by adjacent farms and passing vehicles containing GMO seeds. Here's the message: To avoid lawsuits that threaten to take away your farming livelihood, you might as well sign up to buy our seeds because contamination by us or our farmer customers will be no defense in court. In fact, Canadian courts found that contamination is not a permissible legal defense! Lest you think that I am making this up, here is the relevant portion of a trial court finding which was upheld by the Supreme Court of Canada in Monsanto Canada Inc. and Monsanto Company vs Percy Schmeiser and Schmeiser Enterprises Ltd.:

Thus a farmer whose field contains seed or plants originating from seed spilled into them, or blown as seed, in swaths from a neighbour's land or even growing from germination by pollen carried into his field from elsewhere by insects, birds, or by the wind, may own the seed or plants on his land even if he did not set about to plant them. He does not, however, own the right to the use of the patented gene, or of the seed or plant containing the patented gene or cell.

This precedent and the aggressive enforcement behavior by the industry has led organic growers and seed distributors to file a pre-emptive lawsuit to protect themselves from the industry's legal tactics which are designed to force farmers to pay the company penalties even when the farmer is organic and must avoid all genetic contamination to market his or her crops. (Organic standards prohibit genetically engineered crops.) I am reminded of King Henry's conversation with his counterpart King Philip of France in the play Lion in Winter. Philip is insisting that his sister, Alais, be wedded to Henry's son, as previously agreed by Henry and Philip's father, the now deceased King Louis. It's that or the return of the Vexin, a key county north of Paris given to England in exchange for the betrothal.

Philip: It's their wedding or the Vexin back. Those are the terms you made with Louis. Henry: True, but academic, lad. The Vexin's mine. Philip: By what authority? Henry: It's got my troops all over it. That makes it mine.

Just substitute "crops" for "troops," and you'll see an age-old strategy at work. I am also reminded of Hitler's remilitarization of the Rhineland and the Anschluss, his occupation of Austria. Once his troops were on the ground, nobody wanted to challenge him. The contamination strategy solves two perceived problems for the industry. First, the industry attempted to include GMO plants as acceptable in the original National Organic Program of the U.S. Department of Agriculture. But the outcry was so great from activists that GMOs were taken out of the standards. One way, however, to overcome this resistance is through contamination. By forcing food regulators to accept GMO contamination in organic food as inevitable, the GMO industry is paving the way for eventual capitulation by the organic community and conventional growers as well. The industry wants to propagate the attitude that nothing can be done to stop it. Second, although Europe has long had labeling requirements for GMO foods, in the United States the industry has so far been able to prevent enactment of any such requirement. The response from food activists has been to launch a campaign for voluntary labeling of non-GMO foods and that now has the GMO industry on the defensive. But, what better way to undermine such an effort than to contaminate conventional and organic crops? What would change the calculus of the GMO industry? Perhaps it would change if some of the contamination suits (mostly outside the United States) were to result in huge verdicts, ones large enough to be financially ruinous to the industry. Nothing like that, however, is on the horizon. In the meantime, we can all look forward to the involuntary consumption of genetically modified food ingredients against our will. The GMO industry tells us that they want consumers to have a choice, that GMO foods should "coexist" with conventional and organic foods. Yet, they oppose labeling. Meanwhile, the equivalent of the GMO industry's panzer corps is moving into our farm fields and from there into our kitchens. We may soon regret this creeping annexation of our dinner tables. Once the invasion of GMO genes around the world is complete, we may find it harder to roll back than Hitler's armies.

See also: Ea O Ka Aina: GMO Alfalfa Contamination Certain 2/16/11 Ea O Ka Aina: Feds Lay Down for GMO's 2/15/11 Ea O Ka Aina: Monsanto Lies Again, and Again 10/17/09 Ea O Ka Aina: Genetically Modifies Kauai 12/10/08 Island Breath: World According to Monsanto 5/5/08 Island Breath: Monsanto wants it all 4/21/08 Island Breath: Syngenta spraying near school 2/17/08 Island Breath: Spray Ban Bill 2/1/08 Island Breath: Bill to restrict herbicide 1/24/08 Island Breath: Maluia WCMS 7/10/07 Island Breath: Syngenta Poisoning II 2/23/07 Island Breath: Syngenta Poisoning I 1/12/07 Island Breath: Percy Schmeiser's battle with Monsanto 6/23/04

Different This Time

SUBHEAD: Diminishing return on waste is our economic crisis. We cannot profit by our counter-productive activities any more. By Steve Ludlum on 22 May 2011 in Economic Undertow (http://www.economic-undertow.com/2011/05/22/different-this-time-2/) Image above: Meredeth Whitney, sometimes called the Dollar Dominatrix or a Superstar Analyst. Maybe she is not liked on Wall Street because she is an attractive woman and married to a professional wrestler... or maybe it is because she speaks truth to power. From (http://moneywatch.bnet.com/investing/blog/investment-insights/muni-bonds-another-strike-against-meredith-whitney/636/).

I don’t know if Meredith Whitney ‘gets it’ or not when she claims the muni lending structure is kaput but she is on the right side of history:

Whitney: Next Financial Crisis - Local Government William Alden - The Huffington Post

The next major financial crisis could come from a crisis in local government budgets, according to a new report from analyst Meredith Whitney.

State budgets were over-extended in the years leading up to the recent financial crisis, Whitney says, as relayed by this Fortune piece. The situation is so bad that states are spending 27 percent more than they’re earning in taxes.

The state fiscal situation may be dismal, but Whitney’s thesis says that a future crisis won’t be cause by states directly, since they have a safety net from the federal government. Instead, the local municipalities — cities and towns — which, as Felix Salmon points out, are financially dependent on the states, would default on their debt.

“The state situation reminded me so much of the banks pre-crisis,” Whitney told CNBC’s Maria Bartiromo Tuesday. In 2007, Whitney predicted doom for Citigroup and was immediately vindicated when the bank’s stock price fell and the then-CEO Chuck Prince resigned.

“The similarities between the states and the banks are extreme, to the extent that states have been spending dramatically, growing leverage dramatically. Muni debt has doubled since 2000, but spending has also grown way faster than revenue,” Whitney told CNBC.

States, most of which are constitutionally required to have balanced budgets, have paid for this spending by using money that would otherwise have gone to pension funds, Whitney, who is CEO of Meredith Whitney Advisory Group, said. “You borrow from future dollars to benefit the present, basically generational robbery,” she told CNBC.

The worst states, according to the 600-page report, are California, New Jersey, Illinois and Ohio. The best, with the most conservative fiscal policies, are Texas, Virginia and Washington.

Here’s a current version of Whitney-Vision:

Whitney warns on US state pension schemes Nicole Bullock - Financial Times

Meredith Whitney, the outspoken Wall Street analyst, who predicted a wave of defaults by troubled US municipalities, has warned that the rising cost of states’ retirement schemes could redirect funds away from public services and ultimately hurt the US economy.

Ms Whitney, who shot to fame for spotting trouble at large Wall Street banks ahead of the financial crisis, forecast “state arbitrage” whereby the weakest states, namely California, Illinois, Ohio and New Jersey, face the risk of large emigration of their highest tax base – companies and high net worth individuals – to stronger states that have better managed their finances over the years.

“When states start to cut essential state services [corporations and individuals in high tax brackets] say, ‘I can take or leave it,’ and you are potentially left with a constituency that contributes less to the tax base and takes more from social services,” Ms Whitney told the Financial Times.

It isn’t clear in her writing whether Meredith understands the nature of all debt as a call option on suburbia, on the growth of energy consumption (waste). I have never seen nor heard the words ‘energy consumption’ pass the bee-stung lips of Lovely (but Serious as a Heart Attack) Meredith. Nevertheless, the end game of municipal credit is grounded in the futility of further waste as a means to service rapidly increasing debts.

The stock ‘n’ bond hamsters are outraged by Whitney’s truth to power. She’s costing finance racketeers some serious coin! They line up to pound nails into Whitney’s skull:

Meredith Whitney Speaks, Muni Market Yawns Mark Gongloff -Wall Street Journal

Professional scary person Meredith Whitney took to the op-ed pages of The Wall Street Journal this morning to sprinkle some more of her fear dust on the muni-bond market:

Municipal bond holders will experience their own form of contract renegotiation in the form of debt restructurings at the local level. These are just the facts.

She makes some good points, frankly, and offers some alarming numbers. State and local finances are plainly a mess, and off-balance sheet liabilities in the form of unfunded pension and other benefit obligations are a potential headache. That point is controversial, but it’s always important to listen to Cassandras like Ms. Whitney, who made her bones as a prognosticator before the financial crisis.

But, interestingly, muni-bond investors are not exactly heading for higher ground today on her words. Muni-bond ETFs such as the iShares S&P National AMT-Free Muni Bond fund, are basically unchanged on the day — at six-month highs.

You would think the Journal could come up with a more unflattering image? Below is more Meredith bashing from Bloomberg. If you take the time to look online you can find soothing bromides along side Whitney-bashing all over the place:

Meredith Whitney Trips Over Muni Default Tale Joe Mysak - Bloomberg News

It’s no wonder Meredith Whitney wants to distance herself from her prediction of the municipal market’s meltdown.

“I never said that there would be hundreds of billions of defaults. It was never a precise estimate over a specific period of time.” So said Whitney on Bloomberg Radio on Wednesday morning.

This is what she said on an episode of CBS’s “60 Minutes” that aired on Dec. 19, 2010:

“You could see 50 sizeable defaults. Fifty to 100 sizeable defaults. More. This will amount to hundreds of billions of dollars’ worth of defaults.”

As for timing, “It’ll be something to worry about within the next 12 months.”

What this sounds like is Meredith Whitney saying there will be hundreds of billions of dollars’ worth of municipal bond defaults within the next 12 months. That sounds like a precise estimate over a specific period of time. And that’s how it has been reported and dissected in the press since then, with not a word of protest from Whitney.

Until this week. Whitney told Bloomberg Radio host Tom Keene that she thought “60 Minutes” did a “really good job” on the story. “But the risk is that they take bits and pieces of an hour-and-a-half interview and certain portions are more magnified than others.”

Whitney also later told Keene: “In the cycle of this municipal downturn, I stand by it. But we never had a specific estimate for that. That’s not the nature of our research.”

Our waste-based economy is a scaled-up version of a family that lives in a large house. They have been heating the house by burning the furniture and have started on burning the house. ‘Industry’ notices a problem exists and suggests more efficient furnaces so that the house can be burnt more completely. Salesmen insist that burning the rest of the house is the only way to ‘prosperity’. Whitney notices the furniture is gone but hasn’t made the ‘furnace’ connection, yet.

Keep in mind that debts are being incurred as a money-flow substitute for ‘utility’ received from furniture burning. Real returns from this nonsense does not exist so something has to be created to stand in returns’ place. What economists consider to be ‘margin’ is really the difference between rates of burn. The ‘economy’ only grows when furniture — or the house — is burned faster than during previous times.

The world’s economies burn furniture faster in 2011 than they did in 1911, this represents GDP growth and ‘progress’. Furniture isn’t burned faster now than in 2005 or in 2006 which puts the world at the edge of the pit. Meredith Whitney may not be able to articulate the entire process in detail but she is able to grasp the outline of the process’s form.

“By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD.” (JOE 2010)

Modernity’s madness reaches escape velocity: things ARE different this time. Our house is our resource patrimony, a form of irreplaceable capital. To properly invest our capital the end must be to gain a return on its existence in a useful and enduring form not its destruction. It might have been excusable to immediately burn for heat the fuel we extracted in more benighted times, before the turn of the Twentieth Century. There is no reason why the oil extracted in 1950 is not in our world as capital now, either as a store of value like gold or performing some service, perhaps as a 100% recyclable lubricant or chemical feedstock or part of some process we cannot now imagine.

A businessman whose company made enduring use of the same oil for many decades or centuries — as a conscientious farmer might husband his soil and water — and improved its qualities in the process would be a wise businessman indeed!

The same businessman would also be exceedingly prosperous. His capital account would increase while those of his wasteful competitors would vanish taking their businesses with them … the same way capital accounts and along with capital itself is vanishing around the world right this minute!

Humans constantly seek more to degrade, burn, waste or corrupt. We refuse to think of resources as capital. Beginning with this central and essential lie, all of economics is corrupted! Whether it is coal or water, farmland or natural gas, ‘culture’ or knowledge our attitude bends toward the ‘consume’ part without understanding. The refusal to understand is the inevitable outcome of the lies’ corruption which spirals out from the center.

We haughtily pretend to dominate nature not accepting as first principle that nature is indomitable. We act as if our frauds or labels mean something to anyone or thing but ourselves.

The act of consumption revalues what is consumed.

Consumption requires the cheapest possible inputs so as to allow profits. Increased scarcity of inputs makes capital too expensive to waste. In this way waste- based economies are self- limiting. Recognizing how fuel resources or money reprice themselves by way of scarcity is more than a matter of making adjustments for scale.

Availability reprices the entire consumption dynamic into something that excludes consumption. Availability of a resource sets both the amount and the kind of the return on the resource’s use. ‘Kind’ identifies the character of an asset to be traded, which changes as the asset becomes scarce. Scarcity morphs a cheap throwaway such as a bubble-gum card into a rare collectible to be put into a museum. Scarce oil ceases to be an loss- leader for the auto- and real estate industries and instead becomes an asset to be hoarded.

Meanwhile, the appearance of asset speculation in a ‘use market’ is a scarcity indicator. Exhaustion of resource capital amplifies speculation returns. These returns become greater than those from any of the other ‘uses’ which are driven from the market.

At that point Hotelling’s Rule takes hold. Scarcity of return ‘re-proxies’ money used to measure the return. What is taking place right now under the noses of economists is the titanic struggle between concepts: money as proxy for a good versus money as a proxy for the process that destroys the good. The struggle manifests itself as currency volatility and incipient inflation/deflation. When the perception shifts from input destruction to input hoarding the consumption process will be annihilated because inputs will be unaffordable.

The ‘proxy dynamic’ is the scaffold upon which the idea of hard currency is deployed. Anyone who does not believe that hard- currencies are central to the economic ‘discussion’ taking place right now is not paying attention. The only issue is whether the currency basis should/will be gold — which is useless — or oil, which is not. When the waste- based economy by way of its ‘marketplace’ elevates oil, that resource will morph from ‘something to be wasted’ to become a store of value. The industrial economy that prospers by burning its capital in a furnace will have nothing left to burn.

Few will be able to afford to buy oil other than wealthy speculators seeking to sell it to others for a gambler’s profit. Like gold, oil would become ‘useless’ unless some non- destructive uses can be found for it. This in turn would support higher values still. John D. Rockefeller in the 19th century did not buy oil for himself. He marketed oil as a way to leverage investments in oil consuming industries. As a result, we have ‘infrastructure’ — Whitney’s muni world — built for the ‘masses’ to waste fuel on an unimaginably colossal scale.

When only the Rockefellers of the world can afford oil, none will remain to pay for these ‘infrastructure investments’ … or to service associated debts.

It is this ‘perception of oil as an investment asset’ dynamic rather than net- exports or simple oilfield exhaustion and depletion that hangs over the fuel- waste economy. Oil that is too valuable to waste strands the past 80 years of ‘investment’ by every nation on Earth. The pricing/value shifting process is visibly taking place right now. The stranding part is what Meredith Whitney observes: the fact that she is remarking about it speaks for itself!

The next rung on the ladder of understanding is whether the ‘cease to exist’ part takes place before the ‘hard currency’ part? The answer will be at what price level does the demand- side bid shift perception? At what price does oil become ‘good as gold’ and treated accordingly? Is the price $147? How about $130?

Diminishing return on waste is our economic crisis: we cannot profit by our counter-productive activities any more. At all levels, whether at the grocery store or the central bank, we are pricing ourselves out of business because we have wasted too much of our irreplaceable capital.

In this sense of the ‘pricing out of business’ part, Whitney is absolutely correct and her detractors are misleading. Our states and cities as they are currently constituted cannot afford themselves. The putative ‘customers’ of these entities cannot earn enough from wasting activities to pay for the accumulated debts incurred as substitutes for the past’s non- earnings.

The idea of states or locale entities ‘earning’ or having a return over any period other than the short-term when all that is produced is waste- enablers is a fantasy. Hello! Germany!

Remaining oil resources are difficult to exploit. Their ‘asset’ value becomes greater than their ‘consumption’ value.

We destroy our capital in the name of ‘progress’ and money capital is revalued as an integral part of the process. No wonder people are confused about inflation and deflation because the measurement is the two interconnected relative rates of capital destruction. It becomes impossible to determine what anything is worth.

We assume that the future will provide us with increasing benefits while our consumption devours what tools we need face this future.

Municipal Finance 101

In a fuel constrained environment, as prices rise choices must be made. Something must be cut in place of the fuel; the ‘somethings’ are revenues which decrease relative to expenditures. These in turn represent additional fuel waste by government which creates a vicious cycle. To make up the ongoing and expanding gap funds must be borrowed. Municipalities wind up chasing their tails, caught within incipient debt compounding spirals driven by embedded fuel costs. The only escape is to eliminate fuel waste which is impossible because the municipality is completely invested in it.

If fuel waste is eliminated, revenue vanishes as this is a ‘fee’ enacted upon the rate of wastage. If waste continues the costs increase to stifle returns. More revenue disappears at the same time fuel-waste ‘investments’ are stranded. There is no escape from the waste- based system without an overhaul or a breakdown.

Whitney suggests that state and local governments will reschedule debt payments. This is more can- kicking but what other choice to these entities have? Here is a sketch of state/local income and expenditures since 1990 to 2009 from the Census Bureau: (Please click on the chart for a large picture)

Notice the 1990s period had revenue surpluses; a period of cheap oil and economic ‘growth’. This table — which skips years — indicates a widening gap between revenues (which includes funds transfers from the Federal government) and expenditures. Indeed, state and local tax revenues are increasing but other funds are diminished. Purchase of fuel requires other funding needs be neglected, with differences made up by borrowing.

Whitney is forgiven for not going far enough. The world’s militaries will do so in La Whitney’s place. Here is the Defense Department’s think tank Joint Operating Environment 2010:

A severe energy crunch is inevitable without a massive expansion of production and refining capacity. While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India. At best, it would lead to periods of harsh economic adjustment. To what extent conservation measures, investments in alternative energy production, and efforts to expand petroleum production from tar sands and shale would mitigate such a period of adjustment is difficult to predict.

This sort of thing is the ‘container’ within which municipal and state financing exists. Finance insists that ‘growth’ is a given, which is not true:

Energy Summary (JOE 2010)

To generate the energy required worldwide by the 2030s would require us to find an additional 1.4 MBD every year until then.

During the next twenty-five years, coal, oil, and natural gas will remain indispensable to meet energy requirements. The discovery rate for new petroleum and gas fields over the past two decades (with the possible exception of Brazil) provides little reason for optimism that future efforts will find major new fields.

At present, investment in oil production is only beginning to pick up, with the result that production could reach a prolonged plateau. By 2030, the world will require production of 118 MBD, but energy producers may only be producing 100 MBD unless there are major changes in current investment and drilling capacity.

By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD.

The Progress Pimps insist with increasing desperation that stocks are going to go up, bonds are going to go up, both residential and commercial real estate are going to go up, that commodities are going to go up — with perhaps the dollar as the single financial asset that declines in value, also bullish.

How is an energy shortage — that could begin as soon as next year — be bullish for anything?

Energy prices are supported by economic activity. If activity declines due to a lack of return, what will drive prices?

If shortages result in fuel being so expensive that economic activity is thwarted, what funds can be had to afford anything else? A structural overhaul toward real sustainability falls out of reach. What we have invested so far in wasting activities leaves less capital remaining to fund replacement infrastructures.

Price constrained economies cannot spark-off enough cash flow to service debts. The issue becomes triage: which debts to service or pay off and which to repudiate.

Whitney accepts the obvious, that the revenue/expenditure gap is unlikely to be filled without the hard school of default imposing a new order. The dead must give way to the demands of the living … It is different this time.

Video above: Hudson ad Wolff On Debt and Recession. From (http://www.youtube.com/watch?v=GkALt1GnJa4).

See also: Ea O Ka Aina: Possible Municipal Bond Failure 5/4/11 Ea O Ka Aina: Muni Defaults in 2011 12/21/11 .

Most & Least Likely Scenarios

SUBHEAD: Having not acted in time we now can choose to face either the rock or the hard place. By George Mobus on 19 May 2011 in Question Everything (http://questioneverything.typepad.com/question_everything/2011/05/two-scenarios.html) [Publisher's note: This is the last half of a long article detailing our failure to act on overpopulation and resource depletion when we had he chance to mitigate their ensuing problems. The portion of the article reproduced here describes the resulting options left to us. A Most and Least likely scenario. Use link above for complete article.] Image above: Detail of illustration of "Fat Man's Misery" passage in Mammoth Cave, from 1875. From (http://docsouth.unc.edu/nc/king/ill471.html).
"Sapience is often defined as wisdom, or the ability of an organism or entity to act with appropriate judgment, a mental faculty which is a component of intelligence." (http://en.wikipedia.org/wiki/Wisdom#Sapience)

In the end, our predicament has been caused by a lack of adequate sapience to manage our over-exuberant cleverness and lust for profits. So a lack of adequate sapience is the root or causal liability. Just as once long ago sapience was the root of our success, given the disparity in rates of cultural evolution compared with biological evolution it has turned into a weakness. A major weakness. Perhaps the ultimate weakness.

What Can We Expect? Two Scenarios

Let us examine two scenarios that play out from the above starting conditions. We will look also at the relative likelihood for each and the consequences that ensue from each.

I have chosen these two scenarios (both of which discount any miracle breakthrough in energy production) to contrast the effects on humanity of a bottleneck condition. That is, in both of these scenarios humans go through an evolutionary bottleneck that reduces the population to a very small fraction of the current level.

One bottleneck results from humans continuing to act as they do now (the so-called business as usual attempt), don't take any anticipatory action, and basically let nature take its course. The other scenario assumes a specific intervention taken early enough to make a difference in the quality of life lived as we go through the bottleneck.

In the former case the bottleneck will be steep and rapid in culling the unfit. In the second case, the bottleneck, which is inevitable, is engineered so as to minimize suffering as much as possible. A bottleneck cannot be avoided in any case. The population of humans cannot be sustained at anything like current levels even if we were to discover a reasonably cheap energy source. We are doing irreparable damage to the planet just by virtue of our numbers and the rate at which we produce wastes. Something has to give, and that something will be us (and likely countless other species as well).

This being the case, we have to make a choice. Do we do nothing and go out hard, or do we do something to make our reductions in numbers the least painful possible?

Most Likely — Scenario One

I also think of this as the pain and suffering scenario.

The majority of humans, if they perceive anything being wrong in the world believe they are living in a bad dream and hold onto the belief that they will wake up (things will eventually return to ‘normal’). With this belief driving their judgments they will fail to act in any kind of timely way. They will not anticipate the future and will suffer the consequences. The lucky ones will succumb quickly, perhaps from some early violence or a pandemic disease. But many will survive past the early cataclysmic events to face lives of hardship and grueling subsistence.

By 2020 the effects of depleting net energy will be clear to those who understand its relation to economic work. The first effects will be seen (are even now being seen) in the food supply to poor people. The cost of food produced in industrial agriculture will continue to climb through the decade. The floor cost will be established by declining oil products (or the costs of those products as scarcity increases). The fluctuations above the floor will be caused by weather and climate shifts, draught, floods, etc. making monoculture fail more frequently.

Within twenty-five years net energy available to do useful work could be less than ten percent of what it is today. That means we will be producing ten percent less wealth and/or failing to maintain what physical wealth we have now. Almost certainly within this time frame the financial system, which depends entirely on the hope that real wealth production (backing with real assets) will resume will have collapsed. I would think it likely that the fiat currencies of nations, especially the United States, will have failed and there will be a massive reversion to some kind of barter/local currency-effected trading commerce.

An early response to this failure of the financial system will be very rapid closure of business everywhere. That will mean loss of jobs and incomes (with money that is no good anyway). By 2030 we will see a massive attempt at relocalization restructuring in the OECD countries. Naturally, the dates will vary depending on what sorts of local conditions and resources prevail. For example Japan has little in the way of local natural resources, certainly no energy sources, so we could expect Japan to undergo paroxysmal reorganization as the internal powers seek some new kind of equilibrium. It will be more pronounced for an island nation than a continentally-based one.

Relocalization is the only available response in light of diminishing supplies of energy for transportation. However it has many serious flaws. Its success depends entirely on the local resources available, and things such as climate stability and local population sizes. Unless a locality has the benefits of good soils, mild climate and sufficient growing season, reachable forests, etc. it will not provide a sustainable base for residents. And then, too, if the local population is quite large relative to the local resources, that spells disaster.

I see many discussions about transition towns and relocalization that assumes an adaptation of an existing locale to local-only food and necessities production is feasible. Some have argued that the lawns of suburbia might be converted into crop lands, for example. That thinking is grossly naíve. Most residential lawns are possible only because grasses have shallow root systems and require copious helpings of fertilizers and water to stay green. The underlying soils are generally pretty poor and in no condition to grow food crops in any kind of quantity.

Much as I hate to say this, most of the people who attempt to relocalize in their current neighborhoods are going to die in situ from malnutrition or dehydration. The amount of food crops needed to provide an annual caloric input per person is far greater than most weekend and patio container gardeners can imagine. Most would-be farmers have no idea what crop mixes to grow to achieve a balanced diet, especially providing for the essential amino acids that our bodies do not manufacture. Indeed how many people even know what those amino acids are?

And then there is climate change. Try to imagine the folk in New Orleans eeking out a bare minimum living raising okra in their back yards to have another Cat 5 hurricane swipe across their relocalized homesteads. Or consider, over a longer time scale, admittedly, the folk in southern Florida trying to keep their oranges growing as the sea infiltrates their water table and eventually their land.

By 2050 I am seeing most transportation coming to a standstill. The dreams of an electrified transportation system powered by wind and some solar will be dashed as the transportation necessary to service the wind turbines in remote locations cannot be sustained with diesel prices in the stratosphere. What is happening now that will aggravate this situation is a sudden turn to electric vehicles and things like high-speed rail systems. The latter are truly boondoggles.

They are meant to make a show of doing something proactive for political gain, and to perpetuate the myth that there is a technological solution to every problem. These high-speed rail proposals that Obama is touting are nothing more than his version of Ronald Reagan's "Morning in America" theme (the one that temporarily blinded me in one of my lesser sapient periods!) Considering the overall scale (running between a few cities where the major ridership will be financial types anxious to get to the next ‘deal’), compared with the scale of trying to fix the standard rail system that actually carries supplies between regions that have and those that don't, this is blatant window dressing (these sentiments have been expressed by James Howard Kunstler, perhaps using similar rhetoric, though much more eloquent that I can muster!)

The climate impacts on regions of the world where many people are going to be literally stranded will begin to take their toll within the next few decades. As I said above, the first to suffer will be those in poorer regions. When the cost of a boat trip across the Gibraltar Straits or across the Arizona desert gets to be unaffordable, refugees will be stranded (we will likely see a resurgence of indentured servitude and outright slavery for a while as long as someone can afford the fuel to make the trips). Far more will be left in this condition than will get out. And those that do can expect nothing but hostilities from otherwise host countries.

Even people in the developed world where climate change will be drastic will suffer the same basic fate. The American eastern and western south lands are incredibly vulnerable to drought and increased average temperatures. The southwest is already arid, but supports a huge population due to imports of drinking water from northern regions, like the San Francisco Bay area or the Colorado River. Even now these sources are under severe stress and not likely to hold out beyond 2030 or 2040.

Something has to give. It seems more likely that Americans living in these areas are going to be somewhat able to pack up and leave for northern realms more readily than peoples in the global south (or Mexico). But what will be the effects of massive migrations north on the communities struggling to relocalize? For the US, the south will not rise again. It will find itself begging the north for shelter. And I make no bets on how generous the northerners will be.

Even if many people from the negatively impacted climate zones make it to milder climes, they will contribute to the further increase in population density exactly at a time when health services will be in rapid decline. The opportunities for huge pandemics will increase and there will be little in the way of prevention of the spread, or treatment of the afflicted. It has happened before (Black Plague) and it would be foolish to suggest it couldn't happen again. Indeed under the conditions I envision, it almost certainly must happen again.

Under the dynamics of this scenario I am thinking that by 2075 more than three quarters of the world's population today will be dead, most from traumatic causes. By 2100 the population may be down to little more than a few million individuals scattered among the last regions that have some level of climate stability. The bottleneck event will have transpired. After this time almost anything can happen. With a radical enough change in the living conditions of the Earth, humans may go extinct. The bottleneck could be as severe as the last one supported by some evidence. We could go down to a mere several hundred individuals! Then what?

There are many well intentioned people today who do see the problems arising and who are trying their best to offer possible solutions. They are to be commended for their sincerity and efforts, but condemned for their inability to see this whole situation systemically. They offer false hope and only exacerbate the situation with respect to getting other people to take any kind of realistic action by reinforcing in them the hope that something will be done and therefore they don't need to do anything differently. As long as someone is taking care of the problem they are content to do nothing. As a result, this ‘do nothing’ action plan will be the most likely to be followed. I don't really blame anyone. This is just our human nature with minimal sapience. But it still sucks.

Least Likely — Scenario Two

Suppose the above scenario represents a reality that will obtain if we do nothing now. This is what we could anticipate by taking no action. We could say these are predictions of what will happen because we don't attempt to alter the future with preemptive actions now. Then the question should be, what if we do take some action now? Would that alter the outcomes in some favorable way? And if so, what actions should we take?

I feel this is the least likely scenario because it requires humans to exercise a level of sapience I doubt that they possess. It would require a level of unprecedented cooperation that I suspect we cannot muster. But I cannot help but wonder, ‘What If?’

The objective of intervention cannot be to prevent a bottleneck. We are in population overshoot and there simply will not be enough resources, especially energy, to do that. Instead, the objective needs to be to minimize the pain and suffering of going through such a bottleneck (without of course simply everyone committing suicide which would be the easy way out).

Along these lines, the objective is to extend over a longer period of time the reduction of population by virtue of allowing a natural death rate to exceed (considerably) the birth rate. In other words, we would undertake an engineered population reduction that would achieve getting that population down to a sustainable level in a short enough time scale that would allow the preservation of at least some natural resources for future generations to build upon.

The population reduction rate has to be fast enough to prevent total depletion of resources such that future generations might not be able to have anything to power anything like what we might call a civilization. What rate might that be?

It is determined by the depletion level of fossil fuels, the rate of change in climate impacts, and the depletion levels of all of the other resources mentioned above. If we had evidence that there would be adequate resources for the next hundred years, it would be reasonable to think that we could come up with a planned reduction with a population halving every hundred years or so. That would translate to an intervention that would affect only a fraction (about one fifth) of the world's people in each generation time period over that several hundred years. Of course we would have to target those in the areas currently suffering the largest population growth rates, which is a political quagmire, as in politically incorrect since it would also be viewed as targeting specific racial or ethnic groups. This would be repugnant to liberals and progressives.

Unfortunately, certainly as far as energy is concerned, our evidence suggests something more radical is called for. We don't have several hundred years. We have, at best, forty or so years before the depletion rate exceeds any possible potential for mitigation by engineered (as opposed to violent) population reduction. This is based on my model (mentioned above) which suggests that the energy decline curve will be much more severe than most others now think likely. If I am wrong, hurrah. If I am right...

Using a pretty standard population dynamics model I estimate that something like ninety percent of the current child-bearing population would need to be sterilized in order to force the population size down sufficiently fast to avoid the worst scenario (above). That is admittedly extremely radical, I do not deny it. The model could be wrong. But what if it isn't? We are playing what if after all. What if I am right?

Suppose we did engineer a radical reduction in the population over the next fifty years. Would that be sufficient? Unfortunately no. This would only be a basic action that we could take to assure a managed bottleneck. In addition we would have to make provisions for how to handle an aging population. There would be no new young people to take over the farms and relocalized manufacturing. What we would gain from the reduction is a conservation of energy and material resources that would allow us to stretch out the time scale of reduction. Instead of a catastrophic reduction in, say, ten years, we could have the same percentage reduction stretched over twenty to thirty years or more. The key would be how many reproducing adults were still in the population.

It is feasible that if we do manage to conserve resources we could redirect some of them to developing technologies that would compensate for not having young workers to replace aging ones. I think we are very close to producing workable robots that could take over the more physical tasks directed at producing just the assets we actually need to live reasonably comfortably, not in luxury. Those robots would be used to assist the aging population until the last sterile individual succumbed to old age (or disease). Robots would need to be powered, of course. So their practicality requires that the remaining flows of energy (especially, say, from wind, solar, and hydroelectric) be used to run them and maintain them in working order. The latter task might be taken on by the non-sterile remaining people forming the breeding population.

An interesting possibility for work that people would be engaged in during this time of contraction is dismantling the human built infrastructure and preserving the reusable resources, steel, copper, etc. for future generations. This would be meaningful work. Granted it isn't meaningful in the same sense as building the world. It would be meaningful as a contribution to future generations of humans who will need these resources but won't have the fossil fuels needed to extract them on their own. Spending time now, dismantling the buildings and machines no longer needed and aggregating those resources would serve humanity in the future. It would be a worthy legacy not unlike a fortune's bequeathal to an heir.

Of course the majority of able bodied will initially be needed in the food production industry because it will become increasingly labor intensive. By drastically reducing the population size it should be feasible to find productive land in spite of the depletion of soil quality throughout the industrial agriculture world. Many folk could be put to meaningful (though hard) work restoring additional soils to permaculture standards. As the population declines, the robots, mentioned above would replace the aging workers in this most necessary work.

An engineered bottleneck would have the advantage of reducing the pain and suffering of starvation, etc. but it would have the obvious negative effects of mental trauma from a denial of childbearing. Which is worse? Moreover, it cannot eliminate all physical suffering because that is already underway and would carry forward no matter what we did. It is really a matter of choosing the least painful alternative. There is no way to avoid some pain.

Survivors of the Bottleneck

This leads us to a consideration of the nature of survival of the bottleneck event. In Scenario One I have already indicated that there is a non-zero probability that any survivors would eventually succumb and the human species would be finished forever. There is some chance that some survivors would remain and find ways to procreate, but starting from the genetic pool of today, it is problematic as to what form evolution would take after that. My guess is devolution toward primitivation rather than advancement. Of course this may just be the natural course of things after all so what would it matter?

In scenario Two we have something of an option. An engineered bottleneck allows us an opportunity to choose the characteristics of our species' progeny. And if we did that (wisely) we might seed a future evolutionary process with a gene pool that promotes those very best characteristics of our kind. My vote goes for high sapience.

Yes Virginia this is eugenics! I admit it. But what else would we do? We might choose higher intelligence, but we already know what high intelligence without higher wisdom produces. Better capitalists! And better capitalists rape the world faster than less bright capitalists.

I realize that very many people will question the genetic basis of sapience and wonder if there isn't some kind of education that could prepare the selected survivors. Then we could just use a lottery system for choosing and our only real action would be to set up that educational system.

This amounts to asking "Are people educable to wisdom?" Certainly, to some degree, some aspects of wisdom could be instilled in anyone. But only some aspects. One might as well ask if people with IQs of 75 might not be trained to do calculus. They are certainly capable of being taught intuitions about rates of change (going faster vs. going slower). But this isn't exactly the same thing as doing calculus is it? Holistic wisdom comes from a native ability to learn veridical tacit knowledge and having the facilities for using that knowledge for judgment in decision making. This is a rare capacity in we humans.

Fortunately we are developing the very tools we would need to answer this question and a basis for making selection decisions if we collectively decided that this would be the better route to take. See Overpopulation: Here is the Solution (http://questioneverything.typepad.com/question_everything/2011/04/overpopulation-here-is-the-solution.html).

If we selected high sapient individuals of breeding age (please bear in mind I am not of breeding age!) and provided protections for them, as well as resources to nurture their establishment, they would survive an engineered bottleneck and have a much better chance of surviving the future changes in the environment due to climate change and massive ecosystems alterations. We could bequeath them the fruits of our civilization (the appropriate technologies and knowledge) with the hope that they will succeed in preserving the genetic heritage of our genus into the distant future.

Feasibility

How likely is Scenario Two? Not very, I'm afraid. Not only do we lack, as a species, the wisdom to act appropriately, we lack the intestinal fortitude to practice the kind of triage that would be necessary. Our political structures, at least in the West, do not even allow the subject to come up let alone make necessary decisions.

The feasibility of determining something like sapience level as a selection criterion is, I think, relatively high given our access to information about the brain functions, brain development, and genetic basis for development. Our understanding of judgment is now high and growing, so the possibility of developing psychological probes that would discriminate sapient judgment from mere intellectual decision making is quite high.

But, we won't even try it. We are, collectively, cowards. We won't even face up to the consequences of what we have wrought until it is too late. Moreover, I expect the majority of people to panic when those consequences start to be felt in earnest. Look at how many people are already reacting to high fuel prices. Instead of seeking information and education on the situation, instead of thinking through the various causes and seeing the naturalness of the effect, what do people do? They complain that they can't consume more. They whine about how hard life is for them. Wait until it really starts to get hard. Then let's see how they react.

So once again I offer this as little more than an intellectual exercise knowing full well that my species will be unable to deal with the forces at hand. Which leaves us with Scenario One, the pain and suffering scenario. Now my only hope is that somewhere out there a few really sapient individuals will be thinking clearly and planning ahead, anticipating the worst and preparing for it.

Older individuals, such as myself, can only try to make younger high sapient people aware and trust to their level of sapience that they will be able to make the right choices. This is a hit and miss proposition. No guarantees. Younger people, even with high sapience, have not accumulated the wisdom of experience. Their sapience can only help them obtain that experience. But then hit and miss always was the nature of evolution! The ultimate question will be whether such a process will produce viable survivors with the right qualities to provide a basis for progress in the development of our genus.

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HSF has no secondary impacts?

SOURCE: Ken Taylor (taylork021@hawaii.rr.com) SUBHEAD: Environmental review without secondary impacts analysis—Is Hawaii about to throw the baby out with the bathwater?  

By Jesse K. Souki on 10 April 2011 for Hawaii Land Use - 
  (http://hilanduse.blogspot.com/2009/04/environmental-review-without-secondary.html)

 
Image above: Surfer impacts Superferry environment. Photo courtesy of Jonathan Jay. From (http://www.islandbreath.org/2007Year/09-access&transport/0709-38HSFcontinuing_story.html).

In an odd twist to the Hawaii Superferry drama, it has been suggested that in order to save the Hawaii Superferry, secondary impact analysis should be removed from Hawaii’s environmental review process. See Momentum grows at Capitol to bring Superferry back to Hawaii and Former State Attorney General Has Plan to Save The Superferry. What would this mean for Hawaii and what’s at stake?  

The Hawaii Environmental Policy Act ("HEPA") in a Nutshell.
Before we can make sense of secondary impacts we must first understand the HEPA process. HEPA establishes a system of environmental review that ensures environmental concerns are given appropriate consideration in decision making along with economic and technical considerations. HRS § 343-1. HEPA will potentially apply whenever an agency or applicant (hereinafter, “applicant”) initiates an action that requires a discretionary consent or approval. HRS § 343-2. An applicant must comply with HEPA if its proposed action is one of the triggers enumerated under HRS §343-5. The most common trigger is the proposed “use of state or county lands” (e.g., modification to a state or county highway as part of a residential project). Once triggered, a discretionary approval cannot be granted and the proposed action cannot proceed until the permitting agency does one of the following:
  1. Exemption. Find that the project is exempt from HEPA, because the proposed action “will probably have minimal or no significant effects on the environment.” HRS §343-6.; or
  2. Finding of No Significant Impact (“FONSI”). If not exempt, an environmental assessment (“EA”) must be prepared at the earliest practicable time to determine whether an environmental impact statement (“EIS”) is required. HRS § 343-5(b). The permitting authority will review the EA and may issue a FONSI. If so the process ends here.; or
  3. EIS. If the permitting authority finds that based on the EA “the proposed action may have a significant effect on the environment” then the applicant must prepare an EIS. Upon completion, the EIS must be accepted by the agency issuing the permit.
This is the short of it: discretionary permit-->trigger-->exemption-->EA-->FONSI-->EIS. Embedded in the process are required periods for public notice, public comment, and specific limitations on when a person can sue for perceived deficiencies in the process. See HRS §§ 343-7, 343-5. What are Secondary Impacts? The words “secondary impacts” are not found in the HEPA statute. HEPA requires only that environmental documents analyze “significant impacts”/“significant effects” that will be caused by the proposed action. HEPA defines significant effects as follows:
[T]he sum of effects on the quality of the environment, including actions that irrevocably commit a natural resource, curtail the range of beneficial uses of the environment, are contrary to the State's environmental policies or long-term environmental goals as established by law, or adversely affect the economic welfare, social welfare, or cultural practices of the community and State. HRS § 343-2.
Through HEPA, the legislature directed the Environmental Council to establish rules that, among other things, establish procedures to exempt actions that have minimal or no significant effects on the environment; prescribe the contents of an EA; prescribe the procedure for processing and accepting EIS documents; and establish criteria to determine when an EIS is acceptable. HRS § 343-6. These EIS Rules are codified under chapter 200 of the Hawaii Administrative Rules (“HAR”). Under the EIS Rules “impacts” are far broader and more inclusive than “significant impacts” as defined under HEPA. The EIS Rules define “impacts”/“effects” as including “primary, secondary, or cumulative” effects. “Secondary impacts” are defined as follows:
"Secondary impact" or "secondary effect" or "indirect impact" or "indirect effect" means effects which are caused by the action and are later in time or farther removed in distance, but are still reasonably foreseeable. Indirect effects may include growth inducing effects and other effects related to induced changes in the pattern of land use, population density or growth rate, and related effects on air and water and other natural systems, including ecosystems. HAR § 11-200-2.
"Cumulative impacts” are defined as follows:
“Cumulative impact” means the impact on the environment which results from the incremental impact of the action when added to other past, present, and reasonably foreseeable future actions regardless of what agency or person undertakes such other actions. Cumulative impacts can result from individually minor but collectively significant actions taking place over a period of time. HAR § 11-200-2.
Secondary and cumulative impact analysis occurs in three significant steps under the EIS Rules: (1) when applying for an exemption, (2) when preparing an EA, and (3) when preparing an EIS. If this analysis is missing or lacking, the permit granting authority must deny the requisite request by the applicant.  

What do secondary impacts have to do with the Hawaii Superferry?
The Hawaii Superferry applied for an exemption from the HEPA process for its high capacity inter-island ferry system from the State Department of Transportation (“SDOT”). SDOT granted the exemption despite a February 2007 opinion issued by the Environmental Council stating that “the state failed to account for the secondary and cumulative impacts of Hawaii Superferry when it ruled that the project did not need an environmental impact statement.”

See Marginalized. In August of 2007, the state supreme court similarly held that the exemption was invalid, because SDOT did not consider whether its facilitation of the Superferry would probably have a minimal or no significant impact, both primary (physical harbor improvements) and secondary (impacts resulting from Superferry use of harbor improvements), on the environment in its exemption determination. See Hawaii Supreme Court Publishes Superferry Opinion. The voided exemption and the statutory requirement that the HEPA process be completed prior to operations ultimately led to the failure of the Superferry, which precipitated its ceasing operations and laying off its employees.  

What’s at stake if the legislature bars the analysis of secondary impacts in the HEPA process? In order to remove secondary impact analysis from HEPA, the legislature would need to narrowly define “significant impact” to include only primary impacts and not include cumulative or secondary impacts. This would make the EIS Rules inconsistent with HEPA, forcing the Environmental Council to amend its rules. For landowners, entrepreneurs, investors, and others seeking approval of discretionary permits unpredictable and overly complex land use laws exacerbate costs. Whether the scope of a HEPA document adequately addresses secondary impact analysis has been the source of litigation, confusion, and consternation, prompting the Office of Environmental Council (“OEQC”) to issue guidance in early 2008. See The OEQC Offers Advice on Secondary Impacts.

As a consequence, actions that involve the construction of public facilities or structures (e.g., highways, airports, sewer systems, water resource projects, etc.) may well stimulate or induce secondary effects so that the scope of the HEPA analysis includes taking a hard look not only at an improvement on a state/county intersection, but also the entire project—imagine a 200-unit residential project that needs to make improvements to a state road for access to the project. A full HEPA EIS can take years and hundreds of thousands of dollars in consultants’ costs and fees. In addition, an EIS document is usually thousands of pages and must be reproduced for public distribution. Anecdotally, practitioners in the business of preparing EIS documents have seen them grow significantly in scope and size since HEPA was first passed in 1974.

See OEQC’s Document Site for examples. Even when HEPA documents are prepared, the broad, unconstrained analysis required by the EIS Rules opens the door to litigation. Without guidance, a secondary impact analysis can take on the problem of the butterfly effect where one might argue that a project in Hilo has an effect on Niihau. There is not bright line, or even grey line, where a secondary and cumulative analysis should end. For environmentalists, this would narrow the scope of their challenges to significant effects caused directly by the proposed project and not indirect or all matter of foreseeable effects. For example, in the case of the Superferry, the DOT could grant the exemption based on a significant impact analysis that looks only at the direct site of impact and not other impacts that are “incident to and a consequence of the primary impact.”

Sierra Club v. SDOT. Arguably, Superferry would not be required to analyze its impact to marine wildlife, traffic, and other primary environmental impacts. For the public, they would be unable to participate in the HEPA process if exemptions are more freely granted. However, existing state land use procedures mitigates this. First, an exemption is only granted if it is one of the enumerated exemptions under HAR § 11-200-8 and the proposed action must have a minimal or no significant effect on the environment. HRS § 343-6. The bar is still high for HEPA exemptions. Second, persons have an opportunity to sue under HRS § 343-7. Third, the EIS law applies to discretionary approvals. These approvals are generally subject to chapter 91, HRS public hearings. The decision making body is required to hear testimony from the public and to allow intervention of applicable persons in the permitting process. So, even though a project might be exempt from HEPA, the public still has an opportunity to voice its concerns to decision makers.  

The middle road.
Throwing out secondary and cumulative analysis might be premature without further study. Other state environmental policy acts (“SEPA”) and the National Environmental Policy Act of 1969 (“NEPA”) require secondary and cumulative analysis in their environmental documents. Hawaii should strive to keep HEPA as consistent with NEPA as possible to facilitate coordination for projects that require both HEPA and NEPA documents. For the most part, our courts have deferred to NEPA decisions in federal courts as guidance for interpreting HEPA. No matter what side of the issue you are on, those who work with HEPA could agree that we need clear HEPA guidance either from the Environmental Council or the legislature so that our courts are comfortable with relying on agency decisions, as it should.

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Loving Children - A Design Problem

SUBHEAD: No society that loved its children would use the practice of discounting in order to ignore its future problems. By David Orr on 1 October 2000 in Designer Builder - (http://www.designshare.com/Research/Orr/Loving_Children.htm) Image above: Auto iPod/DVD video system for each rear-seat tyke. From (http://www.coolgadgetszone.com/2008/11/12/portable-media/ipod/audiovox-introduces-ipod-audio-system-car-dvd-system/). The Skymall catalogue, conveniently available to bored airplane passengers, recently offered an item that spoke volumes about our approach to raising children. For a price of several hundred dollars, parents could order a device that could be attached to a television set that would control access to the television. Each child would be given a kind of credit card, programmed to limit the hours he or she could watch TV. The child so disciplined, would presumably benefit by imbibing fewer hours of mind numbing junk. They might also benefit from the perverse challenge to discover the many exciting and ingenious ways to subvert the technology and the intention behind it, including a flank attack on parental rules and public decency via the internet. My parents had a rather different approach to the problem. It was the judicious and authoritative use of the word "no". It cost nothing. My brother, sister, and I knew what it meant and the consequences for ignoring it. Still, I sometimes acted otherwise. It was a way to test the boundaries of freedom and parental love and the relation between the two.

The Skymall device and the word "no" both represent concern for the welfare of the child, but they are fundamentally different design approaches to the problem of raising children and they have very different effects on the child. The device approach to discipline is driven by three factors that are new to parenting in the postmodern world. It is a product of a commercial culture in which we've come to believe that high-tech gadgetry can fix human problems, including that of teaching discipline and self-control to children.

Moreover, the device is intended mostly for parents who are absent from the home for much of the day because they must (or think they must) work to make an expanding number of ends meet. And, all of our verbal assurances of love notwithstanding, it is a product of a society that does not love its children competently enough to teach them self-discipline. The device approach to parenting is merely emblematic of a larger problem that has to do with the situation of childhood within an increasingly dysfunctional society absorbed with things, economic growth, and self.

We claim to love our children, and I believe that most of us do. But we have, sheep like, acquiesced in the design of a society that dilutes the expression of genuine love. The result is a growing mistrust of our children that easily turns to fear and dislike. In a recent survey, for example, only one-third of adults believed that today's young people "will eventually make this country a better place" (Applebome, 1997). Instead, we find them "rude" and "irresponsible." And often they are. We find them overly materialistic and unconcerned about politics, values, and improving society. And many are too materialistic and detached from large issues (Bronner, 1998). Not infrequently they are verbally and physically violent, fully adapted to a society that is saturated with drugs and violence. A few kill and rape other children. Why are the very children that we profess to cherish becoming less than likable and sometimes less than human?

Some will argue that nothing of the sort is happening and that every generation believes that its children are going to Hell. Eventually, however, things work out. Such views are, I think, fatuous because they ignore the sharp divide imposed between the hyper-consumerism of the post-modern world and the needs of children for extended nurturing, mentoring, and imagining. It's the economy that we love, not our children. The symptoms are all around us. We spend 40% less time with our children than we did in 1965. We spend, on average, 6 hours per week shopping, but only 40 minutes playing with our children (Suzuki, 23). It can no longer be taken for granted that this civilization can pass on its highest values to enough of its children to survive. Without intending to do so, we have created a society that cannot love its children, indeed one in which the expression of real love is increasingly difficult.

No society that loved children would consign nearly one in five to poverty (New York Times, August 12, 2000). No society that loved its children would put them in front of television for 4 hours each day. No society that loved its children would lace their food, air, water, and soil with thousands of chemicals whose total effect cannot be known. No society that loved its children would build so many prisons and so few parks and schools. No society that loved its children would teach them to recognize over 1000 corporate logos but fewer than a dozen plants and animals native to their home places. No society that loved its children would divorce them so completely from contact with soils, forests, streams, and wildlife. No society that loved its children would create places like the typical suburb or shopping mall.

No society that loved its children would casually destroy real neighborhoods and communities in order to build even more highways. No society that loved its children would build so many glitzy sports stadiums while its public schools fall apart. No society that loved its children would build more shopping malls than high schools (Suzuki, 23). No society that loved its children would pave over 1,000,000 acres each year for even more shopping malls and parking lots. No society that loved its children would knowingly run even a small risk of future climatic disaster. No society that loved its children would use the practice of discounting in order to ignore its future problems. No society that loved its children would leave behind a legacy of ugliness and biotic impoverishment.

Of course we do all of these things in the belief that they are the necessary price of creating a better world for children. But at some level I believe that our children understand that such arguments are phony. I think this awareness explains what often appears to be their unfocused anger. Our children often mirror the larger incivility and rudeness that we inflict on them. They mirror the larger self-indulgence of a society organized around machines, instant gratification, and excessive individualism. They know that mastery of, say, Shakespeare counts for considerably less in this society than making it big in sports or business or drug-dealing, devil take the hindmost. They understand intuitively that the real curriculum is not what's taught in schools, but what's written on the face of the land. It is remarkable, in fact, that they are not angrier.

What would it mean to make a society that did in fact love all of its children? This is, properly understood, a design problem that calibrates what we intend as parents with how we earn our living, conduct our daily lives, build homes, design communities, manage landscapes, and provision ourselves with food, energy, and materials. I would go so far as to say that the well-being of children in the fullest sense of the word, not gross national product, is the best indicator of the health of our civilization. And I believe that it is the ultimate standard for ecological design. How do we design a civilization for children?

The starting point is the child itself and its need for joy, safety, parental love, play, and the opportunity to safely explore the wider world. Such awareness must begin early in life with the development of what Edith Cobb once called "compassionate intelligence" rooted in "biological motivation deriving from nature's history" (Cobb, 1977, 16). The child's "ecological sense of continuity with nature" is not mystical but is "basically aesthetic and infused with the joy in the power to know and to be" (Cobb, 23). Childhood is the "point of intersection between biology and cosmology, where the structuring of our worldviews and our philosophies of human purpose takes place." In other words, our minds are rooted as much in the ecology in which our childhood is lived as in our ("over emphasized") animal instincts. (Cobb, 101) Similarly, Paul Shepard once argued that mind and body are imprinted in the most fundamental ways by the "pattern of place" experienced in childhood (Shepard, 1996, pp. 93-108). For Shepard, the conclusion is that children must have the opportunity to "soak in a place" and to "return to that place to ponder the visible substrate of his own personality." (Shepard, 106).

Conversely, the child's sense of connection to the world can be damaged by ecologically impoverished surroundings. And it can be damaged as well by exposure to violence, poverty, and even by too much affluence. It can be destroyed, in other words, when ugliness, both human and ecological, becomes the norm. Ecological design begins with the creation of places in which the ecology of imagination and ecological attachment can flourish. These would be safe urban and rural places that included biological diversity, wildness, flowing water, trees, animals, open fields, and room to roam--places in which beauty became the standard.

At a larger scale the same standard applies to the ways children and adolescents are linked to landscapes. Typical industrial era land-use patterns, teach young people that:

  • The highest and best use of land is for shopping malls, roads, and parking lots;
  • Land has little value beyond those of utility and economics;
  • Some land is expendable as land-fills and waste dumps;
  • The poor live on poor land, the well-to-do live on good land;
  • Roads to satisfy our cravings for mobility trump community needs;
  • Lawns are merely decoration maintained by use of chemicals and by fuels that will be exhausted in their lifetimes;
  • Prime farmland is far less important than development;
  • Biological diversity is less important than economic growth.

One consequence of the homogenized and utilitarian landscape is that most young people learn little about how they are provisioned and virtually nothing about better alternatives to meet real human needs. By separating how our lives are provisioned with food and energy from how we earn our keep, we have removed a great deal of ecological reality from daily experience. The things that we used to do for ourselves as competent citizens and neighbors we now purchase from one corporation or another at a considerable markup. It should astonish no one that civility, neighborliness, and communities are in decline and that crime and anomie are on the rise. But when living and livelihood become too widely separated human bonds deteriorate. People do not need each other as they once did. And when minds and landscapes are widely separated, whole categories of thought disappear, ecological competence declines, and awareness of our dependence on nature atrophies.

In an ecologically and esthetically impoverished landscape, it is harder for children and adolescents to find a larger meaning and purpose for their lives. Consequently, many children grow up feeling useless. In landscapes organized for convenience, commerce, and crime, and subsidized by cheap oil, we have little good work for them to do. Since we really do not need them to do real work, they learn few practical skills and little about responsibility. Their contacts with adults are frequently unsatisfactory. When they do work, it is all too often within a larger pattern of design failure. Flipping artery clogging burgers made from chemically saturated feedlot cows, for example, is not good work and neither is most of the other hourly work available to them. Over and over we profess our love for our children, but the evidence says otherwise. Rarely do we work with them. Rarely do we mentor them. We teach them few practical skills. At an early age they are deposited in front of mind-numbing television and later in front of computers. And we are astonished to learn that in large numbers they neither respect adults nor are they equipped with the basic skills and aptitudes necessary to live responsible and productive lives. Increasingly, they imitate the values they perceive in us with characteristic juvenile exaggeration.

Assuming that we can muster the good sense to solve the problem, what would we do? Part of the solution, I believe, is to rejoin mind and habitat at the landscape level by reconnecting living with livelihood. This can only be done in places where a large part of our needs for shelter, warmth, energy, economic support, health, creativity, and conviviality are met locally in competently used and well loved landscapes. To some this will sound either as utopian or as a return to some mythical past. It is neither. In fact, it is an honest admission that we've tried utopia on industrial terms and it did not work. It is merely to recognize the fact that, for better or worse, the organization of our landscapes arranges our possibilities, informs our minds, and directs our attention. A landscape organized for the convenience of the automobile and trivial consumption tells young people more about our real values than anything taught in school. Worse, it deflects and distorts their intelligence at a critical point in life. It is possible, however, to organize landscapes to teach usefulness, practical competence, social responsibility, ecological skill, the values of good work, and the higher possibilities of adulthood. And it is possible to restore minds to the tutorship of soils, wildlife, plants, water, seasons, and the ecology of place.

The farms, feedlots, mines, wells, clearcuts, waste dumps, and factories which provisions us are mostly out of sight and so out of mind. As a result we do not know the full costs of what we consume. Ignorant of the damage we do, we leap to the conclusion that we are much richer than we really are. Ecological poverty and poverty of mind and spirit are reverse sides of the same coin. When we get the design right, however, the manner in which we provision ourselves becomes a reminder of our larger relationships and obligations. The true aim of ecological design, then, is not merely to improve the various technologies and techniques by which we meet our physical needs, but to improve the integration of the human mind with its habitat and to fit in a larger order of things. "To live," in Wendell Berry's words:

"We must daily break the body and shed the blood of Creation. When we do this knowingly, lovingly, skillfully, reverently, it is a sacrament. When we do it ignorantly, greedily, clumsily, destructively, it is a desecration. In such desecration we condemn ourselves to spiritual and moral loneliness, and others to want." (281)

Ecological design in its fullest measure is not just smarter management by technicians, but rather a wider awareness and visible manifestation of our awareness that we are part of a larger pattern of order and obligation.

Frank Lloyd Wright once commented that he could design a house that would cause a married couple to divorce within a matter of weeks. By the same logic it is possible to create buildings and cities so badly as to cause a culture to disintegrate socially and come unhinged from nature. Compare the architecture of the modern world with that of earlier civilizations. The ancient cities of India, Greece, and Rome, for example, were planned, in Peter Wilson's words, as "representations of microcosm and macrocosm, projections of the human body and distillations of the universe" (Wilson, 1988, 75). The architecture of houses and public buildings were means to "portray to people their relation to one another as well as to important features of their environment," a kind of "diagram of how the system works." (Wilson, 153) Buildings were not simply machines as Corbusier would have it, but a map showing "how the individual, the various orders of groups, and the cosmos are linked and related." For all of their imperfections as places and cultures, inhabitants in such cities were oriented to larger patterns.

Compare this with sprawling cities of the 20th century that give no clue about any cosmology larger than the GNP. They have become sprawling wastelands, islands of sybaritic affluence surrounded by a sea of necrotic urban tissue. For the most part, our buildings, in which we spend over 90% of our time, are poorly built. They are often made of materials that are toxic. They are often over-sized and use energy and materials inefficiently. They are mostly disconnected from any discernible sense of community or any larger ecological or spiritual pattern. And what do such cities and buildings teach us? They teach us in exquisite detail that we are alone and powerless in the world, that energy and materials are cheap and can be consumed with impunity, that the highest purpose of life is consumption, and that the world is chaotic and dangerous.

Architectural design, in other words, is also a form of pedagogy that instructs us well or badly, but never fails to instruct. When we get the design of buildings and communities right they will instruct us properly in how we fit within larger patterns of energy and materials flows. They will tie our affections and minds to the care of particular places. When architecture becomes a form of ecological design it promotes ecological competence, the use of local energy and materials, and creates larger patterns of order. Conclusion

The goal of ecological design is not merely to meet our needs within the boundaries of ecological carrying capacity, but more importantly, to inform our desires. Good design would instruct us in what we need and the terms of our existence on Earth. In other words, the systems we devise to provision ourselves with food, energy, materials, shelter, and health need to constitute a larger form of education. But if these systems are designed to educate they must give quick feedback about the consequences of our decisions and they must work at a comprehensible scale. They must be devised in ways that create competence and practical understanding. They must be resonant with our deeper needs for meaning embedded in ritual and celebration. And design intelligence and the practical competence necessary to maintain it must be faithfully transferred from one generation to the next.

Good design must also meet other standards imposed by the way the physical world works. It must result in systems that are flexible and resilient in the face of changing circumstances. Given limits to our knowledge and foresight, good design would never lead us to bet it all, to risk the unforeseeable, or to commit acts that are irrevocable when the consequences are potentially large. And it would reorient our sense of time giving greater weight to our future prospects and to long-term ecological processes as well. It would never cause us to discount the future.

Finally, designing ecologically begins in the belief that the world is not meaningless, but coherent in ways that are often mysterious to us. Our task is to discern, as best we are able, the larger patterns and scales in which we live and act faithfully within those boundaries. Design, in this larger sense, is not simply the making of things but rather a striving for wholeness. At its best, ecological design is the ultimate manifestation of love--a gift of life, harmony, and beauty to our children.

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