The Farmer & the Fisherman

SUBHEAD: There is a connection between the lives of those who make their living dependent on the land and those on the sea.

By Dyan Redick on 27 March 2013 for Home Grown -

Image above: Farmhouse by the sea in Maine. "Night Sleeper" by Jamie Wyeth, 1979, tempura on panel. From (

Sometimes I wonder how things would be different if I had decided to start a farm in another part of Maine, away from the coast. But then I wake up after another night of waiting for goat babes to arrive and am graced with the remnants of wintertime. I take my coffee to sip outside on a cold granite bench engraved with a memory, and there I’m calmed by the seas and the sun, which definitely has risen by now. The surf is pounding, crashing over the rocks, and I can feel the sea spray floating through the air. It’s all so soothing and beautiful.

Living in a fishing village, I am surrounded by men and women who, like me, spend their lives wading in muck—only theirs is generated by fresh catches rather than by some breed of domesticated beast. Their days are filled with backbreaking work, lifting heavy traps full of prized crustaceans rather than bales of fresh local-cut hay. They haul nets laden with fish or shrimp rather than bucketloads of grain or water. They slog around in muck boots and Grundens rather than Carhartt’s and, well, muck boots. Farmers layer their Carhartt’s over a barn sweater so full of holes you wonder how it has any warming effect left. 

Fishermen cover their sweaters, made of sturdy Maine-grown wool full of “grease” to shed the sea spray, under waterproof bibs.

A fisherman’s life is guided by the pounding sea and its ever-changing highs and lows. A monument in my town of Port Clyde attests to lives lost while incurring her wrath or as the result of something gone terribly wrong. Farmers, too, have endured tragic loss from accidents and hardships. Our local St. George and Oceanview Granges stand as monuments to those who have gone before us, tilling the soil, tending flocks and herds, gathering up the harvest in the fall.

The lives of farmers and fishermen are inextricably interwoven.

Mother Nature plays the largest role in whether a fisherman is successful in his catches, much to the consternation of the scientists who try and sort out patterns of aquatic life. So it is with the farmer, who basically hopes and prays that this season won’t bring floods or winds or drought or bugs or fungus or disease while the Cooperative Extension Agency wrestles with Mother Nature’s latest invention.

For fishermen, inspiration comes in the form of an early morning sunrise over the bow of the boat while steaming out for the day’s catch. Likewise, the gentle stirring of warm fuzzy bodies bedded down in soft clean hay that’s brought on by the flick of a light switch nudges a farmer through one more day. Stamina to get up long before dawn’s early light, stamina to push through pain from aching muscles and tired bones, stamina to haul a trap or a net brimming with a prized catch, or buckets of water through waist-deep snow.

Making a life, not just a living, in harmony with the change of seasons and taking each day as it comes, whether on dry ground or on water.

There’s a rhythm to it all. When I lived on the Chesapeake Bay, I would wake every morning at 3 a.m. when my neighbor on one side, Skipper, started his truck for the ride down to his boat, then again at 4 a.m. when Michael, the neighbor on the other side, followed. I’d lie there smiling with the day already starting in sync and then thankfully roll back over to dream of lambs and chickens and goats.

I once asked Michael what he would do if he couldn’t work the water on what had been his father’s old boat anymore. He just shook his head. As it turned out, he ended up selling the boat rather than sinking it and worked the rest of his short 46 years as a carpenter—a job that kept him firmly on the ground he had loved leaving behind every morning as a fisherman. Times have changed for fishermen and farmers both.

For me, there is a connection between the lives of those who make their living dependent on the land and those on the sea. I don’t think I could have been as happy as a farmer if my life wasn’t graced by waking to the sunrise over water. The thread of hardship, joy, and satisfaction binds farmer and fisherman together.

As the tides in the harbor rise and fall, so do the days unfold as I move from chore to chore. I am as dependent on this guarantee as I am on taking my next breath. I pick up my mail each day in my muck-covered boots at the Port Clyde Post Office, where I’m followed through the door by a fisherman fuming with the distinct odor of bait traps. It’s a blending of aromas, strengths, weaknesses, smiles, daily inspirations, and lives.

I love the strength of mountains, but I’m glad to be building this farm by the sea.

• Dyan Redick describes herself as “an accidental farmer with a purpose.” Her farm, located on the St. George peninsula of Maine, is a certified Maine State Dairy offering cheeses made with milk from a registered Saanen goat herd, a seasonal farm stand full of wool from a Romney cross flock, goat milk soap, lavender, woolens, and whatever else strikes Dyan’s fancy. Bittersweet Heritage Farm is an extension of her belief that we should all gain a better understanding of our food source, our connection to where we live, and to the animals with whom we share the earth.


American Drought 2013

SUBHEAD: With U.S. drought season off to a bad start,  NOAA scientists forecast another bleak year for agriculture.

By katherine Bagley on 28 March 3013 for Inside Climate News -

Image above: USDA Drought Monitor map on March 26, 2013. From (

Current climate-induced drought is slipping into a trend that scientists say resembles some of the worst droughts in U.S. history, like the Dust Bowl.

Drought conditions in more than half of the United States have slipped into a pattern that climatologists say is uncomfortably similar to the most severe droughts in recent U.S. history, including the 1930s Dust Bowl and the widespread 1950s drought.

The 2013 drought season is already off to a worse start than in 2012 or 2011—a trend that scientists at the National Oceanic and Atmospheric Administration (NOAA) say is a good indicator, based on historical records, that the entire year will be drier than last year, even if spring and summer rainfall and temperatures remain the same. If rainfall decreases and temperatures rise, as climatologists are predicting will happen this year, the drought could be even more severe.

The federal researchers also say there is less than a 20 percent chance the drought will end in the next six months.

"There were certainly pockets of drought as we went into spring last year, but overall, the situation was much better than it is now," said Tom Karl, a climatologist and director of NOAA's National Climatic Data Center. "We are going to have to watch really closely ... Last year was bad enough."

In February, 54.2 percent of the contiguous United States experienced drought conditions, compared to 39 percent at the same time last year. Large swaths of South Dakota, Wyoming, Nebraska and Montana—which entered last year's major agricultural growing season with very moist conditions—are now battling severe and extreme drought as farmers get ready to plant their spring crops.

The outlooks for rainfall and temperature are similarly bleak.

NOAA's Climate Prediction Center forecast last week that Texas, Oklahoma and the Pacific Northwest will likely get less rainfall in 2013 than in 2012, and that the entire nation will experience a warmer summer than last year.

"Here in Texas, we're worried about experiencing similar impacts on our agricultural industry that we had in 2011," said John Nielsen-Gammon, the Texas State climatologist. "The fact that we're starting off with water levels and reservoirs lower than they've been in decades just makes matters worse."

NOAA has worked for years to find ways to predict when a drought will start and how long it will last. If climatologists had known that the Dust Bowl would stretch for nine years or that 1950s drought would last for five, farmers might have switched their agricultural practices, planted different crops, or used the remaining water more carefully.

By looking back at the environmental factors that helped ease or end historic droughts, researchers also have formed an idea of the weather conditions needed to stop a drought, said Mike Brewer, a climatologist who manages the National Climatic Data Center's Drought Portal. But those predictions aren't accurate beyond a six-month timeframe, because historical droughts can only tell them so much.

"Every drought has a different flavor," Brewer said. "They form in different conditions and are controlled by different factors."

The Dust Bowl in the 1930s, for instance, was caused by above-average temperatures and poor farming practices, said Karl. Farmers plowed their land too deep and too frequently, stripping away the plant life that held the soil together. Once the dirt became airborne, the dark particles absorbed incoming heat from the sun, stabilized the atmosphere and stopped the formation of rain-inducing thunderclouds.

Modern farming practices have reduced the dust, so that isn't the problem this time around. What gives the current drought its own "flavor" is climate change, Karl said.

"We have a lot more greenhouse gases in the atmosphere, so temperatures are warmer than they would have been in the 1930s," he said. "These warmer temperatures increase evaporation, which makes it drier, which in turn makes it even warmer."

The Dust Bowl and the 1950s drought aren't necessarily the worse-case scenarios, said Nielsen-Gammon, the Texas climatologist. Tree ring records indicate that over the past 1,000 years, North America has suffered from droughts that lasted for decades and were much more severe than those in recent history.

"It just gives us a sense of what’s possible," said Nielsen-Gammon.

Despite recent strides in drought predictions, Brewer and Karl said scientists still can't determine whether we are in the climax or at the tail end of a drought—or if we've been thrust into a multi-decade drought—until years after rainfall has increased and temperatures have subsided.

If patterns from previous droughts are in fact being repeated now, the 2013 drought has the potential to seriously damage an already wounded agricultural system.

Last year marked the most severe and extensive drought in at least 25 years, according to the U.S. Department of Agriculture. It was also the hottest year on record for the United States. Nearly 80 percent of farmland experienced drought in 2012, with more than 2,000 counties designated disaster areas. By September 2012, 50 percent of the crops being harvested were in poor or very poor condition.

Last year's damaged harvest is expected to raise food prices by as much as 4 percent in 2013, particularly products like beef, which suffered from a lack of available cattle feed and viable foraging options. Overall, the 2012 drought cost an estimated $150 billion in damage, as well as an estimated 0.5 to 1 percent drop in the U.S. gross domestic product.

The NOAA scientists hope their prediction that this year's drought season is starting off worse than last year's—and that it will last at least another six months—can help farmers make better decisions about what to plant. But Bob Young, the chief economist for the American Farm Bureau Federation, the nation’s largest farm organization, said that while the heads-up may influence some crop decisions, most farmers probably won't pay attention to the scientific findings.

"They know what is going on in their own dirt," Young said. "They tend to watch their own area specifically. Some might choose more soybean than corn since it is more drought tolerant, but overall, I don’t think it will change things much."

Paul Bertels, vice president of production and utilization at the National Corn Growers Association, a major agricultural lobbying group, agreed.

"I don't think they're worrying," said Bertels, who also runs a small farm outside St. Louis, Mo. "Forecasters also said March was supposed to be warm, and it wasn't."

One industry looking closely, albeit cautiously, at the early-season drought maps is the insurance business. Farmers have filed for a record $14.2 billion in crop insurance so far to cover losses from last year, with the federal government and private companies splitting the bill.

"Looking at these early drought estimates gives us some sense of how we should manage our reinsurance," said Tim Weber, president of crop insurance for the Great American Insurance Group, one of the largest agricultural insurers in the country. "We don't have the moisture reserves in the western Corn Belt that we've enjoyed in the past, and if we don't get adequate rain in the spring, it could spell trouble."


Indigenous people and Google

SUBHEAD: Amazonian indigenous tribe move from the Stone Age to the Digital Age in one Big Leap.

By Juan Forero on 28 March 2013 for NPR News -

Image above: Villagers in Surui territory in imbedded YouTube video on GoogleEarth Surui territory cultural database. From video below.

In the heart of the Amazon in western Brazil, an Indian tribe called the Surui lived in the Stone Age as recently as the late 1960s. They wore loincloths, hunted monkeys with bows and arrows, and knew little of the increasingly modernized country in which they lived.

These days, the Surui are perhaps the most technology-savvy tribe in the Amazon. Their chief is among the most traveled of Indian leaders, one who has journeyed as far away as Dubai and Indonesia to lobby for international partnerships to save the rainforest in the Surui's reserve.

Chief Almir Surui, 38, has built alliances with American technology companies, environmental groups and lawmakers in the capital, Brasilia, and in cities far beyond Brazil. And the Surui reserve, called Seventh of September for the date in 1969 when the outside world made its first sustained contact with the tribe, has become a hotbed of technology designed to protect the jungle.

The Indians use smartphones to monitor illegal logging and Google Earth Outreach to show the world what their reserve is like.

"Our model calls for saving the forest and fighting for sustainable development," says Chief Almir, as he stands in the middle of the forest surrounded by chirping birds and many species of trees. "It's a challenge because it's very important to do all this. But other countries do not always pursue responsible policies."

On a recent day, Chief Almir and two other Indians, an uncle and nephew, use machetes to hack through the brush at the reserve, which is about the size of Rhode Island and mostly covered by trees.

It's a bewilderingly diverse stretch of jungle — a land rich in animal life, like tapirs and monkeys. There are many different trees and lots of bird life, from woodpeckers to parrots to eagles.

"The forest has much to offer," Chief Almir says, as he stares up into the trees. "Products like nuts. Wood, if the logging is well regulated. And the forest pumps and protects water."

And without that, Chief Almir asks, what would we drink?

Traveling The World

The chief doesn't just pose those kinds of questions to visitors; rather, he travels to tell it to statesmen and Wall Street financiers, tech-company executives and environmental activists.

"I wouldn't have gone to 33 countries to talk about our culture, our health care, our education and the way things are if it wouldn't work," says Chief Almir, who has made 16 forays to the United States.

The Surui's first sustained contact with modern Brazil came a little over 40 years ago with the arrival of road-building crews and settlers, loggers and Brazil's government. The federal Indian affairs agency laid out trinkets, as well as machetes, for the Surui, who wandered out of the forest and, in essence, into a new world.

Indeed, it changed their lives forever, says Jose Itabira Surui, Chief Almir's uncle, who, who like all in the tribe, uses Surui as a last name.

"It was very sad because they almost finished off the Surui people," he says.

The settlers killed Indians, he recalls, and so did a range of diseases, from small pox to tuberculosis. A tribe with 5,000 members bottomed out at 300.

But the tribe still had some elders, and they fostered a younger generation of leaders. The first to go to college was Almir, in the early 1990s.

He returned knowledgeable about technology and also convinced that the Surui had to find partners to save themselves.
Getting Google's Support

Rebecca Moore of Google was among the first to come on board, back in 2007. She describes Chief Almir as "very savvy. I've never seen anyone who could say 'no' to him."

She recalled how Chief Almir told Google executives that his father's way of defending the Surui was obsolete.

"He realized that the time had come, he says, to put down the bow and arrow and pick up the laptop, that that was the future for defending their territory and strengthening their tribe," she says. "How could you say 'no'?"

Beto Borges, a Brazilian-born environmentalist who works at Forest Trends based in Washington, D.C.,, says Chief Almir knows how to get people's attention, whether it's in Rio de Janeiro or New York.

"Walking with the crowds with Almir is like walking with a pop star," says Borges, the company's director of the Communities and Markets Program. "All of a sudden here's an indigenous person from the Amazon. And not only an indigenous person, but he's a chief, wearing this huge headdress with feathers."

But what wins over converts to the Surui cause, says Borges, is Chief Almir's ability to lay out a cogent argument and persuade.

"All of a sudden, they're facing an indigenous person who can speak at the same level that they can, who can talk about strategic vision, for the companies as well as for his people," says Borges. He says it often leaves listeners astonished.

"I think that really shocks people to the point that they fall in love with him," Borges says. " 'Oh, this guy is fantastic, so we want to do something with him.' "

Developing Partnerships
Those partnerships have led to tangible projects with the Surui.

Rhiza, a Pittsburgh company, worked with the Surui to design the interfaces on the smartphones the Surui would use to collect data about the forest for some of their projects.

Other projects include a slick film, made by the Surui with Google's help, which appears on Google Earth Outreach.

The Surui put together a 3-D mapping project that shows off old battle sites, animal breeding areas, burial grounds and hamlets.

Surui rangers film illegal logging with Android phones and then upload it to the Web. And they use global-positioning devices to map territory, Chief Almir says.

"We want to generate information," he says, "show who are the Surui people and what are the difficulties that we face, to educate people around the world about that."

The tribe's main goal now is a carbon-credit program in which developing countries would pay the Surui to keep the forest intact.

This has been a yearslong process that entailed the difficult task of auditing the forest to determine how much carbon its trees contain. By calculating how much carbon is not released if the trees on Surui lands are left standing, the tribe hopes to sell so-called carbon credits internationally to polluters or governments that want to burnish a green image.

The long-range goal is for industries around the world that spew big amounts of carbon to buy credits and thus ensure that forests from Brazil to the Congo to Indonesia are left standing.

If an environmental governance system is created — the great hope of environmentalists and some governments — then polluters would meet environmental standards by paying others, like the Surui, to ensure carbon is not released into the atmosphere.

For now, the Surui hope to collect up to $1 million annually. It's not a big amount, but Chief Almir considers it an important first step.

"I think it's working," he says.

The Surui still face threats and problems of all kinds, from those who sneak onto their territory to illegally cut down trees to Indians within their ranks who are open to being bribed by loggers.
Still, it's hard not to see how the tribe has made great advances. The Surui have maintained their language and customs. The population has risen to 1,200 and Surui hamlets, like the one where Chief Almir lives, bustle with activity.

Girls carve jewelry to sell in the towns outside the reserve, and men enjoy a game of dominoes on a sleepy afternoon. The tribe also has three computer centers where people can surf the Web.

And then there are the bows and arrows. In a field, Chief Almir fires an arrow and hits his target — a banana tree — from 30 feet away.

The chief celebrates with a whoop, noting that a foreign reporter was there to see it.

And then he says he has to get back to work. He's been developing a 50-year master plan for the Surui, which includes harvesting nuts in the forest and cultivating fruits in small groves.

"This is the great economic potential that the forest has," Chief Almir says.

Video above: Getting Google involved. "Trading Bows & Arrows for Laptops". From (

See also:
Ea O Ka Aina:Moku & Ahupuaa Maps 1/30/12


Lost camera floats to Taiwan

SUBHEAD: An underwater camera lost on Maui in 2007 beaches itself on Taiwan seven years later - images intact.

By Staff on 24 March 2013 for Hawaii News Now -

Image above: Image of back of lost camera. From original article.

After a camera lost on Maui nearly six years ago ended up in Taiwan, it didn't take long for Hawaii News Now to track down its owner.
Lindsay Scallan of Newnan, Georgia never imagined that she would see the precious photos from her past again. She snapped them during her Maui vacation in 2007, but lost her new camera during a night scuba dive in Kaanapali.
"The seas were really rough. There was a lot of sand stirred up. It was hard to see," said Scallan.
Scallan returned to the beach the next morning, hoping the camera had washed up on shore.
"But of course, we didn't find it, so at that point I just gave up. I was pretty disappointed because I had all my vacation pictures on there. Plus, the cost of the camera," Scallan said.
The Canon PowerShot was in a waterproof case and it drifted thousands of miles to Taiwan. A China Airlines employee discovered the camera on a beach last month. The airline asked Hawaii News Now to help find the owner seen in many of the pictures. Once the story hit the airwaves and the internet, Scallan's friend sent her a link.
"I just was floored that it was my camera and it was all my old pictures and it was amazing. I just couldn't believe it had floated so far, so long ago and the memory card was still intact," said Scallan.
China Airlines has offered to fly Scallan to Taiwan to be reunited with her camera, but she isn't sure if she can take time off from work since she just started a new job a week ago.
"Brought back some good memories, and some pictures I'd forgotten I'd taken. It was great. I'm curious to see what else was on there," said Scallan.

Image above: Image of Lindsay Scallan (r) and friend recovered from lost camera. From original article.


Monsanto is Protected

SUBHEAD: What you need to know about the terrifying Monsanto Protection Act just signed by President Obama.

By Traci Bloom on 28 March 2013 for Thruth Dig -

Image above: General Mills and Monsanto love affair in Cheerios. From (

In case you haven’t yet heard of the so-called Monsanto Protection Act—which was buried deep in the spending bill recently passed by Congress to avert a government shutdown and signed into law by President Obama on Tuesday—it’s a horrific piece of legislation that is tantamount to a huge corporate giveaway to the agricultural biotech giant Monsanto.

Don’t be fooled by the phony baloney, consumer-friendly name it’s been dubbed—the Farmer Assurance Provision; the deceptively titled piece of legislation not only won’t help farmers, it’s bad for the rest of us. The general crux of the bill is that it essentially bars the federal courts from stopping the planting or sale of genitally modified or engineered seeds, even if they are shown to cause severe and adverse health risks.

Here’s the full text of the Monsanto provision, which is located in Section 735 of H.R. 933:
Sec. 735. In the event that a determination of non-regulated status made pursuant to section 411 of the Plant Protection Act is or has been invalidated or vacated, the Secretary of Agriculture shall, notwithstanding any other provision of law, upon request by a farmer, grower, farm operator, or producer, immediately grant temporary permit(s) or temporary deregulation in part, subject to necessary and appropriate conditions consistent with section 411(a) or 412(c) of the Plant Protection Act, which interim conditions shall authorize the movement, introduction, continued cultivation, commercialization and other specifically enumerated activities and requirements, including measures designed to mitigate or minimize potential adverse environmental effects, if any, relevant to the Secretary’s evaluation of the petition for non-regulated status, while ensuring that growers or other users are able to move, plant, cultivate, introduce into commerce and carry out other authorized activities in a timely manner: Provided, That all such conditions shall be applicable only for the interim period necessary for the Secretary to complete any required analyses or consultations related to the petition for non-regulated status: Provided further, That nothing in this section shall be construed as limiting the Secretary’s authority under section 411, 412 and 414 of the Plant Protection Act.
Basically, this amounts to a win for Monsanto, a leading producer of genetically engineered seeds, and a major loss for the rest of us.

But more than that, as the International Business Times noted, the provision—though it will be in effect for only six months—sets a dangerous precedent in that it sends a message to already powerful corporations that they can skirt consumer safety protections just by getting Congress on their side.

Here’s some more scary facts about the Monsanto Protection Act from the International Business Times’ list of five “terrifying things to know” about the provision. See below.

Five terrifying things about bill

By Conner Adams Sheets on 27 March 2013 for International Business Times
The "Monsanto Protection Act" is the name opponents of the Farmer Assurance Provision have given to this terrifying piece of policy, and it's a fitting moniker given its shocking content.

President Barack Obama signed a spending bill, HR 933, into law on Tuesday that includes language that has food and consumer advocates and organic farmers up in arms over their contention that the so-called "Monsanto Protection Act" is a giveaway to corporations that was passed under the cover of darkness.

There's a lot being said about it, but here are five terrifying facts about the Farmer Assurance Provision -- Section 735 of the spending bill -- to get you acquainted with the reasons behind the ongoing uproar:
  1. The "Monsanto Protection Act" effectively bars federal courts from being able to halt the sale or planting of controversial genetically modified (aka GMO) or genetically engineered (GE) seeds, no matter what health issues may arise concerning GMOs in the future. The advent of genetically modified seeds -- which has been driven by the massive Monsanto Company -- and their exploding use in farms across America came on fast and has proved a huge boon for Monsanto's profits.

    But many anti-GMO folks argue there have not been enough studies into the potential health risks of this new class of crop. Well, now it appears that even if those studies are completed and they end up revealing severe adverse health effects related to the consumption of genetically modified foods, the courts will have no ability to stop the spread of the seeds and the crops they bear.
  2. The provision's language was apparently written in collusion with Monsanto. Lawmakers and companies working together to craft legislation is by no means a rare occurrence in this day and age. But the fact that Sen. Roy Blunt, Republican of Missouri, actually worked with Monsanto on a provision that in effect allows them to keep selling seeds, which can then go on to be planted, even if it is found to be harmful to consumers, is stunning. It's just another example of corporations bending Congress to their will, and it's one that could have dire risks for public health in America.
  3. Many members of Congress were apparently unaware that the "Monsanto Protection Act" even existed within the bill they were voting on. HR 933 was a spending bill aimed at averting a government shutdown and ensuring that the federal government would continue to be able to pay its bills. But the Center for Food Safety maintains that many Democrats in Congress were not even aware that the provision was in the legislation:

    “In this hidden backroom deal, Sen. [Barbara] Mikulski turned her back on consumer, environmental and farmer protection in favor of corporate welfare for biotech companies such as Monsanto,” Andrew Kimbrell, executive director of the Center for Food Safety, said in a statement. “This abuse of power is not the kind of leadership the public has come to expect from Sen. Mikulski or the Democrat Majority in the Senate.”
  4. The President did nothing to stop it, either. On Tuesday, Obama signed HR 933 while the rest of the nation was fixated on gay marriage, as the U.S. Supreme Court heard oral argument concerning California's Proposition 8. But just because most of the nation and the media were paying attention to gay marriage doesn't mean that others were not doing their best to express their opposition to the "Monsanto Protection Act." In fact, more than 250,000 voters signed a petition opposing the provision. And Food Democracy Now protesters even took their fight straight to Obama, protesting in front of the White House against Section 735 of the bill. He signed it anyway.

  5. It sets a terrible precedent. Though it will only remain in effect for six months until the government finds another way to fund its operations, the message it sends is that corporations can get around consumer safety protections if they get Congress on their side. Furthermore, it sets a precedent that suggests that court challenges are a privilege, not a right.
“I think any time you tweak with the ability of the public to seek redress from the courts, you create a huge risk,” Seattle attorney Bill Marler -- who has represented victims of foodborne illness in successful lawsuits against corporations -- told the New York Daily News.

See also:
Ea O Ka Aina: Monsanto Protection Bill Finale 3/22/13

The Slippery Slope of Growth

SUBHEAD:If energy is placed at the center of our economic worldview, its easy to predict that growth will stop.

By Hawkeye on 19 March 2013 for Golem XIV -

Image above: Competitor about to go down a skijump. From (

1) Whither Growth

Never has a society spoken so much about growth, yet achieved so little.

Time and time again predictions of recovery and a return to normal levels of economic growth have proven premature. The phrase “triple dip recession” has now entered the lexicon in the UK as GDP figures look like turning south again. One wonders how long it will be before quadruple, quintuple and sextuple dips take their place as common phrases to describe the UK’s mire.

With each announcement of GDP slippage, the news is delivered as somewhat of a surprise to politicians, economists and the commentariat in general. We’ve never had a high regard for journalists and politicians but economists on the other hand are deemed to be infinitely more sober and trustworthy. After all, they are the subject matter experts, armed to their teeth with teams of highly qualified forecasters and the very latest in advanced statistical models. Far too advanced for us mere mortals to understand, you hear!

Yet it is the economists who are the people who keep getting it wrong. Not all economists are cut from the same cloth, but the strand of economic dogma that graces our most prestigious institutions and has the ear of policy makers and the media is varyingly referred to here as the “mainstream” (other terms are available, including Neoclassical, traditional, orthodox, central tradition, and in its most ardent form: Chicago School).

It goes without saying that statistical projections of the future have margins of error. Therefore, the failure of standard macro economic forecasts to predict our repeated slumps is often attributed to these statistical errors (maybe with a few post-hoc rationalisations thrown in for good measure, such as that pesky weather we keep having).

But the very premise of statistical error is that on balance, errors are neutral. Therefore our real performance should turn out to occur higher than predictions as often as it turns out lower. Yet that’s not the way things have turned out, with many forecasts turning out to be over optimistic [1].

Chicago (school), we have a problem!

A recent chart from the IMF shows how there has been a general slowing of developed country (G7) growth since the 1990s. There is still some residual growth, but the trend in growth rate is clearly downwards. At the current trajectory the G7 economies risk being in constant decline from about 2015.

This is not what is written in the standard Neoclassical economists’ tea leaves. Economies are meant to bounce back to their “long run” trend of about 2-3% growth per annum (I put long run in quotes because this has only really happened in the last 200 years or so, and therefore not that long in proper historical terms). Hence there is the sign of at least some soul searching within macroeconomics.

As covered in the post “Money makes our heads go round” (, one major gap in macro-economic modelling is the failure to account for debt, money and banks, and bit by bit, the mainstream is starting to play catch-up [2].

But could there be something even more important missing too?

2) A short history of growth theories

Ultimately, when one breaks it down, the main task of economics has attempted to answer two fundamental questions:
Where does economic growth come from, and how should we best allocate the proceeds of economic output?
The Neoclassical school believes it knows the answer to both these questions. Perhaps the clearest single expression of their “answer” is the Solow-Swann model of economic growth ( Of all macroeconomic theories this single model perhaps best encapsulates mainstream thinking on the subject. Whether from the political left or the right, the underlying foundation is the same. Growth is declared to derive from two main input factors, labour and capital, moderated by improvements in technological innovation. 
Wages represent the share of contribution played by labour, whereas rents, profits and interest represent the contribution of capital (a conveniently slippery term if ever I saw one, but lets save that for another day). Therefore, if we want more growth, we just need to increase the quantity of labour and capital or the efficiency of either through technology.

But, what if this mainstream model of economic growth has an even bigger flaw in it, beyond the careless oversight of money, banks and debt? What if all standard economic growth models have no better grounding in reality than attributing progress to something like magic fairy dust and the power of mind over matter? What if they are nothing more than a set of arbitrary and flawed mathematical equations that can only exist on paper rather than the real world? What if they are actually ignoring and contradicting known laws of physics?

Well, it is no exaggeration to say that the standard Solow-Swann growth model (and its close relatives) is in fact a complete work of fiction. Statistical fiction. And to demonstrate this I will call in witnesses including the perpetually popular TV physicist Brian Cox, an obscure Nobel chemist from the early twentieth century, and the recent bemusement over the UK’s productivity decline. Together, they can all shed light on the West’s floundering growth situation.

But before we get into the statistical flaws, we need to journey back in time.

Our story of economic growth theories begins at around the start of the economic profession itself. Not with Adam Smith, but a few decades beforehand in 18th century France with a curious group who were known as the Physiocrats. Being just the cusp of the Industrial revolution, this was a time when a large proportion of people worked the land; i.e. agriculture, farming, lumber-jacking, and even mining. 
To the Physiocrats all wealth originated with productive work on the land, as this is where the raw materials for subsistence living, industrial production and even extravagance were obtained (think palaces, fine clothing and jewellery).

Quesnay’s Tableau Economique ( was developed in 1759 to show the linkage between various sectors of an economy. It clearly defined the inputs of one profession as being derived from the outputs of another. In Quesnay’s worldview, the economic process was explicitly represented as a means of transforming lower grade inputs into more useful and worthwhile outputs. All output ultimately traceable back to the original source of land based resources. 
A key feature of this structure is that the transformations happen in one direction only, as the system can’t work in reverse (i.e. jewellery, fine clothing and palaces cannot in themselves make fruit grow). As their name implies, the Physiocrats were practical people, acknowledging the very real process of economic production; the fusion of manual efforts and raw inputs being converted into more useful and valuable states. Mankind as father, but earth as mother.

But as Europe (especially Britain) began to industrialise, the view of natural resources as key inputs began to wane. Adam Smith led the way in celebrating human ingenuity as the cause of wealth, mainly to fend off the growing popularity of Mercantilism (production for export and trade). Instead, specialisation and division of labour being deemed to create the new riches of increased productivity. Fast forward some 230 years and this human ingenuity argument is still at the centre of most explanations of the cause of growth. 
We are told that mankind can unlock perpetual growth, provided the right prescriptions are followed; whether it is to let market forces unleash ingenuity, let the entrepreneur find new ways to innovate (i.e. Schumpeterian Creative Destruction), tear down trade tariffs (WTO), ensure a good education and legal system, stimulate demand through Government spending, promote a climate of business confidence etc. [3].

Instead of any link to the real process of production, through the Solow-Swan model we are submerged in the land of exchanges, transactions and substitutions which unlike the unidirectional Quesnay model, now take on the mathematical elegance of reversibility. Economic and monetary exchanges (e.g. trading) are reversible. A transaction in one direction can be undone. Substitutions of inputs are deemed to be perfectly feasible. If capital can substitute for labour, then labour can substitute capital (at the right price, of course!). 
No longer do we have a unidirectional model of physical transformation, but instead the pompous exposition of mathematical elegance. In the mainstream view jewellery, fine clothing and palaces can in fact make fruit grow! This is the crowning glory of the marginalist method, where money and price are elevated to majestic reverence. 
All must worship the ubiquitous social convention of monetary exchange; that pseudo-scientific expression of interpersonal trust that always commands us to do the most efficient thing. Extremely powerful stuff that trust, money and prices, but no more tangible really than magic pixie dust (each can vanish before your very eyes!). All effort has been taken to chase away the demon of physical reality, leaving our subjective preferences, choices, and the ether of trust that “powers” our economy. In their world one can milk a tractor as surely as a cow.

As well as the pre-eminence of reversible mathematics, it is clear that almost all mainstream theories of growth place mankind at the centre of things, whether as the heroic risk taking and entrepreneurial individual or as part of enlightened political and social structures. In some respects this appears quite justifiable. Are not these riches of man’s doing? 
But if looked at closely, most explanations of what powers economic growth begins to veer into the paranormal when you witness economists invoking such unscientific explanations as sentiment, ingenuity, animal spirits and invisible hands. Abstract thought experiments are invoked to convey and substantiate their model of the way the world works. Evidence and reality seems to take a back seat compared to colourful rhetoric and zeal. This is quite a departure from the Physiocrats view. 
And if it weren’t for the efforts of a small group of fringe economists and natural scientists, it might have gone entirely unnoticed.
3) Physics fights backs

In 1921 a Nobel Chemist called Frederick Soddy (best known for making major contributions to the discovery of radioactivity whilst working with Ernest Rutherford) held a series of lectures on Economics [4]. This was to later form the basis of a book published in 1926 called “Wealth, Virtual wealth and debt”. 
Soddy began by asking how mankind lived; how we came to acquire the material riches of Industrial Development. In answer to that question, Soddy proclaimed that it is almost exclusively by sunshine. His explanation was based on following the energy / food chain that affects all living creatures. This energy chain was somewhat reprised recently in the first episode of Professor Brian Cox’s TV series “Wonders of Life”. 
Here we are taken to exotic locations and shown elaborate computer graphics to convey the same point Soddy made 90 years ago in a comparatively sparse lecture hall in London.

Life forms take high grade energy from the external environment and use this to power themselves. The plant kingdom is the biological equivalent of solar panels, absorbing energy from the sun’s rays and creating complex sugars through Photosynthesis. A whopping 130 terra watts of energy is absorbed by 100% biodegradable, 100% recyclable, perfectly sustainable self-replicating “solar breeders” that also happen to look, smell and taste nice too! The animal kingdom takes its energy either from the plants, or from other animals in the form of food. Animals can’t directly acquire energy from the sun, but do obtain it indirectly. 
As Prof Cox explains in his inimitable big budget way, the natural laws of physics state that order tends to flow into disorder; entropy being the term for disorder. The second law of thermodynamics explains why water can’t flow uphill and that given the arrow of time why (within a totally closed energy system) the normal tendency is for things to deteriorate to a lower grade of usefulness. 
“Real wealth rots and rusts”, Soddy reminds us. Life on the other hand appears to contravene this process, but in reality this is only because it exploits high quality external energy, in the process creating a localised improvement in order (for the organism), but externally increased disorder (otherwise known as waste and pollution). At first glance it may appear that life is cheating the laws of physics (fighting the process of entropic degradation), but in totality it is not. 
Life is merely a temporary parasite from an energy point of view; feeding off something or someone else for its personal use, and dumping less useful energy in its wake. Without the external energy source, there is no life.

But what has this little digression got to do with Economics? Professor Steve Keen (author of Debunking Economics) explains succinctly in a video lecture on the subject

( The very process of economic production (whether manufacturing or service sector) involves a transformation against the natural tendency of things to break down or degrade. It isn’t scarcity per se that we value in economic exchange, but the superior arrangement of items in our world that wouldn’t necessarily occur automatically (i.e. without some form of anti-entropic intervention). It may not cost us much (in time or effort) to find an exquisite diamond in the ground, or millions of gallons of oil, but the processes of physics, chemistry and biology that created these were against the grain of natural degradation. The Steve keen video explains that production creates order from disorder and so must obey the second law of thermodynamics. 
Therefore it must draw on energy inputs to fight against entropy. Production is the economic equivalent of Maxwell’s demon, creating order from chaos. An external energy source is the only way in which such a constructive transformation can take place without breaking the laws of physics. Just like life, from an energy point of view, economic production must be parasitic.

But surely energy on its own is useless without human intervention? True, but human intervention without an external energy source is even more useless. Again, we can turn to Soddy for clarity on the subject:
“Let me illustrate what I mean …. by asking what makes a railway train go. In one sense or another the credit for the achievement may be claimed by the so-called ‘engine-driver’, the guard, the signalman, the manager, the capitalist, or share-holder, or, again, by the scientific pioneers who discovered the nature of fire, by the inventors who harnessed it, by labour which built the railway and the train. The fact remains that all of them by their united efforts could not drive the train. The real engine-driver is the coal.”
To Soddy, all of those man-made initiatives were merely the catalysts, not the fuel of economic activity. They are the efficient cause rather than the material cause. To a chemist, the distinction is clear and profound. Each human intervention has the ability to trigger or constrain productive forces, but each was not the underlying power source of the economic activity. Ultimately it takes real energetic power to create economic activity, as order from disorder does not come freely, in perpetuity or via human will alone. 
Mankind exploits energy already in existence (fossil fuels being historical solar energy in the form of decayed organic matter) because we can’t create it from nothing. However, the mainstream of economics would have us believe otherwise. For such an overtly materialistic society, one is confused why our economic models pay so little attention to the material world. Instead they are engaged in a self indulgent fixation with mental desires and abstract utility!

It is a shame that Soddy’s views on monetary reform seems to have been used as a way to undermine or distract from his profound insight and argument for a basis of economic growth that adhered to the laws of physics. 
It would take until the early 1970s for a branch of economics to form that encapsulated the physical basis of economic growth. Beginning in earnest with Nicolas Georgescu-Roegen, whose dense written style and razor sharp mind seemed to be handled by ostracisation from the mainstream rather than direct confrontation [5]. 
Following in his footsteps, Herman Daly is perhaps the most long standing and potentially cogent of this new wave of Ecological Economists. A former World Bank chief economist, Daly articulates the fundamental flaw of Neoclassical growth models:
“This, of course, is the famous circular flow diagram, depicting the economy as a circular flow of exchange value between firms and households—as an isolated system in which nothing enters from outside nor exits to the outside. There is no ‘outside’, no environment. The economic animal has neither mouth nor anus—only a closed-loop circular gut—the biological version of a perpetual motion machine!”

4) Deaf, dumb and blind kids

Mainstream economics sees resources and environmental impact as merely a subset of inputs and outputs. To them, the economy is in control and is the master, wheras Ecological Economists see it the other way around.

Georgescu-Roegen and Daly have spent 40 years directly challenging the Solow-Swann growth model both from this conceptual angle, but also on a very practical point too. 
A key criticism was the way that the mainstream model only found a modest relationship between capital and labour with economic growth. It turns out that there is a major missing proportion of explanation in the mainstream model. Extra growth is occurring beyond the amounts explained by labour and capital. In statistical terms it is known as the residual error, and represents that part of the outcome in which the model fails to account for. In normal statistical applications this would be interpreted as a key weakness of the model. 
Rather than accept this as a weakness or attempt to understand and measure the missing inputs that could account for this error, a sleight of hand was resorted to. Solow and others hastily used this residual as a way of declaring that this must be evidence of mankind’s increased technical prowess. 
This is an evasive and elusive “gap” in the model. The shadow of something real, which with no more scientific prowess than a soothsayer, the economists have declared as substantive evidence of technical progress. How are we to know that this is a correct diagnosis? Is it falsifiable? How has it been measured? Do we know the size of it is correct? 
How have we established whether it was not caused by something else? Are we to confidently conclude that technical progress can and will always add to growth? Or are the economic priesthood permitted to let this residual fluctuate with the seasons? Not only is this woeful statistical practice, but it is inherently poor science too.

Since 2007, Ayres and Warr have provided perhaps the best set of nails to drive into the coffin of the Solow-Swann model. They demonstrate that energy available for useful work by society provides a remarkably more satisfactory explanation and statistical fit, without having to resort to intangible and mystical concepts such as human knowledge and technology. This forms the basis of their Useful Work growth theory ( But time and time again, these criticisms are ignored.
5) Wealth is, as wealth does

There is certainly a very strong correlation between energy usage and economic output, whether viewed in a cross-sectional form, or longitudinally.

The very embodiment of a wealthy country is its extravagance, whether in the form of elaborate infra-structure, high rise buildings, large houses, etc. All of which require substantial amounts of energy to build and maintain. Likewise, a highly wealthy individual has access to substantial energy resources at their personal disposal. Some if it is direct, in terms of a large and fuel hungry car (or yacht, or private jet!), whereas other times it is indirect, such as visiting nice restaurants and hotels. 
Being able to command the services of others (who themselves require energy both to live and to fulfill their working duties) or the manufactured products of others is the very embodiment of wealth. We understand wealth as purchasing power, but this doesn’t mean purchasing power (in the form of money or credit) can create energy. So why don’t mainstream economists see the world this way too?

It seems that the two key objections raised to the Useful Work theorem are related to the low cost share of energy and in proving causation. The Cost Share argument goes all the way back to the mainstream Shibboleth about the contribution of inputs to economic activity being reflected by the share of expenditure. 
The energy sector accounts for approximately 4% of UK GDP [7], so its contribution to the economy is deemed as no more or no less than this. But why must we accept this premise in the first place? Pure common sense demonstrates this to be flawed. Take running a car as an example. 
The costs for putting fuel in the tank may only be about a third of the annual running costs (if one takes insurance, road tax, maintenance, servicing and depreciation into account), but that doesn’t mean that the fuel is only one third of the motive power. All those other costs may hinder your ability to use the car, but none of them propel it. Try running the car without any fuel ! Waving your insurance document around or any other amount of paperwork will not make it go.

The cost share argument is also deeply tautological. It starts with the premise that the cost share reflects contribution, yet it’s not entirely clear what the rationale or justification for this is! As energy has low cost share, ergo it must have a low contribution. But what if the price of energy changes rapidly? Does the cost share ebb and flow in tune to this? 
We have seen oil prices more than triple recently. Does this mean that energy is now three times more important? If so, then what has changed so rapidly in the real world to make energy that much more important now that we have to pay three times more for it? Surely it still does broadly the same task.

More importantly, what if the supply of energy is reduced? Let’s assume that the cost share of energy remained at 4%, and then at a sudden point in time, energy supply halved. What would the mainstream model predict? If we follow their logic then we should only see a small dent in GDP, of the order of 2%. Of course, the price might change, and this may push up the contribution proportionately. But could it even entertain a dramatic impact on GDP in the way that an energy based model would? 
Do we really think that our economy could function normally if energy inputs were halved? The mainstream model may suggest so, but a framework that better reflected Quesnay’s Tableau would spot the severity of the issue straight away.

Finally, the cost share premise is surely a deeply unsatisfactory method of prediction, for it allows the contribution to vary over time based on newly observed (therefore constantly changing) values. By its own admission it can’t predict anything because it retrospectively allocates the contribution of inputs! It is akin to Ptolemaic geometry where circles within circles are added when the evidence doesn’t match the prediction. 
Rather then evaluate the underlying premise to see if the very principle of it is flawed, continuous tinkering is employed in a desperate attempt to try and salvage the overall model. Ever since Newton, science has prided itself on the accomplishments of formal predictive models with universal and permanent constants. In the mainstream economists’ world there are no constants. 
The value of key parameters can drift up and down, akin to changing the laws of gravity as they go along. They are entirely free to move the goal posts after the ball has been kicked.

The second challenge to any energy based model involves the legitimate point that correlation doesn’t prove causation. This is certainly true, however the proponents of the importance of energy start with a plausible theoretical framework first. This is the laws of physics, as articulated by Soddy, Georgescu-Roegen and most recently Keen. This demands that useful work (i.e. economic activity) is powered by energy. It would be physically impossible to consider the causation the other way around. 
Try “creating” energy but applying ingenuity, labour and capital. Surely each of these necessitates energy to begin with! We might use ingenuity to discover and exploit energy resources in our environment, but we haven’t made it from nothing. It would be highly egotistical for mankind to believe that he was the creator rather than just a mere curator of energy. 
Despite the protestations from the mainstream about no proof of causation, the irony is that there doesn’t appear to be any plausible justification for why it could work the other way round. Yet the mainstream model has an embedded assumption of causality in which the mere act of ingenuity can bring forth energy and resources. In other words, humans can actually get something for nothing if they just apply themselves sufficiently. It is a bit like saying that if the world begins to suffer from a lack of energy inputs, it just isn’t trying hard enough to will it into existence. Clearly in their view, the human race is just not being optimistic enough. 
The other claim is that we should just substitute energy for something else, like labour and capital, completely ignorant of the fact that reproduction of both these require energy in the first place. It’s as if mainstream economics went downhill some time after the Physiocrats and adopted anthropomorphic voodoo instead!
6) The revenge of reality

If, as the mainstream believes, energy and resource inputs (which undoubtedly would have some form of constraint on them in the near future [8]) are not critical inputs or can be substituted by other input factors, then we can all enjoy economic growth in perpetuity! That is the core presumption and consequent prediction of the mainstream model.

As a perfect example of this, the LSE’s recently released report from its Growth Commission resembles a glorious Technicolor celebration of the mainstream tenets of growth; labour, capital and technical innovation [9]. It is nothing short of a verbose exposition of the mathematical Solow-Swann formula for economic growth. 
Each chapter of their exquisitely produced brochure is an assertive manifesto to harness each of these very human pillars as the elixirs of growth; human capital, man-made infrastructure and man’s abundant curiosity. 
Not that these aren’t worthy aims in themselves. It is just that by resting on such overt hubris and narcissism, the gaping hole of how we power our existing way of life, let alone one of aspirational expansion, is summarily dismissed with a few cursory platitudes about making the right sort of investments in energy generation capacity. 
By emphasizing the very human aspects of policy making, education, and the role of ingenuity, the LSE report provides a flattering sense of our self importance and potentially misleading long term prospects. 
The report can be distilled into one simplistic and self-indulgent message: “permanent growth is ours for the taking, if we have the wisdom and the willpower to grasp it”. It is a technocrat’s wet dream.

Contrast this with the Limits to Growth (LtG) model first developed in 1972. This model commenced with a sensible framework of physical variables first and related linkages between them:
“Five variables were examined in the original model, on the assumptions that exponential growth accurately described their patterns of increase, and that the ability of technology to increase the availability of resources grows only linearly. These variables are: world population, industrialization, pollution, food production and resource depletion.”

There are no ethereal mental variables in this model. It is not based on abstract mathematical formulae or dubious cost share assumptions. In many respects it is a proper 20th century version of Quesnay’s Tableau pared down to the crucial inputs and outputs. There is no room for Deus Ex Machina explanations or post hoc rationalisations. There are variables that one might recognise as technical prowess, but this is a limiting factor (upper limit of maximum efficiency) not a source of productivity.

Unlike the Solow-Swann formula it has a mouth and anus. The LtG model shows an economy that has to feed off resources to grow. More importantly, the waste outputs of production (i.e. pollution) have a feedback loop with a delay to them. It attempts to incorporate the consequences of economic activity, something that is completely omitted from the mainstream model. Two recent reports show how its predictions using the standard model have fared well from 1970 to 2000 [10].

The critical aspect of the LtG model is the way that a major inflection point in food, services and industrial output per capita occurs once resource extraction peaks (estimated as somewhere between 2010-2015). In other words, once the fastest rate of exploitation has passed, living standards decline, and potentially decline rapidly (essentially halving in 20 years or so).

Mainstream economists may argue that their models have worked very well for the last 40 years, but only if we accept the fact that they were making constantly updated short range forecasts and we allow them to ignore all periods when they were wrong! In contrast LtG has remained a very good long range forecast. If its predictions continue to come true then we are indeed nearing the peak of world economic output, as well as hitting limits with food and other key resources. 
The global economy may be facing a very serious risk of overshoot and collapse. Therefore two hundred years of compound growth is hitting up against physical limits that wit, wisdom and ingenuity alone cannot arrest.

As Steve Keen quipped;
Only madmen and economists believe in infinite growth on a finite planet. Time we restricted it to just madmen.”
7) Withering growth, and withering growth thoeries

The traditional model and the predictions made by such hubristic prognoses could get severely tested in the next ten to twenty years. In fact there are already signs of it creaking now. We have faltering economies on every continent. Debt dynamics are not without blame, but Central banks and Government treasuries have been throwing the full policy toolkit at maintaining growth, and yet they cannot understand why it isn’t working. It is almost embarrassing to watch them fumble through these repeated failures. 
The recent UK productivity riddle is one such example ( Employment has slightly increased, yet GDP has stalled. How is this interpreted by the mainstream model? The explanation seems to require us accepting that productivity is declining. How can productivity, which has relentlessly improved for 70 odd years, start going backwards? How are we becoming less productive? We don’t lose technological skill as time progresses, we get better and better. 
So how does the mainstream attempt to explain such riddles? The answer seems to come back as little better than declaring that technical progress and productivity always goes up, except when it starts going down! Post rationalisation emerges in abundance, along with token amounts of humility from the economic forecasters and the assurance of improved models going forward. This sort of shambolic amateurism would be laughed at in any other walk of life, yet economists still seem to retain a scientific aura. 
But to truly qualify as scientists, they should be judged by the accuracy of their predictions; nothing more and nothing less. And their track record is going from bad to worse. Their models seem incapable of predicting stagnation let alone decline, so it is doubtful they will fare better in an increasingly constrained future.

However, if energy is placed at the center of our economic worldview, then we can make the following (testable) predictions:
a) Economies will struggle to substitute away from cheap fossil fuels without severe impacts on growth, as labour, capital and technical innovation cannot sufficiently replace energy (the impact will be far more severe than the cost-share assumption would predict)

b) In the face of increased costs of energy, and potentially constrained supply, many economies (especially the most developed) will struggle to maintain historical growth levels and will stagnate or even decline

c) Risk of political turmoil in struggling economies as the general public is confused and disappointed at weak economic prospects

d) There is an increased likelihood of social unrest, instability, military intervention and even wars in regions with remaining resources as countries compete over the dregs

e) Increased cost of food and water (even in the Developed West) as both rely heavily on cheap energy inputs as well as being highly vulnerable to pollution effects

f) Gradual decline in living standards for most of us (certainly reduced purchasing power, which will inevitably get diverted more towards essentials)

Undoubtedly, mainstream economists will continually resort to a rear guard action, as each new “surprise” requires some form of posthumous retro-fitting of continuous tweaks in a desperate attempt to cling on to their flawed foundations. But the cavalry of critics is growing in ranks. Reality seems to be getting in the way of the mainstream message and the cracks are getting wider. There have been many fringe contemporary critics on this subject, but there are now signs of this criticism reaching a wider acknowledgement. In the last 6 months there have been the following articles from within more mainstream circles:

- Martin Wolf of the FT refers to the peaking of industrial productivity [11]

- An IMF working paper postulates scenarios in which energy plays a more substantial role in economic growth [12]

- US Investor Jeremy Grantham warns that the days of abundant resources and low prices are over [13]

- A recent report called “Perfect Storm” released by Tim Morgan of Tullet Prebon Research warns of an increasingly volatile near future [14]

For the moment, whilst it still basks in unfounded limelight, mainstream economics remains stuck in its ways; clinging to its mathematical formalism. A formalism that is wonderfully elegant and flawless in every regard, except for the slight problem that it doesn’t actually reflect the real world. Undoubtedly, in the long run, reality will triumph. If only it were the flawed economic models that will wither in future, but regrettably, it is quite likely to be accompanied by the wholesale withering of Western economies too.
[1] See Zerohedge on the damning level of cumulative GDP forecasts:
And figure 2 of this Federal Reserve report (pg 25), where far more errors over predict GDP growth (below the diagonal):

[2] The Economist finally wakes up to the fact that alternate macroeconomic models might actually be more accurate at predicting crises:
Whilst Noah Smith makes an interesting case about how macroeconomists (just like military generals) always seem to be fighting a previous war:
“Reading this, one could be forgiven for thinking that macro lurches from crisis to crisis, always trying to ‘explain’ the last crisis, but always missing the next one.”

[3] The Wikipedia page on Economic Growth has a good summary of the main schools of thought on this subject:

[4] “Cartesian Economics: The Bearing of Physical Science upon State Stewardship”

[5] This is dealt with substantially in Herman Daly’s “Ecological Economics and the Ecology of Economics” (1999). A good summary is below:

[6] Source:

[7] Source: (pg 6). Incidentally the chart on pg 11 showing the rising share of energy imports for the UK is somewhat worrisome to say the least.

[8] A discussion of our energy predicament is way beyond the scope of this post, but useful reference sites are and This report by Richard Heinberg is fairly comprehensive

[9] The full report is available here:

[10] “A comparison of the Limits to Growth with 30 years of reality”, Graham Turner
“Revisiting the Limits to Growth After Peak Oil”, Charles Hall and John Day
Bear in mind that the LTG report wasn’t actually intended as a formal prediction. The authors were well aware that their parameter estimates may be wrong. Indeed they ran various scenarios making large changes to some of the parameters (the model structure remained the same). The conclusion at the time was that no matter whether we actually had more fossil fuels at our disposal or if we could be more efficient, and even if we could reduce pollution impacts the world was going to hit limits at some point. It was all a matter of timing and extent of overshoot.

[11] “Is unlimited growth a thing of the past”, Martin Wolf

[12] “Oil and the World Economy: Some Possible Futures”, Michael Kumhof and Dirk Muir
pg11 “Maintaining the system therefore requires the constant addition of a flow of energy.”

[13] Reproduced at:



Film Festival in Waimea

SOURCE: Jonathan Jay (
SUBHEAD: Wild & Scenic Film Festival will benefit Hawaii's statewide land trust. "Protecting the Lands that Sustain Us".

By Jennifer Luck on 28 March 2013 in Island Breath -

Image above: Detail of poster for Wild & Scenic Film Festival to be held at Waimea Theater. From HILT.

Mark your calendars to join Hawaiian Islands Land Trust (HILT) as we host the Wild & Scenic Film Festival on April 6 & 7 at the historic Waimea Theater. We are pleased to present this premiere travelling environmental and adventure film festival featuring award- winning films about nature, community activism, adventure, conservation, water, energy, wildlife, environmental justice, agriculture, and indigenous cultures.

The Wild & Scenic Film Festival is a collection of films from the annual festival held the third week of January in Nevada City, CA. Now in its 11th year Wild & Scenic focuses on films that speak to the environmental concerns and celebrations of our planet. “Films featured at Wild & Scenic give people a sense of place,” says Tour Manager, Lori Van Laanen. “In our busy lives, it’s easy to get disconnected from our role in the global ecosystem. When we realize that the change we need in this world begins with us we can start making a difference. Come watch and see!”

This year’s selections in Waimea combine stellar filmmaking, beautiful cinematography, and first-rate storytelling to inform, inspire and ignite solutions for the environmental challenges that confront us locally (Saturday’s theme) and globally (Sunday’s theme).

The historic Waimea Theater serves as a backdrop for our cinematic journey into a deep appreciation and a sense of wonder for the natural world that surrounds and supports us. The festival is a natural extension of Hawaiian Islands Land Trust’s work to inspire people to act on behalf of the environment. BEsides movies there will be food, and door prizes.

Hawaiian Islands Land Trust is a statewide conservation organization, our mission is to protect the lands that sustain us for current and future generations through conservation of lands providing recreation and access to recreation, culturally significant lands, working farms and ranches, view planes and corridors, and habitat for native plants and animals.

Our mission ties in seamlessly to the Wild & Scenic Film Festival’s call to action to inspire people and unite communities to heal the earth. To find out more about our organization, please visit our website at

Mahalo to our local sponsors Aston Waimea Plantation Cottages and Blue Hawaiian Helicopters and for the support of the Wild & Scenic Film Festival National Partners: Patagonia, CLIF Bar, Sierra Nevada Brewing and Mother Jones.

 The Wild & Scenic Film Festival

April 6th & 7th
Theater opens at 4:00pm. Movies start a 5:00pm. 

Waimea Movie Theater
Kamohoalii Highway
Waimea, Kauai, Hawaii

$15 each night. $20 for both nights.
Buy tickets at HILT website or at Waimea Theater.

Jennifer Luck Kauai Island Director

Hawaiian Islands Land Trust

Kauai Office: P.O. Box 562 Kilauea, HI 96754
phone: 808-755-5707

Main Office: P.O. Box 965, Wailuku, HI 96793
phone: 808-244-5263


Beijing Syndrome

SUBHEAD: It's a syndrome that could engulf us all if we don'tt trade economic growth for our own health.
By Tom Whipple on 21 March 2013 in the Falls Church News -

Image above: Beijing pollution determined to be more dangerous than SARS. From (

As the term “China Syndrome” has already been taken, I am terming what is happening in the country these days the “Beijing Syndrome,” for China’s capitol seems to be shaping up as the epicenter of a great upheaval to come. A “syndrome” is a group of symptoms that when taken together point to a more serious underlying disease, which, of course, is what we see emerging in the contention between China’s rapid growth and its environment .

Thirty-five years ago after China got over its bout of “cultural revolutions” and “great leaps forward” to become serious about economic growth, numerous reforms were undertaken. China’s leaders obviously got something right for their economy grew in the vicinity of 10 percent or better for most of the intervening years and became the envy of the world – at least until recently.

We all know that economic growth requires the consumption of energy at roughly the same pace as GDP increases and indeed this is what has happened in China. Although the Chinese built lots of dams for hydropower, drilled lots of oil and gas wells, and in recent years imported lots of oil, some 70 percent of the primary energy that powers its rapidly growing economy comes from extremely dirty coal. Indeed since 2000 China’s coal consumption has increased three fold and is now over 4 billion short tons a year, nearly half the world’s coal consumption. Beijing plans to increase this consumption to 4.4 billion short tons in 2015. They are going to need it because they apparently plan to build another 360 coal-fired power plants in the foreseeable future

China is also on track to consume about 10 million b/d of oil this year, slightly more that half that of the US. The Chinese, however, currently are selling themselves 20 million new cars and trucks a year (and there are not many trade-ins) so unless there is a major turn of events they will be up with the US’s oil consumption in another decade or so.

All this, of course, ignores the dark side. Like many other industrially developing countries in the last 200 years, China largely ignored the ever accumulating environmental problems brought about by its policy of growth-at-any-cost. Five years ago during the Beijing Olympics China’s government was forced to take draconian measures to insure that the air was at least minimally acceptable for athletes and visitors, but after the event, restrictions were relaxed and growth of coal fired boilers and motor vehicles continued un checked.

China now has a number of very serious environmental problems that when projected ahead for a few decades likely add up to a country that will be partially uninhabitable for its 1.3 billion + citizens. These problems can be summed up as air pollution, water pollution, soil pollution, desertification, and climate change. The litanies of woes in each of these areas are too long to recount here but they add up to a growing numbers of premature deaths from cancer, respiratory and other illnesses, and the forced movements of peoples from their traditional homes.

Someday historians might tell us that the trigger for a major change in China’s environmental policies, was the great smog of January 2013 when for 19 days the air was too unsafe to venture outdoors. The interesting thing about air pollution is that it affects all living things that breath– from the most elite to the most humble with only a handful able to enjoy the luxury of filtered air. When the troubles become this widespread, and without an immediate solution in sight, a paradigm change has occurred.

In the last two months numerous top Chinese officials have stated that there must be a change in policy. At the recent National Peoples Congress fully a third of the delegates refused to rubber stamp meaningless environmental reports – a unprecedented development showing how seriously China’s elite is taking this matter.

For now, Beijing has responded to its pollution crisis with the obvious steps. It is closing down coal fired boilers in the capitol. It is nearly impossible to license a new car in the city (electric ones are OK, however). Cleaner diesel is to be produced. The share of hydro, wind, and solar power is to be stepped up. Energy efficiency is to be increased. The question is whether these are Band-Aids for a country that still seeks to grow its GDP at 8 percent a year into the indefinite future.

Much of what is being proposed will only clean up the dirt in air and will do little about carbon emissions which threaten to eventually result in flooding of China’s coastal cities. Polluted water is still a bigger problem. About 40 percent of China’s farmland is irrigated from underground aquifers, about 90 percent of which are believed to be polluted. While recent surveys of water and soil pollution are treated by the government as “state secrets,” Beijing recently admitted that there are “cancer villages” with extremely high rates of the disease due to nearby industrial pollution.

In the US and Europe, the most egregious forms of air and water pollution as seen in China today were largely dealt with through regulation 40 or 50 years ago. The carbon emission question which is more subtle, as the effects are latent, continues to be a matter of debate in the US. In China, however, there are obviously serious problems staring everyone in the face especially the growing middle class.

Currently we have vows from the new leaders that something will be done. The problem will be come when reducing pollution to safe levels clashes with the cherished 8 percent + growth rate. Given new and different technologies, it might be possible to have both someday; for the immediate future it seems unlikely that the measures announced so far will reverse the numerous problems. Beijing has a syndrome, that could engulf us all.

Dollar as World Currency

SUBHEAD: To act as the global reserve currency, it must be exported in quantity size to facilitate gargantuan trades.

By Charles Hugh Smith on 27 march 2013 for Of Two Minds -

If we shed our fixation with the Fed and look at global supply and demand, we get a clearer understanding of the tailwinds driving the U.S. dollar higher.

I know this is as welcome in many circles as a flashbang tossed on the table in a swank dinner party, but the U.S. dollar is going a lot higher over the next few years. For a variety of reasons, many observers expect the dollar to decline against other currencies and gold, the one apples-to-apples measure of a currency's international purchasing power.

The tailwinds pushing the dollar higher are less intuitively appealing than the reasons given for its coming decline:

Point 1
The Federal Reserve printing another trillion dollars (expanding its balance sheet) will devalue the dollar because money supply is expanding faster than the real economy.

Point 2
The Fed is printing money with the intent of devaluing the dollar to make U.S. exports more competitive globally and thereby boost the domestic economy.

Let's examine Point 1.

If much of the Fed's new money ends up as bank reserves, it is "dead money" and not a factor in the real economy. Fact: money velocity is tanking:

Money is being destroyed by deleveraging and writedowns. This is taking money out of the real economy while the Fed's new money flows to banks.

The purchasing power of the dollar is set by international supply and demand, not the Fed's balance sheet or the domestic money supply.

As for point 2:

Exports are 13% of the economy. A stronger dollar would reduce the cost of oil, helping 100% of the economy, including exporters. Why would the Fed damage the entire economy to boost exports from 13% to 14% of the domestic economy? It makes no sense.

Most U.S. exports are either must-have's (soybeans, grain, etc.) that buyers will buy at any price because they need to feed their people (and recall that agricultural commodities often fluctuate in a wide price band due to supply-demand issues, so if they rise 50% due to a rising dollar, it's no different than price increases due to droughts) or they are products that are counted as exports but largely made with non-U.S. parts.

How much of the iPad is actually made in the U.S.? Basically zero. Is it counted as an export? Yes. How much of a Boeing 787 airliner is actually manufactured in the U.S.? Perhaps a third. Sorting out what is actually made in the U.S. within complex corporate supply chains is not easy, and the results are often misleading.

Many exports are made and sold in other countries by U.S. corporations, and so the sales are booked in the local currency. The dollar could rise or fall by 50% and most of the U.S. corporate supply chain and sales would not be affected because many of the goods and services are sourced and sold in other nations' currencies. The only time the dollar makes an appearance is in the profit-loss statement at home.

Americans tend not to know that up to 75% of U.S. corporations' revenues are generated overseas, in currencies other than the dollar. This may be part of Americans' famously domestic-centric perspective.

Most importantly, the American Empire needs to control and issue the global reserve currency. The Fed is a handmaiden to the Empire; the Fed's claims of independence and its "dual mandate" are useful misdirections.

Some analysts mistakenly believe that Fed policies are aimed at boosting the relatively modest export sector (which we have already seen is a convoluted mess of globally supplied parts, sales in other currencies, etc.) from 13% to 14% of the domestic economy.

This overlooks the fact that the most important export of the U.S. is U.S. dollars for international use. I explained some of the dynamics in Understanding the "Exorbitant Privilege" of the U.S. Dollar (November 19, 2012) and What Will Benefit from Global Recession? The U.S. Dollar (October 9, 2012).

Which is easier to export:
  • Manufactured goods that require shipping ore and oil halfway around the world, smelting the ore into steel and turning the oil into plastics, laboriously fabricating real products and then shipping the finished manufactured goods to the U.S. where fierce pricing competition strips away much of the premium/profit?
  • Or electronically printing money and exchanging it for real products, steel, oil, etc.?
I think we can safely say that creating money out of thin air and "exporting" that is much easier than actually mining, extracting or manufacturing real goods. This astonishing exchange of conjured money for real goods is the heart of the "exorbitant privilege" that accrues to the issuer of the global reserve currency (U.S. dollar).

It's important to put the Fed's $3 trillion balance sheet in a foreign-exchange (FX) and global perspective:
  • The FX market trades $3 trillion a day in currencies.
  • Global financial assets are estimated at around $210 trillion. The Fed's balance sheet is 1.5% of global assets. The key to understanding the dollar and Triffin's Paradox is that as the global reserve currency, the dollar serves both domestic and international markets. Of the two, the more important market is the international one.
To act as the global reserve currency, a currency must be exported in sufficient size to facilitate the gargantuan trade in a $60 trillion global GDP/ $210 trillion global economy. There are only two ways to export enough currency to be remotely useful:
  1. Run massive trade deficits, i.e. import goods and export dollars.
  2. Loan massive quantities of dollars to nations that will place the dollars in international circulation.
The famous Marshall Plan that helped Western Europe rebuild its economies was just that: a series of large loans of dollars to dollar-starved economies. This was necessary because the U.S. was running trade surpluses in the postwar era and was therefore not exporting dollars.

This leads to a startling but inescapable conclusion: no exporting nation can issue the global reserve currency. That eliminates the European Union, China, Japan, Russia and every other nation running surpluses or modest deficits.

Many commentators are drawing incorrect conclusions from various attempts to bypass the dollar in settling trade accounts. For example, China is setting up direct exchanges where buyers and sellers can exchange their own currencies for renminbi, eliminating the need for intermediary dollars.

This is widely interpreted as the death knell for the dollar. But this misses the entire point of the reserve currency, which is that it must be available in quantity for everyone to use, not just those doing business with the domestic economy of the issuing nation.

Here's a practical example. The $100 bill is "money" everywhere in the world, recognizable as both a medium of exchange for gold, other currencies, goods and services, and as a store of value that is priced transparently (often on the black market). For the Chinese renminbi/yuan to replace the dollar as the global reserve currency, China would need to "export" enough currency to grease trade large and small worldwide, and enough electronic money to act as reserves that support domestic lending in nations holding the reserve currency.

This is yet another poorly understood function of the reserve currency: it acts as foreign exchange reserves, backing up the holder's currency, and as reserves in its central bank that act as collateral for its domestic issuance of credit.

In other words, the U.S. has issued and exported trillions of dollars because this is the necessary grease for global trade, currency stability and issuance of credit by nations holding dollars. The U.S. didn't run massive trade deficits by accident: it needed to "export" more dollars as the volume of global trade expanded.

Issuing credit and loans in dollars wasn't enough, so the U.S. exported dollars in exchange for commodities and goods.

For China to issue the global reserve currency, it would have to decouple the yuan from the U.S. dollar and start running deficits on the order of $500 billion a year.

Many observers think China is preparing to back its currency with gold, and they mistakenly conclude (yet again) this would be the death knell for the dollar. But they haven't thought through how currencies work: their value is ultimately set like everything else, by supply and demand.

In an export-dependent country like China, a gold-backed currency would not be exported in quantity--it wouldn't be "exported" at all, because China "imports" others' currencies in exchange for goods.

Assuming some of the gold-backed currency was exported, it would quickly end up in savings accounts or bank vaults, being a proxy for gold. There will be none available for facilitating trade in the $210 trillion global economy.

This dual nature of money trips up many analysts. Establishing a currency that is "as good as gold" but not exporting it in quantity means it will be hoarded as a store of value and be unavailable to facilitate trade. Money has to act both as a store of value and as a means of exchange.

This is why U.S. $100 bills are carefully stored in plastic in distant entrepots of the world, safeguarded as real money, available as a store of value and as a means of exchange.

Currencies can be exchanged in a Forex (FX) marketplace, but the reserve currency is the "winner take all" in the real world. If you hold out an equivalent sum in various currencies around the world, the trader in the stall will likely choose the $100 bill because he is not sure of the value of the other funny-money in his home currency and he knows he can easily exchange the $100 everywhere.

The other currencies might trade on the FX market at some percentage of the dollar, but in the real world they are effectively worthless because there isn't enough of them available to establish a transparent, truly global market. To do that, a nation has to export monumental quantities of their currency and operate their domestic economy in such a fashion that the currency is recognized as being a store of value.

In a very real sense, every currency is a claim not on the issuing central bank's balance sheet but on the entire economy of the issuing nation.

All this leads to two powerful tailwinds to the value of the dollar. One is simply supply and demand: as the global economy slides into recession, trade volumes decline, and the U.S. deficit shrinks. (It's already $250 billion less than was "exported" in 2006.) That will leave fewer dollars available on the global market.

In the case of the U.S., which exports large quantities of what the world needs (grain, soy beans, etc.) while buying mostly stuff that is falling in price in recession (oil, surplus manufactured goods, etc.), the trade deficit could decline significantly. (It is currently around $40 billion a month.)

And what does a declining trade deficit mean? It means fewer dollars are being exported. The global GDP is about $60 trillion, of which about 25% is the U.S. economy. Into this vast sea of trade, the U.S. "exports" about $500 billion in U.S. dollars via the trade deficit. Put in perspective, it isn't that big compared to the machine it is lubricating.

So what happens when there are fewer dollars being exported? Demand for existing dollars goes up, pushing the "price/cost" of dollars up--basic supply and demand.

The second tailwind is the demand for dollars from those exiting the euro and yen. The abandonment of the euro is already visible in these charts, courtesy of Market Daily Briefing: Peak Euros.

We can anticipate this desire to transfer euros and yen into dollars will only increase as those currencies depreciate. Let's say, just as an example, $5 trillion in euros starts chasing $1 trillion in available U.S. dollars. What will that do to the value of the dollar?

Some ask why those selling euros won't buy Chinese yuan. Where are you going to find $1 trillion in yuan? It isn't even convertible on an open market, and since China is an importer of currency, there isn't 1 trillion yuan floating around the global marketplace to buy even if you wanted to.

Many people scoff when I suggest the dollar could rise 50% (i.e. the DXY dollar index could climb from its current level around 80 to 120) or even 100% (DXY = 160) in the years ahead. I know it's the highest order of sacrilege to even murmur this, but if global demand for dollars picks up, the Fed isn't printing nearly enough to dent the rise in the dollar.

As a lagniappe outrage, consider the domestic fallout from a decline in U.S. stocks and the U.S. economy. The Fed's precious horde of political capital will leak away, and its ability to print more money will be proscribed by political resistance and a loss of faith in the Fed's claimed omnipotence.

Any reduction in Fed printing would only limit the quantity of dollars available to global buyers, further pushing up its price on the open market.