Wednesday, October 28, 2009

The Paradox of the Economic Crisis

The economy has definitely slowed, and everyone is feeling it. I am thinking about all those Americans that are laid off, or worse: those that are on their last unemployment check or beyond. But not just them. What about the millions that are now homeless due to flooding in India and now Vietnam, the Philippines, Maldives.....all over it seems. What is their future going to be like? How will they economically survive? How does the global financial crisis impact their lives on top of the physical emergency they find themselves in ?

The world's GDP was coasting along till recently at the growth rate of about 3.5% per year. And every year CO2 emissions have increased: from about 18.500 million metric tons in 1990 to about 26.000 million metric tons per year in 2006 --a stunning 71% increase of CO2 emissions or also an increase of around 3.5% per year. In our economy growth in world GDP has meant growth in CO2 emissions as well.

 During this time only a few economists have fretted about the price that will be exacted to the natural world -- a price that has never been part of the profit driven equations. Or maybe we should ask that question the other way around: what is the price in ecological damage that will be exacted by the natural world, Gaia if you like,  as response to the manifestations of greed and senseless consumption? After all the natural resources and processes that create real wealth and allow higher levels of development are usually not extractive --they follow an economy of generosity-- and thus defy any quantitative equivalency in most economic models and thinking. In other words the resources that nature provides, such as clean air and rain, ecological abundance, diversity,  have yet to be duly calculated as real costs and benefits in prevalent economic models.

But even if you did bring those type of factors provided by nature into account --they wouldn't be able to count for the costs of natural disasters. Capitalism in the late 20th and beginning 21st century is coming to its logical conclusion within the context of resource depletion and extreme inequality, perhaps most grotesquely so in the US. Unregulated capitalism has not only been a financial disaster, it has brought  ecological disaster and lately it has ruined the very pillars of democracy.
Global 'Weir-ding' (global warming gives the wrong impression to the masses), the melting of the 3 poles (including the Himalayas), the agricultural  collapse, the drying of the Amazon, the depletion of the oceans, etc. -- they all have to do with an extractive greed driven model that monopolizes wealth and marginalizes most people in the world. The limitations of this model come into stark view when resources such as oil and food are getting scarce and inequality reaches its peak. It is now when the whole system breaks apart --it is so deeply unsustainable.

I am re-reading my own gloomy writing so far and was wondering where I might find a ray of hope --and that is where the paradox of the economy comes in.
Despite the best efforts of informed minds such as Al Gore and Lester Brown, the the vast majority of the body of politics, hasn't been able to hear  the 'inconvenient truth'  --let alone act on it with urgency. America, still consuming more than 20% of the worlds resources, curiously exempted itself from Kyoto, the urge to develop China has polluted vast ecological resources, hundreds of coal plants are still being built, and most politicians have never seen a dollar they don't like (and have thus sold their souls to the vested (corporate) interests and destroyed democracy). Next year, 2010 China's CO2 emissions will start to exceed those of the US.  Things have been stuck.

 Until now: the time of  the worldwide economic crisis: long simmering, but showing itself starting in 2007, growing into 2009 and probably reaching its low point in my estimate not until 2011 or 2012 --if at all. In 2008 the worlds GDP dropped by almost 3% and, in its footsteps so did CO2 emissions. Optimistically stated: since we assumed an increase of about 3% and we actually got about a 3 % decrease, CO2 emissions have dropped 6% in one year compared to what was expected. Say the crisis lasts another 3 years or so, and economic activity recedes accordingly, we can expect a drop of let's say another 10% to 15% or so in CO2 emissions. I just found some graphs from Lester Brown and his Earth Policy institute that thinks that emissions have dropped since 2007 by a whopping 9%. That is very significant.
Here is the graph for the US--look at the funny tail at the end -- brings us back to the CO2 emissions in the mid 90-ties:

As a consequence in the last year many plans for new coal plants have been shelved --there may not be any demand. Nobody is consuming in quite the same way any longer since people's budgets are limited and debt is seen in a different light: debt has become real since the days of easy credit based on housing hilarity are over for good.The recession succeeds where the politicians failed: a much needed drop in CO2 emissions. Clearly nature itself could be one of the 'winners' and CO2 may be brought back in line from about 390 ppm to the desirable 350 ppm by say 2040 (optimistically), not though the success of politicians, but through their failure.

I point this 'positive side effect' of the recession out --reduced CO2-- not to make light of human suffering during this transition when we see the end of capitalism in sight. Budgets are constrained due to lack of currency flow throughout the system, any credit is sucked into the hole of credit default swaps, while food reserves in storehouses have been strained to the max. In the resulting smaller and larger 'resource wars' there is very little consideration for the population itself  -- in fact many warlords feed on chaos and anomy--with failed states on the rise: think of Iraq or the Horn of Africa or Sub-Sahara or Afghanistan, some say even the US itself (and the list goes on and on) with countless dispossessed people on the run and war and violence becoming a way of live. Top that scenario off with Global 'Weir-ding' and its endless parade of droughts and floods and suddenly there are a lot of people driven out of their houses and off the land...... a flood of refugees, perhaps over a billion, is on its way.

from climate.....
or war....

Thus for the poorest and totally exposed and vulnerable, the capitalist crisis means: less help in an already desperate situation. Often times it means hunger and demise. A shocking 16.000 children per day die from starvation. That is 11 children per minute. That is right now.....and again.....
Yet food aid has dropped dramatically: the US has pledged 800 million less to food aid in 2009. Rich Saudi Arabia went down from 500 million in 2008, to 10 million so far in 2009, the EU dropped its contribution by 130 million, etc.
Josette Sheeran, head of the UN World Food Programme (WFP) warned that the result of these drops in funding may well be the "loss of a generation of children to malnutrition, food riots and political destabilization".

What all of this points out is that conventional economic thinking has missed the boat completely on understanding the roots of the recession and thus failed to sound the alarm. Now the economic models and teaching should be overhauled and revolutionized to start actively creating survival models that are in tune with the planet we live on and who (and how many) we are as humans.
For models of economic sustainability in a post capitalist world, we need to be inspired by Gaia and its regenerative power more deeply, and start mimicking its intricate and inclusive 'economy of generosity" --if we want to survive as a human family.

Friday, October 16, 2009

Economic Rave: Jesus on Being Rich

I haven't read it yet but in his new book Ralph Nader makes real life people  like Yoko Ono and Warren Buffett spend their capital on righteous action such as rebuilding after Katrina (something our government has apparently been totally incapable of doing), and thus save the world. Whether or not the superrich have anything like this in mind, it is becoming increasingly clear that in our current circumstances the rich have a very special role to play.

To encourage you superrich humans among us, to not just think about capital creation but about saving the world, I would like to help set some things straight that were said some time in the past by you know who.

Recently someone told me: "water is the currency of nature".  Maybe we can extend that thought somehow: "Currency (money) is the water of human needs to flow". When money accumulates in the hands of a few masters, way beyond their ability to consume it or use it productively (like a good calvinist capitalist would), it gets stale and stagnant and finally toxic. It is at that point of unreality, that investments in paper derivatives upon paper derivatives start sounding like a rational investment...a good idea.... Because so many really rich talk themselves and each other into this delusional condition of market hypnosis, similar to a ponzi scheme, for awhile it seems to work flawlessly. Until the house of cards came tumbling down.

Lucky for the superrich, Obama and his team of Goldman Sachs alumni, were able to stave off the crisis (by a hair we are told) by bailouts to the bankers paid in taxes of commoners. People that are in the 'know' such as Max Keiser have assured me that this scheme amounts to the largest transfer of wealth in history.

Certainly even in the last half a year most of us must admit that life has become a lot tougher.....Meanwhile the money is still stuck... It doesn't flow..... too big to fail  ??--wait for the next round then...
There is no credit to do anything with.... No investments..... No currency..... No flow.... 
What if finally China calls it bluff..... Since the US has overplayed its hand so grotesquely, the only thing Obama can do is fold:  End of Empire......  Putin thumbs his nose....squinces his eyes and lets out a cramped smile....he knows: there is no coin without an army, no army without a coin.....Russia is in the right spot whoever gets the prize....  Medvedev is meanwhile cousying up with the Dutch queen Beatrix while behind her back Merkel winks her eye at him..... It is about oil, guys: ....pipelines.... flow....Putin invites Shell back in Sakhalin Russia....China making largest oil deals in Iran..... an Arabian dinar.... Once these deals are made in gold backed currencies the value of the dollar collapses.... inflation starts.... gold and oil sky rocket even after desperate bank interventions and draconian tax policies fail to put a back stop to the dollar...... Stores are empty, food is unavailable..... Obama's cabinet threatens to be reduced to a debating club in Washington.....The bill comes due: China takes what it can get in natural resources and president Hu Jintao demands direct taxes to Beijing while american workers are organized in Maoist style collectives...... This is a financial war.... not a shot is being fired but some nemesis is brought to its knees.... leaving heaps of scrap metal behind in faraway desert sands.....and endless papers blowing through an empty wall street...

Wait wait...Sorry, I am sorry... just waking up from a nightmare....some weird rave coming through --discard all that. 

It just points to one thing: It is time the rich leverage their money towards a more equitable green society and make it roll.  I know that a lot of  the rich feel reluctant to undertake such an endeavor. And some of you may have been discouraged by the supposed words of the savior himself. Here I feel privileged: I may be able to help set the record straight. 

As an aside here I will confess to you that I am not at all bible steady myself nor would I call myself even a christian (though I love Jesus), or particularly knowledgeable in the area of religion. For me to say anything at all I have to defer fully to my trust in the knowledge of my mother Bon Malten (1991+), who was by far the most well read person I have met, and though deeply humanist, had a particular interest in the teachings of the bible. Anyhow, she assured me that there is a widespread misunderstanding over what Jesus said about the rich.

The comment of Jesus on the rich that is repeated in every bible is this:

...."It is easier for a camel to go through the eye of a needle, than for a rich man to enter into the kingdom of God..."

It was Bon's believe that Jesus never said that. After study ("Look at a camel, now think of a needle... --Jesus never said absurd things!") she came to the conclusion that this comment was translated in the wrong manner. According to her what Jesus actually said was  this:

...."It is easier for a camel-hair to go through the eye of a needle, than for a rich man to enter into the kingdom of God..." 

In other words: It is hard but it can be done

Thursday, October 15, 2009

Droughts and Floods: the Face of Climate Change

India is experiencing a severe drought (see Vandana Shiva). And if that is not enough, at the time of this writing India is hit by the worst flooding in many years, leaving millions of people homeless.

"Rice and other crops in an area of 260 000 hectares have been destroyed, The floods came at a critical time when many farmers had sowed their winter crops and much of this has been washed away or damaged." state Agriculture Minister N Raghuveera Rao said. Worst timing. The government has not announced plans to help residents deal with food shortages.
There were concerns among aid workers that the damage would likely set off a wave of migration to nearby towns and cities .....

Droughts and floods have become  the demonic face of climate change for so many people, leaving behind a trail of death and destruction. Though they seem contradictory phenomena, they are actually two sides of the same coin.

Indian government data show that water levels in the 80 some mayor reservoirs are holding less than 40% capacity. India has seen the scantiest monsoon season in 7 years, until now when a sudden abundance of late rainfall has resulted in flooding of large areas.
Since the monsoon rains account for more that 75% of India's annual rainfall, this is a source of serious concern. Fluctuations in the monsoon, the timing and the amount have large consequences. Farming is severely affected by this lack of rain: 60% of Indian farmers have no irrigation systems. The monsoon rains are essential to the harvest of rice, soy, sugarcane and cotton.  Deepening the problem of lack of water is the use of hybrid seeds, some of which are real water guzzlers.

The official prognoses is that there will be a shortfall of about 10 %  of rice compared to 2008. The sudden current flooding will certainly make these numbers a lot worse. Food prices are sharply rising and the government has promised to open its storehouses in order to prevent social unrest and to compensate farmers. However for many farmers the situation is already dire. Andhra Pardesh saw a surge of farmer suicides (at least 20 at latest count), and some have tried to sell their wives and daughters in desperation.

Through special satellite images made over the 2002-2008 period, NASA detected an average drop in groundwater levels of about 4 centimeters per year which may not sound like a lot --but added up represents the loss of about 110 cubic kilometers of groundwater lost during that period. Some estimates are actually a lot higher and have predicted a loss of about 54 cubic kilometers of groundwater lost yearly in the Indo-Ganenic plains, the worlds most densely populated and heavily irrigated region. Studies have indicated that the depletion rate is accelerating in the last decade by up to 70 %.

Urbanization and industrialization take their increasing share of groundwater withdrawal, but estimates are that over 90%  of aquifer depletion comes from larger farming operations mainly of rice, wheat and barley. India's soviet style planners egged on by the promise of a Green  Revolution, have not given up on large, prestigious irrigation projects (usually involving big dams) serving hybrid seeds, despite their dismal consequences. All kinds of hybrid crop varieties that require large quantities of water, such as rice, sorghum, maize, cotton and vegetables, are still being promoted in the arid regions.

Due to deforestation higher up, the thinning in the icecap on the  Himalayas (also due to climate change), and the decreased water absorption capacity of the earth that comes with industrial agriculture, monsoon rainfalls all to often result in sudden flooding in the valleys downstream without necessarily replenishing the aquifers themselves. Once the waters recede, they leave depleted soil and human devastation in their wake, increasing the risk of a repeat scenario in the following years. Continued fertility is at stake here.

One very significant effort in this regard is the work of Rajendra Singh, an expert on traditional water systems.
Rajendra understood that the secret to remediation of desertification is two fold:

-increase the aquifer levels underground
-plant appropriate trees at the edge of the desert for water containment and soil generation

Rajendra taught the farmers of the desert state Rajastan how  to catch water in their johads, a system of rivulets and arroyos channelled into large and deep (up to 100 meters) underground water-storage areas that seep into the ground and recharge the aquifer underneath the desert. Participation in the program was successful enough to recharge several dry riverbeds into lively rivers and many wells. Where-as this year other areas in India were too dry to farm due to the lack of a monsoon spell, in Rajastan the effects have been relatively mild. Due to the communal effort and the insight of dr. Rajendra Singh the farmers of the Alwar district have to fear less for a bad harvests. Says Rajendra: "Unless you catch water it disappears quickly. Eighty percent of India's rainfall is just run off. Here too we have noticed too a decrease in rainfall, but through our johads we have saved enough water to bridge this spell of drought".

new mexico...can u c the desert....?

Living in the desert of New Mexico I can see benefits of application of the principles of dr. Singh here. After all we have a few mountain ranges catching a fair amount of water during our monsoon, usually from the beginning of July through August. We have been blessed with relatively good years of precipitation, but we have totally neglected the longer term outlook for New Mexico. Desertification in in the cards for this area also due to increased evaporation (climate warming) and it feels that New Mexico already takes part in one continuous low level dust storm that clouds the once clear mountains.

No large scale efforts are undertaken to head off disaster here. A serious communal effort to create some kinds of johads --let's call them 'recharge wells'-- along the feet of the mountains here would do the same thing: it would stabilize the march of desert lands, decrease the threat of flooding, increase fertility, minimize the effects of rainfall fluctuations, create jobs and realization of bioregional goals. It would establish a beautiful green mantle for the in New Mexico beloved Lady of Guadelupe.

Of course in our case here in New Mexico, we have our particular circumstances, such as making sure that nuclear contaminated run-off doesn't foul up the underground water supplies.... but we can figure those things out locally and share the information for similar efforts elsewhere. In order to cope with the local effects of climate change we should promote the idea of a 'global-local response movement', that shares its intent and experience through world wide networks.

Global systemic solutions to  water management are few since the issues involved are so large and so many national and corporate interests are at stake here, that it is hard to come up with any agreements let alone any practical measures to be implemented. However, it is becoming crystal clear, rapidly, that all countries and regions have to start focussing on long term solutions to the flooding-desertification complex, the loss of fertile soil and the related food crisis.