The Crash Course: The Unsustainable Future of Our Economy, Energy, and Environment by Chris Martenson Page A
Authors: Chris Martenson
Tags: United States, General, Economics, Business & Economics, Economic Conditions, Forecasting, Economic forecasting - United States, Economic forecasting, Development, Sustainable Development, Economic Development, Sustainable Development - United States, United States - Economic Conditions - 2009
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originates with the wealth of the earth is hardly new, but abundant primary wealth, as described here, has been such an assured feature of the landscape of the last few centuries that it seems to be almost entirely taken for granted. Over two hundred years ago, the great economic thinker and observer Adam Smith took great pains to describe how wealth came about, but given that he lived during a time of natural primary abundance and poorly formed tertiary paper-based wealth abstractions, he focused mainly on the role of labor in creating wealth. He turned his considerable attention to secondary wealth and did a most credible job of isolating the essential features by which better-organized labor led to greater wealth. Here he essentially discounts the importance of “soil, climate, and territory” compared to the number of people laboring productively:
[T]his proportion [between production and consumption] must in every nation be regulated by two different circumstances; first by the skill, dexterity, and judgment with which its labour is generally applied; and, secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed. Whatever be the soil, climate, or extent of territory of any particular nation, the abundance or scantiness of its annual supply must, in that particular situation, depend upon those two circumstances. 1
This was a fair view of wealth in the late eighteenth century. Given the limitless natural abundance of the time, those who could transform primary into secondary wealth faster and more productively created wealth the quickest.
We live under very different circumstances than Smith, but the question of how we create wealth remains as relevant today as it was in his day. There are thousands of books to help you navigate tertiary wealth, virtually all of them assuming that the future will resemble the present, only bigger. But here we take a very different stance, recalling that all wealth starts from the bottom of the wealth pyramid with primary wealth and observing that the creation of secondary wealth, without exception, requires energy, which seems the least likely candidate to continue its exponential trend of the past 300 years for very much longer.
By swiveling our gaze to a long-forgotten and dusty intellectual realm, we have the chance to rediscover some basic truths and stake out our positions in relative quiet before the masses arrive like so many wild-eyed land-rush speculators bent on grabbing their share while they still can. The basic truth is this: Our money, debts, stocks, and bonds have a high value in a world of constant economic growth—and a much, much lower value in a world without economic growth. Constant economic growth requires constant inputs of primary resources, especially energy, and someday those will undoubtedly fail to expand any further.
The question is, when?
1 Maslow was a psychologist who proposed that humans have many needs existing in a hierarchical structure in which the higher levels will not be sought and met until the lower ones are met. At the bottom of his pyramid are the physiological needs of breathing, being fed, obtaining water, sleeping, and excreting. The next layer up covers our safety and security, and self-actualization resides at the very top of the pyramid.
PART III
Economy
CHAPTER 10
Debt
If something cannot go on forever, it will stop.
—Herbert Stein, Economist (1916–1999) 1
The United States and much of the developed world suffer from a condition that I call “too much debt.” We could spend an entire book just on the subject of debt, because debt by itself has the capacity to initiate a chaotic and diminished future. But we’re only going to spend just enough time on debt to get to my main conclusion: Debt markets are making an enormous collective bet that the future economy will be exponentially larger than the
[T]his proportion [between production and consumption] must in every nation be regulated by two different circumstances; first by the skill, dexterity, and judgment with which its labour is generally applied; and, secondly, by the proportion between the number of those who are employed in useful labour, and that of those who are not so employed. Whatever be the soil, climate, or extent of territory of any particular nation, the abundance or scantiness of its annual supply must, in that particular situation, depend upon those two circumstances. 1
This was a fair view of wealth in the late eighteenth century. Given the limitless natural abundance of the time, those who could transform primary into secondary wealth faster and more productively created wealth the quickest.
We live under very different circumstances than Smith, but the question of how we create wealth remains as relevant today as it was in his day. There are thousands of books to help you navigate tertiary wealth, virtually all of them assuming that the future will resemble the present, only bigger. But here we take a very different stance, recalling that all wealth starts from the bottom of the wealth pyramid with primary wealth and observing that the creation of secondary wealth, without exception, requires energy, which seems the least likely candidate to continue its exponential trend of the past 300 years for very much longer.
By swiveling our gaze to a long-forgotten and dusty intellectual realm, we have the chance to rediscover some basic truths and stake out our positions in relative quiet before the masses arrive like so many wild-eyed land-rush speculators bent on grabbing their share while they still can. The basic truth is this: Our money, debts, stocks, and bonds have a high value in a world of constant economic growth—and a much, much lower value in a world without economic growth. Constant economic growth requires constant inputs of primary resources, especially energy, and someday those will undoubtedly fail to expand any further.
The question is, when?
1 Maslow was a psychologist who proposed that humans have many needs existing in a hierarchical structure in which the higher levels will not be sought and met until the lower ones are met. At the bottom of his pyramid are the physiological needs of breathing, being fed, obtaining water, sleeping, and excreting. The next layer up covers our safety and security, and self-actualization resides at the very top of the pyramid.
PART III
Economy
CHAPTER 10
Debt
If something cannot go on forever, it will stop.
—Herbert Stein, Economist (1916–1999) 1
The United States and much of the developed world suffer from a condition that I call “too much debt.” We could spend an entire book just on the subject of debt, because debt by itself has the capacity to initiate a chaotic and diminished future. But we’re only going to spend just enough time on debt to get to my main conclusion: Debt markets are making an enormous collective bet that the future economy will be exponentially larger than the
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