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Monday, March 14, 2011

A Crisis of Unsustainable Consumption

The budget stalemate between the right and the left comes down to a basic difference in economic views, the left feels that we need to tax more in order to consume more money, and the right believes that we need to consume less money in order to tax less. Whichever side of the argument you come down on, it's not hard to see which of these positions is fundamentally unsustainable. And it is amazing that the same people who can and do lecture for hours on environmental sustainability, seem to have no grasp of economic sustainability. If you tell them that the solution to high fish prices is to catch more fish, they will tell you right away that you'll fish out the lake. But tell them that the deficit is too high and their immediate solution will be to tax more, never considering the possibility that it's possible to tax human resources, as much as natural resources.

Liberalism's embrace of big government has made it into the party of uncontrolled consumption. While with one hand they force energy efficiency and recycling on the public, with the other they display no conservationist instincts at all when it comes to the public's money. This paradoxical attitude leads to tightfistedness when it comes to everything from light bulbs to plastic bags to toilet paper, and spendthrift ways when it comes to money. Forget to turn off a light bulb when you leave a room and you're a monster, but a few billion dollars here and there doesn't amount to anything.

There's a touch of Marie Antoinette to the spectacle of a government which is fiscally irresponsible, yet obsessed with the fast food purchases and soda can recycling habits of its subjects. A lifestyle of carbon neutral piety that they preach, but never quite practice except in showy ways and on special occasions. People may forgive irresponsibility in a government that expects little from them or imposed austerity in a government that practices it from the top down. But imposed austerity from an irresponsible government is quite another thing. It's more than hypocrisy, it's the practice of tyranny. Taking from the many to give to the few.

The media organs of liberalism act as if everything is a non-renewable resource, except money. But where does money come from? Quite a few politicians seem to be convinced that they create money by passing laws, which is just wrong enough to be right, and just right enough to be very wrong. We may run out of oil, gas, coal, wood and just about everything else-- but the elite is certain that we will never run out of money in this wonderful new paperless global economy. And if we ever do, we'll just print some more. The virtualization of money means that it's treated as an imaginary value defined only in relation to economic and social policies, and those government policies are treated as a means of creating wealth.

If you want more money, you must have more big government. That's the economic policy of every branch of government at every level. The more money an agency spends, the more it can demand. Social services agencies hunt for more 'clients' to serve. Defense projects roll through that the military doesn't want. Politicians stuff in their pork, and even the ones who claim to believe in fiscal discipline say that if they don't grab their constituents' share of the money someone else will. It's like a going out of business sale in which everyone grabs what they can, but it's taxpayer money and national debt that's on sale. 'Use it or lose it', is the mandate.

Manufacturing demand for spending becomes a means of preserving power. During a recession governments spend more money to save the economy-- even though they are what the economy needs saving from. And then they spend money to cut costs, which is a classic example of an addict's rationalization. Government policy is to do anything and everything short of not spending money. Because money is power. Their power. Legislatures are numerous. There is only so much an individual in a legislature can do. Passing laws is difficult. But spending money is easy.

Michael Moore calls for treating wealth as a national resource. The government has been treating individual wealth as a national resource all along. But personal wealth is finite. So is national wealth. Debt on the other hand can be virtually infinite, until people stop lending you money or the underlying system collapses.

Appetite always outstrips available resources. Individuals and governments can always consume more than they make. Debt turns appetite into consumption. It allows for the practice of 'Wimpy economics', forever paying Tuesday for a hamburger today. And we've got a bad case of 'Wimpy economics'. Paul Krugman won a Nobel prize in economics for his own brand of 'Wimpy economics', but even debt has its limits. Your ability to borrow diminishes with your ability to repay the original debt. Too big to fail, just means enough credibility to get deep into debt, but it doesn't mean a bottomless well of money.

Or to put it in a way that Moore can understand. His capacity for eating food will always outpace his ability to pay for it. Moore is capable of eating a dozen of Burger King's 'The Burger' with 'Wagyu beef, white truffles, Pata Negra ham slices, Cristal onion straws, Modena balsamic vinegar, lambs lettuce, pink Himalayan rock salt, organic white wine and shallot infused mayonnaise in an Iranian saffron and white truffle dusted bun', washing them down with bottles of $160,000 a bottle Chateau Lafitte and a 25,000 dollar chocolate sundae served in a goblet with edible gold. But even he would have trouble paying for it.

Appetite outstrips resources. That's where some form of sustainability has to come into the picture. It is possible for the government to keep running up deficits, until the system implodes. Harvesting more money from corporations and the rich may delay that day temporarily, but it will not address the underlying problem. And that problem is consumption based. And it is a problem that cannot be solved by harvesting resources more efficiently. Either the government's appetite for uncontrolled spending is curbed, or the whole economic ecosystem collapses.

Raising taxes during a depression is as smart as overhunting a territory during a punishing winter. You can only kill so many elk, before you put too much stress on the population. Unfortunately the advocates of big government spending are convinced that people with money are an infinitely renewable resource who are part of a conspiracy to keep money away from them. Which allows them to rationalize their bad fiscal policies using class warfare conspiracy theories.

The left says that the problem is that the rich are greedy. The right says that the problem is that government is greedy. And in the economic ecosystem, it is the ultimate predator. The biggest, the fiercest and the hardest to resist. That also makes it the most dangerous. A predator at the top of the economic food chain with no limits on his territory or his appetite, means the extinction of all the species that he preys upon, and then of the species who are parasitically or symbiotically dependent on him.

Are we to be more concerned with the predator at the top of the food chain, or the predators who are next in line, particularly when the predator at the top of the food chain continues to expand his territory and become more aggressive, while the predators below him fall into a decline. The appetite of government has grown along with its ability to requisition whatever funds it wants. What we have then is a crisis of consumption.

Taxing the rich is only a more efficient way of stripping the ecosystem's resources, and when that happens what then? Escalating government spending means an unlimited appetite. Personal wealth is limited. National wealth is limited. All resources are finite, even debt. The crisis of consumption remains inescapable. It cannot be outspent or outtaxed or outrhetoriced. It remains a crisis, so long as unsustainable consumption remains a tool of power in Washington D.C. and at all levels of government.

If the crisis was one of insufficient taxation, as the left insists, then taxing every wealthy American would still not even begin to cover the current deficit. Blame the rich as much as you want, deficit spending backed by higher taxes is still completely unsustainable. And therefore irresponsible. Even taxing the wealthy of the entire planet could not fill a constantly escalating deficit.

'Wimpy economics' says that if we get the deficit high enough, our economy will becomes so vital that we will be able to reduce the deficit. This isn't economics, it's a shell game, in which deficit spending today is justified using a potential recovery. If the recovery comes, then clearly getting deeper into debt worked. And if it doesn't, then as Paul Krugman has said of the stimulus plan, we clearly didn't spend enough.

We have gone from a nation where economic policy was determined by businessmen, to a nation where it is determined by professional politicians. And the latter don't know very much about any business other than their own, which is to spend money. Money to them is imaginary, a long set of zeroes on a piece of paper, detached from anything real. And there are always self-serving justifications for going down the same bad road, for viewing taxpayers and their money as an infinite resource that can never be exhausted so long as the sun burns in the sky.

Treating energy as a finite resource and money as an infinite resource confuses one with the other. There is an infinite amount of available energy, but wealth is finite. The sun beams out more energy than we could possibly use, and governments spends more money than could possibly exist. But while the left worries about sustainable energy, it spares no thought for sustainable spending. While energy can neither be created nor destroyed, wealth can be and is.

5 comments:

Lemon said...

When parents tell kids they don't have enough money to buy them something the children really don't believe that.
They see their parents as a never ending source of money.
Liberals are often childish themselves and see the people as a never ending source of money to spend.
It is a matter of being childish and selfish too.

panzer said...

This may be the best thing you've ever written.

Excellent.

Paul said...

An excellent analysis.

It is odd that you did not even mention the word "capital" or "capitalism" even once in the whole article and this is really what we are talking about when we say that money is finite, even if government spending treats it is as if it were not. Capitalism at its most vital is based on material resources such as land, minerals and energy. Capitalism at its most fundamental level is any individual and their simple existence, which they should be free to exploit in their own material interests. Software is a dramatic exception to the necessary material vitality of capitalism and trading in material capitalism for software to sustain an economy is a bad idea. The economic meaning of software is something that deserves exploration, it is certainly a frontier in economic theory.

But this is not true:

"Treating energy as a finite resource and money as an infinite resource confuses one with the other. There is an infinite amount of available energy, but wealth is finite. The sun beams out more energy than we could possibly use, and governments spends more money than could possibly exist. But while the left worries about sustainable energy, it spares no thought for sustainable spending. While energy can neither be created nor destroyed, wealth can be and is."

There is nothing like an infinite supply of energy anywhere. Even solar power is something that can be harnessed only at some limited level, you are only going to get so many watts of energy per minute from sunlight and there is only so much sunlight coming down at any given time. And of course petroleum is bound to run out eventually too. The planet is not making any more at a rate to provide replacement if at all. To say that energy can neither be created nor destroyed is a subtle error in economics. For our purposes, and in a very real physical sense, energy exists in a state of potential and using energy involves transforming that potential into work. Once done, the potential is gone and while the energy may remain in some absolute physical sense, the potential is most certainly used up and of no available purpose to anyone.

Anonymous said...

What about wind energy or energy from dams or solar energy, I heard if you could make 90 square miles of solar it could be enough for the whole US.

Geoffrey Britain said...

Paul said: "But this is not true:
"There is nothing like an infinite supply of energy anywhere."


Actually, for all practical purposes there is: "MADISON — Two University of Wisconsin-Madison scientists believe moon rocks contain all the energy the United States needs for the next millennium.

The moon’s surface is full of the energy source helium-3, said Gerald Kulcinski, a nuclear engineering professor and director of the Fusion Technology Institute at UW.

“If we could land the space shuttle on the moon, fill the cargo with canisters of helium-3 mined from the surface and bring the shuttle back to Earth, that cargo would supply the entire electrical power needs of the United States for an entire year,”" scientists want to mine moon energy

Someone might ask, "what do we do after we've gone through all the moon's supply of Helium 3"?

Not a problem: Thorium reactors could run civilization for hundreds of thousands of years, and it’s essentially free.

Thorium is so common that miners treat it as a nuisance, a radioactive by-product if they try to dig up rare earth metals. The US and Australia are full of the stuff.

Then there's the asteroid belt an unimaginably rich resource just waiting for us:
"It has been estimated that the mineral wealth resident in the belt of asteroids between the orbits of Mars and Jupiter would be equivalent to about 100 billion dollars for every person on Earth today." NEAR-EARTH OBJECTS AS FUTURE RESOURCES

"At 1997 prices, a relatively small metallic asteroid with a diameter of 1 mile (1.6 km) contains more than $20 trillion US dollars worth of industrial and precious metals." http://en.wikipedia.org/wiki/Asteroid_mining


The problem isn't energy or resources or even money. The problem is human stupidity, ignorance, greed and arrogance.

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