Tuesday, September 22, 2009

Why the era of economic growth is over

Study that graph. (Y-o-Y . . . "Why, Oh Why" you might pronounce it --means "year over year.")

What the graph should show but doesn't is oil price. According to the conventional economic wisdom, plummeting demand for oil means plummeting prices ... not prices fully at 50% of their all-time peak.

What's going on? Why, oh why, is the world and particularly the US in such a state? Well, it's actually simple to understand, once you know that economic "growth" is simply a shorthand way of saying "measuring, in monetary units, of using more energy and materials." Given that, and given that our economic chefs assumed that there was a limitless energy supply when devising the recipe for everything grown, mined, made, or moved in this country, the consequences of reality seem abrupt and painful: energy is actually quite finite, and the kind of energy we're most dependent on --- cheap oil --- is now starting to decline in availability.

In other words, "demand" is recorded as declining because the powers-that-be cannot bring themselves to admit that the world would be quite happy to use lots more oil, except that it's not there (since only a infinitesimally small amount of oil is stored, demand always equals supply ... the graph above should be labeled "supply rate" rather than demand).

Bottom line, the minimum price needed to keep the oil flows from plunging happens to be above the price that causes economies built on cheap oil to collapse. The only way to square that circle and maintain the conventional wisdom blinders is to pretend that "demand" is down and to ignore that the high prices for oil in a reduced demand market seems to suggest that the law of supply and demand has been repealed. Either way, the catastrophic effects are the same: fewer jobs, more poverty, more hunger, more social unease as the post-peak-oil hangover kicks in.

The result for Salem: we're in the new era where "growth" and big new infrastructure projects -- the third bridge, new elementary schools, to name just a few -- are finished. All public investments from here out need to be aimed at reducing our reliance on fossil energy not increasing it or servicing those parts of our system that were built when we thought the party would last forever. (Hat tip to the Goal One Coalition blog for the graph.)


Anonymous said...

Speaking of new infrastructure projects, Walker, when are you going to turn your keen eye and superb intelligence to the new Kroc Center? To me it is emblematic of the hangover of Reaganism that continues to plague us. Salem has let its public swimming facilities deteriorate and close. Instead we fall all over ourselves to take money from the McDonalds estate, turning it over to an anti-gay Evangelical church to build a pseudo-public facility in a location only accessible by car and costing just marginally less to use than Courthouse. There is so much wrong with this project, it's amazing there has been zero criticism in the MSM or elsewhere. You can be the first Walker. Go for it.

Walker said...

Actually, I found the story I linked to on the Breakfast on Bikes blog just as you were making this comment . . . so great minds think alike (and ours too!)

I don't have too much of a beef with the Kroc Center beyond the location -- I'll probably never go there in any mode of transport, and I sure won't walk or bike there. It appears that the place just reflects the usual "Edifice Complex" that afflicts rich people who will gladly give millions to build a building but nothing to keep up the other facilities.

My one concern is that they seem to be requesting books for a library. Salem desperately needs a branch library in North Salem (South too, but not as much as North does) and so the plea from Kroc for books for a library means that the City failed to see the opportunity that a Kroc Center (in a better, more kid-accessible location) could have provided for a co-located city library branch (i.e., one not run by, as you say, an evangelical group). Had the project been a joint community center/library, there would have been more options for land acquisition, better location, and perhaps even a seven-day-a-week library, something that Salem shamefully fails to provide.

Anonymous said...

Walker, go by the Kroc Center sometime. The first thing you'll notice, I bet, is the cross. That's right, a cross. It looks like a church. It is a church. Libraries and churches don't mix. It's interesting that all the photos you see in the newspaper omit the cross. What a Kroc!

PS. I agree that Salem desperately needs branch libraries in north, east and south Salem. Our children and families are being shortchanged. The Multnomah Co. Library has 17 branches with two more on the way.