Managing Economic Decline

I am not making a case that things would be wonderful, if only we would put on differently colored glasses. I am saying that the negative effects of changing to a sustainable economy would be largely mitigated by a different lifestyle.

The key economic issue is growth. It is often argued that moving to ecologically sound practices will not reduce economic activity because millions of high-tech, good paying jobs would be created. I believe some of that argument is true, but it is not completely true. There is a problem in the assumed reference point: those making the argument tacitly compare the way things would be to the way they are now. The suggestion, soto voce, is that most people would continue to live their lives the way they do now. I believe that suggestion is false.

In a world without oil, transportation and travel will become more difficult and expensive. This will make everything needed for ordinary life more expensive, because almost everything people use, and the people themselves, is transported from place to place. Aluminum and steel, for example, begin their journeys to the civilized world as ores dug out of the earth in the far reaches of the Australia outback and similar places. After riding on trucks, trains and ships, the ores are processed into basic materials and then shipped somewhere else. At thousands of other sites, materials are worked into intermediate and final products, and again shipped to far away places. The atoms of paper or plastic in our microwave dinner have gone around the world a few times to get there. Globalization, then, increases our dependence on oil and similar resources.

The international masters of our economies juggle the books to make increased oil dependency appear as a decrease in costs. Thus, thousands of low cost products Made in China and elsewhere appear in Wal-Mart and other stores. Globalization supposedly creates jobs in Third World countries, while alleviating the poverty of the American working class, so benefitting producers and consumers. The difficulty of that calculation is the enormous, continually growing U.S. trade deficit; i.e., the actual costs of "globalized products" are far higher than what consumers pay in the stores. American consumers are buying on government backed credit, reflecting the power relationship between the United States and its suppliers.

It is very likely that some globalized products do indeed reduce overall costs. It is also likely so-called "Big Box" stores represent improved economic efficiency compared to Mom-and-Pop stores in many places. But such products and distribution centers only make a positive contribution to the economy when the assumptions of their operation are met. A Big Box store requires a minimum consumer population to break even. How many households are required to support one Big Box depends on the interaction of product mix and demographic factors. The consuming population must be enabled to travel to the location, and must have sufficient income to buy what is offered. Freeways, gas stations, public transit, parking lots, electricity, water, sewage and much more infrastructure are assumed in the existence of every store and shopping center. There's a reason why one shopping mall looks like all the other shopping malls: they are all constructed to create and meet the conditions of their similar assumptions.

Since globalization increases costs, one way to keep costs down in an oil-free world is economic localization. This is a generalization of old advice: buy what's in season. Localization implies a return to provincial societies and the many regional differences that existed before people were homogenized by television. Localized economies require abilities peculiar to the region, which increases the value of specialized skills. For example, it requires special knowledge to build homes using local materials. But that knowledge might not be needed elsewhere, and it might not be easily translated into related disciplines in some other locality. Globalization solves the problem by substituting a standard part and standard procedures for the local adaptation. In principle, standardization simplifies the problem and reduces costs because of the "economy of scale." When the globalized product or procedure replaces the local variant, it necessarily reduces local abilities and income. The economic question which must now be asked is this: is the globalized product or procedure actually less costly than the local one? Clearly, the answer should be positive, if the globalized version  is a direct and accurate replacement of the local work, due to the economy of scale. But, if the globalized version is not an exact replacement, or is inefficient in the local environment, all that accomplishes is transferring monetary flows from a local to a global nexus.

In many cases, it would seem the standardized product is superior when evaluated with respect to a combination of measures. For example, one might say 'plumbing is plumbing,' so the standard pipes and joints available from global producers are more cost effective than locally produced ones. One might insist on that conclusion, even if the cost of transportation and installation exceeded the local cost of production and use, because the standard product and design might lower eventual maintenance and replacement costs. While that seems a powerful argument against the local workmanship, it does not always apply. In many places, there are extremes of heat or cold. The plumbing often has to handle hard or somewhat corrosive water. Then, there are places prone to earthquakes and other forms of stress. All those conditions require local experts to solve the problems and maintain installations. On the surface, it may seem plumbing is plumbing, but often enough, it is not.

The case for localization is much stronger with respect to food. Low cost "global food" is very often neither an economic nor a healthy choice. Wheat, rice, corn and soy, for example, are stored for years and subsidized by all major governments. When finally sold, they are most often used in food factories that put additives in their products to make them palatable. My experience is that there is a vast difference between fresh, locally grown corn and the stuff sold in frozen foods or as fried chips. I managed to grow cherry tomatoes in my patio this year, which are not at all the same as those sold in grocery stores. The fact is that locally grown food not only tastes better, but is fresher and probably healthier as well. It is true that "organically" grown foods are more expensive than the mass produced, global equivalent. It is also true that much of the total cost of mass production food is disguised by tax subsidies and other corporate welfare programs.

Based on history, I doubt locally produced food can completely feed every population. Some trade will always be necessary. Storage to provide for emergencies and even out year-to-year production variations is required. But a huge reduction in energy inputs is possible by localizing food sources and using less fertilizer and pesticides. I am not advocating a return to labor intensive agriculture; quite the contrary. Advanced technology can reduce labor inputs, and also assist in reducing oil use (as fuel, fertilizers and pesticides). The place to start this changeover to small to medium scale agriculture is near local markets. This is already happening in California.

Reducing population will inevitably reduce the pressure on our food resources. Present agricultural methods, organic and otherwise, are capable of feeding the world's population. Thus, somewhat less efficient methods, such as organic farming, should be able to meet the needs of a reduced population. There is a huge saving in reducing the intensity of modern agriculture. In addition, the extent of cultivation could be reduced, which has many environmental benefits. Reducing the population and getting off the endless growth whirl-a-gig does not bring about a Dust Bowl or a Depression.

Another industry which has been traditonally local in America is housing. Oddly enough, most homes built at the local level are far more expensive and inefficient than manufactured ones. This is a case where it would seem localization is not a good thing, but it need not be that way. At least in the Sacramento area, home construction is no longer a Mom-and-Pop business. Large, national corporations ("developers") have moved in and taken over. They buy the land with capital raised on Wall St. and wait for an opportune time. They manipulate local governments in various ways, such as lobbying, advertising and campaign contributions (bribes), to pass zoning laws that conform to corporate plans. These developers make their money building shopping malls and housing tracts, not by leasing or keeping them. The developers do not have to live with the results of their handiwork. Consequently, homes and offices are built on site for immediate profit, not for efficiency or environmental safety. Manufactured homes are actually cheaper and friendlier to the environment than what the corporate developers provide. So, it is not a lack of local talent that makes home and office space anti-ergecological.

It is not that hard to set up and manufacture homes and small buildings locally. They do not have to be custom built or shipped thousands of miles. They do not have to be energy guzzlers. The skills required can be acquired by ordinary people at the local level. Since local builders have to live with the results, it is less likely that locally developed real estate will be used inappropiately. For example, would a builder put a home on a known flood plain or fault and live in it? Would a local builder have the resources to overwhelm local government and regulatory agencies? (It is a fact that small-time construction companies live in fear of the Building Inspector.) Once again, localization  can be a solution to the problems.

A major barrier to localization and other solutions to our ergecological problems are methods of accounting, What is growth? The way it is now, growth is measured as corporate sales and profits. Small, local businesses don't make much of a mark on growth data, except in the aggregate employment and tax receipt data. That is, we only know what is happening in local businesses by looking at statistical totals, not all of which can be broken down by region. On the other hand, corporate figures are widely and instantly available in the business media, because those numbers are important to Capitalist investors. The concept of growth has been distorted in favor of one economic group, which makes it difficult to assess solutions favorable to everyone else.

During a period of population reduction, the average age tends to increase and the available workforce decreases. In a labor intensive world, aging could be a disaster when the workforce reaches a critical point, the point at which it can no longer support the population. Conservatives try to frighten us into reducing or abandoning Social Security by painting a near future in which that limit is reached. But those scare tactics do not account for the actual world in which we live. The workforce includes huge numbers of machines that produce the goods we actually consume, so the issue is not numbers of human workers, but human productivity.

Consider the positive aspects of more permanent housing structures in a world of reducing population. Isn't it more productive to build structures that last a long time, instead of flimsy stuff that makes a  quick profit? Most housing and strip malls in the United States are designed to last less than 50 years. Most houses are bulldozed before 40 years of service. On the other hand, I have visited  homes of ordinary people that are more than 300 years old. It is possible to build homes that last a long time out of quite ordinary materials. Proper maintenance of wood homes should extend their useful lives to a century or more. Home built using "expensive" oak can last 500 years or more. Homes made of concrete, steel, aluminum and glass can last 150 years or more, if maintained. Long lived homes save forests. They reduce all the energy and resource requirements that went into building,. Moreover, it takes a lot less labor to maintain, even renovate, older homes than build new one. Thus, an intensive policy of preserving our structural inventory goes hand-in-hand with population reduction and an economy that is less resource and energy intensive. We need not live in shacks and tents if we plan things properly, and guide our housing policies by ergecological (not Capitalist) criteria.

Similarly, in an automated world, why are we expending fuel on traveling salesmen? Should not businesses use modern information technology to communicate? This is vastly less expensive than criss-crossing the Atlantic or Pacific in jet airplanes, and serves all the same purposes. The motive for many personal meetings is the ability of some salesmen to impose themselves on their victims. The advantage of electronic  meetings is the  ability to hang up. It is certainly true for me that I make better business decisions at a distance than in person. Technology allows me to shop and compare before I sign on the dotted line, whereas the flesh immediately before me insists on an agreement how. It's hard to dissimulate or refuse an offered hand. Information technology not only reduces direct costs, but gives us the opportunity to be more rational in our allocations.

In a world that requires less work, that has the means of giving people more time for themselves, is it necessary to jet-set our way around the world when slower trains and ships would do? It is far less energy intensive (and, these days, dangerous) to take a cruise to Hawaii than fly there. It does take longer, which illustrates a simple rule, Work = Energy * Space-Time. If we have longer vacations or retirements, travel to many ports is possible at far lower costs than our speeded-up methods. In addition, properly thought out, such travel can be far more enjoyable and comfortable. It even allows time to get to know one's fellow travelers and the people who live at the ports of call. That is a great human gain which is not accounted anywhere in Capitalism.

These same arguments about trans-oceanic travel apply to trans-continental travel. On land, the appropriate vehicle of long distance travel is the railroad. California is in the process of developing a bullet train service which would make such travel possible in the 1,000 mile long State. This is an idea which should be extended elsewhere in the United States. Bullet trains are already a fact of life in Europe and Japan. However, I don't think railroads are the answer for local services except in highly urbanized areas such as New York, San Francisco and many Asian and European cities. Railroads would be a good solution in the United States, if someone could figure out how to stop the growth of suburbia and exurbia. Housing patterns are intimately related to our inefficient use of energy in all other things.

By assessing our well-being in different ways, we come up with different results. What we value depends on how we value it.  It is not only possible, but desirable, to live in ways more in tune with our natural world. Those ways involve lower costs, which represent less effort. In reducing our work effort and resource use, we do not have to lead lives of poverty and woe. By way of reference, most primitive societies allocate less than 20 hours of work per week per person to maintain an acceptable standard of living. In present-day First World economies, taking out military allocations, a work week of 25 hours meets all our needs. A reduced work week has many positive effects, included less illness, travel and other resource uses. In fact, it is likely that living in an ecologically sound society will be just as comfortable for almost everyone as life is now. For many people, life might even be better than it is now. But it is clear that cannot be said for everyone: present-day elites will be negatively affected.

The economic and social elties want economic growth as presently construed because they are the primary beneficiaries. Growth, measured by sales, is also an indicator of power. The company whose sales are increasing is a company that influences more people, because it produces products and services people want for whatever reason. Growth, measured by profits, is also a measure of relative power and status, because almost all of the profits are made over to the elites. In other words, growth, as now defined, measures how well the top strata are doing, not how everyone else is doing.

The easiest way to insure economic growth is through population growth. The Founder Effect gives an large advanatge to whoever gets there "firstest with the mostest." This is easily seen in the real estate market, where early settlers make fortunes selling off the land they enclosed ("own"). In addition, those first arrivals have a supervisory advantage over late comers, so their power increases. Almost all "old line" families increase their wealth and power over time. So, growth is a pyramid scheme. The natural tendency of economies based on growth, such as the United States, is the eventual formation of an entrenched elite; i.e., aristocracy.

A second way to induce growth is to increase the number and complexity of products people use. Thus, now we just "have to have" microwave popcorn and thousands of other formerly unknown products. Sneakers are not good enough: we have to have "designer" shoes, pants, etc. (Remarkably, the designer shoes look like sneakers.) But, when populations decline or settle into defined uses, this sort of growth stops altogether. An ecologically sound society probably will not produce many designer or pre-washed jeans. One way or another, the model of growth implicit in Capitalism must be abandoned in order to manage a sustainable economy.

Again, the reason Conservatives, representing the elite classes to which they belong or aspire, want free markets is the outcome. They deride planned economies because planning usually undermines the perquisites of the rich and powerful. But, if we cut through the propaganda, it should be plain that we can have reasonably fulfilling and comfortable lives when we think about things in a different way. There is no doubt in my mind that the economy will "decline," as measured in Capitalist terms, when people are in tune with Gaia. But that "decline" is not the same thing as one's life getting worse. That is the key distinction and the standard we must bear in mind, when making the change to sustainable practices.