Economies

Can we sustain “Business as Usual (BAU)?” Can we change BAU and create a Green Economy (Business as Sustainable-BAS)? Or do we adopt a new paradigm that recovers our environmental support systems and forestalls collapse?

If we have available energy, we may maintain life and produce every material requisite necessary. That is why the flow of energy should be the primary concern of economics. –Frederick Soddy, 1926, p. 56.

The promoters of the global economy…see nothing odd or difficult about unlimited economic growth or unlimited consumption in a limited world.
― Wendell Berry, Another Turn of the Crank, 1996

Brown, Cohen, & Sweeney, 2009 http://www.sciencedirect.com/science/article/pii/S0304380009006073

The economic term, Gross Domestic Product (GDP), measures market value of goods and services produced in a country over a year. A proposed measure of Gross Emergy Product (GEmP) measures the total emergy value of goods and services produced in a country over a year, instead, and can be visualized above as the sum of (R+F+G+P2I +N0+N1). Emergy intensity can then be measured by dividing GEmP by area, population and GDP of each country. Further measures of Areal Empower Intensity, Empower per capita, and Empower Intensity of Market Value can be calculated (Brown, Cohen, & Sweeney, p. 3427).

Emergy-Money Ratio MTB Democracy Lecture

Brown & Ulgiati 2011 http://www.mendeley.com/research/understanding-global-economic-crisis-biophysical-perspective/

On “Emergy evaluation of WorldBank and IMF impact on less developed countries: the emergy/dollar ratios (after currency conversions to dollars) are much higher in the less developed countries than in developed nations. Where the ratio is 4 to 1 the repayment with interest in real wealth is equivalent to a 440% interest for a loan with a 10% interest rate. The raw resources bought by developed countries transfer 2 to 250 times more real wealth than is paid for in buying power of money exchanged. An undeveloped country can develop its own capital faster by using its real wealth at home than by trying to exchange real wealth for a fraction of its real value. For example, with shrimp pond mariculture in Ecuador the real wealth of the mangrove coastal zone was taken from the local people and sold to the U.S. for a fraction of its emergy value” (Odum, 1996, pp. 208-219).

Maximizing jobs and the economy requires maximizing the symbiosis of the economy with the environment and its resources (Odum, 1995, p. 367).

Flywheel from MT Brown 2004 Picture Worth a Thousand Words (from Odum, 1976)

The Maximum Power principle (MPP) says that “you can’t play for long unless you steal your opponent’s gamepieces.” And after the 1970s, and due to the US’s powerful momentum, oil prosperity, and military might, Americans did just that. Through the IMF, World Bank, and other organizations, the U.S. achieved petrodollar status and expanded the control of their monetary system through expansive international loans. In other words, the system self-organized into a design where the US, already in power, designed new feedback loops to bring in even more power. The MPP basically says that in a situation with surplus energy, those that have typically get more, through competitive exclusion. The principle was also described in Naomi Klein’s The Shock Doctrine and is illustrated in the brief video below. Brown and Ulgiati (2003, 2011) mirror this concern in several recent articles, also below. Whether one calls the imbalance shock doctrine, predatory capitalism, or resource imperialism, the result is massive inequities in economic growth and the capture of global real wealth. Unfortunately, the fifth law of hierarchy says that “stealing your opponent’s game pieces shortens the cumulative length of the game.”  American imperialism has shortened long-term sustainability of our global trade system, as the global flywheel economy spins faster, and faster, and faster.

Berquist & Rydberg, Towards a transdisciplinary understanding of Emergy accumulation, 2008 Emergy Research Conference, (PDF)

 

Ulgiati, Zucaro & Franzese, Resources, lifestyles and shared wealth: thoughts about a prosperous way down, 2011 (ebook) 

hungergamesfandom.net

Resource imperialism is the act of appropriating resources from other countries with unfair advantage. Under the guise of free trade, nations with strong currencies, because of the differences in the buying power of their currencies, (USA and Western Europe) have unfair advantage if trade is balanced based on monetary flows. In all trade, monetary flows have to more or less balance, that is, income must more or less equal expenditures. Thus nations with weak currencies are at a competitive disadvantage. The question arises . . . how best to evaluate currencies and their buying power in a manner that is free of speculation driven values that result from international monetary markets (Brown, 2003, p. 400)?

http://thecapitoltour.pn/ Hunger Games Capitol City as American Empire?

 

Since money and energy/ resource flow in opposite directions, the use of monetary flows to make public policy and decisions regarding the future of a country is in reality looking at the world backwards. Frequently, sound economic advice in resource rich nations recommends the selling of raw resources and the importation of finished products. Yet under such even monetary trades, the resource-exporting country always loses,

1911, from 50watts.com

sending out far more wealth than they receive in finished products (Brown et al., 2009; Ulgiati and Cialani, 2005). Continuing uneven emergy trades at the expense of the developing countries of the world is a recipe for global instability because it keeps the majority of the world’s population in poverty while the west tries to live an unsustainable lifestyle (Brown & Ulgiati, 2011, p.8).

What does privatization really mean? Essentially, it is the transfer of productive public assets from the state to private companies. Productive assets include natural resources: earth, forest, water, air. These are assets that the state holds in trust for the people it represents. In a country like India, seventy percent of the population lives in rural areas. That’s seven hundred million people. Their lives depend directly on access to natural resources. To snatch these away and sell them as stock to private companies is a process of barbaric dispossession on a scale that has no parallel in history. –Roy, in Dallmayr, 2004

Brown & Ulgiati 2011 http://www.mendeley.com/research/understanding-global-economic-crisis-biophysical-perspective/

Comparative Gross Emergy Products (GEmP) have been assembled in an Emergy database for 141 countries.  In the first graph, the US and China have the highest GEmP scores, followed by Mexico as a surprising third rank. The authors suggest that this might be because “Mexico is a renewable resource rich country having coastlines on two oceans which may account for its high GEmP” (Brown, Cohen & Sweeney, 2009, p. 3431). The second graph shows Emergy Intensity (approximated as Areal Empower Density) which is the sum of Renewable R and NonRenewable NR emergy use divided by the area of the country). The graph shows countries with large flows of R energy dominate high empower intensity, while industrialized countries dominate the midrange. Countries with less R and NR flows of energy use are clustered at the low range of Emergy Intensity. The authors explain that “generally, countries with small footprints and either large geopotential (mountainous) or large coastlines and continental shelf areas (which translate into very high renewable energy intensity per unit area of footprint) have the highest energy intensities” (Brown, Cohen & Sweeney, 2009, p. 3431). The third graph below shows GEmP per capita, an index of well-being. In the graph, “the countries with the highest empower per capita are countries that have large area, relatively large neon-renewable flows, and relatively small population densities. Countries with few indigenous non-renewable resources and little renewable empower occupy the lower end of the spectrum. The industrialized nations tend to dominate the mid ranges of empower per capita” (Brown, Cohen & Sweeney, 2009, p. 3432). Other international comparisons in this paper include indices of national economic efficiency for agriculture, trade, national EYR, and indices for environmental efficacy. The authors also discuss sustainability constraints and an Emergy Sustainability index (EmSI), with implications for net energy, energy intensity, and energy efficiency.

y = k/x? Brown, Cohen & Sweeney 2009 http://www.sciencedirect.com/science/article/pii/S0304380009006073

The EmSI is calculated as the ratio of National Empower Yield Ratio (NEYR, derived from the ratio of total emergy use to investment of local non-renewable resources) to Environmental Loading Ratio (ELR, ratio of NR to R emergy use). EmSI = NEYR / ELR

from Mark T. Brown’s Democracy Lecture

Global emergy per capita has been decreasing in a stair step fashion since about 1975. Standards of living depends on the resources in use per person, and the standard of living is falling in developed nations, since the mid to late 1970s. What does this mean for us, and how will it translate in our economies?

“The most intensely developed countries have lowest EmSIs. Industrialized nations, for the most part, all fall below 1.0. Countries with moderate levels of industrialization and large natural renewable energy bases have EmSIs that range from 20/1 to 50/1, while undeveloped countries with very small economies have the highest EmSIs” (Brown, Cohen & Sweeney, 2009, p. 3436).

The total emergy use and emergy from renewable and non-renewable sources in ca. 1997 were evaluated and compared, The analysis showed significant asymmetry, identifying three types of economies: (1) Sustaining Economies: those relying mostly on renewable resource flows; (2) Transforming Economies: countries with increasing participation of nonrenewable resource use; and (3) Consuming Economies: countries that rely almost entirely on non-renewable resource use.
Indices of sustainability were evaluated and compared between countries. The USA and western European countries have high short run sustainability due primarily to their competitive trade advantage but are obviously vulnerable to changes in fossil fuel availability as the percent of their total resource base is 10% or less. Countries with the highest renewable resource base (Bolivia and Afghanistan) are so poorly developed that they cannot provide sufficiently for their populations, so while they are more sustainable in the long run, their short run sustainability is questionable. Other indices suggest that countries with intermediate levels of non-renewable use compared to renewable flows (Canada and Australia) may be more sustainable.
An emergy to money ratio (EMR) was calculated for each country based on the ratio of total emergy use to GDP (in US dollars) and suggested as a measure of the buying power of an economy when compared to other economies. Emergy balance of payments resulting from international trade was also evaluated. Trade between all 41 countries was evaluated using an emergy measure of buying power of currencies and an Emergy Exchange Ratio. Sustaining Economies, when trading globally, are at a disadvantage, exporting more value per dollar than they import. Transforming economies have moderate trade disadvantages with consuming economies, but benefit from trade with Sustaining Economies. Consuming Economies benefit most from trade with other countries enjoying trade advantages of as much as 80 to one when trading with Sustaining Economies.
The relative buying power of national currencies (or Emergy Exchange Ratio) was used as the basis for suggesting sustainable trade policies that balance imports and exports between nations. It is suggested that balanced trade is achieved when emergy of imports and exports of trading partners are equal, not when monetary flows are equal (Brown, M.T. 2003. Resource Imperialism: Emergy perspectives on sustainability, balancing the welfare of nations and international trade).

Brown, Cohen & Sweeney 2009 http://www.sciencedirect.com/science/article/pii/S0304380009006073

The most vital economies in descent will be those that encourage choice in order to find what is workable in a changing world. The most vital economies will be those that adapt promptly.

  • Proven Oil Reserves 2007

    Wars have historically helped organize the landscape into units appropriate to available resources. Current imbalances in international trade are based on market valuations and unfair international exchange. Perhaps energy valuation can evaluate products, goods and serves for trade to balance the equity and energy

  • Holding back on resources does not maximize economic vitality, and the best national economic policy is the symbiotic sharing with neighbors for stability. Developed nations should not limit fuel imports because these stimulate their economies with a 6 to 1 amplifier effect. There is a 6 to 1 negative amplifier effect on the economy when energy use is curtailed, so taxation of energy sources should be avoided.
  • Setting prices of fuels below market prices depresses sources of supply, creates shortages, and inhibits economies
  •  If one sector of the economy is either neglected or overemphasized, the whole economy will suffer
  • When a developed country borrows money from outside, its economy is stimulated temporarily but later it is inhibited by its debt
  • It huts a less developed country more to repay borrowed money
  • Full employment maximizes an economy
  • An economy is hurt by raises in pay at the expense of jobs (Odum, 1987)

When George Bush says “you’re either with us, or you are with the terrorists” we can say “No thank you.” We can let him know that the people of the world do not need to choose between a Malevolent Mickey Mouse and the Mad Mullahs.

Our strategy should be not only to confront empire, but to lay siege to it. To deprive it of oxygen. To shame it. To mock it. With our art, our music, our literature, our stubbornness, our joy, our brilliance, our sheer relentlessness : and our ability to tell our own stories. Stories that are different from the ones we’re being brainwashed to believe.

The corporate revolution will collapse if we refuse to buy what they are selling : their ideas, their version of history, their wars, their weapons, their notion of inevitability.

Remember this: We be many and they be few. They need us more than we need them.

Another world is not only possible, she is on her way. On a quiet day, I can hear her breathing. –Arundhati Roy, Porto Alegre, 2003

Dilbert-One’s perspective depends on the level of scale at which one examines the problem?

Our civilization can thrive in a future where we live with less