On Shortages

Question of the Day February 7, 2011 “Shortage of Products”

If there is a shortage or possible shortage of a product* do you/would you rush out to buy and horde it?
* Good examples are food and petrol.

Interesting question.
Like Gil, it seems to me that most of the shortages in the economic systems are created for the purpose of making more money, and concentrating wealth to the wealthy.

I also believe, like Amber, that it is possible to have abundance in all things needed.

The two things are related.

In my late teens and early twenties I maintained stocks of food and weapons in deep mines, in case of nuclear war. Now I chose to take action on a broader level.

The Sun is “burning” 600 million tons of hydrogen to helium every second. The tiny fraction of that energy that lands on earth is equivalent to 6 inches of oil over the entire earth’s surface every year.

We have an abundance of energy.
We have an abundance of matter.
We have an abundance of smart and energetic people.
What we lack is awareness and communication and organisational structures to bring abundance to everyone.

All economic structures are based on scarcity. Abundance is anathema to economic systems.
Economies are based upon scarcity.
We are only willing to trade for things that are scarce – who would part anything that they value for something that they already have all they need of?

Economic systems can only ever provide true abundance for a very small minority. For the rest – life is scarcity.

Most legal systems are there to protect the interests of those who already have power and money. They support and create barriers to entry to markets, and thus create scarcity, and keep prices up, and availability down.

We are all fed the lie that all things require money – and few ever seriously question it.

So I am about creating abundance – for all – no exceptions; in the full awareness that that means an end to economic systems as they are currently known.

[followed by]

Gil said:

“Stuff” requires work to bring it into being. Our current system of capitalism devalues work by the very act of putting a monetary value on it. Money in itself has no value, its value lies in the potential to access stuff that other people have worked to bring into being in return for stuff that you have worked to bring into being. 

Several areas for misunderstanding in that paragraph Gil.

 

In the scientific sense, yes, most stuff does require “work” to bring it into being, and most of that “work” is done without human input.

 

In our case, most of the energy for the productive systems on this planet comes from suns, the ones that made the matter we are made of in their death explosions, and the one that currently shines in our sky.

 

Most of the abundance in the world simply exists, as a combination of systems interacting.  This planet is a collection of interstellar stuff, and it is still collecting stuff, though the rate of collection continues to slow gradually.  Comets and meteors and solar winds still play many important roles in earth based processes.  

Plate tectonics is a gradual process responsible for all the land on earth.  Without the continual collision and uplift of plate tectonics, all land would have eroded below sea level billions of years ago.  
Tectonic and hydrological forces are responsible for all of the mineral concentrations found on earth.

Biological ecosystems are responsible for all of the food, and the oxygen in the air we breath.

The sun powers biological systems, and also the creation and delivery of fresh water, through evaporation, and the winds created by uneven heating of the earth’s surface.

 

So in this sense, almost all of the abundance on earth was there before people, and has nothing to do with people.

In so far as that abundance forms part of economic systems, for the most part it has to do with people staking out claims to territories, and defending those claims and the wealth within them.   Such claims immediately create “haves” and “have nots” in society, and are thus the basis for an economic system.

 

Now not everything about economics is bad.

Economics can provide very efficient means of getting people to work for what is scarce and what is desired.   Unfortunately, the system tends to become an end in itself, and people tend to focus on creating money, in and of itself.  This leads to things like stock markets, money markets, futures markets, bond markets, and trading systems which are little short of gambling mechanisms for the wealthy.

When the existence of people becomes separated from the natural abundance, and most people become dependent on money alone, with no knowledge of the relationship of that money to the biological processes which actually sustain them, we have a recipe for disaster.   There is no longer any clear relationship between individual behaviour (money seeking) and the long term consequences (ecological degradation and destruction).   Short term profit leads to long term destruction.   And the more we focus on profit, the worse it will get.

 

One of the things that is becoming very obvious, is that the more we automate things, the less becomes the value of unskilled labour.  That trend has now reached the point that most people in the world cannot contribute enough economic value to sustain their own existence, and thus rely on some form of welfare, and have no chance of escaping the poverty trap (some individuals certainly can escape, but not all, nor even a significant minority – most are condemned to poverty by the system itself).

With increasing automation, and increasing concentration of wealth, that trend will continue; unless we do something unlike anything that has previously happened in human history to change it.

 

Current systems encourage centralisation of all services, because centralisation allows the extraction of monopoly rents, and increases profits.   However, centralisation increases risk of systemic failure; and makes the entire system more vulnerable.  System wide, risk is reduced by decentralisation, but this is in direct conflict with economic profits.

 

There is no economic value in abundance if that abundance is freely available to all.

Abundance can only become economically valuable if it is isolated from the the majority, and comes under the monopoly control of a few.  This few, can then extract “exchange value” (money) from the trading of their (once common) abundance.

 

Jared Diamond in his great work “Collapse” gives ample description and many examples of the complexity of the interactions involved.

 

In an ideal world, we would have systems which provided abundance for all of the basic necessities of life, and allowed and encouraged diversity in life.

 

The concept of “diversity” is anathema to the concept of “right and wrong”.

 

If someone has the idea of right and wrong, then something that is unknown, or not well understood, must inevitably end up in the mind imbued with “right/wrong” being classified as “wrong”.   Thus groups based in the “right/wrong” model tend to create strict legal and cultural systems of “rights” (and “wrongs”).

 

It is only when minds evolve past the distinction “right/wrong” (which includes all binary valuation systems as equivalent – “good/bad”, “good/evil” etc) and opens to a universe of infinite possibility, and the inevitability of dancing with the unpredictable consequences of choices, rather than trying to predict everything with certainty ahead of time, can we possibly live in diversity, peace and prosperity for all.

 

Part of the problem we have, is that there are entire industries (education, advertising) devoted to creating us as consumers within an economic system; rather than making us valued, self aware, creative participants in an infinitely expanding abundance.

 

Breaking that mindset is not easy, particularly not when we are so firmly embedded in an economic and political matrix, that is not designed to serve the needs of all – only the needs of a very select few (most of whom seem to be participants in a giant tontine).

[followed by]

Like Gil says – it can get very complex.

Most water “shortage” relates to our desire to grow edible crops in places without enough water.

Most edible crops require a minimum of 20 inches of water for a 6 month growing season and about 40 inches for a 12 month season.

 

Poor management of irrigation and fertiliser regimes means that many areas in the world are experiencing salination problems, as salt from deep in the soil is concentrated on the surface.

 

Add to that that treatment of waste water is expensive, so people will only do it if forced to, and forcing them too often puts them out of business, as places with less severe environmental laws out compete local enterprises.  This can be seen all around the world.

 

Forest ecosystems are extremely complex systems, and soil ecologies are every bit as complex as what is seen above ground.   Our focus on short term crop outputs is putting serious pressure on many systems.   These problems are solvable, but not cheaply (in the current paradigm).

 

Then there is the added dimension of global warming, with changes in precipitation patterns and glacier melting, and changes in forests, and all the other things that have an impact on rainfall and river flows on both the local and regional scales.  Some of these factors have negative feedback, in that once they reach a critical tipping point, they rapidly go a long way before reaching any sort of stability again.

 

So yes – water shortages definitely occur in some places, and world wide, there is ample water, but given current “economic” constraints, it is not economic to solve the issues.

 

Certainly, with technology like that proposed in www.solnx.org, we could once again have the earth as a fertile garden.  Even the current deserts of what was once known as the “fertile crescent” could once again be fertile gardens within a couple of decades, if we chose to make it so.

 

[followed by]

Yes Population is a key factor, and so are many other factors relating to population, mostly diet.

Good pastureland can grow about 25T of dry matter per hectare per year, and about 7T of grain.

If we pasturefeed cattle, they are useful and relatively safe in our diets, all other things being equal (which they rarely are), but grain feeding cattle has major problems for the cattle (they have evolved to eat grass, not grain, and their immune systems suffer as a result (which is good news for antibiotic manufacturers, but bad news for the rest of us)). And so the web builds.

The best thing that most of us can do for ourselves and the planet is to cut down on meats, particularly cheeses, keep grains to a minimum, and eat as much fresh grown greens as we can – spinach is a great one – but lots of diversity in diet is also important. Exercise and sunshine are also vital.

If we seriously balanced all of those things, cut our commuting and lived less hurried lives, and adopted knowledge based sustainable practices in all we do, this planet could sustain about 20 billion of us in abundance, and also maintain at least 30% of land area in non-human modified ecologies, with the remaining 70% being far more diverse ecologies than we are used to now.

If we recycle all our “poop” in fertiliser, then the system is closed and balanced, and we don’t need “chemical fertilisers”, but it is not easy to do when people live in cities with sewers that do not differentiate between toilet waste and detergents.

If we try and go back to how our ancestors managed their relationships with the ecosystem, then we are already over-populated by a factor of about 10.

We cannot go back – that way lies only war, death, and destruction.

Our only option is to go forward, into the unknown, untested, untried, following the trends of the past, not the paths of the past.

[followed by]

Hi OM

Of course, there exists the sense in which money serves a role to reduce scarcity, in the sense you say. If I really have created something, that you want, and we have an agreed token of exchange value (money), it helps both of us.

There is much positive in the use of money as a tool to foster ever greater levels of abstract creativity and specialisation, without the person that wants what we have actually having to have something that we want directly.

In that sense, money plays a very powerful and positive role in society.

Where it breaks down, is when people start chasing money for it’s own sake, rather than producing something for money.

When people start chasing money for it’s own sake, the system contains the seeds of it’s own destruction.

Because money is a measure of exchange value, then there is a definite maximisation point at the intersection of the production and demand curves, that is the optimum point for generating profit. That must mean that there is a significant demand that remains unsatisfied. Thus economic systems can and do, provide abundance to a point, there also remains scarcity for a significant portion of the population.

It gets worse when one takes it to the next level, and looks at how money is created, and how credits and securities are traded. The forex (Foreign Exchange) market, the stock, bond and futures markets, are all forms of gambling, with the losers usually being the producers at the sharp end of the system.

When one looks at legal systems, and looks closely at the economic effects of most of the laws in place, it becomes clear that for the most part, laws are there to protect the economic interests of major players (and not the public good spin that is normally put on top of it).

Taking it even further, there is a huge incentive for major players to build bigger and bigger businesses, which end up as cartels and effective monopolies. Oil production is a case in point. By creating an impression of scarcity, a few oil shareholders create massive windfall profits as oil prices rise, and the people who pay are the average Joes on the street. A huge concentration of wealth. Is it really costing that much more to produce oil? Of course not.

Is there really a massive investment in alternatives? Of course not – George W Bush cancelled all major alternative energy programs in the USA.

What have we got – a system of trading carbon credits, which far from creating alternatives, creates two sets of vested interests in maintaining the existing carbon based energy systems – carbon producers and carbon sinkers.

At the highest level, there is no economic incentive to create abundance.
When abundance is achieved, economic value disappears. When everyone has got all they want, no one will pay for more.
So there is no incentive in economic systems to meet all needs. The incentive is to meet only enough to maximise economic activity.

The creation of money, and debt, out of thin air, is definitely part of the system.

At no time in history has everyone had all they needed for life at their fingertips all the time.
That is now a technical possibility that we could bring into being.
Will we?

If we do, then it is something that makes economic activity redundant in a very real sense.
If we have all we need, then everything else is just doing what we want to do.
In such a system, do we really need money?

We are a social species.
We have evolved cooperative and altruistic habits and tendencies.
How far are we going to take them?

About Ted Howard NZ

Seems like I might be a cancer survivor. Thinking about the systemic incentives within the world we find ourselves in, and how we might adjust them to provide an environment that supports everyone (no exceptions) - see www.tedhowardnz.com/money
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5 Responses to On Shortages

  1. Gil says:

    (Several areas for misunderstanding in that paragraph Gil.)
    I love the way you expanded my comment and clarified it! I did mean “work” in the scientific sense and also was trying to make a pun or play on words to bring in all the other meanings of work that spring to mind. I find it very difficult to commit my thoughts to paper, I wanted to put something in about how the value of money is artificially created and it should by based on something that is quantifiable somehow. You explained it with precision that I am not currently capable of.
    I really resonated/had an epiphany when reading this:-“The concept of “diversity” is anathema to the concept of “right and wrong”.” and your explanation that followed. To me this is a particularly good explanation of the concept of “dualism”. What followed was the realisation that I am not a “dualistic” thinker, and therefore find it difficult to communicate with/be understood by people who are. My default setting seems to be lateral thinking, with intuitive leaps. The answer arrives full blown in my mind, going back and having to explain the working out is tedious beyond measure for me. I am trying to work on this trait in order not to alienate myself from other people. Also this year I am going into 2nd year of my BA Psychology degree and that is going to involve a lot of academic writing that needs to be understandable, precise and articulate.

    On the water issue, I am in total agreement with you once again.
    Ditto on the population issue.
    There however need to be huge paradigm shifts in the way people “think”, in order for them to change the way they “do” things.
    Gil

    Like

  2. That native mode of intuitive leaps is the native mode for all of us. It is just that most of us are trained to ignore it at the top level, even if we rely on it for all day to day activity and communication.

    I wish I had an effective way to communicate how that works, but I haven’t yet.

    I guess that I am just lucky that I got so used to being alienated as a kid, that I am happy to keep operating in intuitive mode as an adult, and I have got very fast at going back and filling in the gaps, so most of the time I can communicate at least to some degree.

    Thanks Gil.

    Like

    • Gil says:

      So now I just need to work on my processing speed. Hopefully it will improve with practise. As a kid I was withdrawn to the point of almost being autistic so I can identify with what you are saying here. Towards the end of high school they ran I.Q. tests on everyone and the school was very surprised by my score. In terms of school work I was an average performer at best. I feel that the system of education that we currently have has very little going for it as it blatantly discourages thought and creativity. It has been a uphill battle to get my kids through school with a minimum of psychological damage. I have tried to train them to keep an open mind.

      Like

  3. Ted – The piece that really grabbed my attention is based on this sad truth:

    “All economic structures are based on scarcity.”

    The gears in my mind are going to be turning tonight – great grist for the mill.

    Like

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